Navaneeth_shetty_project_financial_perfo (1).docx

INTERNSHIP REPORT
On
“A Study on Financial Performance Analysis With Reference To
Dakshina Kannada Co-operative MilkProducers Union Ltd (DKMUL)”
Submitted by
Navaneeth Shetty
4PA14MBA43
To
VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELGAUM
In partial fulfilment of the requirements for the award of the degree of
Master of Business Administration
Under the Guidance of
(Internal Guide)
Dr.BeeranMoidin BM
Director& Professor
P.G.Department of Business Administration
P.A.College of Engineering
Mangalore- 574 153
P.G. DEPARTMENT OF BUSINESS ADMINISTRATION
P.A.COLLEGE OF ENGINEERING
MANGALORE-574153
2016
(External Guide)
Mr.Vasudev Bhat
Assistant Manager (Finance)
Dakshina Kannada Cooperative
Milk Producers’ Union Ltd.
Kulshekar, Mangalore.

ACKNOWLEDGEMENTS
First of all I thank God Almighty for the incessant grace showered upon me to
complete the project work successfully. It gives me immense pleasure to acknowledge and
thank all those who have given consistent guidance, advice and encouragement in my
endeavour.
I take this opportunity to express my immense pleasure with deep sense of gratitude
to thank my internal guide Dr.BeeranMoidin BM, Director& Professor, PG Department of
Business Administration, PACE, Mangalore for his inspiration and constant encouragement
which was the source of inspiration and motivation to me during the course of my project
work.
I respectfully acknowledge my sincere gratitude to my external guide, Mr.Vasudev Bhat
Assistant Manager (Finance), Dakshina Kannada Cooperative Milk Producers’ Union
Limited for all the guidance, motivation and cooperation.
I express my profound thanks to my family and friends for their unrelenting support
and affection. Last but not the least; I take this opportunity to thank each and every one of the
“Dakshina Kannada Cooperative Milk Producers’ Union Limited”.
NAVANEETH SHETTY

TABLE OF CONTENTS
Executive Summary
CHAPTER 1: INTRODUCTION.......................................................................................... 1
1.1General Introduction of financial performance analysis.......................................................1
1.2 Introduction about the Internship.........................................................................................1
1.3 Topic chosen for the study...................................................................................................2
1.4 Need for the study................................................................................................................2
1.5 Objectives of the study........................................................................................................ 2
1.6 Scope of the study............................................................................................................... 2
1.7 Methodology adopted.......................................................................................................... 3
1.8 Literature review..................................................................................................................3
1.9 Limitation of the study.........................................................................................................4
CHAPTER 2: INDUSRTY AND COMPANY PROFILE....................................................5
2.1 Introduction .........................................................................................................................5
2.1.1 Latest Developments in Indian Dairy Industry..........................................................................8
2.1.2 Intensive Dairy Development Programmed (IDDP)..................................................................8
2.1.3 Intensive Dairy Development Programmed (IDDP)..................................................................8
2.2 Growth of Dairy Business........................................................................................................8
2.3 Global Challenges for the Indian Dairy Industry......................................................................10
2.4 Father of Milk Revolution.....................................................................................................11

2.4.1 Three Tier Systems.........................................................................................................11
2.5 Evolution of dairy..............................................................................................................12
COMPANY PROFILE..........................................................................................................14
2.6 Dakshina Kannada Co-operative Milk Producers Union Limited................................................14
2.7 Area of operation................................................................................................................15
2.8 Board of Directors...........................................................................................................16
2.9 Nature of business carried................................................................................................17
2.10 Ownership Pattern ............................................................................................................17
2.11 Organization Structure.......................................................................................................17
2.12 Objectives of DKMUL.......................................................................................................18
2.13 Vision of DKMUL.............................................................................................................19
2.14 Mission of DKMUL...........................................................................................................19
2.15 Quality Policy...................................................................................................................19
2.16 Environment Policy............................................................................................................20
2.17 Product Profile of DKMUL.................................................................................................20
2.18 Work Flow Model...............................................................................................................21
2.19 Infrastructural Facilities......................................................................................................22
2.20 Competitors Information......................................................................................................23
2.21SWOT Analysis...................................................................................................................24
2.22Future Growth and Prospectus..................................................................................................26
2.23Financial Statements...................................................................................................................26
CHAPTER 3: THEORETICAL BACKGROUND OF THE STUDY.............................32
3.1 Introduction and meaning...................................................................................................32
3.2 Tools of the study...............................................................................................................33
3.2.1 Introduction to ratio analysis...........................................................................................33
3.2.2 Meaning of ratio analysis................................................................................................35

3.2.3 Importance of ratio analysis............................................................................................35
3.3 Types of ratio.....................................................................................................................36
3.3.1 Solvency ratio.............................................................................................................36
3.3.2 Activity Ratio.............................................................................................................38
3.3.3 Profitability ratio........................................................................................................39
3.4 Advantage of ratio analysis for shareholders and prospective investors..........................40
3.5 Limitations of ratios analysis............................................................................................40
3.6 Common size statement....................................................................................................41
3.6.1 Forms of common size statement..............................................................................41
3.7Comparative statements....................................................................................................42
3.7.3Forms of comparative statement....................................................................................43
3.8 Trend analysis..................................................................................................................44
3.8.1 Definition of Trend analysis.....................................................................................44
3.8.2 Objectives of Trend analysis.....................................................................................44
CHAPTER 4: DATA ANALYSIS AND INTERPRETATION.......................................45
4.1 Solvency ratios.................................................................................................................45
4.1.1 Liquidity ratios..............................................................................................................45
4.1.2 Leverage ratios..............................................................................................................48
4.2 Activity ratios...................................................................................................................49
4.3 Profitability ratios............................................................................................................53
4.4 Common size financial statement analysis......................................................................54
4.4.1 Common size profit and loss account......................................................................55
4.4.1 Common size balance sheet.....................................................................................57
4.5 Comparative financial statement analysis........................................................................63
4.5.1 Comparative profit and loss account........................................................................63
4.5.2 Comparative balance sheet.......................................................................................66
4.6Trend analysis....................................................................................................................71

4.6.1 Sales Trend................................................................................................................71
4.6.2 Trend cost of goods sold...........................................................................................72
4.6.3 Trend gross profit......................................................................................................73
4.6.4 Trend net profit.........................................................................................................74
4.6.5 Trend profit and loss account....................................................................................75
CHAPTER 5: FINDINGS AND SUGGESTIONS AND CONCLUSION.......................77
5.1 Findings.............................................................................................................................77
5.2 Suggestions........................................................................................................................77
5.3 Conclusion.........................................................................................................................78
BIBLIOGRAPHY
ANNEXURE

LIST OF TABLES
Table No Title Peg No
2.1 Popular brands in milk industry 9
2.2 Board of directors 16
2.3 Gross profit ratio 28
2.4 Net profit ratio 29
2.5 Current ratio 30
4.2 Quick ratio 45
4.3 Cash ratio 46
4.4 Debt equity ratio 47
4.5 Interest coverage ratio 48
4.6 Inventory turnover ratio 49
4.7 Fixed asset turnover ratio 50
4.8 Account receivable turnover ratio 51
4.12 Common size profit and loss account 2010-11 54
4.17 Common size balance sheet 2010-11 56
4.22 Comparative profit and loss account 2010-11 62
4.27 Comparative balance sheet 2010-11 65

4.32 Sales Trend 70
4.33 Trend cost of goods sold 71
4.34 Trend gross profit 72
4.35 Trend net profit 73
4.36 Trend profit and loss account 74
LIST OF CHARTS
Chart No Title Peg No
2.1 Three Tire Sysem 12
2.2 Organisational Structure 18
2.3 Work Flow Model 22
4.2 Quick ratio 45
4.3 Cash ratio 46
4.4 Debt equity ratio 47
4.5 Interest coverage ratio 48
4.6 Inventory turnover ratio 49
4.7 Fixed asset turnover ratio 50
4.8 Account receivable turnover ratio 51
4.12 Sales Trend 70
4.13 Trend cost of goods sold 71
4.14 Trend gross profit 72
4.15 Trend net profit 73
4.16 Trend profit and loss account 75

EXECUTIVE SUMMARY
Milk forms a vital part of the human diet also it is a white liquid produced by the
mammary glands of mammals. India is the highest milk producer in the entire globe. Dairy
enterprise is an important occupation of farmers. In India 70% of population are involved in
Agriculture.
Dakshina Kannada Milk Producers Union Limited (DKMUL) is dairy industry. This
union situated in Kulshekar. DKMUL is 8.5 km away from Mangalore airport. This union is
established in the year of 1986 covering the Dakshina Kannada and Udupi district
jurisdiction. This is a cooperative institution which is owned and managed by milk producers.
The DKMUL is procuring milk from village level cooperative
societiesanddistributing 2.25 lakh litres of milk per day also producing milk products like
Ghee, Peda, Butter Milk, Lassi, Mysore Pak and Flavoured Milk etc. Under the brand name
NANDINI which is also a brand name of KMF (Karnataka Milk Federation) all over
Karnataka. This study was done for a period of ten weeks. The project report is bifurcated
into five chapters which include Introduction, Methodology, Limitation of study, Industry
and Company profile, Theoretical Background of the study, Analysis, Interpretation and
Findings and Suggestions.
The data collection method is the method of collecting primary and secondary data of
the company. The primary data collection method includes discussion with the financial
manager, staff and personal observations. The secondary data collection methods are
company’s six years annual report, audit reports, internet and journals regarding the analysis
of financial performance. For the study ratio analysis like solvency ratio, profitability ratio
and turnover ratios are calculated and comparative studies like comparative balance sheet and
comparative profit and loss account also common size statement analysis like common size
balance sheet and common size profit and loss account, these are all calculated for the study
of financial performance analysis.

