A project report on ratio analysis at the gadag co operative textile mill ltd

A Study on RATIO ANALYSIS AT THE GADAG CO-OPERATIVE TEXTILE MILL LTD

EXECUTIVE SUMMARY:

Financial statements provide summarized view of the financial position and

Operation of the company. Therefore, now a day it is necessary to all companies to

know as well as to show the financial soundness i.e. position and operation of Company

to their stakeholders. It is also necessary to company to know their financial position

and operation of the company. In this report I made an effort to know the financial

position of G.C.T.M HULKOTI.

The Financial analysis of this report will show the Strength and weakness of the

G.C.T.M. Financial analysis will help the firm to take decision.

Thus, we can say that, Financial Analysis is a starting point for making plans before using

any forecasting and planning methods. “The Study of Financial Performance Based On

the Ratio Analysis at G.C.T.M

Babasabpatilfreepptmba.com 1


GADAG CO-OPERATIVE TEXTILE MILLS LTD. HULKOTI.

INTRODUCTION

The textile industry holds significant status in the India. Textile industry provides one of

the most fundamental necessities of the people. It is an independent industry, from the

basic requirement of raw materials to the final products, with huge value-addition at every

stage of processing.

Today textile sector accounts for nearly 14% of the total industrial output. Indian fabric is

in demand with its ethnic, earthly colored and many textures. The textile sector accounts

about 30% in the total export. This conveys that it holds potential if one is ready to

innovate.

The textile industry is the largest industry in terms of employment economy, expected to

generate 12 million new jobs by 2010. It generates massive potential for employment in

the sectors from agricultural to industrial. Employment opportunities are created when

cotton is cultivated. It does not need any exclusive Government support even at present to

go further. Only thing needed is to give some directions to organize people to get enough

share of the profit to spearhead development.

Textile Co-operative industry is being an important traditional cottage

industry plays a vital role in meeting the clothing requirements of the people. The

handloom industry is meeting nearly 1/3 of clothing requirements of the countries

population .the government of India assign to the handloom sector the task of increase in

the production year by year.

\



Textile industry is constituted of the following segments

• Readymade Garments

• Cotton Textiles including Handlooms (Mill made / Power loom/ Handloom)

• Man-made Textiles

• Silk Textiles

• Woolen Textiles

• Handicrafts including Carpets

• Coir

• Jute

The company Objectives are

To satisfy customers by integrating their needs in the mill yarn.

To sustain a mill of able and committed employees and provide opportunities for

growth and development.

To improve the process of managing mill affairs through proper planning, timely

improvement of plan and performance review.

To faster culture innovation with the application of new ideas and methods to solve the

business problems.

To provide the employment opportunities to Men& women of rural area

Ancient time:

Handloom is the oldest known form of making cloth by hand. The history of the

textile industry is decentralized sector as the cottage industries dates back to the epic

ages. In the Rig-Veda the needle used for the purpose sewing is called as “SOOCHI”

&ARIVESHI the scissors “BHURIJi” , the wrap would “MAYUKH”the shuttle”VEMA”

and the weaver “VAYITRI” , “VAMA & SIRI”. A mantra in the rigveda states that it

should wear the cloth woven by women at marriage occasion. As per Atharvanaveda the

bridegroom should wear on the first night garments woven only by his newly wed wife.

In maharastra, the garment filled with pearls is called as “MANICHEERU; . the Buddhist,

pali and taina literatures to emphasis India’s artistic weaving.

COMPANY PROFILE



Name of the company : Gadag Co-operative Textile Mill Ltd., Hulkoti.

Year of establishment : 1972

Status :This co-operative society registered under the

co-. operatives Societies act of 1959

Location : Karnataka state, Gadag dist, Hulkoti.

Chairman : Shri D.R.Patil Ex MLA, Gadag.

Area of operation : Haveri, Gadag & Dharwad.

Export places : New Delhi,Vietnam etc.

Nature of business : Production & sale of yarn.

Membership : 3021 co-operative societies

Share capital : 817.71 Lakhs

No.of Departments 8 departments.

No. of employees : 650

No. of board of directors : elected members -18,

Ex-office members-1,

Nominated by Govt-3

Storage capacity : 7500 million ton

Background of the company



The village Hulkoti has a population of 10000 comprising of various section of people

and since long it has been the cradle cooperative moment in having the first primary

credit cooperative society established in the east while Bombay state .The occupation of

the village is mainly agriculture. The farmer and the farm laborers from a nucleus of this

rural area, the main crop grown around Hulkoti is Jawar,Cotton Groundnut ,Chilly and

Other pulses. Since there are no major irrigation Projects, dry land cultivation, is the only

way out for the farming community .Agricultural produce particularly

cotton,groundnut,Jawar etc where being marked to the tune of Rs 90 To 100 crores per

Annum in and around Gadag.Prior to the emergence of the Gadag Co-operative Cotton

sale society limited ,Gadag farming community was undesirably exploited by private

tenders and commission agents .It is at this juncture, releasing the need for upliftment of

much neglected farmers community and to better the lot of rural area ,Late Shri

K.H.Patil,a son of soil and foreran Co-operator devoted fully for the establishment of co-

operative network around Hulkoti providing various amenities and scope for development

of farmers which went ahead against all odds both traditional and political,till he

transformed vision into a reality. This Endeavour had transformed into worthy institution

located on either side of karwar –Bellary road between Hulkoti and Gadag.The main Hub

of production and Processing of agro industries is farmer and farming community .

After successfully setting up of Ginning and Pressing unit by the Gadag Co-operative

Cotton sale society, the next ambition of our Cooperators, was to establish a textile mill

of 25000 Spindles capacity which would consume the main agriculture produce by paying

remunerative prices to cotton Growers and to save the farming community from the

clothes of private tenders .

