komul project

Financial Analysis & Leverages

CHAPTER-1

INTRODUCTION

PART-A: ABOUT INDUSTRY

Introduction

The dairy sector in the India has shown remarkable development in the past

decade and India has now become one of the largest producers of milk and value-

added milk products in the world. The dairy sector has developed through co-

operatives in many parts of the State. During 1997-98, the State had 60 milk

processing plants with an aggregate processing capacity of 5.8 million litres per

day. In addition to these processing plants, 123 Government and 33 co-operatives

milk chilling centres operate in the State.

With the increase in milk production. Maharashtra now regularly exports milk to

neighbouring states. It has also intiated a free school feeding scheme, benefiting

more than three million school children from over 19,000 schools all over the

State.

ADARSHA COLLEGE OF MANAGEMENT AND SCIENCE 1


Indian dairy industry

Dairy is a place where handling of milk and milk products is done and technology

refers to the application of scientific knowledge for practical purposes.

Dairy Industry in India

More than 2,445 million people economically active in agriculture in the world,

probably 2/3 or even more ¾ of them are wholly or partly dependent on livestock

farming. India is endowed with rich flora & Fauna & continues to be vital avenue

for employment and income generation, especially in rural areas. India, which has

66% of economically active population, engaged in agriculture, derives 31% of

Gross Domestic Product GDP from agriculture. The share of livestock product is

estimated at 21% of total agricultural sector.

Contribution of live stock sector to gross domestic product

(Percentage contribution)

1950-51 1990-91

63.5 67.0

12.0 16.0

4.1 3.1



1.3 0.3

16.5 10.0

Live stock populations:

Number of animals (in thousand)

(Source: production yearbook 1995 /FAO statistics division)

Sheeps Goats Pigs Chickens Cattle

45000 119242 11780 435 194655

Buffaloes Horses Mules Camels

79500 990 1742 1520

(Source Indian Dairy man, 50:1998)

Cattle

(millions)

Buffalo Total (1996)

196 80 276

0.68% / year 0.75% / year



World (1996)

1320 151 1471

0.64% / year 0.87% / year

In India In World

28 breeds of cattle

7 breeds of buffalo

1997 520.6 mt 5.5-0.75%

.2020.620 to 650 mt.

Milk Production

1950 – 17 million tonnes

1996 – 70.8 million tonnes

1997 – 74.3 mT

(Projected) 2020 – 240 mT

Expected to reach- 220 to 250 mT – 2020



India contributes to world milk production rise from 12-15 % & it will increase

upto 30-35% (year 2020)

Average milk production / year

America 6874 Kg/ year

Denmark 6223 Kg/year

Holland 5751 Kg/year

India 552 Kg/year

Average Productivity

2.4 kg/day or 732 kg/lactation/cow

China: 1600 kg/lactation

America 7200 kg/lactation

Percapita availability:

Recommanded – 210 gm

India

1950 132 gm



1997 214 gm

2020 290 gm

India contributes 35% of total Asian milk

Dairy Industry profile 1997

Human Population 953 million (70 million dairy farmers)

Milk production 74.3 million tonnes (203.5 million 1 pd)

Average annual growth rate (1996-2000) 5.6%

Per capita milk availability 214 gm/day or 78 kg/year

Milch animals 57 million cows;

39 million buffaloes

Milk yield per breedable bovine in milk 1,250kg



Cattle feed production (organized sector) 1.5 million

tonnes

Turnover of veterinary pharmaceuticals Rs 550 crores

Dairy plants throughout 20 mlpd

Throughout as percentage of total milk output 10

Value of output of milk group (1994-95) (Based on producers

price)

Rs 50,051 crores

Value of output of dairy industry (Based on retail price) Rs 105,000

crores

Projected milk production at different rates of annual growth 1995 to 2000

year @5% @5.5% @6%

1995 66.3 66.3 66.3

1996 69.3 70.0 70.2

1997 73.1 74.0 74.4

1998 76.7 78.0 78.8



1999 80.6 82.3 83.5

2000 84.6 86.8 88.5

Milk Composition

Sr.

no

Constituents Buffalo Cow Goat Liquid skimmed milk

1 Moisture (gm) 81.00 87.50 86.80 92.10

2 Protein (gm) 4.30 3.20 3.30 2.50

3 Fat (gm) 6.50 4.10 4.50 0.10

4 Minerals (gm) 0.80 0.80 0.80 0.70

5 Carbohydrates (gm) 5.00 4.40 4.60 4.60

6 Energy calories (kcal) 117.00 67.00 72.00 29.00

7 Calcium (mg) 210.00 120.00 170.00 120.00

8 Phosphorus (mg) 130.00 90.00 120.00 90.00

9 Iron (mg) 0.20 0.20 0.30 0.20

Indian Buffaloes: (Dairy business Directory 1996)

Buffaloes are classified into two categories;

1) reverine (depending upon variation in their habitat & genome)



2) swamp

Swamp buffaloes: - 48 chromosomes

South east asian countries

Stocky animals, marshy land habitat

River Buffaloes: - 50 chromosomes

- massive in size and curled horns

- Prefer to enter clear water

World’s Buffalo population:

147 million

about 142 millions in Asia & Pacific

India:

leading most buffalo populated country

78 millions most of reverine



Milk production: About 95% of world buffalo milk (45.3 million tonnes) is

produced in Asia &Pacific, while 64.4% is produced in India (FAO.1992)

From 1950 to 1992 milk production in the world increased by 4.26%

The % of total bovines slaughtered;

Total bovine slaughtered (%)

World 17.1 to 17.4% or - 1.6% per annum

India 15% per annum

Asia 6.6%

Increasing trend of buffalo population in most of the Asian countries in Brazil and

Italy

BREEDS

Classified on phenotypic & geographic locations;

Cockril (1982) = Buffalo river type; two sub groups;

1. Horns are closed and set close to head & are down swept ;eg. Murrah, Ravi,

Mehasana, Jaffarabadi, Sambalpur



2. Horns are sickle shaped and unswept: e.g. Bhadawari, Kalahandi, Kanara,

Manda, Nagpuri, Pandharpuri, Surti, Tarai & Toda

Breeds of Buffaloes of Indian Origin and Breeding Tracts:

Group Breed Breeding tract

Murrah

type

Murrah

Nili Ravi

Rohtak, Jind,Hisar, Bhiwari, Sonepat

(Hariyam)

Ferozepur (Punjab)

Gujarat Surti

Jaffarabadi

Mehsana

Kaira and Baroda

Kutch, Jungarh & Jamnagar dist

Mehsana, sabarkantha, Banaskantha Dist.

Uttar

pradesh

Bhadawari

Tarai

Bhadawari estate, Beh Tehsil in Agra, Gwalior &

Etawah dist. Tarai region of U.P.

Central

India

Nagpuri

Pandharpuri

Kalahandi

Sambalpur

Nagpur, Akola, Amravati dist. South maharashtra, west

A.P., north Karnataka Hilly region of Andra Pradesh and

Orissa Bilaspur dist.

South

India

Toda

South Kanara

Nilgiri Hills

West coast in Kerela



Buffaloes found in the north –eastern states and the eastern coastal region of India

& in China South east Asian countries e.g. Philippines, Thailand, Malaysia,

Vietnam, Srilanka, Burma, Laos, Kampuchea, Bangladesh etc. have been

classified as swamp buffaloes on the basis of their genetic constitution (2n=48) &

natural habitat.The breeds includes in these groups are Manda & Palakhemundi.

Production performance

Growth: The average birth wt.(Indian buffaloes) low 21 kg High 41 kg

Higher in male calves than in females

Average daily gain of 548 gm between 3-6 months

404 gm between birth to 36 months

Body weight at first calving- ranges from

367 kg (Dharwati) to

531 kg (Nili Ravi)

Higher growth rate in reverine breeds than swamp

MILK PRODUCTION

Production performance of different breeds of Buffaloes:

Age at 1st calving

(months)

Lactation.

