86

CHAPTER 4

FINANCIAL PERFORMANCE OF DIMUL AND PRIMARY DAIRY COOPERATIVES

Every dairy Union performs the task of collection, processing and marketing of milk

and milk products on behalf of the registered cooperatives. The overall financial

performance of a dairy industry is dependent on one of the important aspects, that is,

marketing. Thus before studying the financial aspects DIMUL, an attempt has been

made to look into the marketing aspect.

4.1 Marketing Performance of DIMUL Ltd.

After procurement of milk, the next important aspect that a dairy industry has to take

care, is marketing. As milk is highly perishable in nature, appropriate action must be

taken to collect, store and send the products to the market ensuring the quality and

quantity aspect. As demand for milk is income elastic. Market researchers have been

able to correlate milk consumption with the income structures of the society. Therefore,

with an increase in population and income levels the demand for milk and milk-

products is sure to grow in the years to come.1 DIMUL started marketing of milk and

milk products right from the beginning of its operation, thus, handling 3.5 litres in the

beginning from 3 cooperative societies prior to 1985. In the year 2008-09, from the

different range of products marketed, only 6 major products among were selected for

the study. Sale of different products in quantities by DIMUL is shown in Table -4.1A.

1. Kamat, G.S. (1986): Managing Cooperative Marketing, Himalaya Publishing house, NewDelhi.

87

Table- 4.1A Sale of Different Products by Dimul from 2004-05 to 008-09

Year Toned Milk

(lakh litres)

Lassi

(‘000 cups)

Dahi

(‘000 cups)

Ice cream

(‘000 cups)

Ghee

(kg)

Cattle Feed

(MT)

2004 – 05 14.36 436.07 127.57 -- 535 127.00

2005 – 06 12.54 784.51 451.42 16.35 2088 176.00

2006 – 07 12.78 833.92 322.70 66.70 3758 310.00

2007 – 08 13.13 940.86 318.49 176.87 1061.50 255.00

2008 – 09 13.40 1117.52 262.92 428.65 --- 186.00

Average 13.242 823 297 172.1425 1861 211

Percent Over 2004-05 & 2008-09

-0.06685 50.85448 0.514795 -- -- 0.317204

An attempt has been made to show the total sale and total procurement of milk of

DIMUL over the study period. Total Sales of different products (in Lakh Rupees) &

total procurement of milk (in Lakh Litres) are shown in the Table- 4.1B

Table-4.1B Total Sale of Different Products (in Rupees) and Total Procurement of Milk (in

Lakh litres) by Dimul from 2004 to 2009

Year Total Sale of Different

Products (Rupees in Lakh) Procurement (in Lakh litres)

2004 – 05 267.77 11.25

2005 – 06 310.36 12.04

2006 – 07 350.35 12.52

2007 – 08 377.23 10.33

2008 – 09 432.50 8.53

Source-Annual Report, DIMUL, 2004-05 to 2008-09

Thus looking into the above table we can say that the sales of products by DIMUL has

gone up from 267.77 lakhs in the year 2004-05 to 432.50 lakhs in the year 2008-09 thus

registered an average increase of 61.52 percent whereas over the study period but the

procurement of milk has been decreasing over the period. In order to understand the

Collection and procurement of milk better a trend line with equation is shown in

Chart-4.1.

88

Chart-4.1

The graph presented shows the trend equation of Collection of milk as positive and the

procurement of milk as negative. The actual requirement of milk is increasing due to

variety of products marketed by DIMUL. Therefore, this gap of met by purchasing

powdered milk from a Chennai based firm on credit basis. Thus, we can say that

DIMUL has to make more efforts in procurement of milk from its registered dairy

cooperatives.

DIMUL had carried out intensified advertisement drive during the study period through

wall paintings, danglers, panaflex, hoardings, etc. In order to improve upon aesthetics

and ensure hygienic handling of products, installation of all milk vans and carriage of

milk in creates were made mandatory. Insulated boxes were provided for the retail

outlets for safe storage of milk and products. The Agricultural Expo - 2006 was

organised towards the fag end of the year provided the union with a platform to

showcase union's activities and products.

Training and skill upgradation- Trainings, awareness campaigns and skill upgradation

programmes are necessary to keep pace with the speed at which technologies are

89

becoming obsolete. A series of trainings awareness programmes were conducted during

the year within and outside the state.

1. As we have gathered a birdseye view of the marketing activities undertaken by DIMUL,

now an attempt has been made to understand the meaning of finance management and

the ratio analysis as one of the technique of financial management to evaluate the

financial performance of an organisation.

Financial management has attracted a lot of attention of the corporate sector for matter

relating to the capital structure, cost of capital, working capital management, project

appraisal, corporate governance and so on. A good professionally managed company is

greatly concerned about the adaptation of the appropriate technique the result of which

shall be helpful in guiding and deciding the best possible course of action.

Finance has been aptly described as a lubricant of economic activity, without which the

entire business will grind to a halt. According to Soloman, “Financial management is

concerned with efficient use of an important economic resource mainly, capital funds”.

S.C Kuchhal’s definition of financial management is most acceptable which states that

“Financial Management deals with procurement of funds and their effective utilisation

in the business”.2

In order to make financial analysis of an organisation, financial statements are

extensively used. The financial Statements include the Balance sheet which is one the

most significant financial statements of the organisation. It indicates the financial

condition of the state of affairs of the business at a particular point of time.

2. Chakravarty, S. K. (2004) : Cost Accounts and Financial Management, New Age International

Publishers, New Delhi, p673.

90

The Profit and loss account is the other which is a score board of the fund's performance

during a particular period. It explains what has happened to business because of

operation between two balance sheet dates.

Thus, financial Statement analysis consists of the application of analytical tools and

techniques to financial statements and data in order to derive from them certain

measurement and relationship that are significant and useful for decision making.

Ratio analysis is one of the important tools of financial analysis. It involves taking sets

of numbers out of the financial statements and forming ratios with them. The numbers

are chosen so that each ratio has a particular meaning to the operation of the business.

In the present study, the data were collected in order to determine the financial

condition of DIMUL and to study the ratio analysis technique adopted by several

researchers in their respective research works; certain vital ratios were selected and

purposively applied to ascertain the financial strengths and weaknesses of the DIMUL.

With the help of the financial figures presented in the financial Statements an

analysis of the overall financial performance of an organisation can be done.

As no dairy industry specific standard norm for different ratios were available, the

researcher after calculation different ratios for DIMUL and compared the result with the

ratios computed by other researchers in the similar type of studies and finally with the

result of the computed ratios of Tripura Cooperative Milk Producers’ Union Ltd, to

throw light on the financial condition of DIMUL. This chapter is divided into two

sections. Section –I covers the Ratio Analysis for DIMUL and Section-II for financial

Performance of Dairy Cooperatives.