It is with this ideal background .The Gadag Co- operative textile mill was established in

the year 1972 with a project cost of Rs 220 Lakhs and was commenced its trial production

in April 1973 .We have feather in the cap for having installed 25000 spindles capacity

mill in a record time in the whole of India

MEMBERSHIP AND SHARE CAPITAL



Being one the best-run Co-operative Mills in India, Having following membership

and paid up share capital structure as on 31st March 2006.

SL.

No.

Category No. of Share

Holders

Paid up Share

Capital

1 "A" Class (Individual/Societies) 3019 Rs. 107.45 Lakhs

2 "B" Class (K.A.I.C.) 1 Rs. 015.00 Lakhs

3 "C" Class (State Govt) 1 Rs. 695.26 Lakhs

Total 3021 Rs. 817.71 Lakhs

VISION , MISSION AND VALUES OF THE GADAG CO-OPRATIVE

TEXTTILE MILL LTD .,HULKOTI

VISION To be a premier textile company with a clear focus to become globally competitive

through growth & technology up gradation committed to excellence in quality service&

Co-operatives.

MISSION

To purchase the creation of values for all its customers, employees, members (share holder) & society at large. COMPANY VALUES commitment a clarity respect for the individuals transparency honesty ethical conduct co-operative focus farmers oriented

THE GADAG CO-OPERTIVE TEXTILE MILL LTD., HULKOTI


Worker


ORGANISATION CHART

Share Holders

Board of Directors

Chairman

Managing Director

P & I Production Finance Administration Security Marketing

Dy. Dy. Dy. Dy. Sr. Dy.

Manager Manager Manager Manager Supervisor Manager

Extension Q.C. Accounts Assistants Jr. Assistants

Officer Officer. Assistants Supervisors

Helpers Assistants Helpers Helpers Helpers

Board Of Directors



Shri D.R.Patil and H.M Soppin are chairman of the Gadag Co-Operative Textile Mill Ltd

Hulkoti respectively and others following these prestigious persons are board of directors

of Gadag Co-Operative textile mill ltd, Hulkoti.

Sl no Name Designation

1 Shri D.R.Patil Chairman

2 Shri H.M.Soppin Vice Chairman

3 Shri R.M.Mulimani Director

4 Shri V.B.Inamati Director

5 Shri T.D.Mundavad Director

6 Shri C.B.Karikatti Director

7 Shri V.R.Naganur Director

8 Shri S.B.Balareddy Director

9 Shri S.B.Bhasetti Director

10 Shri S.C.Kanavi Director

11 Shri S.C.Huilgol Director

12 Shri G.N.Patil Director

13 Shri A.S.Patil Director

14 Shri R.B.Hosamani Director

15 Shri B.H.Dyavanshi Director

16 Shri S.K.Kuradgi Director

17 Shri D.S.Odugoudar Director

18 Shri R.Y.Kempalingegoudar Director

General Manager



District Industries Centre Gadag Director

Deputy Director of Handlooms Inviters

And Textile

Joint Registrar of Co-Operative Societies Director

Shri T.Shantaveerappa (MD) Director

Infrastructure Facilities

Project Cost

Land and Building 33.71 Lakhs

Plant and Machinery 177.70 Lakhs

Miscellaneous 24.08 Lakhs

Contingency 6.00 Lakhs

Working Capital Margin 22.00 Lakhs

Free Operative Expenses 15.00 Lakhs

Total 278.49 Lakhs

Future Growth and Prospectus

The Co-operative textile mill challenge to the society they have the capacity of

increasing the quality and quantity of their products.

The Co-Operative textile mill needs good specialized types of machines and

modernization of machines.

It challenges to the competed for market shares. The Government has also helped

the mill by giving the financial assistance to improve the industry

Production Department



Production is a main function of company raw material into final products

The Gadag co-operative mill is going to receive the ginned cotton (Cotton fibres

are separated from the seeds) from the above mentioned suppliers. Before going to

production of yarn classified the cotton on the basis of staple length of cotton,fibre and

decides what count can be spun out of the cotton received.

There are number of variety of yarn which are 10s,16s(Short staple)

18s,20s,40s,(medium staple) 50s,60s,62s,(long staple)and 60s,80s,100s,(super staple).

OBJECTIVES

1) To produce quality production.

2) Reduction in waste of raw materials.

3) To maintain the production capacity of the machine.

PRODUCTION PROCESS

MIXING: The is going to mix up the different variety of cotton and made a homogeneous

mixing and makes it a particular count. This process is called mixing.

BLOWROOM: The second step is called cleaning. The kappa’s is going to cleaned

because it contains leaf stir, sand mud and impurities. This process done through the

Blow Room machine.

CARDING: After this process takes place in which fiber is made parallel and hooks are

formed in the carding are straightened.

RING FRAME: the next is simplex in this process final twist is inserted and wound on

the bobbin (tubes) this is also called as Ring Frame.

REELING: after this simplex, Ring Frame takes places in this process next step is going

to classifying on the basis of Reeling,.



COMPETITORS TO G.C.T.M

Modern days are the two day's of the competition. Where you go, in which ever

field you enter there is competition; one must know how competition in the market makes

it absolutely necessary for manufacturers to think of advertising. For new product,

strategies and by doing all these to in areas the sales.

These following companies are the competitors of the G.C.T.M.

1) Banahatti Co-operative Spinning Mill Ltd.2) Sangola Co-operative Spinning Mill Ltd.3) Farmers Co-operative Spinning Mill Ltd.

The C.G.T.M. face major competition from the above 3 competitors and it also

face the competition from which those companies have national presence.

But, our G.C.T.M. has been facing the competition through maintaining

good quality off cotton yarn and also reasonable price, prompt service,

advertisements, and also through maintaining good relation with the suppliers,

consumers with society.

