STUDY OF CO-

OPERATIVE
SOCIETIES IN INDIA
WITH RESPECT TO
“AMUL CO-
OPERATIVE SOCIETY”

1
 INTRODUCTION OF COMPANY

India is a country connected with agricultural and cattle rearing from ancient time
nearly more than 70% on agriculture and cattle rearing. So dairy industry is the best
suited for the growth of India.

The full form of AMUL is ANAND MILK UNION LIMITED that is the brand
name of kaira District co-operatives milk producers union limited for its product
range since 1955. AMUL is Asia’s NO 1 and worlds second number co-operatives
dairy. It has large market and dairy network in every state of India and across the
India, like central Asian countries, Bangladesh, Thailand, Indonesia, Malasiya,
Singapore, etc. It was started with 250 littre of milk and 2 societies and now, it
produce 15 lakh littres milk per day and has 1113 societies and more than 6 lakh
farmer members. It produce milk and milk products. AMUL was started with little
machineries and now all the production of AMUL are produced by latest and
advanced machineries. AMUL has completed 65nd year and entered in 66rd year on
14 December 2010.

It may be recalled that AMUL had a humble beginning of two village dairy co-
operative societies collecting 247 liters of milk in 1946 which has now grown to over
14000 village dairy co-operative societies collecting more than 1crore liters of milk
per day similarly the tree plantation drive which had started with 18.9 lakh sapling in
2007 has now grown into a mass tree plantation drive with plantation of 1crore
sapling in 2010 there by leading the way for greening Gujarat for pestering as per
AMUL green revolution by Burhan pathan

2
 MEANING

Co-operation is a form of organization wherein persons, irrespective of caste,

creed and religion, voluntarily associate together, as human beings, on the basis of

equality for the promotion or furtherance of their common economic interests.

It is self-help through mutual help. The Philosophy behind Co-operative

movement is "All for each and each for all".

3
 HISTORY OF AMUL

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. The government
had given monopoly rights to Polson to collect milk from Kaira and supply it to
Bombay city.

4
 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 (Kaira District
Co-operative Milk Producers' Union) and supply milk directly to the Bombay Milk
Scheme instead of Polson (who did the same but gave them low prices). 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. Milk collection was decentralized, as most producers were marginal farmers
who could deliver, at most, 1–2 litres of milk per day. Cooperatives were formed for
each village, too. By June 1948, the KDCMPUL had started pasteurizing milk for the
'Bombay Milk Scheme'. Under the selfless leadership of Tribhuvandas Patel, in
1973, Amul celebrated its 25th Anniversary with Morarji Desai, Maniben Patel
and Verghese Kurien.

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, 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.

The trio's (T. K. Patel, Kurien and Dalaya's) success at the cooperative's dairy
soon spread to Anand's neighbourhood in Gujarat. Within a short span, five unions in
other districts – Mehsana, Banaskantha, Baroda, Sabarkantha and Surat – were set up,
following the approach sometimes described as the Anand pattern.

In 1970, initiated White Revolution of India, as it help create, Gujrat Co-

Operative Milk Marketing Federation ltd., which now overlooks Amul, in
1973, and today, it is the second best dairy in India. To combine forces and expand
the market while saving on advertising and avoid competing against each other, the

5
GCMMF, an apex marketing body of these district cooperatives, was set up in 1973.
The Kaira Union, which had the brand name Amul with it since 1955, transferred it to
GCMMF.

In 1999, it was awarded the "Best of all" Rajiv Gandhi National Quality Award.

Technological developments at Amul have subsequently spread to other parts of

India.

The GCMMF is the largest food products marketing organisation of India. It

is the apex organisation of the dairy cooperatives of Gujarat. It is the exclusive
marketing organisation for products under the brand name of Amul and Sagar. Over
the last five and a half decades, dairy cooperatives in Gujarat have created an
economic network that links more than 3.1 million village milk products with millions
of consumers in India. Gujarat Cooperative Milk Marketing Federation Ltd.

The GCMMF is the largest food products marketing organisation of India. It

is the apex organisation of the dairy cooperatives of Gujarat. It is the exclusive
marketing organisation for products under the brand name of Amul and Sagar. Over
the last five and a half decades, dairy cooperatives in Gujarat have created an
economic network that links more than 3.1 million village milk products with
millions of consumers in India. Gujarat Cooperative Milk Marketing Federation Ltd.
Importance is also important for industries.

On September 30, 2018, Prime Minister Narendra Modi inaugurated Amul's

chocolate plant in Mogar, Anand near their headquarters.

6
TYPES OF CO. OPERATIVE SOCIETIES

• Consumer co. operative society

• Producers co. operative society

• Marketing cooperatives

• Cooperative farming societies

• Housing cooperatives

• Credit cooperatives

7
 TYPES OF COOPERATIVE SOCIETY

1. Consumers cooperative societies:

Consumers' cooperatives are formed by the consum-ers to obtain their daily

requirements at reasonable prices. Such a society buys goods directly from
manufacturers and wholesalers to eliminate the profits of middlemen.