SECTION-I

4.2 Ratio Analysis- FOR DIMUL

It was found that in order to evaluate the financial performance ratio analysis techniques

was adopted in several studies. Such studies were related to analysis of financial

91

performance of Cooperative Banks at district level or to evaluate the performance of

cooperative federation, cooperative societies, etc. Studies of Natarajan3 et al. (1980),

Rama4 (1984), Bhalerao5 (1985), ShankaraMurthy6 (1986), Patil7 (1991),

Bandyopadhyay8 (1996), Tirfe9 (2008) considered different ratios to determine the

solvency of the organisation, by using liquidity ratio; turnover ratios to determine

various turnovers in relation to Collections and the profitability ratio to determine the

overall profitability of the organisation.

3. Natarajan, R. Et al. (1980): Working of Consumers Cooperatives in Andhra Pradesh – A Case study,

Indian Cooperative Review, Vol.18(1), pp.(7 – 20).

4. Rama, B.R. (1984) : Performance evaluation of Farmer Service Societies in Karnataka, M.Sc.

(Agriculture) Thesis, University of Agricultural Science, Bangalore.

5. Bhalerao, M. M. Et al (1985) : Growth of Arecanut Marketing Societies In India, Indian Co-operative

Review, Vol.19(1), pp.19–32.

6. ShankaraMurthy, H.G.(1986) : Performance of the Karnataka State Co-Operative Marketing Federation

Ltd., and its impact on farm market – An economic analysis, Ph.D (Agriculture) Thesis, Andhra Pradesh

Agricultural University, Hyderabad.

7. Patil, B. L.(1991): Performance of The Karnataka State Cooperative Milk Producer’s Federation Ltd and

its Impact on Dairy Development– An Economic analysis, Ph.D (Agriculture) Thesis, University of

Agricultural Science, Dharwad, Karnataka.

8. Bandyopadhyay, Manob. Kanti. (1996): Dairy Co-operative and Rural Development with Special

Reference to Comparative Study between the Kaira District Co-operative Milk Producers’ Union Limited

and the Himalayan Co-operative Milk Producers’ Union Limited, Ph.D Thesis, North Bengal University,

Rajarammohanpur, Darjeeling, Finance India, Vol. X (2). Pp 406–411.

9. Tirfe, Almaz Mesfin (2008) : Comparative Study on the Performance of Dairy Cooperative Input and

Output Marketing in Astbie, Womerta, Alamata and Enderta woreda in Tigray Regioosn Eithiopia, M.Sc

thesis, Department of Cooperatives, Mekelle University, Ethiopia.

92

Various ratios computed by the researcher are as follows: -

4.2.1 Liquidity Ratios- These are the ratios which measure the short-term

solvency or financial position of the firm. These ratios are calculated to comment

upon the short term paying capacity of the concern for the firm’s capacity to meet its

current obligations. The various liquidity ratios are: current ratio, liquid ratio and

absolute liquid ratio. Further see the efficiency with which the liquid resources had

been employed by a firm, debtor’s turnover and creditor’s turnover ratios are

calculated.

Current ratio - This ratio is also known as working capital ratio. It measures

the general liquidity and is most widely used in analysing the short term

financial position or liquidity of the firm. It is calculated by dividing the total

of current assets (for both Organisations-Cash in hand, cash at Bank, Short

term deposits, Bills Receivables, Sundry Debtors, Inventories, Prepaid

expenses, etc., were taken into consideration) by the total of current liabilities

(Sundry Creditors, Short term advances, Bank Overdraft, outstanding

liabilities, etc., are taken into consideration).

Current assets Current Ratio =---------------------------

Current liabilities

The Current Ratio calculated for DIMUL over the study period is computed in the

Table 4.2.1A.

Table 4.2.1A Computation of Current Ratio of DIMUL

Year

2004

-05

2005

-06

2006

-07

2007

-08

2

008-

09

Ave

rage

Current Ratio 2.42 1.64 1.80 1.75 2.61

2.044

93

Different studies carried on different studies showed that a current ratio of 2:1 was

most ideal. In case of TCMPUL showed average current ratio for the same period

2004-05 to 2008-09) as 5.4.

The equation of the trend line of current ratio for DIMUL was y = 0.049x + 1.897

which showed that there was a positive trend for the study period whereas the

equation for TCMPUL was y = -2.5x + 12.9 showed that there was a negative trend.

As a convention the minimum of ‘2 to 1 ratio’ is considered as mandatory. Thus,

average of this ratio for Dimul during the study period was 2.044 and it can be

concluded that the Current ratio of DIMUL was satisfactory.

Quick or Acid Test or Liquid Ratio - An asset is said to be liquid if it can be

converted into cash within a short period without loss of value. It includes

cash in hand and cash at bank, bills receivable, sundry debtors, marketable

securities and short term or temporary investments. However, the inventories

are left out while calculating this ratio.

Quick or liquid assets Quick or Acid Test Ratio =----------------------------- Current liabilities

The Quick Ratio calculated for DIMUL over the study period is computed in the Table 4.2.1B

Table 4.2.1B Computation of Quick Ratio

As a rule of thumb or as a convention quick ratio is consider satisfactory if quick

assets are equal to current liabilities (1:1) so that the concern may be able to meet its

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Quick Ratio 0.79 0.60 0.70 0.75 1.34 0.896

94

short term obligations. Different studies showed that the satisfactory level of Quick

ratio is to be 1. In case of TCMPUL showed average quick ratio for the same period

2004-05 to 2008-09 as 2.036. The equation derived out of the trend line for quick

ratio for DIMUL was y = 0.125x + 0.461 which showed that there was a positive

trend of quick ratio for DIMUL for the study period whereas the equation of the

trend line for quick ratio for TCMPU was y = -0.578x + 3.77 which showed a

negative trend. As the average Quick Ratio of Dimul is near to 1, it is considered to

be satisfactory.

4.2.2 Current Assets Movement or Efficiency/Activity ratios- These are

calculated to measure the efficiency with which resources of a firm had been

employed. These ratios are also called turnover ratios because they indicate the

speed with which assets are being turned over into Collections.

Inventory Turnover or Stock Turnover Ratio - It indicates whether

inventory has been efficiently used are not. It is normally calculated as

Collections/average inventory or costs of goods sold/average inventory.

