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A STUDY ON COOPERATIVES

A cooperative (also known as co-operative, co-op, or coop) is


"an autonomous association of persons united voluntarily to meet their
common economic, social, and cultural needs and aspirations through a
jointly-owned and democratically-controlled enterprise".[1] Cooperatives
may include:

non-profit community organizations


businesses owned and managed by the people who use their services
(a consumer cooperative)
organisations managed by the people who work there (worker
cooperatives)
organisations managed by the people to whom they provide
accommodation (housing cooperatives)
hybrids such as worker cooperatives that are also consumer
cooperatives or credit unions
multi-stakeholder cooperatives such as those that bring together civil
society and local actors to deliver community needs
second- and third-tier cooperatives whose members are other
cooperatives
Research published by the Worldwatch Institute found that in 2012
approximately one billion people in 96 countries had become members of
at least one cooperative.[2] The turnover of the largest three hundred
cooperatives in the world reached $2.2 trillion which, if they were to be a
country, it would make them the seventh largest.
One dictionary defines a cooperative as "a jointly owned enterprise
engaging in the production or distribution of goods or the supplying of
services, operated by its members for their mutual benefit, typically
organized by consumers or farmers".[4] Cooperative businesses are
typically more economically resilient than many other forms of enterprise,
with twice the number of co-operatives (80%) surviving their first five years
compared with other business ownership models (41%).[5] Cooperatives
frequently have social goals which they aim to accomplish by investing a
proportion of trading profits back into their communities.
The International Co-operative Alliance was the first international
association formed (1895) by the cooperative movement It includes
the World Council of Credit Unions. A second organization formed later in
Germany: the International Raiffeisen Union. In the United States,
the National Cooperative Business Association (NCBA) serves as
the sector's oldest national membership association. It is dedicated to
ensuring that cooperative businesses have the same opportunities as other
businesses operating in the country and that consumers have access to
cooperatives in the marketplace. A U.S. National Cooperative Bank formed
in the 1970s.[7] By 2004 a new association focused on worker co-ops was
founded, the United States Federation of Worker Cooperatives.

Social economy:-
Cooperatives traditionally combine social benefit interests with capitalistic
property-right interests. Cooperatives achieve a mix of social and capital
purposes by democratically governing distribution questions by and
between equal by not controlling members. Democratic oversight of
decisions to equitably distribute assets and other benefits means capital
ownership is arranged in a way for social benefit inside the organization.
External societal benefit is also encouraged by incorporating the operating-
principle of cooperation between co-operatives. In the final year of the 20th
century, cooperatives banded together to establish a number of social
enterprise agencies which have moved to adopt the multi-stakeholder
cooperative model. In the years 19942009 the EU and its member nations
gradually revised national accounting systems to "make visible" the
increasing contribution of social economy organizations.

Meaning
Cooperatives as legal entities
A cooperative is a legal entity owned and democratically controlled by its
members. Members often have a close association with the enterprise as
producers or consumers of its products or services, or as its employees.
There are specific forms of incorporation for cooperatives in some
countries, e.g. Finland and Australia Cooperatives may take the form of
companies limited by shares or by guarantee, partnerships or
unincorporated associations. In the UK they may also use the industrial and
provident society structure. In the US, cooperatives are often organized as
non-capital stock corporations under state-specific cooperative laws.
Coop principles and values
Cooperative principles are the seven guidelines by which coops put their
values into practice, often called the seven Rochdale Principles:

1. Voluntary and open membership


2. Democratic member control
3. Economic participation by members
4. Autonomy and independence
5. Education, training and information
6. Cooperation among cooperatives
7. Concern for community
Legal
Such legal entities have a range of social characteristics. Membership is
open, meaning that anyone who satisfies certain non-discriminatory
conditions may join. Economic benefits are distributed proportionally to
each member's level of participation in the cooperative, for instance, by a
dividend on sales or purchases, rather than according
to capital invested. Cooperatives may be classified as
either worker, consumer, producer, purchasing or housing cooperatives Th
ey are distinguished from other forms of incorporation in that profit-making
or economic stability are balanced by the interests of the community.

