05 financial performance of dimul and...
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CHAPTER 4
FINANCIAL PERFORMANCE OF DIMUL AND PRIMARY DAIRY COOPERATIVES
Every dairy Union performs the task of collection, processing and marketing of milk
and milk products on behalf of the registered cooperatives. The overall financial
performance of a dairy industry is dependent on one of the important aspects, that is,
marketing. Thus before studying the financial aspects DIMUL, an attempt has been
made to look into the marketing aspect.
4.1 Marketing Performance of DIMUL Ltd.
After procurement of milk, the next important aspect that a dairy industry has to take
care, is marketing. As milk is highly perishable in nature, appropriate action must be
taken to collect, store and send the products to the market ensuring the quality and
quantity aspect. As demand for milk is income elastic. Market researchers have been
able to correlate milk consumption with the income structures of the society. Therefore,
with an increase in population and income levels the demand for milk and milk-
products is sure to grow in the years to come.1 DIMUL started marketing of milk and
milk products right from the beginning of its operation, thus, handling 3.5 litres in the
beginning from 3 cooperative societies prior to 1985. In the year 2008-09, from the
different range of products marketed, only 6 major products among were selected for
the study. Sale of different products in quantities by DIMUL is shown in Table -4.1A.
1. Kamat, G.S. (1986): Managing Cooperative Marketing, Himalaya Publishing house, NewDelhi.
87
Table- 4.1A Sale of Different Products by Dimul from 2004-05 to 008-09
Year Toned Milk
(lakh litres)
Lassi
(‘000 cups)
Dahi
(‘000 cups)
Ice cream
(‘000 cups)
Ghee
(kg)
Cattle Feed
(MT)
2004 – 05 14.36 436.07 127.57 -- 535 127.00
2005 – 06 12.54 784.51 451.42 16.35 2088 176.00
2006 – 07 12.78 833.92 322.70 66.70 3758 310.00
2007 – 08 13.13 940.86 318.49 176.87 1061.50 255.00
2008 – 09 13.40 1117.52 262.92 428.65 --- 186.00
Average 13.242 823 297 172.1425 1861 211
Percent Over 2004-05 & 2008-09
-0.06685 50.85448 0.514795 -- -- 0.317204
An attempt has been made to show the total sale and total procurement of milk of
DIMUL over the study period. Total Sales of different products (in Lakh Rupees) &
total procurement of milk (in Lakh Litres) are shown in the Table- 4.1B
Table-4.1B Total Sale of Different Products (in Rupees) and Total Procurement of Milk (in
Lakh litres) by Dimul from 2004 to 2009
Year Total Sale of Different
Products (Rupees in Lakh) Procurement (in Lakh litres)
2004 – 05 267.77 11.25
2005 – 06 310.36 12.04
2006 – 07 350.35 12.52
2007 – 08 377.23 10.33
2008 – 09 432.50 8.53
Source-Annual Report, DIMUL, 2004-05 to 2008-09
Thus looking into the above table we can say that the sales of products by DIMUL has
gone up from 267.77 lakhs in the year 2004-05 to 432.50 lakhs in the year 2008-09 thus
registered an average increase of 61.52 percent whereas over the study period but the
procurement of milk has been decreasing over the period. In order to understand the
Collection and procurement of milk better a trend line with equation is shown in
Chart-4.1.
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Chart-4.1
The graph presented shows the trend equation of Collection of milk as positive and the
procurement of milk as negative. The actual requirement of milk is increasing due to
variety of products marketed by DIMUL. Therefore, this gap of met by purchasing
powdered milk from a Chennai based firm on credit basis. Thus, we can say that
DIMUL has to make more efforts in procurement of milk from its registered dairy
cooperatives.
DIMUL had carried out intensified advertisement drive during the study period through
wall paintings, danglers, panaflex, hoardings, etc. In order to improve upon aesthetics
and ensure hygienic handling of products, installation of all milk vans and carriage of
milk in creates were made mandatory. Insulated boxes were provided for the retail
outlets for safe storage of milk and products. The Agricultural Expo - 2006 was
organised towards the fag end of the year provided the union with a platform to
showcase union's activities and products.
Training and skill upgradation- Trainings, awareness campaigns and skill upgradation
programmes are necessary to keep pace with the speed at which technologies are
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becoming obsolete. A series of trainings awareness programmes were conducted during
the year within and outside the state.
1. As we have gathered a birdseye view of the marketing activities undertaken by DIMUL,
now an attempt has been made to understand the meaning of finance management and
the ratio analysis as one of the technique of financial management to evaluate the
financial performance of an organisation.
Financial management has attracted a lot of attention of the corporate sector for matter
relating to the capital structure, cost of capital, working capital management, project
appraisal, corporate governance and so on. A good professionally managed company is
greatly concerned about the adaptation of the appropriate technique the result of which
shall be helpful in guiding and deciding the best possible course of action.
Finance has been aptly described as a lubricant of economic activity, without which the
entire business will grind to a halt. According to Soloman, “Financial management is
concerned with efficient use of an important economic resource mainly, capital funds”.
S.C Kuchhal’s definition of financial management is most acceptable which states that
“Financial Management deals with procurement of funds and their effective utilisation
in the business”.2
In order to make financial analysis of an organisation, financial statements are
extensively used. The financial Statements include the Balance sheet which is one the
most significant financial statements of the organisation. It indicates the financial
condition of the state of affairs of the business at a particular point of time.
2. Chakravarty, S. K. (2004) : Cost Accounts and Financial Management, New Age International
Publishers, New Delhi, p673.
90
The Profit and loss account is the other which is a score board of the fund's performance
during a particular period. It explains what has happened to business because of
operation between two balance sheet dates.
Thus, financial Statement analysis consists of the application of analytical tools and
techniques to financial statements and data in order to derive from them certain
measurement and relationship that are significant and useful for decision making.
Ratio analysis is one of the important tools of financial analysis. It involves taking sets
of numbers out of the financial statements and forming ratios with them. The numbers
are chosen so that each ratio has a particular meaning to the operation of the business.
In the present study, the data were collected in order to determine the financial
condition of DIMUL and to study the ratio analysis technique adopted by several
researchers in their respective research works; certain vital ratios were selected and
purposively applied to ascertain the financial strengths and weaknesses of the DIMUL.
With the help of the financial figures presented in the financial Statements an
analysis of the overall financial performance of an organisation can be done.
As no dairy industry specific standard norm for different ratios were available, the
researcher after calculation different ratios for DIMUL and compared the result with the
ratios computed by other researchers in the similar type of studies and finally with the
result of the computed ratios of Tripura Cooperative Milk Producers’ Union Ltd, to
throw light on the financial condition of DIMUL. This chapter is divided into two
sections. Section –I covers the Ratio Analysis for DIMUL and Section-II for financial
Performance of Dairy Cooperatives.