Cost of Goods Sold Inventory Turnover or Stock Turnover Ratio = ----------------------------

Average Inventory The Inventory Turnover Ratio calculated for DIMUL over the study period is

computed in the Table 4.2.2A

Table 4.2.2A Computation of Inventory Turnover Ratio

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Inventory Turnover Ratio

8.09 8.99 8.33 9.66 8.88 8.79

95

Average of Inventory Turnover for the study period is case of DIMUL is

8.79. A low inventory turnover implies over-investment in inventories, stock

accumulation and low profits as compared to total investment. The inventory

turnover ratio is also an index of profitability, where a high ratio signifies

more profit; a low ratio signifies low profit. As the average inventory

turnover of Dimul is near to 8.79 and the equation of the trend line was y =

0.225x + 8.115 which showed a positive trend and the equation derived out of

the trend line for TCMPUL was y = 1.11x + 2.49 with average inventory

turnover ratio for the period 2004-05 to 2008-09 was 5.82. The value of x in

the equation of the trend line was better than the equation for DIMUL. Hence the

performance of DIMUL was not satisfactory.

Debtors or Receivable Turnover Ratio- It indicates the number of times

average debtors (receivables) are turned over during the year.

Annual Collections Debtors or Receivable Turnover Ratio = --------------------------- Average trade debtors

Generally, the higher the value of debtor’s turnover the more efficient in the

management of debtors/Collections or more liquid is the debtors. The Annual

Reports of DIMUL did not have credit Collection as an item in the financial

statements of the study period from 2004-05 to 2008-09, the ratio can be

calculated by dividing the total Collections by the balance of debtors

(including bills Receivables).10 Thus, in case of DIMUL, Debtors Turnover

Ratio shall be calculated in Table 4.2.2B.

10. Sarma, R.K and Gupta Shashi. K. (2003): Management Accounting-Principles & Practices, Kalyani Publishers, 8th edn, New Delhi.

96

Table 4.2.2B

Computation of Debtors’ Turnover Ratio for DIMUL

DIMUL had maintained an average Debtors Turnover Ratio of 15.86 but the

equation of the trend line was y = -0.817x + 18.311 showing a negative trend

for the study period and the equation derived out of the trend line for

TCMPUL was y = -1.971x + 25.671 with an average debtors’ turnover ratio

for the same period 2004-05 to 2008-09 was 19.76. The trend of negativity in

the equation was more in case of TCMPUL, thus it can be concluded that the

performance of DIMUL was satisfactory than TCMPUL.

Creditors/Payable Ratio- The creditors are represented by the sundry

creditors and bills payable who are normally interested in finding the velocity

with which the creditors are turned over in relation to purchase. Generally,

higher the creditors velocity better it is for the firm. As the annual reports of

the study period from 2004-05 to 2008-09 do not provide information

regarding credit purchases in the financial statements. The creditors’ turnover

ratio can be calculated by dividing the total purchases by the balance of

creditors (including bills payable). Thus, Creditors Turnover Ratio shall be

calculated in the Table-4.2.2C

Annual Purchases Creditors payable turnover/velocity =--------------------------------- Trade Creditors

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Debtors Turnover

18.75 14.80 14.58 18.21 12.96 15.86

97

Table 4.2.2C

Computation of Creditors Turnover Ratio for DIMUL

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Creditors Turnover

Ratio

27.30 23.10 21.93 63.86 57.28 38.69

A high creditors’ turnover ratio enhances the credit worthiness of any

organisation. However a very favourable ratio to this effect also shows that

the business is not taking the full advantage of credit facilities allowed by

the creditors. In case of TCMPUL showed average creditors’ turnover ratio

for the same period 2004-05 to 2008-09 was 17.80 whereas for DIMUL the

average for the period was 38.69 times. Looking into the trend of creditors’

turnover ratio over the period of time, the trend equation for DIMUL was y =

10.072x + 8.478 whereas for TCMPUL the trend equation for TCMPUL was

y = -6.901x + 38.501 which was negative, Thus it can be concluded that

Creditors’ turnover ratio was satisfactory for DIMUL.

Working Capital Turnover Ratio- This ratio indicates the number of times

the working capital had turned over in the course of the year. The increase or

decrease in current assets like debtors, bills receivable, cash, stock, etc., with

Collections has a direct relationship on the increase or decrease in the

working capital. The working capital is determined as follows:

Working capital = current assets - current liabilities

In order to compute the Working Capital Turnover Ratio, it is required to

compute the Cost of Collections. The Cost of Collections is the difference

between the total of Opening stock, purchases, direct expenses and the

98

closing Stock on the numerator and dominator net working capital is taken

into consideration. It is calculated Table- 4.2.2D.

Cost of Collections Working capital turnover ratio =------------------------------

Average working capital

Table 4.2.2D

Computation of the Working Capital Turnover Ratio for DIMUL

The higher working capital indicates efficient utilization of working capital

and the low ratio indicates otherwise. A very high working capital turnover

is also not a good situation for any firm. In case of DIMUL the average of

five years’ working capital turnover ratio was 6.26 and in case of TCMPUL

showed an average for the same period as 4.43. Looking into the trend of

working capital turnover ratio over the period of time, the trend equation

was negative for DIMUL (y = -0.132x + 6.66) whereas for TCMPUL the

trend equation was a positive (y = 0.276x + 3.286) Thus it can be concluded

that working capital turnover ratio was unsatisfactory for DIMUL for over

the period of time.

4.2.3 Long-term Solvency and Leverage ratios: Leverage ratios show the

proportion of debt and equity in financing of the firm. These ratios measure the

contribution of financing by owners as compared to financing by outsiders. Long-

term solvency ratios convey a firm's ability to pay the interest costs and replacement

schedule of its long-term obligations.

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Working Capital Turnover 5.72 7.67 5.28 7.51 5.14 6.26

99

Debt-Equity Ratio- It is calculated to measure the relative claims of

outsiders and the owners (i.e., shareholders). The computation of Long-Term

Debt-Equity Ratio is shown in Table-4.2.3A. It can be calculated as:

Long-term debt Long-term Debt - Equity Ratio =- ---------------------------- Shareholders’ Funds

Table 4.2.3A

Computation of Long-term Debt - Equity Ratio for DIMUL

YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Debt-Equity

0.08 0.14 0.21 0.21 0.14 0.16

A ratio of 1:1 may be usually considered to be a satisfactory ratio although

there cannot be any 'rule of thumb’ or standard norm for all types of

businesses. In one study while using this ratio concluded that in the initial

year the ratio was 0.65 because the equity of the corporation was low.

Thereafter the ratio increased upto 0.65 due to increase in long term liabilities

of the corporation. In the next year, i.e. 2006-07, the ratio decreased to 0.35

indicating though there was a decreasing trend but it was positive that the

long term liabilities of the corporation decreased.11 Generally speaking, the

low ratio means debt being low in comparison to shareholders fund, that the

organisation has not utilized the debt market for the effective use of the

organisation.

