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307862898 Ratio Analysis Project

Masters in Business Administration (Acharya Institute of Management and Science)

Studocu is not sponsored or endorsed by any college or university

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A PROJECT REPORT
ON
“RATIO ANALYSIS”
FOR

“SHREE WARANA SAHAKARI DUDH UTPADAK PRAKRIYA

SANGH LTD.”

UNDER THE GUIDENCE OF

TRUSHNA KANDELAKR

PREPARED BY

MISS RUPALI WAGHULDE

SEAT NO:-

IN PARTIAL FULFILLMENT OF BACHELOR OF

BUSINESS ADMINISTRATION

(BBA)

SUBMITED TO UNIVERSITY OF PUNE

THROUGH

DNYANSAGAR ARTS AND COMMERCE COLLEGE

BALEWADI, PUNE-45
YEAR-2015-16

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ACKNOWLEDGMENT

This project report is the part of study of ‘Bachelor Degree in

Business Administration.

I would like to thank my project guide Mrs. Trushna Khandelkar

under whose guidance, I have been able to complete this project report.

Then I would like to thank principal of DACC Prof. Dr. sajid alvi to
give this opportunity to do the project report.

I take this opportunity to convey my thanks to for giving me an

opportunity to do this project from the company and for providing me all the
necessary support. I am deeply grateful to the at off of Pune and company for
their for valuable guidance and co-operation to the preparation of this project
report.

I would like to thank to all who have given me all necessary

information during my study.

Rupali G. Waghulde

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DECLARATION

I WAGHULDE RUPALI GANESH, do hereby declare and confirm that the

project entitled “RATIO ANALYSIS OF SHREE WARANA SAHAKARI
DUDH UTPADAK PRAKRIYA SANGH LTD” submitted in the partial
fulfillment of the Bachelor of Business Administration, at DYNASAGAR ATRS
AND COMMERCE COLLEGE PUNE 45 is my original work and not submitted
for the award of any other degree, diploma, fellowship, or any other similar
title or prizes.

Place :- Pune RUPALI WAGHULDE

Date :- T.Y.BBA

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INDEX

CHAPTE PARTICULARS PAGE

R NO. NO.
1. RESEARCH METHODOLOGY 01

2. CONCEPTUAL BACKGROUND 05

3. ORGANIZATION PROFILE 19

4. DATA INTERPRETATION 34

5. FINDINGS AND SUGGESTIONS 53

6. BIBLIOGRAPHY 57

INTRODUCTION

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All the manufacturing organizations use different types of the financial

concepts for the purpose of understanding the financial position of the firm.
RATIO ANALYSIS is one of the popular tools used to evaluate the financial
position of any organization. With the help of Ratio analysis we can simply
identify the financial strengths as well as weaknesses of the organization. In
such case there will be need of establishing relationship between balance
sheet and the profit and Loss account. The financial analysis can be done by
management of the firm or by outside parties i.e. Owner, creditors, investors,
and other.

Thus the nature of analysis will differ depending on the purpose of

analysis. The use of ratio analysis is not confined to financial manager only.
There are different parties interested in the ratio analysis for knowing the
financial position of a firm for different purpose. In view of various users of
ratios, there are many types of ratios which can be calculated from the
information give in the financial statements. The particular purpose of the
user determines. Ratio analysis is much help in financial forecasting and
planning is looking ahead and the ration calculated for a number of years
work as a guide for the future. Meaningful conclusions can be drawn for
future from these ratios. Thus ratio analysis helps in forecasting and
planning.

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OBJECTIVES OF THE STUDY

The study is undertaken to achieve the following objectives.

1. To understand concepts of RATIO ANALYSIS in detail.

2. To analyze and interpret the data pertaining to RATIO ANALYSIS of the

unit under study.

3. To calculate the ratios and find the financial position, financial

strengths as well as weaknesses of the organization.

4. To suggest the meaningful and constructive measures based on data

analysis and interpretation.

5. To find out solvency condition of the company.

METHODOLOGY OF THE STUDY

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The following methodology is adopted for the collection of required.

Data The data for the above study is collected through primary as well as
secondary sources.

1. Primary Source:
The data for the above study is collected by having discussion with the
concern officers and accountants of the company.

2. Secondary sources:
The data collected through The Secondary sources are.

a] Office Record:

The data collected from the office records for study from the
company’s various books of Accounts, and Annual Reports of the
organization for five years.

b] Published literature:

The data was also collected through the Published literature

company like Annual Reports, Annual Diaries and profile of the company.

SCOPE AND LIMITATIONS

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SCOPE OF THE STUDY

This report is related with the study of current asset management and
covers the data pertaining to the past five year’s financial performance of the
Warana Dudh Sangh. Financial performance includes financial statements
analysis. In this the researcher has to study the past performance of the
company.
1) Period Covered :
The study is based on the previous five years data (2009-10 to 2014-15).

2) Contents :
The study contains the Ratio Analysis with respect to Warana Sahakari
Dudh Utpadak Prakriya Sangh.

 LIMITATIONS
Limitations for the study are as follows.

1. As the certain documents were confidential, it

was not possible to collect all the information necessary for the deep study.

2. The study is limited to 60 days. It is difficult to

collect all the data with the short period of time.

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3. A financial technique itself is a very wide

subject, which particularly motivates to evaluate its financial analysis with
ordinary measures for capital organization.

4. The study is concerned only to The Warana

Sahakari Dudh Utpadak Prakriya Sangh.

5. It may be difficult to find out basis for

comparisons.

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CHAPTER – II

CONCEPTUAL

BACKGROUND

RATIO ANALYSIS

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 INTRODUCTION:

Financial statement are prepared primary for decision making. They

play a dominant for decision-making. They play a dominant role in setting the
framework of managerial decision. But the information provided in the
financial statements is not as end in itself as no meaningful conclusions can
be drawn from these statements alone. However, the information added in
the financial statements is of immense use in making decisions through
analysis and interpretation of financial statements. Financial analysis is the
process identifying the financial strengths and weaknesses of the firm by
properly establishing relationship between the items of the balance sheet
and the profit and loss account. There are various methods or techniques
used in analyzing financial statements, such as comparative statements,
schedule of changes in working capital, common size percentages, funds
analysis, trend analysis and ratio analysis.