Yield (kg)

Lactation Length (days)



Buffalo Avg. Range Avg. Range Avg (Range)

Murrah 43.0 39.9-54.5 1850 1476-2515 315(267-365)

Nili Ravi 42.0 41.4-47.3 1765 1596-2808 2808 (09)

Surti 39.0 26.5-45.0 1364 1304-1693 313(300-373)

Bhadawari 46.0 44.3-54.2 1181 - 276 (-)

Nagpuri 48.0 44.3-55.6 1103 926-1175 270 (-)

Reproduction Performance: -

Most of the buffaloes are considered to be seasonal breeds with maximum calving

taking place from July to November in almost all breeds

Buffaloes come in oestrus in cold month and are sub-fertile during hot month

Sub-fertility-> due to poor thermoregulaion in buffaloes and

Poor nutrition -> poor heat symptom-low heat detection (only ligno-cellulosic

material straw /dry roughages)

Calving interval

(days)

Dry period

(days)

Service period

(days)

Murrah 454 148 133

Nili Ravi 530 198 211

Surti 410 165 103



Bhadawari 460 156 -

Nagpuri - - 98

Ag.

Technologies

(Dairy)

The dairy industry plays an important role in the socio-economic development of

India. The dairy industry in India is instrumental in providing cheap nutritional

food to the vast population of India and also generates huge employment

opportunities for people in rural places.

The Department of Animal Husbandry, Dairying, and Fisheries, which falls under

the central Ministry of Agriculture, is responsible for all the matters relating to

dairy development in the country. This department provides advice to the state

governments and Union Territories in formulating programmes and policies for

dairy development. It also looks after all the matters relating to production and

preservation of livestock farms (cattle and sheep). To keep focus on the dairy

industry a premier institution known as the National Dairy Development Board

was established. This institution is a statutory body that was established in 1987.



The main aim to set up the board was to accelerate the pace of dairy development

in the country and attract new investments.

India is a wonderland for investors looking for investment opportunities in the

dairy industry. The dairy industry holds great potential for investment in India and

promises high returns to the investors.

The reasons why the industry has huge potential for attracting new foreign

investment are:

1. There is a basic raw material need for the dairy industry; that is, milk is

available in abundance.

2. India has a plentiful supply of technically skilled laborers.

3. There is an easy availability of technological infrastructure.

4. India has all the key elements required for a free market system.

There are different sectors within the dairy industry that promise great business

investment opportunities:

• Biotechnology:

1. The Indian cattle yield less milk as compared to their foreign counterparts. The

Indian cattle breeders are on the lookout for ways to improve their milk yield

through cross-breeding. Thus, there is a huge potential available for foreign



investors to invest in dairy cattle breeding of high-quality buffaloes with hybrid

cows.

2. There is also great scope for investment in different dairy cultures, including

dairy biologics, enzymes, probiotics, and other coloring materials for food

processing.

3. Producing biopreservative ingredients based on dairy fermentation, such as

pediococcin, aciophilin, bulgarican, and Nisin contained in dairy powder, also

promise great investment opportunity.

• Dairy/Food Processing Equipment:

Great potential lies for foreign investment for manufacturing and marketing of

cost-effective, top-quality food processing machinery.

• Food Packaging Instruments:

There is a tremendous investment opportunity for foreign investors in the

manufacturing of both machinery and packaging materials that aid the

development of brand loyalty and gives a clear edge in the marketing of dairy

products.

• Retailing:

Retailing of dairy products also promises great investment opportunities for

standardization and upgrading dairy products in the main metropolitan cities.



• Manufacture of Ingredients:

Several ingredients are involved in the making of different dairy products like

ghee, condensed milk, and cheese. Manufacturing of ingredients for these products

offers a great potential for foreign investment in India.

• Finished Products:

There is a great scope for investment in the manufacturing of finished dairy

products such as cheese sauce and cheese powders.

• Technically Advanced Manufacturing Units:

There is a great opportunity for foreign investors to invest in establishing

manufacturing units for dairy products. The investors can build world-class

manufacturing units and let them for hire. Building manufacturing units supports

specialized dairy-related activities, such as cheese slicing, cheese packaging,

butter printing, and dicing lines, which hold greater potential over other activities.

Thus, the dairy industry in India has huge investment opportunities in a variety of

sectors. The investors are all set to gain profitable returns on their investment.

PART-B: ABOUT SUBJECT

INTRODUCTION



The study “Financial Analysis & Leverages” was conducted in Kolar

Milk Union Limited in order to know the financial status of the company.

The scope of the study is to know the financial activities of the company,

which serves as a support service for the manufacturing of the Milk & products

and also the contribution of the financial activities within the company. The field

of financial analysis is comprised of leverages, comparative statement and

common size statement analysis.

The study is made to analyze the financial performance with reference to

financial statements like profit and loss account and balance sheet with the help of

tables, graphs, providing suggestions for improving the methods and procedure

followed in the firm.

The main aim is to study the activities of finance department by utilizing the

theoretical knowledge relating to practical situation and to highlight differences in

practice.

MEANING OF FINANCIAL ANALYSIS:



One of the important steps of accounting is the analysis and interpretation of

the financial statements which results in the presentation of data that helps various

categories of persons in forming opinion about the profitability and financial

position of the business concern.

In the words of Myres, “Financial Statement Analysis is largely a study of

relationship among the various financial factors in a business as disclosed by a

single set of statement and a study of the trend of the trend of these factors as

shown in a series of statements”.

The most important objective of the analysis and interpretation of financial

statements are to understand the significance and meaning of financial statement

data to known the strength and weakness of a business undertaking so that a

forecast may be made of the prospects of that undertaking.

FINANCIAL STATEMENTS:

A Financial Statement is an organized collection of data according to

logical and consistent accounting procedures. Its purpose is to convey an

understanding of some financial aspects of business firm. It way show a position



at a moment of time as in the case of balance sheet, or may reveal a series of

activities over a given period of time, as in the case of and Income Statement.

Therefore, the term financial statement generally refers to two basic

statements, such as Income Statement and Balance Sheet. Apart from these two

statements, a company may also prepare a statement of Retained Earnings and

Statement of changes in financial position

OBJECTIVES OR USES OF FINANCIAL ANALYSIS:

Financial analysis is helpful in assessing the financial position and

profitability of a concern. The following are the main objectives of analysis of

financial statements:

1. To judge the present and future earning capacity or profitability of the concern.

2. To judge the operational efficiency as a whole and of its various parts or

departments.

3. To judge the short-term and long-term solvency of the concern for the benefit

of the debenture holders and trade creditors.

4. To have comparative study in regard to one department with another

department.

5. To help in assessing developments in the future by making forecasts and

preparing budgets.



PROCESS OF FINANCIAL ANAYSIS:

The analysis of financial statements is a process of evaluating the

relationship between component of financial statements to obtain a better

understanding of the firm’s position and performance. The functional analysis is

the process of selections, relation and evaluation.

1. The first task of the financial analyst is to select the information relevant to

the decision under consideration from the total information contained in the

financial statements.

2. The second step is to arrange the information in a highlight significant

relationship.

3. The final step is interpretation and drawing of inferences and

conclusions.

TYPES OF FINANCIAL ANALYSIS:



A Financial analysis can be external or internal.

External Analysis:

Those persons who are not connected with the enterprise make it. They do

not have access to the enterprise. They do not have access to the detailed record of

the company and have to depend mostly on published statements. Investors credit

agencies, governmental agencies and research Scholars make such type of

analysis.

Internal Analysis:

Those persons who have access to the books of accounts make the internal

analysis. They are members of the organization. Analysis of financial statements

or other financial data for managerial purpose is the internal type of analysis. The

internal analyst can give more reliable result than the external analyst can because

every type of information is at his disposal.

TECHNIQUES OF FINANCIAL ANALYSIS:



The analysis and interpretation of financial statement is used to determine

the financial position and operations as well. A number of techniques are used to

study the relationship between different statements. The following methods of

analysis are used.

COMPARATIVE FINANCIAL STATEMENTS:

The comparative financial statements are statements of the financial

position at different periods of time. The elements of financial position are shown

in a comparative form so as to give an idea of financial position at two or more

periods.