Infrastructural Facilities:

A good sophisticated building is there for the mill for working and

transportation facility also provided for the workers i.e ,2 buses are roaming from

the mill to a city.Good canteen facility with the cheap price and play ground for

the workers is there.and also a library facility is there for the workers.

Awards :

All India spinning mill productivity first to India in 1978 to 1981

Infrastructure Facilities

Project cost

Land and buildingPlant and machinery

33.71 Lakhs177.70 Lakhs



MiscellaneousContingencyWorking capital marginFree operative expenses

24.08 Lakhs 6.00 Lakhs

22.00 Lakhs 15.00 Lakhs

Total 278.49

Our Mill has another distinction of having established with a project cost of Rs 278.49

Lakhs, which was, met out in the following manner.

Means of Finance

Members of share capital

Government share capital

Team loan

40.00 Lakhs

80.00 Lakhs

100.00 Lakhs

Total 220.00 Lakhs

ADMINISTRATION DEPARTMENT

Administrative department play very important role in the organization for fits

smooth running of the business and success of this company is mainly depending on the

efficient administration of the G.C.T.M.

This department looks after administrative functions such as payment of salaries,

arrangement of meetings, and formation of policies etc, the general functions of this

department are as follows.

Maintenance of files, records etc. up to date, collecting and presenting data in the

form of useful information from the records.



Implementing the organization systems, procedures and policies in a coordinated

manner.

Ensuring smooth running of the office buy interfacing with the eternal agencies as

required. For ex-payment of telephone bills, electricity, water supply bills etc.

Maintenance of the office premises.

Providing required facilities.

SHIFT INCHARGE:

He is the person who works under the production manager.

He assists which are done in shift GCTM has three shifts Viz 8 a.m. to 4 p.m.

to 12 p.m. to 8 a. m.

SECTION SUPERVISOR :

He is the person who supervises the works done in the section he is the key.

HUMAN RESOURCE DEPARTMENT

This department looks after the recruitment, selection and welfare of the

employees. It also conduct and orientation programmes. Facilities given to employees

are as follows.

Transportation

Medical

Canteen

Uniform

Provident fund



Gratuity

Women's pregnancy allowance.

LABOUR WELFARE :

Our mills has provided a gainful employment to 350 regular employees and about 200

trainees of 3 shifts basis. The employees are given Bonus up to 20% & residential

accommodation on nominal rent. Besides the employees are given confessional transport

facilities from Gadag to Hulkoti. They are also members of the employee’s credit Co-

operative society for getting loans.

Functions of HRD Department :

Job design

a. Job rotation

b. Job enrichment

Job analysis

a. Job description

b. Job enrichment

Human resources planning

Recruitment resources planning

Recruitment and selection

Placement and induction

Performance appraisal

Training and development

CLASSIFICATION OF THE WORK FORCE

Work force of the society shall be classified as under :

1) Permanent 2) Badli



3) Trainee or apprentice

RECRUITMENT PLANNING

Maintaining an organization culture of outpace elements like mutual trust, human

values, openness etc, requires a proper recruitment plan on the part of the human

resources manager. Hence, recruitment plan is an important component of the human

resource plan.

It is recruitment which enables an organization to provide a substantially large

pool of potential candidates for each join, so that adequate talents would be available

for the organization on to select whenever needs arise.

OBJECTIVES OF THE H.R.D. DEPARTMENTS

To maintain high morale among the workers.

To motivate the employees to contribute their maximum to the organizational goal.

Creating the employment opportunity to the society.

To take welfare care of labors.

RECRUITMENT PROCEDURE:

Interview panel of G.C.T.M. consist of 4 members who will responsible for

selection of worker or employees. The interview panel will be same for every time.

In case of lower level management direct recruitment is preferred.

In case of top level management such as Accountants, Engineering, Managers etc.

They need B.Com, B.E., M.B.A., M.Com, Etc.,

In case of production level G.C.T.M. will prefer diploma in electrical or diploma

in mechanism or any Graduate who will be suitable for job.

WORKING HOURS OF THE EMPLOYEES

TIME SHIFTS



* 8.30am to 4.30pm 1ST Shift

* 4.30pm to 12.30am 2nd Shift

* 12.30pm to 8.30am 3rd Shift

Half an hour break is there between the working hours in each shift.

HOUR OF WORK

The hour of work for all employees shall be fixed

FINANCE DEPARTMENT

OBJECTIVES OF FINANCE MANAGEMENT

To have permanent record of all the transaction for future reference.

To know the result of business in terms of profit and loss.

To know the financial position of the business.

To know the progress of the business from year to year.

FUNCTIONS OF FINANCE DEPARTMENT

To prepare a Trading & P&L account.

To prepare Balance sheet.

Maintenance of accounts is undertaken

Rate fixing.

Suppliers bill paying.

Maintenance of cash and bank balance.

ACCOUNTING SYSTEM

Gadag Co-operative Textile Mill Ltd Finance, Every company needs carry on its

business operations and to achieve its targets and finance is the lifeblood of the business.

It is the foundation of every economic activities needs. A business requires finance at

every stage. Finance is needed for bringing a business in no existence. It is required for



financing. The fixed capital is used for expansion and modernization of business and also

for financing the working capital.

The management of finance is necessary for very organization and financial

management is managerial and activities or effort which is concerned with the

ascertainment of finance and it is that aspect of management which is responsible for the

acquisition of funds and their allocation.

This management of finance is locked after by the finance and prepares the

accounts. It has to plan for funds acquisition, funds allocation and acceptable levels of

revenue generation. If surplus are generated then there funds have to be properly utilized

so that they produce the maximum returns with safely, at the same time available for

business purposes at the shortest notice. There are mainly 2 types of financial

requirement:

1) Long Term – Acquisition fixed assets2) Short Tem – Working capital needs

For both these requirements funds can be found the senior manager of finance and

executive maintain key role in accessing the financial transaction.