 MEANING AND NATURE OF RATIO ANALYSIS:

Ratio analysis is a technique of analysis and interpretation of financial

statement it is the process of establishing and interpreting various ratios for
helping in making certain decisions.

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1. Selection of relevant data from the financial statement

depending upon the objective of the analysis.

2. Calculation of appropriate ratios from the above data.

3. Comparison of the calculated ratios with the ration of the

some firm in the past or the ratios developed from projected financial
statements or the ratios of some other firms or the comparison with the
ratios of the ratios of the industry to which the firm belongs.

4. Interpretation of the ratios.

 IMPORTANT MANAGERIAL USES OF RATIO

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ANALYSIS:

1) Help in decision-making :-
Financial statements are prepared for decision-making. But the
information provides in financial statements is not an end in itself and no
meaningful conclusion can be drawn from these statements alone. Ratio
analysis helps in making decision from the information provided in these
financial statements.

2) Helps the financial forecasting and planning: -

Ratio analysis is much help in financial forecasting and planning is
looking ahead and the ration calculated for a number of years work as a
guide for the future. Meaningful conclusions can be drawn for future from
these ratios. Thus ratio analysis helps in forecasting and planning

3) Help in communicating:-

The financial strength and weakness of firm are communicated in a

more easy and understandable manner by the use of ratios. The information
conveyed in a meaningful manner to the one for whom it is meant. Thus,
ratios help in communication and enhance the value of the financial
statements.

4) Help in co-ordination:-

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Ratio even helps in co-ordination which is of utmost importance in

effective business management. Better communication of the efficiency and
weaknesses of an enterprise results in better co-ordination in the enterprise.

5) Help in control:-

Ratio analysis also helps in making effective control of the business,

standard ratios can be based upon perform financial statements and
variances or deviations, if any can be found by comparing the actual with the
standard so as to take a corrective action at the standard so as to take a
corrective action at the eight time. The weakness or otherwise if any, come
to the knowledge of the management which helps in effective control of the
business.

6) Other Uses:-

There are so many other uses of the Ratio analysis. It is an essential

part of the budgetary control and standard costing. Ratios are of an immense
importance in the analysis and interpretation of

 LIMITATIONS OF RATIOS ANALYSIS :

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The Ratio analysis is one of the most powerful tools of financial

management. Through ratios are simple to calculate and easy to understand,
they suffer from some serious limitations.

1) Limited use of a single Ratio :-

A single ratio usually does not convey much of a sense. To better

interpretation a number of ratios have to be calculated which is likely to
confuse the analyst than help him in making any meaningful conclusion.

2) Lack Of Adequate Standards:-

There are no well-accepted standards or rules of thumb for all ratios,

which can be accepted as norms. It renders interpretation of the ratios
difficult.

3) Inherent Limitations of Accounting:-

Like financial statements ratios also suffer from the inherent weakness
of accounting records such as their historical nature. Ratios of the past are
not necessarily true indicators of the future.

4) Change in Accounting Procedure:-

Change in accounting procedure by a firm often making ratio analysis

misleading, e.g. a change in the valuation of methods of inventories from and
FIFO to LIFO increases the cost of sales and reduces considerable the value of

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closing stock which makes stock turnover ratio to be lucrative and a

unfavorable gross profit ratio.

5) Window Dressing:-

Financial statements can easily window dressed to present a picture of

its financial and profititability position to outsiders. Hence, one has to be
very careful in making a decision from ratios calculated from such financial
statements. But it may be very difficult for an outsider to know about the
window dressing made by a firm.

6) Personal Bias:-

Ratios are only means of financial analysis and not a end in itself.
Ratios have to be interpreted and different people may interpret the same
ratio in different ways.

7) Uncomparable:-

Not only industries differ in their nature but also the firms of the similar business
widely differ in there size and accounting procedures, etc. It makes comparison of ratios
difficult and misleading. Moreover, comparisons are made difficult due to difference of
various financial terms used in the ratio analysis.

8) Absolute figures Distortive:-

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Ratios devoid of absolute figures may prove Distortive, as ratio

analysis is primary a quantitative analysis and a qualitative analysis.

9) Price level changes:-

While making ratio analysis, no consideration is made to the change in

price levels and this makes the interpretation of ratios invalid.

10) Ratios no substitutes:-

Ratios analysis is merely a tool of financial statements. Hence ratios

become unless if separated from the statements from which they were
computed.

 CLASSIFICATION OF RATIOS:

The use of ratio analysis is not confined to financial manager only.

There are different parties interested in the ratio analysis for knowing the
financial position of a firm for different purpose. In view of various users of
ratios, there are many types of ratios which can be calculated from the

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information give in the financial statements. The particular purpose of the

user determines.

1) CURRENT RATIO: Current ratio may be defined as the relationship

between currents assets and current liabilities. This ratio, also known as
working capital ratio, is measure of general liquidity and is most widely used
to make the analysis of a short-term financial position or liquidity of a firm. It
is calculated by dividing the total of current assets by total of the current
liabilities.

Formula:

Current assets

Current ratio =

Current liabilities

The two basic components of this ratio are: current assets and current
liabilities. Current assets include cash and those assets which can be easily
converted into cash within a short period of time generally, one year. And
current liabilities are those obligations which are payable within a short
period of generally one year.

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Components of Current Ratio

CURRENT ASSETS CURRENT LIABILITIES

1. Cash in hand 1.Outstanding Expenses or
Accrued Expenses
2. Cash at Bank
2. Bills payable
3. Marketable Securities
3. Sundry Creditors
( Short-term )
4. Short-term Advances
4. Short-term Investments
5. Income tax payable
5. Bills Receivable
6. Dividends payable
6. Sundry Debtors
7. Bank Overdraft
7. Inventories

8. Work-in-process

9. Prepaid Expenses

A relatively high current ratio is indication that the firm is liquid and
has the ability to pay current obligations in time as and they become due. On
the other hand, a relatively low current ratio represents that the liquidity
position of the firm is not good and the firm difficulties. An increase in the
current ratio represents improvement in the liquidity position of a firm while
a decrease in the current ratio indicates that there has been deterioration in

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the liquidity position of the firm. As a convention the minimum of 2:1 is

referred to a banker’s rule of thumb of arbitrary standard of liquidity.