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CHAPTER 1: INTRODUCTION
1.1 GENERAL INTRODUCTION OF FINANCIAL PERFORMANCE ANALYSIS:
The financial performance analysis identifies the financial strengths and weaknesses of
the firm by correctly establishing relationships between the items of the balance sheet and
profit and loss account. The financial statement is an organized collection of data according
to logical and consistent accounting procedures. The Performance analysis helps in short-
term and long term forecasting and growth can be identified with the help of financial
operation analysis. The study of financial statement is a process of evaluating the relationship
between the component parts of financial statement to obtain a better understanding of the
firm’s position and performance. This analysis can be help to undertaken by management of
the firm or by parties outside the namely, owners, investors creditors.
1.2 INTRODUCTION ABOUT THE INTERNSHIP:
The project titled “A Study on Financial Performance Analysis With Reference
ToDakshinaKannada co-operative Milk Producers union Ltd (DKMUL)” was undertaken in
DakshinaKannada co-operative Milk Producers union Ltd (DKMUL) from 14th December
2014 to 18th February 2015. Main aim of this study is gathering practical knowledge with the
research, started the project under the guidance of Mr. Vasudev Bhat, assistant manager
(Finance) of DKMUL, primarily I analyzed the past 5 year data’s related to financial
performance analysis, so primary source of the information about the financial statements
that I gatheredfrom past year project and internet source. To collect primary data’s related to
company, I visited manufacturing department of the company in their plant manager gave
more information about the working process and some information about the products.
Related to financial information I gathered information from my external guide Mr.
VasudevBhat, they provided annual report from the year 2010 to 2015. From the annual
report I picked the balance sheets and profit and loss accounts from that I interpret the
comparative statements, common size statements and ratio analysis. In the 10 week of
duration first two weeks given for understand the company, another three weeks for data
analysis and problem identification in the company and last five weeks for data encoding and
solution identification so on these based the project has done.

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1.3 TOPIC CHOSEN FOR STUDY:
The topic chosen for the study is “A Study on Financial Performance Analysis With
Reference To Dakshina Kannada co-operative Milk Producers union Ltd (DKMUL)”.
1.4 NEED FOR THE STUDY:
This study helps to identify the financial performance of the company. The financial
statements will show the financial strength and weakness of the company. For investor this
study is very useful by seeing the performance of the company in the study, also for
investment and financial decision making this study guides. In employee performance, credit
policies, efficiency of the operations and credit worthiness of the company this study is
needed. It is necessary for measure the company’s ability to satisfy particular obligation and
to take financial decision and measures. For strategic planning the ratio analysis is needed.
1.5 OBJECTIVES OF THE STUDY:
 To critically evaluate the financial performance of the DKMUL.
 To analyze the profitability and solvency position of the DKMUL.
 To understand the financial strategies adopted byDKMUL.
 Toanalyse the leverage position of the DKMUL.
1.6 SCOPE OF THE STUDY:
The study is conducted only for organizational level. The aim of the study is to
analyse the financial performance of DKMUL using the financial statement of company for
the period of five years (2010-2015) with in the limited time period of Ten weeks from 3rd
December 2015 to 18th February 2016.The result of financial performance analysis of
DKMUL will be useful information to judge the soundness of DKMUL. For the accurate
analysis various tools are adopted such as comparative balance sheet, comparative profit and
loss account, common size balance sheet, common size profit and loss account, trend
analysis, and ratio analysis particularly solvency ratio, profitability ratio and activity ratio’s
etc.

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1.7 METHODOLOGY ADOPTED:
This study is exploratory in nature. In this analysis2010 to 2015 year’s balance sheet
and profit and loss account is proposed to be used for the study. The study is restricted to
KMF, Mangalore only. Secondary data collected from balance sheet, profit and loss account
of Dakshina Kannada co-operative Milk Producers union Ltd. Beside other published details
in the newspapers, journals and websites shall be used for the study. Financial details also
collected through interviews to DKMUL’s personnel working in the account department. For
the analysis ratios shall be used. Other statistical tools like regression, mean scores and trend
projection is proposed to be used.
1.8 LITERATURE REVIEW:
 Jonas Elmerraji (2005) in his research article on financial performance has observed
that ratio is the tool for investment decision. From this analysis May investors are
decide invest or not invest. Ratios are guide to investor about the investment is he
capable in the field.
 Wild et al (2006) in their research article on financial performance stated that
financial statement analysis is a tool for the investor. A financial performance analysis
explains difficulties of the business and reduces the risks.
 Pandey (2007) in his research article on financial performance has explained that from
the financial analysis we understand about the condition of the business whether it is
good or bad and that business is progressing or declining. One can relate the financial
variables given in financial statements in a meaningful way which will suggest the
actions which one may have to initiate to improve the firm’s financial condition.
 Vanitha and Selvam(2007) in their study entitled “Financial Performance of Indian
Manufacturing Companies during Pre and Post Merger” analysed the pre and post-
merger performance of Indian manufacturing sector during 2000-2002 by using a
sample of 17 companies out of58 (thirty percent of the total population). For financial
performance analysis, they used ratio analysis, mean, standard deviation and‘t’ test.
They found that the overall financial performance of merged companies in respect of
13 variables were not significantly different from the expectations.

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 Ward (2008) in his article of financial performance has argued that financial analysis
ratio help investors to secure his investment.
 Priyaak (2012), in her research article on financial performance explained that it is a
tool in decision making process about the bond, stock and other financial instruments.
Financial statements analysis the process of explaining relationship among financial
statement elements and making comparisons with relevant information.
 Minaxi(2011), his study concluded about financial performance has says that financial
statement analysis is give exact information about the diction making. Financial
performance analysis is the way of analyzing the connection between component
parts of the financial statements to obtain a better understanding of an entity’s
position and performance of the company.
1.9 LIMITATION OF THE STUDY:
 The ratios are only calculating the past so it not indicates the future.
 Time available for the financial analysis was limited.
 The financial data analysed were restricted to the annual report and website only.

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CHAPTER 2: INDUSRTY AND COMPANY PROFILE
2.1 INTRODUCTION
Milk is a white liquid produced by the mammary glands of mammals also this is the
primary source of nutrition for young mammals before they are able to digest other types of
food. It is a vital part of the human diet; it has been regarded as one of the most complete
food, due to its composition consisting of proteins, carbohydrates, fat, minerals and vitamins.
In the 500ml milk consists Fat 15.5gm, protein 18gm, carbohydrate 25gm, potassium
881mg, calcium 693mg, vitamin (B-6) 0.35mg, vitamin A 135µg, zing 2.3mg, pantothenic
acid 1.9mg, biotin 11.7µg, selenium 6mg, iodine 88mg, magnesium 6.5mg, vitamin (B-12)
2.3µg, niacin 5.1mg, riboflavin 1.1mg, thiamine 0.2mg, chloride 587mg, sodium 323mg, iron
0.3µg, folic acid 35µg, vitamin C 6mg and phosphorus 558mg.
Milk may be defined as whole, fresh, clean, lacteal secretion obtained by the complete
milking of one or more healthy milch animals excluding that obtained within 15 days
beforehand or 5 days after calving or such duration as may be necessary to render the milk
practically colostrums- free and consist the minimum prescribed percentage of milk fat and
milk-solids-not-fat. In India the term ‘milk’, unqualified, recommended to cow or buffalo
milk or a combination of two. Throughout the world more than 6 billion consumers are there
for milk and milk products. Over 750 million people live within dairy husbandry households.
Milk is a contributor to improving nutrition and food security particularly in developing
countries. Improvement in livestock and dairy technology offer significant promise in
reducing poverty and malnutrition in the world.
Initially, the capability to digest milk was limited to children as adults did not produce
lactase, an enzyme necessary to digesting the lactose in milk. Milk is therefore converted to
curd, cheese and other products to reduce the levels of lactose. It is excellent growth medium
of microorganism when suitable temperature exists. If it is produced unhygenically and
handled carelessly, it gets contaminated very glibly leading to early spoilage.
Dairy enterprise is an important occupation of farmer. India is the highest milk
producer in the entire globe. 70% people are depends on agriculture so it is backbone of
India. India is well known as the ‘oyster’ of the global dairy industry, with opportunities
profusion for the entrepreneurs globally. It might be dream for any nation in the world to
capitalize on the biggest and fastest growing milk and milk products’ market. The dairy

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industry in India has been witnessing rapid growth with liberalization. The economy provides
good opportunities for MNC’s and foreign investors to release the full probable of this
industry. The important objective of the Indian Dairy Industry is to manage the national
resources in a manner to increase milk production and betterment milk processing using
innovative technology.
The crossbred technology in the Indian Dairy Industry has further improvised with the
viability of the dairy units by increasing the milk production per animal. Then subsequently
milk production has also improved at an exponential rate while the benefits of hike in milk
production also reached the consumers from a relatively lower heighten in the price of milk.
The favourable price environment for milk producers for the Dairy Industry in India however
appeared to have weekend during the 90’s, a digression in the real price of milk being noticed
after the year 1992 and then slowly regained it is majesty after 1992 to till now. In India
dairying from very much earlier is exist as an instrument for social and economic
development. The country’s milk supply comes from millions of small milk producers, who
are dispersed throughout the rural areas. All these farmers surveillance an average herd of
one or two milch animals, comprising cows or/and buffaloes. Mostly ample labour and a
small land base influence farmers to practice dairying an occupation subsidiary to agriculture.
As income from crop production is seasonal lieu dairying provides a stable which is a year-
round income and also an important economic incentive for the elfish farmers.
India had comprehensive milk production in40 years and has become the world’s
largest milk-producing country with a gross output of 84.6 million tons in 2001. The Indian
Dairy Industry has succeed this strength of a producer-owned and professionally managed
cooperative system, despite the facts that many farmers are run small, marginal operations
and selling milk is their sole source of income and a majority of dairy farmers are illiterate.
Almost more than 10 million dairy farmers belong to 96,000 local dairy cooperatives, who
are sell their products to one of 170 milk producers’ co-operative unions who in turn are
supported by 15 state cooperative milk marketing federations.
In India the dairy business has been practiced as rural chalet industry over the years.
Semi-commercial dairy started with the installation of military dairy farms and cooperative
milk union throughout the country towards the end of the nineteenth century. Since
independence this industry has made rapid process. A large number of milk factories are
established also they are advanced in pasteurized bottled milk for Indian dairy products.