Thus, in these statements, figures for two or more periods are placed side by

side by side to facilities easy comparison. Both the income Statement and Balance

Sheet can be prepared in the form of comparative financial statements.

COMPARATIVE INCOME STATEMENTS:



The income statement discloses net profit or net loss or account of

operations. A comparative income statement will show the absolute figures for

two or more periods, the absolute change from one period to another and if

desired the change in terms of percentages. Since the figures two or more periods

are shown side by side, with the help of this we can quickly ascertain whether

sales have increased or decreased, whether cost of sales have increased or

decreased etc…therefore, only a glance of data incorporated in this statement will

be helpful in making useful conclusions.

COMPARATIVE BALANCE SHEET:

Balance Sheet of two or more different dates can be used for comparing

assets and liabilities and finding out any increase or decrease in those items.

Therefore, in a single Balance Sheet the emphasis is on present position, it is on

change in the comparative balance sheet. This type of balance sheet is very

helpful in studying the trends in a business concern.

1. Common Size Financial Statements:



Common size financial statements are those in which figures reported are

converted into percentage to some common base. When this method is pursued,

the income statement exhibits each expense item or group of expense items as a

percentage of net sales, and net sales are taken at 100 percent. Similarly, each

individual asset and liability classification is shown as a percentage of total assets

and liabilities respectively. Statements prepared in this way are referred to as

Common Size statements.

Common-Size statements prepared for one firm over the years would

highlight the relative changes in each group of expenses, assets and liabilities.

These statements can be equally useful for inter-firm comparisons, given the fact

that absolute figures of two firms of the same industry are not comparable.

2. Trend percentages:

Trend percentages are very much helpful in making a comparative study of

the financial statements for several years. The way calculating trend percentages

involves the calculation of percentage relationship that each item bears to the

same item in the base year. Each item of base year is taken as 100 and on that

basis the percentages for each of the items of each of the years are calculated.



These percentages can be taken as index Number showing the relative changes in

the financial data resulting with the passage of time. This method is a very much

useful, analytical device for the management since by substitution of percentages

for large amounts, brevity and readability are achieved.

3. Funds flow statements:

Funds flow statement is a financial statement, which indicates the various

means by which the funds have been obtained during the certain period and the

ways to which these funds have used during that period.

In short, it is the statement, which shows the movement of funds between

two balance sheet dates.

According to Anthony, “The funds flow statements describes the sources

from which additional funds were derived and the uses to

Which these funds were put”.



The funds flow statement is called by different names, such as, Statement of

sources and Applications of Funds, Statement of changes in Working Capital,

Where Got and Statement and statement of Resources Provided and Applied.

4. Cash flow statement:

Cash flow statement shows the movement of cash and their causes during

the period under consideration. It may be prepared annually, half – yearly,

monthly, weekly or for any other duration.

Cash flow statement is prepared to show the impact of financial policies and

procedures on the cash position of the firm and takes into consideration all

transactions that have a direct impact upon cash.

A cash flow statement concentrates on transactions that have direct impact

on cash. It deals with the inflow and outflow of cash between two Balance Sheet

dates. In other words, a statement of changes in a financial position of a firm on

cash basis is called a Cash flow statement.

6. Leverage Ratios

Leverage refers to an increased means of accomplishing some

purpose. In financial management, it refers to employment of funds to accelerate



rate of return to owners. It may be favorable. An unfavorable leverage exists if the

rate of return remains to be lower. It can be used as a tool of financial planning by

the finance manager. Leverage may be.

i. Operating leverage and

ii. Financial leverage.

iii. Combined leverage

iv. Return on investment leverage

i. Operating leverage:

It occurs when with fixed costs the percentage change in profits due to

change in sales volume. It shows the extent of the change in earnings before

interest and tax (EBIT) as a result of change in sales volume. Two important

points i.e. relating to fixed costs and break-even point should be noted about

operating leverage.

The magnitude of the operating leverage is related to the fixed costs of

the firm. If the fixed costs of the firm are relatively large, substantial portion of its

contribution margin is appropriated to cover these fixed costs. Once the break-

even point is reached, all contribution margins become profit of the concern. If



there is small percentage of increase in earnings. On the other hand, a small drop

in sales eliminates the entire earnings near the break-even point.

The significance of operating leverage lies in the fact that it tells the

finance manager about the impact of change in sales revenue and operating

income. Thus, a firm with high degree of Operating leverage will experience much

large effect on EBIT because of small change in sales. As far as possible a firm

should avoid operating under conditions of a high degree of operating leverage, as

it is a high-risk situation. It will be desirable to operate at sufficiently above the

break –even point to avoid the danger of sharp fluctuations in profits because of

variation in sales. It may be noted carefully that the degree of operating leverage

goes on decreasing with every increase in sales volume above the break-even

point. It is calculated by the following formulas:

Operating leverage = Marginal contribution / Earnings before interest and

Tax

ii. Financial leverage:

When a firm procures debut capital to finance its needs, it is said to

have financial leverage. It tells the extent of the change in earning before tax

(EBT) due to change in operating income (EBIT). It is calculated with the help of

the following formula:



Financial leverage = Earnings before interest and Tax / Earnings before

Tax.

iii. Return on investment leverage :

It may be favorable or unfavorable. If the rate of return on investment

(ROI) of a firm is higher than the cost of debt capital, it is said to have favorable

financial leverage. On the other hand, if the rate of return on investment (ROI) is

lower than the cost of debt capital, the firm is said to have unfavorable financial

leverage. Favorable financial leverage is also referred to as trading on equity.

iv. Combined leverage:

This leverage exhibits the relationship between a change in sales & in

corresponding variation in taxable income.

Combined leverage = Contribution

Taxable income

OR

Combined leverage = Operating leverage X Financial leverage



CHAPTER 2

RESEARCH DESIGN

TITLE OF THE STUDY

A STUDY ON “FINANCIAL ANALYSIS & LEVERAGES OF

KOLAR MILK UNION LIMITED”.

STATEMENT OF PROBLEM:



After the white revaluation, many milk union limited’s came into existence.

As a result lot of competition according in the field of purchase and sale of milk in

satisfying the customers. Now a day’s KOMUL is facing lot of competition in the

market due to existence of more competitors like HERITAGE, DODLA,

TIRUMALA, AROGYA, GOOD MORNING MILK etc. In this situation, the

KOMUL should be in a position to analyses its financial and leverage factors, to

take corrective steps to overcome the competitors by doing the financial analysis,

it helps to know the financial position of the KOMUL which involves in analyzing

of various financial statement such as Profit And Loss Account, Balance Sheet etc.

and by during the leverages analysis it helps in knowing the risk involved carrying

on the operations of KOMUL so, this project is done to show how the financial

and leverages analysis to be done to overcome the competition by understanding

it’s own financial position and extent the risk taken along with its importance.

OBJECTIVE OF THE STUDY

To study and analyze the financial performance of KOMUL

To get the practical knowledge of the financial evaluation techniques and

analysis of annual reports in KOMUL



To forecast the financial performance through Leverage analysis

To make the analysis and interpretation more effective by using various

techniques such as Trend analysis Comparative analysis, Analysis,

Comparative Common Size Analysis.

SCOPE OF THE STUDY

The current study is undertaken for the purpose of knowing the

financial Performance KOLAR MILK UNION LIMITED”

The study focuses attention mainly on the level of financial Performance

of KOLAR MILK UNION LIMITED.

REVIEW OF LITERATURE

Reviewing the text books of finance, reports provided by the finance department in

KOMUL.



OPTIONAL DEFINITIONS OF CONCEPTS:

LEVERAGE

Definition

Leverage is “the employment of an asset or funds for which the firms pays a fixed

cost or fixed return”

James Horne

TYPES OF LEVERAGES

1. Operating leverage

2. Financial leverage.

3. Combined leverage.

4. Return on investment leverage.

Operating leverage:

Operating leverage shows the relationship between the changes in sales &

the changes in then fixed operating income. Operating leverage has impact

mainly on fixed cost & variable cost & also on contribution.



