A STUDY ON PERFORMANCE APPRAISAL OF THE
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LIMITED
THESIS SUBMITTED TO THE
BHARATHIDASAN UNIVERSITY, TIRUCHIRAPPALLI
FOR THE AWARD OF THE DEGREE OF
DOCTOR OF PHILOSOPHY
IN
COMMERCE
Research Scholar
A. SELVENDRAN
Research Advisor
Dr. A. PEER MOHIDEEN, M.Com., M.Phil., Ph.D.,
Associate Professor in Commerce
POST GRADUATE AND RESEARCH DEPARTMENT OF COMMERCE
KHADIR MOHIDEEN COLLEGE
ADIRAMPATTINAM.
TAMIL NADU,
INDIA
JANUARY-2013
Dr. A. PEER MOHIDEEN, M.Com., M.Phil., Ph.D.,
Associate Professor & Research Adviser
P.G. & Research Department of Commerce
Khadir Mohideen College,
Adiram Pattinam,
Tamil Nadu.
E-mail: apmkmc@yahoo.co.in
Mobile: 9942589135
CERTIFICATE
This is to certify that the thesis entitled “A
PERFORMANCE
APPRAISAL
OF
THE
STUDY
ON
TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LIMITED IN
TAMIL NADU, INDIA” is submitted by Mr. A. SELVENDRAN, a part time
Ph.D Scholar in the Department Of Commerce Khadir Mohindeen College,
Adiram Pattinam, Pattukottai, Thanjavur. The thesis is outcome of the personal
research done by the candidate under my supervision and guidance and I certify
that the thesis has not formed the basis of award of any degree or any other
similar title.
Date:
Place:
SIGNATURE OF THE GUIDE
A.SELVENDRAN., M.Com., M.Phil., M.B.A.,
RESEARCH SCHOLAR
P.G. & Research Department of Commerce
Khadir Mohindeen College,
Adiram Pattinam,
Pattukottai, Thanjavur.
I hereby declare that the work embodied in this thesis has been originally
carried out by me under the supervision of Dr. A. PEER MOHIDEEN., M.Com.,
M.Phil., Ph.D., Associate Professor, Department of Commerce, Khadir Mohindeen
College, Adirampattinam, Pattukottai, Thanjavur and this work has not been
submitted either in whole or in part for any other degree or diploma at any
university.
Date:
Place:
(A. SELVENDRAN)
Research Scholar
ACKNOWLEDGEMENTS
I am able to complete this study mainly because of the wholehearted support, guidance
and cooperation received from different quarters. Even though, I wish to thank all of them, I
feel words will not really convey the extent of help and support I got.
I would like to thank my Research advisor, Dr. A. PEER MOHIDEEN M.Com.,
M.Phil., Ph.D., I am so grateful for the numerous hours the he dedicated to me and my
dissertation. He was always available, offered reassuring encouragement and showed
unwavering patience. He added inspiration to my research and strengthened my passion for
the area of Co-Operation. But most of all, I would like to thank to him because he thought me
what it truly means to strive for excellence. Thanks him for your friendship!
I extent my heartiest thanks to our beloved Principal & Secretary Khadir
Mohindeen College, Adiram Pattinam College, Pattukottai, Thanjavur
for their
encouragement and support.
I extent my heartiest thanks to our beloved Principal Dr. S. SEKAR., M.Com.,
M.Phil., M.B.A., P.G.D.C.A., Ph.D., for the blessing and encouragement towards this
research work.
I am also thankful to my doctoral committee member, Dr. T. UTHRAPATHI,
M.Com., M.Phil., Ph.D., Dean, School of Business, PRIST University, Vallam, Tanjavur,
for sharing his time and willingness, expertise, knowledge, and insightful suggestions.
My sincere thanks go to The Staff Members of the P.G & Research department of
Commerce, Khadir Mohideen College, Adirampattinam.
I am indeed grateful to my Friends Dr. T. ARIVUDAI NAMBI former Senate
and Syndicate member, Dr. S. S. RAJENDERAN, Dr. R. GOVINDA RAJ,
Dr.
A.
ARUNACHALAM,
Dr.
P.
VADIVELU,
Dr.
G.
THANDAPANI,
Dr. A. PARTHIBAN, Dr. VARADHARAJAN, Dr. V. PAARI, Dr. A. ARUL RAJ,
Dr. INGARSAL , Dr. R. RAJARAJAN, Dr. R. JAYAKUMAR and other friends, staff
members of RAJA SHERFOJI GOVERNMENT COLLEGE, THANJAVUR, for the
continuous supports and helps for the research work.
I express my thanks to S. SHANMUGAM, M.Com., M.Phil., B.Ed., Associate
Professor and HOD of Commerce and Dr. V. PUGALANTHI, Dr. V. KATHAIYYAN,
Dr. R.P. RAMESH, Dr. M. CHARLES and other friends of Rajah Serfoji Government
College, Tanjavur.
I am also thankful to Dr. A. CHANDRASEKAR, M.Com., M.Phil., Ph.D., Dean,
School of Business, Dhanalakshmi Srinivasan College, Perambalur, for sharing his time
and willingness, expertise, knowledge, and insightful suggestions.
I express my thanks to Dr. R. THIYAGARAJAN, Dr. J. PAKIYA PRABHA,
Dr.
SELVARANI,
Dr.
V.
GOMATHI,
Dr.
N.
SARATHA,
Dr.
NORSIS,
and Dr. N. JAISANKAR for encouragement towards this research work.
I would like express my thanks to Dr. A. MANJULA, Senate Member- BARD
UNIVERSITY, Dr. DAVID LIVINGSTONE, Dr. ASHOK KUMAR, Dr. G.K. MANI,
Dr. SIVARAJAN Dr. JAYAKUMAR, Dr. RAMAN, Dr. ARUMUGAM and other friends
of Govt. Arts College, Trichy – 22, for their moral support to do this research work.
I extent the thanks to Prof. S. RajaSekaran and Prof. Dr. A. Thangapandian for
their continuous support to do this research work.
I wish to convey my thanks to Auditor M. Kannan and their officials in
Tiruchirappalli District Co-Operative Milk Producer’s Union Ltd, who have helped me in
various ways to make this work a successful.
I extent the thanks are due to Sun Net Computer Centre, Ishan Computer CentreKattur, Trichy members of their valuable service and their continuous support for this
research work.
My profound gratitude and thanks to my family and friends, who stood with me
throughout the research and completing this thesis.
Lastly, I thanks to The Great Almighty (GOD), who has given me the strength to
survive in this journey. Thank you for giving me a chance to know you closer to my heart and
realize that you are and will be always with me and watching me… Thank you…
A. SELVENDRAN
CONTENTS
LIST OF TABLES
LIST OF FIGURES
Page No.
CHAPTER – I INTRODUCTION
1
1.1.
Introduction
1
1.2
National Co-operative Development corporation in India (NCDC)
5
1.3
Major dairy co-operative federation in India
7
1.4
Organizational Structure of Dairy co-operative
8
1.5.
Primary milk producers’ co-operatives
8
1.6.
District milk producers’ co-operative union
9
1.7
Significance of the dairy development department in India
9
1.8
Working conditions of the dairy development department in India
10
1.9
Primary dairy cooperatives milk societies in India
11
1.10
Strengthening Infrastructure for quality and clean mink production of
the union
12
1.11. Dairy Co-operative development in Tamil Nadu
15
1.12
18
Dairy Co-operative Development in Tiruchirappalli District
1.13. Statement of the problem
25
1.14. Objectives of the study
26
1.15. proposed conceptual model for performance of
The Tiruchirappalli District Co-operative Milk Producer’s Union
Ltd.
27
1.16. Significance of the study
28
1.17. Research methodology
28
1.18
Variables and data collection
29
1.19
Procedure for data analysis
30
1.20
Structural equation modeling
30
1.21
Bayesian estimation and testing in SEM
33
1.22
Hypothesis development
34
1.23
Hypothesis INTEREST- SALES MODEL
34
1.24
Hypothesis formulated for RM - SALES MODEL
37
1.25 Hypothesis formulated for overall dimension for performance
of shareholders wealth.
40
1. 26 Various dimensions in measuring the overall performance (Net
worth) in Tiruchirappalli District Co-operative Milk Producers’
42
Union Ltd.
1.27
Business income and non business income
44
1.28
Net learning’s
44
1.29
Long term and short term Debt
44
1.30
Comprehensive Business Assets
45
1.31
Research Study Period
46
1.32
Limitation of the study
46
1.33 Chapter Scheme
47
CHAPTER - II REVIEW OF LITERATURE
49
2.1.
Introduction
49
2.2.
Empirical Studies on Co-operatives
49
2.3.
Empirical studies on role of co-operatives
50
2.4.
Empirical studies on co-operative for development
50
2.5.
Empirical studies on types of co-operative in the country
51
2.6.
Empirical studies on co-operatives for poverty reduction
51
2.7.
Empirical studies on milk pricing system
52
2.8.
Empirical studies on chain actors
52
2.9.
Empirical studies on principle of empowering consumers
53
2.10
Empirical studies on facilities on facilities for the village level milk
producers
53
2.11. Empirical studies on performance analysis of Co-operatives
54
2.12. Empirical studies on cost analysis of dairy Co-operatives
59
2.13. Empirical studies on significance of dairy Co-operatives
64
2.14. Empirical studies on performance of dairy Co-operatives in India and
abroad
79
CHAPTER – III ANALYSIS AND INTERPRETATION OF DATA
100
3.1.
Introduction
100
3.2.
TREND Analysis
101
3.3.
Ratio Analysis
137
3.4.
Structural Equation Regression Model For Performance of
Tiruchirappalli District Co-operative Milk Producers’ Union Limited
3.4.1 Interest sales mediated regression model of Tiruchirappalli District
Co-operative Milk Producers’ Union Limited
3.4.2. Receivables management – sales mediated regression model of
Tiruchirappalli District Co-operative Milk Producers’ Union Limited
3.5
Hypotheses Verification
3.5.1 Hypothesis verification of overall performance of Tiruchirappalli
176
188
198
209
209
district co-operative milk producers union limited
3.5.2 Hypotheses Verification of Mediated Interest - Sales model results
from interest – sales mediated regression model of Tiruchirappalli
210
District Co- operative Milk Producers’ Union Ltd
3.5.3 Hypotheses Verification of Mediated Receivables Management –
Sales model results from regression model of Tiruchirappalli
District co- operative Milk Producers’ Union Ltd
213
CHAPTER – IV FINDINGS, SUGGESTIONS AND CONCLUSION
216
4.1.
Introduction
216
4.2.
Findings form trend analysis
216
4.3.
Findings form ratio analysis
223
4.4
Findings form regression analysis and structural equation model
227
4.5.
Suggestions To District Milk Co-operative Producers Union
Limited
4.6
Scope for future research
REFERENCES
APPENDIX
231
233
234
Sl. No.
LIST OF TABLES
Page No.
1.1
Pattern of assistance by NCDC
6
1.2
Products of Tiruchirappalli district milk co-operative
13
producer union limited
1.3
Equipment, Plant and Machinery in Tiruchirappalli District
19
co-operative milk producers’ union limited
3.1
Manufacturing Cost, Staff Cost, Administrative Cost,
101
Trade Cost and Interest Cost of Tiruchirappalli District
Co-operative milk producers’ union Limited
3.2
Land and Buildings, Plant and Machinery, Furniture, and
109
Investments of Tiruchirappalli District Co-operative milk
producers’ union Limited from 1997-1998 to 2007-2008
3.3
Total Current Assets, Sundry Debtors, Cash and Bank, and
115
Inventory of Tiruchirappalli District Co-operative milk
producers’ union Limited from 1997-1998 to 2007-2008
3.4
Trade Income, Miscellaneous Income, Gross Profit, and
120
Net Profit of Tiruchirappalli District Co-operative milk
producers’ union Limited from 1997-1998 to 2007-2008
3.5
Long Term Debt and Short Term Debt of Tiruchirappalli
125
District Co-operative milk producers’ union Limited from
1997-1998 to 2007-2008
3.6
Total Subsidy, Total Cost ,Total Sales, Total Assets, of
128
Tiruchirappalli District Co-operative milk producers’
union Limited from 1997-1998 to 2007-2008
3.7
Total Debt, Total Non Business Income and Shareholders
Fund of Tiruchirappalli District Co-operative milk
producers’ union Limited from 1997-1998 to 2007-2008
133
3.8
Current Ratio of Tiruchirappalli District Co-operative Milk
137
Producers’ Union Ltd
3.9
Quick or Acid Test or Liquid Ratio of Tiruchirappalli
140
District Co-operative Milk Producers’ Union Ltd
3.10
Stock Turnover Ratio In Tiruchirappalli District Co-
143
operative Milk Producers’ Union Ltd
3.11
3.12
Average Collection Period of Tiruchirappalli district CoOperative Milk Producers’ Union Ltd
Average Payment Period of Tiruchirappalli district Co-
145
147
Operative Milk Producers’ Union Ltd
3.13
Total Assets Turnover Ratio of Tiruchirappalli district Co-
149
Operative Milk Producers’ Union Ltd
3.14
3.15
Current asset turnover ratio of Tiruchirappalli District Cooperative Milk producers’ union ltd
Working Capital Turnover Ratio in Tiruchirappalli Co-
151
154
operative Milk Producers’ Union Ltd
3.16
Gross Profit Ratio of Tiruchirappalli district Co-operative
156
Milk Producers’ Union Ltd
3.17
Net Profit Ratio in Tiruchirappalli district Co-operative
158
Milk Producers’ Union Ltd
3.18
Staff Cost to Total Cost Ratio of Tiruchirappalli Co-
162
operative Milk Producers’ Union Ltd
3.19
Manufacturing Cost to Total Cost Ratio of Tiruchirappalli
164
district Co-operative Milk Producers’ Union Ltd
3.20
Office And Administrative Cost to Total Cost Ratio of
166
Tiruchirappalli District Co-operative Milk Producers’
Union Ltd
3.21
Interest Cost to Total Cost Ratio of Tiruchirappalli
168
district Co-operative Milk Producers’ Union Ltd
3.22
Trade Cost to Total Cost Ratio of Tiruchirappalli district
Co-operative Milk Producers’ Union Ltd
170
3.23
Sales in liters of Tiruchirappalli district co-operative milk
172
producers’ union ltd
3.24
Correlations Between The Procurement and Sales Values
174
of Milk In Tiruchirappalli District Co-operative Milk
Producers’ Union Limited
3.25
Bayesian Convergence Distribution of DCMPU - PERF
185
Mediated Regression Model
3.26
3.27
Bayesian Convergence Distribution of INT-SA Mediated
Regression Model
Bayesian Convergence Distribution of RM -SA Mediated
Regression Model
196
207
Sl. No.
1.1
LIST OF FIGURES
Proposed Conceptual Model for Performance of
Page No.
27
Tiruchirappalli District Co-operative Milk Producers’
Union Limited
1.2
Hypothesized Interest - Sales Model
36
1.3
Hypothesized RM – Sales model
39
1.4
Hypothesized DCMPU - PERF Model
41
3.1
Trend Analysis Plot for the Manufacturing Cost in TDC
102
Milk Producers’ Union Ltd
3.2
Trend Analysis Plot For The Staff Cost In TDC Milk
103
Producers’ Union Ltd
3.3
Trend Analysis Plot for the Administrative Cost in
105
TDC Milk Producers’ Union Ltd
3.4
Trend Analysis Plot for the Trade Cost in TDC Milk
106
Producers’ Union Ltd
3.5
Trend Analysis Plot for the Interest Cost in TDC Milk
107
Producers’ Union Ltd
3.6
Trend Analysis Plot for the Land and Buildings in
110
TDC Milk Producers’ Union Ltd
3.7
Trend Analysis Plot for the Plant and Machinery in TDC
111
Milk Producers’ Union Ltd
3.8
Trend Analysis Plot for the Furniture in TDC Milk
113
Producers’ Union Ltd
3.9
Trend Analysis Plot for the Investment in TDC Milk
Producers’ Union Ltd
114
3.10
Trend Analysis Plot for the Current Assets in TDC Milk
116
Producers’ Union Ltd
3.11
Trend Analysis Plot for the Sundry Debtors in TDC Milk
117
Producers’ Union Ltd
3.12
Trend Analysis Plot for the Cash and Bank in TDC Milk
118
Producers’ Union Ltd
3.13
Trend Analysis Plot for the Inventory in TDC Milk
119
Producers’ Union Ltd
3.14
Trend Analysis Plot for the Trade Income in
121
Tiruchirappalli District Co-operative Milk Producers’
Union Ltd
3.15
Trend Analysis Plot for the Miscellaneous Income in TDC
122
Milk Producers’ Union Ltd
3.16
Trend Analysis Plot for the Gross Profit in TDC Milk
123
Producers’ Union Ltd
3.17
Trend Analysis Plot for the Net Profit in TDC Milk
124
Producers’ Union Ltd
3.18
Trend Analysis Plot for the Long Term Debt in TDC Milk
126
Producers’ Union Ltd
3.19
Trend Analysis Plot for the Short Term Debt in TDC Milk
127
Producers’ Union Ltd
3.20
Trend Analysis Plot for the subsidy in TDC Milk
129
Producers’ Union Ltd
3.21
Trend Analysis Plot for the Total Cost in TDC Milk
130
Producers’ Union Ltd
3.22
Trend Analysis Plot for the Total Sales in TDC Milk
131
Producers’ Union Ltd
3.23
Trend Analysis Plot for the Total Asset in TDC Milk
132
Producers’ Union Ltd
3.24
Trend Analysis Plot for the Total Debt in TDC Milk
Producers’ Union Ltd
134
3.25
Trend Analysis Plot for the Non Business Income in TDC
135
Milk Producers’ Union Ltd
3.26
Trend Analysis Plot for the Shareholders fund in TDC
136
Milk Producers’ Union Ltd
3.27
Current Ratio of Tiruchirappalli District Co-operative Milk
138
Producers’ Union Ltd
3.28
Quick Ratio of Tiruchirappalli District Co-operative Milk
141
Producers’ Union Ltd
3.29
Stock Turnover Ratio of Tiruchirappalli district Co-
144
operative Milk Producers’ Union Ltd
3.30
Average Collection Period of Tiruchirappalli Co-operative
146
Milk Producers’ Union Ltd
3.31
Average Payment Period of Tiruchirappalli district Co-
148
operative Milk Producers’ Union Ltd
3.32
Total Asset Turnover Ratio of Tiruchirappalli district Co-
150
operative Milk Producers’ Union Ltd
3.33
Current Asset Turnover Ratio of Tiruchirappalli district
152
Co-operative Milk Producers’ Union Ltd
3.34
Working Capital Turnover Ratio of Tiruchirappalli district
155
Co-operative Milk Producers’ Union Ltd
3.35
Gross Profit Ratio of Tiruchirappalli district Co-operative
157
Milk Producers’ Union Ltd
3.36
Net Profit Ratio of Tiruchirappalli district Co-operative
159
Milk Producers’ Union Ltd
3.37
Comparison Of Gross Profit And Net Profit Ratio of
160
Tiruchirappalli district Co-operative Milk Producers’
Union Ltd
3.38
Staff Cost To Total Cost Ratio of Tiruchirappalli district
163
Co-operative Milk Producers’ Union Ltd
3.39
Manufacturing Cost To Total Cost Ratio of Tiruchirappalli
district Co-operative Milk Producers’ Union Ltd
165
3.40
3.41
Administration Cost To Total Cost Ratio Of
Tiruchirappalli district Co-operative Milk Producers’
Union Ltd
Interest Cost To Total Cost Ratio of Tiruchirappalli district
167
169
Co-operative Milk Producers’ Union Ltd
3.42
Trade Cost To Total Cost Ratio of Tiruchirappalli district
171
Co-operative Milk Producers’ Union Ltd
3.43
Structural Equation Regression Model For Overall
177
Performance Of Tiruchirappalli District Co-operative Milk
Producers’ Union Limited
3.44
Posterior frequency polygon distribution of the Total
179
Cost and Share -holders Fund
3.45
Posterior correlation plot of the DCMPU - PERF Model
180
regression model for the mediated factor Total Cost and
Share holders Fund
3.46
Posterior trace plot of the DCMPU - PERF regression
181
model for the mediated factor Total Cost and
Shareholders Fund
3.47
Three-dimensional surface plot of the marginal posterior
182
distribution of the mediating factor Total Cost with the
SF
3.48
Two-dimensional plot of the bivariate posterior density
183
for the regression weights TC to SF
3.49
INT – SA Model Mediated Regression Model of
188
Tiruchirappalli district Co-operative Milk Producers’
Union Ltd
3.50
Posterior frequency polygon distribution of the Interest
190
and Sales
3.51
Posterior correlation plot of the INT-SA Model
regression model for the mediated factor
191
3.52
Posterior trace plot of the INT-SA regression model for
192
the mediated factor Interest and Sales
3.53
Three-dimensional surface plot of the marginal posterior
193
distribution of the mediating factor Interest with the Sales
3.54
Two-dimensional plot of the bivariate posterior density for
194
the regression weights Interest and Sales
3.55
RM -SA Model Mediated Regression Model of
198
Tiruchirappalli district Co-operative Milk Producers’
Union Ltd
3.56
Posterior frequency polygon distribution of the
200
Receivables management and Sales
3.57
Posterior correlation plot of the RM -SA Model
201
regression model for the mediated factor
3.58
Posterior trace plot of the RM -SA regression model for
202
the mediated factor Inventory and Sales
3.59
Three-dimensional surface plot of the marginal posterior
204
distribution of the mediating factor Sundry Debtors with
the sales
3.60
Three-dimensional surface plot of the marginal posterior
204
distribution of the mediating factor Sundry Debtors with
the sales
3.61
Two-dimensional plot of the bivariate posterior density for
205
the regression weights sundry debtors and Sales
4.1
Structural equation regression model for performance of
Tiruchirappalli district co-operative milk producers’ union
limited. (COST- SF model)
229
CHAPTER I
INTRODUCTION AND DESIGN OF THE STUDY
1.1 Introduction
The Dairy Industry in India has developed on lines somewhat different
from that in other advanced countries. On account of the increasing pressure on
the small size dairy industry continued fragmentation of agricultural holdings.
There are no medium or large privately owned dairy farms. Stray efforts by
some manufacturers of dairy products to set up such farms did not succeed and
they have also come to depend mainly on milk collected from small producers
in the rural areas either by their agents or by the co-operatives. The only large
farms now in existence are military farms owned and run by the Central and
state Governments which serve mainly as centre’s for research and extension
and not as commercial ventures producing table butter in some areas and also
started selling liquid milk to some institutions and military establishments. Due
to the absence of a system of dairying based on commercial rural milk
production, collection, bulk transportation, processing and marketing of milk
and milk products to meet the demand of the growing urban population, the gap
between demand and supply in cities continued to grow and acute shortage was
felt in many areas. Private vendors took full advantage of such shortages by
large scale adulteration of milk and also charged high prices for poor quality
milk, On account of the general exploitation by the private vendors and as a
1
measure for counter-acting these acute shortages, a few cooperative milk
supply societies were started during the second and third decades of this
century but these societies were invariably consumer oriented and they did not
try to organize the producers or to provide facilities and inputs for increasing
milk production.
Inspired by the achievement by the kaira (District
Cooperative Milk Producers’ Union, The Government of India, Ministry of
Agriculture constituted a national Dairy Development Board (NDDB) on 26th
September1965 to organise and oversee the planning and execution of dairy
development programmes on a national scale and to provide technical guidance
to various states in setting up projects for overall development of milk
production, processing and marketing in the country and provide, technical and
consultancy services on all relevant aspects. Dairying is mostly conducted in
very small units, with one or two milking animals and is usually secondary to
other forms of agriculture. In rural areas a sizable proportion of the total dairy
herd is owned by landless producers, such as agricultural workers. However, an
estimated 5% of adult milch animals are kept by specialized producers in urban
and semi-urban areas, as a rule, the larger farmers produce milk only for the
market because crop production is much more profitable and less labour
intensive.
According to the Nutrition Advisory Committee of the Indian Council of
Medical Research, a balanced diet for an adult Indian should include 285 g of
milk per day. But, against this requirement the actual intake per head is much
2
less being only 140 grams. It ranges from 37 in Kerala to 396 in Punjab. It has
been much low as compared to New Zealand. Denmark, Holland, Australia and
USA where the per capita consumption is over 1700 g per day and it is one of
the most important item of human diet, especially vegetarian diet.
Most of the milk is produced in rural areas, while the profitable market
for milk and its products is urban. In view of these peculiar problems it has
been rightly recognized by the Planning Commission that "producer's cooperatives should be organized in villages to supply milk to the urban milk
supply schemes, milk powder making plants and to the consumers". This would
not only ensure adequate supplies of fresh milk to the urban consumers but also
bring profitable returns to the producers. Dairy co-operatives are very essential
to Indian conditions because of the following reasons.
Most of the milk is produced in rural areas while the profitable market is
based in urban areas.
Most of the milk is produced in small quantities by small farmers, which
leads to difficulties in the transportation to the consuming areas.
Lack of suitable transport facilities, non-availability of veterinary
services in the rural areas, inadequacy of properly organized system of
processing and marketing and lack of cheap and nutritious feed and
fodder.
Producer has often no direct link with the consumer and hence, the price
received by him is rather low.
3
There are no medium or large privately owned dairy farms because of
the increasing pressure on land.
The first dairy co-operative society was registered in 1913 at Allahabad
in U.P. and was called "Katra Cooperative Dairy Society". Thereafter a number
of dairy co-operative societies were registered at Baroda, Belgaum, Dhulhia,
Bhagalpur, Hublij Bungalkot, Calcutta etc. there were. Small societies mainly
formed with a view to meet the consumer demand for milk from people
residing in a specified area in which the society was operating. Between World
War I and II, a number of co-operative milk supply unions were registered in
different states. The principal among which were the Madras G3-operative
Supply Union, the Surat City G3: operative Milk Supply Union, the Coimbatore
Milk Supply Union, the Calcutta Milk Supply Union and the Lucknow Milk
Supply Union. By the end of the thirties there were 19 milk supply unions
covering 264 primary societies with a total membership of 11,262 or about 44
members per society.