These societies protect lower and middle class people from the exploitation of
profit hungry businessmen. The profits of the society are distributed among members
in the ratio of purchases made by them during the year.

Consumer's cooperatives or cooperative stores are working mainly in urban

areas in India. Super Bazar working under the control of Government is an example
of consumers' cooperative society.

2. Producers cooperatives:

Producers or industrial cooperatives are voluntary associations of small

producers and artisans who join hands to face competition and increase production.
These societies are of two types.

(a) Industrial service cooperatives:

In this type, the producers work independently and sell their industrial output
to the cooperative society. The society undertakes to supply raw materials, tools and
machinery to the members. The output of members is marketed by the society.

(b) Manufacturing cooperatives:

In this type, producer members are treated as employees of the society and are
paid wages for their work. The society provides raw material and equipment to every
member.

8
 The members produce goods at a common place or in their houses. The
society sells the output in the market and its profits are distributed among the
members.

3. Marketing Cooperatives:

These are voluntary associations of independent producers who want to sell

their output at remunerative prices. The output of different members is pooled and
sold through a centralised agency to eliminate middlemen. The sale proceeds are
distributed among the members in the ratio of their outputs.

As a central sales agency, the society may also perform important marketing
functions such as processing, grading and packaging the output, advertising and
exporting products, warehousing and transportation, etc.

Marketing societies are set up generally by farmers, artisans and small

producers who find it difficult to face competition in the market and to perform
necessary marketing functions individually. The National Agricul-tural Cooperative
Marketing Federation (NAFED) is an example of marketing cooperative in India.

4. Cooperative Farming Societies:

These are voluntary associations of small farmers who join together to obtain
the economies of large scale farming. In India farmers are economically weak and
their land-holdings are small.

In their individual capacity, they are unable to use modern tools, seeds,
fertilizers, etc. They pool their lands and do farming collectively with the help of
modern technology to maximum agricultural output.

5. Housing Cooperatives:

These societies are formed by low and middle income group people in urban
areas to have a house of their own. Housing cooperatives are of different types. Some

9
societies acquire land and give the plots to the members for constructing their own
houses.

They also arrange loans from financial institutions and Government agencies.
Other societies themselves construct houses and allot them to the members who make
payment in instalments.

6. Credit Cooperatives:

These societies are formed by poor people to provide financial help and to
develop the habit of savings among members. They help to protect members from
exploitation of money lenders who charge exorbitant interest from borrowers.

Credit cooperatives are found in both urban and rural areas. In rural areas,
agricultural credit societies provide loans to members mainly for agricultural
activities. In urban areas, non-agricultural societies or urban banks offer credit
facilities to the members for household needs.

In India, several national federations of cooperative societies have been

formed. National Cooperative Consumers Federation, National Federation of
Cooperative Sugar Factories, National Agricultural Cooperative Marketing
Federation, National Cooperative Dairy Federation, National Cooperative Housing
Federation, All India State Cooperative Banks Federation is some examples.

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 Purpose of Accounting in Cooperatives
Like any other business organization, cooperatives need to maintain accounts for:

(i) ascertaining the results of the transactions undertaken by it;

(ii) understanding its financial performance; and,
(iii) providing accounting based information to the management for facilitating
decision-making process. Besides the above, cooperatives need to have a
strong accounting system for many other reasons.
(iv) They may be briefly stated. First, cooperatives are owned by members,
managed by the elected representatives and controlled by the state
government.
(v) They are also supervised by the financing and the functional federations.
This makes the cooperatives accountable and answerable to too many.
(vi) Secondly, an important objective of cooperative business is to render
services to its member users at a reasonable cost with a profit margin.
(vii) A part of the profit needs to be distributed as patronage dividend to its
members.
(viii) This requires the cooperatives to account for the members' business with
them

Thirdly, the cooperatives have to report to various authorities outside the

cooperatives. For example, a cooperative sugar mill has to send financial, technical
and other statements to the financing institutions, federations at the state and national
level and government at frequent intervals.

Financing institutions may wish to know the financial condition of mills.

Government may require information for taxation, framing policy, planning
cooperative activity and so on. Federations may need information to understand the
performance of its affiliated units. The purpose of cooperative accounting is,
therefore, veiy broad and it serves as an important source of information to a variety
of stake holders.

11
 Cooperative Accounting vis -a-vis other systems of Accounting

Although cooperative accounting as a process is well in tune with the

universally accepted definition of accounting, it varies from the modem system of
account keeping in certain respects. Krishna samy, who made a pioneering attempt to
study the cooperative account keeping system, described it as "an improved System of
Receipts and 48 comparison of cooperative accounting with receipts and payments
system and also with double entry system, brings out clear-cut and definite
dissimilarities between the three systems of account keeping (See table 3.1). They
may be briefly explained.

