A Presentation on Working capital mgmt of Madhur Dairy

Presented To: Prof. Sarita Kumar

Presented By: Avantika Vihol (11MBA33)

Flow of Presentation

Introduction of Industry Company Information Research Methodology Data Analysis and Interpretation Conclusion Recommendation Bibliography

Introduction of Industry

Dairy Industry is crucial importance to India. A lots development in the dairy business by co-operative ways . In India, the business of milk has become historical.

Introduction of Madhur Dairy

1971 : Established and registered of the Gandhinagar District Co-operative Milk Producers Union Ltd. Objective: Excellent quality, timely supplies, customer satisfaction To pay maximums milk producers Financial Planning Improving plant performs

1992 : first began movement of arranging village level meeting 1996 : Plant on capacity was expanded up to 60,000 LPD 2002-03 : Plant on capacity was more expanded 200,000 LPD

PUBLICATION : This union publication Madhur Patrika quarterly for his member. BRAND IMAGE : Product of M.D. famous in capital of Gujarat as a Testes of Capitals with the brand MADHUR. Steering : Name of managing Director: Mr.Rohit. Mehta Name of chairman: Dr. Shankarsinh R. Rana

Finance Department

The heart of any institute is the accounts of business lending is happened it the function of the account section is to prepare account at the end of the year, to prepare account of co-operative institution to present account of co-operative institute against the member and to show transparent business

Research Methodology

Primary objective: TO Know financial the financial position of madhur dairy through financial tools. Secondary Objectives : To Evaluation of Liquidity position and Profitability of Madhur Dairy. To analyze the relationship between working capital and profitability. To analyze the level of current assets with relation to current liabilities. To identify the financial strength & weakness of the dairy

Working Capital Management

Introduction Meaning Concepts Need

Objective Working Capital Mgmt

Underline the need for investing in current assets and elaborate the concepts of operating cycle. Highlight the necessity of managing current assets and current liabilities.

Explain the principle of current assets investment & financing

Focus on the proper mix of short term and long term financing for current assets.

Objective of Madhur Dairy

To assess the significance of working capital by selecting few important parameters such as, working capital ratio, acid test ratio, current assets to total assets, total assets to sales ratio, age of inventory, debtors etc. To make item wise analysis of the elements or component of working capital to identify the item responsible for changes in working capital. To study liquidity position of the company by taking four measures at time namely, inventory to current assets, debtors, to current assets cash and bank to current assets and loan & advances and other assets to current assets.

Limitation of Working capital mgmt of Madhur dairy

The study is limited for the period . The data used in this study have been taken from published annual reports and auditors report only. As per the requirement and necessity some data are grouped and sub grouped. For making my study clear cut, I have used Ratio techniques of the financial management. There may be limitation to this study because the study duration (SIP) is very short and its not possible to observe every aspect of working capital management practices.

Data and Methodology of working capital

Analysis of liquidity ratio. Analysis of liquidity position. Analysis of operating cycle. Analysis of components of gross working capital.

Working capital = C.A - C.L

Particular
Current assets Current liabilities

2009-10
17,69,56,593

2010-11 33,93,88,557
31,20,33,490

2011-2012 21,12,60,469
24,81,43,851

12,78,16,108

Net working capital 4,91,40,485

2,73,55,067

(36,88,33,82)

Analysis of Liquidity Ratio

Current Ratio: C.A / C.L

Years 2009-10 2010-11 2011-12

Current Assets
Current Liabilities Current Ratio

17,69,56,593
12,76,16,108 1.38:1

33,93,88,557
31,20,33,490 1.09:1

21,12,60,469
24,81,43,851 0.85

Current Ratio
1.6 1.4 1.2 Ratio 1 1.38 1.09 0.85

0.8 0.6 0.4 0.2 0

2009-10 2010-11 Year 2011-12

2. Liquid Ratio:

Liquid Ratio: L.A / L.C

2009-10 15,00,27,439 2010-11 29,27,35,589 31,20,33,490 0.93:1 2011-12 19,38,01,209 24,81,43,851 0.78

Years C.A - Inventory

Liquid Liabilities 12,76,16,108 Liquid Ratio 1.17:1

Liquid Ratio
1.4 1.2 1 0.8 0.6 0.4 0.2 0 1.17 0.93 0.78

Ratio

2009-10

210-11 Year

2011-12

3.Abslute Ratio

A.L.R = C.A Receivable /C.L

2010-11 23,42,62,226 31,20,33,490 0.75:1 2011-12 13,38,96,305 24,81,43,851 0.54

Years 2009-10 C.A. Inventory- 10,90,94,962 Debtors Current Liabilities 12,78,16,108 Absolute Test Ratio 0.85:1

Absolute Test Ratio

1 0.8 Ratio 0.85 0.75 0.54

0.6
0.4 0.2 0 2009-10 2010-11 Year 2011-12

4.Inventory to sales

Inventory to sales = inventory / sales.