During the Second World War, the increased demand for milk and milk
products for the army and acute shortage of milk in various urban areas gave a
new push to the organization of milk co-operatives. As a result number of milk
supply societies was registered in different parts of the country, particularly in
Bombay and Madras State. Most of the cities however, continued to be
consumer oriented. The Kaira District Co-operative Milk Producers Union at
Anand (AMUL) was formed in 1946 and constituted an important landmark in
4
the development of the dairy co-operative movement. Around this time the
Government of India also decided to make arrangements for the supply of
hygienic milk to Bombay city and this resulted in organized collection of rural
milk produced in Kaira District and its bulk transportation by train to Bombay
for distribution. This was the first organized link-up of rural milk-shed with
major urban markets.
1.2 National Co-operative Development Corporation in India (NCDC)
The dairy co-operatives need long-term finance for establishing
processing units, pasteurization plants, investment on building, plant,
machinery etc. They need medium term finance for the purchase of livestock
for replacement, and short term payment for wages and salaries, etc. In the
early stages of development of dairy co-operatives, the bulk of their
requirement was met by government. At present the most important source of
finance for milk co-operatives is borrowings from state governments and
central
financing
agencies
like
National
Co-operative
Development
Corporation (NCDC).
NCDC's scheme for the development of dairy co-operatives, the
corporation provides financial assistance for the establishment of integrated
dairy projects through the state co-operative dairy federations. It will also
provide technical inputs to milk producers’ organization, such as mobile
veterinary care, artificial insemination, etc. and will also formulate fodder
development programmes. The project cost includes the creation of new or
5
expansion of the existing chilling and processing facilities and also for the
setting up of cattle feed plants by the district milk unions and State Cooperative Dairy Federation.
Table 1.1 Pattern of assistance by NCDC
State
From NCDC to the
From state govt. to the
state govt.
society
Co-operatively
70% of the block cost 70% as loan 30%as
developed states
of the project as loan subsidy/ share capital
Co-operatively under
60% loan and 20%
developed state
subsidy
Cooperatively least
75% loan and 20 %
developed states
subsidy
60% loans 40% loans
60% loans 40% subsidy
Source: Annual report of National Co-operative Development Corporation
NCDC's assistance is routed through the state government or the state
co-operative bank for a period of 14 years in the fond of reimbursement
finance. Assistance is first released by the state government to the concerned
society and then an equal amount is claimed from the corporation later on.
Twenty-five per cent of the sanctioned assistance is released as ways and
means of advance after the society has acquired land and placed orders for the
machinery. Further assistance is given in relation to the progress in the
implementation of the project.
6
The marketable surplus of milk in the area under the operation of the
proposed unit should be sufficient to run the unit to its full capacity within two
years of its operation. The organization of milk collection routes in the area
should be such that the expenses incurred on transportation from milk producer
union are least. The bye-loans of the society should be the same as that of the
Anand pattern dairy cooperatives. The dairy co- operatives should have
experience of 2 to 3 years in the handling of milk.
1.3 The major Dairy Cooperative Federations in India:
• Andhra Pradesh Dairy Development Cooperative Federation Ltd
(APDDCFL)
• Bihar State Cooperative Milk Producers' Federation Ltd (BCOMPFL)
• Harvana Dairy Development Cooperative Federation Ltd. (HDDCFL)
• Himachal Pradesh State Cooperative Milk Producers' Federation Ltd
(HPSCMPFL)
• Jammu & Kashmir Milk Producer's Co-operative Limited(JKMPCL)
• Karnataka Cooperative Milk Producers' Federation Ltd (KMFL)
• Kerala State Cooperative Milk Marketing Federation Ltd f KCMMFL)
• Madhva Pradesh State Cooperative Dairy Federation Ltd (MPCDFL)
• Maharashtra Raiya Sahakari Maryadit Duqdh Mahasanqh (Mahasanqh)
• Orissa Slate Cooperative Milk Producers' Federation Ltd (OMFEDL)
• Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDFL)
7
• Punjab State Cooperative Milk Producers' Federation Ltd (MILKFEDL)
• Rajasthan Cooperative Dairy Federation Ltd(RCDFL)
• Tamil Nadu Cooperative Milk Producers’ Federation Ltd (TCMFL)
• West Bengal Cooperative Milk Producers’ Federation Ltd (WBCMPFL)
1.4 Organizational Structure of Dairy co-operative
The most rational organizational parameters for dairy co-operatives
would be (A) primary milk producers co-operatives, (B) district milk producers
co-operatives, and (C) state dairy federation (state level).
1.5 Primary milk producers’ co-operatives
These village level co-operative societies should be operationally and
financially viable. Such societies should be in a position to collect at least 309
to 500 liters of milk daily depending on the margin available between purchase
price and the sale price. The society should be viable even with a collection of
300 liters if the margin is adequate. If the margin is fixed at a low level, the
society will have to collect around 500 liters. Thus the primary milk producers’
cooperatives are concerned with:
Helping the members to increase their produce of milk; and
Arranging for its profitable sale in the consumer markets through the
milk supply unions.
8
1.6 District milk producers’ co-operative union
Primary milk societies are federated to district milk producers’ cooperatives. They own chilling and pasteurization plants located in different
areas. The capacity of pasteurization plant should be decided with regard to:
The quality of milk which could be marketed locally in the urban areas
of the district;
The possibility chilling and transporting surplus milk after meeting the
local demand, to the nearest metropolitan city dairy for pasteurization
and distribution.
1.7 Significance of the Dairy Development Department in India
(1) Assure a remunerative price for the milk produced by the member of
the Milk Producers' Co-operative Societies through a stable, steady and well
organized market support. (2) Distribution of quality milk and milk products to
the consumers at reasonable price.
Keeping these objectives in mind, a number of activities are undertaken
by the Dairy Development Department, viz., Provision of free veterinary health
cover to all animals owned by the members of milk cooperatives,
implementation of Artificial Insemination Programme, supply of balanced
cattle feed and inculcation of farmers with the modern animal husbandry
methods and practices.
9
All activities, which are essential for the up gradation of the milch
animals and improving their productivity in the long run, have been
undertaken.
Provision of necessary infrastructure facilities for marketing milk and
milk products and supply of quality milk to the consumer has been made by
way of establishing new chilling centre’s, pasteurization plants and adoption of
modern processing system.
The Commissioner for Milk Production and Dairy Development is the
Head of the Dairy Development Department. He is the functional registrar in
respect of Dairy Co-operatives in the State. He is also the Ex-officio Managing
Director of the Tamilnadu Cooperative Milk Producers' Federation Limited, i.e.
Aavin.
1.8 Working conditions of the dairy development department in India
The main functions of the Dairy Development Department include
Organization of societies, registration of societies, supervision and control of
primary milk cooperatives, District Cooperative Milk Producers Unions and
Tamilnadu Cooperative Milk Producers Federation.
The Dairy Development Department exercises statutory function - like
Inquiry, Inspection, Surcharge and Super session, appointment of special
officers, liquidation and winding up of dormant Societies etc. The
Commissioner for Milk Production and Dairy Development, Deputy Milk
10
Commissioner (Co-operation), and Circle Deputy Registrars (Dairying) are
vested with quasi-Judicial powers in respect of settlement of disputes, appeal,
revision and review under various provisions of Tamilnadu Cooperative
Societies Act, 1983 & the Tamilnadu Cooperative societies Rules, 1988 made
there under.
1.9 Primary Dairy Cooperatives Milk Societies in India
A minimum of 25 or more individuals competent to contract under
section 11 of the Indian Contract Act of 1872, owning milch animals, can form
a Primary Dairy Cooperative Society, with one or more villages as its area of
operation. Such persons have to approach the Circle Deputy Registrar's
(Dairying) office functioning at the District for further guidance. The members
of Primary Cooperative milk society have to supply milk to the Society which
will procure milk on quality basis and they will receive milk cost once in 10
days /15 days from the Society. Milch animals are provided with free
veterinary health cover, artificial insemination and the supply of balanced cattle
feed. Inductions of farmers on modern animal husbandry practices are aimed at
by upgrading the milch animals and thereby improving their productivity in the
long run for the benefit of the members. Women Milk Producers' Cooperative
Societies In order to encourage the women members to contribute more to the
dairy sector, they are being called upon to organize women milk producers'
cooperative societies in their respective areas. There are 1210 women milk
Producers' cooperative societies functioning in Tamil Nadu.
11
1.10 Strengthening Infrastructure for Quality and Clean Milk Production
of the union
Government of India sponsored a scheme called 'Strengthening
Infrastructure for Quality and Clean Milk Production' to strengthen
infrastructure facilities and to ensure Clean milk production at village level.
The period of the scheme is two / three years.
Objective of the scheme is to train farmers on clean milk production
activities, to provide chemicals and utensils to pouring members, to strengthen
district union dairies / chilling centers laboratory and to install bulk milk
coolers at societies to improve initial quality of milk.
Government of India will release the entire amount as full grant for
training, provision of antiseptic solutions, supply of stainless steel utensils and
modernization of Quality Control Labs at Dairies / Chilling Centers.
Government of India will release 75 percent as grant for installation of bulk
milk coolers and the remaining 25 percent will be met by the concerned
beneficiary District Unions.
12
Table.1.2 Products of Tiruchirappalli District Milk co-operative producer
union limited
Pasteurized Toned Milk Standardized Milk FAT 3.0% SNF 8.5% FAT 4.5% SNF
Full cream Milk Double toned Milk
8.5% FAT 6 % SNF 9.0% FAT 2.0 %
SNF 9.0 %
Ghee
Tins
-
200gms
lkg/2kg/5kg/15kg
/
500gms
Carton
pack
/
-
500gms/lkg Sachets - 50gms/500gms
Skimmed Milk Powder
Carton - 500gms
Poly Bag - 1 kg
Bulk Bag - 25 kg
Cheese
Chiplets - 25gms/250gms
Flavoured Milk
Tetra Pak & bottles 200ml strawberry
-cardamom
-chocolate
-Pineapple
-Pista
UHT Milk
1000 ml (Tetra Brik Aseptic Package)
500 ml (Tetra Fino Aseptic Package)
Ice-creams
Cups 50gms/100gms/500gms
Vanilla, Strawberry, Chocolate, Pineapple, / Hit / 1 gallon
13
Blackcurrant, Pista, Badam, Chaco Risin, Sticks
Mango, Butter Scotch, Tutti Frutti,
Cones
Sugar Free Ice creams
Milk Sweets
Gulab Jamun, Mysurpa, Kalakandh,
Cartons - 500gms/lkg
Butter Butter
Salted - 100gms/200gms/ 500gms /
Milk
20kg
Plain – l00gms / 200gms / 500gms
/20kg
Masala Butter Milk
Sachet - 200ml
Mango Drink - Maavin
200 ml (Tetra Brik Aseptic Package)
Milk Khoa
Packets 50gms/l 00gms/200gms/500gms Bulk
- Un sugared
CURD
200 ml sachet &
200 GMS CUP
Source: Annual report of Tiruchirappalli district milk producers’ union
limited
The area around the proposed unit should have sufficient potential for the
sale of milk/milk products. The society should indicate whether it will be
selling milk to the dairy unit or to the consumers directly and also whether the
society will supply milk to the dairy unit in its own transport or if the dairy unit
should make its own arrangements for transportation.
14
The milk unions interested in the assistance from the corporation should be
financially sound and they should have professionals working with them, to
take care of the working of the project.
1.11 Dairy Co-operative development in Tamil Nadu
State level co-operative federation which would be able to support and
guide district unions, absorb surplus milk available with the district unions for
distribution in the big cities and also convert any surplus milk received from
the district unions into milk powder and other products either for sale, or for
later use for recombination in times of scarcity particularly in the lean season.
It is important that the federation should have control over the dairies and the
market in at least one major city which could be absorb surplus milk and the
number of federations to be informed should be based primarily on this
consideration of the availability of a ready market within its area of operation.
It is important to note that, this is only an outline organizational pattern and
there should be no rigidity in applying it.
The actual organizational structure should only take into account the
special regional and other local factories affecting the growth of the cooperatives, ownership of the dairies, price control on milk and milk products
etc.
There are 17 District Cooperative Milk Producers' Unions functioning in
the State of Tamil Nadu covering 30 Districts. There are 15 Dairies in District
Co-operative Milk Producers' Unions with an installed processing capacity of
15
19.42 llpd. There are 36 Chilling Centers (Functional) in District Co-operative
Milk Producers' Unions with installed chilling capacities of 13.55 llpd (1)
Establishment of chilling centre’s (2) Formation of new milk routes to collect
milk produced by the members of the societies. (3) Collection of milk from
societies, process and pack in modern dairy plants by maintaining quality
standards. (4) Supply of quality milk to Chennai Metro under hygienic
conditions. (5) Fixation of procurement and selling price of Milk (6) Increase
of liquid milk sales by introducing innovative sales promotional activities. (7)
Supply of inputs to the members of the societies. (8) Render Veterinary Health
Service and emergency service to the cattle of members of primaries, to impart
training on First aid and on Artificial insemination to the staff of member
societies. (9) Extending Artificial insemination to the cattle owned by the
members of Milk Cooperative Societies. (10) Providing milk cans, Milk “O”
testers and LN2 containers.
(11) Salem, Erode, Madurai and Dharmapuri
Unions are the Feeder Balancing Dairies. Surplus milk in the District Unions,
after meeting their local sales is diverted to the nearest Feeder Balancing
Dairies for conversion into milk products, such as Skim Milk Powder, Butter
and Ghee. (12) The three Cattle Feed Plants at Madhavaram, Erode and
Kappalur are run by the Kancheepuram - Tiruvallur Union, Erode Union, and
Madurai Union respectively. The production capacity of these cattle feed plants
is 100 MT per day each. The balanced cattle feed produced in the form of
pellets and mash are supplied to the members of the Milk Co-operatives,
16
livestock farms manned by the Animal Husbandry Department and to various
local bodies including the Corporation of Chennai.
The Tamilnadu Co-operative Milk Producers' Federation Limited is an
apex body of 17 District Cooperative Milk Producers' Unions. The Federation
has four dairy plants in Chennai, one at Ambattur with a capacity of 4.00 lakh
liters per day, another at Madhavaram with a capacity of 2.00 lakh litres per
day and the third dairy at Sholinganallur with a capacity of 4.00 lakh litres per
day. These dairies collect milk from District Unions process and pack in
sachets and send for sale to the consumers in and around Chennai City. The
fourth product dairy at Ambattur is engaged in the manufacture of milk
products such as Yogurt, ice cream, Khova, Kulab jamoon, Buttermilk, Curd
and Mysore pa. The Dairy Development Department was established in 1958 in
Tamilnadu. The administrative and statutory control over all the milk
cooperatives in the State was transferred to the Dairy Development Department
on 1.8.1965. The Commissioner for Milk Production and Dairy Development
was made as the functional Registrar under the Tamilnadu Cooperative
Societies Act. With the adoption of 'Anand pattern' in the State of Tamilnadu,
Tamilnadu Co-operative Milk Producers' Federation Limited was registered in
the State on 1st February 1981. The commercial activities of the Department
such as Milk Procurement, Processing, Chilling, packing and sale of milk to the
consumers etc., hitherto dealt with by the Tamilnadu Dairy Development
Corporation Ltd., were transferred to the newly registered Tamilnadu Co17
operative Milk Producers' Federation Limited, popularly known as "Aavin".
Tamilnadu Co-Operative Milk Producers' Federation Limited was constituted
on 1st February 1981.Milk Procurement, Processing and distribution are being
attended by the District Unions in the respective areas. Significant achievement
has been made by Milk Producers' Cooperative Societies, Unions and
Federation in the State of Tamilnadu.
1.12 Dairy Co-Operative Development in Tiruchirappalli
The Tiruchirappalli Srirangam Co-Operative Milk Supply Union registered
in the year 1939 was converted as Tiruchirappalli District Co-Op, milk
Producers’ Union Ltd by an amendment and registered on 26.9.1980 under Coop, Act, The activities of milk Procurement and milk production have been
taken over by the Producers' Union thereafter.
At the beginning there were 120 village level milk Societies in
Tiruchirappalli Dist. after taking over the activities by the Milk Producers'
Union now societies have been organized after conducting surveys at taluks.
The activity of this union comprising of 4 districts namely Trichy,
Perembalur, Karur and Ariyalur. The new dairy for this Union has been
constructed with the Capacity of 1.5 Lakhs Liters per Day with the financial
assistance from the World Bank by the National Diary Development
Programmer. The new dairy is situated to the extent of 20 acres at Kottapattu.
The new dairy commissioned its functioning on 9.6.95.
18
Trichy District Co-operative milk producers union ltd now possess 514
Societies which are functioning and supplying milk to this Union an average of
2,12 Lakhs Liters Per Day (LPD). At present 3 Milk Chilling Centers are
functioning at Perembalur, Karur and Jayakondam with the capacity of 500000
LPD 30000 LPD and 2000 LPD respectively. It is also proposed for 2 new
Chilling Centers at Manapparai and Vilangudi with the capacity of 50.000 LPD
each. Manapparai Chilling Centre to the total estimate of "22.70 Lakhs. A sum
of 10 Lakhs has been received as 50% grant from the District Rural
Development Agency, Trichy.
Table.1.3 Equipment, Plant and Machinery in Tiruchirappalli Dt. Co-Op
Milk Producers’ Union Ltd., Trichy
Particulars
Pest of flash fly killing 4 nos
No.
4
Milk tubs 10000nos
10,000
Khova pan 200 ltrs capacity 2 nos
2
CAN-AL 40 ltrs capacity 200 nos
200
Cream Separator (sour milk) 360 lts x 3 nos
3
SS ghee packing table 4 nos
4
Mini Diagonstic Lab
1
Cooling tower pump 60000lph 2 nos
2
Boiler oil pump with accessories 4 nos
4
Purchase of cable & providing
1
Hydroflow 15hp water pump 2nos
2
Xerox machine & Assr
1
Compressor 9 x 9 Frick India 2 nos
2
Cell Phone & Assr
1
19
Computer / Printer P & I team 35+1.5
1
Pasturize 20kl
1
Silo 40000kl/20000kl-2/5000kl-1
1
Boiler feedwater and oil pump each 2 nos
2
Drinage pump 100000 ltr/hr and conversion
1
Approach road to terminal sump & borewell
1
New submergible pump with acceseries
1
Expansion of IBT 75000ltrs
1
HT transformer 500 kva cable etc 2 not
2
CIP system
1
Pannel Board with CAN etc
1
Ghee boiler 1000 ltrs
1
Cream pasteuriser 1 kl 1no
1
Ghee clarifier 600ltr 1 no
1
Providing silo level indicator
1
Prepac machine PLC conversion
1
CAR & JEEP
1
Water Softening plant
1
Water bath
1
Refrigerator
1
High way parlour Trichy
1
Freezer 10 nos
10
Parlour structure 8’x6’-10 nos
10
Walkin cold storage 8’ x6’-10 nos
10
Ice Cream making Eqpt
1
Slippers 40
1
Softy Machine
1
Source Annual Report of Tiruchirappalli Dt. Co-Op Milk
Producer’s Union Ltd., Trichy
20
Map of Aavin Milk Chilling Plant
Source: http://maps.google.co.in/maps?hl=en&tab=wl
Now an average of 6305 liters of an average has been done every month
through 179 Sub Centers. There are 7 Mobile Veterinary Routes are operated
for providing health cover to the animals available with the members of the
Societies. Every month an average of 4176 Nos. of cases are attended through
the 7 Mobile veterinary Routes.
21
Scope of the study
In this study the Tiruchirappalli district milk producers’ union limited
has been selected on the comprehensive of the performance appraisal analysis
with help of Trend analysis, financial Ratio analysis, Current ratio, Quick
ration, Stock Turnover ratio, Average collection period, Average payment
period, Total turnover ratio, Current assets turnover ratio, working capital
turnover ratio, gross profit ratio, net profit ratio, staff cost to total ratio,
manufacturing to total cost ratio, office and administrative cost to total cost
ratio, interest cost to total cost ratio and trade cost to total cost ratio.
This secondary data collected were analyzed for the annual report of
Tiruchirappalli district milk producers’ union limited. Data analyses were
performed with statistical package for social sciences (SPSS) using methods
that included descriptive statistics, regression analysis, Karl’s Pearson
correlation coefficient and AMOS package for structural equation Modeling
and Bayesian Estimation and testing.
Trend Analysis
In financial analysis the direction of changes over a period of years is of
crucial importance. Time-series or trend analysis of ratios indicates the
direction of change. This kind of analysis is particularly applicable to the items
of profit, loss account and balance sheet. The trend analysis also occupies an
22
important place in the analysis and interpretation of the annual reports of
Tiruchirappalli district milk producers’ union limited. It is referred signifies a
tendency of the variable during the study period on the upward or downward
movement of the come out in the union. Such an analysis has been disclosed
the changes in the financial position and operational position of the study
period from 1997 – 1998 to 2007 – 2008. The analysis of the trend in the
Tiruchirappalli district milk producers’ union limited facts reviled any of the
following calculations.
by calculating trend ratio or percentages
by plotting on graph-paper or chart
Ratio Analysis
A financial ratio is a relationship between two financial variables. It
helps to ascertain the financial conditions of the union. Ratio analysis is a
process of identifying the financial strength and weakness of the union. The
important financial dimensions analyses are liquidity, activity and profitability.
Liquidity ratio measures the union’s ability to meet current obligations and is
calculated establishing relationship between current assets and current liability.
Activity ratio reflects the union’s efficiency in utilizing its assets in generating
sales and is calculated by establishing relationship between sales and assets.
profitability rations measure the overall performance of the union by determine
the effectiveness of the union in generating profit, and are calculated by
establishing relationship between profit and sales. with the help the ratios’ can
23
be determined the ability of the union to meet its current obligations, the extent
to which the union has used its long-term solvency by borrowing funds, the
efficiency with which the utilizing its various assets in generating sales revenue
and the overall operating efficiency and performance of the firm. It stands for
the process of determining and presenting the relationship of items and groups
of items in the financial statements. It is an important technique of financial
analysis. It is a way by which financial stability and health of the
Tiruchirappalli district milk producer union has judged. Accounting ratios
reveal the financial position of the union.
The ratio analysis involves
comparison for a useful interpretation of the annual report of the
Tiruchirappalli district milk producer union.
Structural Equation Model
SEM has been denoted the estimation of the covariance matrix of the
measures or analysis of covariance structures. The variable has been analyzed
for the purpose of findings of the results of the covariant of the matrix
compared to an empirical data based on the covariance matrix.
In SEM denotes on latent constructs – abstract the variables like
Finance or operational areas towards the analysis of the data
24
1.13 Statement of the Problem
Humans being life is begin with milk and end with milk. Milk is
perishable commodity and the surplus cannot be stored for a long time.
Identifying a research problem is said that research is an activity with a focus
on something. This focus is the topic or the problem about which the research
is conducted. Therefore, what is to be researched about is more important than
research itself. In other words, unless a researcher has a problem to study
about, he cannot conduct research. Therefore, identifying the research problem
is one of the basic steps in research. Researcher who has succeeded in
identifying the research problem is half-successful. It is often felt that any
problem is fit enough to research about. But, a problem is systematically
identified and conducting research on it. Researcher has clearly indicated how
the entire process of research suffers if there is no systematic attempt to
identify the research problem.
The problem that the Tiruchirappalli District Cooperative milk
producers’ union are facing Lack of Business Strategy, Poor asset quality,
Raising cost of operation, Low owned capital, Low working capital, poor credit
facilities, lack of funds, buildings, and equipment, lack of financial reserve,
lack of production and less price due to subsidies, Low provision of loan in
society or govt. for purchasing cattle, Low incentives or bonus for supplying
milk, Lack of improved equipments, and Lack of technical guidance etc.,
25
Since, the previous researchers have not dealt with the above
factors elaborately,
the present research attempts to identify the factors
internally affecting the operation of Tiruchirappalli District Cooperative milk
producers’ union Limited and suggests an appropriate model to understand the
mediating effects on the performance of Tiruchirappalli District Cooperative
milk producers’ union Limited.
1.14 Objectives of the Study
The main objective of this study is to identify the factors affecting the
financial parameters and thereby the efficiency of the Tiruchirappalli District
Cooperative milk producers’ union Limited in an era of regulation and suggest
a model to capture the constraining factors in a better way. Several specific
goals are formulated to achieve this main objective. Based on the literature
review and gaps such as lack of in-depth study of the factors, effects of
regulations on performance, following specific objectives are formulated
to study the impact of various performance factors on the operations of the
Tiruchirappalli District Cooperative milk producers’ union Limited.
1. To find out the internal factors impacting the efficiency of various activities
and profitability.
2. To identify impact of the critical cost factors that need to be monitored with
relation to return generation and the performance of Tiruchirappalli District
Cooperative milk producers’ union Limited.
26
3. To analyze the crucial role played by business factors on the
performance of Tiruchirappalli District Cooperative milk producers’ union
Limited.
4. To suggest suitable model capturing the structural factors affecting the
overall performance.
1.15 Proposed Conceptual Model for Performance of Tiruchirappalli
District Cooperative Milk Producers’ Union Limited.
Research Model
Subsidy
Total
Debt
Non Business
Income
Shareholders
Equity
Total
Costs
Total
Sales
Profit
(Business Income)
Fig.1.1
27
1.16 Significance of the Study
In this research, the aim of the researcher is to conceptualize various
financial factors in evaluating the efficiency of Tiruchirappalli District
Cooperative milk producers’ union Limited. Very little empirical studies in
this area, with use of financial ratios and application of non-parametric tools
has been done and so it requires better understanding of various financial
factors and implementation of a model to evaluate it. The accounting variables
of interest in this study amongst the principal financial aggregates reported in
financial statements: Shareholders’ Equity (SE), Total Debt (TL), Sales (SA),
Profit (P), Non Business Income (NBI), Subsidy (SU) and Total Costs (TC).