The following equation is developed by RW Johnson to compute operating

leverage.

Contribution

Operating leverage =

Operating Profit (EBIT)

Financial leverage:

The process of variation in capital structure is called financial leverage or

trade on equity. The variation in capital composition will have an impact on

operating & taxable income of the company. It signifies the relationship between

the earning power on equity capital & rate of interest on borrowed fund or debt.

By adopting this leverage, the rate of return on equity capital is modified.

Operating income

Financial leverage =

Taxable income

Combined leverage:

This leverage exhibits the relationship between a change in sales & in

corresponding variation in taxable income.



Contribution

Combined leverage =

Taxable income

OR

Combined leverage = Operating leverage X Financial leverage

SAMPLING:-

There are two ways in which the required information may be obtained.

They are

Complete enumeration survey

Sampling technique

Here the study is based on complete enumeration method, that is, data are

collected for each and every item of expenses, as the case may be. The

advantage of this type of survey will be that no item is left out and hence greater

accuracy may be ensured. However the effort, money and time required for

carrying out the enumeration will generally be more.



No samples are required for this study as it is concerned with the true

financial analysis.

METHODOLOGY:

It has also been assumed that the information obtained from the respondents

were true and authentic.

SOURCES OF DATA COLLECTION:

The study is based on both primary data & secondary data.

Primary data

It was collected from over all products financial statements as per the

respective years.

Secondary data

It was collected from company annual reports, personal discussion

with executives in the company, books, etc.

PLAN OF ANALYSIS



The data edited from the company financial statements in respect of over all

products statements or analysis of respective year’s .For better analysis profit is

computed by using leverages & financial analysis methods

Further impact of variable cost, fixed cost on profit, is also studied to made

presentation fair & adequate techniques of financial analysis were made use off.

REFERENCE PERIOD:

The reference period of this study was 30 Days i.e., 1Month

LIMITATIONS OF THE STUDY

The study no doubt with relation to objective, but it does not give complete

and total accuracy of findings.

The study was done only for the past four years only.

It is only the study of interim reports.

Due to time constraints, all the ratios could not be calculated, only few of

them were taken in to account.

Discussion about the project could be conducted only with a few officials

due to time constraints face by them.

As this study is related to the financial aspects the union could not revel all

the information, some data were confidential.

Constraints of time due to busy schedule of organizational Personnel.



Analysis and interpretation of the report is purely based on the manual

provided by the finance department.

Time allotted by the company for the study was very short with in which

collection of all the information was not possible.

It is based on monetary information only.

CHAPTER SCHEME

The study report will be presented in 5 chapters as indicated below:

Chapter-1

Introduction:

It deals with theoretical back ground of the study.

Chapter-2

Research Design:

It deals with design of the study, Title of the project, Statement of the

problem, Objectives & Scope of the study, operational definitions of the

concept. Source of Data collection & the Methodology, Limitations of the

study & chapter scheme

Chapter-3

Profile of the Company:



It deals with the Company Background & details.

Chapter-4

Analysis & Interpretation of Data:

It deals with the analysis & interpretation of the financial data collected

from the Company.

Chapter-5

Summary of Findings & Conclusions:

It presents the summary of all findings & Conclusions

Chapter-6

Recommendations & Suggestions

It helps to take out some unwanted information’s by giving suggestions. Chapter-

7

Appendices & Annexures

It is a copy of Balance Sheet of a Company.

Chapter-8

Bibliography



It is the reference made from Internets, web sites and the text books etc...

CHAPTER-3

COMPANY PROFILE

INCEPTION:

Dairy development activity in the district was initiated during the year 1975

under IDA assistance as a part of Kolar Milk Union Limited (KOMUL).

Subsequently the district was bifurcated for the operational area of KOMUL to

form a separate Milk union with effect from 01-04-1987.

Total geographical area of Kolar district is 8,200sq km with 2889 inhabited

village, and the total population averaging is 26, 00,000. Average rainfall in the

area is about 750mm. Operation of the Milk union consists of all the eleven Taluks

of Kolar district. Initially the union started its function with a total number of 460

dairy co-operative societies at the time of bifurcation. The average daily

procurement of the union was 1, 56,774 kg. Of milk Today with a total number of

1497 functional Milk producers co-operative Societies (MPCS) a total

membership of 2.89 lakhs and an average daily procurement of about 6, 84,954



kg/day. It ranks second in the state as far as Milk procurement is concerned and

first as far as the

functional MPCS is concerned. Total cattle population in the Milk-shed area is

about 4, 36,654 that includes 1, 60,000 crossbreed cattle. At present the average

Milk procurement per society is 447 kg per day with a minimum price paid per kg

of Milk is Rs.8.58/-

TYPE:

The union has a Milk processing plant at Kolar with handling the capacity of 2,

50,000 liters per day (LPD) and has three chilling centers at.

Chintamani

Gowribidanur

Sadli

With handling capacity of one lakh LPD at Kolar, the dairy is manufacturing

Butter, Ghee, Peda, Curd, Cheese, Masala Butter Milk, UHT Milk in addition to

pasteurized toned Milk and full cream Milk. UHT Milk is being sold under the

brand name “Nandini”, “Good Life”, and “Nandini Smart” while all other

products are sold under the brand name of “Nandini”. The union started

marketing of liquid Milk in polythene sachets in entire Kolar district and in a part



of Bangalore city since 1994. Recently it has entered Chintamani market also

selling nearly 10,000 LPD

NATURE:

DCS Organizations; the member producers and their Dairy Co-operative

Societies (DCS) are the vital constituents of the Union and their progress is the

judging yardstick on the efficiency of the Union’s operation. Hence the maximum

importance has been given to the development and the progress achieved in

various activities, is the fruit of these efforts.

Until the year 1940, there was very little published information available about the

method of preparation and use of these products. The credit for the first

publication on the subject goes to Dr. W. B. Davis, the first director of Dairy

Research. Within a span of four decades considerable research had been

conducted at the National Dairy Research Institute and other places on indigenous

dairy products.

Since then, the Dairy Industry had begun to grow at a rapid pace. There

have been tremendous efforts put in by the various organizations to assure good



quality milk to the people and the saying “All that is white is pure milk” came in

to existence.

BOARD OF DIRECTORS


NO. NAM E DESIGNATION PLACE

1 Sir.k.N. Nagaraj President Mulbagal

2 Sir.k. V. Nagaraj Director chikkabalapu

r

3 Sir.S.Ramesh Director Gowribidanur

4 Sir.T.N. Rajgopal Director Chintamani

5 Sir.K.Gudiappa Director Shidlagatta

6 Sir.Jayasihmha Krishna Director Bangarpet

7 Sir.C.Munivenkatappa Director Srinivaspur

8 Sir.K.Ashwathareddy Director Gudibande

9 Sir.R. Krishnappa Director kolar

10 Sir.K Ramaya Director Malur

11 Sir.manjunatha Reddy Director Bageplli


ORGANIZATION CHART



BUSINESS OPERATIONS OF KOMAL

Milk shed area of KOMUL



PRODUCT PROFILE:

1. Toned Milk: Karnataka’s most favorite Milk, is Nandini Toned milk. Pure

milk containing of 3.0% fat and 8.5% SNF. It is Available in 500 ml and 1-liter

packs.

2. Full Cream Milk: This pure milk Containing 6% fat and 9% SNF, A rich

Creamer and tastier milk, ideal for preparing homemade sweets and savories.

It is Available in 500 ml and 1-liter packs.

3. Cheese: Cheese plant was started in the Union in 1997 at a cost of

Rs.3.5crores. At present Cheddar Cheese is produced from Cow Milk and

ripened to various lengths of Time will be blended and processed to obtain

Processed Cheese.

4. Peda: Peda is sweetened heat desiccated Product obtained from milk. It is

Rich in Fat, Proteins, Lactose and minerals especially Iron content. On an

average 25 Kg Peda is Produced and sold in units of 250gms box. Each box

contains10 pedas weighting 25 gm each.