SECTION-I
4.2 Ratio Analysis- FOR DIMUL
It was found that in order to evaluate the financial performance ratio analysis techniques
was adopted in several studies. Such studies were related to analysis of financial
91
performance of Cooperative Banks at district level or to evaluate the performance of
cooperative federation, cooperative societies, etc. Studies of Natarajan3 et al. (1980),
Rama4 (1984), Bhalerao5 (1985), ShankaraMurthy6 (1986), Patil7 (1991),
Bandyopadhyay8 (1996), Tirfe9 (2008) considered different ratios to determine the
solvency of the organisation, by using liquidity ratio; turnover ratios to determine
various turnovers in relation to Collections and the profitability ratio to determine the
overall profitability of the organisation.
3. Natarajan, R. Et al. (1980): Working of Consumers Cooperatives in Andhra Pradesh – A Case study,
Indian Cooperative Review, Vol.18(1), pp.(7 – 20).
4. Rama, B.R. (1984) : Performance evaluation of Farmer Service Societies in Karnataka, M.Sc.
(Agriculture) Thesis, University of Agricultural Science, Bangalore.
5. Bhalerao, M. M. Et al (1985) : Growth of Arecanut Marketing Societies In India, Indian Co-operative
Review, Vol.19(1), pp.19–32.
6. ShankaraMurthy, H.G.(1986) : Performance of the Karnataka State Co-Operative Marketing Federation
Ltd., and its impact on farm market – An economic analysis, Ph.D (Agriculture) Thesis, Andhra Pradesh
Agricultural University, Hyderabad.
7. Patil, B. L.(1991): Performance of The Karnataka State Cooperative Milk Producer’s Federation Ltd and
its Impact on Dairy Development– An Economic analysis, Ph.D (Agriculture) Thesis, University of
Agricultural Science, Dharwad, Karnataka.
8. Bandyopadhyay, Manob. Kanti. (1996): Dairy Co-operative and Rural Development with Special
Reference to Comparative Study between the Kaira District Co-operative Milk Producers’ Union Limited
and the Himalayan Co-operative Milk Producers’ Union Limited, Ph.D Thesis, North Bengal University,
Rajarammohanpur, Darjeeling, Finance India, Vol. X (2). Pp 406–411.
9. Tirfe, Almaz Mesfin (2008) : Comparative Study on the Performance of Dairy Cooperative Input and
Output Marketing in Astbie, Womerta, Alamata and Enderta woreda in Tigray Regioosn Eithiopia, M.Sc
thesis, Department of Cooperatives, Mekelle University, Ethiopia.
92
Various ratios computed by the researcher are as follows: -
4.2.1 Liquidity Ratios- These are the ratios which measure the short-term
solvency or financial position of the firm. These ratios are calculated to comment
upon the short term paying capacity of the concern for the firm’s capacity to meet its
current obligations. The various liquidity ratios are: current ratio, liquid ratio and
absolute liquid ratio. Further see the efficiency with which the liquid resources had
been employed by a firm, debtor’s turnover and creditor’s turnover ratios are
calculated.
Current ratio - This ratio is also known as working capital ratio. It measures
the general liquidity and is most widely used in analysing the short term
financial position or liquidity of the firm. It is calculated by dividing the total
of current assets (for both Organisations-Cash in hand, cash at Bank, Short
term deposits, Bills Receivables, Sundry Debtors, Inventories, Prepaid
expenses, etc., were taken into consideration) by the total of current liabilities
(Sundry Creditors, Short term advances, Bank Overdraft, outstanding
liabilities, etc., are taken into consideration).
Current assets Current Ratio =---------------------------
Current liabilities
The Current Ratio calculated for DIMUL over the study period is computed in the
Table 4.2.1A.
Table 4.2.1A Computation of Current Ratio of DIMUL
Year
2004
-05
2005
-06
2006
-07
2007
-08
2
008-
09
Ave
rage
Current Ratio 2.42 1.64 1.80 1.75 2.61
2.044
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Different studies carried on different studies showed that a current ratio of 2:1 was
most ideal. In case of TCMPUL showed average current ratio for the same period
2004-05 to 2008-09) as 5.4.
The equation of the trend line of current ratio for DIMUL was y = 0.049x + 1.897
which showed that there was a positive trend for the study period whereas the
equation for TCMPUL was y = -2.5x + 12.9 showed that there was a negative trend.
As a convention the minimum of ‘2 to 1 ratio’ is considered as mandatory. Thus,
average of this ratio for Dimul during the study period was 2.044 and it can be
concluded that the Current ratio of DIMUL was satisfactory.
Quick or Acid Test or Liquid Ratio - An asset is said to be liquid if it can be
converted into cash within a short period without loss of value. It includes
cash in hand and cash at bank, bills receivable, sundry debtors, marketable
securities and short term or temporary investments. However, the inventories
are left out while calculating this ratio.
Quick or liquid assets Quick or Acid Test Ratio =----------------------------- Current liabilities
The Quick Ratio calculated for DIMUL over the study period is computed in the Table 4.2.1B
Table 4.2.1B Computation of Quick Ratio
As a rule of thumb or as a convention quick ratio is consider satisfactory if quick
assets are equal to current liabilities (1:1) so that the concern may be able to meet its
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Quick Ratio 0.79 0.60 0.70 0.75 1.34 0.896
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short term obligations. Different studies showed that the satisfactory level of Quick
ratio is to be 1. In case of TCMPUL showed average quick ratio for the same period
2004-05 to 2008-09 as 2.036. The equation derived out of the trend line for quick
ratio for DIMUL was y = 0.125x + 0.461 which showed that there was a positive
trend of quick ratio for DIMUL for the study period whereas the equation of the
trend line for quick ratio for TCMPU was y = -0.578x + 3.77 which showed a
negative trend. As the average Quick Ratio of Dimul is near to 1, it is considered to
be satisfactory.
4.2.2 Current Assets Movement or Efficiency/Activity ratios- These are
calculated to measure the efficiency with which resources of a firm had been
employed. These ratios are also called turnover ratios because they indicate the
speed with which assets are being turned over into Collections.
Inventory Turnover or Stock Turnover Ratio - It indicates whether
inventory has been efficiently used are not. It is normally calculated as
Collections/average inventory or costs of goods sold/average inventory.