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The growth of Indian dairy industry during last 3 decades has been glorious, at more
than 5% per annum and in the 90’s the country has emerged as the largest milk producer.
This is not a little achievement when we consider the fact that dairying in India is largely
stringent that farmers in general maintain dairy animals in proportion to their free crop and
also are available for family labour with little or no purchased input and a minimum of
marketed outputs. The existence of restrictive trade policy milk in the Dairy industry and the
emergency of Amul type cooperatives have changed the dairy farming practices in the
country. Farmers have gained the favourable price for their milk and for their production
which was essentially a self-reliant one which is now being transformed into a commercial
proposition.
In India milk production is dominated by marginal and small land-holding farmers
and also by landless labourers who in aggregate own 70% of the countrywidemilch animal
herd and as the crop production on 78% of the agricultural land still depends on rain, which is
prone to both drought and flood, rendering agricultural income is very low in most of
farmers. So dairying, is subsidiary source of occupation and income, is real solution to most
of the farmers in the society. Generally one or two milch animal permit the farmers to
createacceptable income to break the vicious subsistence agricultural-debt cycle.
The operation flood is the successful Indian dairy development programmed has
analyzed that how food aid can be used as an investment in construct the type of institutional
infrastructure that can bring about national dairy development programs like this, with similar
policy orientations, may prove to be appropriate to dairy development in India. India in the
old year 1950’s was commercially importing around 55000 tonnes of milk powder annually
to meet the urban milk demand. Most of the considerable developments in dairying have
taken place in India in this century only.
The Indian Dairy industry engages in the processing and production of cream and
milk. This industry is involved in the manufacture of various dairy products like yogurt, curd,
cheese, etc. The Indian Dairy Industry concentrates in the attainment, production, processing,
storage and circulation of dairy products. India as nation outlooks first in its share of dairy
production in the international scenario and Indian dairy industry funds about Rs1, 15,970 to
the national economy. The Indian Dairy Industry is in the stage of developing and it is
provides gainful employment to a vast majority of the ruler households. It employs around
8.45 million people on yearly basis from which 71% are women.

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2.1.1 Latest Developments in Indian Dairy Industry
Indian Dairy Industry is the largest milk producer all over the world, around 100
million MT Indian Dairy Industries worth of output in the year 2004-05 total to Rs.1179
billion which approximately equals collective output of paddy and wheat; with 1/5th of the
world’s bovine population. In India the milch animals institutes55% buffaloes, 45%
indigenous cattle, and 10% cross bred cows.
2.1.2 Intensive Dairy Development Programmed (IDDP)
The schemes, modifies under this programmes on the basis of prescription of the
evaluation studies which were launched through Eighth Plan period and is being continued
livelong the Eleventh Plan with an outlay of Rs. 32.49 core for 2009-10.
2.1.3 Dairy Venture Capital Fund
This is formed in the 10th five year plan to bring about structural changes in
unorganized sector, which would measure like marketing of pasteurized milk in a cost
efficientmode, milk handling at village level, quality or the up liftment of traditional
technology to handle commercial balance using modern equipment’s and management skills.
2.2 Growth of dairy business
Dairying is an ancient phenomenon in India. One of the greatest epics “Mahabharata”
gives as the fact that dairying has an age old background. In those days cattle were treated as
god. As the years passed but people started cattle to satisfy their needs of milk and other milk
products. Only after 1940’s dairying was started in an organized form. In those days dairies
were encouraged to make pasteurized butter, mainly for the British army.
The Indian dairy was radically different from what it is to be in 1950-60. In those days
dairying business in India faced many problems from technology to management. But today
the major market in India is dairy producing and selling milk and milk products. The
estimated production of milk in India is 84 tonnes in year 2001.
The National Dairy Development Board (NDDB) was launched by the national
government on 1965 with a mandate to strengthen and expand the cooperative dairy
movement in India. NDDB initiated operation with the intention of making dairying a mode
to a healthier future for millions of grassroots milk producers. Since then, India has emerged
as the world’s largest milk producing nation. Production has increased by approximately 4%

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a year, growing from 21.2 million metric tonnes in 1968 to 84.6 million metric tons in 2001-
capable of supplying India’s very large population with 226 grams of milk per person per
day.
Indian milk manufacture, in distinction to other milk producing countries, is proved by
millions of small and little farmers, including landless dairy producers for whom dairying is
not only for an enterprise but also the key supply of revenue.
The dairy cooperative programme has been crucial to the expansion of India’s dairy
industry. The stimulation for this programme was the victory of the khairadistrict cooperative
milk producers’ union well known as Amul. Seven combining the traditional acquaintance
and industriousness of farmers with professional management, cooperatives aim to maximize
farmers’ and provide member farmers with a variety of services such as veterinary first aid,
basic healthcare for farmers, and animal husbandry services. Asignificantreason in the
success of the cooperative approach has been the involvement of the farmers in their own
development.
The institutional infrastructure, including the village cooperatives, dairy, milk union
and cattle feed plants, and municipal and countrywidemarketing; these all owned and
controlled by the farmers. Progressively linking producers with consumers, cooperatives have
helped empower farmers and transform dairying into a meant of development for India’s
rural people. Though dairy cooperative are establish throughout India, the cooperative
programmehas been most successful in a few states, notably Gujarat. Gujarat’s achievement
can be credited to a huge number of farmer activism and more efficient political institutions.
Over the years, states have popular dairy brands that are given in the table.
Table no 2.1(Popular Dairy Brands):
BRANDS STATE
Amul Gujarat
Vijaya Andhra Pradesh
Verka Punjab
Saras Rajasthan
Nandini Karnataka
Milma Kerala
Gokul Maharashtra

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These brands have earned high degrees of brand identity and customer trust, especially
with in their consecution states.
2.3Global Challenges for the Indian Dairy Industry:-
The Indian dairy business faced challenges from the universal dairy market. Chief
among these challenges is that India, as a signatory to the World Trade Organization, is
obligated to open its milk and milk products markets to international dairy companies.
Because the Indian dairy industry is characterized by relatively high costs in milk yield,
processing, and marketing, and relatively mal quality of milk due to unhygienic handling, this
could potentially pose a significant scare to the industry and its farmers. In 1999, India
imported 10,000 metric tons of milk powder, primarily from Australia, the European Union,
and the United states. In 2000, the industry was threatened by the arrival of low-cost fresh
milk from New Zealand. The imposition of a heavy import tax on milk in 2001 has given the
domestic dairy industry some breathing space. However, the respite is temporary, as the tax is
slated to be abolished before the year 2006, as per the WTO agreement. The cost of milk
production in India is high in part because the average annual yield of Indian Dairy cows is
low- only 987 kg of milk, as compared to 6,273kg in Denmark, 5,289kg in France, 5,462kg in
the united Kingdome, 5,938kg in Canada, 7,038kg in the US, and 11,000kg in Israel. An
Indian Dairy farmer gets paid about US$0.16(7-8Rs) per kg. Milk is handled at several
levels, passing from the farmer, to the local dairy cooperative society (DCS), and the union
before it is pasteurized. The milk is then shipped to retail markets through various supply
chain delivery mechanism, ultimately reaching the consumer after several of “middlemen”.
This multi-layered system not only poses hygiene issues, but each level of handling adds
additional cost. The high costs of domestic production is compounded by the fact that Indian
dairy products cannot be exported to overseas markets due to their poor quality which results
from poor animal health, a polluted and unclean environment, and manual handling delays.
High costs and limited market make the threat from low-priced, high-quality milk and milk
products from international competitors particularly keen. Addressing these challenges and
increasing the competitiveness of the Indian dairy industry will require both improved
technology and better management. The innovative use of appropriate technologies can help
the industry produce high-quality products at a lower cost, while professional management
can ensure a more optimal utilization of the industry’s human and financial resource.
Technology solution will need to address the unique needs of India’s dairy supply chain,

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which runs from its largest cities to its smallest, most remote villages, in an integrated and
locally-relevant way. Because the Indian dairy industry supply chain extends from small
villages where the milk collection happens to big cities where consumers buy dairy products,
it necessarily involves people from very different backgrounds who often speak very dialects.
Appropriate solutions need to be integrated in a way that can address these differences; for
example, applications at the village-level will require a different language interface and
customer support than applications and customer support for marketing and procurement
executives of companies in India’s largest cities.
2.4Father of Milk Revolution:-
Dr.Varghesekurian is the father of milk revolution. He has born in November 26th, 1921
in Calicut of Kerala state. He got graduation in science from Madras University at the age of
19, and Mechanical engineering at the age of 22 and he got many degrees during the year.
Also he awarded with honorary doctorates from many universities in India also America,
Australia, England and Canada. He got many awards by many organizations and institutions
in that “Padmashree”, “Padmabhushan” and “Krushinatha”. He has also been awarded by
international constitutions as “Raman Magsese” award, also plenty awards and certificates
from many institutions and organizations for his valuable contribution to the dairy
cooperative movement in India. His big achievement is the Amul pattern milk cooperative
system. This system has contributed towards economic growth and good living life of poor
people in the country. So his achievement is the good gift for the nation so he named as
“father of milk revolution”.
2.4.1 Three Tier Systems
The organizational pattern for the development of dairy industry in Karnataka was
based on the three tier system known as “AMUL PATTERN” that is dairy cooperative
societies at village level district. Milk union at district level has federation as an apex body at
the state level.
Canara milk union, at Manipal which was established in the year 1975 was established
at Manipal under the direction of the Manipal industrial Trust and National Dairy
development Board (NDDB) providing technical assistance to Udupi, Kundapur and Karkala
district. On 15th February 1985 the government of Karnataka transferred the Management of
Mangalore Dairy to Karnataka Milk Federation (KMF) carrying all taluks of the