PURCHASE DEPARTMENT

The Cotton Purchase policy of the mill is designed in a way so as to provide an

incentive price to the Cotton Growers. The Mill purchases its cotton at the open auction

held by Co-operatives namely The Gadag Co-op. Cotton Sale Society. T.A.P.C.S.M.

Society of Annigeri. Cotton brought in these Societies is graded by the A.P.M.C.

Agricultural authority. Around 3000 Grower members and also 10200 other cotton

Grower derive a significant economic benefits from our mills.



Objectives:

Experiment of cotton and yarn

Observing the cotton and yarn

Minimize the purchase cost

Transportation (minimizing the transportation cost).

Suppliers:

CCI cotton co operation of India

Maharastra cooperative federation

Shanty textile Mumbai

Baradia cotton cooperative Mumbai

Pm kolhar Gokak

CCI Auraghabad.

Local suppliers:

S.T chuavan Gadag.

Purchase committee:

It includes

1) Managing director

2) General manager

3) Production manager

4) Quality controller

5) Cost department head

ECONOMIC BENEFITS TO MEMBERS:

The rates offered for cotton by our Mill in the Tenders at the Marketing

Societies are generally higher than the rates available to the farmers at Tenders

carried out at the premises of Private Commission Agent.

A price incentive of Rs. 100 to Rs. 150 per quintal over the market rates are

given to every member linked to the Share value of Rs. 100 each.

Member's cotton is ginned and converted into yarn on behalf of them and after

deduction of conversion cots; the profits are passed on to members concerned.



Form 1982-83 onwards members availing of such scheme got up to Rs. 150

per quintal after sale of yarn.

Extension advice to improve cotton production is given by Agricultural

Science Foundation established by the Mill. Our mill has been arranging

Workshops/Seminars by inviting Agricultural experts for the benefits of

Farming Community of this area.

Thus, we have taken care of cotton development in particular and Agricultural

Development of this area, in general.

STORES DEPARTMENT

Stores Department is one which stores all the materials, equipments and spare parts etc. Which are needed in the signalization for its smooth running .

Objectives of the Stores Department:

1) Concentrating towards smooth running of the production process.

2) Facilitating all required equipments on time .

3) Reduction of Inventory equipments on time .

4) Working like a traffic signal to signalize to all equipments.

5) Proper maintenance of all equipments.

This Stores Department is divided in to two sub departments they are:

a) Materials stores

b) General Stores.

a) Material Stores: It is a sub department of the stores , which maintain the stock of raw material needed in the plant i.e. cotton , paper cones , bags . This department mainly concerned with storage of 30 days stock of raw material in the plant.

b) General Stores: It is also a sub department of the stores which maintaining the stock of general material like ,paper ,files ,uniforms of workers ,shoes ,goggles, helmets, glows, cups, spare parts of machines , stationeries and other lubricants and packing materials.



These all materials are stored under bin system. In this department each material or item will be assigned a number to it which is called as Bin number. There are about 11,000 items are maintained in this department and all have been assigned in No’s.

Bin number is a 9 digit number, which will help in recognizing the item very quickly and accurately.

The first three numbers in Bin card will giving the information about which section . and the second 3 digit will gives information about which equipment and the last 3 digit will gives information of which item it is.

The stores department is maintaining mainly two ledgers , they are:

1) Material Receipts Ledger.

2) Material Issued Ledger. At he time of each entry in the ledger they are quoting the date, item number quantity

price / piece, total price

Varieties of bags

Varieties suppliers

0-1 socks Mpower belting & elestomus Bangalore

P-P Jute Shah cooperation Ahemdabad.

Polithin bag New pack industry Belgaum.

0-1 In the form of pack

ENGINEERING AND MAINTENANCE DEPARTMENT

The department maintains stock of important spare parts of the machinery and

looks after the accuracy of the machinery. Well qualified engineers are always ready to

repair the defects in the machineries

FUNCTIONS

To look after the proper working of the machines.

To take immediate measures in case of any defect in the machines.



To keep the stock of the machines

MARKETING DEPARTMENT

The Mill manufactures 10s, 14s 20s, 30s, 34s, 40s, 60s, 80s, 100s, 2/20s, 2/40s,

2/60s, etc., in the form of Hanks as well as Cones as per the prevailing market demand.

Sale of hank yarn and cone forms 40:60 respectively. We have been fulfilling the Hank

Yarn obligated stipulated by the Textile Commissioner, Government of India at the end of

every quarter. The daily production of yarn is about 8,500 kgs. And Mills is working

round the clock for all the seven days of the week. Special preference is selling yarn is

given to Weavers Co-operative Apex Organizations and Karnataka Handloom

Development Corporation. Export of yarn has been our priority Yarn is being exported to

countries like Vietnam, South Korea, China and couple of European Countries. In last Six

years, we have exported yarn worth Rs. 676.00 Lakhs. We are happy to inform that, we

have fulfilled Export obligation as stipulated by the D.G.F.T., New-Delhi.

Sales will have mainly in 3 types

Direct Sale

Consignment Sale

Through Depot Sale

Sales Places:

1) National Handloom Development Corporation

2) Karnataka Hand look Development Corporation

3) Depot



a. Coimbatore

b. Solhapur

c. Ieachalkaranji

d. Malegaon

PACKAGING OF YARN

It is a process of converting to a product for protection hanks yarn are packing in

the bale form cones yarn are packing form. The standard of bale is consists of 181.6 kgs.

Mode of Sales :

In this organization orders are normally done through:

1) By phone

2) By their own sales depots and

3) By local sales agents.