2] QUICK OR ACID TEST RATIO: Quick ratio also known as Acid test ratio
of Liquid is a more rigorous test of liquidity than the current ratio. The term
‘liquidity’ refers to the ability of a firm to pay its Short-term obligations and
when they become due. The two determinants of current ratio, as a measure
of liquidity, are current assets and current liabilities. Current assets include
inventories and prepaid expenses which are not easily convertible in to cash
within a short period. Quick ratio may be defined as the relationship
between quick assets and current or liquid liabilities.

An asset is said to be liquid if it can be converted in to cash within a

short period without loss of value.

Formula:

Current Assets - Inventories

Acid Test ratio =

Current liabilities

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3] DEBT TO EQUITY RATIO: Debt to Equity Ratio, also known as External-

Internal Equity Ratio is calculated to measure the relative claims of outsiders
and the owners against the firm’s assets. This radio indicates the relationship
between the external equities or the outsider’s funds and the internal
equities the shareholders funds

Formula:

Outsider’s funds

Debt to Equity Ratio=

Shareholders funds

The two basic components of the ratio are outsider’s funds, i.e. external
equities and shareholders funds i.e. internal equities. The outsiders funds
include all debts/ liabilities to outsiders, whether long term or whether in the
from of debentures bonds mortgages or bills. the shareholders funds consists
of equity share capital, preference share capital, capital reserves, revenue
reserves and reserves representing accumulated profits and surpluses like
reserves for contingencies, sinking fund etc. The accumulated losses and
deferred expenses, if any should be deducted form the total to find out
shareholders funds.

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4] PROPRIETARY RATIO OR EQUITY RATIO: A variant to debt equity

ratio is proprietary ratio which is also known as Equity Ratio or shareholders
to total Equities Ratio or Net worth to total assets Ratio. This ratio establishes
the relationship between shareholders to funds to total assets of the firm.
The ratio of proprietor’s funds to total funds is an important ratio for
determining long term solvency of a firm. The components of this ratio are
‘shareholders’ funds or proprietors funds and total assets. These
shareholders funds are Equity Share Capital, Preference Share Capital,
undistributed profits, reserves and surpluses. Out of this amount,
accumulated losses should be deduced. The total Assets on the other hand
denote total resources of concern.

Formula:

Shareholders funds

Proprietary Ratio = × 100

Total Assets

As Proprietary Ratio represent the relationship of owners fund to total assets, higher the
ratio or the share of the shareholders in the total capital of the company, better is the long
term solvency position of the company. The ratio indicates the extent to which the assets of
the company can be lost without affecting the interest of creditors of company.
5] SOLVENCY RATIO:

This ratio is a small variant of equity ratio and can be simply calculated
as 100 - equity ratio, i.e. , the ratio indicates the relationship between the
total liabilities to outsiders to total assets of a firm and can be calculated as
follows:

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Formula :

Total Outsiders Liabilities

Solvency Ratio = X 100

Total Assets

Generally lower the ratio of total outsider’s liabilities to total assets, more
satisfactory or stable is the long term solvency position of firm.

6] EARNINGS PER SHARE RATIO (E.P.S.):

Earnings per share are a small variation of return equity capital and are
calculated by dividing the net profit after taxes and preference dividend by
the total number of equal shares.

Formula:

Not Profit after tax – Preference Dividend

E.P.S. =

No. of Equity Share

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The earning per share is a good measure of profitability and when compared
with E.P.S. of similar other companies, it gives a view of the comparative
earning or earnings power of a firm E.P.S. calculated for a number of years
indicates whether or not earning power of company has increased.

7] GROSS PROFIT RATIO :

Gross profit ratio measure the relationship of gross profit to net sales
and is usually represented as a percentage. Thus, it is calculated by dividing
the gross profit by sales:

Formula :

Gross Profit

Gross Profit Ratio = X 100

Net Sales

The gross profit ratio indicates the extent to which selling price of goods per
unit may decline without resulting in losses on operations of firm. Higher the
ratio better to the company.

8] NET PROFIT RATIO :

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Net profit ratio establishes a relationship between net profit and sales and indicates
the efficiency of the management in manufacturing, selling, administrative and other
activities of the firm. This ratio is overall measure of firm’s profitability and is calculated
as:

Formula :

Net Profit after tax

Net Profit Ratio = X 100

Net Sales

.
9] AVERAGE COLLECECTION PERIOD RATIO :
The average collection period represents the average number of days
for which a firm has to wall before its receivables are converted into cash.
The ratio can be calculated as follows:

Formula :

Average Trade Debtors

i) Average collection period = X No. of working days

Net Sales

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Average Trade Debtors (Including B.R.)

ii) Average collection period =

Sales per day

The average collection period ratio represents the average number

numbers of days for which a firm has ratio wait before its receivable are
converted into cash. It measures the quality of debtors. Generally, the
shorter the average collection period the better is the quality of debtors as a
short collection period implies quick payment by debtors. Similarly, a higher
collection period implies as inefficient collection performance which in turn
adversely affects the liquidity or short-term paying capacity of a firm out of
its current liabilities. Moreover, longer the average collection periods, larger
are the chances of bad debts.

10] CREDITORS / PAYABLES TURNOVER RATIO :

In the course business operations, a firm has to make credit purchases

and incur short-term liabilities. A supplier of goods, i.e. creditor, is naturally
interested in finding out how much time the firm is likely to take in repaying
its trade creditors. The analysis for creditor’s turnover is basically the same as
of debtors turnover ratio except that in place of trade debtors the trade
creditors are taken as one of the components of the ratio and in place of

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average daily sales, average daily purchases are taken as the other
component of the ratio.

Average Credit Annual Purchases

Creditors Turnover Ratio =

Average Trade Creditors

If information about credit purchases is not available, the figure

of total purchases may be taken as the number and the trade creditors
include sundry creditors and bills payables. If opening and closing balances
of creditors are not known, the balance of creditors given may be taken to
find out ratio. The ratio indicates the velocity with which the creditor’s
velocity better it is or otherwise lower the creditor’s velocity, less favorable
are the results.