12
DakshinaKannada Districts. Thus Manipal and Mangalore were merged as Karnataka Milk
Federation. The DKMUL came into existence on 8th June 1988. The KMF unit Mangalore
dairy along with Puttur chilling center was handed over to Dakshina Kannada Milk
Producer’s Union Limited on 1st September 1988.
Three tire systems are designed under Anand Pattern Co-operation. KMF follows the
same pattern. The model of three tire system is as follows.
Chart no2.1 (Three Tire System):
2.5Evolution of dairy:
As an agency in 1975 to implement the World Bank Aided Dairy Development
projects, Karnataka Dairy Development Corporation was formed, the company grew itself
fast and as it spreads the wings of new found rural economic activity- Dairying all over the
state, the genesis of apex cooperative body took the shape of Karnataka Milk Federation in
1983 encompassing entire State with 13 District Co-operative Milk Unions executing the
various parameters of Dairy activity – organization of Dairy cooperatives, Milk Routes,
Veterinary services, Procurement of milk in two shift of the day, chilling, processing of milk,
distribution of milk and also establishment of Cattle Feed Plants, Nandini Sperm Station,
Liquid Nitrogen Supply, Training Centers – as its main stay.
Karnataka Milk Federation
(State Level)
Village-Level Co-operative Societies
(Apex Level)
Co-operative Milk Federation
(District Level)

13
The entire system was reconstructed on the model of now well known ‘ANAND’
pattern dairy cooperative societies. Eight southern districts of Karnataka was considered
initially with a target of organizing 1800 Dairy Co-operative Societies, four Milk Unions and
processing facilities were set up to the tune of 6.5 lakhs per day by 1984.
Under Operation Flood- II & III, project which started in 1984 & 87 covered the
remaining parts of Karnataka. 13 milk unions are organized in 175 taluks of all districts then
and the field work was extended by organizing more dairy cooperative societies. The
processing facilities i.e. chilling centers, milk dairies and power plants were transferred in
phases to the administrative control of respective cooperative milk unions and the activities
continued to be implemented by these District Organisations. Additional processing facilities
were created & existing facilities augmented every decade with the help of Govt. Zillah
Panchayath and National Dairy Development Board to handle ever increasing milk
procurement without declaring milk holidays. The processing facility as exists at 32.25 lakh
liters per day is further strengthened.

14
COMPANY PROFILE:
2.6 DakshinaKannada Co-operative Milk Producers Union Limited.
The Dakshina Kannada Co-operative Milk Producers Union Limited situated in
Kulshekar and it covers Mangalore and Udupi district. This union started in 1985 has covered
8 taluks with more than 450 functioning DCS. This is 8.5 km far from Mangalore airport.
This union spread over in 12 acre of land also this union is arranged at favourable spot where
all the procurements are available. The office is arranged in nature which is free dust and
offensive smell. This is the largest sector enterprises in terms of sales, assets and net worth.
The DKMU processing and producing milk and milk products under the brand name
NANDINI. Nandini has become the most popular and dependable name in milk and milk
products.
The union can be gap into two locations one for generation and another for
authoritative, account, promoting departments, canteen and workers society is arranged in
main issue of the union. There is a wonderful garden before managerial office, there is a
parking for the vehicles of office persons. There is a different meeting hall. There are security
monitor for the association, advertising divisions and time administration office and the
generation center.
The union built up in the year 1986, covering the Dakshina Kannada and Udupi region
locale. The union has two dairies in Mangalore and Manipal with procedure limit of one do
not have 60,000 clients for each day. Aside from offering conditioned/ homogenized/
institutionalized/ full cream drain, the union additionally delivers and offers Ghee, Curds,
Lassi, Peda, Butter, and Milk Powder.
The normal milk acquisition and deals every day to the union is 2, 50,708.17 for each
day and two do not have a quarter century for each day. Dairy offices in Dakshina Kannada
area began in 1971. Karnataka legislature began dairy with limit of around ten thousand for
each day in Mangalore. It encourages the efficient acquisition and appropriation of milk in
Dakshina Kannada locale.
In 1974 the Canara milk co-operation union was built up in Manipal under the course of
Manipal modern trust. A dairy was built up in Manipal in 1980 with the limit of 10,000 liters
for every day by giving specialized help to Udupi, Kundapur, and Dakshina Kannada Taluk.

15
It set up a co-agent milk union. Thus the acquisition and milk conveyance began with
creature husbandry office and Canara Milk makers union. But on 15th February 1985 the
legislature of Karnataka exchanged administration of Mangalore dairy to Karnataka milk
organization and thus Dakshina Kannada milk union restricted came into presence on 8th May
1986. Its operation covers all taluks of Dakshina Kannada and Udupi districts. Manipal and
Mangalore dairy are working under Dakshina Kannada milk makers union. At present 658
Dairy co-operative societies are functioning of which, 160 are women societies. The
DKMUL has established 86 women Dairy Co-operatives in its jurisdiction under STEP
programme of government of India. At present the aggregate obtainment channel in this
union is one do not have ninety one thousand four hundred and seventeen liters for every day
and distributing around 2.751 lack liters of milk for each day. The negotiators included in
DKMU are SCDCC Bank Limited, syndicate bank, state bank India and enterprise bank.
2.7 Area of operation:-
The area of operation of DKMUL is confined to regional area. This union’s coverage is
entire area of Dakshina Kannada and Udupi district. There are plants in Mangalore &Manipal
and a chilling unit in Puttur.
Puttur chilling center: - The Mangalore dairy is the head for Puttur chilling center and
it has the capacity of 20,000LPD. The Puttur chilling unit chills milk received from district
co-operative societies and dispatched to main dairy at Mangalore. There are 10 employees in
Puttur chilling center. It transports 35,000 liters per day to Mangalore dairy.
Manipal dairy plant: - This dairy has the capacity of 60,000LPD. It deals with
processing and packing of milk for Udupi districts. There are around 70 employees in the
Manipal plant. It has a capacity of 1lakh litter per day.
Mangalore dairy: - Mangalore plant deals with processing of milk and milk products.
It sells around 2, 88,962 liters milk on average day. The demand for milk is increasing
because of increasing in population in the district. There around 710 employees in this dairy
plant, out of which 260 are permanent employees and 450 are on the contract basis. This
dairy is 3rd biggest dairy plant in Karnataka.

16
The DKMU is currently marketing 3, 25,000 LPD of milk and products through 1250
Dealers and 20 Milk parlours. In order to strengthen milk revolution in its jurisdiction, the
union has following technical input activities:
1. Monthly at an average of 17000 Artificial Inseminations are being conducted through
350 A.I.Centers.
2. Monthly 1000 to 1500 cases are treated for infertility.
3. Monthly an average of 1500 cases are treated under Veterinary Routes.
4. All societies are having facilities of First- Aid.
5. In the realm of fodder development, the union has developed fodder-farms
incollobaration with Savanur, Mudarangadi and Thannirpantha DCS.
2.8 Board of Directors
President: - Sri. RavirajaHegde, Kodavoor, Udupi.
Managing Director: -Dr. B.V. Sathyanarayana
Table no 2.2 (Board of Directors):
S.no Directors
1 Sri.Kapudivakarashetty, Uliyaragoli, Udupi.
2 Sri.B.Niranjan, Thanneerupantha, Belthangady.
3 Sri.K.Sitharam Rai, Savanooru.
4 Sri.K.P.Sucharitha Shetty, Kadandale.
5 Dr. Krishna Bhatt K.M, Soorya
6 Sri.Padmanabha Shetty Arkaje, Panakaje
7 Sri.HadduruRajivaShetty, Crooddhabailuru
8 Sri.Ashoke Kumar Shetty,Mudkina jaddu
9 Mrs.JanakiHande, handettu
10 Sri.NarahariPrabhu, Mundabettu
11 Mrs.Veena.R.Rai,Sanyasigudde
12 Sri.Sooryashetty,Thekkatte
13 Sri.Navinchandra Jain ,Borgal gudde
14 Sri.Udaya.S.Kotyan, Irvathur
15 Sri.Narayanaprakash.K, Panaje
16 Sri. Saleem, Deputy Registrar of Co-op.Socities, Mangalore.
17 Shri. B.M. Suresh Kumar, Joint Director (Engineering), KMF, Bangalore.
18 Dr.Tippeswamy, Deputy Director, Veterinary Department, Mangalore.
19 Sri. Rajeev, Representative, National Dairy Development Board, Bangalore.
20 Sri.Nire Krishna Shetty Nominated Director

17
2.9 Nature of business carried
The co-operative societies procure milk from the village producers and transfer to
chilling center or dairy. They carry out two main activities that are processing of milk and
milk products in the dairy and distribution of milk and milk products to the market. In this
process belongings to three various departments they are procurement and input department,
production department, and marketing department. In order to support these departments
there are service departments like administration department, finance department, purchasing
department, management information system, personnel department, store department and
security department.
2.10 OWNERSHIP PATTERN:
DKMUL is a co-operative form of organization. The members are the owners of the
organization. The farmers who are the members in the organization are the real owners of the
organization. The organization forms the bridge among the formers who are the producers
and the customers who consume milk and milk products. The organization which produces
milk form the products that will be further converted to better on the factors of production.
They elect a person who represents farmer’s community who is the chairman of KMF, under
him there is BOD who represents different units who are again chosen by the farmer’s. They
followed by president of the union, followed by managing director who is the executive head
of the union. Under him there will be heads of different functions and other employees under
each functional division head.
2.11 ORGANIZATION STRUCTURE:
DKMUL is headed by the Board which constitutes 12 non-official elected BOD
behalf of the government of Karnataka. The president and the managing Director are the
member of the board DKMU is having a manpower resource of 251 in its branches at
Manipal and Puttur pattern.
Organization structure can be viewed as established pattern of relationship among the
components of the organization. It refers to integration of the activities and authorities in the
organization. The organization structure in DKMU is planned. The function and the objective
of the organization are brought to notice of employees. The authority and implementation are
therefore carried out smoothly.