The purpose of the present study is to throw more light on the factors affecting
the performance of Tiruchirappalli District Cooperative milk producers’ union
Limited that can guide the investors, government, lenders and other
shareholders to have a comprehensive knowledge about the functioning of the
union before investing their funds.
1.17 Research Methodology
Pooled data collection is to assess the impact of the performance of
Tiruchirappalli District Cooperative milk producers’ union Limited over the
time horizon viz., 1997 - 1998 to 2007 - 2008. The approach to macroeconomic
variables is time series. The design of the study is based on financial data,
28
which are published. The secondary data is considered as the most appropriate
research design to the measure the dimensional effects of the performance of
the Tiruchirappalli District Cooperative milk producers’ union Limited in this
study. The secondary data is the most appropriate research design as it can
enable the researcher to identify the divergence in practice and collect
information on financial variables over a time horizon. The secondary data is
practically, a quantitative method that requires standardized information in
order to define or describe variables or to study the relationships between the
variables. The current study is secondary data oriented and relies on the
industrial publications. The research is designed to bring out the casual
relationship within various dimensions of the performance and Cost as the
mediating factor and the outcome of performance in maximizing the equity
holders’ wealth.
1.18. Variables and Data Collection
The study employed a panel time series approach to the impact of
regulation over the horizon time viz.,1997-1998 to 2007-2008. The study,
to conduct empirical analysis, collected secondary data in the form of
published document from various sources viz.; union published annual reports
and other journals. Initially, the data was tested for suitability using ratio
analysis and simple statistical tools such as standard deviation, standard error
of the sample. However , Data was accepted as these were frequently
inspected by Charted Accountants of India .
29
1.19 Procedure for Data Analysis
The data collected were analyzed for the annual report of Tiruchirappalli
District Milk Producers’ union from the year 1997-1998 to 2007-2008. Data
analyses were performed with Statistical Package for Social Sciences (SPSS)
using techniques that included descriptive statistics, regression analysis and
AMOS Package for Structural Equation Modeling and Bayesian Estimation
and testing.
1.20 Structural Equation Modeling
In the previous studies, the financial performance measures cause errorsin-variable problems.
Moreover, the application of ordinary least squares
method to these studies faces other problems, such as multicollinearity problem
in the independent variables and the violation of assumptions in disturbance
term. By using a structural equation modeling approach in this research, the
researchers overcome the problems mentioned above.
For instance, the
regression analysis doesn’t control measurement errors and can only deal with
one dependent variable at a time. But, the structural equation modeling not
only controls the measurement errors but also handles several dependent
variables. Further with regard to, as for independent variables, it regards
several observable variables as indicators of the theoretical constructs without
causing multicollinearity problems, which is a common issue of regression
analysis in financial studies. In addition, regression deals with observable
30
variables but not latent constructs. It assumes the observable proxies as the
exact measures of the theoretical constructs, though this may not be true due to
measurement errors. In empirical research, the assumptions of regression
analysis can easily be violated, while the normality distribution required by
maximum likelihood estimation method in structural equation modeling can be
met by a normal score transformation.
Considering the drawbacks of
regression analysis, initially apply the structure equation modeling approach to
investigate the determinants of capital structure. The former employ it to study
the determinants of capital structure, while the latter examine the effect of
earnings surprises on stock prices.
The advantage of structural equation
modeling over traditional regression analysis is that it explicitly models
measurement errors and can estimate parameters with full information
maximum likelihood (FIML), which provide consistent and asymptotically
efficient estimates. By fixing the scales of latent variables, one can solve the
indeterminacy problem.
In other words, a series of split but independent
multiple regressions were simultaneously estimated by SEM. Therefore, the
direct and indirect effects were identified. However, a series of separate
multiple regressions had to be established based on “theory, prior experience,
and the research objectives to distinguish with independent variables predict
each dependent variable”. SEM considers a measurement error; the reliability
of the predictor variable was improved. Structural Equation Modeling was
conducted with AMOS 16.0 (an upgraded version of AMOS 7.0 and a
31
computer program for formulating, fitting and testing structural equation
models to observed data was used for SEM and the data preparation was
conducted with SPSS 15.0. Linear structural equation models (SEMs) are
widely used in sociology, econometrics, management, biology, and other
sciences. A SEM without free parameters has two parts: a probability
distribution in the Normal case specified by a set of linear structural equations
and a covariance matrix among the “error” or “disturbance” terms, and an
associated path diagram corresponding to the casual relations among variables
specified by the structural equations. It is often thought that the path diagram is
nothing more than a heuristic device for illustrating the assumptions of the
model. However, in this research, the researcher will show how path diagrams
can be used to solve a number of complex problems in structural equation
modeling.
Structural equation models with latent variables (SEM) are more and
more often used to analyze relationships among variables in marketing and
consumer research (refer Batisa-Foguet & Coenders 2000, for an introduction
and Bagozzi 1982 for applications to marketing research). Some reasons for the
widespread use of these models are their parsimony (they belong to the family
of linear models), their ability to model complex systems (where simultaneous
and reciprocal relationships may be present, such as relationship between
profitability and economic growth), and their ability to model relationships
among non-observable variables while taking measurement errors into account
32
(which are usually sizeable in small sample and can result in biased estimates if
ignored). Usually recommends a confirmatory factor analysis (CFA) to account
for the measurement of relationships from latent to observable variables. In our
case, the latent variables are the Business Income, Total Cost, Total Debt, Total
Sales, Non Business Income, Subsidy and shareholders’ wealth. The
relationships among latent variables cannot be tested until a well-fitting CFA
model has been reached. In our case, the relationships among overall
performance of District Cooperative milk producers’ union Limited, the
mediating influence of Cost with other performance parameters are quite
interesting from the academic research standpoint. This modeling sequence
stresses the importance of the goodness of fit assessment. As a combination of
regression, path and factor analyses, in SEM, each predictor is used with its
associated uncontrolled error and; unlike regression analysis; predictor multicollinearity does not affect the model results.
1.21 Bayesian Estimation and Testing in SEM
With modern computers and software, a Bayesian approach to structural
equation modeling (SEM) is now possible. Posterior distributions over the
parameters of a structural equation model can be approximated to arbitrary
precision with AMOS, even for small samples. Being able to compute the
posterior over the parameters allows the researchers to address several issues of
academic and practical issues. First, prior knowledge about the parameters may
33
be incorporated into the modeling process in AMOS. Second, need not rely on
asymptotic theory when the sample size is too small, a practice which has been
shown to be misleading for inference and goodness-of-fit tests in SEM. Third,
the class of models that can be handled is no longer restricted to just-identified
or over-identified models. Finally, the SEM estimates the cause-effect between
the variables. In a Bayesian approach some of these assumptions can be
specified with perhaps with more realistic uncertainty.
1.22 Hypothesis Development
Mediation refers to a process or mechanism through which one variable
(i.e., exogenous) causes variation in another variable (i.e., endogenous). Studies
designed to test for moderation may provide stronger tests for mediation than
the partial and whole covariance approaches typically used. It is useful to
distinguish between moderation and mediation. Moderation carries it with no
connotation of causality, unlike mediation, which implies causal order. Based
on the arguments the following hypotheses have been framed to assess the
performance of District Cooperative milk producers’ union limited.
1.23 Hypotheses mediated INTEREST- SALES MODEL (See fig 1.2)
Hypothesis 1: The Manufacturing cost dimension positively influences
the Business Income (Sales) so as to create wealth for the investors.
Hypothesis 2: The Staff cost dimension positively influences the Business
Income (Sales) so as to create wealth for the investors.
34
Hypothesis 3: The Administration cost dimension positively influences the
Business Income (Sales) so as to create wealth for the investors.
Hypothesis 4: The Trade cost dimension positively influences the Business
Income (Sales) so as to create wealth for the investors.
Hypothesis 5: The Manufacturing cost dimension positively mediated by
interest towards increase in Business Income (Sales) to create wealth for the
investors.
Hypothesis 6:
The staff cost dimension is mediated by Interest towards
increase in Business Income (Sales) so as to create wealth for the investors.
Hypothesis 7: The administration cost dimension is mediated by Interest
towards increase in Business Income (Sales) so as to create wealth for the
investors.
Hypothesis 8: The Trade cost dimension is mediated by Interest towards
increase in Business Income (Sales) so as to create wealth for the investors.
Hypothesis 9: The Manufacturing cost, staff cost, Administration Cost and
Trade Cost dimensions mediating dimension Interest positively influence the
outcome of Business Income (Sales) to create wealth.
35
Figure.1.2 HYPOTHESIZED INTEREST - SALES MODEL
MF
COST
e2
H1
1
H2
STAFF
COST
H5
ADMIN
COST
SA
H3
H4
H6
H7
TRADE
COST
H9
H8
I
1
e1
DIMENSIONS: SA – SALES, I – INTEREST, MF COST- MANUFACTURING EXPENSES,
AND STAFF COST, ADMIN COST AND TRADE COST.
36
1.24 Hypotheses formulated for RM - SALES Model (see fig1.3)
Hypothesis 1: The land and Building dimension positively influences the
Business Income (Sales) so as to create wealth for the investors.
Hypothesis 2: The Plant and Machinery dimension positively influences the
Business Income (Sales) so as to create wealth for the investors.
Hypothesis 3: The Furniture dimension positively influences the Business
Income (Sales) so as to create wealth for the investors.
Hypothesis 4: The Stock dimension positively influences the Business Income
(Sales) so as to create wealth for the investors.
Hypothesis 5: The Cash dimension positively influences the Business Income
(Sales) to create wealth for the investors.
Hypothesis 6: The land and buildings dimension is mediated by Sundry
Debtors towards increase in Business Income (Sales) so as to create wealth for
the investors.
Hypothesis 7: The Plant and Machinery cost dimension is mediated by Sundry
Debtors towards increase in Business Income (Sales) so as to create wealth for
the investors.
Hypothesis 8: The Furniture dimension is mediated by Sundry Debtors towards
increase in Business Income (Sales) so as to create wealth for the investors.
37
Hypothesis 9: The stock dimension is mediated by sundry towards increase in
Business Income (Sales) so as to create wealth for the investors.
Hypothesis 10: The Cash dimension is mediated by Sundry Debtors towards
increase in Business Income (Sales) so as to create wealth for the investors.
Hypothesis 11: The Land and Buildings, Plant and Machinery, Furniture, stock
and Cash dimensions mediating dimension Sundry Debtors positively influence
the outcome of Business Income (Sales) to create wealth for the Business.
38
Figure 1.3 HYPOTHESIZED RM – SALES MODEL
L&B
H1
e2
1
H2
P&M
H6
FUR
H7
SALES
H3
H4
H5
H8
H11
STOCK
H9
CASH
H10
DEBTORS
1
e1
DIMENSIONS: L&B-LANDAND BUILDINGS, P&M-PLANT AND MACHINERY, FURFRUNITURE, DEBTORS, CASH, STOCK AND SALES, RM-RECEIVABLE MANAGEMENT
39
1.25 Hypotheses formulated for overall dimensions for performance of share
holders’ wealth (fig 1.4)
Hypothesis 1: The profit dimension positively influences the Shareholders’
Funds.
Hypothesis 2: The Subsidy dimension positively influences the Shareholders’
Funds.
Hypothesis 3: The Sales dimension positively influences the Shareholders’
Funds.
Hypothesis 4: The Debt dimension positively influences the Shareholders’
Funds.
Hypothesis 5: The Non Business Income dimension positively influences the
Shareholders’ Funds.
Hypothesis6: The profit dimension is mediated by Total Cost to create wealth
for the investors.
Hypothesis 7: The Subsidy dimension is mediated by Total Cost to create
wealth for the investors.
Hypothesis8: The Sales dimension is mediated by Total Cost towards increase
in to create wealth for the investors.
Hypothesis 9: The Debt dimension is mediated by Total Cost to create wealth
for the investors.
40
Hypothesis 10: The Non Business Income dimension is mediated by Total Cost
to create wealth for the investors.
Hypothesis 11: The profit, Subsidy, Sales, Debt, and Non Business Income
dimensions mediating dimension Total Cost to create Shareholders’ wealth.
Fig. 1.4 HYPTHESIZED DCMPU - PERF MODEL
P
H1
e2
1
H2
SUB
H6
TS
SF
H3
H4
H7
H5
H8
H11
TD
H9
NBI
H10
TC
1
e1
DIMENSIONS: P- profit, Sub- total subsidy TS-total sales, TD-total debt, TA-total
asset, NBI-non business income, TC – total cost,- SF- shareholders’ fund
DCMPU-District co-operative milk producers’ union, PERF- Performance
41
1.26 Various Dimensions in Measuring the Overall Performance (Net
worth) In Tiruchirappalli District Cooperative Milk Producers’ Union
Limited of Comprehensive Expenses (COST)
The crucial indicators have been identified as quintessential under this
criterion after consulting reputed auditors, tax consultants, and literature: In this
research the cost has been classified into five categories which are
manufacturing cost, Staff cost, Administration, Trade cost and Interest cost.
Manufacturing cost includes Milk-purchase, Products-Purchase, Cattle feedpurchase, Semen & Straw purchase, and can purchase. Staff cost includes
Salaries, Daily wages salaries, National Holiday salary, Surrender leave salary,
Dearness Allowance arrears, Increment arrears, Travelling allowance, OPE for
staff, EPF contribution, ESI contribution, Gratuity premium LIC, Pongal gift to
staff, Staff benefits expense, Free milk to staff, Security charges-expenses, and
Night Shift Allowance. Admin Cost includes Postal charges, Telephone
charges, Courier services-Expenses, Toilet & Road cleaning expenses, Printing
charges, Office stationary, Periodical Expenses, Computer repair &
maintenance, Computer Stationary, Bank commissions & charges, Internal
audit fees expenses, VIP-Expenses, Miscellaneous .Expenses, Consultant fee,
Meeting expenses (ADMN) , Other expenses, Taxi hire (ADMN), Property
Taxes, Insurance/cash –in-Transit, Stitching charges, Advertisement, Pooja
Expenses, Xerox expenses, Rent, Rent& Training Expenses. Trade cost
includes Transport Expenses (Inward),
42
Transport Expenses (Conversion),
Transport Expense (C.F), Transport Charges (Other),
Overhead Charges
,Freight Charges, Conversion Charges, Fooder Slip, Medicine, Incentive For
Production, Advertisement For Procurement, Training For P&I, Meeting
Expenses For P&I, Taxi Hire For Production, Rent For P & I, Pasteurization
Eqpt. Repair, Boiler Repair, air Compressor Eqpt. Repair,Water Supply Eqpt.
Repair, Generator Eqpt. Repair, Electricals, Other Expenses, Other Expenses,
Caustic Soda, Nitric Acid,
Bleaching Powder,
Sulfuric Acid,
Ammonia Gas, Compressor Oil, Furnace Oil, Power,
Cleaning Exp./Pbl,
Fuel/Tanker,
Can Cleaning Fuel/Car,
Batteries/Tankers,
Insurance/Car,
Insurance/Jeep,
Fuel Generator, Can
Fuel/Jeep,
Retarding/Tanker,
Insurance/Tanker,
Alcohol,
Fuel/Jeep,
Contingencies/Car,
Driver Bata,
Film-
Purchase, Tubs & Crates Purchase, Ghee Packing Expenses, Sealing Wax &
Wire,
Other Packing Expenses,
Commission Paid,
Expenses,
Khova Packing Expenses,
Transport Expenses (Outward),
Agent
Stall Maintenance
Advertisement For Mkg, Taxi Hire For Mkg, Zponal Office
Expense, Others For Marketing Expenses, Insurance –Product Transit, LabelLicense Fees, License-Trade, Pollution Control-Trade, Pollution ControlTrade, Milk Packing Expenses. Interest cost includes Interest on NDDB loan,
Interest on Govt. loan, Interest on security deposit, and Interest on working
capital.
43
1.27 Business Income and Non Business Income
The following critical indicators of earnings have been identified as core
to this criterion after consultation with previous research work, financial
advisors, and industry executives: Regarding the earnings in the business,
which includes business income like Sales and non business income like
earnings from Trade Income and miscellaneous income such as Interest,
Interest from nationalized bank, Interest from co-op Bank, Interest from TNEB,
Admission fee, Associate Fee, Book sale, Tender forms, Others, Bank
commission, AI charges recovery income, Emergency fee, M.T.E sale, Acid
income, Fodder Slips, Waste film sale (Action) Overhead income, Accident
insurance claim, Other, FMDCP-A/C income, MVP-AI Income, Diesel cost
recovery, Transport charges received, and Milk tester repair claim,
1.28 Net Earnings (NET PROFIT)
The core indicators which are been identified under this criterion as
critical success factors for the profitability; regarding the operating profit from
the operating activities.
1.29 LONG TERM AND SHORT TERM DEBT
It is a long term debt raised essentially to meet the long term financial
obligation such as purchase of fixed asset to run the business, to make
investments in the subsidiaries. It is a debt capital which is in the nature of
long term source.
This kind of debt capital rose against the security,
44
hypothecation of quality business assets such as plant and machinery, buildings
and finished goods. Major sources of this debt capital are banks and are in the
form of term loan and subsidy to Societies. Another kind of debt capital in the
form of public deposits (i.e. deposits from Non Members), loans from banks,
Loans from NDDB and government guaranties, Current liabilities and
provisions form the source of short term debt financing. This kind of debt
includes trade and other credit from suppliers, matured liabilities payable to
staff and others.
1.30 Comprehensive Business Assets (FIXED ASSETS & CURRENT
ASSET)
These assets are in the nature of fixed or permanent asset and remain
within the business unless they are worn out. They are in the form of land,
investments, buildings which house the factories and office. Other important
business assets in this nature are plant and machinery, vehicles used for
transportation and other asset. Assets current are those are short term
investment required for maintaining operation of the business which can be
realized within relatively short time i.e. can be converted into cash or
equivalent in a year. They are classified as most liquid and fluid assets need
conversion. Quick asset are cash and sundry debtors (account receivable and
trade claims). Fluid asset includes raw materials, stock, work in progress and
require certain period of time of retention.
45
1.31 Research Study Period
The Research is confined to Performance appraisal of the Tiruchirappalli
District Co-Operative Milk Producers’ Union Ltd and the research has covered
a period of eleven years only i.e. form 1997-1998 to 2007-2008.
1.32 Limitations of the Study
It is important that the findings of this empirical research be evaluated in
the background of certain limitations carried along, since acknowledgement of
these limitations could suggest new directions for future research.
Data on both dependent and independent variables were collected from
the published reports and from public domain. Findings, therefore, will
represent a casual approach.
Some researchers argue that adjustments to the financial statements may
lack comparability, but such adjustments indeed acceptable by the accounting
professionals and also for cross- industry comparison. It is a useful and
effective methodology to employ such an approach, as statutes bar publication
or dissemination of Union sensitive information.
46
1.33 CHAPTER SCHEME
This study has been divided into four chapters of the performance
appraisal of the Tiruchirappalli district milk co-operative producers’ union.
Chapter I This chapter deals with a general introduction/background of
the study tracing the evolution of Tiruchirappalli District Cooperative milk
producers’ union Limited. Besides, this chapter gives a brief account of the
regulatory framework within which the firms are operating at present. It also
presents the significance of the study, statement of the problem of the study,
research methodology, hypotheses to assess the overall performance of
Cooperative milk producers’ union, limitations of the study, and finally
outlines the structure of the study.
Chapter II: Review of literatures deals with respect to the regulatory frame
work, evolution of the Tiruchirappalli District Cooperative milk producers’
union Limited presents various important factors affecting the performance
of the sector contained in works of several researchers, identifies the gap in
past research, outlines the objectives of the study, the previous empirical
findings and models developed to analyze the efficiency and performance
parameters are thoroughly examined.
47
Chapter III: Summarizes the outcomes of the statistical and econometric
analysis that are used to test the hypotheses.
Chapter IV: Identifies the findings of the study pertaining to the
hypotheses, the implications, for the sector as a whole and individually, drawn
from the findings of the research, suggestions for future
conclusions of the study.
48
research, and
CHAPTER II
REVIEW OF LITERATURE
2.1 Introduction
This chapter provides a review of literature pertaining to empirical
studies on Cooperative,
empirical studies on Role of Cooperatives,
Cooperative for Development, empirical studies on Types of Cooperative in the
Country, empirical studies on Cooperative for Poverty Reduction, empirical
studies on Milk Pricing System, empirical studies on Chain Actors in
cooperative
sector,
empirical
studies
on
Principle
of
Empowering
Smallholders, empirical studies on Risk in the Dairy Business, empirical
studies on Facilities for the Village Level Milk Producers, empirical studies on
Growth of co operative institution , empirical studies on Constraints of the
cooperative institution, empirical studies on Performance Analysis of
co-operatives, empirical studies on Cost analysis of dairy cooperatives,
empirical studies on Significance of dairy cooperatives, and, finally empirical
studies on Performance of diary cooperatives in India and overseas.
2.2. Empirical studies on Cooperatives
Cooperative is a form of community organization where its entire
member works together in order to fulfill their common needs. All the
members of this organization are obliged to maintain their democratic,
participatory and transparent decision making procedure because it is jointly
owned, and commonly operated on the value of self help, mutual help and self49
responsibility (National Cooperative Federation Nepal, 2010). The members of
cooperative’s have a common goal in order to meet their economic, social and
cultural needs under the control of joint approach by its own members so that
their members are directly responsible for benefiting themselves and ultimately
to the society in general.
2.3 Empirical studies on Role of Cooperatives
While pricing the milk and milk products cooperatives play an important
role. A cooperative is an enterprise owned by and operated for the benefit of
those members and users. The dairy cooperatives operated by the farmers often
use a complete milk distribution system from the point of procurement to the
consumers where it is marketed. Also make a bargaining capacity for the price
with the traders. It represents in that level of decision where different rules and
regulations are formed. Cooperative also can make the decision to change the
marketing system of the product and the nature of product from one to another
in order to maintain highest return to the members and users (Shields, 2009).
2.4. Empirical studies on Cooperative for Development
Cooperatives are one of the major means of development. Cooperatives
are accepted worldwide as effective institutions to enable and uplift the lower
section of the people and ultimately contribute to the economic and social
development of the country (Bhandari, 2008). Development of the cooperative
was started with the first five year plan in 1956 in Nepal. It was formalized by
the passage of Cooperative Societies Act of 1960. In 1964, during the second
50
plan period, land reform was introduced with a compulsory savings plan for
farmers. By the time of the Third Plan (1965-1970) a total of 1,109 cooperative
societies, had been established, but the financial condition remains poor. In the
fifth five year Plan (1975-80), more concrete effort was taken by the
Government and initiated a separate agricultural development program to the
farmers at the village level for the sustainable development of the cooperative
(Bhandari, 2008).
2.5 Empirical studies on types of Cooperative in the Country
There are all together 9720 cooperatives in the country. Among them
only 1564 are related with milk production and others are concerned with other
purposes. Whereas the cooperatives related with saving and credit shared most
part in the cooperative field with a number of 3392 and is followed by
multipurpose cooperative 2532 in number. The saving and credit cooperative
(35%), multipurpose cooperative (26%) and dairy cooperatives (16%) have
covered the first, second and third position respectively. The total member of
the cooperatives in the country is 1259747; whereas the female members are
412447 (32.7%) and male members are 847300 (67.3%) respectively
(Department of cooperatives, 2008).
2.6 Empirical studies on Cooperative for Poverty Reduction
The milk production is an important source of income for the rural poor
(Ghosh and Maharjan, 2004). The dairy cooperatives play an important role to
reduce the level of poverty in rural area by providing the support in the field of
51
milk production and marketing aspect. Infrastructure facilities for collection,
transportation, storage and processing of milk are the main problems which can
directly affect the producer in receiving the price of milk marketing.
2.7. Empirical studies on Milk Pricing System
The pricing policy of the Government play an important role in dairy
sector because fixing the rate of a product in both producer and retailer level
are also under the influence of politics without any relevance of general market
condition existing to the surrounding environment .The policy also has covered
effectively the both producer and retailer price limiting with the margin
available for dairy processing industry but it does not represent the impact of
increasing cost, wages, utilities etc. But the classified pricing system depend
upon the demand and market characteristics of the products which provides a
large market and better return even both rather than a single pricing system for
all use (National Zoonoses and Food Hygiene Research Centre, n. d.).
2.8. Empirical studies on Chain Actors
Any individuals or organizations that produce the products ultimately
for the use of consumer’s satisfaction are considered as chain actors. The chain
actors who will be the owner of the products during the time of processing in
the chain, also forward it to the further processing. There will be an increasing
trend in the price of products after each and every step of the chain to make it
more convenient for the use of consumer’s (KIT & IIRR, 2010).
52
2.9. Empirical studies on Principle of empowering consumers
Empowerment of the consumers is vital for maintaining sustainability of
a project (chain). Short duration and limited funding organizations often made
some mistake by imposing interference on the management of the project
rather to make them able to do it by themselves, which made the project tends
to collapses without any residual impact. Intermediary organizations affiliated
to that project should have the principles of empowering smallholders before
engaging them in a value chain development process. Thus, the efforts should
be made to support their capacity, which ensure the sustainable businesses,
equity (fairly distribution of benefit within the actors), gender and social
responsibility (KIT and IIRR, 2006).