HOMOGENIZED MILK: This Milk is good in quality which gives you more

cups of tea or coffee and is easily digestible. This is available in 500ml, 1 liter and

5 liter packets.



CURDS: ‘Nandini’ curds are made out of pure Milk. It is thick and delicious,

giving all the goodness of homemade curds. It is available in 200gms and 500gms

packets.

BUTTER: Rich smooth and delicious, ‘Nandini’ butter is made out of fresh

pasteurized Milk cream. Any preparations made from this will be a delicious

treat. It is available in 100gms (salted), 200gms and 500gms cartons both salted

and unsalted.

GHEE: ‘Nandini’ ghee is made from pure butter. It is fresh and pure and have

delicious flavor. Hygienically manufactured and packed in a special pack to retain

the goodness of pure ghee. Shelf life of 6 months at ambient temperature. This is

available in 200ml, 500ml, 1-liter sachets, 5-liter tins and 15kg tins.

FLUID MILK: Currently two types of HTST pasteurized fluid Milk is processed

and packed. They are toned Milk with 3% fat and 8.5% SNF (Solids Non Fat) and

full cream Milk with 6% fat and 9% SNF. Both are packed in the units of ½ Later

and 1 Later Fluid Milk is sold in bulk to other dairies both inside and outside the

state.



UHT MILK: It refers to ultra high temperature heat-treated Milk. The concept of

UHT milk is absolute i.e. bacteria free besides retaining the nutritional quality of

milk. During the process, milk is exposed to a temperature of 137ºc for 4 sec and

immediately cooled a room temperature packing it aseptically.

At present two types of UHT Milk are being produced one “Nandini Good Life”

with 3.6% fat and 8.5% SNF and another one is “NANDINI smart” with 1.5% fat

and 9% SNF. Nandini Smart being low fat products good for health conscious

people. Both the milk can be stored for at least 45 days at room temperature. It

needs no boiling before drinking. on an average 25,000 of both variety of Milk is

being sold per day.

The packing material used for UHT Milk packing consists of 6 layers consisting of

polythene, aluminum, foil and paper which prevents the center of air, water, light

and bacteria there by keeping the Milk well 60 level quality i.e. “less than one

defect out of ten lakhs products”, has been achieved in UHT Milk due to good

quality of initial raw Milk. Raw milk is used for UHT processing to get good

quality end products. The composition of the milks is more nutritious and is as

below.



Constituters Fat Minerals Proteins Lactose Water Total

Solids

Nandini Good

Life

3.6

%

3.5% 10.7% 4.3% 87.5% 12.1%

Nandini Smart 1.5

%

3.95% 0.75% 4.3% 89.5% 10.5%

MASALA BUTTERMILK: Masala buttermilk is manufactured and sold in the

summer season, especially from month of March to July, the only period during

which it gets demand. On an average the selling mounts to about 1000lts. Per day

in 250ml sachets.

MASTI DHAI: Recently Kolar dairy was taken up the production of “Masti-dhai”

in polythene cups of units of 200gms and 400gms. The Milk used for “Masti-

dhai” preparation consists of 4, 7% of fat and 11% of SNF added with lactic stator

culture. This product is being marketed by Gujarat Co-operative Milk Marketing

Federation (G.C.M.M.F)



SLIM MILK POWDER:

Excess Milk obtained during flush season is converted into SLIM Milk

powder at other product dairies as Mandya, Dharwad and Dempo dairies

belonging to K.M.F and packed in bulk sachets of 25kgs. Annually about 1000

tons of SMP is produced and sold to other dairies in Karnataka, Bihar Milk

federation, Delhi Mother Dairy and others the remaining is used for reconstitution

during lean.

Although KOMUL had set high standards for its products and customer

services, its prior reliance on manual operations made it difficult to keep up with

surging demand. In designing the “Mega Dairy”, Komul looked towards an

automated system that would allow it to achieve consistent quality parameters for

each product. Energy and power was more effectively optimized and controlled

and all plant equipment was integrated. Additionally, employees were given

training to use the new automated systems and valuable management information

were collected at the main server and used for marketing and evaluations.

Mega Dairy has a capacity it process 7 lakh liters of Milk per day. This Dairy has

been built by investing Rs.35.70crores obtained as a term loan from National



Dairy Development Board. The Mega Dairy has the latest “State-of-the-Art”

technological facilities in dairy processing and the Union has the ability to

manufacture Milk and milk products to world-class standards, ultimately

consumers are at the beneficial end. Milk and Milk products now reaches the

market faster, at a higher quality and with a

Longer shelf life. This is sharp contrast to its previous reliance on manual systems

that led to time lags in each production stage.

KOMUL product range:

The products produced by KOMUL are

MILK

CURD

BUTTER Milk

PEDA

GHEE, CHEESE

GOOD LIFE and other products



MARKET SHARE:

BRIEF OVERVIEW OF “KOMUL

PROCUREMENT & INPUTS

Inhabited Villages 2930

Milk producer Members 288751

Dairy Co-operative Societies 1497

Milk Procurement Routes 105

Artificial Insemination Centers 1475

PROCESSING PLANTS

Kolar Dairy 2,00,000 Kg’s PD

Gowribhidanur Chilling center 1,00,000 Kg’s PD

Sadil 1,00,000 Kg’s PD

Chintamani 1,00,000 Kg’s PD

MARKETING & SALES

Number of distribution routes 32

Agents 292

Milk Parlors

Every day Sachet milk sales

7

15.56 Lakhs

FINANCE

Total Share Capital 9.12 Cores

Annual Turnover 271.97 ores



COMPETITORS:

There are 125 competitors form private factories. The main are:

HERITAGE

GOMATA

SHRUTHI

SWASTIC

GOLD FIELF

DIARY PLUS

NILGIRIS

AROKYA

DODLA etc.,



FUNCTIONAL CHART:


FUNCTIONAL CHART

BOARD

DEPARTMENTS

PURCHASE SALES

FINANCE ADMINISTRATIONMARKETING R&D

DD HRD ENGINEERING


GROWTH & DEVELOPMENT OF THE INDUSTRY:

Until the year 1940, there was very little published information available

about the method of preparation and use of these products. The credit for the first

publication on the subject goes to Dr. W. B. Davis, the first director of Dairy

Research. Within a span of four decades considerable research had been

conducted at the National Dairy Research Institute and other places on indigenous

dairy products.

Since then, the Dairy Industry had begun to grow at a rapid pace. There

have been tremendous efforts put in by the various organizations to assure good

quality milk to the people and the saying “All that is white is pure milk” came in

to existence



CHAPTER 4

DATA ANALYSIS & INTERPRETATION

TABLE 1:

SHOWING OPERATING LEVERAGES

ANALYSIS:

From the above table we can observe that operating leverage is 1.045 in

the year 2007 & it has been increased to 1.050 in the year 2008 & 1.056 in the

year 2009 & in 2010 it is 1.072. So we can say that there is a gradually

increased in leverages when compared to base year 2006-07.


Years Operating leverages

2006-07 1.045

2007-08 1.050

2008-09 1.056

2009-10 1.072


Graph- 1: SHOWING OPERATING LEVERAGES

1.045

1.05

1.056

1.072

1.03 1.04 1.05 1.06 1.07 1.08

2006-07

2007-08

2008-09

2009-10

Series1

Interpretation:

So we can say that there is a gradually increased in leverages when

compared to base year 2005-06.

TABLE 2: TABLE SHOWING FINANCIAL LEVERAGE



Year Financial leverage

2006-07 1.013

2007-08 1.007

2008-09 1.006

2009-10 1.002

Analysis:

From the above table we can observe that the financial leverage is 1.013

In the year 2007, & it has been decreased to 1.007 in the year 2008 & to 1.006 in

the year 2009 & in 2010 it is again decreased to 1.002. So we can say that there is

gradual decreased in leverages when compared to the base year 2007.