18
Chart no 2.2 (Organizations Structure):
2.12 OBJECTIVES OF DKMUL
DKMUL is a cooperative Apex Body in the state of Karnataka speaking to
associations of milk makers’ and executing all-round dairy advancement exercises to
accomplish the accompanying goal:
 To promise assured and remunerators market round the year for the milk produced by
the farmer members.
 To make availability of quality milk and other premier dairy products to urban
consumers.
 To build and incubate village level organizations helpful model unit to deal with the
dairy activities.
 To guarantee procurement of inputs for milk production, preparing offices and
dispersal of expertise.

19
 To stimulate country headway by providing place for self employment at village
level.
 To facilitate rural development by providing opportunities for self employment at
village level, preventing expatriation to urban zones, introducing cash economy and
chance for a sustained rectory.
2.13 VISION OF DKMUL
 To march forward with a missionary zeal which will make KMF a trailblazer of
exemplary performance and accomplishments alluring other milk federations in the
nation in pursuit of total emulation of its great deeds.
 To ensure prosperity of the rural milk producers who are ultimate owners of the
federation.
 To promote producer oriented viable cooperative society to impart an impetus to the
rural income, dairy productivity and rural employment.
 To bridge the gap among price of milk procurement and sale price.
 To develop business acumen in marketing and trading disciplines so as to serve
consumers with quality milk, give a fillip to the income of milk producers.
 To complete with MNCs and private dairies with better quality of milk and milk
products and in the process sustain invincibility of cooperatives.
2.14 MISSION OF DKMUL
 Union aims to help its individuals to expand milk creations and produce merchandise
quality grain by developing need based administrations, in this way enhancing their
monetary and social advancement while guaranteeing the budgetary legitimacy of the
union.
 Union similarly endeavours to fulfil the clients by giving constantly great milk items
 Along these lines getting to be number one at national level.
2.15 QUALITY POLICY (ISO 22000:2005):
DakshinaKannadaCo-Operative Milk Producers Union Limited is aimed to the boost
of its milk producers by supporting them to produce surplus milk of good quality. This is
fulfilling the customers’ expectations by delivering milk on time and standard quality also

20
milk products meeting to legal standard. It also booms a strong relationship with suppliers
and motivates the workforce to adhere to good manufacturing practices.
Strengthening infrastructure for quality and clean milk production (CMP) is central
government sponsors scheme which was launched in October 2003, which had the main
objective of improving the quality of raw milk produced at the every village level in India.
DKMUL is focused on: - hard work, honesty and discipline, mutual appreciation, sense
of ownership and belonging, total quality in all appreciation, co-operation,
transparency/equality and thrift/ cost consciousness.
2.16 ENVIRONMENT POLICY:
DKMUL taken safe environment and Eco-friendly technologies.
To reduce pollution DKMUL has control on waste management.
Continual progress in Environmental performance.
All the policies and regulations related to environment welfare are correctly following
by the company.
2.17 PRODUCT PROFILE OF DKMUL
Milk – milk forms a vital part of human diet due to its high nutrition value. It has been
regarded as of the most complete food due to its composition consisting of proteins,
carbohydrates, fat, minerals and vitamins.
Varity in Milks:-
 Toned milk: -Nandini toned milk containing 3.0% fat and 8.5% SNF. It is the most
favourite milk.
 Homogenized Toned milk: -Nandini homogenized milk is homogenized and
pasteurized this contains 3.5% fat. It is available in 500ml packets.
 Full cream milk: - Nandini full cream milk containing 6% fat and 9% SNF. It is
available in 500ml packets.
 Nandini Standardised Milk: - Pure milk containing 4.5% fat & 8.5% SNF. Available
in 500ml.
 Good life pure milk: - this keep the milk for 60 days without refrigeration until
opened. It is available in 500ml packets.

21
 High Fat Creamier Milk: - Pure milk containing 12% & 9% SNF packed in 500ml
terta-fino pack supplied bulk only for Ice Cream manufacturers/ Institutions. Not
available for customers.
Products:-
 Curds
 Cashew Barfi
 Paneer
 Payasa(Mix)
 Badam powder
 khoa
 Sweet Lassi
 Butter Milk
 SamridhiMilk.
 Flavoured Milk
 Mango Lassi
 Mysore Park
 Peda
 Nandini Bite
 Jamoon R.T.E
 Ghee
2.18 WORK FLOW MODEL:
DKMUL is collecting, processing and distributing of milk and milk products in
Dakshina Kannada and Udupi districts. More part of milk is comes from chilling centers ad
from member farmers. The chilling centers are attached to dairies. The chilling center at
Puttur and Manipal are also supplying the milk to the dairy for processing purposes. Portion
of milk is processed and packed at Manipal dairy.
Chart no 2.3 (work flow model):

23
2.19 Infrastructural Facilities
Beside the regular remuneration given by DKMUL in the form of salaries, leave policy
etc, staff welfare expenses are provided in the form of free or subsidized medical treatment,
transportation facilities, recreation facilities, staff food, canteen expenses, staff and welfare
facilities, etc. These expenses are not the employee’s salary but are borne by the employer for
the benefits of employees.
1. Head of all sections are provided with computer’s and telephone facilities in order to
attend to grievance of the customers and conduct official business. Specific email id is
provided for communicate each other and customers but the calls are limited to office
work only.
2. Good housekeeping is provided to keep the office clean. In addition to improve
efficiency, they also ensure safe working conditions within the factory.
22

23
3. Good security is provided in front of the gate and exit point. Without prior permission
no one can allowed to inside except company staffs. All shout sign in the visitors
register book.
4. This union is nearer to NH3, and the company is in the position to get the required
infrastructure facilities like power, water supply at standard rate.
5. Karnataka state electric board supplies electricity at standard rate.
6. The company has its own well-structured building as a administrative block and it
hold a land more than 12 acre so it is the scope for expansion.
7. Proximity and accessibility in the market. As entire site is centrally located within a
radius of 10 km to the city, the company enjoys the many benefits in ways preparing
and accessibility to its market, as also all the 3 mode of transport road railway and air
way are at proximately.
8. It rates employees with two wheelers to amount of cost of 1.5 litres or 10 litres
depending on the basic pay and the type vehicle. Employees with no vehicle get of 8
litres of petrol per month. In the post if assistant manager and above, the employees
who get 4 wheelers will get 25 litres whose base pay will be Rs36600. For others bus
travellers will get 11 litre of petrol. The employees who use two wheelers get 20 litres
of petrol if their pay is Rs8000 per month and above. The employees who use two
wheelers get 15 litres petrol if their pay is less than Rs 8000 per month.
9. A canteen facility is established at the ground floor of the building for all the
employees and guests. They provide clean, hygienic and nutritious food at the cheaper
rate.
10. Employees are given the facilities of co-operative stores within the premises of the
factory. There are many products are available like soap, chocolates, snacks,
photocopy facility etc.
2.20 Competitors Information
Competitors are considerable element in the market. The existence of the competitors is
a curse for the company and boon to the customer. Their products have to fight of the
competitors to penetrate the market and reach to the customers. Dakshina Kannada milk
producers union limited at its union level does not enjoy monopoly in its operations.
Therefore the competition could have been found in the areas of procurement and marketing
of milk.

24
The DKMU dominates the entire market although some of the private company
operating in Dakshina Kannada and Udupi district and Sri Krishna dairy private limited,
HerurUdupi AROGYA milk products, AMUL products and other indigenous sellers.
2.21 SWOT Analysis
SWOT analysis is very important for the organization it associated with strengths,
weakness, opportunities and threats. This analysis is made to know about organizations non
tangible assets. Here strength determine the positive aspects of the organization, weakness
tells the negative aspects of the organization, opportunity shows the path for success and
threat determine the external and internal fear for smooth functioning of the organization over
a period of time.
 STRENGTH:
1. Every employee of the union works accordingly with sincerely and integrity also they
are well known about their duties and responsibilities. Worthy and trained employees
are the greatest strength of the organisation.
2. Well organization dairy cooperative societies with each society viable and operating
in profit.
3. ‘The employee discusses the problem when it should be done and he tries to solve’
this is the greatest strength of the union.
4. Milk producers of the union are having belief in every activity of the union.
5. The union is well maintaining the quality of milk and its products by scientific
method also production process carried out smoothly.
6. Allocation and usage of resources are in good condition also shows good
performance.
7. Finance functions also show good performance in allocation and usage of resource.
8. This union has well maintained security system; from this the malpractices are
reduced.
9. DKMUL has adopted across functional approach to meet the present global scenario.
10. The great strength of the union is every decision shall be taken by the top level
management because to avoid the jeopardizing situations.

25
 WEAKNESS:
1. Transfers of employees in the top level management are affects to organization
activities. Every executive in the top level management are works their own style.
2. Organization is not able to sell all the products of Nandini as the taste because
different products have verity of taste and preferences differ from all over places in
Karnataka.
3. Cost of the production is high comparing to other union also purchasing price of milk
is high and so making the contribution of the union less in terms of financial earnings.
4. This organisation is not possible to produce Nandini’s entire product.
5. The final decision making is the top level management which consumes lot of time.
This cannot be avoiding. This result in the show processing of work. This is very
important factor but the procedure should be done accordingly.
 OPPORTUNITIES:
1. The DKMUL has better opportunity for market expansion.
2. DKMUL is the market leader in Dakshina Kannada district so it has major
opportunity for growth.
3. Readily expanding market facilities to introduce the value added products with high
margin.
4. Certification of ISO future allows having provisions for many other usages of
advanced technology.
5. National dairy development board provides broad opportunities for the dairy progress
and market expansion this is the great opportunity for DKMUL.
 THREATS:
1. Normally for the organization competitors are the major threat. In Mangalore and
Udupi area DKMUL is market chief.
2. Constant increase in the land value is the big threat for organization like the farmers
are vend their properties to profit so that are not available for dairying.
3. This problem reduces the number of formers also it is courses for decline in the milk
procurement.
4. Reduction in the procurement of milk in organization is reduces the customers and
consumers expectations from that the demand will decline. It will hinder the whole
activity of the dairy industry.