2.10. Empirical studies on Facilities for the Village Level Milk Producers
The cooperative activities in the society have made an opportunity to
make an integrated approach for marketing and processing of the milk
produced by the smallholder rural milk producers. All the cooperatives have
their own different territory to perform the activities to the village in which it
was formed (Halse, 1980 cited in Wambura, 2006). Village milk producers
bring their milk to the village level collection centre and village collection
centres sale the milk to the village cooperative twice a day. The milk collected
from different village cooperatives goes to the relatively large modern dairy
plant union dairies where the different activities like cooling and pasteurisation
of milk is taken place (Brumby, 1983 cited in Wambura, 2006). All the
53
facilities for the member of village level milk producers and regular payment of
the milk according to the fat content are also the beneficial movement for all
the actors who are involve in the chain (Wambura, 2006).
2.11. Empirical studies on Performance Analysis of cooperatives
Natarajan et al. (1980) analysed the working of consumers co-operative
in Andhra Pradesh, and observed that the current ratio of 2:1, quick ratio of 1:1,
inventory ratio, net profit margin, return on assets and return on share capital
were the best standards of evaluation. The results of their analysis showed that
the liquidity position was not satisfactory. Financing in excess of equity, poor
inventory turnover, heavy establishment and contingent expenses in proportion
to sales, huge stocks of inventory and ineffective utilization of funds were the
major causes for the poor performance of consumers Cooperative in Andhra
Pradesh. Ananth (1984) evaluated the performance of the grape grower’s
marketing and processing co-operative society in Bangalore by employing the
ratios such as structural, liquidity ratio, profitability ratio, turnover ratio, total
sales to fixed assets ratios and total sales to owned funds ratio in order to study
the financial position at the various stages of the growth of the society. Rama
(1984) evaluated the performance of a farmers service co-operative society
(FSCS) in Karnataka, using the solvency ratios, such as total liability to owned
funds and fixed assets to owned funds; the liquidity ratios like liquid assets to
total assets, current assets to current liabilities and acid test ratio; the
profitability ratios such as net profits to total assets, net profits to working
54
capital, net profits to owned funds and net profits to fixed assets; and the
turnover ratios like efficiency of capital, inventory turnover ratio, working
capital turnover gross ratio percentage and operating ratio.
Rayudu (1985), to measure the financial operations and performance of
cooperative spinning mills in Andhra Pradesh studied different financial ratios
such as current ratio, acid test ratio and debt equity ratio. He opined that ratio
analyses had a dominant role not only for the appraisal of financial
performance of cooperative but also for their ability to handle professional
financial management. Gangadhar and Raji Reddy (1986), employed debt
equity ratio to study the capital structure and for studying working capital,
liquidity and turn over. Ratios like current ratio, acid test ratio, inventory
turnover ratio were used while studying the financial performance of super
bazaar in Warangal. Nikam (1986), made an attempt to study the financial
strength of four cooperative sugar factories situated in Aurangabad district.
Two important ratios viz., current ratio and acid test ratio were employed to
locate financial strength of three units (short term) and two ratios viz., debt
equity ratio and net fixed assets to net worth ratio were used for assessing the
long term financial strength of the societies. Shankara Murthy (1986), studied
the performance of Karnataka State Cooperative Marketing Federation
Limited. He employed financial ratio analysis to evaluate the financial
performance of the federation. He used different ratios to study the different
aspects of financial position of the federation such as solvency, liquidity,
turnover, profitability, efficiency and strength. He said that the ratio analysis
55
would provide better idea of the financial position of the federation. Narayana
Swamy and Ramachandran (1987) measured the profitability performance of a
south Arcot district central cooperative bank in relating various components of
profit and loss account statements to common denominator to volume of
business. Shankaramurthy (1986) studied the performance of the Karnataka
State co-operative marketing federation limited and its impact on farm market.
He used various financial ratios like solvency, liquidity, profitability and
turnover ratio for the analysis of the performance. He also used compound
growth rate analysis for the selected financial and physical indicators. He
analysed the response from three different groups of respondents by employing
cluster analysis technique. Thanulingam and N.Gurumoorthy (1987) analysed
the financial performance of thirty hand loom cooperative societies in
Paramakudi town, Tamilnadu for the period 1980-84 using liquidity,
profitability and turnover ratios. The study revealed that financial performance
of the societies was poor due to factors like accumulation of heavy stocks, very
low gross profit margin and large quantity of debtors created high current ratio
resulting in inability of handloom sectors to meet short term obligations.
Bishnupriya and Mishra (1990) studied the working capital management in
Orissa state cooperative milk producers federation (OMFED) limited. He has
used various concepts like gross working capital, net working capital in the
analysis. Mattigati R.M (1990) while conducting a study on the performance of
milk producers Cooperative societies in Dharwad district, made use of different
financial ratios to assess the financial position of the societies. He found that,
56
1) increasing trend of gross ratio was due to the increase in the business
turnover, 2) net worth in the case of below average societies was lower but
positive and net capital ratio was more than unity. He inferred that the lower
net worth did not affect the strength of the below average societies. Patil B.L
(1991) studied the financial position of Karnataka state milk producer’s
Cooperative Federation using different ratios such as, solvency, liquidity,
profitability, turnover, efficiency, and strength. He drew the following
conclusions decreasing trend in the liquidity ratio was due to accumulation of
more fixed assets, higher liabilities represented by increasing trend of solvency
ratio was due to higher sales turnover and this will not affect the solvency
position of the organization and higher inventory turnover ratio represented the
higher existing stock rate and chances of inventory carrying or unsalable were
limited. Ayenew et al. (2000) studied the performance of primary agricultural
co-operative credit societies in Haryana.They used the secondary data collected
from various published sources for the period 1997-1999.The data with regard
to different components of cooperative credit structure of the society were
collected. He noticed that about more than six –fold increase in the amount of
deposits, yet the amount of deposits mobilized by PACS as compared to loans
advanced was found unsatisfactory during the period under study and the
magnitude of deposit mobilized per society had increased by more than four
times. Chidambaram (2000), analyzed the growth and development of
Amaravati sugar mill, Tamil Nadu, with respect to 13 identified indicators such
as (1) area under sugar cane production (2) membership (3) recovery (4) equity
57
capital (5) debt capital (6) net working capital (7) cane price (8) cost of
production of sugar (9) machinery utilization (10) sale price (11) income (12)
expenditure and (13) profit, compound growth rate was calculated for each
indicator to study the growth. Devaraja (2000) studied the performance of
HOPCOMS, Karnataka. He collected data relating to physical and financial
indicators of the society from balance sheet, annual reports, records and audit
reports of the society for a period of 38 years. For financial ratio analysis he
used structural ratio, liquidity ratios, profitability ratios, turnover ratios. He
concluded that there were substantial increase both in the physical indicators
and the financial indicators of the society over the operational period of study.
i.e. growth in 1membership, rental outlets, share capital, owned funds, total
assets, long-term investments etc. Soundara et al. (2001) analysed the
performance of coir co-operatives in Tamil Nadu.Secondary data were used foe
the study were collected from the directorate of industries and commerce
Chennai for 2000-01. The study covers a period of 10 years. From the study he
concluded that the various facts and findings relating to the working of the coir
co-operatives in Tamil Nadu clearly indicated that the position of the units was
not satisfactory. Smitha et al. (2003) evaluated the business performance of
fishery cooperative societies in Vasai taluk of Thane district, Maharastra.The
study was conducted among eight fishery cooperatives of 11 existing primary
cooperative societies in Vasai taluk. A financial ratio technique was used to
study financial performance of fishery cooperatives. Vasai zone with a
production of 32,643 tons had contributed to the tune of about 32 percent of the
58
total marine fish landing of thane district in 1995-96, which has come down to
about 9,943 tons by the year 2002-03.This decline was due to over exploitation
of fish and loss of fish stock due to increasing population level in the area.
Bardhan (2004) evaluated India’s trade performance in livestock and livestock
products. The study is based on the time series data pertaining to the period
1980-2004.The data were collected from FAOSTAT data base. To examine the
changes in exports and imports compound growth rates were estimated. The
growth rates were calculated for two periods like pre- evaluated the
performance indicators of primary agriculture credit societies (PACS).By the
available literature, eight broad categories of indicators have been developed
namely organizational, functional, self reliance, profitability, cost, democratic,
participation and social efficiency .He concluded that any attempt to analyse
the performance of co-operative we should be comprehensive to include the
economic and social dimension.
2.12. Empirical studies on Cost analysis of dairy cooperatives
Chhikara et al (1975), studied the relative efficiency of the different
types of Milch animals in area of Jind milk plant of Gujarat. They fitted cobbdouglas production function to estimate marginal value productivities and milk
production (input output details of Milch animals). They concluded that the use
of green fodder, dry fodder, concentrates and human labour had explained
about 45, 93 and 90 percent of variation in the milk output of cow, murrah
buffalo and cross bred cow respectively. The net return over the variable cost
59
was highest for the crossbred cow, followed by murrah buffalo and cow. The
total cost of milk production in lactation was Rs 1795, Rs 3340 and Rs 2687 for
the cow, murrah buffalo and crossbred cow in that order. Parthasarathy (1975),
studied the economics of milk production and trade covered on hundred dairy
farmers supplying milk to the Integrated Milk Project (I.M.P), Vijayawada,
Krishna district of Andhra Pradesh. The input output ratios, cost components
were analyzed. They revealed that the average input output ratio was 1.31 per
animal and the average yield was 2024 lts per lactation and the total cost of
maintenance was Rs 3112 and 85 percent of it was on feeds. Most of the milk
trade was with private agencies and only one fourth was with I.M.P. Madhava
Swamy (1982), studied the comparative economics of production of local and
graded research buffaloes in Kurnool district of Andhra Pradesh. He estimated
the relative share of crop and livestock production in total gross farm income of
small and marginal farmers. Costs and returns of crops besides the cost of
dairying, feed, concentrates, and milk yield pertaining to animal maintained
were gathered. Tabular analysis was employed to draw results. He concluded
that the graded murrah buffaloes yielded higher net returns by Rs 258 than
local breed. The cost of production per liter of milk of local buffalo was Rs
1.50 as against Rs 1.3 in graded murrah buffalo. It was revealed that out of the
total gross farms income, 48 percent of higher net returns were contributed due
to live stock production compared to crop production. Sambasiva Rao, (1985),
studied the factors affecting milk production, marginal value productivity of
different resources at their respective geometric mean levels in Nagarajuna
60
sagar project command area of Andhra Pradesh. Cobb-douglas type of
production function was used to express relationship between the average milk
yield per day and value of dry fodder, green fodder, concentrates per animal
per day, number of lactations completed, labour hours used per animal per day,
value of animal (in rupees) and age of animal. He observed that the inputs like
green fodder and concentrates were the principal factors affecting milk
production in all the size groups of farmers and estimated marginal value
products of green fodder and concentrates were greater than factor cost
implying that all the farmers were under utilizing these two inputs. He
concluded that the use of green fodder and concentrates increased the milk
yield and regarding labour, only marginal farmers were utilizing in an efficient
manner. Biradar(1999), employed break even analysis technique in dairy
enterprise in Udyir taluk, Lathur district of Maharashtra. He observed that the
bread even milk production among beneficiaries was 1291 lts at the given price
of milk i.e., Rs 7.23 further, the average BEP price per ltr of milk Rs 7.55. He
concluded that either milk producers should able to procure 1291 lts for BEP
level or the price should be raised from Rs 7.23 to Rs 7.55. The prices paid to
milk producers were not remunerative. Jayachandra Reddy et al (2004),
conducted a comparative study of economics of milk production in three states,
viz., Chitoor district in Andhra Pradesh, Erode district in Tamil Nadu and
Kolar district in Karnataka involving aspects related to existing cost structure
of milk production, profitability of crossbred dairy cows in the three states
under the changed socioeconomic- political scenario and also suggests methods
61
to improve the viability and profitability of these enterprises. The net
profitability varied from 43 percent in Tamil Nadu, 70 percent in Andhra
Pradesh and 83 percent in Karnataka. The study has further brought out the fact
that higher fat content provides higher prices as milk is priced based on fat and
solidnot- fat (SNF) content by dairies. Hence proper scientific breeding
procedure is to be followed to improve fat content in the milk as well as milk
production per animal. Thakur And Singh (2004), conducted surveys in the
year 2002-03 to assess the energy and cost requirement for milk production in
different commercial dairy farms in four locations, viz., Maharajpur, Imaliya,
Pariyat and Mohaniya, around the Panagar block of Jabalpur district,
representing the Kymore plateau and Satpura hills zone of Madhya Pradesh.
The locations for conducting the survey was selected at random without
following any statistical method as there are enough number of commercial
dairy farms to get a good comprehensive data on the different activities in milk
production. It was inferred that cattle rising was not only an important
occupation for supplying the nutritional diet to the people but also it has greater
concern to uplift the socio-economic status of the people related to agricultural
sector. Likewise raising goats, cows, buffaloes and birds as a supplementary
occupation in the agricultural sector is apparently most economical for the
development of socio economical status of rural people particularly in weaker
sections, having small and marginal holdings or low investment capacity and
tribal communities. Dixit et al (2004) studied the economics of milk production
in five agro climatic zones of Kerala. The primary data with respect of farm
62
inventory, production traits of Milch bovines, feeds and fodder fed, labour
utilization, production and consumption of Milk, value of various inputs and
outputs, expenditure on veterinary and other miscellaneous items etc. were
collected from 750 households. The data pertained to the year 2002-03. The
results of the analysis indicate that bovine husbandry forms an important
component of the typical homestead-farming situation in Kerala. The
crossbreeding of cattle has resulted in the spectacular performance of dairy
sector in the state. Singh and Rekha Dayal (2004), studied the economics of
production and marketing of milk in the state of Uttar Pradesh. Linear and loglinear functions were used to work out the estimates of factors affecting
marketed surplus of milk both for the private and cooperative systems. The
results of the study indicated that the feed and fodder cost was the most
important item of the total maintenance cost accounting for 55 to 65 percent of
the total cost in zone-I and 51 to 66 percent in zone-II. The net profit per day of
a milch buffalo was very low due to the higher maintenance and low milk yield
of milch buffalo on each herd size group in each zone of the state. The net
profit of milk production per buffalo per day was observed to be higher in the
case of small size group due to higher milk yield of milch buffaloes in this size
group as compared to medium and large herd size groups in both the zones.
The establishment of milk cooperative societies in the rural areas had positive
impact on the marketed surplus of milk. The study further showed that the milk
vendor being an important intermediary in milk marketing made huge profits
by adopting various types of malpractices. Lender utilization of plant capacity
63
was the major factor for incurring losses by cooperative milk plant in fluid milk
marketing. Neeraj Rao et al (2004), studied the economics of milk production
in Kanpur (dehat) district of Uttar Pradesh Two blocks from the selected
district and five villages from each selected blocks were selected randomly in
proposition to the number of farmers categorized under three size groups of 01,1-2 and above two hectares. The study revealed that the total maintenance
cost of a milch animal per lactation increased as farm size increased.
2.13. Empirical studies on Significance of dairy cooperatives
Jain (1980), in his study on dairy development, through cooperatives,
discussed that dairy development in Rajasthan included various aspects, like
evaluation of cooperative system and its pattern of establishment, methods of
milk procurement, and processing; supply of technical inputs; animal breeding
facilities, supply of cattle feed; training and extensions; supervision and the
extent of cooperative programme. Singh et al (1983) compared and analyzed
monthly fluctuations in the prices of cow and buffalo milk offered and quantity
of milk procured by cooperatives, private and public sector organizations,
operated in three villages adopted under operation flood of Kernal. They
observed that private milk plant paid the lowest price per liter of milk during
July to March and the highest during April to May. Public sector paid higher
price in July. Cooperatives price remained constant and higher than public
sector and equal to private plants during July 1980- 1981. They concluded that
public and private sector organization could attract only about 17 percent of the
64
total milk sellers and cooperatives procured milk from about 45 percent and the
remaining milk sellers sold to milk vendors, tea shops etc. Bhanja et al (1987),
examined the critical factors in organization of dairy cooperatives by selecting
twenty one primary milk producers cooperative societies covering three milk
production zones in Mahasana district of Gujarat. They observed that the
societies were successful in the cases of members who joined a society besides
economic reasons, and realization of social benefits. Milk producers who were
selling through milk vendors had came to know some malpractices made by
vendors. Patil (1991) studied the performance of the KMF (Karnataka Milk
Federation) and its impact on dairy development in Karnataka. He observed
that milk procured (in tones) increased by 2695 percent during KDDC
(Karnataka Dairy Development Cooperation) period and 190.41 percent during
KMF. However, the overall percent increase was around 8018 percent. Possible
reason for such high increase in milk procurement were, viz the considerable
rise in registration and DCS commissioned as well as the number of milk
routes made operational, which had increased the DCS commissioned and milk
routes operational by 2545 and 721 percent respectively.
Thakur (1996)
studied the impact of dairy development through milk cooperatives in Gujarat
which covered four milk unions which were at the different stages of
development. Twenty-four village milk producers’ societies were selected
randomly in four districts and 400 respondents, respectively. The primary data
collected on survey method from respondents and secondary data from the
sample milk unions and societies, progress was captured by tabular analysis.
65
The farmers are categorized, as landless, small, medium, and large in order to
examine the impact of milk cooperatives on economic conditions of the weaker
sections. It was observed that the landless people earn as much as 65-70percent
and small farmers earn more than 25-30 percent of the total income from
dairying. The cash income obtained continuously from the sale of milk can be
used for better management of Milch animals and for the purchase of improved
agricultural inputs to some extent which help the farmers in increasing their
total income. Reddy (2000), studied the employment opportunities and the
standard of living among the rural folk and compared between arable farming,
mixed farming and dairy farming laborers in milk shed area of Vijayawada and
the dry land area of Chitoor. The data was collected by survey method from
selected respondents. The secondary data were collected, and analyzed. They
found that mixed farming created 32 percent of extra work as compared to
arable farming. The dairy farming created 45 percent of extra work as against
mixed farming and 92 percent of extra work as compared to arable farming.
They also estimated that an additional employment for 129 days as compared
to mixed farming and 225 days as compared to arable farming were found by
maintaining dairy farm. Ramachandran (2004), studied the income and
employment potential of dairy farming in different stages in Kanyakumari
district of Tamil Nadu. The primary data collected from 100 farmers engaged
in farming activities of five selected villages of Kanyakumari district. The
study revealed that the dairy farming is an activity with great potential and has
offered considerable scope for employment and income generation in
66
Kanyakumari district, the dairy farming gives employment opportunities in the
form of collecting dung, cleaning shed, watering and feeding animals, grazing
and cutting grass, milking, sale of milk, processing of milk and milk products.
It may be concluded that dairy constitutes the major proportion of the cattle
population in the sample households. Cattle rearing occupy a pivotal place
among women folk of the rural areas. Thus, dairy farming plays the main
source of employment and income generation in the study area. Sidhu et al
(2004) studied the impact of dairy on income and employment in Punjab. The
study revealed that the livestock economy especially dairy is considered to be
an economically viable alternative for increasing income and employment in
the farm sector of Punjab. It is clear that the contribution of livestock economy
to the farm sector has increased over time whereas the contribution of crop subsector to the agricultural growth as well as NSDP has declined due to
stagnation/fall in productivity of important crops, rise in fixed cost and
degradation of soil and water resources. The importance of dairy especially on
small and marginal farms has increased and the proportion of dairy to the total
farm business income on these farms has increased. The economic sustenance
of these farmers is primarily dependent on dairy enterprise as it helps in
utilizing their surplus family labour, requires less land and water resources and
provides cash income to meet their daily consumption needs. The dairy sector
has also helped in generating employment on small, marginal and semimedium farms despite fall in employment in crop production. Sharma et al
(2004), a study was carried out to estimate the contribution of dairy and crop
67
enterprises towards income and employment in relation to different size of
holdings in the semiarid region of Rajasthan. For this study data were collected
from 60 farmers in the four adopted villages of Sikar tehsil of Sikar district
during the agricultural year 2003-2004. The farmers were classified in to
different size groups, namely, small (upto 2 ha), medium (2 to 4 ha) and large
(4ha and above). From each village and each size group, 5 cultivators were
randomly selected. Dairy enterprise provided maximum employment of 338
man-days and crop farming provided 219 man-days. Per worker employment
from crop and dairy farming were 80 man-days and 123 man-days,
respectively. Thus, dairy farming plays a key role in increasing employment
and income in the semi arid tract of Rajasthan. Sujatha et al (2004), studied the
market structure, price spread, marketing costs and marketing efficiency for
milk in the cooperative and private sectors of Andhra Pradesh. It was found
that price spread was less in private sector and hence the consumer price was
also less. The major constraints identified in milk marketing were high feed
cost, inadequate price for milk, poor credit facilities, disease outbreak, etc.
Because of delay in the payment of fee for the milk sold to the cooperative
society, the farmers approached the private firms. For enhancing the marketing
efficiency of milk, infrastructure facilities like chilling plant, pasteurization and
dairy products processing plants have to develop. Vinod et al (2004),
Conducted a study with reference to 120 respondents scattered in six villages of
two blocks in Rewari district of Hariyana to analyze the nature of markets and
role of cooperatives in marketing of milk. It was observed that on medium and
68
large category of farms the milk sold through cooperative society was found to
be higher than the disposal through milk vendors and directly to the consumers
mainly due to more marketable surplus. While on small farms the disposal was
found to be almost equal, i.e., 35 percent through milk vendors and directly to
the consumers, and the disposal of milk through cooperative society was less
due to lower marketable surplus owing to smaller heard size. Usha Tuteja and
Narinder Singh (2004) conducted a study on employment and income
generation through livestock based milk processing units in rural Hariyana. The
study revealed that the production of milk in Hariyana grew at the rate of 4.07
per cent per annum during 1980-1981 to 200-2001. Therefore, milk processing
on commercial scale has great potential in terms of enhancing the income of
the farmers by selling milk products in the expanding domestic and
international markets. The milk processing units on an average generated
employment of 8.40 persons in Gurgaon and 5.86 persons in Jind district. The
factories generated the highest employment of about 14 persons in the former
and 11 persons in the latter district. The study highlighted that marketing of
local products faced severe competetion from the multinationals. Hence,
promotional policies need to focus on the marketing bottlenecks and devise
efficient marketing channels through public and private partnership. Special
zones can be created in those areas where raw material/milk is easily available.
The alternative way could be formation of cooperatives like Amul.
G.K.Hiremath, et al. (1978) also studied that the profitability of dairy
enterprises with buffaloes in Hubli-Dharwad area of Karnataka State. They
69
concluded that dairying with buffalo was quite profitable in the area. They
found that the profitability increased with the size of the dairy unit. The
expenditure on feed contributed largely to the total cost and the lower price of
milk in the rural areas adversely affected the profitability of the milk
production. Natarajan et al. (1980) analysed the working of consumers cooperative in Andhra Pradesh, and observed that the current ratio of 2:1, quick
ratio of 1:1, inventory ratio, net profit margin, return on assets and return on
share capital were the best standards of evaluation. The results of their analysis
showed that the liquidity position was not satisfactory. Financing in excess of
equity, poor inventory turnover, heavy establishment and contingent expenses
in proportion to sales, huge stocks of inventory and ineffective utilization of
funds were the major causes for the poor performance of consumers
Cooperative in Andhra Pradesh. Bhalerao et al. (1981) studied the growth of
arecanut marketing societies in India for the period 1967 to 1977. The year
wise analysis of growth considered variables such as number of societies,
membership, share capital, working capital, reserve funds, deposits and per
member average of all these indicators. The study indicated that the growth
was not consistent and there were annual fluctuations in the variables
considered.
Rao (1985) analyzed the growth rate of certain variables like
share capital, membership, total assets in his study on business performance of
the Central Arecanut Marketing and Processing Cooperative Ltd., Mangalore,
Karnataka from 1973-74 to 1980- 81.The growth functions of both exponential
and modified exponential form as given below were fitted to a certain
70
performance variables. He observed that annual rates of increase of different
performance variables were not uniform. The growth of paid-up share capital,
membership, total assets, working capital and purchases increased steadily,
while in the case of sales, the growth rate was high in the initial years and
declined in later years (from 1977-78). Dorsten (1986), the study related to the
impact of the Kaira District cooperative milk producers union on milk
production in Kheda District, Gujarat. Although India possessed an enormous
cattle and buffalo population, annual milk production was very low. The
average annual milk yield per cow was about 504 kg. One of the major
constraints was supply and quality of feeds and fodder. By the year 2000 AD,
There was expected to be a short fall of concentrates, 19.8 MT of green fodder
and 16.2 MT of dry fodder. The shortage was expected despite the declining
trends in the dairy cattle population. The study proposed a number of
suggestions for improving the feed and fodder situations and also the wealth
and breeding of dairy animals. Shankarmurthy (1986) used compound growth
rate analysis of exponential form while studying the performance of Karnataka
state co-operative marketing federation Ltd. The important physical indicators
considered were membership, branches/depots, total number of employees,
direct recruits and deputations. The indicators related to share – capital, owned
funds, fixed assets, total liabilities, inventory, total sales, sale of fertilizers, sale
of other commodities and establishment expenses. In the case of financial
indicators, constant price was followed for the sub-periods and for the
aggregate period to account for the inflationary trend in the economy in order
71
to get real picture of the situation. Jitendrakumar (1990) in his study of
performance of dairy co-operative on milk production, income and
employment in Chitoor District, Andhra Pradesh, used the compound growth
rate analysis for various physical and financial indicators of the selected milk
producer’s co-operative societies. The exponential function of the following
type was employed to estimate the growth rates. He also used the financial ratio
analysis to evaluate the performance of a business organisation. Patil (1991)
studied the financial position of Karnataka state milk producer’s Cooperative
Federation using different ratios such as, solvency, liquidity, profitability,
turnover, efficiency, and strength. He drew the following conclusions
decreasing trend in the liquidity ratio was due to accumulation of more fixed
assets, higher liabilities represented by increasing trend of solvency ratio was
due to higher sales turnover and this will not affect the solvency position of the
organization and higher inventory turnover ratio represented the higher existing
stock rate and chances of inventory carrying or unsalable were limited. Padmini
et al. (1992) studied the financial performance of Shree Narayana power loom
industrial co-operative Society by employing various financial ratios such as
turnover ratio, liquidity ratio, sales ratio, etc. The analysis revealed that the
liquidity position of the society was very poor, thus financial performance of
the society is not up to the level. Pradeep (1993) used growth rate to analyse
the growth in physical and financial performance indicators of horticultural
producer’s co-operative marketing society limited, Bangalore. The indicators
considered were membership, share capital, owned funds, sales, inventories,
72
fixed assets, current assets, total assets, current liabilities and total liabilities.