Cost of Goods Sold Inventory Turnover or Stock Turnover Ratio = ----------------------------
Average Inventory The Inventory Turnover Ratio calculated for DIMUL over the study period is
computed in the Table 4.2.2A
Table 4.2.2A Computation of Inventory Turnover Ratio
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Inventory Turnover Ratio
8.09 8.99 8.33 9.66 8.88 8.79
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Average of Inventory Turnover for the study period is case of DIMUL is
8.79. A low inventory turnover implies over-investment in inventories, stock
accumulation and low profits as compared to total investment. The inventory
turnover ratio is also an index of profitability, where a high ratio signifies
more profit; a low ratio signifies low profit. As the average inventory
turnover of Dimul is near to 8.79 and the equation of the trend line was y =
0.225x + 8.115 which showed a positive trend and the equation derived out of
the trend line for TCMPUL was y = 1.11x + 2.49 with average inventory
turnover ratio for the period 2004-05 to 2008-09 was 5.82. The value of x in
the equation of the trend line was better than the equation for DIMUL. Hence the
performance of DIMUL was not satisfactory.
Debtors or Receivable Turnover Ratio- It indicates the number of times
average debtors (receivables) are turned over during the year.
Annual Collections Debtors or Receivable Turnover Ratio = --------------------------- Average trade debtors
Generally, the higher the value of debtor’s turnover the more efficient in the
management of debtors/Collections or more liquid is the debtors. The Annual
Reports of DIMUL did not have credit Collection as an item in the financial
statements of the study period from 2004-05 to 2008-09, the ratio can be
calculated by dividing the total Collections by the balance of debtors
(including bills Receivables).10 Thus, in case of DIMUL, Debtors Turnover
Ratio shall be calculated in Table 4.2.2B.
10. Sarma, R.K and Gupta Shashi. K. (2003): Management Accounting-Principles & Practices, Kalyani Publishers, 8th edn, New Delhi.
96
Table 4.2.2B
Computation of Debtors’ Turnover Ratio for DIMUL
DIMUL had maintained an average Debtors Turnover Ratio of 15.86 but the
equation of the trend line was y = -0.817x + 18.311 showing a negative trend
for the study period and the equation derived out of the trend line for
TCMPUL was y = -1.971x + 25.671 with an average debtors’ turnover ratio
for the same period 2004-05 to 2008-09 was 19.76. The trend of negativity in
the equation was more in case of TCMPUL, thus it can be concluded that the
performance of DIMUL was satisfactory than TCMPUL.
Creditors/Payable Ratio- The creditors are represented by the sundry
creditors and bills payable who are normally interested in finding the velocity
with which the creditors are turned over in relation to purchase. Generally,
higher the creditors velocity better it is for the firm. As the annual reports of
the study period from 2004-05 to 2008-09 do not provide information
regarding credit purchases in the financial statements. The creditors’ turnover
ratio can be calculated by dividing the total purchases by the balance of
creditors (including bills payable). Thus, Creditors Turnover Ratio shall be
calculated in the Table-4.2.2C
Annual Purchases Creditors payable turnover/velocity =--------------------------------- Trade Creditors
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Debtors Turnover
18.75 14.80 14.58 18.21 12.96 15.86
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Table 4.2.2C
Computation of Creditors Turnover Ratio for DIMUL
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Creditors Turnover
Ratio
27.30 23.10 21.93 63.86 57.28 38.69
A high creditors’ turnover ratio enhances the credit worthiness of any
organisation. However a very favourable ratio to this effect also shows that
the business is not taking the full advantage of credit facilities allowed by
the creditors. In case of TCMPUL showed average creditors’ turnover ratio
for the same period 2004-05 to 2008-09 was 17.80 whereas for DIMUL the
average for the period was 38.69 times. Looking into the trend of creditors’
turnover ratio over the period of time, the trend equation for DIMUL was y =
10.072x + 8.478 whereas for TCMPUL the trend equation for TCMPUL was
y = -6.901x + 38.501 which was negative, Thus it can be concluded that
Creditors’ turnover ratio was satisfactory for DIMUL.
Working Capital Turnover Ratio- This ratio indicates the number of times
the working capital had turned over in the course of the year. The increase or
decrease in current assets like debtors, bills receivable, cash, stock, etc., with
Collections has a direct relationship on the increase or decrease in the
working capital. The working capital is determined as follows:
Working capital = current assets - current liabilities
In order to compute the Working Capital Turnover Ratio, it is required to
compute the Cost of Collections. The Cost of Collections is the difference
between the total of Opening stock, purchases, direct expenses and the
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closing Stock on the numerator and dominator net working capital is taken
into consideration. It is calculated Table- 4.2.2D.
Cost of Collections Working capital turnover ratio =------------------------------
Average working capital
Table 4.2.2D
Computation of the Working Capital Turnover Ratio for DIMUL
The higher working capital indicates efficient utilization of working capital
and the low ratio indicates otherwise. A very high working capital turnover
is also not a good situation for any firm. In case of DIMUL the average of
five years’ working capital turnover ratio was 6.26 and in case of TCMPUL
showed an average for the same period as 4.43. Looking into the trend of
working capital turnover ratio over the period of time, the trend equation
was negative for DIMUL (y = -0.132x + 6.66) whereas for TCMPUL the
trend equation was a positive (y = 0.276x + 3.286) Thus it can be concluded
that working capital turnover ratio was unsatisfactory for DIMUL for over
the period of time.
4.2.3 Long-term Solvency and Leverage ratios: Leverage ratios show the
proportion of debt and equity in financing of the firm. These ratios measure the
contribution of financing by owners as compared to financing by outsiders. Long-
term solvency ratios convey a firm's ability to pay the interest costs and replacement
schedule of its long-term obligations.
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Working Capital Turnover 5.72 7.67 5.28 7.51 5.14 6.26
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Debt-Equity Ratio- It is calculated to measure the relative claims of
outsiders and the owners (i.e., shareholders). The computation of Long-Term
Debt-Equity Ratio is shown in Table-4.2.3A. It can be calculated as:
Long-term debt Long-term Debt - Equity Ratio =- ---------------------------- Shareholders’ Funds
Table 4.2.3A
Computation of Long-term Debt - Equity Ratio for DIMUL
YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Debt-Equity
0.08 0.14 0.21 0.21 0.14 0.16
A ratio of 1:1 may be usually considered to be a satisfactory ratio although
there cannot be any 'rule of thumb’ or standard norm for all types of
businesses. In one study while using this ratio concluded that in the initial
year the ratio was 0.65 because the equity of the corporation was low.
Thereafter the ratio increased upto 0.65 due to increase in long term liabilities
of the corporation. In the next year, i.e. 2006-07, the ratio decreased to 0.35
indicating though there was a decreasing trend but it was positive that the
long term liabilities of the corporation decreased.11 Generally speaking, the
low ratio means debt being low in comparison to shareholders fund, that the
organisation has not utilized the debt market for the effective use of the
organisation.