The first dissimilarity is with reference to maintenance of subsidiary books and

transactions. The cooperatives maintain day book as the only book of original entry.
Depending on the volume of transactions certain cooperatives may maintain sub-day
books. But the receipts and payments totals of the sub-day books are incorporated in
the main day book every day. Both cash and credit transactions are recorded in the
day book itself. Under double entry system of accounting different subsidiary books
are maintained. Cash transactions alone are recorded in the cash book. Other
transactions are entered in the appropriate subsidiary books. Each book is
independent. In the case of receipts and payments system of accounting cash book is
the only book of original entry.

Cash transactions alone are entered in the cash book. The second dissimilarity
arises in the process of posting and summarization. Postings under cooperative
accounting are made in the general ledger which is the only book of final entry. There
are also subsidiary ledgers known as special ledgers in which details of major classes
of accounts such as share capital, deposits, borrowings, members' loans are recorded.

In double entry book keeping, accounts are opened in various ledgers such as
debtors ledger, creditors ledger, private ledger and general ledger. This general ledger
is different from the general ledger of cooperatives. While the latter contains all
accounts, the fonner is an impersonal ledger and contains properties and nominal
accounts. In the case of receipts and payments system of account keeping the general
ledger alone is maintained to post all transactions.

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The day book, as the name suggests, is closed eveiy day. Cooperatives may,
depending upon the number and volume of transactions in a day, maintain any of the
following day books.

(i) Simple day book having cash columns only.

(ii) Day book with cash, adjustment and total columns: All cash transactions
are entered in the cash column and all credit and bank transactions which
do not normally involve actual receipt or payment of money aie entered in
the adjustment column.
(iii) Day book with bank, adjustment and total columns: This book is used in
cooperatives where transactions are carried out through bank accounts and
no cash is transacted in the normal course of business. Credit transactions
alone are entered in the adjustment column. In cooperatives where
transactions are numerous, two day books are maintained one for odd days
and another for even days.

This arrangement is made in order to complete the entry of transactions

without delay. The cooperatives under study, however, present a different picture.
For instance, the cooperative wholesale unit maintains columnar main day book. It
also maintains sub-day books for sales, credit sales, bank, employees advance,
income, operational expenses etc. Their totals aie incorporated in the columnar
main day book. Postings are made from the entries made in the main day book.
Thus, the sub-day books are not independent. In die case of the spinning, sugar
and daily units different day books like cash book, purchase day book, sales day
book, bank day book and journal are maintained.

Each book is independent. The entries made in the different day 51 books
are straight away posted to the general ledger. Maintenance of different
independent day books by the three manufacturing units indicates the adoption of
subsidiary books system as found in double entry system of book keeping.
However the formate of day books in cooperatives is distinctly different from that
of the double entry system. All day books in cooperatives have invariably two
sides viz., receipts and payments sides.

13
Actual or notional Opening Balance List of adjustment
receipt/payment sheet Item

receipt and payment

Day book Final accounts
statement

General ledger
special ledger Balance Sheet
account

14
 CONDITIONS FOR COOPERATIVE SOCIETY
1. Co-operative Societies Act under which the same is registered whether it be
under state Act or Cental Act.
2. Co-operative Societies rules made there under whether it be central or state
rules
3. Bye-laws approved by the registrar at the time of registration and amendments
made from time to time and approved by the registrar, these bye-laws have to
be formed by the concerned members themselves and present it to the
registration authority for its approval.
4. Notification and Orders by the concerned Government

The following steps have to be followed while forming a Co-operative society, they
are

Step 1: Ten Individuals together who are desirous of forming a Society

To form a society, law mandates that 10 members minimum must show

intention to be part of the society having same aim and objective to be achieved
through the society for their mutual benefit and thereby be desirous to be part of it.

Step 2: Provisional Committee to select Chief Promoter

Once a group of individuals have a desire to form a society the next step
should be there must be a provisional committee of which everyone is part of and all
of them should by mutual consent or by majority whichever their prefer must choose a
person who will be a chief promoter of the society which is going to be formed by
them.

Step 3: A Name for the Society has to be selected

15
 Thereafter once a chief promoter is selected by set of individuals among them,
they have to select a name for the co-operative society which they wish to form

Step 4: Application has to be made to the Registration Authority

Once the name of the society is selected by the members then they have to
make a application to the registration authority stating that they have a intention to
form a society and the name of the society has to be given to the authority for its
approval and registering authority has to confirm that name is in conformity with laws
and issue a confirmation certificate to the members. Then when the members get their
name approval from the authority it is valid for 3 months from the date of approval.

Step 5: entrance fees and share capital

Thereafter once name approval comes from the concerned authority, the
entrance fee and the share capital must be collected from the concerned prospective
members to meet the statutory requirements under law and it can be prescribed by the
members themselves or society act mandates certain fees to be paid by them.