Graph -2: SHOWING FINANCIAL LEVERAGE

1.013

1.0071.006

1.002

0.996

0.998

1

1.002

1.004

1.006

1.008

1.01

1.012

1.014

2006-07 2007-08 2008-09 2009-10

2006-07

2007-08

2008-09

2009-10

Interpretation:

Thus, we can say that there is gradual decreased in leverages when compared to

the base year 2007.



TABLE 3: TABLE SHOWING RETURN ON INVESTMENT LEVERAGE

Year Return on investment

2006-07 3.537

2007-08 4.24

2008-09 3.23

2009-10 6.26

Analysis:

From the above table we can observe that the return on investment leverage is

3.537 in the year 2007 & it has been increased to 4.24 times in the year 2008 &

decreased to 3.23 in the year 2009 & in the year 2010 again increased to 6.26. So



we can say that there is gradual increase & decrease when compared to the base

year 2006-2007.

Graph-3: SHOWING RETURN ON INVESTMENT LEVERAGE

3.537

4.24

3.23

6.26

0

1

2

3

4

5

6

7

2006-07 2007-08 2008-09 2009-10

2006-07

2007-08

2008-09

2009-10

Interpretation

Hence, we can say that there is gradual increased & decreased when compared to

the base year 2005-2006



TABLE 4: TABLE SHOWING COMBINED LEVERAGE

YearsCombined

leverage

2006-2007 1.0575

2007-2008 1.0563

2008-2009 1.0613

2009-10 1.0698

Analysis:

From the above table we can observe that the combined leverage is 1.0575 in the

year 2007 & it has been decreased to 1.0563 times in the year 2008 & increased to



1.0613 in the year 2009 and in 2010 it is almost constant. So we can say that there

are gradual fluctuations in the combined leverages.

Graph-4: SHOWING COMBINED LEVERAGE

1.05751.0563

1.0613

1.0698

1.045

1.05

1.055

1.06

1.065

1.07

2006-2007 2007-2008 2008-2009 2009-10

2006-2007

2007-2008

2008-2009

2009-10

Interpretation



From the above graph we can observe that the combined leverage is 1.0575 in the

year 2007 & it has been decreased to 1.0563 times in the year 2008 & to 1.0613 in

the year 2009 and in the year 2010 it was 1.0698. So we can say that there is more

fluctuations when compared to the base year 2006-2007.

TABLE 5: SHOWING CHANGES IN THE SHARE CAPITAL

YearsAmt. Percentage

2006-07 91327700 100

2007-08 117448400 128.6

2008-09 219176400 239.98

2009-10 281193700 324.78

Analysis:



From the above table we can observe that the percentage of share capital

is 100 % in the year 2007 & it has been increased to 128.6% in the year 2008 &

239.98% in the year 2009 and in the year 2010 324.78%. So we can say that

there is a gradually increased in the share capital when compared to base year

2006-07.

TABLE 5: SHOWING CHANGES IN THE SHARE CAPITAL

100

128.6

239.98

324.78

0

50

100

150

200

250

300

350

2006-07 2007-08 2008-09 2009-10

2006-07

2007-08

2008-09

2009-10



Interpretation:

Thus, we can say that there is a gradually increased in the share capital

when compared to base year 2006-07.

TABLE 6: CHANGES IN THE RESERVES & SURPLUS

Years Amt. Percentage

2006-07 101111251 100

2007-08 101556505 101

2008-09 117137541 116

2009-10 114696482 113



Analysis:

From the above table we can observe that the percentage of Reserves &

surplus is 100 % in the year 2007 & it has been increased to 101% in the year

2008 & increased to 116% in the year 2009 & to 113% in the year 2010. So

we can say that there are a more fluctuations in the Reserves & surplus when


Graph- 6: CHANGES IN THE RESERVES & SURPLUS



100 101

116

113

90

95

100

105

110

115

120

2006-07 2007-08 2008-09 2009-10

Series1

Interpretation:

From the above chart we can say that there is a more fluctuations in the

Reserves & surplus when compared to base year 2006-07.

TABLE -7: SHOWING CHANGES IN THE LOAN



Analysis:

From the above table

we can observe that the

percentage of loans is 100 %

in the year 2007 & it has

been decreased to 87% in the year 2008 & increased to 120% in the year 2009

and to 138% in the year 2010. So we can say that there are a more fluctuations

in the loans compared to base year 2006-07.

Graph- 7: SHOWING CHANGES IN THE LOANS



2006-07 217181741 100

2007-08 189293306 87

2008-09 260394944 120

2009-10 299710803 138


10087

120

138

0

20

40

60

80

100

120

140

160

2006-07 2007-08 2008-09 2009-10

2006-07

2007-08

2008-09

2009-10

Interpretation:

So we can say that there are a more fluctuations in the loans compared to

base year 2006-07

TABLE- 8: SHOWING

CHANGES IN THE

FIXED ASSETS



2006-07 17417221 100

2007-08 15515275 89

2008-09 18113910 104

2009-10 14531709 84


Analysis:

From the above table we can observe that the percentage of fixed assets

is 100 % in the year 2007 & it has been decreased to 89% in the year 2008 &

increased to 104% in the year 2009 & again decreased to 84% in the year 2010.

So we can say that there is a more fluctuations in the Fixed assets when




Graph-8: SHOWING CHANGES IN THE FIXED ASSETS

Interpretation:

We can say that there is a more fluctuations in the Fixed assets when


TABLE 9: SHOWING CHANGES IN THE CURRENT ASSETS



Years

Amt. Percentage

2006-07 345166990 100

2007-08 346147409 101

2008-09 497244244 144

2009-10 429398826 124

Analysis:

From the above table we can observe that the percentage of Current

assets is 100 % in the year 2007 & it has been increased to 101% in the year

2008 & 144% in the year 2009 & decreased in 2010 to 124%. So we can say

that there is a gradually reduced current assets in the year 2009-10.

Graph- 9: SHOWING CHANGES IN THE CURRENT ASSETS



100 101

144

124

0

20

40

60

80

100

120

140

160

2006-07 2007-08 2008-09 2009-10

Interpretation:

So we can say that there are gradually reduced current assets in the year

2009-10.

TABLE 10: SHOWING CHANGES IN THE CURRENT LIABILITIES




2006-07 144444239 100

2007-08 127370442 88

2008-09 253148677 175

2009-10 192963579 134

Analysis:

From the above table we can observe that the percentage of current liabilities is

100 % in the year 2007 & it has been decreased to 88% in the year 2008 & 175%

in the year 2009 & 134% in 2010. So we can say that there is a more fluctuations

when compared to base year 2006-07.

Graph-10: SHOWING CHANGES IN THE CURRENT LIABILITIES



134

175

88100

0

20

40

60

80

100

120

140

160

180

200

2006-07 2007-08 2008-09 2009-10

2006-07

2007-08

2008-09

2009-10

Interpretation:

We can say from the above diagram that there is a more fluctuations when




TABLE -11: SHOWING CHANGES IN THE WORKING CAPITAL


2006-07 200722751 100

2007-08 218776966 108

2008-09 244095567 122

2009-10 236435247 118

Analysis:

From the above table we can observe that the percentage of Working capital is

100 % in the year 2007 & it has been increased to 108% in the year 2008 & 122%

in the year 2009 & 118% in the year 2010. So we can say that there is a gradually

increased in the working capital when compared to base year 2006-07.



Graph-11: SHOWING CHANGES IN THE WORKING CAPITAL

100

108

122

118

0 50 100 150

2006-07

2007-08

2008-09

2009-10

2009-10

2008-09

2007-08

2006-07

Interpretation:

Thus there is a gradually increased in the working capital when compared to base

year 2006-07.

TABLE 12: SHOWING CHANGES IN THE SALES




2006-07 3058526160 100

2007-08 2987049900 98

2008-09 3578197425 117

2009-10 3961593839 130

Analysis:

From the above table we can observe that the percentage of sales is 100 % in the

year 2007 & it has been decreased to 98% in the year 2008 & 117% in the year

2009 & 130% in 2010. So we can say that there is a variation in the sales when




Graph-12: SHOWING CHANGES IN THE SALE

22%

22%

26%

30%

2006-07

2007-08

2008-09

2009-10

Interpretation:

So we can say that there is a variation in the sales when compared to base year

2006-07.