11. Tallikeri Kallappa Deepa (2008) : Performance of Karnataka State Agricultural Produce Processing and Export Corporation, Limited – An Economic Analysis, M.Sc Thesis in Agricultural Economics, Dept Of Agricultural Economics, College of Agriculture, University of Agricultural Sciences, Dharwad.
100
For DIMUL other than Bank overdraft, and bank loans, it did not take up the
risk of either shares/debenture or any other sort of bonds. TCMPUL showed
average long term debt to equity ratio for the same period (2004-05 TO 2008-
09) as 4.33 and the equation of the trend was y = 0.481x + 2.971 whereas the
average debtors’ turnover of Dimul was only 0.16 and the equation of the
trend was y = 0.019x + 0.099, thus it can be concluded that the overall
performance of the Debt-Equity Ratio for DIMUL was not satisfactory.
Proprietary or Equity Ratio - This ratio establishes the relationship between
shareholders funds to total assets of the firm. It is calculated in the following
manner-
Shareholders' funds Proprietary ratio or equity ratio : -------------------------------
Total Assets
Table 4.2.3B
Computation of Proprietary or Equity Ratio for DIMUL
YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average
PROPRIE-TARY RATIO
0.89 0.85 0.96 0.96 0.89 0.91
Normally, higher the ratio of the share of shareholders in the total capital of
the organisation, better is the long-term solvency position of the organisation.
A low proprietary ratio will include greater risk to the creditors. In case of
TCMPUL showed average proprietary ratio for the same period (2004-05 to
2008-09) as 0.65 times and the trend equation y = -0.012x + 0.69 showed a
negative trend. For DIMUL, the proprietary Ratio showed that the
shareholders/stakeholders had greater control over the assets on an average of
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the period of 0.91 times but the trend equation y = 0.011x + 0.877 showed a
positive sign, thus it was considered as favourable.
Fixed Assets to Net Worth or Fixed Assets to Proprietors’ Fund- The
ratio establishes the relationship between fixed assets and shareholder's funds,
that is, share capital plus reserves, surpluses and retained earnings.
Calculation of the ratio is given below.
Fixed assets (after Depreciation) Fixed assets to net worth =----------------------------------------------- Shareholders' funds
Table 4.2.3C
Computation of Fixed Assets to Net Worth
Or Fixed Assets to Proprietor's Fund of DIMUL
In case of TCMPUL showed average Fixed Assets to Net Worth or Fixed
Assets to Proprietor's Fund ratio for the same period (2004-05 to 2008-09)
was 0.45 times and the trend line equation y = -0.027x + 0.529 showed a
negative trend . DIMUL had the Fixed Assets to Net Worth or Fixed Assets
to Proprietor's Fund as 0.89 time and the trend line equation y = 0.011x +
0.877 showed a positive trend over the study period. Hence Fixed Assets to
Net Worth or Fixed Assets is favourable for DIMUL.
Ratio of Current Assets to Proprietor’s Funds- This ratio is calculated by
dividing the total of current assets by the amount of shareholders' funds. It
indicates the extent to which owners funds are invested in current assets.
Years 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Fixed Assets to net worth
0.89 0.85 0.96 0.96 0.89 0.91
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Current Assets Ratio of Current Assets to Proprietor’s Funds =- -----------------------------
Shareholders' funds
Table 4.2.3D Computation of Current Assets to Proprietor's Fund For DIMUL
In case of TCMPUL showed average Current Assets to Proprietors’ Fund
ratio for the same period (2004-05 to 2008-09) was 1.18 times and the trend
line equation y = 0.086x + 0.922 showed a positive trend which meant that
there was more dependency on the proprietors’ fund to finance the current
assets. DIMUL had the Current Assets to Proprietors’ Fund as 0.32 time and
the trend line equation y = 0.126x - 0.058 showed that though there was a
negative tendency to depend on the proprietors’ fund to finance the current
assets. Thus it can be concluded that the performance of Current Assets to
Proprietors’ Fund ratio over the period was satisfactory.
4.2.4 Profitability ratios - These ratios measure the result of business operations or
overall performance and the effectiveness of the firm. For the present study the
following ratios are calculated.
Gross profit Ratio- It measures the relationship of gross profit to net
Collections and is usually represented as a percentage. Table 4.2.4A shows
the computation of Gross Profit Ratio over the study period. It is calculated
by dividing the gross profit by Net Sales.
Gross profit Gross profit Ratio =------------------------ X 100
Net Sales
YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average
CURRENT ASSETS TO PROPRIETORS’ FUND
0.14 0.21 0.25 0.25 0.75 0.32
103
A high Gross profit Ratio is adequate to cover up the operating
(administrative and office expenses, selling and distribution expenses) and to
provide for fixed charges, dividends and accumulation of reserves.
Table 4.2.4A
Computation of Gross Profit Ratio of DIMUL
It is evident from the Table-4.2.4.1A that there is an increasing trend of gross
profit ratio for DIMUL expect for the year 2007-08. In case of TCMPUL
showed average Gross Profit ratio for the same period (2004-05 to 2008-09)
of 17.4 percent and the trend line equation and the trend line equation y = -
0.4x + 18.8 showed a negative trend of gross profit. For DIMUL,there was an
increasing trend of gross profit ratio for DIMUL and the trend line equation
showed that y = 1.3x + 14.1, a positive trend. The average of Gross Profit
Ratio for the five years showed that DIMUL had 18 percent. Thus Gross
profit ratio was satisfactory for DIMUL.
Operating Ratio - It establishes the relationship between cost of goods sold
and other operating expenses on one hand and the Net Collections on the
other. It is generally represented as a percentage.
Cost of Goods Sold + Operating Expenses Operating Ratio =-------------------------------------------------------- X 100 Net Collections
Organisation 20
04-0
5
2005
-06
2006
-07
2007
-08
2008
-09
Ave
rage
DIMUL 15% 18% 17% 19% 21% 18%
104
Table 4.2.4B
Computation of Operating Ratio
There is rule of thumb for this ratio and 75- 85 percent may be considered to
be a good ratio in case of manufacturing unit. The performance of DIMUL
has been high as the average Operating rate for the period of study was 85.6
percent as it was just a little more than the specific standard of 75 – 85
percent and the equation of the trend liney = -1.977x + 91.527 showed that
the operating expenses have been decreasing over the period of time. The
trend line reflected a positive sign of decrease of operating expenses for
DIMUL whereas operating ratio for TCMPU on the average for the period of
study was 80.26 percent. The equation of the trend liney = 0.615x + 78.333
showed that the operating expenses have been increasing over the period of
time, at a moderate rate. Thus, on comparison with TCMPUL, we can
conclude that performance of operating ratio was satisfactory for DIMUL as
it has managed to control some of the operating expenses.