Kale et al (2000) studied the financial position working and operational
efficiency of 23 dairy cooperatives in Raigad District of Maharashtra. They
studied the economic efficiency through income expenditure ratio, expenditure
income ratio, rate of return on capital and rate of turnover. They concluded that
(i) the societies had low owned capital and were dependent on borrowing from
financial institutions (ii) even though the working capital of the dairy
cooperatives was low, their turnover was high because dairy cooperative did
not make payment to milk producers from their own funds. Therefore, dairy
cooperatives were able to carry on business with limited capital and (iii)
majority of the societies was trading profit. Thakur And Singh (2004),
conducted surveys in the year 2002-03 to assess the energy and cost
requirement for milk production in different commercial dairy farms in four
locations, viz., Maharajpur, Imaliya, Pariyat and Mohaniya, around the Panagar
block of Jabalpur District, representing the Kymore plateau and Satpura hills
zone of Madhya Pradesh. The locations for conducting the survey was selected
at random without following any statistical method as there are enough number
of commercial dairy farms to get a good comprehensive data on the different
activities in milk production. It was inferred that cattle rising was not only an
important occupation for supplying the nutritional diet to the people but also it
has greater concern to uplift the socio-economic status of the people related to
agricultural sector. Likewise raising goats, cows, buffaloes and birds as a
supplementary occupation in the agricultural sector is apparently most
73
economical for the development of socio economical status of rural people
particularly in weaker sections, having small and marginal holdings or low
investment capacity and tribal communities. Sujatha et al (2004), studied the
market structure, price spread, marketing costs and marketing efficiency for
milk in the cooperative and private sectors of Andhra Pradesh. It was found
that price spread was less in private sector and hence the consumer price was
also less. The major constraints identified in milk marketing were high feed
cost, inadequate price for milk, poor credit facilities, disease outbreak, etc.
Because of delay in the payment of fee for the milk sold to the cooperative
society, the farmers approached the private firms. For enhancing the marketing
efficiency of milk, infrastructure facilities like chilling plant, pasteurization and
dairy products processing plants have to develop. The milk production is an
important source of income for the rural poor (Ghosh and Maharjan, 2004).
The dairy cooperatives play an important role to reduce the level of poverty in
rural area by providing the support in the field of milk production and
marketing aspect. Infrastructure facilities for collection, transportation, storage
and processing of milk are the main problems which can directly affect the
producer in receiving the price of milk marketing. M.V.Rama Prasad (2005) in
his article ‘Dairy industry – Milking the milk’ has opined that, as India is
located amidst major milk deficit countries in Asia and Africa it can easily
become a leading exporter of milk and milk products provided it improves the
quality and productivity of milk. Marjan Janzekovic and Crotmir Rozman
(2006) undertook a case study on the milk quality and feasibility analysis to
74
lose housing dairy cows. The aim of the study was technological and
economical analysis of free range cow breeding. The model total costs
enterprise was developed for evaluation of economic feasibility of loose
housing dairy cows in comparison with tied cow breeding system. Computer
supported calculation enabled estimation of the most important economic
parameters viz., net return, total cost and coefficient of economics. Results of
the study showed that (at observed input parameters) loose housing system is
economically feasible if there is a minimum of 41 dairy cows with an average
milk production of 8610 Kg per cow. It was also established that cows need
approximately 6 months to fully adapt to the housing system. G.Chandrasekar
(2006) in his article titled ‘Milk output poised to top 100 million tonnes’ has
stated that output growth of milk in India is seen driven by increasing demand
for value-added milk products on consumer side and extensive dairy
development programmes on the supply side. He has pointed out that though
India is the largest producer of milk, the level of integration of the country’s
dairy sector with the global economy is relatively low. Veerakumaran (2009),
in his paper mentioned about the focused on co-operative milk production and
marketing network in the state of Kerala. Further he has identified the problems
of milk co-operatives in Kerala, like escalating cost of production, occupational
mobility and structural setbacks of the milk co-operatives. (Farooq et al., 2010)
found that the low productive performance was observed while it was at par
with those of Sahiwal cattle. Ilatsia et al. (2012) also observed the productive
and reproductive performance of local Sahiwal cattle to optimize the breeding
75
strategies in Kenya. Strandberg et al. (2009) observed genotype by
environment interaction for various fertility traits in UK dairy cattle.Moreover,
so far, little attention is being paid to food safety and quality in the dairy supply
chains in India (Kumar et al., 2011). However, changes may be imminent, as
strong income growth in India increasingly triggers awareness of food safety
issues. The authors expect that before stringent quality standards can be
enforced, the dairy sector will need to undergo structural change, as quality
management is extremely difficult with the current production structure. Such
processes of change have been observed in the dairy sectors of other parts of
the world, such as Eastern Europe (Dries et al., 2009, Mo et al., 2011, and Jia
et al., 2012) and are known to be extremely transformative, with important
farm-level effects.
Cooperative has provided different facilities to the farmers such as
internal loan support, dairy animal insurance programme, technical support
including animal treatment when needed, free A.I. service support for the
genetic improvement of local cow, seed of improves grasses, training on
livestock husbandry and market guarantee of the products. Cooperative has a
great influence to the member producers. The benefits the cooperative provided
to smallholders and the overall impact created is not assessed yet. It has not
reported to the concern authority by which, considerably low attention has been
paid by the authority. There isn’t any formal study and report on the field.
Thus, the important roles played by the milk cooperative are little understood
76
in the absence of concrete evidences on the part of the cooperative. Therefore,
the important activities played by the cooperatives are not justified clearly to
the authority. Since most of the dairy cooperative societies themselves are
faced with the problem of recovery of loan they had provided to their attached
cooperative farms, they are not able to provide loan facility to the latter;
consequently, the latter face financial problems for all types of constraints. The
lack of exercising proper management practices by cooperative societies in
favour of their attached farms is the major constraint. Due to this they fail to
provide precise and detailed information on marketing facilities (milk
collection, processing and distribution) to their attached farms in time. For
technical constraints, lack of technical guidance is severe for members of
cooperative farms, because cooperative societies, in particular, are not aware of
many of these hurdles. As regards the socio psychological constraints, the lack
of time due to busy in domestic / agricultural work and lack of cooperation and
coordination among members are major constraints. The cooperative societies
hardly employ additional man power for milk collection and transportation
during busy season of agricultural year and do not hold regular meetings of the
members of cooperative farms. All these problems have been found acute for
non cooperative farms also, because the private entrepreneurs usually neither
provide any direct loan facility to their attached farms for the constraints they
face nor they usually provide any physical or social service to them or execute
purchase and supply of milk regularly. Therefore, to increase productivity of
milk, it is necessary to provide proper input services such as high quality cross77
breed of milk cows along with required amount of cattle feed, fodder and
mineral mixture, veterinary care and management, etc. These require adequate
institutional credit with low interest rate to purchase those inputs. A proper
operating cooperative is essential for farmers, in order to unite skills,
knowledge and assets, and to retain a certain influence in the market.
After review the above literature, the problem that these District
Cooperative milk producers’ unions are facing Lack of Business Strategy, Poor
asset quality, Raising cost of operation, Low owned capital, Low working
capital, poor credit facilities, lack of funds, buildings, and equipment were
deteriorating quickly, lack of financial reserve, lack of production and less
price due to subsidies, Low provision of loan in society or govt. for purchasing
cattle, Low incentives or bonus for supplying milk, Lack of improved
equipments, and Lack of technical guidance etc.,
Since, the previous researchers have not dealt with the above
factors elaborately.
The present research attempts to identify the factors
internally affecting the operation of Tiruchirappalli District Cooperative milk
producers’ union Limited and suggests an appropriate model to understand the
mediating effects on the performance of Tiruchirappalli District Cooperative
milk producers’ union Limited.
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2.14 Empirical studies on Performance of diary cooperatives in India and
abroad
Jain et al. (1978) studied the growth of milk producers’ cooperatives in
Mehasana district of Gujarat. The sample villages in the milk shed area were
selected and were studied for the growth of cooperative societies, membership,
share capital, volume of milk handled, price paid by different agencies. The
data was scored under the benchmark and repeated surveys carried out by the
Indian Agricultural Statistics Research Institute during 1968-69 and 1973-74
respectively. It was observed that there was a sizable increase in the number of
village level milk producer’s cooperatives viz., from 230 to 380 between the
two occasions, the membership of those cooperatives also increased from an
average of 157 members per cooperatives on the first occasion to 240 on the
second occasion and the share capital of their cooperatives increased from an
average of Rs 3448 per milk cooperative on the first occasion to Rs 18842 on
the second occasion. They also noticed that there was an overall increase in the
number of persons employed by the milk cooperatives to assist in their
functioning and the daily milk collection of milk cooperatives increased in
second occasion during all three seasons. Kulkarni (1979) opined that the lack
of sufficient milk collection of cooperatives in the rural areas, malpractices in
weighment and quality testing, inconvenient timings of milk collection,
spoilage during the rains, and warm seasons and inadequate extension services
were some of the lacunae in milk collection from the producers. Baviskar
(1986) based on data collected during field work in two villages of Surat
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district. The report traced the increase in the number of cooperative milk
producer societies and their impact on dairy development in the tribal area of
Gujarat. It focused upon milk cooperatives managed by Jesuit missionaries in
the region presenting a detailed description of their internal organization. The
main reason for the success of the Jesuit seen cooperative was found to lie with
the loyalty of its members and integrity of its leaders. The secretary of dairy
cooperative was found to be key functionary in the success of the project.
Jawan Ram (1988) made an attempt to analyze the organization and working of
Jaipur district milk producers’ cooperative union limited, Jaipur. The study was
conducted through personal interview with management and other employees
of the union. It was found that the organizational structure and functions
performed such as (i) milk collection (ii) supply of technical inputs (iii) farmers
induction programmes (iv) supervision etc., were analyzed. Some drawbacks
were found out and appropriate suggestions were made. Mahak Malik (1989)
made an economic evaluation of organized milk procurement in Haryana Dairy
Development Cooperative Federation. Milk procurement is described as the
life-line of a dairy plant. It also points out that proper utilization of the installed
capacities of the dairy plants for processing milk and manufacturing various
milk products are heavily dependent on the total quantity of milk procured by
it. Moreover, it is said that the dairy plants found it very difficult to utilize the
given capacity during lean season. The study concluded that there was a plenty
of scope for the milk collected per society and per member by effectively
linking the milk procurement programme of the union with the volume of milk
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procured by each member. Jithendra Kumar (1990) studied the performance of
dairy cooperatives and their impact on milk production, income and
employment in Chitoor district of Andhra Pradesh. The study revealed that the
societies which were above the average level has shown better performance
with an increase in membership and milk procurement, and profits of societies
showed and increasing rate except the society-II . Kamalaveni (1990) has
analyzed the utilization pattern of the members of the Erode District Milk
Producers’ Cooperative Societies. For the purpose of the study, utilization
index was calculated. Personal factors like age, caste, sex etc., and institutional
factors like knowledge of one’s own society, member satisfaction, and
democratic participation were analyzed. The study concludes that, if the milk
producers fail to use the societies as an outlet for selling milk, the very purpose
of forming the MPCS gets jeopardized. The study stresses the need for the
expulsion of a member supplying milk to the private traders.
Animesh
Banerjee (1996) in his article “Indian Dairying : An Overview” traces the
growth of the industry from by gone ages to its present model of Co-operative
structure and suggests a collaborative pattern between the Co-operatives and
investment oriented private sector to reap the benefits of modern technology.
J.T.Dorge et al (1998) analyzed the marketable surplus of milk in Konkan
region and Western Maharastra. They made an attempt to estimate the cost of
marketing of milk in the area of study. They identified that the Cooperatives
were the major buyers of milk. The difference in natural topography was found
to cause variation in the average cost of marketing of milk between the two
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regions. V.P.S.Arora et al (1998) have made a temporal analysis on the role of
cooperatives in milk marketing at North-west Uttarpradesh. The following
conclusions were emerged from the findings of the study: i) In spite of the
increase in gap between marketed and marketable surplus of milk, there exists
potential to increase the milk supply; ii) Annual milk production and price of
milk may be used as policy instruments to increase milk supply; iii) Overall,
Co-operatives are playing very important role in the procurement, processing
and distribution of milk, however, popularity of Village Dairy Cooperatives
among small milk producer is to be enhanced; iv) Milk price received by
sample milk producers vary according to the milk agency to whom sold and
also among category of milk producers buffalo milk fetches higher price than
cow milk. V) Village Dairy Cooperatives pay higher price for milk than other
agencies and average price of milk decreases with size of dairy farming. M.K.
Radhakrishnan, (1998) undertook a study to evaluate the performance of dairy
cooperatives in Erode District of Tamilnadu. The study has been conducted in
the dry block of Perundurai and one wet block of Gobichettipalayam of Erode
District selecting 300 sample respondents. Field survey technique and personal
interview methods have been adopted to collect relevant information. The
study points out that the procurement of the union is severely affected due to
the presence of private traders in large numbers, seasonality in milk production
and dissatisfaction over the procurement price of the milk sold by the union.
Delayed payments to the producers, payment of heavy interest on borrowing,
delay in receiving payments for milk products from federation, non-payment of
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dividend to the inputs are identified as the major problems of the union. Low
capacity utilization, lack of commercial outlook, low return on investment,
political nomination, political interference and absence of elected board are the
other factors responsible for the poor performance of the Erode Union. Amit
Kumar Saha (1999) made a Cost and Returns Analysis of milk union at Orissa
for the year 94-95. The Union’s source of income was identified to be sale of
milk to the dairy, the penalties paid by the societies for deviation from
standards, in terms of Fat/SNF percentage in raw milk. Besides this the
extension activities to promote socio-economic development enable the union
to earn commission. The net profit or loss of union was determined by
deducting cost form total receipts. The cost was determined component-wise
under two main categories namely variable & fixed costs for toned and double
toned milk. The study revealed that the average procurement cost during 199495 was Rs.1.07 per litre with major share being the average transportation cost.
The cost of manufacturing per litre of toned and double toned milk was almost
the same at Rs.6.73 and Rs.6.66 respectively. However, with selling price of
toned and double toned milk set at Rs.8.60 and Rs.7.60 respectively, the dairy
earned an average margin of Rs.1.87 per litre of toned milk and Rs.0.94 per
litre of double toned milk. V.Kurien (1999)identified the factors responsible
for the success of dairy industry as i) Technology, ii) Quality, iii)
Infrastructure, iv) Right investment and v) Relationship with agriculture . He
has said that the success of Indian dairy industry is because dairying has been
potentially remunerative to the producers. He suggested that i) the factor
83
advantage of India has to be converted to competitive advantage; ii) world–
class standards has to be maintained; iii) the Government should have no role
in financing of the development of the industry and all enterprises big and
small should be self reliant; iv) industry to be self–regulated; v) official pricing
policy to protect the interest of milk producers and vi) timely and accurate
information about happenings to be provided. C.Pitchai (1999) undertook a
study on the distribution of milk and milk products by cooperatives in Tamil
Nadu. The study result says that the increase and decrease in milk procurement
is due to monsoon. He has compared four unions to analyse the cost aspect of
milk. The production and sales cost was found to be less in Salem union and
high in Erode union. All unions were found to supply milk to the Federation at
a cost lower than the selling cost. The transportation cost was identified as the
major cost component in the overall milk distribution cost. The‘t’ test revealed
that the average monthly expenditure on milk and milk products has been
significantly different across income groups in the same town but not
significantly different between the same income groups across towns.
A.K.Kakkappan (1999) undertook a study on milk industry economy in Trichy
District with the intention to know the present condition of milk industry in the
district. An attempt was made to analyze the marketing operations of dairy
industry in general at a macro level and Tiruchirappalli cooperative dairy in
particular for an in depth study at micro level. The study revealed certain gaps
and the researcher suggested measures to bridge these gaps with the view to
increasing the efficient marketing management of milk scenario of the dairy
84
industry. Kale et al (2000) studied the financial position working and
operational efficiency of 23 dairy cooperatives in Raigad district of
Maharashtra. They studied the economic efficiency through income
expenditure ratio, expenditure income ratio, rate of return on capital and rate of
turnover. They concluded that (i) the societies had low owned capital and were
dependent on borrowing from financial institutions (ii) even though the
working capital of the dairy cooperatives was low, their turnover was high
because dairy cooperative did not make payment to milk producers from their
own funds. Therefore, dairy cooperatives were able to carry on business with
limited capital and (iii) majority of the societies was trading profit. Jagdish
Kumar et al (2000) made an economic analysis of production and disposal
pattern of milk in Haryana. The study revealed that cow milk production
constituted about one fourth of the total milk production and the milk
production per household increased with the increase in the number of milch
animals. About 80 percent of marketed surplus of milk was sold through local
milk vendors and remaining quantity was sold through cooperative milk
producers’ societies. Majority of the milk producers were facing problems like
lack of good quality feeds and their high prices, lack of finance, lack of
veterinary services and lack of insemination facilities. Major problems
encountered in disposal of milk were: inadequate facilities in cooperative
societies, delayed payment, risk of payment and lower prices paid per unit of
milk through milk vendors. Brajesh Jha (2000) made an attempt to learn the out
comings of globalizing the dairy sector. The study found that replacement of
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non-tariff barriers with an import tariff of 40 percent will be sufficient to
protect the domestic dairy sector. The study also found that Indian milk
products are not competitive in the world market, though milk price in India is
one of the lowest in the world which calls for improving efficiency in
processing of milk and milk products in the country. Shantanu Kumar and
Uma Sha (2000) analyzed the differential status of dairying in India. For the
purpose of the study he divided the entire country into four regions: i) Northern
Region ii) Western and Central Region iii) Southern Region and iv) Eastern
Region. He identified that the Eastern Region though having enough bovine
resources is lagging very much behind other regions and there is more scope
for improvement in this region. Bovine density, cattle-buffalo ratio, cross breed
population, number of cooperative societies, producer member per society and
milk procured per day per society were found to be the important decisive
indicators responsible for imbalance in dairy development in different regions.
Rajendra Singh et al (2000) assessed the reasons for increase in milk
production in India. Average production per lactating and per milch animal
during a year proved beyond doubt that, high rate of acceleration in milk
production in the country was achieved basically due to enhancement in
productivity of cows and buffaloes and was not merely due to increase in
number of these animals. Kamal Vatta and Sanjay Kumar (2000)made a linear
programming analysis of the potential of dairy enterprise on Punjab farms
using multi-stage random sampling with the objective to: i) find the change in
cropping pattern caused by dairy enterprise and ii) estimate the additional
86
income and employment opportunities generated by dairy enterprise on various
farms. It was found that dairy enterprise has influenced the cropping pattern of
farms significantly. The increase in income and labour use, due to dairy
enterprise, was also observed on all the farms. Dairying also generated
additional employment opportunities for casual labour on big farms.
Irrespective of size of farms dairy enterprise caused reduction in additional
cash requirements on all farms due to the regular flow of income throughout
the year. B.C. Katre and Sittaram Prasad (2000) in their article exhaustively
presented the importance of raw milk. According to them, it is the quality,
which enhances the value of milk. They stressed on the fact that production of
quality milk is possible through better planning, better management, better
personnel skill development etc. They have discussed various internationally
accepted systems of quality management. R.Masilamani (2000)41 evaluated
the performance of Salem District Cooperative Milk Producers’ Union Limited
by analyzing 12 years data from 1986-87 to 1997-98 obtained from the records
of the union. The primary data was collected from 8 regions viz., Attur, Salem,
Mettur, Vazhapadi, Sankari, Kahipuram, Namakkal and Velur cooperative
societies. Members of the societies and 120 non members were interviewed.
The study results showed that the estimated cost in the regions varies slightly.
Labour cost was found to dominate the total cost in all regions. The ANOVA
results revealed that there was no significant variation between regions and
between groups (members and non-members).
Shiv Kumar Gupta (2001)
analyzed how the financial interventions can reduce the impact of WTO on
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Indian Dairy and suggested that the Indian dairy industry should advocate the
imposition of tariff equivalent to the difference between the world and
domestic prices of dairy products with some premium on it. It was stated that
since countries like New Zealand and Australia, which produce dairy products
without subsidy have imposed 10-20 per cent tariff on SMP imports, India also
have to minimize production costs to protect the Indian dairy industry.
S.Suriyamurthy (2001) has identified the following Milk marketing strategies:
i) adherence to regulatory standards of quality will ensure consumers
confidence and satisfaction, ii) to exercise generally a uniform strategy for
quality control which should begin at the milk production itself, iii) organized
sector replacing the traditional vendors trade, iv) customized batch processing,
v) competitiveness, vi) develop intermediary business for milk procurement
and intermediate chilling, vii) handling of each area of production,
procurement, processing and marketing by specialist viii) promoting dairy
equipment manufacture ix) future dairy products should promise to be
healthier, safer, fresher, tastier, more convenient and offer more value to
consumers, x) single cooperative brand to be promoted in India, xi) generating
value-added products and make these available in wide range of package size,
xii) new markets to be explored and tackled, xiii) effective solutions to be
found for the sharp seasonal and cyclic fluctuation in milk production that
makes the market for liquid milk & products a volatile one, xiv) necessary safe
guards to be made in the new policies of liberalization and GATT, xv)
cooperatives should develop expertise in managing the politics-legal
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environment. N.Goswami et al (2001) developed a least cost combination of
feeds and fodders for dairy units in Meghalaya. Cattle breeding farm at
Rungkhon where cross breed and local cows are maintained was selected for
the study. For each breed/type maintained in the dairy unit an individual milch
animal was selected, who’s per day milk yield was nearest to the average milk
yield per day during lactation period. Linear programming technique was used
to work out least–cost combination of feeds and fodders under the specified
nutrient restrictions, which were estimated from the actual feeding of milch
animals.
D.S.Prasad (2003) assessed the resource returns and resource use
efficiency of buffalo milk production in Ranga Reddy District of Andra
Pradesh using Cobb-Doughlas production function. Three sets of equations
were chosen to know the effect of inputs on milk production. Equation was
used to know the effect of feeds on given milk yield. Equation was fitted to
ascertain the effect of the nutrients on milk yield. Equation specified the effect
of feeds and their rate of conversion into nutrients so as to assess the
contribution of each of the factors on milk yield. Dummy variable technique
was applied to assess milk production efficiency of graded and murrah
buffaloes, over the local buffaloes in the study region. The Tribune (2003)
stated that the National Dairy Development Board (NDDB) and Co-operative
Resources International (CRI) USA, have signed a consulting agreement
calling CRI to evaluate the existing systems of providing animal breeding and
advisory services by the dairy cooperatives in India to dairy farmers and give
89
recommendations to modernize the system with a view to achieving higher and
faster progress in increasing productivity of cattle and buffaloes in the country.
B.Subburaj et al (2003) made an evaluation of the appropriateness of
management strategies to cooperatives and concluded that the general
management strategies have to be appropriately redesigned when they are
applied to cooperatives. It was said that before designing appropriate strategies
for cooperative enterprises issues affecting the organizational climate viz.,
mission for cooperatives, state intervention, law for cooperatives, structural
soundness and viability, identity crisis and puppet play has to be addressed. It
was stressed that unless a conductive organization climate is created harnessing
the benefits of management strategies will be of no use to cooperatives.
Business standard (2003) stated that the National Dairy Development Board
would be strengthening its cooperative, launching effective disease
management programme, managing quality issues and building national
information systems as a prelude to setting up an effective milk grid. As part of
the attempt to raise quality standards, NDDB also has launched the clean milk
production programme that has been adopted by 126 milk unions covering
about 10,000 village dairy cooperative societies.
B.Ganesh kumar (2003)
undertook a study to measure the technological change in dairy farming in
Tamil Nadu with the view to formulate some guidelines for increasing the
growth of milk production. By decomposition analysis it was found that the
adoption of cross bred cows in the place of indigenous cows or buffaloes led to
higher per day milk yield and a sizeable total percentage gain in milk yield.
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M.Sivasubramanian (2003) in his study on per capita milk consumption among
consumers using purposive sampling method collected data from 300
respondents in Chennai & Chidambaram and analyzed the relationship between
milk consumption, income and education It was found that the per capita
consumption of milk was more in Chennai than Chidambaram. Irrespective of
the region, income level and education was found to have a significant impact
on milk consumption as it was found to be more in higher income and higher
educational groups. He stressed on the fact that Total Quality Management is
of vital importance and it depends on proper education, suitable training and inservice training from time to time in accordance with the changing scenario.
R.Saravanakumar and G.Manimegalai (2003) in their paper titled, ‘Traditional
Milk foods in India’, stated that there are more than 146 traditional milk base
products produced in India and in terms of annual value, the production of
traditional milk products exceeds Rs.20000 crores, excluding the value of ghee.
It was stated that the production of all the traditional products fall in one of the
basic steps of heat coagulation, acid coagulation, condensing or fermentation.