TABLE 13: SHOWING CHANGES IN FIXED COST


2006-07 135966984 100

2007-08 139735298 103

2008-09 167089030 123

2009-10 184213082 135

Analysis:

From the above table we can observe that the percentage of fixed cost is

100 % in the year 2007 & it has been increased to 103% in the year 2008 &

123% in the year 2009 & 135% in 2010. So we can say that there is a gradually

increased in the fixed cost when compared to base year 2006-07.



Graph-13: SHOWING CHANGES IN FIXED COST

100

103

123

135

0 50 100 150

2006-07

2007-08

2008-09

2009-10

2009-10

2008-09

2007-08

2006-07

Interpretation:

So we can say that there is a gradually increased in the fixed cost when

compared to base year 2006-07



TABLE 14: SHOWING CHANGES IN THE PRIME COST


2006-07 1783510325 100

2007-08 2074798683 116

2008-09 2224474539 125

2009-10 2354233629 132

Analysis:

From the above table we can observe that the percentage of Prime cost is 100 % in

the year 2007 & it has been increased to 116% in the year 2008 & 125% in the

year 2009 & 132% in 2010. So we can say that there is a gradually increased in

the prime cost when compared to base year 2006-07.



Graph-14: SHOWING CHANGES IN THE PRIME COST

100

116125

132

0

20

40

60

80

100

120

140

2006-07 2007-08 2008-09 2009-10

Series1

Interpretation:

So we can say that there is a gradually increased in the prime cost when




TABLE 15: SHOWING CHANGES IN THE VARIABLE COST

Analysis:

From the above table we can observe that the percentage of variable cost is 100 %

in the year 2007 & it has been increased to 122% in the year 2008 & 162% in the

year 2009 & 212% in 2010. So we can say that there is a gradually increase in the

variable cost when compared to base year 2006-07.


Years Percentage Difference

2006-07 100 Nil

2007-08 122 22

2008-09 162 40

2009-10 212 50


Graph-15: SHOWING CHANGES IN THE VARIABLE COST

2006-072007-08

2008-092009-10

S1

100122

162

212

0

50

100

150

200

250

2006-07

2007-08

2008-09

2009-10

Interpretation:

Hence there is a gradually increased in the variable cost when compared to base

year 2006-07.



TABLE 16: SHOWING CHANGES IN THE CONTRIBUTION

Years Percentage Difference

2006-07 100 Nil

2007- 08 115 15

2008-09 127 12

2009-10 148 21

Analysis:

From the above table we can observe that the percentage of contribution is 100 %

in the year 2007 & it has been increased to 115% in the year 2008 & 127% in the

year 2009 & 148% in 2010. So we can say that there is a more increase when




Graph-16: SHOWING CHANGES IN THE CONTRIBUTION

20%

23%

26%

31%

2006-07

2007- 08

2008-09

2009-10

Interpretation:

So we can say that there is a more increase when compared to base year 2006-07.



CHAPTER -5

SUMMARY OF FINDINGS & CONCLUSIONS

Findings

From this table we can observe that operating leverages of KOMUL is in

increasing trend in the year 2006-07 when compare to the other three years

From this table we can observe that the financial leverage of KOMUL are in

gradual decreasing trend when compared to the other three years so we can

say that the financial risk taken by KOMUL are decreasing year by year.

From this table we can observe that there was more fluctuations in the

return on investment leverage .i.e. in the year 2006-07.



From this table we can observe that the combined leverage of KOMUL are

having more fluctuations are due to gradual increasing trend in operating

leverage & gradual decrease in trend in financial leverage.

From this table we can observe that the changes in the share capital at

KOMUL. In this table we can observe that there is increased in the share

capital in the all 4 years so we can say that the amt. collected from the

public through shares as been increased.

From the above table we can observe that reserves & surplus of KOMUL is

having slight fluctuations due to decreasing in profit

The Current assets of KOMUL is also having more fluctuations that is it has

been increased extensively by in the year 2009 -10 this because of various

credit policies of KOMUL in the year

There are fluctuations in the liabilities over the four years.

The working capital in the has been increased slightly due to increase in the

risks taken by the company.

The sales volume is increasing year by year.

There is a gradual increase in the prime cost.

Usually the fixed cost should remain constant. But here it has not happened

like that so it is a bad sign to the company.



CONCLUSION

From the study conducted by me a study on financial &leverage analysis. I came

to know the performance of Komul. their way of classification of assets

&liabilities in the balance sheet, classification of cost particulars their method of

costing even I came to know the risks taken by Komul both financially

&technically by calculating various types of leverages,

So thus project is concluded with the composition of performance of Komul

by taking the classification in the items of balance sheet, profit and loss account

trading account cost statements, progress reports for 3 accounting years along with

this .I have identified several differences in the performance of Komul and also

given some suggestions to overcome those differences and problems.



CHAPTER-6

RECOMMENDATIONS AND SUGGESTIONS.

SUGGESTIONS:

Since the operating leverages are increasing trend when compare to the

other three years it is a good sign to the company & should maintain

operating leverages.

Since the financial leverage are in decreasing trend so we can say that then

financial risk taken by KOMUL are decreasing which is a Good sign to the

company. The Komul as to continue to maintained the same rate of

financial leverage.

The ROI of KOMUL in the year 2009-10 is better than other two years so

Komul as to maintain the same leverages or further it should try to get more



returns on investment in the fore coming years. To maintain good rate of

leverages.

Fluctuations are good sign to the company because the risk is taking after

knowing the competition in the market so KOMUL has to maintain the

same method of combined leverage.

Since the share capital is increasing trend .It is a good sign to the company

&it should maintain the same. Even it should try to further attract more

investment from the public

The KOMUL has to maintain more reserves &surplus in order to meet UN -

certain contingencies. It should try to avoid fluctuations in the maintaining

the reserves &surplus by earring more profits.

The fluctuations in the fixed assets are not a good signed but here KOMUL

has reduced investments of fixed assets in the year 2006-07. Mainly because

reduction on fixed assets in the year 2006-07 mainly because the reduction

in financial risk taken by KOMUL due to heavy competition this method of

reducing the financial after analyzing comp0etation is a good for a

competition to survive in this competitive world.



The fluctuations in the fixed assets are not a good signed but here KOMUL

has reduced investments of fixed assets in the year 2006-07. Mainly because

reduction on fixed assets in the year 2006-07 mainly because the reduction

in financial risk taken by KOMUL due to heavy competition this method of

reducing the financial after analyzing comp0etation is a good for a

competition to survive in this competitive world.

Since the KOMUL has maintain liberal credit policy in the year 2007 with

attract more customer and increases it sales but cash inflows cannot been

collected immediately this may also arises due to increase in bad debts also

in the year 2007 it has maintained rigid policies it can be collected CIF

immediately but it results in decrease in sales and also decrease in the year

2007 bad debts. So after analyzing the advantages and disadvantages of

both credit policies to it has balance in the year 2007 between these two

methods.



The increase in working capital is good signed by the company as; it

indicates the risk taken by the company therefore KOMUL has to maintain

same.

Decrease in sales is not a good signed to the company so the company has

to adopt aggressive sales policy through sales promotion activity to increase

sales as well as earning capacity.

The increase in prime cost and decrease in sales is not a good Sign so the

company has to adopt cost control technique .to reduce the cost.

In order to increase control the company has to reduce the prime cost and

other variable cost not only the company should reduce the casts in the

other hand. And it has been increased the sales.

The company should maintain the fixed cost at a constant rate and the it

should not variable from one year to another year.



GENERAL SUGGESTIONS

In Komul they are not even able to find out steam expenses for a particular

production units of products. Since the steam is common to all in the

production units and they are approximately allocating steam expenses for

finding out of the cost of the products.

From the analysis I came to know that most of the expenses have been

decreasing when compared to the previous years or year by year.

It is found that Komul is not following certain cost control techniques.

Even they are not fallowing cost reduction techniques.