RESPONSIBILITIES OF MARKETING MANAGER

Billing

Collection of amount

Ordering

PROBLEMS

Electricity

Labor

QUALITY CONTROL DEPARTMENT



The main objective of the quality control department is to check the quality of the

cotton and the cotton yarn I the firm. The step by step tests are conducted by the

officers to meet this requirement. If any product does not pass through the quality

standards than that is rejected. Even before dispatching the products they undergo

testing and they must be approved by the quality department.

THE STEPS OF TESTING

Raw material testing I.e. cotton testing.

Testing at first stage i.e. blow room stage.

Testing at the carding level.

Testing the yarn at processing level.

Testing at the final stage.

OBJECTIVES

Increasing customer satisfaction.

Quick response to order fulfillment.

Producing the quality products.

COMPETITORS

Mill has competition with many competitors like

Banahatti Co-operative spinning mill

Mandya etc.

THE TOTAL WORKERS OF G.C.T.M

* The strength of skilled workers 350

* The strength of unskilled workers 300

Total workers 650



Waste elimination

Row materials 20 count, 100 kg row materials (cotton) in the 100 kg of row

materials 85 kg is pure 15 kg is waste row materials. Waste of 15 kg as under:

Blow Room 6 kg

Carding 5 kg

Preparatory 2 kg

Hard waste 1.5 kg

Roving/silver 1 kg

15 kg

Inventory control system

This is also followed daily and it is also computerized.

Purchase:

Variety wise row materials opening stock

Add: purchase xxx

Total xxx

Less: Issued for consumption xxx

Closing stock xxx

Sales:

Variety wise finished goods

Add: Production xxx

Total xxx



Less: Sold xxx

Closing stock xxx

quality control of cotton yarn production bears distinct advantage for all whether

producers or consumers, some of the important advantages to quality control one as

follows.

IMPORTANCE OF THE QUALITY CONTROL

The brand products build up goodwill or image, which ultimately increase sales of G.C.T.M. yarn

It helps the manufacturers in fixing responsibility of workers in the production process.

Quality control also helps in minimizing the costs by increasing efficiency, standardization, working conditions at the G.C.T.M.

It also help or enables the G.C.T.M. to know the cost of their product quite in advance which helps them in determining competitive prices of their product.

Last but not the least; the G.C.T.M. can confirm whether the yarn manufactured by them is in accordance with standard set by the government. It further facilities the G.C.T.M. to take necessary actions to comply with the standard set.

Order of execution

A committee consisting of seven directors and chairman / managing directors will

meet every Saturday in the meeting after completion and after formalities committee will

purchase the Raw materials (cotton) and sell the finished goods (yarn) the officials will

execute the decisions made in the committee meeting and act accordingly.

STAFF

Classification of staff and Duties and Responsibilities of various groups of staff.



1) Administrative staff 2) Technical and factory staff

1) Administrative staff

Chairman

The chairman of the Mill shall have an over all control over the day to day

management of the Mill. He shall preside over the meetings of the Board of Directors and

the General Body. The chairman of the Mill shall have general control over the affairs of

the Mill. He shall exercise such of the powers of the Board as may be delegated to him

form time to time.

Managing Director

There shall be a Managing Director appointed by the Board of Directors. He shall be a

professionally qualified experienced man in the textile industry. He shall be the Chief

Executive Officer of the Mill. He shall be an Ex-officio, Member of the Board of

Directors. He shall be responsible for the Executive Administration of the Mill subject to

the control of the Board and chairman

Secretary

There shall be a Secretary to assist the Managing Director in the day - to – day

working of the society who shall have such powers as delegated by the board from time to

time.

To keep or cause to keep all accounts and registers required by the rules, to

prepare all the vouchers, Balance Sheet and other documents required for the transactions

of the Mill in, Administrative section.



purchaser

He is the most important Administrative staff in the company. He purchases row

materials for production of finished goods.

Seller

He is also one of the staff in the company. By the name itself he sells finished

goods effectively and efficiently.

2) Technical & Factory staff

General Manager

General Manager overall production performance of the Mill mainly machine

utilization, productivity in each department men engage, power control, maintenance etc.

Deputy Spinning Master

There are two Deputy Spinning Master in the Mill. One should look up to

Spinning point and another Deputy Spinning Master look past spinning.

Assistance Spinning Master



There are two Assistance Spinning Master in the Mill. They are shift in chargers.

There are three shifts First shift from 8.30 am to 4.30 pm. Second shift from 4.30 pm to

12.30 am. Third shift from 12.30 am to 8.30 am.

Supervisors

Supervisor is one of the technical staff in the Mill. He takes every work from

every section.

SWOT ANALYSIS

Strength WeaknessOpportunities Threats

STRENGTHS:

1) Nearest to the raw materials source:

Availability of the row material to the G.C.T.M. is very near, it is in such way that

is, the purchase cotton from around 3000 grower members of G.C.T.M. and the mill

purchases its cotton at the open auction held by co-operatives namely The Gadag Co-

operative cotton sale society, T.A.P.C.S.M. society of Annigeri and in Gadag A.P.M.C.

this is result in less transport cost.

2) Less transport cost:



G.C.T.M. purchases row materials around the Gadag area, so carrying cost of the row

material is very less.

3) Goodwill:

Around Gadag area there are less industries, and it has provided large

employment opportunities to people. So it has good will in south Karnataka.

4) Satisfaction of consumer needs :

G.C.T.M. has been satisfying the consumer needs.

5) Highly quality:

And also G.C.T.M. maintains high quality of cotton yarn.

1) Availability of cheap labor :

WEAKNESS:

1) National presence is not there :

In international market G.C.T.M. has been demand for its product, so it has less

national presence.

2) Heavy excise duty:

Government has fix up heavy excise duty on cotton yarn export of G.C.T.M.

3) Less working capital:

The main weakness of G.C.T.M. is the less working capital for its day to day

activities.