P.A.Koli (2003) has made a case study on the role of cooperatives in reduction
of poverty with reference to Warana Milk Cooperative union, Maharashtra, and
identified that the farmers are getting regular income, subsidized cattle feed,
artificial insemination, cattle-health services, subsidy for construction of dairy
building, milco tester and training on scientific feeding and breeding which
ensures income and employment in rural areas. He stressed on the fact that it
was the input services rendered by the union that has assured the flow of
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quality milk and not the high price paid by the union. He concluded that the
success of Warana milk cooperative union is due to its dynamic leadership, and
due to the fact that the cooperative principle have been put in use in their real
sense. Agricultural Economics Unit, an institute of economic growth (2003)
made an analysis of the Indian dairy in the emerging trade order. It was said
that, though growth performance of dairy at aggregate level indicates
satisfactory growth and desired changes in the sources of milk production in
favour of cross bred cattle; a disaggregate analysis of dairy development
presents wide disparity across states. The impact of import on the domestic
prices of milk was evaluated and was found that existing price in the wholesale
markets are significantly higher than the international reference price. It was
suggested to reorient the existing domestic policies in order to overcome
problems of domestic front like, low milk yield compared to other countries,
high cost of processing, poor quality of milk and milk products and significant
regional disparity in dairy development. Petar Bosnic (2003) in his article
‘world production and quality of cow’s milk’ has stated that the world milk
production in 2000 was 568.480 thousands of tonnes, of all types of milk, of
which 484.895 thousands tonnes are cow’s milk with a total of 85.30 per cent
of the world milk production. Buffalo’s milk production is on the second place
with 61.913 thousands of tonnes (10.89 per cent) production capacity on the
three continents (Europe, North America and Asia) 81.82 per cent of total
cow’s milk production is located. He stated that as regards long term
development, until 2030, changes on herd management (outdoor and indoor
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exposure) between continents will occur. In 2030, the world milk production
was forecast to increase by 64 per cent, with cow’s milk production of 765.9
million tonnes. He concluded that milk quality, with regard to milk fat and
protein content, in developed countries is above an average value. Due to milk
characteristics as agro-food product, milk and dairy products manufacture and
transportation are in detail regulated with existing quality standards.
S.
Suriyamurthi and S. Ramachandran (2003) have analyzed the problems and
prospects of cooperative milk producers union in Tamil Nadu. The authors
opined that organizing an industry on cooperative basis has been accepted as an
effective method of dairy development. The private operators were offering a
better price for milk to divert milk from cooperatives to private collection
centers which may result in destabilization of dairy cooperatives. This may in
the long run put milk producers in the tehsil to suffer exploitation in the hands
of private operators. The cooperatives have to mend the cooperative laws and
adopt model act to ensure that cooperatives compete with the private sector in a
level playing ground as much as commercial organization. V.Kurien (2004)
chairman of the National Cooperative Dairy Federation of India Limited has
stated that, the farmer’s sense of ownership of the cooperative and its brands
has been the single biggest ingredient in their unique success against all odds.
He has opposed the move to convert dairy cooperatives into public sector units,
since the NDDB is a Government Body and such action would be detrimental
to the autonomy of the cooperatives. He has stated that the funds of NDDB
meant for development of the dairy Cooperatives are being diverted to the
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subsidiary and joint venture companies to promote NDDB’s commercial
interests. Hari Krishna Dwivedi (2004) analyzed the empowerment of women
at Icchamati milk union, where all the members are women. It was found that
these women members enjoyed political and social acceptability. The
challenges of the union being i) value addition and diversification of activities
ii) capacity building and iii) social and political interference. It was suggested
that the activities of the cooperative societies have to be diversified into other
animal and agri-allied activities to provide them opportunities for alternative
earnings. Intensive training and awareness program is suggested to sufficiently
equip the women members with skill, technical and managerial expertise for
managing their own affairs as the growth of the union very much depends on
the women managers. P.Paramashivaiah and S.Arvind Kulkarni (2004) under
took a case study to know the consumer attitude towards pasteurized milk in
rural areas of Gulbarga district. Price was identified to be a big hindrance in the
purchase by non users of pasteurized milk. They suggested that the suppliers of
pasteurized milk should introduce smaller packs (say 250ml) in rural areas and
lower the price of best quality milk i.e., full cream milk, in order to make it
more affordable for the poor rural consumers. G.P.Dang et al (2004) analyzed
the problems and future prospects of Indian Dairy Industry. Lack of use of
scientific practices in milching, inadequate availability of fodder in all seasons,
non-availability of veterinary health services and shortage of quality dairy
animals were said to be reasons for low milk yield. It was said that India has
the potential to become one of the leading players in milk and milk products
94
due to its location advantage of being situated amidst major milk deficit
countries in Asia and Africa. V.Kurien (2004) in his article ‘Dairying and rural
development’ has stated that the contribution of dairying in the vast field of
animal husbandry has been most significant, in terms of employment as well as
income generation. Cooperative dairying has a profound impact on socioeconomic development of rural areas. He has suggested that the control over
the management of cooperatives should remain in the hands of genuine stake
holders – the farmers. Only then can the dairy cooperatives continue to play
their vital role of creating a socio-economic revolution in India.
The
B.Subburaj et al (2004) analyzed the factors influencing the performance of
dairy cooperative farmers and their involvement in managing the affairs of the
dairy cooperative societies. It was suggested that educated young person’s
should come forward to carry out dairy business activities and the district
cooperative unions should intensify their education and training programmes as
the low level of education of members and non-members was found to hamper
the growth and development of dairy cooperative sector. The participation of
the members in the management of dairy cooperatives was found to be very
low which was not a good indicator of growth and hence dairy cooperative
organizations must motivate and encourage its members to actively take part in
the management. V.Selvarani (2004) made a comparative analysis of
cooperative milk producers’ union in Tiruchirappalli district and Coimbatore
district. It was found that the consumer of both the unions preferred to buy
Aavin milk over other brands because of its assured quality and easy
95
availability. Majority of the consumers of both the unions found the price to be
reasonable and were satisfied with the quality of milk. The administrative and
selling and distribution and rural milk collection expenses were found to be
higher in Coimbatore district cooperative milk producers’ union. It was
concluded that the efficient functioning of the dairy industry depends on the
quantum of milk procurement and minimizing overhead charges of the dairy
unit. The dairy industry, through its reasonable pricing policy allowing an
agreeable margin of profit to the producers and also bringing milk within the
reach of the economically weaker sections, should pave path for the advent of
much cherished ‘white revolution’ in the country. M.V.Rama Prasad (2005) in
his article ‘Dairy industry – Milking the milk’ has opined that, as India is
located amidst major milk deficit countries in Asia and Africa it can easily
become a leading exporter of milk and milk products provided it improves the
quality and productivity of milk. Also he stated that, since, the average per
capita consumption of milk in India is only 214 gms/day as against the world
average as 303 gms/day there is lot of scope for the development of the dairy
industry in the country. V.Kubendran and T.Vanniyarajan (2005) made a
comparative analysis of rural and urban consumers on milk consumption. The
impact of socio-economic profile of the consumers namely income status,
occupational position, educational level, sex, age and region was analyzed
using purposive sampling method. It was found that consumers of milk in rural
areas fall behind the consumers in urban areas. The urban consumers were
found to prefer branded milk especially Aavin milk whereas the rural consumer
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preferred mostly unbranded milks. It was hence suggested to discriminate the
marketing strategies to position the product in the two different markets.
Marjan Janzekovic and Crotmir Rozman (2006) undertook a case study on the
milk quality and feasibility analysis to lose housing dairy cows. The aim of the
study was technological and economical analysis of free range cow breeding.
The model total costs enterprise was developed for evaluation of economic
feasibility of loose housing dairy cows in comparison with tied cow breeding
system. Computer supported calculation enabled estimation of the most
important economic parameters viz., net return, total cost and coefficient of
economics. Results of the study showed that (at observed input parameters)
loose housing system is economically feasible if there is a minimum of 41
dairy cows with an average milk production of 8610 Kg per cow. It was also
established that cows need approximately 6 months to fully adapt to the
housing system. G.Chandrasekar (2006) in his article titled ‘Milk output poised
to top 100 million tonnes’ has stated that output growth of milk in India is seen
driven by increasing demand for value-added milk products on consumer side
and extensive dairy development programmes on the supply side. He has
pointed out that though India is the largest producer of milk, the level of
integration of the country’s dairy sector with the global economy is relatively
low. Veerakumaran (2009), in his paper mentioned about the focused on cooperative milk production and marketing network in the state of Kerala. Further
he has identified the problems of milk co-operatives in Kerala, like escalating
cost of production, occupational mobility and structural setbacks of the milk
97
co-operatives. (Farooq et al., 2010) found that the low productive performance
was observed while it was at par with those of Sahiwal cattle. Ilatsia et al.
(2012) also observed the productive and reproductive performance of local
Sahiwal cattle to optimize the breeding strategies in Kenya. Strandberg et al.
(2009) observed genotype by environment interaction for various fertility traits
in UK dairy cattle.Moreover, so far, little attention is being paid to food safety
and quality in the dairy supply chains in India (Kumar et al., 2011). However,
changes may be imminent, as strong income growth in India increasingly
triggers awareness of food safety issues. The authors expect that before
stringent quality standards can be enforced, the dairy sector will need to
undergo structural change, as quality management is extremely difficult with
the current production structure. Such processes of change have been observed
in the dairy sectors of other parts of the world, such as Eastern Europe (Dries et
al., 2009, Mo et al., 2011, and Jia et al., 2012) and are known to be extremely
transformative, with important farm-level effects.
This chapter has covered a review of relevant literature. The chapter
began with reviews of the empirical studies on Cooperative, followed by
empirical studies on Importance of Cooperative, empirical studies on Activities
of Cooperative, empirical studies on Role of Cooperatives, Cooperative for
Development, empirical studies on Types of Cooperative in the Country,
empirical studies on Cooperative for Poverty Reduction, empirical studies on
Milk Pricing System, empirical studies on Chain Actors in cooperative sector,
empirical studies on Principle of Empowering Smallholders, empirical studies
98
on Risk in the Dairy Business, empirical studies on Facilities for the Village
Level Milk Producers, empirical studies on Growth of co operative institution ,
empirical studies on Constraints of the cooperative institution, empirical studies
on Performance Analysis of cooperatives, empirical studies on Cost analysis of
dairy cooperatives, empirical studies on Significance of dairy cooperatives, and
empirical studies on Performance of diary cooperatives in India and overseas.
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CHAPTER III
DATA ANALYSIS AND INTERPRETATION
3.1 Introduction
This chapter the results of the statistical analysis done for testing
hypothesis are presented and interpreted. Interpretation of data is very much
dependent on the type of analyses to which the date is subjected to. Selection of
appropriate tools of analysis would yield useful results. But how their results
could be used to defend any theory or inference depends on how these results
are interpreted.
The analysis is done with SPSS, MINITAB and AMOS
software.
The following section presents the results of various relationships
between the Profit, Subsidy, Total Sales, Total Debt, Non Business Income and
Shareholders’ Wealth, relationships between Land and Building, Plant and
Machinery, Furniture, Debtors, Cash, Stock and Sales, relationship between
Manufacturing Cost, Staff Cost, Administration Cost, Trade Cost, Interest Cost
and Sales . In this chapter, the results bring out the crucial financial factors
affecting performance of the Tiruchirappalli District Co-operative milk
producers’ union Limited.
100
3.2 Trend Analysis
Table 3.1 - Manufacturing Cost, Staff Cost, Administrative Cost, Trade
Cost and Interest Cost of Tiruchirappalli District Co-operative milk
producers’ union Limited
Amount in Rupees
Trade
Cost
Interest
Cost
4567897
Adminis
trative
Cost
1425193
5795859
6646011
555894097
5678456
2824997
6357038
7845085
1999-2000
603755511
7890567
3002589
8321447
9354873
2000-2001
633106519
9876345
3472825
8441047
12706304
2001-2002
636666246
12345345
3485270
9060095
12239379
2002-2003
650893126
23434563
3510738
10176062
11169175
2003-2004
805134457
23467867
3651392
10338461
12238076
2004-2005
996063871
29568734
3701173
10450781
14482109
2005-2006 1044288511 31537581
2006-2007 1063922701 38123456
2007-2008 1233763603 44726233
3827556
12350781
14624583
3958206
13012581
15237272
1997-1998
Manu
facturing
Cost
384912390
1998-1999
Year
Staff
Cost
4068354 14012831 16152968
Source: Annual Reports of Tiruchirappalli District Co-operative milk
producers’ union Limited.
101
Fig 3.1 Trend Analysis Plot for the Manufacturing Cost in TDC Milk
Producers’ Union Ltd
C
DE
F BB F
!"
& ' A
B
# "$ B%$
A
C
F
D
B
D
(
C
BC DE
BC
B
A
B
F
F
F
E
E
E
A
B
C
AA
AAA
Table 3.1 and Trend analysis figure 3.1 reveal the trends in the Manufacturing
Cost. The trend plot that shows the original data, and the fitted trend line, the
output also displays the fitted trend equation Yt = 319362690 + 77203204*t
and three measures help to determine the accuracy of the fitted values: 7.43743,
5.34868, and 4.01252. The Manufacturing Cost data show a general upward
trend, though with an evident cyclic factor. The trend model appears to fit well
to the overall trend. The above chart shows the amount of Manufacturing Cost
(in rupees) from 1997-1998 to 2007-2008. The value has increased from
384912390 rupees in 1998 to 1233763603 rupees in 2008. This is an increase
of 848851213 rupees. The long-run trend for the manufacturing cost is
increasing in Tiruchirappalli District co-operative milk producers union
Limited. From the above trend from 2001 t0 2004 the cost is below the fitted
102
trend line. In that period the Tamil nadu co operative milk producers union
reduce its cost. From 2005 onwards the cost above the fitted trend line which
shows the inefficient management of manufacturing cost. Reduce the cost of
procurement, processing and marketing of dairy products through economy of
scale approach will leads to increase profitability. After liberalization, the cooperative dairy plants are facing aggressive competition from the private
players for market share. Some of the research concluded that the private
players’ performance is better than co-operative diary in cost control aspect.
For example Pawar and Sawant (1979) have confirmed that the private dairy
plants use their resources efficiently and reduce their total operational costs as
compared to those by the co-operative dairy plants.
Fig 3.2 Trend Analysis Plot for the Staff Cost in TDC Milk Producers
Union Ltd
C
DE
F BB F
B
!"
& ')
C
F
D
B
D
# "$ B%$
(
C
A
B
C
BCDE
BC
B
AA
AAA
103
B
FA
FA
F
E
E
AE
Table 3.1 and Trend analysis figure 3.2 reveal the trends in the Staff Cost. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 3753446 + 4153350*t and three
measures help to determine the accuracy of the fitted values: 1.96262, 1.96231,
and 6.06549. The Staff Cost data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of staff Cost (in rupees) from 1997-1998 to
2007-2008. The value has increased from 4567897 rupees in 1998 to 44726233
rupees in 2008. This is an increase of 40158336 rupees. The long-run trend for
the staff cost is increasing in Tiruchirappalli District co-operative milk
producers union Limited. The trend analysis shows increasing trend of labour
cost because of increases in prices paid for hired labour. In the year 2001, 2002
and 2005 the cost is below the fitted trend line because of the intensive use of
labour in that period. Sometime member of the family contribute labour to the
dairy farm activities out of their own interest. The wages and salaries are not
paid to the family member who contributes the dairy farm activities. This may
lead to the opportunity cost. Comprehensive utilization of labour will support
to reduce the cost.
104
Fig 3.3 Trend Analysis Plot for the Administrative Cost in
TDC Milk Producers Union Ltd
C
DE
F BB F
ED! B
!"
& '
"
B
# "$ B%$
A
C
F
D
B
D
(
C
B
F
F
F A
E
E
E
A
B
C
BCDE
BC
B
AA
AAA
Table 3.1 and Trend analysis figure 3.3 reveal the trends in the Administrative
Cost. The trend plot that shows the original data, and the fitted trend line, the
output also displays the fitted trend equation Yt = 2220043 + 189512*t and
three measures help to determine the accuracy of the fitted values: 1.16437,
2.74676, and 1.39763. The Administrative Cost data show a general upward
trend, though with an evident cyclic factor. The trend model appears to fit well
to the overall trend. The above chart shows the amount of Administrative Cost
(in rupees) from 1997-1998 to 2007-2008. The value has increased from
1425193 rupees in 1998 to 4068354 rupees in 2008. This is an increase of
2643161 rupees. The long-run trend for the cost of administration is increasing
in Tiruchirappalli District co-operative milk producers union Limited and the
105
same cannot be controlled without controlling the total cost since the cost of
administration are common to all commodities produced in the study period
from 1997-1998 to 2007-2008.
Fig 3.4 Trend Analysis Plot for the Trade Cost in TDC Milk Producers
Union Ltd
Trend
C DAnalysis
E F B BPlot
F for the Trade
C D Cost in BTDC
C Milk FProducers’
D
BUnion
!"
& '
# "$ B%$
A
D
(
C
B
F AE
F
E
F
E
A
B
C
BCDE
BC
B
A
AA
AAA
Table 3.1 and Trend analysis figure 3.4 reveal the trends in the Trade Cost. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 520569 + 773572*t and three measures
help to determine the accuracy of the fitted values: 3.62767, 3.30501, and
1.86157. The Trade Cost data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of Trade Cost (in rupees) from 1997-1998
to 2007-2008. The value has increased from 5795859 rupees in 1998 to
106
14012831 rupees in 2008. This is an increase of 8216972
rupees. The long-
run trend for the trade cost is increasing in Tiruchirappalli District co-operative
milk producers union Limited. The trade cost shows upward trend because of
rise in the transportation cost due to increase in diesel and gas prices.
Fig 3.5 Trend Analysis Plot for the Interest Cost in TDC Milk Producers
Union Ltd
C
DE F B B F
B
!"
& '
B
C
F
D
B
D
# "$ B%$
A (
C
B
F
F
AF
E
E
E
A
B
C
BCDE
BC
B
AA
AAA
Table 3.1 and Trend analysis figure 3.5 reveal the trends in the Interest Cost.
The trend plot that shows the original data, and the fitted trend line, the output
also displays the fitted trend equation Yt = 6801641 + 876936*t and three
measures help to determine the accuracy of the fitted values: 6.88315, 7.48174,
and 9.42621. The Interest Cost data show a general upward trend, though with
an evident cyclic factor. The trend model appears to fit well to the overall
107
trend. The above chart shows the amount of Interest Cost (in rupees) from
1997-1998 to 2007-2008. The value has increased from 6646011 rupees in
1998 to 16152968 rupees in 2008. This is an increase of 9506957 rupees. The
long-run trend for the interest cost is increasing in Tiruchirappalli District cooperative milk producers union Limited. Interest cost includes Interest on
NDDB loan, Interest on Govt. loan, Interest on security deposit, and Interest on
working capital. Interest cost is in increasing trend which indicates unavoidable
borrowed fund to carry business. The larger the borrowed fund more will be the
interest. In the initial year it is increasing trend and later it was decreased.
Economic use of borrowed fund leads to decrease in interest expenditure.
108
Table 3.2 – Land and Buildings, Plant and Machinery, Furniture, and
Investments of Tiruchirappalli District Co-operative milk producers’
union Limited from 1997-1998 to 2007-2008
Amount in Rupees
Year
Plant
and
Machinery
39344977
Furniture
Investments
1997-1998
Land
and
Building
49640811
5792784
3411134
1998-1999
49680684
40296533
5841341
3425349
1999-2000
51505668
40366085
6567511
3452174
2000-2001
51505668
41461348
7024349
3751279
2001-2002
54620488
41954023
7386228
3805291
2002-2003
55194199
47410940
8658898
3883038
2003-2004
55194199
53433988
8717667
3969606
2004-2005
55194199
54308714
8963870
5114004
2005-2006
55194199
55852213
8963870
5116250
2006-2007
55194199
55945913
9008637
5219290
2007-2008
56097412
56728356
9112061
5465873
Source: Annual Reports of Tiruchirappalli District Co-operative
milk producers’ union Limited
109
Fig 3.6 Trend Analysis Plot for the Land and Buildings in
TDC Milk Producers Union Ltd
C
DE
F BB F
D # $ FD
!"
& ' A
C
F
D
B
D
# "$ B%$
A(
C
B
F
F
AF
AE
AE
E
A
B
C
BCDE
BC
B
A
AA
AAA
Table 3.2 and Trend analysis figure 3.6 reveal the trends in the Land and
Buildings. The trend plot that shows the original data, and the fitted trend line,
the output also displays the fitted trend equation Yt = 49546334 + 666849*t
and three measures help to determine the accuracy of the fitted values: 1.58379,
8.50849, and 9.86217. The Land and Buildings data show a general upward
trend, though with an evident cyclic factor. The trend model appears to fit well
to the overall trend. The above chart shows the amount of Land and Buildings
(in rupees) from 1997-1998 to 2007-2008. The value has increased from
49640811 rupees in 1998 to 56097412 rupees in 2008. This is an increase of
6456601 rupees. The long-run trend for the land & building is increasing in
110
Tiruchirappalli District co-operative milk producers union Limited. Land
shows above fits from 2002 to 2005 which is the positive sign for
Tiruchirappalli District co-operative milk producers union Limited. Cow is the
most important factor for milk production. The land is supporting for
increasing production by increasing numbers of cows but at the same time the
land should not be rented out or used for some other purpose. Land is an
income whereas the labour and machinery is expenses. In this study from 20022005 the Tiruchirappalli district milk producer union limited efficiently
employed their land.
Fig 3.7 Trend Analysis Plot for the Plant and Machinery in TDC Milk
Producers Union Ltd
C
DE
F BB F
F
!"
& '
D
C
# "$ B%$
A
F
D
B
D
(
C
A
B
C
BCDE
BC
B
AA
AAA
111
B
FA
E
F
E
F AE
Table 3.2 and Trend analysis figure 3.7 reveal the trends in the Plant and
Machinery. In the long run the union can change the fixed factors such as plant,
equipments and machinery and there by enlarge the scale of operation and
produce more output in the most efficient way. The trend plot that shows the
original data, and the fitted trend line, the output also displays the fitted trend
equation Yt = 35201327 + 2119523*t and three measures help to determine the
accuracy of the fitted values: 3.90047, 1.81867, and 4.38698. The Plant and
Machinery data show a general upward trend, though with an evident cyclic
factor. The trend model appears to fit well to the overall trend. The above chart
shows the amount of Plant and Machinery (in rupees) from 1997-1998 to 20072008. The value has increased from 39344977 rupees in 1998 to 56728356
rupees in 2008. This is an increase of 17383379 rupees. The long-run trend for
the plant and machinery is increasing in Tiruchirappalli District co-operative
milk producers union Limited. Plant costs turn down from 2000-2003 and 2008
but the level of production is increased at the same time the union should
concentrate on transportation cost because the transport cost increase with
distance. Machinery (milking and other equipment) is extremely dependent on
the amount of output being produced. Increasing machinery in the year
1998,1999,2004,2005 and 2006 is suspect to result in large increased milk
production but will root increasing unit cost of producing milk.
112
Fig 3.8 Trend Analysis Plot for the Furniture in TDC Milk Producers
Union Ltd
C
DE
F B B
F
%
!"
& '
C
#
A
F
D
B
D
"$ B%$
(
C
C
BC DE
BC
B
A BB
A
AA
B
FA
F
F
AE
E
E
AAA
Table 3.2 and Trend analysis figure 3.8 reveal the trends in the Furniture. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 5548922 + 378774*t and three measures
help to determine the accuracy of the fitted values: 3.96739, 3.17346, and
1.67424. The Furniture data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of Furniture (in rupees) from 1997-1998 to
2007-2008. The value has increased from 5792784 rupees in 1998 to 9112061
rupees in 2008. This is an increase of 3319277 rupees. The long-run trend for
the furniture is increasing in Tiruchirappalli District co-operative milk
producers union Limited. From 2003 to 2005 the furniture is in above the fitted
trend is due to furniture purchased by the Tiruchirappalli District co-operative
milk producers union Limited.
113
Fig 3.9 Trend Analysis Plot for the Investment in TDC Milk Producers
Union Ltd
C
DE
F B B
F
" B !
!"
& '
#
C
F
D
B
D
"$ B %$
A (
C
B
F
F
FA
E
AE
E
A
B
C
BC DE
BC
B
AA
AAA
Table 3.2 and Trend analysis figure 3.9 reveal the trends in the Investment. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 2855844 + 230290*t and three measures
help to determine the accuracy of the fitted values: 5.22663, 2.13649, and
6.90583. The Investment data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of Investment (in rupees) from 1997-1998
to 2007-2008. The value has increased from 3411134 rupees in 1998 to
5465873 rupees in 2008. This is an increase of 2054739 rupees. The long-run
trend for the investment is increasing in Tiruchirappalli District co-operative
milk producers union Limited. From 2002 to 2004 the investment is below the
fitted trend there after it has been above the fitted trend line. The result shows
that the diary firms make use of their investment for the production activities
during the year 2002 to 2004.
114
Table 3.3 Total Current Assets, Sundry Debtors, Cash and Bank and
Inventory of Tiruchirappalli District Co-operative milk producers’ union
Limited from 1997-1998 to 2007-2008.
Amount in Rupees
Year
Total
Sundry
Cash
Current
Debtors
And
Assets
Inventory
Bank
1997-1998
122439711
80571575
9431759
2063621
1998-1999
149736259
94961901
14512347
2286779
1999-2000
169449906
115059840
15540796
14857021
2000-2001
165923492
104758985
16762221
18259868
2001-2002
195590522
126755702
19663290
19073864
2002-2003
210361905
130368884
21018879
17124431
2003-2004
216515612
148127366
22358294
25517930
2004-2005
191824063
125680310
36041568
17272446
2005-2006
186515612
142722102
43637784
18295825
2006-2007
190737095
122765704
51778286
12648678
2007-2008
227215641
131619882
61349106
13247688
Source: Annual Reports of Tiruchirappalli District Co-operative
milk producers’ union Limited
115
Fig 3.10 Trend Analysis Plot for the Current Assets in TDC Milk
Producers Union Ltd
C
DE
F B B
F
EBB
!"