Komul is also not fallowing responsibility accounting system.

They should use certain technical devices in order to know the steam

expenses for a particular production unit from this they can arrive at correct

steam cost for a particular production department.



Komul should follow certain cost control techniques which helps in

formulation of standards & budgets that incorporate objectives and goals to

be achieved & also helps in formulation of corrective measures to eliminate

& reduce unforcerable variables.

Responsibility accounting system should be allowed in Komul as it

personalizes control reports by accumulating and reporting cost & revenue

information according to defined responsibility areas within a company.

Komul should also fallow cost production techniques which helps in

eliminating waste improving operations, increasing productivity, search for

cheaper materials, and improved standards of quality finding other means to

reduce the costs of products.

From the above study we can conclude that financial position of the

company in good to certain extant. The solvency position of the company is

acceptable to certain extant. The liquidation position is good.



CHAPTER-7

APPENDICES AND ANNEXURES

AN OVER VIEW OF THE STATISTICS RELATED TO

PROCUREMENT ACTIVITIES

Particulars Uni

t

Years

91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99

DCS Registered No.

s

551 667 724 781 820 861 932 968

DCS Functional No.

s

511 624 696 760 807 841 915 943

Members Enrolled Lak

hs

0.87 1.03 1.15 1.17 1.65 1.71 1.80 1.88



Daily average Milk

Procurement

Kgs

.

1,75,8

66

1,92,19

7

2,11,9

39

2,09,0

80

2,06,3

24

2,39,5

01

2,60,5

06

2,64,3

24

Procurement Price

payable per Kg.

Rs. 3.16 3.14 3.53 3.48 4.45 5.72 5.54 5.58

Daily average Milk

Procurement/DCS

Kgs

.

344 308 305 275 256 285 285 280

Procurement

Transportation Cost/ Kg.

Rs. 0.13 0.14 0.16 0.19 0.21 0.19 0.21 0.22

DCS In Profit No.

s

503 609 669 732 786 827 900 920

Profit Amount Lak

hs

132.12 160.87 165.21 161.93 182.34 282.81 285.20 308.03

DCS in Loss No.

s

8 15 25 28 21 14 15 23

Loss Amount Lak

hs

0.44 2.04 2.66 2.91 2.13 1.65 2.29 3.16

Daily Average Liquid

milk sales

Litr

es

- - - - - - - 17,220

Union’s Net Profit/Loss Lak

hs

7.64 14.74 3.64 9.55 11.43 3.80 -

165.82

152.30

Date of completion of

Audit

16-09-

91

31-07-

93

20-01-

94

19-08-

94

11-09-

95

30-12-

95

20-02-

98

27-04-

98



Particulars Uni

t

Years

99-00 00-01 01-02 02-03 03-04 04-05 06-07 07-08

DCS Registered No.

s

1039 1150 1220 1264 1270 1322 1389 1418

DCS Functional No.

s

1013 1105 1168 1199 1199 1246 1303 1346

Members Enrolled Lak

hs

1.96 2.10 2.16 2.22 2.27 2.56 2.61 2.65

Daily average Milk

Procurement

Kgs

.

3,16,0

19

3,65,1

50

3,65,6

17

3,94,9

98

4,63,1

03

4,97,1

28

5,38,42

7

5,54,3

67

Procurement Price

payable per Kg.

Rs. 6.66 7.56 7.88 8.25 8.25 8.15 7.89 8.48

Daily average Milk

Procurement/DCS

Kgs

.

312 330 313 329 386 399 413 411

Procurement

Transportation Cost/ Kg.

Rs. 0.19 0.20 0.24 0.25 0.24 0.23 0.23 0.22



DCS In Profit No.

s

987 10.76 11.42 1175 1171 1227 1277 1124

Profit Amount Lak

hs

394.09 453.43 493.36 910.73 600.90 681.93 750.28 460.5

1

DCS in Loss No.

s

26 29 26 24 28 19 26 22

Loss Amount Lak

hs

5.51 6.24 5.16 4.27 7.60 18.83 5.91 11.42

Daily Average Liquid

milk sales

Litr

es

39,636 54,267 68,710 76,686 80,429 83,528 90,867 82,47

0

Union’s Net Profit/Loss Lak

hs

67.41 117.41 158.13 114.87 21.96 54.76 45.22 -

122.1

5

Date of completion of

Audit

13-12-

99

26/08/

00

23/09/

00

23/09/

00

14/05/

01

10/09/

01

27/11/0

2

-



AN OVER VIEW OF THE STATISTICS RELATED TO

TECHNICAL INPUT ACTIVITIES

S

l.

N

o

.

Particulars Un

it

Years

93-9494-

9595-96

96-

9797-98 98-99 99-00 00-01

0

1

Emergency Cases

Attended

No

.s

0

2

Cost/Case in

Emergency Visit

Rs.

0

3

Animal Health

Camps Conducted

No

.s

- - - - - - - 167

0

4

Cost/Case in Animal

Health Camps

Rs.



0

5

Total single AI

Centers

No

.s

215 291 332 335 352 344 341 355

0

6

AI done/Single AI

Center

No

.s

63,66

2

78,5

81

1,01,

491

98,7

99

1,05,

920

1,13,

662

1,18,

235

1,12,

734

0

7

Total Cluster AI

Centers

No

.s

- - - - - - - -

0

8

AI Done/Cluster AI

Centeres

No

.s

- - - - - - - 3829

54

0

9

FMD Vaccination

done

Do

ses

1

0

Villages Covered

Under FMD Vaccn.

No

.s

1

1

Theileriasis (T)

Vaccination Done

Do

ses

1

2

Villages Covered

Under T. Vaccn.

No

.s

1

3

Brucellosis (B)

Vaccination Done

Do

ses

- - - - - - - -

1

4

Villages covered

Under B. Vaccn.

No

.s

- - - - - - - -

1

5

Sample Analysed in

ADDL

No

.s

- - - - - - - -



1

6

Cattlefeed Sold M.t

on

3,995 4,78

9

5,250 4,42

7

3,726 4,726 3,068 2,718

Sl

.

N

o.

Particulars Uni

t

Years

01-02 02-03 03-04 04-05 05-06 06-07 07-08 02-03

0

1

Emergency Cases

Attended

No.

s

49406 53006 60021 70260 54873

0

2

Cost/Case in Emergency

Visit

Rs.

0

3

Animal Health Camps

Conducted

No.

s

280 307 - - - -

0

4

Cost/Case in Animal

Health Camps

Rs.

0

5

Total single AI Centers No.

s

339 369 372 378 383 387 390 379



0

6

AI done/Single AI

Center

No.

s

1,26,2

69

1,26,5

33

1,17,7

37

1,23,4

21

12449

8

14332

7

15061

6

10652

0

7

Total Cluster AI Centers No.

s

- - - - - - -

0

8

AI Done/Cluster AI

Centeres

No.

s

- - - - - - -

0

9

FMD Vaccination done Dos

es

33073

6

31971

0

36505 53319

1

44995

4

45100

0

1

0

Villages Covered Under

FMD Vaccn.

No.

s

1

1

Theileriasis (T)

Vaccination Done

Dos

es

1

2

Villages Covered Under

T. Vaccn.

No.

s

1

3

Brucellosis (B)

Vaccination Done

Dos

es

- - - - - - -

1

4

Villages covered Under

B. Vaccn.

No.

s

- - - - - - -

1

5

Sample Analysed in

ADDL

No.

s

- - - - - - 962 953

1

6

Cattlefeed Sold M.t

on

4,920 6,795 5,586 9,698 14,956 18,087 15,455 9,588



CHAPTER-8

BIBLIOGRAPHY

BOOKS:

Business research methodology - K. Aswathappa

Financial management - R.K.Jain & kulkerni.

Business Finance - Reddy & Appaniah.

Financial accounting - B.S.Raman.,

Cost & Management accounting - Shahsi.K.gupta,

Cost & financial analysis - B S Raman



KOMUL Annual report

KOMUL progress report

Website

WWW.KOMUL.COM


komul project

Documents