EVOLUTION OF
COOPERATIVES IN INDIA
The cooperative movement in India owes its origin to agriculture and allied sectors.
Towards the end of the 19th century, the problems of rural indebtedness and the
consequent conditions of farmers created an environment for the chit funds and
cooperative societies. The farmers generally found the cooperative movement an
attractive mechanism for pooling their meagre resources for solving common
problems relating to credit, supplies of inputs and marketing of agricultural produce.
The experience gained in the working of cooperatives led to the enactment of
Cooperative Credit Societies Act, 1904. Subsequently, a more comprehensive
legislation called the Cooperative Societies Act was enacted. This Act, inter alia,
provided for the creation of the post of registrar of cooperative societies and
registration of cooperative societies for various purposes and audit. Under the
Montague-Chelmsford Reforms of 1919, cooperation became a provincial subject and
the provinces were authorised to make their own cooperative laws. Under the
Government of India Act, 1935, cooperatives were treated as a provincial subject. The
item "Cooperative Societies" is a State Subject under entry No.32 of the State List of
the Constitution of India.

In order to cover Cooperative Societies with membership from more than one
province, the Government of India enacted the Multi-Unit Cooperative Societies Act,
1942. This Act was an enabling legislative instrument dealing with incorporation and
winding up of cooperative societies having jurisdiction in more than one province.
With the emergence of national federations of cooperative societies in various
functional areas and to obviate the plethora of different laws governing the same types
of societies, a need was felt for a comprehensive Central legislation to consolidate the
laws governing such cooperative societies. Therefore, the Multi-State Cooperative
Societies Act, 1984 was enacted by Parliament under Entry No. 44 of the Union List
of the Constitution of India.

After India attained Independence in August, 1947, cooperatives assumed a great


significance in poverty removal and faster socio-economic growth. With the advent of
the planning process, cooperatives became an integral part of the Five Year Plans. As
a result, they emerged as a distinct segment in our national economy.In the First Five
Year Plan, it was specifically stated that the success of the Plan would be judged,
among other things, by the extent it was implemented through cooperative
organisations.

EVOLUTION
In 1958 the National Development Council (NDC) had recommended a national
policy on cooperatives. Jawaharlal Nehru had a strong faith in the cooperative
movement. While opening an international seminar on cooperative leadership in
South-East Asia he had said " But my outlook at present is not the outlook of
spreading the cooperative movement gradually, progressively, as it has done. My
outlook is to convulse India with the Cooperative Movement or rather with
cooperation to make it, broadly speaking, the basic activity of India, in every village
as well as elsewhere; and finally, indeed, to make the cooperative approach the
common thinking of India....Therefore, the whole future of India really depends on the
success of this approach of ours to these vast numbers, hundreds of millions of
people".

The cooperative sector has been playing a distinct and significant role in the
countrys process of socio-economic development. There has been a substantial
growth of this sector in diverse areas of the economy during the past few decades. The
number of all types of cooperatives increased from 1.81 lakh in 1950-51 to 4.53 lakh
in 1996-97. The total membership of cooperative societies increased from 1.55 crore
to 20.45 crore during the same period.

SOME INDIAN COOPERATIVES


AMUL
Amul is an Indian dairy cooperative, based at Anand that is situated in the
state of Gujarat, India.[2]
Formed in 1950, it is a brand managed by a cooperative body, the Gujarat
Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is
jointly owned by 3.6 million milk producers in Gujarat.[3]
The white revolution was spearheaded by Tribhuvandas Patel under the
guidance of Sardar Patel and Verghese Kurien. As a result, Kaira District
Milk Union Limited was born in 1946. Tribhuvan das became the founding
chairman of the organization which he led till his last day of his life. He
hired Dr. Kurien three years after the white revolution. He convinced
Dr.Kurien to stay and help with the mission rest was history in the dairying
industry.
Amul spurred India's White Revolution, which made the country the world's
largest producer of milk and milk products.[4] In the process Amul became
the largest food brand in India and has ventured into markets overseas.