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CHAPTER III

ORGANIZATION PROFILE

 WARANA GROUP INFORMATION

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1] INTRODUCTION

1.1] About Warananagar : The Warana Co-operative Complex has become

famous as one of the forerunner of successful integrated rural
development resulting from Co-operative movement. The Warana Co-
operative Sugar factory registered in 1955, has led this movement resulting
in formation of over 25 successful co-operative societies today, listed below
:-

1) Warana Co-operative Sugar Factory Ltd.

2) Warana Co-operative Milk
Produce Processing Society Ltd.
3) Warana Co-operative Bank
4) Warana region Co-operative Grahak Mandal
5) Warana Poultry Co-operative Society
6) Sahyadri Co-operative Poultry Society
7) Vishwanath Co-operative Poultry Society
8) Warana Worker Vividh Working Co-operative Society
9) Warana Agriculture Goods and Processing Society
10) Warana Cooperative Industrial Colony
11)Warana Women Cooperative Credit Society

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12) Savitri Women Co-operative Industrial Society

13) Amrit Sevak Co-operative Society
14) Satyavathi Co-operative House Construction Society
15) Nivritti Co-operative Housing Society
16) Educational Institute
 Warana Vibhag Shikshan Mandal
 Tatyasaheb Kore Institute of Engineering and
Technology
 Yashwantrao Chavan Warana University
 Tatyasaheb Kore Industrial Training Centre
 Tatyasaheb Kore Training and Production Centre
 Warana School
 Warana Vidyamandir
 Warana Nursery School
 Warana Satkarya Savanrdak Mandal
17) Warana Foods Private Ltd.
18) Mahatma Gandhi Medical Trust
19) Warana Bhagini Mandal
20) Lijjat Pappad Centre
21) Warana Sugar Worker's Society
22) Warana Exercise Centre
Total turnover of all these societies exceeds Rs. 600 Crores. Most of
these societies are distributed within 4Km. radius with clear line of site. This is
in addition to the P&T lines provided by DOT. However this Exchange is not
connected to the P&T lines. Some of the important society’s e.g. sugar and dairy
already have computer hardware installed at their premises and few application

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software running for their routine requirements. These include payroll, billing,
MIS. The applications have been developed by local private agencies.

Organization Chart.
Board of Directors

Chairman

Vice-Chairman

Sub-Committees

For Sale For Purchase For Labour Marker

Managing Director

Administrative Officer Production Manager Labour Officer

Ass. Production Time Keeper Labour Welfare

Ass. Manager
Ass. Manager Sales Manager Officer
Accounts

Sales Dept.
Chief Accountant Fn charger Engineer Store Keeper
Quality Control Staf Staf

Assist
Staf Engineer
Staf Staf
Staf

Staf

Following are the important business centers at Warananagar -

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1.1.1] Warana Sugar Administrative Building

Situated in the heart of Warananagar is the 2 storied building

housing the administrative staff of the Sugar, Distillery and Paper
Factory. The sugar factory is located at a distance of around 500 mtrs from
this building. Sugar Cane which is the raw material for the factory is obtained
from 70 odd villages located in the districts of Kolhapur and Sangli. The
Distillery is located at a distance of 200mtrs from the sugar factory and the
paper mill is at a distance of 200 mtrs from the distillery. A motor able road
separates the distillery and the Paper Mill. The administrative building
has a flat roof from where most of the factories and Institutes fall within the
line of sight. It is covered by a wide expanse of lush green trees forming a
canopy around the building. The roof top, however is clear and is ideal for
installation of both the VSAT and Mast for omni directional antenna of the
wireless LAN. Milk at the Warana dairy is collected from 78 major villages
located in 2 districts, vis Kolhapur and Sangali. Some of the villages produce
both sugarcane and milk. The Administrative Office has around 25 stand
alone Computers in various sections which may be connected in a LAN using
structured cabling techniques. Presently data is collected from the factories on
floppy or in hard copy form, and is updated on these computers and
reports generated for use by the Management. The Managing Director and
Chairman of the Company have offices in this building.

1.1.2] Warana Grahak Mandal (Warana Bazaar) :

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This is the largest bazaar in Warana with an annual turnover of Rs

31 Corers. This has 2 departmental stores in Warananagar and Wagon. This
Bazaar has 29 retail outlets in the 78 villages spread across Kolhapur and
Sangli. The main departmental store is located opposite the Sugar
administrative building at a distance of 30mtrs. A motor able road bifurcates
these two buildings. The administrative office of the Grahak Mandal (Warana
Ba Warana Sahakari Dudh Utpadak Prakriya Sangh zaar) is
located in this departmental store. The management procures the goods
directly from various factories and desires to have strong communication
network so that orders and follow up could be made through E-mail. Daily
statistics from each of these retail outlets is obtained by the Management by
either calling the official concerned from the outlet or by visiting these
outlets.
1.1.3] Mahatma Gandhi Medical Trust

A multifarious hospital with state-of-the-art technology having a

capacity of more than 200 beds catering to the requirements of the
common farmers, is located at a distance of 10 Kms from the Sugar
Administrative building. The hospital has been equipped with modern
and latest facilities available in medical field. The unidirectional antenna
for wireless LAN can be installed on the roof of the hospital and services like
Medlars would be highly beneficial to the Doctors.

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1.1.4] Warana Bhagini Mandal

This Mandal is set up by the women folk and produce items like Lijjat
Pappad etc. The factory and office is located at a distance of 200 mtrs
from the main sugar administrative building. Warana Women Co-operative
credit society, Savitri Women Co-operative Industrial Society, Lijjat Pappad
Kendra are the organisation under its umbrella. Some of the factories
are also located at a distance of 1 km from the main sugar administrative
building. The unidirectional antenna for the wireless LAN may be installed
on the rooftop of the main building of the mandal.