4) Electricity problem :

G.C.T.M. also facing the electricity problem. So it is also one of the barriers to

continuous production.

OPPORTUNITIES :

1) Grab market in south Karnataka :

G.C.T.M. has it maximum share in south Karnataka

2) Increase in production capacity :

Due to the installation of new technology, new machines, production

capacity of the G.C.T.M. has been increasing .

3) Increasing demand for yarn:

Step by step demand for yarn and yarn products have been increasing.

4) Bank finance:

G.C.T.M. takes its financial assistance from K.C.C. Bank, N.C.D.C. Bank,.

Bijapur, D.C.C. Bank

5) Employment Oriented :

G.C.T.M. is the employment oriented unit

THREATS:

1) Danger from the strong competitors:

Danger from the strong competitors who are having national presence and spend a

lot on promotion activities.

2) Danger of loosing international market :

It is because of other strong competition from the other standard companies who are

having a national presence.

3) Heavy excise duty:

G.C.T.M. is in loss. So excise duty on its sales and export is the major threat for

G.C.T.M.

Research Methodology



Methodology :

The methodology includes the personal interaction with the finance manager.

Selection of data: From the Annual Reports of the Company for last three years;

i.e. from

Annual Report for the year 2005-06



Period: The Study covers a period of three years data from 2005 -06, 2006-07.and

2007-08 to mean an Accounting year of the company consisting of 365 working

days.

Frame work Analysis for the purpose of analyzing the Liquidity Position of the

company. The study make use of various accounting Ratios

INTRODUCTION

When we observed the financial statements comprising the balance sheet and

profit or loss account is that they do not give all the information related to financial

operations of a firm, they can provide some extremely useful information to the extent

that the balance sheet shows the financial position on a particular date in terms of

structure of assets, liabilities and owners' equity and profit or loss account shows the

results of operation during the year. Thus the financial statements will provide a

summarized view of the firm. There fore in order to learnt about the firm the careful

examination of in valuable reports and statements through financial analysis or ratios is

required.

Meaning and Definition:-

Ratio analysis is one of the powerful technique which is widely used for

interpreting financial statements. This technique serves as a tool for assessing the

financial soundness of the business. The idea of ratio analysis was introduced by

Alexander Wall for the first time in 1919. Ratios are quantitative relationship between

two or more variables taken from financial statements.



Ratio analysis is defined as. "The systematic use of ratio to interpret the financial

statement so that the strength and weakness of the firm as well as its historical

performance and current financial condition can be determined.

In the financial statements we can find many items are co-related with each other For

example current assets and current liabilities, capital and long term debt, gross profit and

net profit purchase and sales etc.

Whole taking managerial decision the ratio of such items reveals the soundness of

financial position. Such information will be useful for creditors, shareholders,

management and all other people who deal with company.



Importance.

As a tool of financial management ratio are of crucial significance. The

importance of ratio analysis lies in the fact that it presents facts on a comparative

basis and enables the drawing inferences regarding the performance of a firm. Ratio

analysis is relevant in assessing the performance of a firm in respect of the

following aspects: (i) liquidity position, (ii) long-term solvency. (Hi) operating

efficiency, (iv) overall profitability, (v) inter-firm comparison, and (vi) trend

analysis.

Liquidity Position With the help of ratio analysis conclusions can be drawn

regarding the liquidity position of a firm. The liquidity position of a firm would be

satisfactory if it is able to meet its current obligations when they become due. A

firm can be said to have the ability to meet its short-term liabilities if it has

sufficient liquid funds to pay the interest on its short-maturing debt usually within a

year as well as to repay the principal. This ability is reflected in the liquidity ratios

of a firm. The liquidity ratios are particularly useful in credit analysis by banks and

other suppliers of short-term loans.

As ratios provide a benchmark for company’s against their own performance in

industry. The company wants to study the ratio’s and compare its performance of

past with the present performance with the help of ratio analysis, various items of

financial statement that ensure their existence as well as their future progress

Research Problem:



To know the Financial Position of the company and its Liquidity

Performance through comparing three years financial performance by applying

different financial Ratios.

Purpose of the study:

As it is very difficult to decide any inference from the mass of figures

included in financial statements. So in order to judge accurately the

financial health of the firm, it is generally regroup and analyze the figures as

disclosed by these financial statement.

The use of Ratio Analysis or Accounting Ratios enables conclusions to be

drawn from the figures as to know the earning capacity, operational

efficiency, and financial condition etc. of a concern.

The study includes the calculation of different financial ratios. It compares

three years financial statements of the company to know its performance in

these different years.

To know whether the company is growing or incurring losses or it is

stagnant in its performance.

Objectives of the study:



1. Main Objective is to study the different ratios used in Gadag co

operative textile mill

2. To know the mills financial performance based on ratios.

3. To find out the companies efficiency based on past and present

profitability ratios

4. To study the liquidity position of the company.

To improve its future performance by analyzing its financial statements

DATA COLLECTION METHOD:

1. PRIMARY DATA: The information is collected from the personal

interaction with the financial managers of Gadag co-operative textile

2. SECOUNDARY DATA: This is been is collected through mills ANNUAL

REPORTS, & WEBSITES.

MEASUREMENT TECHNIQUE / STATISTICAL TOOLS:

Accounting Ratios.



Financial statements of the company.

ANALYTICAL TECHNIQUE:

Statistical technique used for calculation of ratios is in terms of percentage.

LIMITATION OF THE STUDY:

The study is done only on the Balance sheet and profit and Loss A/c

Study is based on information provided by the company.

The limitation of ratio analysis is itself a limitation in achievement the set

objective.

Meaning and Definition

Ratio analysis is one of the powerful techniques which are widely

used for interpreting financial statements. This technique serves as a tool for

assessing the financial soundness of the business. it can be used to compare the risk

and return relationship of firms of different sizes. The term ratio refers to the

numerical or quantitative relationship between two items/ variables.