Step 6: Bank Account

Thereafter once the prescribed fee and share capital is collect from the
prospective members, then as per the directions of the registering authority promoter
has to open a bank account in the name of the society and deposit the said fees and
share capital in that account and a certificate has to be obtained from the bank to that
effect

16
Step 7: Application for registration

Once the bank formalities are completed then the promoter has to apply for the
society formation to the registration authority and it has to be accompanied with set of
documents, they are

All these documents have to be submitted at the time of applying for

registration of the society to the registering authority and the authority after it is
satisfied with the documents submitted to it has to apply its mind to whether or not to
register the said society.

Step 8: Registrar has to acknowledge

After the submission of the said documents has mentioned in step 7, the
registrar of that municipal ward has to enter the particulars in the book called the
“register of Application” which is generally specified in form B and give it a serial
number to the application. Thereafter the registrar has to issue a receipt to that effect
and give it to prospective members to know the status of the application when it is
pending.

Then the registrar after perusal of the records submitted to him/her has to
make a decision whether has to issue a certificate of registration or not and if there are
any discrepancies noticed then he/she has to inform the members of the same and get
it rectified if any.

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 FINANCIAL RECORD MAINTAINED THROUGH
COOPERATIVE SOCIETY

To keep and maintain the records of the society

It is necessary that the managing committee of the society should have to prepare all
registers, books of accounts and files as mentioned in Rule 65 and Bye-law No. 142
of the Maharashtra Co-operative Societies Rules, 1961.

It is the responsibility of the Secretary of the society to take entry in time in all
registers kept in society Sanctioned plan / lay-out of the society

Records of the society shall be in possession of the Secretary.

After expiry of the tenure of the Secretary of the society, the responsibility to prepare
list of the records, and hand over it as per list to the new secretary shall be of
concerned Chairman, Secretary and Managing Committee.

If the Managing Committee whose tenure is expired has not handed over the record to
the new managing committee in first meeting, then the Members of that managing
committee shall be liable for action under Section 146 & 147. After such action, the
decision to disqualify them from contesting the election shall be taken by the
Registrar of that society.

It shall be obligatory to keep the record of the society in the office of the society only.
If there is no office of the society, the managing committee should fix the place for
keeping record by making resolution. It shall be obligatory to keep record in such
place.

The responsibility of maintaining the record of the society in neat and up to date shall
be of Secretary and with him it is the responsibility of the managing

If the members demand for the inspection of the paper of the society/ copies then it
shall be the responsibility of the Secretary to examine under Section 32 and bye-law
23 of the Maharashtra Co-operative Societies Act 1960 and to issue the copy by
taking necessary fee under bye law No. 172.

18
The Society may appoint salaried manager for looking after day to day working of the
society.

For this the concerned candidate should have obtained the management diploma in
Housing Co-operative Societies proposed by the Co-operation Department, or should
have obtained qualification prescribed by the office of Commissioner Co-operation.

The Society where members number is 50 or more then such society should appoint a
full time manager and other small societies can appoint manager collectively.

The General Body decides Manager’s working terms, conditions, salary etc.

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 GLOBLE SCENARIO OF AMUL

 International market: USA, Nepal, South Africa, Kenya, Bhutan, Australia,

Thailand, Bangladesh, and gulf countries.

 Prospective market: Russia, Japan, and Srilanka.

 Agreement with wal –mart: Wal-mart agreed to sell AMUL products on its
shelves under brand AMUL itself.

 NEW DELHI: India's largest dairy brand Amul would soon be seen on the
shelves of leading international stores like Wal-Mart and Mustafa in Singapore
after its successful foray into the United Arab Emirates (UAE).

"We are expanding outside to test our quality and face competition, while
going ahead with plans to spread across the country to pre-empt any foreign
competition," said B.M. Vyas, managing director of Gujarat Cooperative Milk
Marketing Federation (GCMMF), India's largest dairy cooperative.

GCMMF's Amul has been recording 20 percent annual growth in overseas

markets largely through supermarkets and chain store sales.

Though Amul products have been selling in the US since 1998, "we are in
discussion with Wal-Mart to have a separate counter for stocking and selling
our products. We also have an arrangement with Mustafa supermarket chain in
Singapore, Lanka Milk Foods (CWE) Ltd and John Keels chain in Sri Lanka,
as also Choithram, Carrefour and Lulu chains in the UAE," said Vyas.

Amul is also being marketed in Hong Kong.

"Our export strategy is only to test market our branded products, but our real
market is India. At all times our effort would be to remain market leaders in
India and stave off competition, while testing our products globally," Vyas

20
told IANS in an interview.

The major supermarket and chain stores have been identified as the vehicle
overseas to promote Amul dairy products ranging from milk powder, butter,
ghee, cheese, butter, ice creams and tinned Indian sweets.