1.1.5] Warana Co-operative Bank

The main branch of the bank is a two storied building located at a

distance of about 1 Km. from the Main Sugar Administrative Building.
It has 20 branches in Kolhapur and Sangali districts. Most of these are within
30 Km radius from the main branch. Annual turnover of this bank is nearly
Rs. 28 corers. The roof top of the Main branch can be used for installation of
the unidirectional antenna for wireless LAN

1.1.6] Warana Co-op Milk Produce Society

The factory for processing Milk related products is situated at a

distance of approx 3 Kms from the Sugar administrative building. The
administrative office of the Milk Dairy is located at a distance of approx.
500mtrs from the Factory. This office has stand alone computers for its own

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data processing. (Some of the important milk products are Pasteurized Milk,
Milk powder, Ghee, Butter, Shrikhand etc. Approximately 2 MT of
Shrikhand is sold in Mumbai alone daily. The factory processes about 2 lakhs
liters of milk per day collected from surrounding 176 villages in the
districts of Sangli, Satara and Kolhapur). The factory management has
shown keen interest in Computerization and networking, but has also stressed
on necessary training for the staff. This society has a branch office in
Mumbai from where daily information is required to be obtained. It is
recommended to have a Wireless LAN setup installed which could
communicate with the central VSAT installed on the Sugar Administrative
office. The Management has indicated that they have started processing for
Leased Line connectivity between the Sugar Administrative Office and the
Dairy Office. This may not be necessary once the Radio LAN is set-up.

With the sole intention of supplementing the income of zealous farmers

a great idea of dairy farming was put forth in the minds of enthusiastic team.
This resulted in the birth of the Warana Dairy, in 1968. This white revolution
has spread to all other 78 surrounding villages and added revenue of Rs. 150
cores per annum.

The dairy plant has a capacity to handle more than 300,000 liters of
milk of which 100,000 liters can be converted into milk products. A clean and
efficient management of dairy brought the proud products of Warana like
Warana pasteurized Milk, Milk Powder, Ghee, Butter,

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Shrikhand, Amrakhand, Lassi, Cheese, and Strawberry Desert etc.

These products once tasted chase the taster. The dairy has made its strides
all the way. The turnover for the year 1997-98 was Rs. 138 corers. By selling
2035 tones of Shrikhand in the year 1998, Warana reached a new record of
maximum selling of Shrikhand in India. For its qualitative and quantitative
excellent performance dairy has acquired an ISO 9002 Certification in record
time of three months. M/S. Cadbury India Ltd. has joined hands with
Warana Dairy and started production of Bournvita, Drinking chocolate and
Cocoa Powder. "Warana Stymena" - a malted milk product has bagged a
mammoth order of 550 metric tones from the Indian Army. Even the 60% of
total production of the Cadbury India Ltd.'s Bournvita is produced from
Warana Dairy. This simply reflects the quality and efficiency of the dairy.
Warana Dairy has won many awards for its quality products and efficiency.
The dairy, in future, has ambitious plans to venture into products like
branded cheese, pasteurised butter, beverages and ice creams. This will
surely bring many credentials and laurels to Warana.

Warana Cattle-feed division is producing the quality cattle feed, which

is supplied to the farmers for their cows and buffaloes, at subsidized prices.

2] History

WARANA is eminently, a unique name that stands as forerunner in the

co-operative movement in India. The name WARANA sounds suitable

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wherever there is a mention of co-operative movement. The uninitiated may

be amazed by the way barren land has been converted into a green valley.
The green valley with its smiling face welcomes the whole nation for its
exemplary services. "Love at first Sight" can be rightly applied to this land of
integrated rural development. The beauty of this land makes music which
can penetrate and lilt the most inaudible ears and a riot of natural colors to
the most unaccustomed eyes and it can even make even the unlettered to
construct the duets. The activities in this valley can enliven the most passive.

There is no name parallel to WARANA except perhaps the WARANA

RIVER, which flows parallel to WARANA. Warana culture has set an example
and is making wonders today.

WARANA- A successful name in the cooperative movement;

A successful name in the operation flood;

A successful name in the agricultural field;

A successful name in the sugar lobby;

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A successful name in the education field;

A successful name in the banking field;

A successful name in the consumer services; industries; and

A successful name by itself!

All this did not happen by chance or through any sort of magic. An
incredible man set on an arduous mission with a singular dream of achieving
all these incredible things. The man who sacrificed his joys, happiness and
stood bold, to do the best. This man like a sprint achieved the success in all
the fields. His words were Godly words to his followers. With an undaunted
strong belief along with his team when he struck, the whole barren valley
that was filled with dacoits and turned it into a prosperous and polite land.

Who was this incredible man? Who was this motivator? Who was this
sprint? He was Late Vishwanath V. Kore alias Tatyasaheb Kore.

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Tatyasaheb Kore who did a magnificent miracle in the land of Warana,

born on 17th October 1914, he was the son of a farmer in a small village
Kodoli. Young Vishwanath Kore had to overcome several hurdles due to the
poverty of his family. Besides poverty the sad demise of his parents might
have crunched him a great deal. But young Vishwanath did not flinch an inch.
Being the eldest in his family he took all the responsibilities on his shoulder
and through his hard work he brought up the whole family through difficult
times. By entering the local village co-operative society in 1935 he started his
social service. He actively participated in Quit India Movement of 1942. He
was actively associated with underground movement of Late "Y.B. Chavan -
1st Former Dy. Prime Minister of India. Due to his social services he was
unanimously elected as President of Kodoli Municipality in 1940.

He plunged into a severe action when an unprecedented depression in

1951 literally ruined the farmers of this area and they had to burn out their
sugar canes rather than making jaggery and face the prospect of selling it at
throw away prices. This shocking incident made him to set up a modern co-
operative sugar factory in the barren land WARANA situated next to Kodoli
village. The success of this sugar factory doubled his enthusiasm and lead to
the overall development of Warana Complex. Today Warananagar is a place
of many facets and fragrances and its success story started unfolding with
every sunrise. Warana is making stupendous growth and is expected to make
miracles in the days to come.

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India's largest dairy products, milk products selling Organization. We

have an ISO 9001-2000 & HACCP certified organisation manufacturer &
exporter of milk, milk products & fruit poducts. Our plant situated 30 KMS
from Kolhapur of Maharashtra state in India. Warana is a Co-operative milk
union. We also undertake job work contracts of Multinational Companies like
Cadbuary, Novarties, Heinz India & Glaxo etc

3] Dairy Products:-

Warana Co-operative milk union offers best quality milk products,

India's leading dairy having capacity 5 lakhs/day.