11. Tallikeri Kallappa Deepa (2008) : Performance of Karnataka State Agricultural Produce Processing and Export Corporation, Limited – An Economic Analysis, M.Sc Thesis in Agricultural Economics, Dept Of Agricultural Economics, College of Agriculture, University of Agricultural Sciences, Dharwad.

100

For DIMUL other than Bank overdraft, and bank loans, it did not take up the

risk of either shares/debenture or any other sort of bonds. TCMPUL showed

average long term debt to equity ratio for the same period (2004-05 TO 2008-

09) as 4.33 and the equation of the trend was y = 0.481x + 2.971 whereas the

average debtors’ turnover of Dimul was only 0.16 and the equation of the

trend was y = 0.019x + 0.099, thus it can be concluded that the overall

performance of the Debt-Equity Ratio for DIMUL was not satisfactory.

Proprietary or Equity Ratio - This ratio establishes the relationship between

shareholders funds to total assets of the firm. It is calculated in the following

manner-

Shareholders' funds Proprietary ratio or equity ratio : -------------------------------

Total Assets

Table 4.2.3B

Computation of Proprietary or Equity Ratio for DIMUL

YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average

PROPRIE-TARY RATIO

0.89 0.85 0.96 0.96 0.89 0.91

Normally, higher the ratio of the share of shareholders in the total capital of

the organisation, better is the long-term solvency position of the organisation.

A low proprietary ratio will include greater risk to the creditors. In case of

TCMPUL showed average proprietary ratio for the same period (2004-05 to

2008-09) as 0.65 times and the trend equation y = -0.012x + 0.69 showed a

negative trend. For DIMUL, the proprietary Ratio showed that the

shareholders/stakeholders had greater control over the assets on an average of

101

the period of 0.91 times but the trend equation y = 0.011x + 0.877 showed a

positive sign, thus it was considered as favourable.

Fixed Assets to Net Worth or Fixed Assets to Proprietors’ Fund- The

ratio establishes the relationship between fixed assets and shareholder's funds,

that is, share capital plus reserves, surpluses and retained earnings.

Calculation of the ratio is given below.

Fixed assets (after Depreciation) Fixed assets to net worth =----------------------------------------------- Shareholders' funds

Table 4.2.3C

Computation of Fixed Assets to Net Worth

Or Fixed Assets to Proprietor's Fund of DIMUL

In case of TCMPUL showed average Fixed Assets to Net Worth or Fixed

Assets to Proprietor's Fund ratio for the same period (2004-05 to 2008-09)

was 0.45 times and the trend line equation y = -0.027x + 0.529 showed a

negative trend . DIMUL had the Fixed Assets to Net Worth or Fixed Assets

to Proprietor's Fund as 0.89 time and the trend line equation y = 0.011x +

0.877 showed a positive trend over the study period. Hence Fixed Assets to

Net Worth or Fixed Assets is favourable for DIMUL.

Ratio of Current Assets to Proprietor’s Funds- This ratio is calculated by

dividing the total of current assets by the amount of shareholders' funds. It

indicates the extent to which owners funds are invested in current assets.

Years 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Fixed Assets to net worth

0.89 0.85 0.96 0.96 0.89 0.91

102

Current Assets Ratio of Current Assets to Proprietor’s Funds =- -----------------------------

Shareholders' funds

Table 4.2.3D Computation of Current Assets to Proprietor's Fund For DIMUL

In case of TCMPUL showed average Current Assets to Proprietors’ Fund

ratio for the same period (2004-05 to 2008-09) was 1.18 times and the trend

line equation y = 0.086x + 0.922 showed a positive trend which meant that

there was more dependency on the proprietors’ fund to finance the current

assets. DIMUL had the Current Assets to Proprietors’ Fund as 0.32 time and

the trend line equation y = 0.126x - 0.058 showed that though there was a

negative tendency to depend on the proprietors’ fund to finance the current

assets. Thus it can be concluded that the performance of Current Assets to

Proprietors’ Fund ratio over the period was satisfactory.

4.2.4 Profitability ratios - These ratios measure the result of business operations or

overall performance and the effectiveness of the firm. For the present study the

following ratios are calculated.

Gross profit Ratio- It measures the relationship of gross profit to net

Collections and is usually represented as a percentage. Table 4.2.4A shows

the computation of Gross Profit Ratio over the study period. It is calculated

by dividing the gross profit by Net Sales.

Gross profit Gross profit Ratio =------------------------ X 100

Net Sales

YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average

CURRENT ASSETS TO PROPRIETORS’ FUND

0.14 0.21 0.25 0.25 0.75 0.32

103

A high Gross profit Ratio is adequate to cover up the operating

(administrative and office expenses, selling and distribution expenses) and to

provide for fixed charges, dividends and accumulation of reserves.

Table 4.2.4A

Computation of Gross Profit Ratio of DIMUL

It is evident from the Table-4.2.4.1A that there is an increasing trend of gross

profit ratio for DIMUL expect for the year 2007-08. In case of TCMPUL

showed average Gross Profit ratio for the same period (2004-05 to 2008-09)

of 17.4 percent and the trend line equation and the trend line equation y = -

0.4x + 18.8 showed a negative trend of gross profit. For DIMUL,there was an

increasing trend of gross profit ratio for DIMUL and the trend line equation

showed that y = 1.3x + 14.1, a positive trend. The average of Gross Profit

Ratio for the five years showed that DIMUL had 18 percent. Thus Gross

profit ratio was satisfactory for DIMUL.

Operating Ratio - It establishes the relationship between cost of goods sold

and other operating expenses on one hand and the Net Collections on the

other. It is generally represented as a percentage.

Cost of Goods Sold + Operating Expenses Operating Ratio =-------------------------------------------------------- X 100 Net Collections

Organisation 20

04-0

5

2005

-06

2006

-07

2007

-08

2008

-09

Ave

rage

DIMUL 15% 18% 17% 19% 21% 18%

104

Table 4.2.4B

Computation of Operating Ratio

There is rule of thumb for this ratio and 75- 85 percent may be considered to

be a good ratio in case of manufacturing unit. The performance of DIMUL

has been high as the average Operating rate for the period of study was 85.6

percent as it was just a little more than the specific standard of 75 – 85

percent and the equation of the trend liney = -1.977x + 91.527 showed that

the operating expenses have been decreasing over the period of time. The

trend line reflected a positive sign of decrease of operating expenses for

DIMUL whereas operating ratio for TCMPU on the average for the period of

study was 80.26 percent. The equation of the trend liney = 0.615x + 78.333

showed that the operating expenses have been increasing over the period of

time, at a moderate rate. Thus, on comparison with TCMPUL, we can

conclude that performance of operating ratio was satisfactory for DIMUL as

it has managed to control some of the operating expenses.