History
Amul-cooperative registered on 14 December 1946 as a response to the
exploitation of marginal milk producers by traders or agents of the only
existing dairy, the Polson dairy, in the small city distances to deliver milk,
which often went sour in summer, to Polson. The prices of milk were
arbitrarily determined. Government had given monopoly rights to Polson to
collect milk from Kaira and supply it to Bombay city.[6][7]
Angered by the unfair trade practices, the farmers of Kaira
approached Sardar Vallabhbhai Patel under the leadership of local farmer
leader Tribhuvandas K. Patel. He advised them to form a cooperative and
supply milk directly to the Bombay Milk Scheme instead of Polson (who did
the same but gave them low prices).[8] He sent Morarji Desai to organise
the farmers. In 1946, the milk farmers of the area went on a strike which led
to the setting up of the cooperative to collect and process milk.[7] Milk
collection was decentralized, as most producers were marginal farmers
who could deliver, at most, 12 litres of milk per day. Cooperatives were
formed for each village, too.[9]
The cooperative was further developed and managed by Dr.Verghese
Kurien with H.M. Dalaya. Dalaya's innovation of making skim milk powder
from buffalo milk (for the first time in the world) and a little later, with
Kurien's help, making it on a commercial scale,[10] led to the first modern
dairy of the cooperative at Anand, which would compete against
established players in the market. Kurien's brother-in-law K.M. Philip
sensitized Kurien to the needs of attending to the finer points of marketing,
including the creation and popularization of a brand. This led to the search
for an attractive brand name. In a brainstorming session, a chemist who
worked in the dairy laboratory suggested Amul, which came from the
Sanskrit word "amulya", which means "priceless" and "denoted and
symbolised the pride of swadeshi production."[11]

The three-tier "Amul


Model"[edit]
The Amul Model is a three-tier cooperative structure. This structure
consists of a dairy cooperative society at the village level affiliated to a milk
union at the district level which in turn is federated into a milk federation at
the state level. Milk collection is done at the village dairy society, milk
procurement and processing at the District Milk Union and milk products
marketing at the state milk federation. Thus, the entire value-chain right
from the 'farm to the table (of the consumer)' is owned by the farmer, which
is not the case with many dairies elsewhere in the world where only some
parts of the value-chain belongs to the cooperative of farmers and the more
lucrative, like marketing, given away to multinationals and corporates. The
structure was evolved at Amul's initial, solitary dairy and later adopted by
GCMMF and thereafter replicated all over the country under the Operation
Flood programme. It is known as the 'Amul Model' or 'Anand Pattern'.
It is the mandate of Amul that no milk brought by dairy farmers to the
cooperative can be refused to be collected. Yet, three-fourths of the price
paid by consumers goes back into the hand of the dairy farmer, who is the
owner of the cooperative. Thus, Amul has a very low tax liability as a result
of giving away cash and not distributing dividends.[14] Also, only one
percent of its sales can be spent on advertising.

Products[edit]
A can of AMUL cow ghee
Amul's product range includes milk powders, milk, butter, ghee,
cheese, dahi, yoghurt, buttermilk, chocolate, ice cream, cream,
biscuit, shrikhand, paneer, gulab jamuns, flavoured milk, basundi and
others.
Amul's sugar-free Pro-Biotic Ice-cream won The International Dairy
Federation Marketing Award for 2007.[15] in

In popular culture[edit]
The establishment of Amul is known as White Revolution.
The White Revolution inspired the notable Indian film-maker Shyam
Benegal to base his film Manthan (1976) on it. The film was financed by
over five lakh (half a million) rural farmers in Gujarat who contributed Rs 2 each to its
budget. Upon its release, these farmers went in truckloads to watch 'their' film, making it a
commercial success.[22][23]Manthan was chosen for the 1977 National Film Award for Best Feature
Film in Hindi.
Sales Turnover Rs (million) US$ (in million)