Expenses Ratios: expenses ratios indicate the relationship of the various
expenses to net Collections. Individual or specific expense ratio may be
calculated as:
Cost of Goods Sold Cost of Goods sold Ratio:-------------------------------------- X 100
Net Collections
Years 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Operating
Ratio 88.46 % 86.83% 89.14 % 83.12% 80.43% 85.60%
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Table 4.2.4C(i)
Computation of Cost of Goods Sold Ratio of DIMUL
Organisation 2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008-09
Average
DIMUL 78% 77% 77% 80% 72% 76.8%
The average Cost of Goods sold Expenses Ratio for DIMUL during the study
period came to 76.8 percent and the equation of the trend liney = -0.9x + 79.5
showed that the Cost of goods sold has been reducing over the period of
study. The average Cost of goods sold ratio in case of TCMPUL was 85
percent and the equation of the trend liney = 0.5x + 81.1 showed that the Cost
of goods sold has been increasing over the period of study, thus, it can be said
that the performance of DIMUL in this regard has been more satisfactory
than TCMPUL.
Administrative Expenses Ratio- The administrative Expenses Ratio is
calculated to determine the amount of money spent on various expenses
incurred in maintaining the office and administration of an organisation.
Administrative Expenses Administrative Expenses ratio:-----------------------------------X 100 Net Sales
Table 4.2.4C(ii)
Computation of Administrative Expenses Ratio of DIMUL Ltd
Year 2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008-09 Average
Admn Exp Ratio
18% 22% 21% 18% 20%
19.8%
The average administrative and Office Expenses Ratio during the study
period came to 19.8 percent and the trend line showed more or less same at y
106
= 19.8 and DIMUL has to reduce some of administrative expenses in future.
The administrative expenses ratio in case of TCMPU with an average of 11.2
percent and the equation of the trend line for the period of study was y = -
1.2x + 14.8 showed decreasing trend over the study period. Thus, it can be
concluded that the performance in relation to administrative expenses was not
satisfactory to DIMUL.
Selling & Distribution Expenses Ratio- It includes all the expenses relating
to the selling of the products such as commission paid to the distributors,
advertisement, travel cost, etc. The formula is-
Selling & Distribution Expenses --------------------------------------- X 100
Net Sales
Table 4.2.4C(iii)
Computation of Selling & Distribution Expenses Ratio
Year 2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008-09
Average
Selling & Distribtion Expenses
Ratio
1.35% 1.21% 2.62% 1.57% 1.68%
1.69 %
The average percent of Selling & Distribution Expense Ratio of DIMUL was
low with an average of 1.69 percent and the equation of the trend line was y =
0.102x + 1.38 which showed that there was an increasing trend where as
TCMPUL had an average of 4.2 percent and the equation of the trend line
over the period y = -0.1x + 4.5 showed that there was a decreasing trend.
Thus it can be concluded that the performance of DIMUL over the period of
time was not satisfactory in comparison to TCMPUL.
107
Net profit ratio- It establishes the relationship between net profit (after tax)
and Collections. It indicates the efficiency of the management in controlling
manufacturing, selling and distribution expenses. It is calculated as:
Net profit after tax Net profit ratio= ----------------------------------- X 100 Net Sales
This ratio also indicates the firm's capacity to face adverse conditions such as
price competition, low demand, etc. Higher the ratio is better for the firm for
the adjustment to be adverse situations.
Table 4.2.4D
Computation of Net Profit Ratio for DIMUL
As cooperative exists for rendering service to its members, therefore, profit
earning is not the motto but in order to sustain the organisation DIMUL had
just managed to get an average of 1.056 percent and the equation of the trend
line was y = 0.116x + 0.708 showed a moderate increasing trend over the
study period. For TCMPUL had sustained a loss of net profit in the year
2007-08 but its overall average percent was only 3.024 percent and the
equation of the trend line was y = -0.333x + 4.023 which showed a negative
trend over the study period therefore it can said that the performance of
DIMUL was better in all these years of study.
4.2.5 Overall Profitability Ratio- Profits are the measure of overall efficiency of the
business. Here, return on shareholders' investment or net worth (ROI) is considered
to determine the overall profitability of DIMUL.
YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average
NET PROFIT RATIO
1.00% 0.99% 0.89% 0.65% 1.75% 1.056%
108
Return on Shareholders' Investment or Net Worth (ROI ): It is the
relationship between net profits (after interest and tax) and the Proprietors’
fund.
Net Profits (after interest and tax) Return on Shareholders' Investment (ROI): ------------------------------------- Shareholders fund
Table 4.2.5
Computation of Return on Shareholders' Investment (ROI)
DIMUL had average Return on investment of 8.92 percent and the equation
of the trend line was y = 1.585x + 4.165 was better than the TCMPUL and
there was an increasing trend over the study period. TCMPUL had Return on
investment of 13.2% with a negative ROI in the year 2007-08 and the
equation of the trend line was y = 0.4x + 11.922 showed a mild increase in
the ROI over the period. Thus, it can be concluded that the overall
performance of ROI over the study period was better than TCMPUL.
Computation of all the ratios for DIMUL is presented in the Table 4.2.6 in next
page.
YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average
ROI 9.87% 5.97% 5.74% 4.48% 18.54%
8.92 %
109
Table-4.2.6
Computation of Various Ratios for DIMUL
Before drawing the final conclusion about the financial performance of DIMUL, it
was felt appropriate to look into some of the relevant important items available in the
Balance Sheets of DIMUL.