26
5. Many multinational stepping into these areas by using modern technology is the major
threat.
2.22 Future Growth and Prospectus
Government of India and National Dairy Development Board signed an agreement
during February 2000 for further strengthening dairy development activities in Karnataka
with an outlay of 250 cores. Consequent to the announcement of new lending terms and
conditions by NDDB through an evolution of the action plan prospective 2011 to enable the
dairy cooperatives to face the challenges of the increased demand for milk products by
focusing the efforts in the four major thrust areas, that are strengthening the cooperatives,
enhancing productivity, managing ability and building national information network plans are
under implementation. To increase in the quality of milk and to minimising the cost of milk
production, providing advanced technology facilities to the farmers with the help of National
Dairy Development Board. For increase usage of milk the KMF (DKMUL) is introduce new
milk parlour.
2.23 Financial statement
Comparative balance sheet for the Year2014-15
Particulars
Year Increase or
Decrease
Percentage
Change
2014 2015
SOURES OF FUNDS:
Capital Account
Share Capital 80556300 88707300 8151000 10.12
ReservesAndSurplus 421491537.7 576170619.8 154679082.1 36.70
Loans (Liabilities)
SecuredLoans 40301343.31 55451537.31 15150194 37.59
CurrentLiabilities
OtherCurrentLiabilities 47129978.4 49543155.15 2413176.75 5.12
Provisions 93930626.66 74939863.26 -18990763.4 -20.22
SundryCreditors 210769121.4 211389531.6 620410.2 0.29
Suspense Account
Suspense Account 0 0 0
Profit& Loss A/C
OpeningBalance 70908903.99 38029974.44 -32878929.55 -46.37
CurrentPeriod 38029974.44 42559697.36 4529722.92 11.91
Less:- Transferred 70908903.99 38029974.44 -32878929.55 -46.37
TOTAL 932208881.2 1098761704 166552822.8 17.87

27
APPLICATION OFFUNDS:
FixedAsset
FixedAssets 177569852.9 262733339.6 85163486.7 47.96
Investments
Investments 429758024.7 580756831 150998806.3 35.14
CurrentAssets
ClosingStock 63867070.29 63985352.57 118282.28 0.19
OtherCurrentAssets 82863124.17 79422324.01 -3440800.16 -4.15
Loans, Advances 25576 13576 -12000 -46.92
SundryDebtors 74838830.63 65603953.5 -9234877.13 -12.34
Cash In Hand 28723639.01 1430270.77 -27293368.24 -95.02
Bank Accounts 50624238.89 44695557.01 -5928681.88 -11.71
AuditObjections 23938524.55 120500 -23818024.55 -99.50
TOTAL 932208881.2 1098761704 166552822.8 17.87
Interpretation:
The above comparative balance sheet shows thattheshare capital increased to 10.12% and
reserves and surplus increased to 36.70% than the base year. In the Secured loans huge
amount of increment has shown than the 2013-14 comparative analysis (1.67). In Provisions
20.22% decreased than the previous year. Increased investment on fixed assets and
investment also increased. Sundry debtors, cash in hand, bank account, loans and advances,
and audit objections are decreased.
Comparative balance sheet for the Year2013-14
Particulars
Year Increase or
Decrease
Percentage
Change
2013 2014
SOURES OF FUNDS:
Capital Account
Share Capital 73977300 80556300 6579000 8.17
ReservesAndSurplus 291504437 421491537.7 129987100.7 30.84
Loans (Liabilities)
SecuredLoans 39626712.31 40301343.31 674631 1.67
CurrentLiabilities
OtherCurrentLiabilities 44558272.8 47129978.4 2571705.6 5.46
Provisions 64719069 93930626.66 29211557.66 31.10
SundryCreditors 132463355.2 210769121.4 78305766.2 37.15
Suspense Account
Suspense Account 0 0 0
Profit& Loss A/C
OpeningBalance 59262849.8 70908903.99 11646054.19 16.42
CurrentPeriod 36376629.52 38029974.44 1653344.92 4.35

28
Less:- Transferred 24730575.33 70908903.99 46178328.66 65.12
TOTAL 717758050.3 932208881.9 214450831.6 23.00
APPLICATION OFFUNDS:
FixedAsset
FixedAssets 157482632.7 177569852.9 20087220.2 11.31
Investments
Investments 331993995.6 429758024.7 97764029.1 22.75
CurrentAssets
ClosingStock 67593322.11 63867070.29 -3726251.82 -5.83
OtherCurrentAssets 34976890.03 82863124.17 47886234.14 57.79
Loans, Advances 39691 25576 -14115 -55.19
SundryDebtors 37021381.19 74838830.63 37817449.44 50.53
Cash In Hand 11305369.12 28723639.01 17418269.89 60.64
Bank Accounts 53851678.87 50624238.89 -3227439.98 -6.38
AuditObjections 23493090.55 23938524.55 445434 1.86
TOTAL 717758051.2 932208881.9 214450830.7 23.00
Interpretation:
This table shows that capital account like share capital and reserves and surplus increased
particularly 8.17% and 30.84%. Current liabilities like provisions and sundry creditors
increase particulaly31.10% and 37.15%. Increased investing on fixed assets and sundry
debtors increased to 50.53%. Advances decreased to 55.19% and cash at bank decreased
6.38% also audit objections increased to 1.86%.
2.23.1 Gross Profit Ratio
Gross Profit Ratio = Gross Profit / Sales * 100
Table no: - 2.3 Gross profit ratio
Year Gross profit Sales Gross Profit Ratio (%)
2010 154833267 2311707337 6.7
2011 169118454 3003815473 5.6
2012 176520357 3670375017 4.8
2013 211828939 4474025577 4.7
2014 250148604 5307074907 4.7
2015 302215909 5934496156 5.1

29
Chart no: - 2.4 Gross profit ratio (%)
Interpretation:
The above table shows that gross profit ratio of the company during the study period had a
decreasing continuously till 2013 from 2010 and in the year 2014 no changes has happen
butin 2015 it shows incrementing phase because 2015 sales decreased to 11% from 18%
comparatively 2013 and 2014, also the cost of goods sold comparatively 2013 and 2014 it are
decreased so it gross profit 0.4 increased.
2.23.2 Net Profit Ratio
Net Profit Ratio= Net Profit / Net Sales * 100
Table no: -2.4 Net profit ratio
Year Net profit Net Sales Net profit ratio (%)
2010 14906620 2311707337 0.64
2011 24730575 3003815473 0.82
2012 34532274 3670375017 0.94
2013 36376630 4474025577 0.81
2014 38029974 5307074907 0.72
2015 42559698 5934496156 0.72
6.7
5.6
4.8 4.7 4.7 5.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2010 2011 2012 2013 2014 2015

30
Chart no: -2.5 Net profit ratio
Interpretation:
Above table it indicate that net profit ratio of the company has the growing period 2010
to 2012 after that it was get in to decreased till 2014 and in the year 2015 it consist as 2014
that 0.72.
2.23.3 Current Ratio
Current Ratio= Current Asset/ Current Liability
Table No- 2.5 Current ratio
Year 2010 2011 2012 2013 2014 2015
Current Assets 195611498 292501829 245121846 228281423 324881004 255271534
Current liabilities 145342946 192506987 161571240 177021628 257899100 260932687
Current Ratio 1.35 1.52 1.52 1.29 1.26 0.98
Chart No- 2.6 Current ratio
0.64
0.82
0.94
0.81
0.72 0.72
0.00
0.20
0.40
0.60
0.80
1.00
2010 2011 2012 2013 2014 2015
1.35
1.52 1.52
1.29 1.26
0.98
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5

31
Interpretation:
During the period then current ratio of the company was less than optimum current ratio
of 2:1. It shows that the investment in current asset and current liability of the company is not
sound.last year of the study it means (2015) it was record least current ratio of 0.98:1 than it
shows excess of current liability than current asset.

32
CHAPTER 3: THEORETICALBACKGROUNDOF THE STUDY
3.1 INTRODUCTIONAND MEANING:
Financial analysis is the initial point for making plans, before using any planning
actions and urbane forecasting. Understanding the past is a prerequisite forantedating the
future.
Financial performance analysis is the process of identifying the financial strengths
and weakness of the firm by properly establishing the relationship between the items of profit
and loss account and balance sheet of the company. This analysis also helps in long term and
short term forecasting and growth of the company. The analysis of financial statement is a
process of evaluating the relationship between the component parts of financial statements to
obtain a better understanding of the firm’s position and operation. This analysis is under
taking by company’s management and also outsiders namely owners, investor, creditors for
knowing company’s position and performance. It provides a summarized view of the
financial position and operation of the firm. It is the assessment of the past performance and
the current position of the company and analysis of the financial changes over a period of
time. It says how well company can used its assets from its business and generate rectory.
Financial performance analysis is very influential instrument to take effective measures in the
existing system and formulation of strategies; also company can make essential changes and
adopt new strategies if it is required.
The nature of financial performance analysis will differ depending on the intent of the
analyst.
 Trade creditors are interested in firm’s ability to meet their claims over a very short
period of time.
 Suppliers of long- term debt, on the other hand, are more concerned with the firm’s
long- term solvency and survival. They analyze the firm’s profitability over the period
of time, its ability to generate cash to be able to pay principal and interest.
 Investors, who have invested their money in the company’s shares, are more
concerned about the company’s earnings or profits.
 Management of the firm would be interested in every element of the financial
analysis.