Expenses Ratios: expenses ratios indicate the relationship of the various

expenses to net Collections. Individual or specific expense ratio may be

calculated as:

Cost of Goods Sold Cost of Goods sold Ratio:-------------------------------------- X 100

Net Collections

Years 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Operating

Ratio 88.46 % 86.83% 89.14 % 83.12% 80.43% 85.60%

105

Table 4.2.4C(i)

Computation of Cost of Goods Sold Ratio of DIMUL

Organisation 2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008-09

Average

DIMUL 78% 77% 77% 80% 72% 76.8%

The average Cost of Goods sold Expenses Ratio for DIMUL during the study

period came to 76.8 percent and the equation of the trend liney = -0.9x + 79.5

showed that the Cost of goods sold has been reducing over the period of

study. The average Cost of goods sold ratio in case of TCMPUL was 85

percent and the equation of the trend liney = 0.5x + 81.1 showed that the Cost

of goods sold has been increasing over the period of study, thus, it can be said

that the performance of DIMUL in this regard has been more satisfactory

than TCMPUL.

Administrative Expenses Ratio- The administrative Expenses Ratio is

calculated to determine the amount of money spent on various expenses

incurred in maintaining the office and administration of an organisation.

Administrative Expenses Administrative Expenses ratio:-----------------------------------X 100 Net Sales

Table 4.2.4C(ii)

Computation of Administrative Expenses Ratio of DIMUL Ltd

Year 2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008-09 Average

Admn Exp Ratio

18% 22% 21% 18% 20%

19.8%

The average administrative and Office Expenses Ratio during the study

period came to 19.8 percent and the trend line showed more or less same at y

106

= 19.8 and DIMUL has to reduce some of administrative expenses in future.

The administrative expenses ratio in case of TCMPU with an average of 11.2

percent and the equation of the trend line for the period of study was y = -

1.2x + 14.8 showed decreasing trend over the study period. Thus, it can be

concluded that the performance in relation to administrative expenses was not

satisfactory to DIMUL.

Selling & Distribution Expenses Ratio- It includes all the expenses relating

to the selling of the products such as commission paid to the distributors,

advertisement, travel cost, etc. The formula is-

Selling & Distribution Expenses --------------------------------------- X 100

Net Sales

Table 4.2.4C(iii)

Computation of Selling & Distribution Expenses Ratio

Year 2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008-09

Average

Selling & Distribtion Expenses

Ratio

1.35% 1.21% 2.62% 1.57% 1.68%

1.69 %

The average percent of Selling & Distribution Expense Ratio of DIMUL was

low with an average of 1.69 percent and the equation of the trend line was y =

0.102x + 1.38 which showed that there was an increasing trend where as

TCMPUL had an average of 4.2 percent and the equation of the trend line

over the period y = -0.1x + 4.5 showed that there was a decreasing trend.

Thus it can be concluded that the performance of DIMUL over the period of

time was not satisfactory in comparison to TCMPUL.

107

Net profit ratio- It establishes the relationship between net profit (after tax)

and Collections. It indicates the efficiency of the management in controlling

manufacturing, selling and distribution expenses. It is calculated as:

Net profit after tax Net profit ratio= ----------------------------------- X 100 Net Sales

This ratio also indicates the firm's capacity to face adverse conditions such as

price competition, low demand, etc. Higher the ratio is better for the firm for

the adjustment to be adverse situations.

Table 4.2.4D

Computation of Net Profit Ratio for DIMUL

As cooperative exists for rendering service to its members, therefore, profit

earning is not the motto but in order to sustain the organisation DIMUL had

just managed to get an average of 1.056 percent and the equation of the trend

line was y = 0.116x + 0.708 showed a moderate increasing trend over the

study period. For TCMPUL had sustained a loss of net profit in the year

2007-08 but its overall average percent was only 3.024 percent and the

equation of the trend line was y = -0.333x + 4.023 which showed a negative

trend over the study period therefore it can said that the performance of

DIMUL was better in all these years of study.

4.2.5 Overall Profitability Ratio- Profits are the measure of overall efficiency of the

business. Here, return on shareholders' investment or net worth (ROI) is considered

to determine the overall profitability of DIMUL.

YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average

NET PROFIT RATIO

1.00% 0.99% 0.89% 0.65% 1.75% 1.056%

108

Return on Shareholders' Investment or Net Worth (ROI ): It is the

relationship between net profits (after interest and tax) and the Proprietors’

fund.

Net Profits (after interest and tax) Return on Shareholders' Investment (ROI): ------------------------------------- Shareholders fund

Table 4.2.5

Computation of Return on Shareholders' Investment (ROI)

DIMUL had average Return on investment of 8.92 percent and the equation

of the trend line was y = 1.585x + 4.165 was better than the TCMPUL and

there was an increasing trend over the study period. TCMPUL had Return on

investment of 13.2% with a negative ROI in the year 2007-08 and the

equation of the trend line was y = 0.4x + 11.922 showed a mild increase in

the ROI over the period. Thus, it can be concluded that the overall

performance of ROI over the study period was better than TCMPUL.

Computation of all the ratios for DIMUL is presented in the Table 4.2.6 in next

page.

YEAR 2004-05 2005-06 2006-07 2007-08 2008-09 Average

ROI 9.87% 5.97% 5.74% 4.48% 18.54%

8.92 %

109

Table-4.2.6

Computation of Various Ratios for DIMUL

Before drawing the final conclusion about the financial performance of DIMUL, it

was felt appropriate to look into some of the relevant important items available in the

Balance Sheets of DIMUL.

Particulars 2004-05 2005-06 2006-

07 2007-08

2008-09

Avg

Current Ratio 2.42 1.64 1.80 1.75 2.61 2.044

Quick Ratio 0.79 0.60 0.70 0.75 1.34 0.896

Inventory Turnover Ratio 8.09 8.99 8.33 9.66 8.88 8.79

Debtors Turnover Ratio 18.75 14.80 14.58 18.21 12.96 15.86

Creditors Turnover Ratio 27.30 23.10 21.93 63.86 57.28 38.69

Working Capital Turnover Ratio

3.20 4.39 5.99 3.86 4.69 4.43

Proprietary or Equity Ratio 0.57 0.80 0.75 0.48 0.67 0.65

Fixed Assets to Net Worth

0.50 0.45 0.47 0.46 0.36 0.45

Current Assets to Proprietor's Fund

0.40 0.21 0.25 0.25 0.75 0.32

Gross Profit Ratio 15% 18% 17% 19% 21% 18%

Operating Ratio 88.46% 86.43% 89.14% 83.12% 80.43% 85.60%

Cost of Goods Sold Ratio 78% 77% 77% 80% 72% 77%

Administrative Expenses Ratio

18% 22% 21% 18% 20% 19.8%

Selling & Distribution Expenses Ratio

1.35% 1.21% 2.62% 1.57% 1.68% 1.69 %

Net Profit Ratio 1.00% 0.99% 0.89% 0.65% 1.75% 1.056%

Return on Shareholders' Investment (ROI)