The idea of ratio analysis was introduced by Alexander Wall for the

first time in 1919. Ratios are quantitative relationship between two or more

variables taken from financial statements.

Ratio analysis is defined as, “the systemic use of ratio to interpret the

financial statement so that the strength and weakness of the firm a well as its

historical performance and current financial condition can be determined.



In the financial statement we can find many items are co-related with

each other for example current assets and current liabilities, capital and long term

debt, gross profit and net profit purchase and sales etc

Importance of the ratio analysis

As a tool of financial management, ratios are of crucial significance. The

importance of the ratio analysis lies in the fact that it presents facts on a

comparative basis and enables the drawing of inference regarding the

performance of a firm.

The ratios which i studied about are

Liquidity ratio

1.Current ratio

2.Quick ratio

3.Inventory/Stock turn over ratio

4.Gross profit ratio

5.Net profit ratio

6.Working capital turnover ratio

7.Debtors turnover ratio

8.Debt collection period

Liquidity Ratio: The importance of adequate liquidity in the sense of the ability of a

firm to meet current /short –term obligations when they become due for payment

can hardly be overstressed. The liquidity ratios measure the ability of the firm to

meet its short-term obligations and reflect and the short-term financial

strength/solvency of a firm.



Current Ratio: The current ratio is the ratio of current assets to the current

liabilities .It is calculated by dividing current assets by current liabilities.

The current ratio of total current assets to total current liabilities.

Current Ratio = Current Assets / Current Liabilities

Year Current assets Current Liabilities Ratio

2004-2005 117291902 72046325 1.62

2005-2006 119869315 68946971 1.732006-2007 138949815 77335112 1.79

2007-2008 138554890 69425372 1.99

2008-2009 126873621 72678933 1.74



CURRENT RATIO

0

0.5

1

1.5

2

2.5

Year

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

Interpretation: The working capital of G.C.T.M is good. Because current assets are doubled compared to the current liabilities. And the ratio called to be standard. .

Quick ratio:



It is a measure of liquidity calculated dividing current assets minus

inventory And prepaid expenses by current liabilities

.

Quick ratio= Quick assets

Quick liabilities

Year Quick assets Quick liabilities Ratio

2004-2005 64343512 59498988 1.08

2005-2006 66826151 68946971 0.96

2006-2007 76593359 77335112 0.99

2007-2008 80483135 69425372 1.16

2008-2009 80584499 72678933 1.11



Quick ratio

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Year

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

Interpretation: The quick ratio of 1:1 is satisfactory. The company is having good

Liquidity. That is in the years of 2004-2005,2007-2008,2008-2009 I,e

1.08,1.16,1.11 respectively.



Inventory/Stock turn over ratio:

The ratio indicates how fast inventory is sold. A high ratio is good from the

viewpoint of liquidity and vice versa..

The cost of the goods sold can also be computed as net sales less gross profit.

The average inventory is computed as the simple average of the opening stock and

closing stock of the inventory. This ratio indicates number of times inventory is

replaced during the year. In case of seasonal industries, the average can be

computed by taking simple average for opening stock of a month for a year, which

will smoothen out fluctuating in the inventory. In some cases if the data is not

easily available, then this ratio can be calculated by dividing the net sales by

closing inventory.

Formula:

Inventory turnover ratio= cost of goods sold/average stock

Cost of goods sold = op.stock + pur + direct exps – cl. Stock

Average stock= op.stock +cl.stock/2

Year Cost of goods sold Average stock Ratio

2004-2005 267396134 46596794.5 0.572005-2006 215622553 46438443.5 4.642006-2007 227364007 51082152 4.452007-2008 263436840 53337453.5 4.932008-2009 252689320 44985614.5 5.62

.



INVENTORY TURNOVER RATIO

0

1

2

3

4

5

6

Year

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

Interpretation: The inventory turnover ratio of the company is satisfactory because

the ratio is go on increasing year by year from 2004-2005 to 2008-2009



Gross profit ratio:

It is ratio of Gross profit to net sales expressed as percentage. It shows the

relationship between gross profit and sales.

Gross profit/ sales*100

Year G/P Sales Ratio

2004-2005 2536378 269932512 0.93

2005-2006 15767889 231390442 6.81

2006-2007 27291869 254655866 10.71

2007-2008 10816538 274253348 3.94

2008-2009 4049865 256739185 1.57

GROSS PROFIT RATIO

0

2

4

6

8

10

12

Year

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009



Interpretation: The gross profit ratio increased year by year I.e. 0.93, 6.81,10.71 for

the financial years of 2004-2005,2005-2006,2006-2007

NET PROFIT RATIO:

It is ratio of Net profit to net sales expressed as percentage. It shows the

relationship between Net profit and sales.

Net profit/ sales*100

Year Net Profit sales Ratio



2004-2005 -7733598 269932512 -2.86

2005-2006 -228728 231390442 -0.0982006-2007 7421223 254655866 2.91

2007-2008 4449324 274253348 1.62

2008-2009 -13165013 256739185 -5.12

NET PROFIT RATIO

-6

-4

-2

0

2

4

Year

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

Interpretation:

By analyzing the company financial statements it is recovering losses in the

year 2007-08 but it is not possible in the year 2009



The above chart shows that the company is facing heavy loss in the year

2009.beacuase the reasons behind this is one is the previous year losses and

also the expenses are increased year by year

Working capital turnover ratio:

It represents the excess of current assets over current liabilities.

It is a measure of liquidity calculated by subtracting current

liabilities from current assets.

: sales/net working capital

Year SalesNet working

capital Ratios

2004-2005264624507 45245577 5.84

2005-2006228943400 50922344 4.49

2006-2007250490529 61614703 4.06

2007-2008262156033 69129518 0.37



2008-2009242486231 54194688 4.47

.