1994-95 11140 355


1995-96 13790 400
1996-97 15540 450
1997-98 18840 455
1998-99 22192 493
1999-00 22185 493
2000-01 22588 500
2001-02 23365 500
2002-03 27457 575
2003-04 28941 616
2004-05 29225 672
2005-06 37736 850
2006-07 42778 1050
2007-08 52554 1325
2008-09 67113 1504
2009-10 80053 1700
2010-11 97742 2172
2011-12 116680 2500
2012-13 137350 2540
2013-14 181434 3024
2014-15 207330 3410
2015-16 229720 3500
2016-17 270850 4100
INTRODUCTION:
AMUL is Asias no. 1 and worlds second number co-operative dairy. It has large market and dairy network in every
state of India and across the India, like central Asian countries, Bangladesh, Thailand, Indonesia, Malaysia,
Singapore, etc. It was started with 250 liters of milk and 2 societies and now, it produces 10 lakhs litters milk per
day and has 1113 societies and more than 6 lakes farmer members. It produces milk and milk products. The main
motto of AMUL is to help farmers. Farmers were the foundation stone of AMUL. The system works only for
farmers and for consumers, not for profit. The main aim of AMUL is to provide quality products to the consumers at
minimum cost. The goal of AMUL is to provide maximum profit in terms of money to the farmers. Vision of
AMUL is to provide and vanish the problems of farmers (milk producers). The AMUL apparition was to run the
organization with the co-operation of four main parties, the farmers, the representatives, the marketers, and the
consumers.

Year Milk procured (in kgs) Sales turnover (Rs. In lack)

2000-01 277840861 50919

2001-02 258692443 46878

2002-03 257957726 48834

2003-04 255856435 54593

2004-05 276150374 60047

2005-06 297436246 70922

2006-07 324410536 81632

2007-08 401718616 107712

2008-09 468587136 137807

2009-10 498033310 169989

2010-11 515900000 211140

OBJECTIVE OF THE STUDY:

The objective of financial statement is to know information about the financial position, performance & cash flows of an
enterprise with the help of analytical tools.
To know the Market Position AMUL by taking Market Value Ratios
To know the tradeoff between Liquidity & Profitability.

DEVELOPMENT OF HYPOTHESIS:
H0: There is no positive relationship between the Liquidity & Profitability of AMUL.
H1: There is positive relationship between the Liquidity & Profitability of AMUL.
TESTING OF HYPOTHESIS:
STEP 1:

Financial Performance on the basis of Profitability & Liquidity Analysis


Relationship Between Current Ratio & Operating Profit Ratio

Years CR OPR

2001-02 2.702 88.380

2002-03 3.240 89.342

2003-04 2.376 90.460

2004-05 2.344 90.199

2005-06 2.136 91.035

2006-07 1.738 90.957

2007-08 2.136 92.178

2008-09 1.652 91.873

2009-10 1.394 92.580

2010-11 1.431 947.906

r -0.415

Relationship Between Current Ratio & Net Profit Ratio

Years CR NPR

2001-02 2.702 0.314

2002-03 3.240 0.405

2003-04 2.376 0.467

2004-05 2.344 0.523

2005-06 2.136 0.461

2006-07 1.738 0.504

2007-08 2.136 0.421

2008-09 1.652 0.419

2009-10 1.394 0.436

2010-11 1.431 0.440


r -0.323

STEP 2: FIVE DIFFERENT CORRELATIONS


1) Strong Negative Correlation (r=-0.933)
2) Moderate Negative Correlation (r=-0.674)
3) Moderate Positive Correlation (r=0.514)
4) Strong Positive Correlation (r=0.909)
5) Virtually No Correlation (r=-0.004)

STEP 3: INTERPRETATION
1) Correlation Result between the Operating Profit & Current Ratio shows a Moderate Negative Correlation
between them, & that if the current ratio increases it will have a negative impact on profitability & it will decreases
because there is a correlation r=-0.41472. Here AMULs current ratio is more than standard of 2:1, this indicate
negative reflection towards current assets
2) Correlation Result between the Net Profit & Current Ratio shows a Moderate Negative Correlation between
them, & that if the current ratio increases it will have a negative impact on profitability & it will decreases because
there is a correlation r=-0.32255. This indicates that if CR is increased by 1 Rs on liquidity basis, it reduces NPR by
0.32255 paisa on profitability.
3) Correlation result between Liquidity & Profitability have Moderate Negative Correlation