#
& '
AA A
B
C
F
D
B
D
"$ B%$
(
C
B
F
F
F
E
A E
E
A
B
C
BC DE
BC
B
AA
AAA
Table 3.3 and Trend analysis figure 3.10 reveal the trends in the Current
Assets. The trend plot that shows the original data, and the fitted trend line, the
output also displays the fitted trend equation Yt = 139929637 + 7380058*t and
three measures help to determine the accuracy of the fitted values: 8.43073,
1.51497, and 3.07050. The Current Assets data show a general upward trend,
though with an evident cyclic factor. The trend model appears to fit well to the
overall trend. The above chart shows the amount of Current Assets (in rupees)
from 1997-1998 to 2007-2008. The value has increased from 122439711rupees
in 1998 to 227215641 rupees in 2008. This is an increase of 104775930 rupees.
The long-run trend for the current asset is increasing in Tiruchirappalli District
co-operative milk producers union Limited. The current asset shows an
increasing trend because the inventory of diary firms is playing an important
role in the diary business. In 2004 the current asset is above the fitted trend line
116
in that period their major investment is in current asset which leads to increase
the production.
Fig 3.11 Trend Analysis Plot for the Sundry Debtors in TDC Milk
Producers Union Ltd
C
DE
F BB F
D
!"
& 'A
&
B
C
F
D
B
D
# "$ B%$
(
C
B
AF A E
F
E
F
AE
A
B
C
BC DE
BC
B
A
AA
AAA
Table 3.3 and Trend analysis figure 3.11 reveal the trends in the Debtors. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 92345231 + 4660526*t and three
measures help to determine the accuracy of the fitted values: 9.4965, 1.11804,
and 1.53039. The Debtors data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of Debtors (in rupees) from 1997-1998 to
2007-2008. The value has increased from 80571575 rupees in 1998 to
131619882 rupees in 2008. This is an increase of 51048307 rupees. The longrun trend for the debtors is increasing in Tiruchirappalli District co-operative
milk producers union Limited.
117
Fig 3.12 Trend Analysis Plot for the Cash and Bank in TDC Milk
Producers Union Ltd
C
DE
F BB F
B
!"
& ')
D$
$ F
C
F A
D
B
D
# "$ B%$
(
C
B
F
F
F
A E
E
E
A
B
C
BC DE
BC
B
AA
AAA
Table 3.3 and Trend analysis figure 3.12 reveal the trends in the Cash and
Bank. The trend plot that shows the original data, and the fitted trend line, the
output also displays the fitted trend equation Yt = 765706 + 4856320*t and
three measures help to determine the accuracy of the fitted values: 2.27092,
4.73033, 3.17556, and 1.53039. The Cash and Bank data show a general
upward trend, though with an evident cyclic factor. The trend model appears to
fit well to the overall trend. The above chart shows the amount of Cash and
Bank (in rupees) from 1997-1998 to 2007-2008. The value has increased from
943175949 rupees in 1998 to 6134910647 rupees in 2008. This is an increase
of 5191734698 rupees. The long-run trend for the cash and bank is increasing
Tiruchirappalli District co-operative milk producers union Limited.
118
Fig 3.13 Trend Analysis Plot for the Inventory in TDC Milk Producers
Union Ltd
C
DE
F BB F
"
!"
& '
C
# "$ B%$
A
A
F
D
B
F
D
(
C
B
F A E
F A E
F
E
A
B
C
BCDE
BC
B
AA
AAA
Table 3.3 and Trend analysis figure 3.13 reveal the trends in the Inventory. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 8486910 + 1019578*t and three
measures help to determine the accuracy of the fitted values: 8.72945, 5.12196,
and 3.45377. The Inventory data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of Inventory (in rupees) from 1997-1998 to
2007-2008. The value has increased from 2063621 rupees in 1998 to 13247688
rupees in 2008. This is an increase of 11184067 rupees. The long-run trend for
the inventory is increasing in Tiruchirappalli District co-operative milk
producers union Limited.
119
Table 3.4 – Trade Income, Miscellaneous Income, Gross Profit, and Net
Profit of Tiruchirappalli District Co-operative milk producers’ union
Limited from 1997-1998 to 2007-2008
Amount in Rupees
Year
Trade
Miscel
Gross
Net
Income
laneous
Profit
Profit/Net
Income
Loss
1997-98
20856678
208950
48545959
1922136
1998-1999
22402849
298568
34536624
-9321452
1999-2000
28555009
399585
46982878
-4318870
2000-2001
29308946
890386
60009927
14249262
2001-2002
30115365
1312768
58999448
5040331
2002-2003
30992022
1382190
38039421
-19128634
2003-2004
42569589
1474201
89226615
7580419
2004-2005
45622196
1514000
52224371
84760511
2005-2006
62732203
1513880
16701123
-95946601
2006-2007
78862900
1678444
61619914
4841761
2007-2008
82569341
1876233 132006874
71060473
Source: Annual Reports of Tiruchirappalli District Co-operative
milk producers’ union Limited
120
Fig 3.14 Trend Analysis Plot for the Trade Income in TDC Milk
Producers’ Union Ltd
C
DE
F BB F
C D
!
!"
& ' A
# "$ B%$
C
F
D
B
D
(
A
C
B
F
F
F
E
E
E
A
B
C
BCDE
BC
B
AA
AAA
Table 3.4 and Trend analysis figure 3.14 reveal the trends in the Trade Income.
The trend plot that shows the original data, and the fitted trend line, the output
also displays the fitted trend equation Yt = 5943417 + 6200144*t and three
measures help to determine the accuracy of the fitted values: 1.85463, 6.74787,
and 5.82140. The Trade Income data show a general upward trend, though with
an evident cyclic factor. The trend model appears to fit well to the overall
trend. The above chart shows the amount of Trade Income (in rupees) from
1997-1998 to 2007-2008. The value has increased from 20856678 rupees in
1998 to 82569341 rupees in 2008. This is an increase of 61712663 rupees. The
long-run trend for the trade income is increasing in Tiruchirappalli District cooperative milk producers union Limited.
121
Fig 3.15 Trend Analysis Plot for the Miscellaneous Income in TDC Milk
Producers’ Union Ltd
C
DE
F BB F
B FF
!"
& '
B
!
C
F
D
B
C
# "$ B%$
A A(
C
B
F
F
F
E
E
E
A
B
C
BCDE
BC
B
AA
AAA
Table 3.4 and Trend analysis figure 3.15 reveal the trends in the miscellaneous
Income. The trend plot that shows the original data, and the fitted trend line,
the output also displays the fitted trend equation Yt = 125884 + 169159*t and
three measures help to determine the accuracy of the fitted values: 2.22714,
1.58068, and 3.17800. The Miscellaneous data show a general upward trend,
though with an evident cyclic factor. The trend model appears to fit well to the
overall trend. The above chart shows the amount of Miscellaneous (in rupees)
from 1997-1998 to 2007-2008. The value has increased from 208950 rupees in
1998 to 1876233 rupees in 2008. This is an increase of 1667283 rupees. The
long-run trend for the Miscellaneous Income is increasing in Tiruchirappalli
District co-operative milk producers union Limited.
122
Fig 3.16 Trend Analysis Plot for the Gross Profit in TDC Milk Producers
Union Ltd
C
DE
F B B ' BB
C
!"
F
D
B
D
# "$ B%$
& '
A (
C
B
F A E
FA
E
F
AE
A
B
C
BCDE
BC
B
AA
AAA
Table 3.4 and Trend analysis figure 3.16 reveal the trends in the Gross Profit.
The trend plot that shows the original data, and the fitted trend line, the output
also displays the fitted trend equation Yt = 33565822 + 4085896*t and three
measures help to determine the accuracy of the fitted values: 5.12197, 1.95844,
and 6.84769. The Gross Profit data show a general upward trend, though with
an evident cyclic factor. The trend model appears to fit well to the overall
trend. The above chart shows the amount of Gross Profit (in rupees) from
1997-1998 to 2007-2008. The value has increased from 48545959 rupees in
1998 to 132006874 rupees in 2008. This is an increase of 83460915 rupees.
The long-run trend for the gross profit is increasing in Tiruchirappalli District
co-operative milk producers union Limited.
123
Fig 3.17 Trend Analysis Plot for the Net Profit in TDC Milk Producers
Union Ltd
C
DE
F BB
(
C
!"
& ' )A
# "$ B%$
F
D
B
D
(
C
B
F
E
F
E
FA A E
A
B
C
BCDE
BC
B
)
)
AA
AAA
Table 3.4 and Trend analysis figure 3.17 reveal the trends in the Net Profit. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 9261366 + 2463854*t and three
measures help to determine the accuracy of the fitted values: 1.20623, 2.7616,
and 1.9291. The Gross Profit data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of Net Profit (in rupees) from 1997-1998 to
2007-2008. The value has decreased from 1922136 rupees in 1998 to 71060473
rupees in 2008. This is decrease of 69138337 rupees. There after i.e. in the year
2006- 2007 and 2007-2008 the milk producers union earns profit. Therefore the
long-run trend for the net profit is increasing in Tiruchirappalli District cooperative milk producers union Limited.
124
Table 3.5 – Long Term Debt and Short Term Debt of Tiruchirappalli
District Co-operative milk producers’ union Limited from 1997-1998 to
2007-2008
Amount in Rupees
Year
Long Term
Debt
Short Term
Debt
1997-1998
66300793
93920465
1998-1999
66320057
127751267
1999-2000
66189501
146123356
2000-2001
65684741
123366591
2001-2002
63893851
149104398
2002-2003
52579492
151359165
2003-2004
42293117
125170147
2004-2005
32116505
171779971
2005-2006
48383239
181967401
2006-2007
32121102
157391911
2007-2008
27163145
194621639
Source: Annual Reports of Tiruchirappalli
District Co-operative milk producers’ union
Limited
125
Fig 3.18 Trend Analysis Plot for the Long Term Debt in TDC Milk
Producers Union Ltd
C
DE
F BB F
C
!"
& '
!
&
# "$ B%$
)
A
C
F
D
B
D
(
C
B
F
F
F
E
E
E
A
B
C
BC DE
BC
B
AA
AAA
Table 3.5 and Trend analysis figure 3.18 reveal the trends in the Long Term
Debt. The trend plot that shows the original data, and the fitted trend line, the
output also displays the fitted trend equation Yt = 77075416 - 4314910*t and
three measures help to determine the accuracy of the fitted values: 1.08822,
5.06478, and 3.63064. The Long Term Debt data show a general down ward
trend, though with an evident cyclic factor. The trend model appears to fit well
to the overall trend. The above chart shows the amount of Long Term Debt (in
rupees) from 1997-1998 to 2007-2008. The value has decreased from
66300793 rupees in 1998 to 27163145 rupees in 2008. This is a decrease of
39137648 rupees. The long-run trend for the long term debt is decreasing in
Tiruchirappalli District co-operative milk producers union Limited.
126
Fig 3.19 Trend Analysis Plot for the Short Term Debt in TDC Milk
Producers Union Ltd
C
DE
F BB F
C
!"
& '
!
&
C
# "$ B%$
A
A
(
F
D
B
D
C
B
AF
A E
F
A E
F
E
A
B
C
BC DE
BC
B
AA
A
A
AA
Table 3.5 and Trend analysis figure 3.19 reveal the trends in the Current
Liabilities. The trend plot that shows the original data, and the fitted trend line,
the output also displays the fitted trend equation Yt = 102905779 + 6608182*t
and three measures help to determine the accuracy of the fitted values: 9.34692,
1.28298, and 2.14180. The Current Liabilities data show a general upward
trend, though with an evident cyclic factor. The trend model appears to fit well
to the overall trend. The above chart shows the amount of Current Liabilities
(in rupees) from 1997-1998 to 2007-2008. The value has increased from
93920465 rupees in 1998 to 194621639 rupees in 2008. This is an increase of
100701174 rupees. The long-run trend for the current debt is increasing in
Tiruchirappalli District co-operative milk producers union Limited.
127
Table 3.6 – Total Subsidy, Total Cost, Total Sales, Total Assets, of
Tiruchirappalli District Co-operative milk producers’ union Limited from
1997-1998 to 2007-2008
Amount in Rupees
Year
Total
Total
Total
Total
Subsidy
Cost
SALES
Assets
1997-1998
1000600
453869558
486196683
286278625
1998-1999
1250800
633609296
644536776
296441032
1999-2000
1328714
709338112
735622628
367839132
2000-2001
1427500
765180569
793630316
370705875
2001-2002
1555600
804710033
829023133
404386463
2002-2003
1600000
821917484
831222267
439017292
2003-2004
1700000
981512468
922396974
445444280
2004-2005
1859000
1186313951
1197192193
312893893
2005-2006
2048736
1354949371
1272877213
343446693
2006-2007
2123546
1318238045
1347582360
313890246
2007-2008
2235467
1497673097
1513234408
352292717
Source: Annual Reports of Tiruchirappalli District Co-operative
milk producers’ union Limited
128
Fig 3.20 Trend Analysis Plot for the subsidy in TDC Milk Producers
Union Ltd
C
Trend
in"TDC
UnionB Ltd
D E Analysis
F B B F Plot for the
&B Subsidy
D % !'
! Milk Producers’
C
F
D
!"
& '
# "$ B%$
A
D
(
C
A
B
F
F
F
E
E
E
A
B
C
BCDE
BC
B
AA
AAA
Table 3.6 and Trend analysis figure 3.20 reveal the trends in the subsidy. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 5873294 + 370364*t and three measures
help to determine the accuracy of the fitted values: 1.48042, 1.00228, and
1.34787. The subsidy data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of subsidy (in rupees) from 1997-1998 to
2007-2008. The value has increased from 1000600 rupees in 1998 to 2235467
rupees in 2008. This is an increase of 1234867 rupees. The long-run trend for
the subsidy is increasing in Tiruchirappalli District co-operative milk producers
union Limited.
129
Fig 3.21 Trend Analysis Plot for the Total Cost in TDC Milk Producers
Union Ltd
C
DE
F BB F
C
!"
& '
F
B C
# "$ B%$
AA
F
D
B
D
(
C
B
F
F
F
E
E
E
A
B
C
BC DE
BC
B
AA
AAA
Table 3.6 and Trend analysis figure 3.21 reveal the trends in the Total Cost.
The trend plot that shows the original data, and the fitted trend line, the output
also displays the fitted trend equation Yt = 3601750053 + 99213052*t and
three measures help to determine the accuracy of the fitted values: 6.12620,
5.5784, and 4.44608. The Total Cost data show a general upward trend, though
with an evident cyclic factor. The trend model appears to fit well to the overall
trend. The above chart shows the amount of Total Cost (in rupees) from 19971998 to 2007-2008. The value has increased from 453869558 rupees in 1998 to
1497673097 rupees in 2008. This is an increase of 1043803539 rupees. The
long-run trend for the total cost is increasing in Tiruchirappalli District cooperative milk producers union Limited.
130
Fig 3.22 Trend Analysis Plot for the Sales in TDC Milk Producers Union
Ltd
C
DE
F BB F
C
!"
& ' A
F
F B
C
# "$ B%$
A
F
D
B
D
(
C
B
F
F
F
E
E
E
A
B
C
BC DE
BC
B
AA
AAA
Table 3.6 and Trend analysis figure 3.22 reveal the trends in the Sales. The
trend plot that shows the original data, and the fitted trend line, the output also
displays the fitted trend equation Yt = 390703233 + 95087566*t and three
measures help to determine the accuracy of the fitted values: 6.0867, 5.47352,
and 4.82058. The Sales data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of Sales (in rupees) from 1997-1998 to
2007-2008. The value has increased from 486196683 rupees in 1998 to
1513234408 rupees in 2008. This is an increase of 1027037725 rupees. The
long-run trend for the sales is increasing in Tiruchirappalli District co-operative
milk producers union Limited.
131
Fig 3.23 Trend Analysis Plot for the Total Asset in TDC Milk Producers
Union Ltd
C
DE
F BB F
C
F EBB B
!"
& '
C
# "$ B%$
A
F
D
B
D
(
C
B
F
E
F A E
F
E
A
B
C
BCDE
BC
B
AA
AAA
Table 3.6 and Trend analysis figure 3.23 reveal the trends in the Total Asset.
The trend plot that shows the original data, and the fitted trend line, the output
also displays the fitted trend equation Yt = 343760177 + 2292035*t and three
measures help to determine the accuracy of the fitted values: 1.28350, 4.56893,
and 2.65435. The Total Asset data show a general upward trend, though with
an evident cyclic factor. The trend model appears to fit well to the overall
trend. The above chart shows the amount of Total Asset (in rupees) from 19971998 to 2007-2008. The value has increased from 286278625 rupees in 1998 to
352292717 rupees in 2008. This is an increase of 66014091 rupees. The longrun trend for the total asset is increasing in Tiruchirappalli District co-operative
milk producers union Limited.
132
Table 3.7 –Total Debt, Total Non Business Income and Shareholders Fund
of Tiruchirappalli District Co-operative milk producers’ union Limited
from 1997-1998 to 2007-2008
Amount in Rupees
Year
Total
Total Non
Debt
Business
Shareholders
Income
Fund
1997-1998
160221258
21065628
176232909
1998-1999
194071324
22701417
117421841
1999-2000
212312857
28954594
129530154
2000-2001
189057332
30199332
130029509
2001-2002
212998249
31428133
138442470
2002-2003
203938657
32374212
154918094
2003-2004
167463264
44043790
196134746
2004-2005
203896476
47136224
153680705
2005-2006
230350640
64246083
157766782
2006-2007
189513013
80541355
166076053
2007-2008
221784783
84445574
171198673
Source: Annual Reports of Tiruchirappalli District
Co-operative milk producers’ union Limited
133
Fig 3.24 Trend Analysis Plot for the Total Debt in TDC Milk Producers
Union Ltd
C
DE
F BB
F
C
!"
& '
F
&
#
A
C
"$ B%$
A
F
D
B
D
(
C
B
FA AAE
F
E
F
E
F
&
C
BC DE
BC
B
C
A
AA
AAA
)**+ , -..+
Table 3.7 and Trend analysis figure 3.24 reveal the trends in the Total Debt.
The trend plot that shows the original data, and the fitted trend line, the output
also displays the fitted trend equation Yt = 81846582 + 4220937*t and three
measures help to determine the accuracy of the fitted values: 4.25433, 4.53218,
and 3.08521. The Total Debt data show a general upward trend, though with an
evident cyclic factor. The trend model appears to fit well to the overall trend.
The above chart shows the amount of Total Debt (in rupees) from 1997-1998 to
2007-2008. The value has increased from 93415020rupees in 1998 to
140222344 rupees in 2008. This is an increase of 46807324rupees. The longrun trend for the total debt is increasing in Tiruchirappalli District co-operative
milk producers union Limited.
134
Fig 3.25 Trend Analysis Plot for the Non Business Income in TDC Milk
Producers Union Ltd
C
DE
F BB
F
(
,$ B
BB
!
!"
# "$ B%$
& '
A
A
C
F
D
B
D
(
A
C
B
F
F
F
A
A
E
E
E
A
B
C
BC DE
BC
B
AA
AAA
Table 3.7 and Trend analysis figure 3.25 reveal the trends in the Non Business
Income. The trend plot that shows the original data, and the fitted trend line,
the output also displays the fitted trend equation Yt = 6069301 + 6369304*t
and three measures help to determine the accuracy of the fitted values: 1.75988,
6.58980, and 5.61025. The Non Business Income data show a general upward
trend, though with an evident cyclic factor. The trend model appears to fit well
to the overall trend. The above chart shows the amount of Non Business
Income (in rupees) from 1997-1998 to 2007-2008. The value has increased
from 21065628rupees in 1998 to 84445574 rupees in 2008. This is an increase
of 63379946 rupees. The long-run trend for the non business income is
increasing in Tiruchirappalli District co-operative milk producers union
Limited.
135
Fig 3.26 Trend Analysis Plot for the Shareholders fund in TDC Milk
Producers Union Ltd
C
D E
F BB
F
FD
!"
B
#
%
D
C
F
D
B
D
"$ B %$
& '
(
C
A
B
AF
F
FA
E
E
E
A
B
C
BC DE
BC
B
AA
AAA
Table 3.7 and Trend analysis figure 3.26 reveal the trends in the Shareholders
fund. The trend plot that shows the original data, and the fitted trend line, the
output also displays the fitted trend equation Yt = 134176528 + 3265002*t and
three measures help to determine the accuracy of the fitted values: 9.51735,
1.45733, and 3.91503. The Shareholders fund data show a general upward
trend, though with an evident cyclic factor. The trend model appears to fit well
to the overall trend. The above chart shows the amount of Shareholders fund
(in rupees) from 1997-1998 to 2007-2008. The value has increased from
176232909 rupees in 1998 to 171198673 rupees in 2008. This is a decrease of
5034236 rupees due to accumulated loss during the preceding years and the
same has been set off and carry forward. The long-run trend for the
shareholders fund is increasing in Tiruchirappalli District co-operative milk
producers union Limited.
136
3.3 RATIO ANALYSIS
Table 3.8 - CURRENT RATIO OF TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LTD
Year
Amount in Rupees
Current
Ratio/Result
Current
Assets
Liabilities
1997-1998 122439711
93920465
1.30
1998-1999 149736259
127751267
1.17
1999-2000 169449906
146123356
1.16
2000-2001 165923492
123366591
1.37
2001-2002 195590522
149104398
1.31
2002-2003 210361905
151359165
1.40
2003-2004 216515612
125170147
1.70
2004-2005 191824063
171779971
1.11
2005-2006 186515612
181967401
1.02
2006-2007 190737095
157391911
1.21
2007-2008 227215641
194621639
1.17
Source: Annual reports of Tiruchirappalli District
Co-operative Milk Producers’ Union Limited from 1997-1998
to 2007-2008
137
AB
FIG 3.27
.27 CURREN
ENT RATIO
IO OF TIRU
UCHIRAPP
PPALLI DIS
ISTRICT
CO-OPERA
C
ATIVE MIL
ILK PROD
DUCERS’ U
UNION LT
TD
C D
ABCCDEF C F
The current
c
ratio
tio indicatess tthe ratio of total curren
rent assets to total curren
rent
lia
liabilities.
It is an indic
dicator of th
the firm’s commitment
co
nt to meet its
it short-term
erm
lia
liabilities.
Cu
Current
Asse
sets
Current
nt Ratio =---------------------------------------------------------------------------Cur
urrent liabilit
ilities
Curre
rent assets consist
co
of ca
cash in hand,
d, cash at ba
bank and suc
uch assets tha
that
ca be conv
can
nverted intoo cash
c
within
hin a year in the usuall course
c
off tthe business
ess.
T
These
includ
lude sundry
y debtors,
d
bil
bill receivabl
ble, short-ter
term investm
tments, stock
cks
an prepaid
and
id expenses. Current liabilities
lia
include
inc
all it
items of pay
ayment to be
b
138
made within a year, such as sundry creditors, bills payable, outstanding
expenses, short-term borrowings etc. Long-term liabilities that are to be
discharged within a period of one year are also included under current
liabilities. The current assets of Tiruchirappalli District Co-operative Milk
Producers Union limited include cash and bank balances, stock, debtors and
short-term investments. Current liabilities include creditors and other shortterm deposits received.
Table 3.8 and figure 3.27 stated that current assets and current liabilities
have been fluctuating throughout the study period. The current ratio is also
found to be fluctuating during the study period. During the period 2005 – 06,
the current ratio was very low due to increase in interest expenses outstanding.
Prompt settlement of dues and decline in the interest amount, have resulted in
increase in the current ratio in 2006–07. The current assets have increased in
2003 – 04 which reveal that the Tiruchirappalli District Co-operative Milk
Producers Union limited invest in current asset for better profitability and
better working capital. In the 2003-2004 the Tiruchirappalli District Cooperative Milk Producers Union limited manages their current asset efficiently
in the study period. It shows that the inventory management, receivable
management and cash management performance is good in the year 2003-2004
during the study period.
139
Table 3.9 QUICK OR ACID TEST OR LIQUID RATIO OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD
Amount in Rupees
Year
liquid
Assets
Current
Liabilities
1997-1998
1676221
93920465
Ratio/Result
In Times
0.02
1998-1999
15540796
127751267
0.12
1999-2000
14512347
146123356
0.10
2000-2001
36041568
123366591
0.29
2001-2002
43637784
149104398
0.29
2002-2003
51778286
151359165
0.34
2003-2004
9431759
125170147
0.08
2004-2005
13742397
171779971
0.08
2005-2006
21018879
181967401
0.12
2006-2007
22355829
157391911
0.14
1997-1998
39663290
194621639
0.20
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION
Limited
from 1997-1998 to 2007-2008
140
EF
Fig. 3..28 QUICK
K RATIO O
OF TIRUC
CHIRAPPA
ALLI DIST
TRICT
CO-OPERA
C
ATIVE MIL
ILK PROD
DUCERS’ U
UNION LT
TD
C D
Thiss rratio establ
blishes the relationship
re
ip between qquick assets
ts and curren
rent
lia
liabilities
of
o the Tiru
iruchirappalli
lli districtt milk prod
oducers’ uni
nion limited
ted.
G
Generally
a Liquid rati
atio of 1to11 is consider
ered to thee rrepresent a satisfactor
ory
cu
current
finan
ancial condit
dition. The un
union difficu
icult to meet
et its obligati
ations becaus
use
its quick ratio
rat is very
ry low in the year 2002
02-03 is 0.0
.08 times and
an graduall
ally
in
increased
th
the study pe
period 1997--1998 thee quick
q
ratio
tio of 0.2 tim
times only.. IIt
sh
shows
thatt difficult
d
too meet
m
its ob
obligation because
be
unio
ion quick assets
ass are ver
ery
lo time off ccurrent liab
low
abilities of th
the union.
141
Liquidity or Quick ratio is a measure of liquidity. This ratio tests the
short-term solvency of business concern. The ratio is ascertained by comparing
the liquid assets i.e. current assets excluding stock and prepaid expenses to
current liabilities.