WORKING CAPITAL TURNOVER RATIO

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

year

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

Interpretation:



The ratio is increased in 1 st financial year i.e. in the year 2004-05 is

at 5.84, and in the year 2005-06 is at 4.49. But in the year 2006-07 it

decreases to 4.06.But it is quit normal and it is negligible. This ratio

indicates that working capital has been effectively utilized.

Debtor’s turnover ratio

Debtors constitute an important constituent of current assets and

therefore the quality of debtors to great extent determines that firm’s

liquidity

Year credit sales average debtor Ratios2004-2005

269932512 35371142 7.632005-2006

231390442 43475086 5.322006-2007

254655866 49449732 5.142007-2008

274253348 49515187.5 5.532008-2009 256739185 51356537 4.99

Babasabpatilfreepptmba.com

Debtors turnover = Sales /debtors

49


DEBTORS TURNOVER RATIO

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

year

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

Interpretation: The ratio increases in the year 2004-05 is at 7.63, which decreases to

5.32, 5.14, in the year 2005-06, 2006-07. But in the year 2007-08 it decreases to

5.53, 4.99.. It indicates that debts are being collected more promptly.



Debt collection period

This ratio indicates the extent to which the debts have been collected

in time. It gives the average debt collection period. The higher is the

turnover ratio and shorter is the average collection period the better is the

trade credit management and the better is the liquidity of debtors, as short

collection period and high turnover ratio imply prompt payment on the part

of debtors. On the other hand, low turnover ratio and long collection period.

Debtors Collection Period = No. of days __________ DTR

Year DAYSDebtors turnover ratio Ratio

2004-2005 365 7.63 47.832005-2006 365 5.32 68.602006-2007 365 5.14 71.012007-2008 365 5.53 66.002008-2009 365 4.49 73.14



DEBT COLLECTION PERIOD

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

year

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

.

Interpretation: The debt collection period is not satisfactory. The standard

period of collecting debt is 30 days. Within 30 days the debt to be collected

but the mill has taken more time. It affects all the current assets.



FINDINGS , SUGGESTIONS & CONCLUSION

FINDINGS:

1) The debtor turnover ratio is good. It shows the collection of debtors is very

prompt.

2) The current ratio of the company has been increased from 1.62 to 1.99, from the

2004to 2008.

3) The quick ratio has been increased by years i .e. 1.08, 1.11, 1 .16respectively

from 2005, 2008& 2009 & last year it was constant i.e. 1. It shows that company’s

liquidity position is good, so it is favorable to the company

4) The inventory ratio indicates how fast inventory is sold .A high ratio is good

from the viewpoint of liquidity.

5) The working capital ratio have increased in the financial year 2004-05 I.e. 5.84

& decrease in the next 2 years.

6) Net working capital is a measure of liquidity; inadequate working capital is the

first sign of financial problems for a firm.



SUGGESTION

.

The firm should try to bring them more professionalism. From the study it is

found that there is lack of periodic review & analysis which is leading to inefficient

utilization of resources & thus loss. Therefore it is suggested that the firm should

conduct quarterly analysis. So that the problems can be amended in time.



Conclusion

Financing is the backbone of the progress of any company. A Ratio gives

The clear picture of financial condition of the company.

The areas which were assigned to me were all key areas of the financeDivisions which also include different departments & functions

.

. ANNEXURE

THE GADAG COOP. TEXTILE MILL LTD.HULKOTI.



TENTATIVE BALANCE SHEET AS ON 31.3.2009LIABILITIES Rs Ps ASSETS Rs

PsAUTHORISED SHARE CAPITALShare capitalRehabilitation Fund(BGK)Share SuspenseReserve Fund0ther FundsModernization FundSubsidy

BORROWINGS(A and B)(A)K C C Bank Ltd, LOAN(B)N C D C Loan(Modernization)DepositsCurrent LiabilitiesBonus Provision PaymentReserve for Bad & Doubtful DebtsOther payables

TOTAL

5,56,00,000.008,17,73,700.001,00,00,000.00500.001,29,45,559.7617,01,97,970.2310,00,000.0020,35,400.00

2,62,50,000.003,68,00,000,0040,20,383.005,24,86,226.2912,27,535.001,02,00,000,0047,44,788.75

41,36,81,663.03

Cash in HandCash at BankF.D.with BanksInvestmentsDepositsSundry DebtorsLoan to F C S M...HulkotiPre-University CollegeAdvancesFixed Assets(Land)BuildingsEquipments(Old)Equipments( Modernization)Plant & MachineryLibrary(Books)Furniture’s & FixturesRehabilitation A\c (BGK)Other ReceivablesVehiclesClosing Stock(stores& packing)Stock as per Mfg A\cStock as per TR A\cPrevious year’s loss 9,24,31,193.39 Loss April 08 to 1,31,65,013.05March 2009

TOTAL

27,094.001,93,46,309.872,75,077.541,24,42,533.0040,52,950.005,10,03,132.1985,00,000.002,55,296.9548,58,427.871,23,187.001,56,72,362.4915,77,875.9177,40,422.0012,52,74,234.401,01,893.3118,42,166.6160,63,048.7210,21,508.0016,18,814.0071,03,034.541,59,36,750.002,32,49,338.0010,55,96,206.44

41,36,81,663.03

BIBILOGRAPHY

FINANCIAL MANAGEMENT: M Y KHAN AND JAIN



FINANCIAL MANAGEMENT: I M PANDEY

.



.



BIBILOGRAPHY

Financial management - M.Y. KHAN & P.K JAIN

Financial management I.M.PANDEY

1) .

.



.

.



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A project report on ratio analysis at the gadag co operative textile mill ltd

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Transcript of A project report on ratio analysis at the gadag co operative textile mill ltd