9.89% 5.97% 5.74% 4.48% 18.54% 8.92 %

110

4.2.7 Study of some of the Balance Sheet items of DIMUL

Given below some of the relevant important items available in the Balance Sheets of

DIMUL from 2004-05 to 2008-09 are shown in Table- 4.2.7

Table- 4.2.7 Selected Items from the Balance Sheets of DIMUL from 2004-05 to 2008-09

(In Lakh Rupees)

PARTICULARS 20

04-

05

200

5-06

200

6-07

200

7-08

200

8-09

Ave

rage

Government Share Societies Share

1,20 1,11

1,20 1,11

1,20 1,11

1,20 1,26

1,20 1,26

-- 1.17

Total Share Capital

2,31 2,31 2,31 2,46 2,46 2.37

Reserve & Surplus

425.56 406.76 373.62 388.54 384.33 395.762

Net Profit 2.68 3.06 3.13 2.44 7.58 3.778

Current Liabilities

27.16 51.23 54.60 54.51 40.88 ---

Net Fixed Asset 392.25 380.44 376.70 360.25 345.53 371.034

Gross Profit 41.62 56.41 61.06 70.41 90.89 64.078

Current Assets 65.77 84.06 98.14 95.31 106.67 89.99

Investment 1.70 1.70 1.70 1.70 1.70 1.7

Source- Annual Reports -2004-05 to 2008-09 From the Table above, the following inferences can be drawn-

1. The Share capital of DIMUL has remained constant till 2006-07 and it is only in

the year 2007-08 there was an increase of Rs 15,000 in the Share Capital, this

increase was due to the increase in three registered primary dairy cooperative in

the year 2006-07. The share of Government has remained constant throughout

the period of study.

2. The amount of Reserves and surplus has been decreasing. It was Rs 425.56 lakhs

in the year 2004-05, but it has come down to Rs. 384.33 Lakhs, a decrease of

9.65 percent in the period of study. As DIMUL has not acquired any fixed assets

111

during this period, this amount was utilised for meeting the expenses of routine

nature which is not a positive sign.

3. There is a positive growth of net profit except for the year 2007-08 over the

study period. In the year 2004-05 the amount of net profit was Rs 2.68 lakhs and

in the year 2007-08, the net profit had come down to Rs 2.44 but net profit

increased to Rs 7.58 lakhs in the year 2008-09.

4. The amount of current liabilities has increased during the first three years of the

study period. This increase was due to fall in the procurement of milk and the

purchase of milk powder from a Chennai based firm on credit basis.

5. Total Fixed Assets have decreased over the period due to the charge of

depreciation (reducing balance method) of 2.5 to 20 percent on all fixed assets.

6. There has been a remarkable increase in the gross profit from Rs 41.62 lakhs in

the year 2004-05 to 90.89 lakhs in the year 2008-09 thus registered an increase

of 118 percent.

7. There has been increase in the level of current assets but the organisation must

improve its current assets position in the years to come.

8. DIMUL has no futuristic outlook in terms of its investment. It has managed to

invest only in shares of Nagaland State Cooperative Bank Ltd (NSCB Ltd) and

Nagaland State Dairy Cooperative Federation Ltd (NSDCF Ltd) respectively. It

is, therefore, suggested to make right investment after proper judgement in

shares and debentures in the future.

After the detailed analysis of the important items of the balance sheet, it is now felt

appropriate to compare the different ratios calculated for DIMUL and TCMPUL

(Appendix -1) in Table- 4.2.8.

112

Table- 4.2.8 Comparative Analysis of Ratios by Comparing with the Standard & with the

result of the Ratios of DIMUL and TCMPUL

* The trend of negative was found more in case of TCMPUL for Debtors turnover ratio.

From the above Table it is revealed that 12 ratios are in favour of DIMUL against 5

in case of TCMPUL. So, DIMUL is doing better than TCMPUL but as mentioned

Type of Ratios

General Standard/

Findings Other Research Studied

Average of

DIMUL

Average of

TCMPUL

Analysis of Trend

Satisfactory/ UnSatisfacto

ry to DIMUL

Incr

easi

ng

Dec

reas

ing

Sat

isfa

ctor

y

Uns

atis

fact

ory

Liquidity Ratios Current Ratio= CA/CL

2:1

2.044

5.4

Yes

--

Yes

Quick Asset Ratio = QA/CL 1:1 0.836 2.036 Yes -- Yes

Current Assets Movement Or Efficiency/Activity ratios

Inventory Turnover Ratio High Ratio 8.79 5.82 -- Yes -- Yes

Debtors Turnover Ratio High Ratio 15.86 19.76 -- Yes*

Yes --

Creditors Turnover Ratio High Ratio 38.69 108 Yes -- Yes --

Working Capital Turnover Ratio

High Ratio 6.26 4.43 -- Yes -- Yes

Long-term solvency and leverage ratios

Debt – Equity Ratio 1:1 0.154 4.33 Yes -- -- Yes

Proprietary Ratio High Ratio 0.91 0.65 Yes -- Yes --

Fixed Assets To Net Worth High Ratio 0.23 0.45 Yes -- Yes --

Current Assets to Proprietors’ Funds

Low Ratio 0.32 1.18 Yes

Yes --

Profitability ratios:

Gross Profit Ratio High Ratio 18% 17.4% Yes Yes Yes --

Operating Ratio 75- 85% 85.60% 80.26%

Yes Yes

Expenses Ratio:

COGS Ratio Low Ratio 77% 83% -- Yes Yes

Admn/Office Ratio Low Ratio 20% 11% Yes -- Yes

Selling &Distribution Exp Low Ratio 2% 4% Yes -- Yes

Net Profit Ratio High Ratio 1.06% 3.02% Yes -- Yes

Overall Profitability:

Return on Investment High Ratio 8.92% 13.12% Yes -- Yes

113

earlier that there is marginal fluctuations of different ratios but the collection of milk

from the different dairy cooperatives has reduced, the number of active members of

the active members also has reduced and some of the expenses ratios such as cost of

goods sold and administration expenses ratios were showing a high trend. So there is

no significant improvement of the financial performance of DIMUL over the period

of time.

SECTION – II

The Financial Performance of the Primary Dairy Cooperatives The second part of the hypothesis testing was in relation to the financial analysis of

the primary dairy cooperatives both registered and functional. Primary dairy

cooperatives are the collection centres of milk. These cooperatives also provide

different types of services to the members, such as, supply of fodder, vaccination,

veterinary services, etc.