1. Lassi : "Warana Lassi" The all season drinks its most popular drink from
warana.

2. Shrikhand : We have largest manufacturer & seller of shrikhand in four

flavors Badam, Pista, Keshar mango & Elachi.

3. Ghee: Ghee is a quality products from warana available in different packing

sizes.

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4. Cheese: Our product Mozzarella cheese, processed cheese, pistta.

5. Butter: Solted butter, white butter & yellow butter are our best products.

6. Milk : Milk & milk products from India like milk powder, cheese, paneer,
ghee, butter, lassi

7. Fruit :- Exporter of fruit pulp/puree like mango, guava, banana etc.

8. Mango :- Alphonso mango pulp, Totapuri mango in 215kg drum pack & 3.1 k,
850gm tin pack.

9. Pulp :- We sale mango pulp, banana pulp, guava pulp.

10. Baby Food :- We export baby food (Infant formula)

11. Banana :- Banana puree/pulp.
12. Guava :- We export white guava pulp/puree.
13. Jam :- Warana mixed and most delicious fruit jam.
14. Puree :- We offer Alphonso mango puree, Totapuri mango
puree, Banana puree, White guava puree in natural flavour.
15. Cream :- Skimmed milk powder, full cream milk powder,
0%,26% fat quality products from Warana.

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16. Malted :- Malted milk food, we are planning to

manufacture products like stamina etc.
17. Curd :- Warana co-operative milk union products. Curd,
butter, cheese, milk powder, lassi, shrikhand, paneer etc.
18. Butter :- Solted butter, white butter & yellow butter.
19. Paneer :- Malai paneer is our favorite paneer products.
20. Dudh :- Skimmed milk powder, full cream / whole milk
powder from warana

4] Achievement

 Vasantrao Naik Pratishthan Puraskar for our Dairy Unit (First Prize) for
the work of our Founder late Tatyasaheb Kore for development of
Cooperative Industry and Education.

 Fie Foundation Puraskar to our Founder late Tatyasaheb Kore for the
work in Co-operative and social services.

 " Sahakar Bhushan" Puraskar to our Founder late Tatyasaheb Kore from
Wai Urban Co-operative Bank for the year 1993.

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 Awards (Puraskars) to Mr. Vinay Kore, President of Warana Co-

operative Group of Industries and Educational Institutions for his work in Co-
operative and Social Services Fie Foundation Puraskar, 1997. "Sahakar Shree"
Puraskar, 1997.

 First Prize from United Western Bank Ltd. to the Managing Director,
Shri. V. S. Chavan for his work in Warana Co-operative Group of Industries
and Educational Institutions.

 "Management Excellence Award" for our Children's Orchestra from

Institute of Marketing and Management, Pune.

 Award from Institute of Marketing & Management - First Prize to our

Warana Co-operative Group as the "Best Co-operative Group in India".

 ISO-9002 Certification: ISO-9002 Certification from M/s: TUV Bayern,

Germany in the year 1999.

 "Vanashri" Puraskar from Government of Maharashtra in 1999.

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CHAPTER IV

DATA INTERPRETATION

Interpretation

RATIO ANALYSIS

1) Current Ratio –

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Current assets

Current Ratio= ___________________

Current liabilities

Table 4.1 (figures in lakhs )

2012- 2013- 2014- 2015-

Years 2011-12 13 14 15 16
Current
Assets 4587.28 4122.75 4746.58 5617.86 6561.79
Current
Liabilities 3768.15 4035.82 7035.03 8075.6 8215.59
Ratios 1.21 1.02 0.67 0.69 0.79

Chart 4.1

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CURRENT RATIO

1.4 1.21
1.2 1.02
RATI

1
OS

0.79
0.8 0.67 0.69
Series1
0.6
0.4
0.2
0
2011-12 2012-13 2013-14 2014-15 2015-16
YEARS

Interpretation –

Generally accepted ratio is 2:1. In Warana Sahakari

Dudh Utpadak Sangh it was very excellent in year 2012-13 to 2013-14. But in
year 2014-15 to 2015-16 it was not satisfactory. It is below 1 which signifies
danger in future. The ratio lies between 0.67 to 1.21.

2) Quick Ratio -

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Current assets - inventory

Quick Ratio = ________________________

Current Liabilities

Table 4.2 (figures in lakhs)

2012- 2013- 2014- 2015-

Years 2011-12 13 14 15 16
Quick 2787.2 3160.2 2491.2 3864.0
Assets 8 2119.61 6 9 9
Current 3768.1 4035.8 7035.0 8215.5
Liabilities 5 2 3 8075.6 9
Ratios 0.73 0.53 0.44 0.3 0.47

Chart 4.2

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QUICK RATIO

0.8 0.73
0.7
RATI

0.6 0.53
OS

0.44 0.47
0.5
0.4 0.3 Series1
0.3
0.2
0.1
0
2011-12 2012-13 2013-14 2014-15 2015-16
YEARS

Interpretation –

From the above table & graph it is interpreted that

quick ratios are 0.73, 0.53, 0.44, 0.30 & 0.47 respectively. Generally accepted
ratio is 1:1.But here in case of Warana Sahakari Dudh Utpadak Sangh it
seems to be not satisfactory and trend of ratio is not constant. It shows
inadequacy of working capital.

3) Debt to Equity Ratio -

Outsiders Fund

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Debt to Equity Ratio = ___________________

Shareholders Fund

Table 4.3

(Figures in lakhs)

2011- 2012- 2013- 2014- 2015-

Years 12 13 14 15 16
Outsiders 8393.3 7714.4 8171.5 7891.4
Fund 2 5 6 1 11804
Shareholder 1435.0 1481.5 1677.8 1983.1 2567.6
s Fund 1 3 9 3 6
Ratios 5.85 5.21 4.87 3.98 4.59

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Chart 4.3

Interpretation –

Generally low debt-Equity ratio is favorable to for the

creditors of the company. The standard ratio is 1:1, but in case of Warana
Sahakari Dudh Utpadak Sangh debt-equity ratios are as 5.85, 5.21, 4.87, 3.98
and 4.59 respectively. Which are more than the specified standard &
dangerous for company in future.