Particulars 2004-05 2005-06 2006-
07 2007-08
2008-09
Avg
Current Ratio 2.42 1.64 1.80 1.75 2.61 2.044
Quick Ratio 0.79 0.60 0.70 0.75 1.34 0.896
Inventory Turnover Ratio 8.09 8.99 8.33 9.66 8.88 8.79
Debtors Turnover Ratio 18.75 14.80 14.58 18.21 12.96 15.86
Creditors Turnover Ratio 27.30 23.10 21.93 63.86 57.28 38.69
Working Capital Turnover Ratio
3.20 4.39 5.99 3.86 4.69 4.43
Proprietary or Equity Ratio 0.57 0.80 0.75 0.48 0.67 0.65
Fixed Assets to Net Worth
0.50 0.45 0.47 0.46 0.36 0.45
Current Assets to Proprietor's Fund
0.40 0.21 0.25 0.25 0.75 0.32
Gross Profit Ratio 15% 18% 17% 19% 21% 18%
Operating Ratio 88.46% 86.43% 89.14% 83.12% 80.43% 85.60%
Cost of Goods Sold Ratio 78% 77% 77% 80% 72% 77%
Administrative Expenses Ratio
18% 22% 21% 18% 20% 19.8%
Selling & Distribution Expenses Ratio
1.35% 1.21% 2.62% 1.57% 1.68% 1.69 %
Net Profit Ratio 1.00% 0.99% 0.89% 0.65% 1.75% 1.056%
Return on Shareholders' Investment (ROI)
9.89% 5.97% 5.74% 4.48% 18.54% 8.92 %
110
4.2.7 Study of some of the Balance Sheet items of DIMUL
Given below some of the relevant important items available in the Balance Sheets of
DIMUL from 2004-05 to 2008-09 are shown in Table- 4.2.7
Table- 4.2.7 Selected Items from the Balance Sheets of DIMUL from 2004-05 to 2008-09
(In Lakh Rupees)
PARTICULARS 20
04-
05
200
5-06
200
6-07
200
7-08
200
8-09
Ave
rage
Government Share Societies Share
1,20 1,11
1,20 1,11
1,20 1,11
1,20 1,26
1,20 1,26
-- 1.17
Total Share Capital
2,31 2,31 2,31 2,46 2,46 2.37
Reserve & Surplus
425.56 406.76 373.62 388.54 384.33 395.762
Net Profit 2.68 3.06 3.13 2.44 7.58 3.778
Current Liabilities
27.16 51.23 54.60 54.51 40.88 ---
Net Fixed Asset 392.25 380.44 376.70 360.25 345.53 371.034
Gross Profit 41.62 56.41 61.06 70.41 90.89 64.078
Current Assets 65.77 84.06 98.14 95.31 106.67 89.99
Investment 1.70 1.70 1.70 1.70 1.70 1.7
Source- Annual Reports -2004-05 to 2008-09 From the Table above, the following inferences can be drawn-
1. The Share capital of DIMUL has remained constant till 2006-07 and it is only in
the year 2007-08 there was an increase of Rs 15,000 in the Share Capital, this
increase was due to the increase in three registered primary dairy cooperative in
the year 2006-07. The share of Government has remained constant throughout
the period of study.
2. The amount of Reserves and surplus has been decreasing. It was Rs 425.56 lakhs
in the year 2004-05, but it has come down to Rs. 384.33 Lakhs, a decrease of
9.65 percent in the period of study. As DIMUL has not acquired any fixed assets
111
during this period, this amount was utilised for meeting the expenses of routine
nature which is not a positive sign.
3. There is a positive growth of net profit except for the year 2007-08 over the
study period. In the year 2004-05 the amount of net profit was Rs 2.68 lakhs and
in the year 2007-08, the net profit had come down to Rs 2.44 but net profit
increased to Rs 7.58 lakhs in the year 2008-09.
4. The amount of current liabilities has increased during the first three years of the
study period. This increase was due to fall in the procurement of milk and the
purchase of milk powder from a Chennai based firm on credit basis.
5. Total Fixed Assets have decreased over the period due to the charge of
depreciation (reducing balance method) of 2.5 to 20 percent on all fixed assets.
6. There has been a remarkable increase in the gross profit from Rs 41.62 lakhs in
the year 2004-05 to 90.89 lakhs in the year 2008-09 thus registered an increase
of 118 percent.
7. There has been increase in the level of current assets but the organisation must
improve its current assets position in the years to come.
8. DIMUL has no futuristic outlook in terms of its investment. It has managed to
invest only in shares of Nagaland State Cooperative Bank Ltd (NSCB Ltd) and
Nagaland State Dairy Cooperative Federation Ltd (NSDCF Ltd) respectively. It
is, therefore, suggested to make right investment after proper judgement in
shares and debentures in the future.
After the detailed analysis of the important items of the balance sheet, it is now felt
appropriate to compare the different ratios calculated for DIMUL and TCMPUL
(Appendix -1) in Table- 4.2.8.
112
Table- 4.2.8 Comparative Analysis of Ratios by Comparing with the Standard & with the
result of the Ratios of DIMUL and TCMPUL
* The trend of negative was found more in case of TCMPUL for Debtors turnover ratio.
From the above Table it is revealed that 12 ratios are in favour of DIMUL against 5
in case of TCMPUL. So, DIMUL is doing better than TCMPUL but as mentioned
Type of Ratios
General Standard/
Findings Other Research Studied
Average of
DIMUL
Average of
TCMPUL
Analysis of Trend
Satisfactory/ UnSatisfacto
ry to DIMUL
Incr
easi
ng
Dec
reas
ing
Sat
isfa
ctor
y
Uns
atis
fact
ory
Liquidity Ratios Current Ratio= CA/CL
2:1
2.044
5.4
Yes
--
Yes
Quick Asset Ratio = QA/CL 1:1 0.836 2.036 Yes -- Yes
Current Assets Movement Or Efficiency/Activity ratios
Inventory Turnover Ratio High Ratio 8.79 5.82 -- Yes -- Yes
Debtors Turnover Ratio High Ratio 15.86 19.76 -- Yes*
Yes --
Creditors Turnover Ratio High Ratio 38.69 108 Yes -- Yes --
Working Capital Turnover Ratio
High Ratio 6.26 4.43 -- Yes -- Yes
Long-term solvency and leverage ratios
Debt – Equity Ratio 1:1 0.154 4.33 Yes -- -- Yes
Proprietary Ratio High Ratio 0.91 0.65 Yes -- Yes --
Fixed Assets To Net Worth High Ratio 0.23 0.45 Yes -- Yes --
Current Assets to Proprietors’ Funds
Low Ratio 0.32 1.18 Yes
Yes --
Profitability ratios:
Gross Profit Ratio High Ratio 18% 17.4% Yes Yes Yes --
Operating Ratio 75- 85% 85.60% 80.26%
Yes Yes
Expenses Ratio:
COGS Ratio Low Ratio 77% 83% -- Yes Yes
Admn/Office Ratio Low Ratio 20% 11% Yes -- Yes
Selling &Distribution Exp Low Ratio 2% 4% Yes -- Yes
Net Profit Ratio High Ratio 1.06% 3.02% Yes -- Yes
Overall Profitability:
Return on Investment High Ratio 8.92% 13.12% Yes -- Yes
113
earlier that there is marginal fluctuations of different ratios but the collection of milk
from the different dairy cooperatives has reduced, the number of active members of
the active members also has reduced and some of the expenses ratios such as cost of
goods sold and administration expenses ratios were showing a high trend. So there is
no significant improvement of the financial performance of DIMUL over the period
of time.
SECTION – II
The Financial Performance of the Primary Dairy Cooperatives The second part of the hypothesis testing was in relation to the financial analysis of
the primary dairy cooperatives both registered and functional. Primary dairy
cooperatives are the collection centres of milk. These cooperatives also provide
different types of services to the members, such as, supply of fodder, vaccination,
veterinary services, etc.