As growth through bulk exports is variable, GCMMF has opted for sustained
growth through retail sales that ensure brand recall and customer loyalty.

Of the 29 billion turnover in 2003-04, up from 24.75 billion in the previous

fiscal, GCMMF's overseas sales contributed 500 million.

The figures could have been much higher but for shortage of milk supplies
early last year leading to GCMMF dropping an export order to Iraq.

"Last year, we had to turn down an order for exports to Iraq and divert the
milk and milk products to meet domestic demand (in New Delhi)," said R.S.
Khanna, officer on special duty with the GCMMF based here.

After a high 13 percent growth in 2000-01, GCMMF has been witnessing its
normal four to five percent growth in milk production annually. The
cooperative's current milk production, collected from 2.2 million milk
producers of Gujarat, is around five million litres a day.

Through tie-ups with similar dairy cooperatives in other states, GCMMF is

now trying to not only increase its milk procurement but also enhance its
production and market reach to new towns.

Other than its own processing plants in Anand and Gandhinagar, both in
Gujarat, GCMMF has acquired a dairy in Pune and Nagpur (both in
Maharashtra) and entered into franchise arrangements in Baghpat and
Ballabhgarh on the suburbs of Delhi.

Amul milk is currently being supplied in 10 cities and towns outside Gujarat,
21
including in Rajasthan and Maharashtra.

Looking at expanding further in urban and semi urban regions, while

strengthening its presence in 400 towns, GCMMF is finalising plans to set up
a 400 million dairy plant in Manesar in Haryana.

"We have already bought the land and would soon be putting out tenders for
the project. In a year's time, we hope to have the 500,000 litres per-day-
capacity plant ready for processing of milk and milk products for supply in
Delhi and the neighbouring region," said Khanna.

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 MOTTO, VISION AND QUALITY & POLICY

MOTTO:

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 provide quality products to the consumers. At minimum
lost. The goal of AMUL is to provide minimum profit in terms of money to the
farmers. The main motto AMUL is do help farmers. AMUL system work under
objectives of highest possible price to the milk produce and lowest possible price to
consumer. Farmers are paid money in each payment for the milk. Milk gives them
money for daily necessities AMUL is the one who started using their profit for the
milk produce common goods.

VISION:

Vision of AMUL is to provide & vanish the problems of farmers. The

apparition was to run the organization with the cooperation of four main parties, The
farmers, The Representatives, The Marketers and The consumers.

QUALITY POLICY:

We the motivated and devoted work force of AMUL are

committed to produce whole some and safe food of excellent quality to remain market
leaders through development of quality management systems, State of art technology
innovations and eco-friendly operation delightment of customers and betterment of
milk producers.

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 ORGANIZATION PROFILE

NAME: KAIRA DISTRICT CO-OPERATIVE MILK PRODUCERS UMION

LIMITED widely known as AMUL.

FORM: Co-operative sector register under the co-operative society act.

LOCATION: Kaira District Co-operative Producers limited.

Near railway station

Amul dairy road.

Anand-388001

Gujarat.

REGISTRATION: 14TH December 1946

REG. OFFICE: Kaira District Co-operative milk producers ltd. Anand-388001

SALES OFFICE: Gujarat co-operation milk marketing federation, Anand

CERTIFICATES: ISO 9001:2000

ISO 2000:2005

SIZE: On large scale basis.

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PROMOTERS:

1) SHRI TRIBHUVAN DAS PATEL

2) SHRI MORARJI DESAI
3) DR. VARGHESE KURIEN
4) DR. H. M. DALAYA

BANKERS:

1) Kaira District co-operative Bank

2) Axix Bank
3) State Bank Of India
4) Bank Of Maharashtra
5) Cooperation Bank
6) Bank Of Baroda
7) Bank Of Saurastra

AUDITORS: Special Auditor (MILK), Milk Audit Office Anand.

INTERNAL AUDITOR: B.B. Bhabhor.

NO. OF SHIFT: 1st shift time: 08:30 AM to 4:30 PM

2nd shift time: 10 AM to 6 PM

3rd shift time: 4:30 PM to 12:30 AM

VILLAGE CO-OPERATIVE

SOCIETIES: 1163

MEMBERS: 634675

OFFICE TIME: 10 AM TO 6 PM

PREMISES: 49.55 Acres

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 BOARD OF DIRECTORS

SHRI. RAMSINH PRABHATSINH PARMAR CHAIRMAN

SHRI. RAJENDRASINH DHIRSINH PARMAR VICE-
CHAIRMAN
SHRI. BHAIJIBHAI AMARSINGH ZALA DIRECTOR
SHRI. RAVJIBHAI TULSIBHAI PATEL DIRECTOR
SMT. MADHUBEN DHARMSINGH PARMAR DIRECTOR
SMT. SHARDABEN HARIBHAI PATEL DIRECTOR
SHRI. GHELABHAI MANSINH ZALA DIRECTOR
SHRI. PRAVINSINH FULSINH SOLANKI DIRECTOR
SHRI. MANSINH KOHYABHAI CHAUHAN DIRECTOR
SHRI. SHIVABHAI MAHIJIBHAI PARMAR DIRECTOR
SHRI. RANJITBHAI KANTIBHAI PATEL DIRECTOR
SHRI. CHANDUBHAI MADHABHAI PARMAR DIRECTOR
SHRI. B. B. BHABHOR SPECIAL
AUDITOR