As there were no Balance Sheets and the income Statements, the facts and figures

relating to the accounting aspects, was generated from the personal interview of the

respective secretary of the Primary Dairy Cooperatives and the primary data

collected from the members of the societies by help of schedules. The general

performance of the dairy cooperatives associated with DIMUL are estimated

considering only total number of members at the start of the cooperative, number of

members in the year 2008-09 and total collection of milk, etc. The total collection of

milk by the DCS were estimated on the basis of following formula-

Total collection of milk from the respondents of a cooperative (in a year) = X

X Average collection of milk = ------- = Y N

114

(N = Total number of respondents of the Cooperative)

Total collection of milk from the cooperative as a whole = Y X TA

(TA = Total number of active respondents)

In this portion of the study, the overall performance of cooperative was estimated on

the following yard sticks:-

1. Percent of Increase/decrease in Collections over last 5 years of study period.

2. Increase /decrease of membership from the beginning of the establishment of the

cooperative till 31.03.2008.

3. Percentage of Collection of milk by a DCS in the year 2008-09 in comparison to the

total Collection of the cooperatives under study.

The detail analysis of the total Collection of milk by the respective dairy co-

operatives is taken up here-

4.3 Performance of DCS under study-

4.3.1 CHARITY DCS-

Membership- This cooperative was established and registered in the year 2002 with

total membership of 14 but as on 31.03.2009, it had 6 active members and they pour

milk regularly.

Collection of milk- The total collection of milk in the year 2004 – 05 was 3,150

litres which increased to 3750 litres in the year 2008 – 09. Thus, it recorded an

increase in the collection of only 18 percent and the average collection of milk of

3514 litres over the five years. The percent of collection in the year 2008–09 in

comparison with the other dairy co-operatives under study is only 1.44 percent.

The table-4.3.1 and Chart-4.3.1 provide the collection of milk by Charity over the

study period.

115

TableTableTableTable----4.4.4.4.3333.1.1.1.1 Quantity of Milk Quantity of Milk Quantity of Milk Quantity of Milk Collected bCollected bCollected bCollected by Charity Dairy Cooperativey Charity Dairy Cooperativey Charity Dairy Cooperativey Charity Dairy Cooperative

(In Litres)

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Annual Collection of Milk

3150 3458 3588 3670.5 3705 3514

The chart drawn below gives an impressive growth over the study period but the true

fact is that Charity was one of the lowest enrolment of members and the lowest milk

pouring cooperatives in the list of the Union.

ChartChartChartChart---- 4444....3333.1.1.1.1

4.3.2 BHOLA DCS-

Membership- It is one of the oldest registered cooperatives established in the year

1988. The total membership was 175 in the beginning but as on 31.03.2009, it had

only 55 members active, a decrease of 69 percent from the beginning.

Collection of milk by Bhola- the total collection of milk in the year 2004 – 05 was

58272 litres which increased to 67770 litres in the year 2008–09, an increase in the

collection of milk 16.30 percent with an average collection of milk was 65233 litres

over the years. The percent of Collection in the year 2008–09 in comparison with

the other dairy co-operatives under study was only 26.39 percent of the total

Collections by all the DCS. It was the highest pouring dairy cooperative in

comparison to the other cooperatives. The table-4.3.2 and Chart 4.3.2 present the

Collection of milk by Charity over the study period.

116

TableTableTableTable----4.4.4.4.3333.2.2.2.2 CollectionCollectionCollectionCollection of Milk by Bhola Dairy Cooperatof Milk by Bhola Dairy Cooperatof Milk by Bhola Dairy Cooperatof Milk by Bhola Dairy Cooperativeiveiveive

(in Litres)(in Litres)(in Litres)(in Litres)

YEAR

2004

-0

5

2005

-0

6

2006

-0

7

2007

-0

8

2008

-0

9 Average

Annual Collection of

Milk

58272 55986 71301 72836 67770 65233

Chart Chart Chart Chart ----4.4.4.4.3333.2.2.2.2

4.3.3 NITO DCS-

Membership- This cooperative was established and registered in the year 1998 with

total membership of 60 but as on 31.03.2009, it has only 45 members active. In

percent wise, there is decrease of 25 percent from the beginning till 2009.

Collection of milk by Nito- The total Collection in the year 2004 – 05 was 59,673

litres which decreased to 45,922 litres in the year 2008–09. It registered a decrease

in the collection of 23.04 percent with an average of 49904 litres of milk over the

five years. The per cent of collection in the year 2008–09 in comparison with the

other dairy co-operatives under study was only 17.88 percent of the total Collections.

The table-4.3.3 and Chart-4.3.3 present the Collection of milk by NITO over the

study period.

117

TableTableTableTable---- 4.4.4.4.3.3.3.3.3333 CollectionCollectionCollectionCollection of Milk by Nito Dairy Cooperativeof Milk by Nito Dairy Cooperativeof Milk by Nito Dairy Cooperativeof Milk by Nito Dairy Cooperative

(in Litres)(in Litres)(in Litres)(in Litres)

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Annual Collection of Milk

59673 49060 48172 46695 45922 49904

ChartChartChartChart---- 4.4.4.4.3333.3.3.3.3

4.3.4 Valley DCS-

Membership- This cooperative is one of the oldest cooperatives registered in the

year 1988 with total membership of 50 but as on 31.03.2009, it has only 45 members

active. In percent wise, there is decrease in the membership of 10 percent from the

beginning till 2009.

Collection of milk by Valley- The total Collection in the year 2004 – 05 was 34,750

litres which increased to 50,270 litres in the year 2008–09, an increase in collection

of 45.96 percent with an average of 43,555 litres of milk over the years. The percent

of collection in the year 2008–09 in comparison with the other dairy co-operatives

under study was only 19.75 percent. The table 4.3.4 and Chart 4.3.4 present the

Collection of milk by Valley over the study period.

118

TableTableTableTable----4.4.4.4.3333.4.4.4.4

CollectionCollectionCollectionCollection of Milk by Valley Dairy Cooperativeof Milk by Valley Dairy Cooperativeof Milk by Valley Dairy Cooperativeof Milk by Valley Dairy Cooperative

(in Litres)(in Litres)(in Litres)(in Litres)

Years 2004-

05 2005-06 2006-07 2007-08

2008-09

Average

Annual Collection of milk

34750 37372 48017 46917 50720 43555

Chart-4.3.4

4.3.5 Kikhruru DCS-

Membership- This cooperative was registered with the Union in the year 1998 with

total membership of 71 but as on 31.03.2009, it has 66 members active. In percent

wise, there is decrease of 7.04 percent from the beginning till 2008.