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4) Fixed Asset Turnover Ratio -

Sales

Fixed Asset Turnover Ratio = _________________

Net Fixed Asset

Table 4.4 (figures in lakhs)

2012- 2013- 2014- 2015-

Years 2011-12 13 14 15 16
Sales 17867 18394.7 18155.7 18514.5 19429
Net Fixed
Asset 3115.33 3382.12 3432.12 3436.17 3754
Ratios 5.74 5.44 5.29 5.39 5.17

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Chart 4.4

Fixed Asset Turnover Ratio

5.8 5.74

5.6
5.44
Rati

5.39
os

5.4 5.29
5.17 Series1
5.2

4.8
2011-12 2012-13 2013-14 2014-15 2015-16
Years

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Interpretation –

This ratio indicate the efficiency with which firm utilizes

its fixed assets. Here ratios are as 5.74, 5.44, 5.29, 5.39 and 5.17 respectively.
High ratio is beneficial for company, which shows how effectively firm utilizes
its investments.

It is relationship between sales and net assets. The ratios are

constant in each year. Sales and Net assets increases proportional to each
other.

5) Earning Per Share -

Net Profit

Earning Per Share = __________________

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Number of Shares

Table 4.5 (figures in lakhs)

200 201 201 201 201

Years 8-09 2-13 3-14 4-15 5-16
Net Profit 3.01 3.71 2.55 1.72 3.72
No. Of
Shares 600 600 600 600 600
0.00 0.00 0.00 0.00 0.00
Ratios 5 6 4 2 6

Chart 4.5

Earning Per Share

0.007 0.006 0.006

0.006 0.005
0.005
Rati

0.004
os

0.004
Series1
0.003 0.002
0.002
0.001
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

Interpretation –

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EPS is small variant of return on equity capital. It gives

a view of comparative earnings of firm. High ratio is favorable to the
shareholders of company. In case of Warana Sahakari Dudh Utpadak Sangh it
is very poor.

EPS in Warana Sahakari Dudh Utpadak Sangh is not favorable to

the shareholders.

6) Return on Shareholders Fund -

Net Profit

Return on Shareholders Investment = __________________ X 100

Shareholders Fund

2012- 2013- 2014- 2015-

Years 2011-12 13 14 15 16
Net Profit 3.01 3.71 2.55 1.72 3.72
Shareholders 1435.01 1481.53 1677.89 1983.13 2567.66

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Fund
Ratios 0.20% 0.25% 0.15% 0.08% 0.14%
Table 4.6 (figures in lakhs)

Chart 4.6

Return on Shareholders Investment

0.30%
0.25%
0.25%
0.20%
Rati

0.20%
os

0.15% 0.14%
0.15% Series1
0.10% 0.08%

0.05%
0.00%
2011-12 2012-13 2013-14 2014-15 2015-16
Years

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Interpretation –

In Warana Sahakari Dudh Utpadak Sangh return on

Shareholders Investment is not constant. There is more fluctuation in this
ratio because of increase and decrease in Net profit of the firm. The ratio lies
between (0.08) to (0.25). It also predicts the returns on investment.

In year 2005-06 net profit of company is very poor (0.08) and it

affects the returns of the shareholders. But in year 2006-07 it again
increases.

7) Return on Equity Capital -

Net Profit

Return on Equity Capital = ________________

Paid up Capital

Table 4.7 (figures in lakhs)

2011- 2012- 2013- 2014- 2015-

Years 12 13 14 15 16
Net Profit 3.01 3.71 2.55 1.72 3.72

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Paid up 258.4
Capital 230.36 231.45 232 235.77 1
Ratios 0.013 0.016 0.011 0.007 0.014

Table 4.7

Return on Equity Capital

0.018 0.016
0.016 0.014
0.014 0.013
0.012 0.011
Rati

0.01
os

0.008 0.007
0.006
0.004
0.002
0
2011-12 2012-13 2013-14 2014-15 2015-16
Years

Interpretation –

Return on Equity Capital which relationship between

profits of company and equity capital. It is more constant in all the years but
in year 2014-15 (0.007) it decrease suddenly, because of the decrease in net

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profit of the company. Again in year 2015-16(0.014) it is in increasing phase

which is good for company and its shareholders.

It is not favorable condition for the company and its

shareholders. The returns are very poor.

8) Gross Profit Ratio -

Gross Profit

Gross Profit Ratio = ________________X 100

Net Sales

Table 4.8 (figures in lakhs)

2011- 2012- 2013- 2014- 2015-

Years 12 13 14 15 16
Gross Profit 208.5 140.83 213.39 815.53 614
Net sales 19638 20558.2 22641.6 27920 30236.6
Ratios 1.05% 0.68% 0.94% 2.92% 2.03%

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Table 4.8

Gross Profit Ratio

3.50%
2.92%
3.00%
2.50%
2.03%
Rati

2.00%
os

1.50%
1.05% 0.94%
1.00% 0.68%
0.50%
0.00%
2011-12 2012-13 2013-14 2014-15 2015-16
Years

Interpretation –

The above analysis shows that the gross profit is

1.05%, 0.68%, 0.94%, 2.92%, and 2.03% respectively. Higher the ratio better
for the company and good sign. But in Warana Sahakari Dudh Utpadak Sangh
it is not constant and not good enough.

9) Net Profit Ratio -

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Net profit

Net profit Ratio = ____________ X 100

Net Sales

Table 4.8 ( figures in lakhs )

2011- 2012- 2013- 2014- 2015-

Years 12 13 14 15 16
Net Profit 3.01 3.71 2.55 1.72 3.72
Net sales 19638 20558.2 22641.6 27920 30236.6
0.01
Ratios 0.02% 0.02% 0.01% % 0.01%

Table 4.9

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Net Profit Ratio

0.03%
0.02% 0.02%
0.02%
ratio

0.02%
s

0.01% 0.01% 0.01% Series1

0.01%

0.01%

0.00%
2011-12 2012-13 2013-14 2014-15 2015-16
years

Interpretation –

The above analysis shows that the Net profit is as

0.02%, 0.02%, 0.01%, 0.01%and 0.01% respectively. This is below the
standard and also not satisfactory to the company.. Higher the ratio better
for the company.