26
27
 LOGO OF THE AMUL

Logo of AMUL is a ring of four hands, which are co-ordinated each

other. The actual meaning of this symbol is co-ordination of hand of different people
by whom this union is now at top.

FIRST HAND: is for farmers (producers), without whom the organization would not
be existed. Farmers are the inspiration of the AMUL-taste of India.

SECOND HAND: is for the representatives of processors by whom the raw milk
processed in to different finished products.

THIRD HAND: is for marketers without whom the products would not been able to
reach to the customer.

FOURTH HAND: is for customers without whom the organization could not carry
on because they are the people who consume the products.

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 PLANT OF AMUL

AMUL PLANT MANUFACTURING PRODUCTS

1) Anand Milk, Butter, Ghee, Milk powder, Flavored milk and Butter
milk
2) Mogar Chocolates, Nutramul, Amul ganthia and amullite
3) Kanjari Cattle feed
4) khatraj Cheese
5) Pune Milk and Curd
6) Calcutta Milk, flavored milk, Ice-Cream

PRODUCT PROFILE

The AMUL two type of products for the selling purpose. The first one is
consumer products and other one is an Industrial products.

CONSUMER PRODUCTS

Pasteurized milk Butter

Cheese Amul spray
Condensed milk Amul milk powder
Amul baby food Amul nutramul
Amul ghee Chocolates
Amul cattle feed Amul buttermilk
Amul masti dahi Amul gathiya
Amul lassi Amul ice-cream
Amul mithayee Amul panner
Amul flavored milk Amul shrikhand
Amul fresh cream
INDUSTRIAL PRODUCTS

Coco butter
Cream
Coco powder

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PRODUCT PROFILE

30
31
 SWOT ANALYSIS

A] STRENGTH:

 CO-OPERATIVE CULTURE: All the co-operatives are work together

to accomplish a particular task.

 BRAND STRENGTH: The strong brand equity of AMUL, which

made it possible to become a market leader in milk and milk products.

 PRODUCT INNOVATION: Under its umbrella brand AMUL has

added a wide range of milk products like- cheese, butter, Srikhand,
flavored milk, Ice-Cream, Chocolate, Sugar-free Chocolate, Probiotic
Ice-Cream etc. Recently AMUL launched Pizza and milkshakes.

 EXCELLENT PROMOTIONAL TOOLS: AMUL is promoting with

the help of advertisement, personal selling, sale promotion etc. AMUL
generally use hoarding for its promotion. Recently, AMUL is also
sponsoring Star Channel for its programmed star Voice of India. B]
WEAKNESSES:

 Co-operative culture if not dealt properly can affect the organization.

 Animals are now taken as side business. This can affect the industry as
the main raw material is milk which is provided by animals.

C] OPPORTUNITIES:

 AMUL is exporting its products in different countries like UAE,

Singapore, Australia, U.S.A. and Gulf Countries. Being, Asia‘s largest

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 milk brand AMUL has acquired significant position in the global
market.

 Day by day increase in the collection of the milk, AMUL has wide
opportunity to produce variety of products like Choco Flakes.

 Large demand in the market.

D] THREATS:

 With the advent of multinational companies in India the competition

has intensified. Amul is facing a tough competition with the companies
like Cadbury, Nestle, and Britannia etc.

 In the health drink segment for its Stamina AMUL is facing

competition with PepsiCo India, Parle Agro etc. Similarly in beverage
section also it is having a lot of competitors.

 Animals are now taken as side business by the farmers. Their illiteracy
poses a threat to change their mindset thereby affecting the
organization.
 Changes in government policies.

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 OBJECTIVE OF FINANCIAL MANAGEMENT

Efficient financial management requires the existence of some objectives, which are
as follows:

 Profit maximization:
The objective of financial management is the same as the objective of a
company which is to earn profit. But profit maximization alone cannot be the
sole objective of a company. It is a limited objective. If profits are given undue
important then problems may arise as discussed below:
 The term profit is vague & it involves much more contradictions.
 Profit maximization must be attempted with a realization of risks involved. A
positive relationship exists between risk & profits. So both risk & profit
objectives should be balanced.
 Profit maximization fails to take into account the time pattern of returns.
 Profit maximization does not take into account the social consideration.