As there were no Balance Sheets and the income Statements, the facts and figures
relating to the accounting aspects, was generated from the personal interview of the
respective secretary of the Primary Dairy Cooperatives and the primary data
collected from the members of the societies by help of schedules. The general
performance of the dairy cooperatives associated with DIMUL are estimated
considering only total number of members at the start of the cooperative, number of
members in the year 2008-09 and total collection of milk, etc. The total collection of
milk by the DCS were estimated on the basis of following formula-
Total collection of milk from the respondents of a cooperative (in a year) = X
X Average collection of milk = ------- = Y N
114
(N = Total number of respondents of the Cooperative)
Total collection of milk from the cooperative as a whole = Y X TA
(TA = Total number of active respondents)
In this portion of the study, the overall performance of cooperative was estimated on
the following yard sticks:-
1. Percent of Increase/decrease in Collections over last 5 years of study period.
2. Increase /decrease of membership from the beginning of the establishment of the
cooperative till 31.03.2008.
3. Percentage of Collection of milk by a DCS in the year 2008-09 in comparison to the
total Collection of the cooperatives under study.
The detail analysis of the total Collection of milk by the respective dairy co-
operatives is taken up here-
4.3 Performance of DCS under study-
4.3.1 CHARITY DCS-
Membership- This cooperative was established and registered in the year 2002 with
total membership of 14 but as on 31.03.2009, it had 6 active members and they pour
milk regularly.
Collection of milk- The total collection of milk in the year 2004 – 05 was 3,150
litres which increased to 3750 litres in the year 2008 – 09. Thus, it recorded an
increase in the collection of only 18 percent and the average collection of milk of
3514 litres over the five years. The percent of collection in the year 2008–09 in
comparison with the other dairy co-operatives under study is only 1.44 percent.
The table-4.3.1 and Chart-4.3.1 provide the collection of milk by Charity over the
study period.
115
TableTableTableTable----4.4.4.4.3333.1.1.1.1 Quantity of Milk Quantity of Milk Quantity of Milk Quantity of Milk Collected bCollected bCollected bCollected by Charity Dairy Cooperativey Charity Dairy Cooperativey Charity Dairy Cooperativey Charity Dairy Cooperative
(In Litres)
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Annual Collection of Milk
3150 3458 3588 3670.5 3705 3514
The chart drawn below gives an impressive growth over the study period but the true
fact is that Charity was one of the lowest enrolment of members and the lowest milk
pouring cooperatives in the list of the Union.
ChartChartChartChart---- 4444....3333.1.1.1.1
4.3.2 BHOLA DCS-
Membership- It is one of the oldest registered cooperatives established in the year
1988. The total membership was 175 in the beginning but as on 31.03.2009, it had
only 55 members active, a decrease of 69 percent from the beginning.
Collection of milk by Bhola- the total collection of milk in the year 2004 – 05 was
58272 litres which increased to 67770 litres in the year 2008–09, an increase in the
collection of milk 16.30 percent with an average collection of milk was 65233 litres
over the years. The percent of Collection in the year 2008–09 in comparison with
the other dairy co-operatives under study was only 26.39 percent of the total
Collections by all the DCS. It was the highest pouring dairy cooperative in
comparison to the other cooperatives. The table-4.3.2 and Chart 4.3.2 present the
Collection of milk by Charity over the study period.
116
TableTableTableTable----4.4.4.4.3333.2.2.2.2 CollectionCollectionCollectionCollection of Milk by Bhola Dairy Cooperatof Milk by Bhola Dairy Cooperatof Milk by Bhola Dairy Cooperatof Milk by Bhola Dairy Cooperativeiveiveive
(in Litres)(in Litres)(in Litres)(in Litres)
YEAR
2004
-0
5
2005
-0
6
2006
-0
7
2007
-0
8
2008
-0
9 Average
Annual Collection of
Milk
58272 55986 71301 72836 67770 65233
Chart Chart Chart Chart ----4.4.4.4.3333.2.2.2.2
4.3.3 NITO DCS-
Membership- This cooperative was established and registered in the year 1998 with
total membership of 60 but as on 31.03.2009, it has only 45 members active. In
percent wise, there is decrease of 25 percent from the beginning till 2009.
Collection of milk by Nito- The total Collection in the year 2004 – 05 was 59,673
litres which decreased to 45,922 litres in the year 2008–09. It registered a decrease
in the collection of 23.04 percent with an average of 49904 litres of milk over the
five years. The per cent of collection in the year 2008–09 in comparison with the
other dairy co-operatives under study was only 17.88 percent of the total Collections.
The table-4.3.3 and Chart-4.3.3 present the Collection of milk by NITO over the
study period.
117
TableTableTableTable---- 4.4.4.4.3.3.3.3.3333 CollectionCollectionCollectionCollection of Milk by Nito Dairy Cooperativeof Milk by Nito Dairy Cooperativeof Milk by Nito Dairy Cooperativeof Milk by Nito Dairy Cooperative
(in Litres)(in Litres)(in Litres)(in Litres)
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Annual Collection of Milk
59673 49060 48172 46695 45922 49904
ChartChartChartChart---- 4.4.4.4.3333.3.3.3.3
4.3.4 Valley DCS-
Membership- This cooperative is one of the oldest cooperatives registered in the
year 1988 with total membership of 50 but as on 31.03.2009, it has only 45 members
active. In percent wise, there is decrease in the membership of 10 percent from the
beginning till 2009.
Collection of milk by Valley- The total Collection in the year 2004 – 05 was 34,750
litres which increased to 50,270 litres in the year 2008–09, an increase in collection
of 45.96 percent with an average of 43,555 litres of milk over the years. The percent
of collection in the year 2008–09 in comparison with the other dairy co-operatives
under study was only 19.75 percent. The table 4.3.4 and Chart 4.3.4 present the
Collection of milk by Valley over the study period.
118
TableTableTableTable----4.4.4.4.3333.4.4.4.4
CollectionCollectionCollectionCollection of Milk by Valley Dairy Cooperativeof Milk by Valley Dairy Cooperativeof Milk by Valley Dairy Cooperativeof Milk by Valley Dairy Cooperative
(in Litres)(in Litres)(in Litres)(in Litres)
Years 2004-
05 2005-06 2006-07 2007-08
2008-09
Average
Annual Collection of milk
34750 37372 48017 46917 50720 43555
Chart-4.3.4
4.3.5 Kikhruru DCS-
Membership- This cooperative was registered with the Union in the year 1998 with
total membership of 71 but as on 31.03.2009, it has 66 members active. In percent
wise, there is decrease of 7.04 percent from the beginning till 2008.