It decreases continuously in each year, which may create problem

for the company in future. The financial position of the company is poor.

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10) Operating Ratio -

Operating Cost

Operating Ratio =________________X 100

Net Sales

Table 4.10

( Figures in lakhs )

2008- 2009- 2012-

Years 09 10 2010-11 2011-12 13
Operating
Profit 1372.74 1465.05 1494.05 1524.23 1993
Net sales 19638 20558.2 22641.6 27920 30236.6
Ratios 6.99% 7.12% 6.60% 5.45% 6.59%

Table 4.10

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Operating Profit Ratio

8.00% 7.12%
6.99%
7.00% 6.60% 6.59%
6.00% 5.45%
Rati

5.00%
os

4.00%
3.00%
2.00%
1.00%
0.00%
2011-12 2012-13 2013-14 2014-15 2015-16
Years

Interpretation –

Generally operating ratio represented as percentage.

The above table shows that the operating ratio is as 6.99, 7.12, 6.60, 5.45 and
6.59 respectively. In above case we can see the fluctuations in the operating
ratio.

Generally very high ratio is not satisfactory to the company. It is

not good sign for the company. Operating cost is increases very frequently in
each year.

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11) Cost of Goods Sold -

Cost of Goods Sold

Cost of Goods Sold = __________________X 100

Net Sales

Table 4.11

(Figures in lakhs)

2011- 2012- 2013- 2014- 2015-

Years 12 13 14 15 16
Cost Of 17867. 18394. 18155. 18514.
Sales 2 7 7 5 19429
20558. 22641. 30236.
Net sales 19638 2 6 27920 6
Ratios 90.99% 89.47% 80.18% 66.31% 64.25%

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Table 4.11

Cost of Goods Sold Ratio

100.00% 90.99% 89.47%

90.00% 80.18%
80.00%
66.31% 64.25%
70.00%
Rati

60.00%
os

50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
2011-12 2012-13 2013-14 2014-15 2015-16
Years

Interpretation –

The above table shows the cost of goods sold ratio is

as 90.99, 89.47, 80.18, 66.31 and 64.25 respectively. This decreases
continuously year after year. It is good sign for the company. It also shows
profitability of the company. Lower is the ratio greater is the profitability of
the company.

In above case the net sale of the company increases very

steadily year after year.

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12) Proprietary Ratio –

Shareholders Fund

Proprietary Ratio = ___________________X 100

Total Asset

Table 4.12 (Figures in lakhs)

2012- 2013- 2014- 2015-

Years 2011-12 13 14 15 16
Shareholders
Fund 1435.01 1481.53 1677.89 1983.13 2567.66
Total Asset 9828.28 9195.98 9849.46 9874.55 9886.3
Ratios 14.60% 16.11% 17.04% 20.08% 25.97%

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Table 4.12

Proprietary Ratio Ratio

30.00%
25.97%
25.00%
20.08%
20.00% 17.04%
Rati

16.11%
14.60%
os

15.00%

10.00%

5.00%

0.00%
2011-12 2012-13 2013-14 2014-15 2015-16
Years

Interpretation –

Higher the proprietary ratio better for the company. In

case of Warana Sahakari Dudh Utpadak Sangh proprietary ratio is favorable
to the company. It shows the solvency position of the firm. Here the ratio is
in increasing trend. It is as 14.60, 16.11, 17.09, 20.08 and 25.97 respectively.
It shows good working conditions.

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CHAPTER V

FINDINGS AND
SUGGESTIONS

Findings of Ratio Analysis

1) The Warana Sahakari Dudh Utpadak Prakriya Sangh has its

current ratio as 1.21, 1.02, 0.67, 0.69& 0.79 respectively. Here all the ratios

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are below the rule of thumb (2:1).The Firm may not able to pay its liabilities
as they falls due.

2) The acid test ratio of Warana Sahakari Dudh Utpadak

Prakriya Sangh is as 0.73, 0.53, 0.44, 0.30 and 0.47 respectively. Which is
below the rule 1:1.It shows The Firm is not able to meet its current liabilities.

3) In company Debt-Equity ratio is satisfactory and favorable.

Generally Debt-Equity ratio 1:1 is satisfactory. But here all the ratios are
above the rule.

4) Fixed Asset Turnover ratios indicate the efficiency at which

Firm utilizes its fixed Asset. Here the ratios are as 5.74, 5.44, 5.29, 5.39 and
5.17 respectively. Its ratios are higher and favorable to the company.

5) In case of operating ratio each year operating cost increases.

It is not satisfactory to the company.

6) The gross profit ratio is favorable in Warana Sahakari Dudh

Utpadak Prakriya Sangh. It is in increasing trend since 2015-16.

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7) The net profit ratio, each year net profit ratio is decreases as
0.015, 0.018, 0.011, 0.006 and 0.012 respectively.

8) The solvency condition of the Warana Sahakari Dudh

Utpadak Prakriya Sangh is good, while considering the proprietary ratio.
9) Overall efficiency of the Firm is good by considering return
on Investment Ratio.

Suggestions -

1) The current ratio of the Warana Sahakari Dudh Utpadak Prakriya

Sangh is below the rule of thumb 2:1. So it is suggested that to maintain the
standard.

2) The Debt-Equity Ratio of the Warana Sahakari Dudh Utpadak Prakriya

Sangh is also dangerous. So they should try to reduce it.

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3) The Net Profit of the company is in decreasing trend. So it is advised

to the company that they should increase their sales and reduce operating
expenses.

4) The Quick Ratio of the Warana Sahakari Dudh Utpadak Prakriya

Sangh is also below the rule of thumb 1:1. So it is advised to maintain it
properly.

5) Warana Sahakari Dudh Utpadak Prakriya Sangh must appoint special

staff for collection of the sundry debtors.

Bibliography

1. Sharma & Gupta, (1987), Management Accounting Principals and

practice,” Kalyani Published, New Delhi.

2. Web-site - www.warana.org.com.

3. Annual reports of Warana Sahakari Dudh Utpadak Prakriya Sangh.

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