 Wealth maximization:

It is commonly understood that the objective of a firm is to maximize

value of a firm is represented by the market price of the company‘s stock. The
market price of a firm‘s stock represents the assessment of all market
particular firms. It takes into account present & prospective future earnings per
share, the timing & risk of these earnings, the dividend policy of the firm &
many other factors that bear upon the market price of the stock. Market price
acts as the performance index or report card of the firm‘s progress & potential.

 PROCESS:

In Financial Management, process following points is considered:

 Financial Analysis
 Financial Decision-Making
 Financial Planning
 Financial Control

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  FINANCE FUNCTION:

The financial management involves critical decisions on which the very survival of
the organization depends. The main financial decisions are as follows:

 Investment Decision
 Financing Decision
 Dividend Decision

 SOURCE OF CAPITAL:

Source of Capital of AMUL are:

 All the products are sold and distributed by Gujarat Co-operative milk
marketing federation (GCMMF). So federation gives them daily amount
decided by union if selling of Amul products will be happened or not.
 Fix deposit of society is the major source of finance.
 Interest of fix deposit of bank like UTI, BOB, GEB Bond and Sardar Sarovar
Bond etc. are one of the sources of finance.
 Share capital of Amul, which is not listed in market because it is not for
public. It is only for the members of societies.

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 OBJECTIVES OF STUDY

 Primary objective:

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.

 Secondary objectives: Based on this information, objective of analysing them

is to evaluate:

1) The adequacy of the profits earned by the company

2) The adequacy of its financial strength

3) Its ability to generate enough cash & cash equivalents, timing & certainly of their
Generation.

4) The future growth outlook of the company.

5) To know the financial performance evaluation of AMUL

6) To give suggestion on the basis of Liquidity, Profitability, Efficiency and Leverage

analysis

7) To know the Market Position AMUL by taking Market Value Ratios

8) To know the trade off between Liquidity & Profitability.

 Objectives of trend analysis:

1) To find out the general pattern of a relationship between associated factors or

variables.

2) To forecast the future direction of this pattern (for instance sales figure).

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 Objectives of horizontal analysis:

1) To compare the figures of the current period with that of the past period.

2) To analyze the performance and find out areas of improvement.

 Objectives of cash flow statement analysis:

1) To assess the quality of cash position of a company

2) To generate positive cash flows in future & aid to decision making

3) To know the impact of controversy on the treatments of dividend & interest

paid on the assessment of cash flows.

 Objectives of ratio analysis:

1) To compare the actual ratios with the budgeted ratios.

2) To find out deviation in targeted and achieved results.

3) It helps in planning the future activities.

4) Comparison with Competitor Company helps in developing competitive

strategy.

5) Comparison with Industry ratio, give picture about company‘s growth.

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HYPOTHESIS TESTING:

Since the objective of this study is to examine the relationship between

Profitability & Liquidity, the study makes a Financial Performance through
testable hypothesis.

Hypothesis:

H0: There is no positive relationship between the Liquidity & Profitability of

AMUL.

H1: There is positive relationship between the Liquidity & Profitability of AMUL.

SAMPLE & DATA:

 For trend analysis data has been taken from 2007-08 to 2011-12 that is six
years data.
 For Horizontal analysis data has been taken from 2010-11 to 201-12 that is
two years data.
 For cash flow statement analysis data has been taken from 2010-11 to
2011-12 that is two years data.
 For Ratio analysis data has been taken from 2009-10 to 2011-12 that is ten
years data.

DETAIL OF STUDY:

Financial statement analysis seeks to evaluate the performance,

financial strength, ability to generate enough cash & the growth outlook of a
company. It determining the money needs in a business can be a tough task.
The analyses of the accounts and the economic prospects of a firm require
skilled and experienced professionals to carry out the task. But the returns are
as beneficial and profitable as much as the effort involved.

Financial analysis is the process of identifying the financial strength

& weaknesses of the firm by properly establishing relationship between the
items of the balance sheet & profit & loss account. Financial analysis is the
starting point for the making plans, before using any sophisticated forecasting
& planning procedures.

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 A number of tools are available in the tool kit of the analyst for the
purpose certain tools are:

1) Trend analysis

2) Horizontal analysis

3) Cash flow statement analysis

4) Ratio analysis

 Trend analysis:
Trend analysis is an extension of horizontal analysis in that while the latter
compares only two years‘ position, the former the same for more than two years.
Again the methodology is very simple. The farther or the base year figure is taken
as 100 or just 1 & all successive years‘ figures are accordingly restated, or
indexed.

 When to use:

Trend analysis is valuable when one wants to use historical data to

predict future values or to calculate expected values for comparison to actual
current values. Trend analysis is also useful for identifying unexpected variances
that may indicate strategic or operational changes or entity weaknesses worthy of
additional exploration and analysis.