33
From the process of reviewing and evaluating the financial statement they can
understand financial health of the company also enabling more effective decision making
and take the action about the problems. The performance of the firm can be measured by
its financial output, i.e., by its size of earnings Riskiness and profitability are both of major
factors which jointly determine the value of the concern. Correct financial decisions will
increase the profitability also increase value of the firm. Risk and profitability are both
essential ingredients of a business concern. Financial statement enter financial data and
this information must be evaluated through financial statement analysis to become more
useful to who like to invest the company, stakeholders, managers and other interested
parties.
3.2 TOOLS OF THE STUDY:
Normally for the study of financial performance analysis the analyser are using
underneath given tools:
 Ratio analysis
 Common-size statement
 Comparative statement
 Trend analysis
3.2.1 Introduction to Ratio Analysis:
Ratio analysis is a very powerful tool of financial analysis. A ratio is benchmark for
evaluating the performance and financial position of a firm. Ratio analysts will use ratios as a
primary tool for understand the financial health and performance of a company. The absolute
accounting figure of the financial statement of the company will not provide meaningful
understanding of the performance and financial position of the company.
An accounting figure conveys meaning when it is related to some other relevant
information. For the ratio analysis financial statement of the company is required because
they summarize data in a form easy to understand and compare. Ratio helps to summarize
large quantities of financial data and to make qualitative judgment about financial position of
the firm.

34
The ratio analysis involves comparison for a useful interpretation of the financial
statements. A signal ratio will not provide a meaning full and favourable condition of the
firm. It should be compared with some standards, that are 1) past ratio, this ratios calculated
from the past financial statement of the firm. 2) Industry rations, ratios of the industry to
which the firm belongs. 3) Projected ratios, ratios developed using the pro forma, financial
statement of the same firm. 4) Competitors’ ratios, ratios of some selected firms, most
progressive and successful competitor, at the same point in time.
Time series analysis- The easiest way to evaluate the performance of a firm is to
compare its present ratios with the past ratios. When financial ratios over a period of time are
compared, it is notable as the time series analysis.
Cross- sectional analysis-One more way of comparison is to compare ratios of one
firm with some selected companies in the same industry at the same point in time. This kind
of comparison is known as the cross- sectional analysis or inter-firm analysis.
Industry analysis- To determine the financial condition and performance of a firm,
its ratios may be equated with average ratios of the industry of which the firm is a member.
This short of analysis, known as the industry analysis, helps to diagnose the financial
standing and capability of the firm vice versa other firms in the industry.
Pro forma analysis-Sometimes future ratios are used as the standards of comparison.
Future ratios can be flourished from the projected or pro forma financial statements. The
comparison of current or past ratio with future ratio shows the firm’s relative strengths and
weaknesses in the past and the future.
Ratio analysis helps to insight company’s problems and leads to right questions and
helps to develop right historical perspective. This understanding is essential to forecast future
performance. Ratio analysis calculated by seeing balance sheet, company’s cash flow
statement and income statement; the ratios of one item - or a combination of items- to another
item or combination are then calculated of different sizes.
To evaluate company’s operating and financial performance such as its efficiency,
liquidity, profitability and solvency this ratio analysis has used. The culture of studying ratio
analysis over a period for to find out whether they are declining or improving. Ratio analysis
is a cornerstone of fundamental analysis. Myers detailed as, “Ratio analysis is a study of
relationship among the various financial factors in a business”. The analysis is compared

35
across different companies in the same sector for how they are solve the problem and how
they overcome the problem and what strategy they are using.
3.2.2. Meaning of Ratio Analysis:
A ratio is defined as “the indicated quotient of two mathematical expressions” and as
“the relationship between two or more things. It is a widely – used tool of financial analysis.
Ratio analysis can used to compare the relationship between risk and return in a firm.
3.2.3 Importance of Ratio Analysis
Ratio analysis is widely used tool of financial analysis. It shows a reckoning
relationship between two figures. The ratio implies that analysis of financial statements with
the aid of accounting ratios. The systematic use of ratio in the analysis help to interpret the
financial statements of the company also position of the company as well as its historic
performance. The ratio analysis is the combine of relationship between figures, it indicate the
performance the company also it is an assessment of the significance of one figure number in
relation the other.
 Ratio analysis is a powerful analytical tool for measuring performance of the
company.
 Ratio analysis helps to the management to make further projections by seeing past
performance.
 The ratio is compared with standard ratio and this shows the degree of operativeness
usage of firm total assets, etc.
 Ratio analysis concentrates on the inter-relationship among the figures appearing in
the financial statements.
 With the help of ratio analysis can compare the performance of the company which
are in the same sector.
 Short- term liquidity position and long-term solvency position can be easily
ascertained with help of ratio analysis.
 Ratio analysis allows interested persons to make evaluation of certain aspects of the
firm’s performance.
 The proper ratio analysis will evaluate the proper condition and performance of the
company.

36
3.3 TYPES OF RATIO:
1. Solvency ratio
 Liquidity ratio (short term solvency ratio)
 Leverage ratio (long term ratio)
2. Profitability Ratio
3. Activity ratio
Liquidity ratios measure the firm’s ability to meet current obligations, leverage ratios
show the proportions of debt and equity in financing the firm’s assets, activity ratios reflect
the firm’s efficiency in utilizing its assets and profitability ratios measure overall
performance and effectiveness of the firm. Each of these ratios is discussed below.
3.3.1 Solvency ratio:
“The ability of a company to meet its long-term and short-term financial obligation” is called
solvency. Solvency is intrinsically in business, if the firm fail to solve its solvency then it has
to face the bankruptcy; if the company is solvent also can face the bankruptcy because of
lacks of liquidity.
3.3.1.1 Liquidity ratio/ Short term ratio:
Liquidity is a company’s ability to meet its short-term financial obligation; short term
solvency ratio is the other word of liquidity ratio. These ratios seek to determine the ability
of a firm to avoid financial distress in the short- run. The short term creditors of the
company like bankers and suppliers of raw material, are more concerned with the firm’s
current debt- paying ability. The most important liquidity ratios are current ratio, quick
ratio and cash ratio.
 Current ratio :
This ratio calculated by dividing current assets by current liabilities. Within a year
which and all current assets converted into cash that all comes under current asset side.
All obligations maturing within a year are included in current liabilities. This ratio
measures the firm’s short- term solvency. In this ratio greater the ‘1’ means the firm has
more asset than the current liability so this says it can solve its solvency. 2:1 ratio treated
as standard ratio. The current ratio is also called as solvency/working capital ratio.

37
 Quick ratio:
Quick ratio is the ratio of quick or liquid asset to current liability. Quick ratio also
called as acid- test ratio. This is the relationship between quick asset and current
liabilities. In the current asset side of the balance sheet all are have more liquidity except
inventory , because it required some time for realizing into cash; their value also has a
tendency to fluctuate, so hear in the calculation of current assets the inventories are not
included so it would be quick asset. This ratio is found out by dividing quick assets by
current liabilities. A quick ratio of 1:1 is considered to represent a satisfactory current
financial condition.
 Cash ratio:
Cash is the most fluently available funds can pay off current liabilities and
obligation also it is the most liquid asset. This ratio is found out by dividing cash and
cash equivalent assets by current liabilities. Trade investment or marketable securities are
equivalent of cash. Commonly creditors are measure this ratio for identify the company’s
liquidity and how can cover short term liabilities also how it can service debt.
3.3.1.2 Leverage Ratio/ Long term ratio:
Long- term creditors are more concerned with the firm’s long- term financial strength,
like debenture holder, financial institutions, etc. These ratios are calculated for measure
the financial risk and the firm’s ability of using debt to shareholders’ advantage. The
leverage ratio indicates – the extent to which the firm has relied on debt in financing
assets. These ratios computed from the profit and loss items by determining the extent to
which operating profits are sufficient to cover the fixed charges.
 Debt Equity Ratio:
This measures the relation between debt and equity in the capital structure of the
business. In other expression, this ratio shows the relationship between the obtained
capital and owner's capital. A high debt equity ratio may be followed to adopt good thing
about cheaper personal debt capital. This ratio shows the relative claims of creditors and
shareholders against the assets of the firm alternatively; this rate indicates the relative
dimensions of debt and collateral in financing the property of the firm.

38
 Interest Coverage Ratio:
The interest coverage ratio or the times-interest-earned is utilized to test the firm’s
debt- servicing capacity. The interest coverage ratio is computed by dividing earnings
before interest and tax by interest charges. This proportion indicates the number of times
the interest charges are secured.
3.3.2 Activity Ratio
Activity ratios are computed to gauge the proficiency with resources of a concern have
been utilized. These ratios are also called activity ratios because they exhibit the speed with
which resources are being transformed over into deals.
 Inventory Turnover ratio:
This ratio demonstrates the productivity of firm in producing and selling its products. In
other words it designates the number of times inventory is replaced during in a year. It
measures the connectionamong thestock leveland cost of goods sold.
 Fixed Asset turnover ratio
This is a troublesome arrangement of ratios to translate, as resource qualities depend on
historic cost, an increase in the fixed asset figure may result from the replacement of an
asset. Figure may result from the substitutionof an asset at an expanded cost or the buying
of an extra resource planned to improve production capability.
 Debtors turnover ratio
Receivables turnover proportiongivesa knowledge into the adequacyof the
organization's credit strategies. It gauges the level of investment in receivable expected to
bolster the company’s business level.
3.3.3 Profitability Ratio
These proportions measure the consequence of business operations or general execution
and viability of the firm, the ratios like gross profit ratio, operating or return on capital
utilized. The distinctiveprofitability ratios have been given in the outlinedisplaying the

39
arrangement of proportionsas per test. Mostly, 2 sorts of profitability ratios computed are in
connection to deals, and in association to speculations.
 Gross profit ratio:
Gross profit is the varianceamong sales and the manufacturing cost of goods sold.
Gross profit is related with the sales of product. Gross profit margin ratio demonstrates the
productivity with which management produces each unit of product. Gross profit is the
consequence of the connectionamong prices of sales volume and costs of goods.
Aadjustment in the gross margin can be brought about by changes in any of these
components.
 Net Profit Ratio
Net profit is obtained when operating expenses, interest and tax are abstracted from the
gross profit. The net profit margin ratio is measured by dividing profit after tax by sales.
This proportion is the overall measure of the firm’s capability to turn each rupee sales
into net profit.
3.4 Advantage of Ratio Analysis for Shareholders and Prospective Investors:
1. The government agencies will analysis ratios for to review the performance of the
company.
2. Shareholders and upcoming investors will analysis ratio for taking decision about
whether to invest or not to invest.
3. The financial institution which is providing long term debt to the company that will
analyse the ratios for project appraisal and debt servicing capacity of the firm.
4. Brokers who provide working capital will analyse ratios for appraising the credit
worthiness of the firm.
5. The financial analyse ratio for making comparisons and recommending to the
investing public.
3.5 Limitations of Ratios analysis:
The following limitation must be taken into account.
1. The standards will differs from industry to industry. Comparison of ratios of ratio of
firm belonging to different industries is not suggested.