Collection of milk by Kikhruru- The total collection of milk in the year 2004 – 05
was 20,688 litres which increased to 35,258 litres in the year 2008–09, registering an
increase in collection of 70.43 percent with an average of milk of 29679 litres over
the years. The percent of collection in the year 2008–09 in comparison with the
other dairy co-operatives under study was 13.73 percent. The table- 4.3.5 and Chart
4.3.5 show the collection of milk by Valley over the study period:
119
TableTableTableTable----4.4.4.4.3333.5.5.5.5
CollectionCollectionCollectionCollection of Milk of Milk of Milk of Milk bybybyby Kikhruru Dairy CooperativeKikhruru Dairy CooperativeKikhruru Dairy CooperativeKikhruru Dairy Cooperative
(in Litres)(in Litres)(in Litres)(in Litres)
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average
Annual Collection of
Milk
20688 27240 31766 33442 35258
29679
ChartChartChartChart----4.4.4.4.3333.5.5.5.5
4.3.6 Azapeni DCS-
Membership- This cooperative was registered with the Union and established in the
year 2002 with total membership of 45 but as on 31.03.2009, it has only 30 members
active. In percent wise, there is decrease of 33.33 percent from the beginning till
2009.
Collection of Milk - The total collection in the year 2004 – 05 was 37095 litres
which decreased to 36862 litres in the year 2008–09. It is seen that a decrease in
collection of 0.63 percent and average collection of 42,697 litres of milk over the
years. The percent of Collection in the year 2008–09 in comparison with the other
dairy co-operatives under study was only 14.36 percent of the total Collections. The
120
table 4.3.6 and Chart 4.3.6 show the collection of milk by Azapeni over the study
period.
TableTableTableTable----4.4.4.4.3333.6.6.6.6 CollectionCollectionCollectionCollection of Milk by Azapeni Dairy Cooperativeof Milk by Azapeni Dairy Cooperativeof Milk by Azapeni Dairy Cooperativeof Milk by Azapeni Dairy Cooperative
(in Litres)
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Avg
Annual Collection of
Milk
37,095 35,947 69,165 34,417 36,862 42,697
ChartChartChartChart----4.4.4.4.3333.6.6.6.6
4.3.7 Medziphema DCS-
Membership- This cooperative was registered with the Union in the year 1988 with
total membership of 17 but as on 31.03.2008, it has only 5 members active. In
percent wise, there is decrease of 71 percent from the beginning till 2009.
Collection of milk- The total collection in the year 2004 – 05 was 2465 litres which
increased to 4864 litres in the year 2008–09. It is seen that an increase in Collection
of 97.71 percent in the Span of five years. The per cent of collection in the year
2008–09 in comparison with the other dairy co-operatives under study was only 6.44
121
percent of the total Collections. The table 4.3.7 and Chart 4.3.7 present the
Collection of milk by Medziphema over the study period.
TableTableTableTable----4.4.4.4.3333.7.7.7.7 CollectionCollectionCollectionCollection of Milk by Medziphema Dairy Cooperativeof Milk by Medziphema Dairy Cooperativeof Milk by Medziphema Dairy Cooperativeof Milk by Medziphema Dairy Cooperative
(in Litres)(in Litres)(in Litres)(in Litres)
Year 2004-05 2005-06 2006-07 2007-08 2008-09 Avg
Annual Collection
of Milk
8381 9442 10798 14460 16538 11924
ChartChartChartChart----4.4.4.4.3333.7.7.7.7
4.4 Total Quantity of Milk Collected by DCS (in litres)-
The Table-4.4 shows the quantity of milk sold in litre together with the percent of
total Collection for the period from 2004-05 to 2008-09-
122
Table-4.4 Comparative Collection of Milk (in litres) Along with the percent in the year
2004-05 and 2008-09
Year/Name of the DCS
2004-05
2008-09
Percentage Change over the
years Collection of milk (in
litres) Percent
Collection of milk
(in litres) Percent
Charity DCS 3,150 1.4188614 3,705 1.44289748 17.62
BHOLA DCS 58,272 26.2475846 67,770 26.3927563 16.30
NITO DCS 59,673 26.8786401 45,922 17.88413981 -23.04
Valley DCS 34,750 15.6525186 50,720 19.75270178 45.96
Kikhruru DCS 20,688 9.31854114 35,258 13.73108753 70.43
Azapeni DCS 37,095 16.7087821 36,,862 14.35575893 -0.63
Medziphema
DCS 8,381 3.77507218 16,538 6.440658164
99.71
Total collection
of Milk 2,22,009 100 2,56,775 100 15.66
Chart 4.4
The chart-4.4 shows the overall increase of Collections over the period of five years
and it is evident that Bhola dairy has done well in terms of its Collection as it has the
123
highest Collection in these five years. The next best of these cooperatives is the
Valley DCS.
4.5 Overview of the General Performance of DCS-
In order to analysis of the data, the Table-4.5 is constructed to get the overview of
the general performance of the DCS in relation to Year of establishment, Number of
years in existence till 2009, Number of membership in the beginning, Number of
Active members till 2009.
TableTableTableTable---- 4.4.4.4.5555 Overview of the General Performance of DCSOverview of the General Performance of DCSOverview of the General Performance of DCSOverview of the General Performance of DCS
Particulars
Bhola DCS
Nito DCS
Valley DCS
Kikhruru DCS
Azapeni DCS
Year of establishment 1988 1998 1988 1998 2002 Number of membership in
the beginning 175 60 50 71 45
Number of Active members till 2009 55 45 45 66 30
% of members in the beginning and the active
members - 69% - 25% - 10% - 7% -33 %
4.6 Constraints of DCS-
The primary cooperative societies collect share money from the members but these
share money is deposited in DIMUL. So the primary cooperative societies collect at
the rate of 0.80 Rupees / per litre of milk from the members as a service charge. The
expenses are met from these service charges.
From the above analysis it is revealed that -
1. The number of Dairy cooperatives has been gradually decreasing. This is
because the procurement price does not cover their growing cost of
production. Many farmers consider dairy farming is un-economical.
2. Number of active members of the dairy cooperatives has been reducing over
the period of time.
124
3. The milk collection of the two dairy cooperatives namely NITO and Azapeni
have been reducing; another two namely-Charity and Medziphema with
minimum active member have been struggling for their survival and rest only
three Bhola, Valley and Kikhruru which are doing fair but the members in
theses DCS also have reduced over the period.
4. The cost of production of milk has been increasing due to withdrawal of some
of the services by the UNION.
Considering the above mentioned factors we can come to the conclusion that there is
no significant improvement of the performance of dairy cooperatives societies in
Nagaland.