 Advantages:

Trend analysis can:

1) Reveal potentially fruitful areas of audit investigation

2) Detect significant variations over time

3) Be easily understood and communicated

4) Be readily accepted due to its widespread use

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  Horizontal analysis:

Horizontal analysis is very simple tool. It facilitates a quick review of the

current year‘s performance & financial position of a business over the previous year.
The methodology is to work out increase or decrease in each item of the balance sheet
& profit & loss account of the current year over those of the last year & to express this
as a percentage of the last year‘s figure. The horizontal analysis is the financial
statements of a company of successive years presented side-by-side.

 Cash flow statement analysis:

An analysis of cash flow is useful for short-term planning and controlling.

A firm needs sufficient cash to pay debts maturing in the near future, to pay interest
and other expenses as well as to pay dividends to the shareholders. The firm can make
projections of cash inflows and outflows for the near future to determine the
availability of cash. This cash balance can be matched with the firm‘s need for cash
during the period, and accordingly, arrangements can be made to meet the deficit or
invest the surplus cash temporarily. Thus, a historical analysis of cash flow
projections for the immediate future is very much necessary for the smooth and
proper running of the firm.

A cash flow statement is nothing but a statement of changes occurring in

financial position of a company on basis of cash. It summarizes the causes of changes
in cash position between dates of the two balance sheets. It also indicates the sources
and uses of cash. The cash flow statement is similar to the funds flow statement
except that it focuses attention on the cash instead of working capital or funds. Thus,
this statement analysis changes in non current accounts as well as current accounts to
determine the flow of cash.

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 ANALYTICAL RESULTS

A] TREND ANALYSIS:

PARTICULAR 2007-08 2008-09 2009-10 2010-11 2011-12

RESULT FOR THE YEAR:
Sales and other
income 107187.3 137212.35 168938.7 210642.68 246634.70
Index 1 1.28 1.57 1.96 2.30
PBDT 1896.81 2604.78 3350.05 4323.04 5386.34
Index 1 1.37 1.77 2.28 2.84
PBT 508.22 680.53 976.06 1139.43 2053.37
Index 1 1.34 1.96 2.24 4.04
PAT 499.22 575.53 721.06 926.65 1070.29
index 1 1.52 1.44 1.87 2.14

QUANTITATIVE DETAILS:
Sales 107712 137807 169489 211140 247267
Index 1 1.27 1.57 1.96 2.30

POSITION AT THE YEAR END:

Gross block
Index
Net block
Index
net current asset
Index
Net worth

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 Chart for Result for the year is as below:

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INTERPRETATION:-

 From above graph we can see that current ratio of Amul for theyear 2006-
07, 2008-09 and 2009-10 are lower than previous year and also lower
than standard ratio.

 This happened because of increase in current liabilities.This ratio can be

improved by

o Increase in equity share capital.

o Retaining profits in business.

 LIQUID RATIO:

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Although receivable, debtors and bills receivable aregenerally more liquid than invent
ories, yet there may bedoubts regarding their realization into cash immediately or inti
me. Hence, absolute liquid ratio should also be calculated together with current ratio
and quick ratio so as to exclude even receivables from the current assets and find out
the absolute liquid assets.
 The standard Liquid Ratio is 1.5:1.
LIQUID RATIO = LIQUID ASSETS
LIQUID LIABILITY

 INTERPRETATION :

 This ratio shows that the liquidity position of the AMUL isrising slowly in
2009-10.And from graph we can see that
theliquidity position of the Amul is declining in 2008-09 ascompared to
previous year but this year though it is higher than previous year, it is not up to
standard ratio.

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  This ratio can be improved by reducing proportion of inventories and
increasing proportion of bank borrowings for working capital in current
liabilities.

 QUICK RATIO:

Quick ratio, also called Acid test ratio, establishes a relationship between quick or
liquid assets and current liabilities. An asset is liquid if it can be converted into cash
immediately or reasonably soon without a loss of value.

Quick Ratio = quick Assent

Liquid Liability

 INTERPRETATION :
 Form above graph we can summarize that the quick ratio for the2008-09 is
lowest but in 2009-10 again it rises slowly. In 2005-06Amul has strongest
position in terms of liquidity. During 2005-06, 2006-07 and 2007-08 , this
ratio is good as compared to standard ratio but in last two years, i.e. in 2008-
09 and 2009-10, it is below the standard ratio.
 To improve this ratio, Amul should retain its profit in business.

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  LIMITATION OF STUDY:

1) As data provide to us, has been taken from the secondary source, it is not sure
that collected data is perfectly accurate.

2) Companywide factors.—only use of numerical or accounting information

[avoid best human resource, automation in production such a non-account
factors are ignored.]

3) Study based on historical data & records.

4) Fail to indicate what the entity‘s normal or benchmark position is

5) Be heavily influenced by the choice of the base fiscal period

5) Cash flow statement is based on cash basis of accounting; it ignores the basic
accounting concept of accrual basis.

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