40
2. Since ratios are calculated from past records, there are no indicators of future.
3. Proper care should be exercised to study only such figures as have a cause and effect
relationship, otherwise ratios will only be meaningless or misleading.
4. The reliability and significance attached to ratios depend on the accuracy of data
based on which ratios are calculated.
3.6 Common Size Statement:
The common size statements belongs, balance sheet and income statement these are
shown in analytical percentages. Also in this statement the figures are shown as percentage of
total assets, total liabilities and total sales. Hear the total assets are taken as 100 percent and
different assets are expressed as a percentage of the total, likewise various liabilities are taken
as a part of total liabilities.
Advantages of Common-Size Statement:
 The common size statements are easily understandable.
 This helps to compare between two or more firms and two or more years balance
sheet and income statement.
 The perfect common- size statement helps in the formulation of future financial
policies.
3.6.1 Forms of common- size statement:
 Common size profit and loss account
 Common –Size Balance Sheet
3.6.1.1 Common size Profit and Loss Account:
The items in income statement can be shown as percentage of sales to show the relation
of each item to sales. A considerable relationship can be established among items of income
statement and volume of sales. The increase in sales will certainly increase administrative or
financial expenses and selling expenses.

41
3.6.1.2 Common –Size Balance Sheet:
A statement in which balance sheet items are expressed as the ratio of each liability to
total liabilities and the ratio of each asset is expressed as a ratio of total assets is called
common-size balance sheet.
3.7Comparative Statement:
Comparative statement analysis is a simple method for tracing periodic changes in the
financial performance of a company. This is the statement of different period of time. This
statement contains items at least for two periods. Changes and increase and decrease in
income statement and balance sheet over a period can be shown in two ways, one is drawing
columns for aggregate amount or percentage or both of increases and decreases can indicate
aggregate changes, another one is recording percentage calculated in relation to a common
base in special columns, shows relative or proportional changes.
According to A.F Foulke, “Comparative financial statements are statements of the
financial position of a business so designed as to provide time prospective to the
consideration of various elements of financial position embodied in such statements”.
3.7.1 Objectives of Comparative Statements:
 From comparative statement analysis we recognise the changes in the financial
performance it refers to take decisions and adopt new strategies. Also this analysis
helps to make further analysis.
 This analysis gives qualitative information about the firm’s condition about solvency,
liquidity, profitability and so on. The data are exacted from the analysis of financial
statements.
 From the help of past financial data of the company, the firm’s get easy to make
preparation of forecasting and planning.
3.7.2 Rules of Comparative Statement Analysis:
 The change is situated in absolute rupee amount and also in percentage.
 If there is no amount for the base period, no percentage change is computable.

42
 When the base period amount is small, a percentage change can be computed but the
number must be interpreted with caution.
 When an item has a value in the base period and none in the next period, the decrease
is 100%.
 If in the two year, one year is negative amount and another one year is positive
amount then there is no meaning full percentage change can be computed.
3.7.3 Forms of Comparative Statements:
 Comparative profit and loss account
 Comparative balance sheet
3.7.3.1 Comparative Profit and Loss Account:
The comparative income statement gives an idea to the business about the progress over
a period of time; also this gives the results of the operation of a business. The changes in
absolute data in money values and percentages can be determined to analyze the profitability
of the business.
The analyst must explain the items in income statement that are Increased or decreased
in: - gross profit, operating profit, operating expenses, sales, cost of goods sold, net profit etc.
3.7.3.2 Comparative balance sheet:
The comparative balance sheet analysis is the study of the items of the same balance
sheet and comparing, two or more balance sheet of same business on different dates. The
changes are arrived by comparing the balance sheet items at the beginning period and end
period this helps to form opinion about the business. The change in periodic balance sheet
items reflects the conduct of a business.
Comparative balance sheet have five columns in that first on is meant for particulars it
means details about assets and liabilities to be named, second one is for figures for past year
and third one is for figures for current year, forth columns is meant for absolute change and
last one is meant for percentage changes.

43
3.8 Trend Analysis
3.8.1 Definition of ‘Trend Analysis’:
The actual meaning of ‘trend’ is future possibilities. The dashing and influential
management tries to understand the actual performance and future prospects of the business.
With the help of technical analysis in stock the investor predict the future movement by
seeing past data. The trend analysis is based on the ideas, why because it tells what has
happened in the past on that based the analyser will assume what will happen the future.
According to Kohler’s, Trend analysis is defined as “the average of times series data in
order that a smooth curve shoeing general growth or decline may be developed for some past
periods of time”.
3.8.2 Objectives of Trend Analysis:
 This will indicate the actual and prospective performance of the business and
profitability of the enterprises.
 This analysis is guides in decision making regarding future line of action.
 Showing operation efficiency of the business

44
CHAPTER -4: DATA ANALYSIS AND INTERPRETATION
4.1 SOLVENCY RATIOS:
4.1.1 LIQUIDITY RATIOS / SHORT TERM SOLVENCY RATIO:
The liquidity Ratios demonstrate whether it will be feasible for a venture to meet it transient
commitments or liabilities out of its short-term assets or resources. It additionally demonstrate
whether an endeavour have adequate working funding to bear on its everyday operations.
4.1.1.1 Current ratio:
Current ratio is the one of the most vital equipmentto measure the short term liquidity. The
current ratio shows the firm's capacity to pay its current liability out of its current assets. The
perfect of the firm ought to be 2:1.
Current Ratio= Current Assets/ Current Liabilities
Table No-4.1 Current Ratio
Year 2010 2011 2012 2013 2014 2015
Current Assets 195611498 292501829 245121846 228281423 324881004 255271534
Current Ratio 1.35 1.52 1.52 1.29 1.26 0.98
Chart No- 4.1 Current Ratio
1.35
1.52 1.52
1.29 1.26
0.98
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
2010 2011 2012 2013 2014 2015

45
Interpretation:
Current ratio measures short term solvency of the company, it has to maintain 2:1 range of
current ratio. In the year 2010 to 2011 the short term solvency position of the company is
increases but after that it goes on decline so it indicates that company is not having current
assets to solve the current obligations and present current ratio is 0.98:1.
4.1.1.2 Quick Ratio:-
The quick ratio measures anorganization's capacity to meet its transient commitment with
itsmost liquid assets. Quick assets incorporatethose current assets that apparently can be
immediately changed over tocash at near their book values.. It is the ratio of cash and other
liquidassetsof an association in contrast with its present liabilities.
Quick Ratio= Quick Assets / Current liabilities
Table No-4.2Quick Ratio
Year 2010 2011 2012 2013 2014 2015
Quick Assets 164287518 229458936 200393945 160688101 261013933 191286181
Current Ratio 1.13 1.19 1.24 0.91 1.01 0.73
Chart No- 4.2 Quick Ratio
1.13
1.19 1.24
0.91
1.01
0.73
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
2010 2011 2012 2013 2014 2015
Quickt Ratio

46
Interpretation:
Quick ratio indicates that quick assets to honour to immediate clime. Standard ratio of quick
ratio is 1:1 so highest the ratio is betters the coverage. In above table in 2010 to 2012 it keep on
increasing after that in the year 2012 it decreased to 0.91 and again increased in 2014 to 1.01
this shows good position in solvency but in 2015 it decreased to 0.73 so the company loosing
the solvency capacity in quick ratio.
4.1.1.2 Cash Ratio:-
Cash ratio is the proportion of cash and equivalents of aorganization to its current liabilities.
It is an amazing liquidity ratio where just cash and cash reciprocals are compared with the
present liabilities
Cash Ratio= Cash + Cash Equivalents/ Current liabilities
Table No-4.3CashRatio
Year 2010 2011 2012 2013 2014 2015
Cash 47450286 105038675 71460628 65157048 79347878 46125827.8
Cash Ratio 0.33 0.55 0.44 0.37 0.31 0.18
Chart No- 4.3 Cash Ratio
0.33
0.55
0.44
0.37
0.31
0.18
0.00
0.10
0.20
0.30
0.40
0.50
0.60
2010 2011 2012 2013 2014 2015
Cash Ratio

47
Interpretation:
Cash is most liquid asset, marketable securities and trade investments are equivalent to cash.
Cash ratio more than one is indicate that firm has liquid resource, which are low in
profitability. DKMUL carried small amount of cash in 2010 and in 2011 it increased to 0.55,
after to hike in 2011 it keep on decreasing to 2015. In the present scenario cash position of the
company is 0.18.
4.1.2 LEVERAGE RATIO/ LONG TERM SOLVENCY RATIO:
4.1.2.1Debt Equity Ratio:
The relationship in the middle of obtained and proprietor's capital is a mainstream measures of
a long-term financial solvency of a firm and this relationship appeared by a Debt-Equity ratio.
Debt Equity Ratio= Total Debt/ Net Worth
Table No-4.4 Debt Equity Ratio
Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Total Debt 69913360 65031369 51965831 39626712 40301343 55451537.3
NetWorth 119216388 220195280 289645131 334585898 471151999 636276080
Debt- Equity Ratio 0.59 0.30 0.18 .12 0.09 0.09
Chart No-4.4Debt Equity Ratios
0.59
0.30
0.18
0.12
0.09 0.09
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

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