Collection of milk by Kikhruru- The total collection of milk in the year 2004 – 05

was 20,688 litres which increased to 35,258 litres in the year 2008–09, registering an

increase in collection of 70.43 percent with an average of milk of 29679 litres over

the years. The percent of collection in the year 2008–09 in comparison with the

other dairy co-operatives under study was 13.73 percent. The table- 4.3.5 and Chart

4.3.5 show the collection of milk by Valley over the study period:

119

TableTableTableTable----4.4.4.4.3333.5.5.5.5

CollectionCollectionCollectionCollection of Milk of Milk of Milk of Milk bybybyby Kikhruru Dairy CooperativeKikhruru Dairy CooperativeKikhruru Dairy CooperativeKikhruru Dairy Cooperative

(in Litres)(in Litres)(in Litres)(in Litres)

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Average

Annual Collection of

Milk

20688 27240 31766 33442 35258

29679

ChartChartChartChart----4.4.4.4.3333.5.5.5.5

4.3.6 Azapeni DCS-

Membership- This cooperative was registered with the Union and established in the

year 2002 with total membership of 45 but as on 31.03.2009, it has only 30 members

active. In percent wise, there is decrease of 33.33 percent from the beginning till

2009.

Collection of Milk - The total collection in the year 2004 – 05 was 37095 litres

which decreased to 36862 litres in the year 2008–09. It is seen that a decrease in

collection of 0.63 percent and average collection of 42,697 litres of milk over the

years. The percent of Collection in the year 2008–09 in comparison with the other

dairy co-operatives under study was only 14.36 percent of the total Collections. The

120

table 4.3.6 and Chart 4.3.6 show the collection of milk by Azapeni over the study

period.

TableTableTableTable----4.4.4.4.3333.6.6.6.6 CollectionCollectionCollectionCollection of Milk by Azapeni Dairy Cooperativeof Milk by Azapeni Dairy Cooperativeof Milk by Azapeni Dairy Cooperativeof Milk by Azapeni Dairy Cooperative

(in Litres)

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Avg

Annual Collection of

Milk

37,095 35,947 69,165 34,417 36,862 42,697

ChartChartChartChart----4.4.4.4.3333.6.6.6.6

4.3.7 Medziphema DCS-

Membership- This cooperative was registered with the Union in the year 1988 with

total membership of 17 but as on 31.03.2008, it has only 5 members active. In

percent wise, there is decrease of 71 percent from the beginning till 2009.

Collection of milk- The total collection in the year 2004 – 05 was 2465 litres which

increased to 4864 litres in the year 2008–09. It is seen that an increase in Collection

of 97.71 percent in the Span of five years. The per cent of collection in the year

2008–09 in comparison with the other dairy co-operatives under study was only 6.44

121

percent of the total Collections. The table 4.3.7 and Chart 4.3.7 present the

Collection of milk by Medziphema over the study period.

TableTableTableTable----4.4.4.4.3333.7.7.7.7 CollectionCollectionCollectionCollection of Milk by Medziphema Dairy Cooperativeof Milk by Medziphema Dairy Cooperativeof Milk by Medziphema Dairy Cooperativeof Milk by Medziphema Dairy Cooperative

(in Litres)(in Litres)(in Litres)(in Litres)

Year 2004-05 2005-06 2006-07 2007-08 2008-09 Avg

Annual Collection

of Milk

8381 9442 10798 14460 16538 11924

ChartChartChartChart----4.4.4.4.3333.7.7.7.7

4.4 Total Quantity of Milk Collected by DCS (in litres)-

The Table-4.4 shows the quantity of milk sold in litre together with the percent of

total Collection for the period from 2004-05 to 2008-09-

122

Table-4.4 Comparative Collection of Milk (in litres) Along with the percent in the year

2004-05 and 2008-09

Year/Name of the DCS

2004-05

2008-09

Percentage Change over the

years Collection of milk (in

litres) Percent

Collection of milk

(in litres) Percent

Charity DCS 3,150 1.4188614 3,705 1.44289748 17.62

BHOLA DCS 58,272 26.2475846 67,770 26.3927563 16.30

NITO DCS 59,673 26.8786401 45,922 17.88413981 -23.04

Valley DCS 34,750 15.6525186 50,720 19.75270178 45.96

Kikhruru DCS 20,688 9.31854114 35,258 13.73108753 70.43

Azapeni DCS 37,095 16.7087821 36,,862 14.35575893 -0.63

Medziphema

DCS 8,381 3.77507218 16,538 6.440658164

99.71

Total collection

of Milk 2,22,009 100 2,56,775 100 15.66

Chart 4.4

The chart-4.4 shows the overall increase of Collections over the period of five years

and it is evident that Bhola dairy has done well in terms of its Collection as it has the

123

highest Collection in these five years. The next best of these cooperatives is the

Valley DCS.

4.5 Overview of the General Performance of DCS-

In order to analysis of the data, the Table-4.5 is constructed to get the overview of

the general performance of the DCS in relation to Year of establishment, Number of

years in existence till 2009, Number of membership in the beginning, Number of

Active members till 2009.

TableTableTableTable---- 4.4.4.4.5555 Overview of the General Performance of DCSOverview of the General Performance of DCSOverview of the General Performance of DCSOverview of the General Performance of DCS

Particulars

Bhola DCS

Nito DCS

Valley DCS

Kikhruru DCS

Azapeni DCS

Year of establishment 1988 1998 1988 1998 2002 Number of membership in

the beginning 175 60 50 71 45

Number of Active members till 2009 55 45 45 66 30

% of members in the beginning and the active

members - 69% - 25% - 10% - 7% -33 %

4.6 Constraints of DCS-

The primary cooperative societies collect share money from the members but these

share money is deposited in DIMUL. So the primary cooperative societies collect at

the rate of 0.80 Rupees / per litre of milk from the members as a service charge. The

expenses are met from these service charges.

From the above analysis it is revealed that -

1. The number of Dairy cooperatives has been gradually decreasing. This is

because the procurement price does not cover their growing cost of

production. Many farmers consider dairy farming is un-economical.

2. Number of active members of the dairy cooperatives has been reducing over

the period of time.

124

3. The milk collection of the two dairy cooperatives namely NITO and Azapeni

have been reducing; another two namely-Charity and Medziphema with

minimum active member have been struggling for their survival and rest only

three Bhola, Valley and Kikhruru which are doing fair but the members in

theses DCS also have reduced over the period.

4. The cost of production of milk has been increasing due to withdrawal of some

of the services by the UNION.

Considering the above mentioned factors we can come to the conclusion that there is

no significant improvement of the performance of dairy cooperatives societies in

Nagaland.