2009-10 26929159 1279339009 to 0.02 2010-11 46652968 1541895451 0.03 2011-12 1,74,59,260 1,70,69,44,059 0.01

Years Inventory Sales Inventory sales

Inventory to sales
0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 0.03 0.02

0.03

Inventory to sales

2009-10

2010-11

2011-12

5.Debtor to sales

Debtors to Sales: Debtors / Sales

2009-10 40932472 2010-11 19193850 2011-12 5,99,04,895

Years Debtors

sales

1279339009

1541895451 0.01

1,70,69,44,059 0.03

Debtor turnover 0.03 ratio

Debtor turnover ratio

0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 0.03 0.03

0.01

Debtor turnover ratio

2009-10

2010-11

2011-12

6.Current assets to Total assets

Current assets to total assets ratio: C.A / total assets

Years Current assets Total assets CA to Ratio 2009-10 176956593 209863751 2010-11 339388557 395444575 0.86 2011-12 21,12,60,469 416660099 0.51

TA 0.84

CA to TA Ratio
1 0.8 0.6 0.4 0.2 0 2009-10 2010-11 2011-12 0.84 0.86 0.51 CA to TA Ratio

7.Current assets to sales

Current assets to sales ratio: C.A / Sales

2009-10 176956593 1279339009 2010-11 33938857 1541895451 0.22 2011-12 21,12,60,469 1,70,69,44,059 0.12

Years Current assets Sales

CA to sales 0.14 ratio

CA to sales ratio
0.25 0.2 0.15 0.1 0.05 0 2009-10 2010-11 2011-12 0.14 0.12 CA to sales ratio 0.22

Cash Management

Introduction Evaluation 1. cash to current assets 2. cash turnover ratio 3. average cash of sales

1. Cash to current Assets Ratio

Cash to Current Assets Ratio = Cash / Current Assets

2009-10 5,87,43,344 176956593 2010-11 16,31,06,967 33938857 2011-12 8,29,37,978 21,12,60,469

Years Cash Current assets

Cash ratio

to

CA 0.33

4.80

3.90

Cash to CA ratio
6 5 4.8

4
3 2 Cash to CA ratio 0.33 2009-10 2010-11 0.22 2011-12

1
0

2. Cash Turnover Ratio

Cash to Turnover Ratio = Total current liabilities / Cash
Years Total C.L Cash Cash Turnover ratio 2009-10 12,78,16,108 5,87,43,344 2.18 2010-11 31,20,33,490 16,31,06,967 1.91 2011-12 24,81,43,851 8,29,37,978 2.99

Cash Turn Ratio

3.5

3
2.5 2 1.5 1 0.5 0 2009-10 2010-11 2.18 1.91

2.99

Cash Turn Ratio

2011-12

3. Average age Ratio

Average Age of Cash = 360 / Cash Turnover Ratio

2009-10 360 2010-11 360 1.90 189 2011-12 360 2.99 120

Years Total days

Cash turn ratio 2.18 Avg age of 165 cash

Age of inventory
200 150 100 50 0 2009-10 2010-11 2011-12 165 189

120
Age of inventory

Conclusion

Current ratio, liquidity ratio etc. are declining as compare to previous years. Operating cycle of the company is less. Cash turnover ratio is declining. Raw material inventory turnover is also declining.

Recommendation

Company should increase the current ratio & liquid ratio by increasing the investment in the current assets. Company should try to make its operating cycle small. Company should try to increase the cash turn over Company should try to increase the turnover of the raw material inventory

Bibliography

Secondary information: Annual reports of the madhur dairy Books: Prasanna Chandra, 7th edition, Financial Management, Tata McGraw Hill, New Delhi. I. M. Pandey , Financial Management 8th Edition, Vikash publishing house Pvt Ltd, New Delhi Websites: www.madhurdiry.com www.working.com