Liquid assets (Current Assets – Inventory)
Liquid Ratio = ----------------------------------------------------Current liabilities
The ability of the concern in meeting its short-term liabilities is found to
be good as indicated by Table 3.9 and figure 3.28. The quick ratio was found to
be the lowest in the year 1997-98 (0.02) due to increase in current liabilities.
The quick ratio was found to be the highest in the year 2002- 2003 (0.34). It
reveal that the Tiruchirappalli District Co-operative Milk Producers Union
limited efficiently manage their liquid asset in 2002-2003 in during the study
period.
142
Table.3.10 STOCK TURNOVER RATIO IN TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LTD
Year
Cost of
Inventory
Amount in Rupees
Ratio/Result
Goods sold
In Times
1997-1998
437650724
2063621
212.07
1998-1999
610000152
2286779
266.75
1999-2000
688639750
14857021
46.35
2000-2001
733620389
18259868
40.17
2001-2002
770023685
19073864
40.37
2002-2003
793182846
17124431
46.31
2003-2004
833170359
25517930
32.65
2004-2005
1144967822
17272446
66.28
2005-2006
1256176090
18295825
68.65
2006-2007
1285962446
12648678
101.66
2007-2008
1381227534
13247688
104.26
Source: Annual reports of Tiruchirappalli District Co-operative
Milk Producers’ Union Limited from 1997-1998 to 2007-2008
143
Fig.3.29
.29 STOCK
K TURNOVE
VER RATIO
IO OF TIRU
RUCHIRAP
PPALLI
DISTRI
RICT CO-O
OPERATIV
IVE MILK PRODUCE
P
ERS’ UNIO
ION LTD
EF
E
C D
Thiss rratio indica
cates the effi
fficiency off a firm in pr
procuring and
an selling its
it
pr
products.
This
Th ratio esta
stablishes a re
relationship
ip between th
the periodic
ic cost of sale
ales
an averagee stock (inve
and
ventory).
Co
ost of Goods
ds sold
Inventoryy Turnoverr Ratio
R
(ITR)) =-------------------------------------------------------Ave
verage Invent
entory
Table
le 3.10 figur
ure 3.29 sta
tates that the inventory
ry turnoverr ratio of th
the
un
union
which
ch is in fluctu
ctuating cond
ndition durin
ring the study
dy period. It has been in
i
th
he minimum
um (32.65 tim
times) in the
he year 2003
03-04 and ma
maximum (21
(212.07 times
es)
144
in the year 1997-1998. The stock turnover ratio of the union has been
satisfactory during the entire study period. In diary firm cannot keep raw
materials and finished goods inventory in the store because production starts
immediately when the materials are received and the sales is made after
production. The researcher suggested that just in time approach of inventory
management which minimize the finished goods holding and ordering cost.
Table 3.11 AVERAGE COLLECTION PERIOD OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD
Year
DRS Turnover
ratio
Result
In days
1997-1998
No. of.
Working
Dates
365
6 Times
61
1998-1999
365
6.78 Times
54
1999-2000
365
6.39 Times
57
2000-2001
365
7.57 Times
48
2001-2002
365
6.54 Times
56
2002-2003
365
6.37 Times
57
2003-2004
365
6.63 Times
55
2004-2005
365
9.52 Times
38
2005-2006
365
8.91 Times
41
2006-2007
365
10.97 Times
33
2007-2008
365
11.49 Times
32
Source: Annual reports of Tiruchirappalli District Co-operative
Milk Producers’ Union Limited from 1997-1998 to 2007-2008
145
Fig.3.30 AVERAGE COLLECTION PERIOD OF TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LTD
E
E
C
EF
E
DC D
A !!DAF E
"DC # E # $%
C D
Average Collection Period measures the quality of debtors, since it
indicates the speed of their collection. The shorter the average collection
period, better is the quality of debtors. Short collection period implies prompt
payment by debtors.
Average Debtors
Average Collection Period (ACP) = -------------------------------------- x 365
Sales
Table 3.11 and figure 3.30 that the Average collection period has been
high and fluctuating during the study period. It has been the highest (61 days)
in the year 1997-1998. It has been lowest (32 days) in the year 2007-2008. The
results shows that negative sign in the collection of debts. Hence the
Tiruchirappalli District Co-operative Milk Producers Union
146
Limited should
adopt effective receivable management technique for the growth of the
business. Normally the credit has been provided to the customers who order
large in size daily. In order to collect overdue receivables Tiruchirappalli
District Co-operative Milk Producers Union
Limited send reminder, make
telephone calls and extend credit periods. The Tiruchirappalli District Cooperative Milk Producers Union Limited should employ collection agents to
collect the debts.
Table.3.12 - AVERAGE PAYMENT PERIOD OF TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LTD
Year
Creditors
Turnover
Ratio/Result
In days
1997-1998
No. of
working days
in a year
365
7.37 Times
50
1998-1999
365
6.88 Times
53
1999-2000
365
6.35 Times
57
2000-2001
365
8.06 Times
54
2001-2002
365
6.67 Times
54
2002-2003
365
6.26 Times
58
2003-2004
365
16.72 Times
22
2004-2005
365
18.26 Times
20
2005-2006
365
19.41 Times
18
2006-2007
365
32.56 Times
11
2007-2008
365
18.07Times
20
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION Limited from
1997-1998 to 2007-2008
147
Fig.3.31 AVEREAGE PAYMENT PERIOD OF TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LTD
C!
E
E
C
EF
DC D
" $&DEF "DC #
E # $%
C D
The Average Payment Period indicates the promptness in making
payment to the creditors. A lower payment period indicates that the creditors
are being paid promptly that enhancing the credit worthiness of the company.
Average Creditors
Average Payment Period (APP) =------------------------------------------ x 365
Net Credit Purchases
Table 3.12 figure 3.31 shows a higher and fluctuating average payment
period. This shows the less liquid position of the union. The higher Average
Payment Period indicates that payments were not made in stipulated time
(usually 10 to 15 days) to the suppliers. The table 3.12 and figure 3.31 indicate
that highest average payment period of 57 days in the year 1999-2000 and
148
lowest in the year 2006-2007. The average payment period is higher than the
same may be used for rotating the amount in the business enterprises. The
supplier charges interest for it than any steps has to be taken by Tiruchirappalli
District Co-operative Milk Producers Union Limited to manage their Account
payable management. Ineffective lack of coordination is the reason for lag in
payment to suppliers.
Table.3.13 TOTAL ASSETS TURNOVER RATIO OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD
Amount in Rupees
Sales
Total
Assets
Ratio/Result
In Times
1997-1998
486196683
286278625
1.69
1998-1999
644536776
296441032
2.17
1999-2000
735622628
367839132
1.99
2000-2001
793630316
370705875
2.14
2001-2002
829023133
404386463
2. 05
2002-2003
831222267
439017292
1.89
2003-2004
982396974
445444280
2.20
2004-2005
1197192193
312893893
3.83
2005-2006
1272877213
343446693
3.70
2006-2007
1347582360
313890246
4.29
2007-2008
1513234408
352292717
4.29
Year
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION Limited
from 1997-1998 to 2007-2008
149
Fig.3.32 TO
F
OTAL ASS
SSET TURN
NOVER RA
ATIO OF T
TIRUCHIR
IRAPPALL
LI
DISTR
RICT CO-O
OPERATIV
IVE MILK
K PRODUC
CER UNION
ON LTD
E!
EF
E E
C D
Fig.3.
.3.32 indicate
ates the total
al assets turn
rnover ratioo ffrom 1.6988 times is th
the
ye 1997-1
year
1998 to 4.2
.29 times in the yearr 2007-08 it shows that
tha the unio
ion
ge
generates
a sale of Rs.4.29
R
for
or one rupe
pee in total
al assets. In which the
th
T
Tiruchirappa
palli districtt milk
m produ
ducers’ union
on ability too produce
p
a large
la
volum
me
of sales forr tthe given amount
a
off nnet assets is the mostt important
i
t aaspects off its
it
op
operating
performance
pe
ce in the stu
tudy period
d from 1997
97-1998 to 20072
2008
08,
un
under
utiliza
zation of asse
ssets and it is increased
d the
t cost off pproduction.
n.
150
Table.3.14 CURRENT ASSET TURNOVER RATIO OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE
MILK PRODUCERS’ UNION LTD
Amount in Rupees
Sales
Current
Ratio/Result
Year
Assets
In Times
1997-1998
486196683
122439711
1998-1999
644536776
149736259
1999-2000
735622628
169449906
2000-2001
793630316
165923492
2001-2002
829023133
195590522
2002-2003
831222267
210361905
2003-2004
982396974
216515612
2004-2005
1197192193
191824063
2005-2006
1272877213
186515612
2006-2007
1347582360
190737095
2007-2008
1513234408
227215641
3.97
4.30
4.34
4.78
4.24
3.95
4.53
6.24
6.82
7.07
6.66
Source: Annual reports of Tiruchirappalli District Co-operative
Milk Producers Union Limited from 1997-1998 to 2007-2008
151
Fig.3.33 CU
F
URRENT A
ASSET TRU
RUNOVER RATIO OF
O
TIR
RUCHIRAP
PPALLI DI
DISTRICT CO-OPER
C
RATIVE MILK
M
PRODUC
CERS’ UNI
NION LTD
EF
E
C D
Asset
ets are usedd to generate
ate sales. The
herefore, a ffirm should
ld manage its
it
as
assets
efficie
ciently to maaximize sale
ales. The rela
elationship be
between sale
ales and asset
sets
is called Ass
ssets Turnov
over. Of thee vvarious Ass
ssets Turnove
ver ratios on
only Inventor
ory
T
Turnover
Ratio,
Ra
Total
al Assets Tu
Turnover Rat
atio and Cu
Current Asse
sets Turnove
ver
R
Ratios
of the
he Union hav
ave been ana
nalyzed.
Sales
Total Asse
ssets Turnove
ver =--------------------------------------------------------------------Tota
otal Assets
Sales
S
Current Assets
As
Turno
nover =------------------------------------------------------------------Curr
rrent Assets
152
It could be inferred from Tables 3.13 and figure 3.32 that the
performance of total assets in generating sales was high during the year 2007 2008 and it has been very low during the year 1997-1998. Afterwards, an
improvement in the Total Assets Turnover is witnessed which means
betterment in the performance of total assets.
Table 3.14, & figure 3.33 states that the performance of current assets in
generating sales was high during the year 2006 - 2007 and it has been very low
during the year 1997-1998. Afterwards, an improvement in the current Assets
Turnover is witnessed which means betterment in the performance of total
assets.
This shows that the Union is improving in its performance in terms of
assets. On comparing the two ratios it could be found that the performance of
current assets in generating sales was better than the total assets.
153
Table.3.15 WORKING CAPITAL TURNOVER RATIO IN
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD
Amount in Rupees
Year
Sales
Working
capital
Ratio/Result
In Times
1997-1998
486196683
28519246
17.04
1998-1999
644536776
21984992
29.31
1999-2000
735622628
23326550
31.54
2000-2001
793630316
42556901
18.64
2001-2002
829023133
46486124
17.83
2002-2003
831222267
59002740
14.09
2003-2004
982396974
91345165
10.75
2004-2005
1197192193
20044092
59.72
2005-2006
1272877213
45482112
27.98
2006-2007
1347582360
33345184
40.41
2007-2008
1513234408
32594002
46.42
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION Limited from
1997-1998 to 2007-2008
154
Fig
ig.3.34 WOR
RKING CA
APITAL TRUNOVER
TR
ER RATIO
O OF
TIR
RUCHIRAP
PPALLI DI
DISTRICT CO-OPER
C
RATIVE MILK
M
PRODUC
CERS’ UNI
NION LTD
E
E
E E
E!
EF
"
C D
Work
rking capital
tal (WC) off a concern
rn is directly
tly related to sales. The
Th
cu
current
asset
sets like debt
btors, billss rreceivable,
e, cash, stock
ck etc., chan
ange with th
the
in
increase
orr decrease
d
inn sales.
s
Work
rking Capital
tal = Current
nt Assets – Current
Cu
liabil
bilities
Work
rking capital
al turnover ra
ratio indicate
ates the veloc
locity of thee uutilization oof
th networki
the
rking capital.
al. This ratio
tio indicatess the number
ber of timess the workin
ing
ca
capital
is turned
tur
overr iin the cours
urse of a yea
ear. It measu
sures the effi
fficiency wit
ith
w
which
the working
wo
capi
pital is used.
Work
orking Capita
ital
Working Capital
C
Turn
urnover Ratio
tio =------------------------------------------------------Sales
155
It is clear from Table 3.15 and figure 3.34 that the working capital
turnover ratio that it is in condition fluctuating during the study period. It was
found 59.72 tones during the year 2004 which shows that the capacity of
working capital generate the volume of sales in the year 2004. It also indicates
how the firm manages their inventory and receivable.
Table.3.16 - GROSS PROFIT RATIO OF TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LTD
Amount in Rupees
Year
Gross profit
Sales Rs.
Ratio/Result
1997-1998
48545959
486196683
9.98%
1998-1999
34536624
644536776
5.36%
1999-2000
46982878
735622628
6.38%
2000-2001
60009927
793630316
7.56%
2001-2002
58999448
829023133
7.12%
2002-2003
38039421
831222267
4.57%
2003-2004
89226615
982396974
9.08%
2004-2005
52224371
1197192193
4.36%
2005-2006
16701123
1272877213
1.31%
2006-2007
61619914
1347582360
4.57%
2007-2008
132006874
1513234408
8.72%
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION Limited
from 1997-1998 to 2007-2008
156
Fig.33.35 GROS
SS PROFIT
IT RATIO OF
O TIRUC
CHIRAPPA
PALLI
DISTRIC
ICT CO-OP
OPERATIVE
VE MILK PRODUCE
P
ERS’ UNIO
ON LTD.,
'
'
'
D# F $
'
EF
'
'
'
'
'
'
'
'
'
'
'
'
'
C D
( )) *
- ./
+
+
,
*
** --
0 *1
211 3 - *
.
1 )4 5 5
The Gross Prof
rofit margin
in reflects th
the efficien
ency with which
w
unio
ion
pr
produces
milk
mi and the
he milk prod
oducts the ratio
ra
indicat
cates the ave
verage sprea
ead
be
between
thee cost of goo
oods sold an
and the sales
es revenue.. T
The gross profit
p
margi
rgin
10 percent
100
nt that can be obtainingg the ratio of goods sold
old to sales.. A high gros
oss
pr
profit
margin
gin relative to the produc
uction averag
rage impliess that
t the uni
nion is ablee tto
pr
produce
att relatively
re
lo
lower or high
igher cost. A high gross
ss profit marg
argin ratio is a
si of good
sign
od manageme
ment. The low gross pro
rofit margin
in may reflect
ect higher cos
ost
of goods sold
so due too the Tiruch
chirappalli milk
m
produc
ucers’ unionn inability to
t
pu
purchase
at favorablee items,
i
ineff
efficient utili
ilization of pplant and machinery
m
oor
ov investm
over
tment in plan
ant and mach
chinery result
ulting in high
gher cost off pproduction.
157
Table.3.17 - NET PROFIT RATIO IN TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LTD.,
Amount in Rupees
Year
Net profit
Sales
Ratio/Result
1997-1998
1922136
486196683
0.39%
1998-1999
9321452
644536776
- 1.45%
1999-2000
4318870
735622628
- 0.59%
2000-2001
14249262
793630316
1.79%
2001-2002
5040331
829023133
0.61%
2002-2003
19128634
831222267
-2.30%
2003-2004
7580419
982396974
0.77%
2004-2005
84760511
1197192193
7.07%
2005-2006
95946601
1272877213
-7.53%
2006-2007
4841761
1347582360
0.36%
2007-2008
71060473
1513234408
4.69%
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION Limited
from 1997-1998 to 2007-2008
158
Fig.3.36 NET PROFIT RATIO OF TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION LTD.,
'
'
'
'
'
'
AB
'
0
'
'
'
'
0
'
0
0
0
'
0
'
0
'
0
'
'
'
'
0
'
'
0
)DC D%
' 0
0
0
0
0
'
0
0
' 0
0
'
0
' 0
0
0
0
'
'
D
Net profit ratio indicates the Tiruchirappalli district milk producers’
union capacity to withstand adverse financial conditions. Net profit ration
margin establish a relation between net profit and sales and it is indicate
management’s efficiency in manufacturing, administrating and selling the
products. This ratio is the overall measure of the union’s ability to turn each
rupee sales into the net profit. If the net margin is inadequate the milk
producers’ union failed to achieve satisfactory return on equity.
159
Fig.3.37 COMPARISON OF GROSS PROFIT AND NET PROFIT
RATIO OF TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD
'
'
'
'
'
'
D# F $
'
'
'
'
'
'
'
'
'
'
0
'
0
'
0
'
0
'
0
0
'
0
'
'
'
'
'
0
'
0
0
(C %% *C 6 F
'
5DF *C 6 F
' 0
'
'
0
0
'
0
'
0
0
0
'
'
'
' 0
'
'
'
'
0
'
0
'
0
'
'
'
' 0
0
0
'
'
'
'
'
These ratios are based on the fact that a firm should earn sufficient profit
on each rupee of sales. If adequate profits are not earned on sales there will be
difficulty in meeting the operating expenses and no return will be available to
the owners. The gross profit ratio indicates the extent to which selling prices of
milk and milk products decline without resulting in loses of the operation of the
union has procurement of the milk from their members. The gross profit (GP)
reflects the efficiency with which the management purchases each unit of a
product. The union net-profit (NP) ratio establishes a relationship between net
profit and sales which indicates the poor management’s efficiency in procuring,
administering and selling the products.
160
Gross Profit
Gross Profit Ratio = -----------------------------------------------------x 100
Sales
Net Profit
Net Profit Ratio =----------------------------------------------------------- x 100
Sales
From Table 3.16 and figure 3.35 it is clear that in general the sales trend
is increasing due to growing demand for milk from the organized sector. The
gross profit ratio during the study period is highly fluctuating. The Gross profit
ratio indicates the inefficiency of the union in terms of sales during 2003
to2006 which has been shown in figure 3.35 as it was inadequate to cover the
operating expenses (administration and office expenses, selling and distribution
expenses) and provision for fixed charges. The Gross profit ratio during the
1997-1998, 2003-04 and 2007-08 of the study period indicates the improved
efficiency of the union. Table 3.17 and figure 3.36 shows a negative net profit
ratio during 1998-1999, 1999-2000, 2002-2003 and 2005-2006 of the study
period. The reason for the loss was high establishment, administration, interest
and processing cost. From figure 3.37 the gross profit and net profit ratios
indicate that the union should make effective cost management and cost control
technique so that the Tiruchirappalli District Co-operative Milk Producer’s
Union Limited may sustain and grow in the longer run.
161
Table 3.18 - STAFF COST TO TOTAL COST RATIO OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD
Amount in Rupees
Year
Staff Cost
Total
Cost
Ratio/Result
1997-1998
4567897
453869558
1.01%
1998-1999
5678456
633609296
0.896%
1999-2000
7890567
709338112
1.112%
2000-2001
9876345
765180569
1.290%
2001-2002
12345345
804710033
1.53%
2002-2003
23434563
821917484
2.85%
2003-2004
23467867
981512468
2.39%
2004-2005
29568734
1186313951
2.49%
2005-2006
31537581
1354949371
2.32%
2006-2007
38123456
1318238045
2.89%
2007-2008
44726233
1497673097
2.98%
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS UNION Limited from
1997-1998 to 2007-2008
162
Fig.3.38
Fi
STA
TAFF COST
ST TO TOT
TAL COST
T RATIO OF
O
TIR
RUCHIRAP
PPALLI DI
DISTRICT CO-OPER
C
RATIVE MILK
M
PRODUC
CERS’ UNIION LTD.,
'
'
'
EF % D# F $
'
'
'
'
'
'
'
'
'
'
'
'
'
'
'
C D
T
Table
3.18 and
a figure 3.38
3
state th
that the perc
rcentage off sstaff Cost in Total Cos
ost.
In an annual
al report sala
alaries and w
wages are given
gi
togethe
ther but abou
out 70 to 75%
5%
of these wag
ages related
ed to purchas
hasing, storin
ring and proc
rocessing off milk thatt iis
ge
general
opin
inion of thee eexpert. As far
f as salarie
ries and wag
ages is conce
cerned theree iis
so
some
scope
pe for reduc
duction of ssuch expen
enses witho
hout harming
ing deservin
ing
em
employees.
Tiruchirapp
ppalli Distri
trict Milk Producers
Pr
U
Union Ltd successfull
ully
co
controlled
salary
sa
and wages
w
in thee year 1998--1999 amon
ong the study
dy period.
163
Table.3.19 MANUFACTURING COST TO TOTAL COST RATIO OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD.,
Amount in Rupees
Year
Manufacturing
Cost
Total
Cost
Ratio/Result
1997-1998
384912390
453869558
84.81%
1998-1999
555894097
633609296
87.73%
1999-2000
603755511
709338112
85.12%
2000-2001
633106519
765180569
82.13%
2001-2002
636666246
804710033
79.12%
2002-2003
650893126
821917484
79.19%
2003-2004
805134457
981512468
82.02%
2004-2005
996063871
1186313951
83.96%
2005-2006
1044288511
1354949371
77.07%
2006-2007
1063922701
1318238045
80.70%
2007-2008
1233763603
1497673097
82.37%
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION Limited from
1997-1998 to 2007-2008
164
Fig.3.39 MANUFACTURING COST TO TOTAL COST RATIO OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD.,
'
'
'
D# F $
F
'
'
'
'
'
'
'
'
'
'
'
'
)DC D%
'
'
'
'
C D
Table 3.19 and figure 3.39 state that the percentage of manufacturing
cost against Total Cost. Out of eleven years most of the time the milk
procurement, storing and processing expenses was 80% and above of the total
input. Only in three years (2001-2002, 2002-2003 and 2005-2006) it was less
than 80%. Hence the Trichy District Milk Producers Union Ltd should make
use of efficient cost management policy to control the Manufacturing cost to
increase the profitability.
165
Table 3.20 - OFFICE AND ADMINISTRATIVE COST TO TOTAL
COST RATIO OF TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE
MILK PRODUCERS’ UNION LTD
Amount in Rupees
Year
Office and
administration
Expenses Amount
Total
Cost
Ratio/Result
1997-1998
1425193
453869558
0.31%
1998-1999
2824997
633609296
0.45%
1999-2000
3002589
709338112
0.42%
2000-2001
3472825
765180569
0.45%
2001-2002
3485270
804710033
0.43%
2002-2003
3510738
821917484
0.43%
2003-2004
3651392
981512468
0.37%
2004-2005
3701173
1186313951
0.31%
2005-2006
3827556
1354949371
0.28%
2006-2007
3958206
1318238045
0.30%
2007-2008
4068354
1497673097
0.27%
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS, UNION Limited from
1997-1998 to 2007-2008
166
Fig. 3.400 ADMINIS
ISTRATION
N COST TO TOTAL
L COST RA
ATIO OF
TIR
RUCHIRAP
PPALLI DI
DISTRICT CO-OPER
C
RATIVE MILK
M
PRODUC
CERS’ UNI
NION LTD
'
'
'
'
'
'
'
'
EF % D# F $
'
'
'
'
'
'
'
'
'
'
'
'
'
C D
T
Table
3.20
0 and
a figure
re 3.40 state
te that the ppercentagee oof Adminis
nistration cos
cost
ag
against
Tota
tal Cost. Adm
dministration
ion or genera
eral expenses
es can be controlled
co
and
an
re
reduced
to some
s
exten
ent to increa
ease profitab
ability. Durin
ring 1998-19
1999 to 2002
0220 the adm
2003
dministration
ion cost wass more thann 40% and rest
re of thee yyear the cos
ost
w ranges in between 25
was
2 percentt tto 35 perce
cent.
167
Fig. 3.21 INTEREST COST TO TOTAL COST RATIO OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD
Amount in Rupees
Year
Interest Cost
Total
Cost
Ratio/Result
1997-1998
6646011
453869558
1.56%
1998-1999
7845085
633609296
1.23%
1999-2000
9354873
709338112
1.31%
2000-2001
12706304
765180569
1.66%
2001-2002
12239379
804710033
1.52%
2002-2003
11169175
821917484
1.36%
2003-2004
12238076
981512468
1.24%
2004-2005
14482109
1186313951
1.22%
2005-2006
14624583
1354949371
1.08%
2006-2007
15237272
1318238045
1.15%
2007-2008
16152968
1497673097
1.08%
Source: Annual reports of TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION Limited from
1997-1998 to 2007-2008
168
Fig
ig 3.41 INTE
EREST CO
OST TO TO
OTAL COS
ST RATIO
O OF
TIR
RUCHIRAP
PPALLI DI
DISTRICT CO-OPER
C
RATIVE MILK
M
PRODUC
CERS’ UNI
NION LTD
'
'
EF % D# F $
'
'
'
'
'
'
'
'
'
'
'
'
'
'
'
'
'
C D
Table
le 3.21 and
d figure 3.4
.41 state tha
hat the perce
rcentage off Interest
I
cos
cost
ag
against
Total
tal Cost. Exis
xistence of In
Interest deno
notes unavoid
oidable borro
rowed fundd to
t
ca busines
carry
ness. The larg
rger the borr
rrowed fundd more will
ll bbe the expe
penditure afte
fter
in
interest
and
d lower will
ill be the prof
rofitability. Interest
In
expe
penditure is unavoidabl
ble
du to highe
due
her volume of business.
s. In the initia
itial year it is in increasin
sing trend an
and
la it wass decreased.
later
d. Economic
ic use of borrowed
bo
fun
und leads to decrease in
i
in
interest
expe
penditure. This
Th industry
ry should red
educe borrow
owed fund and
an also mak
ake
ef
efficient
uti
tilization of fund ther
ere by curb
rb interestt eexpenditure
re and mak
ake
pr
progress
in profitability
p
ity.
169
Table 3.22 TRADE COST TO TOTAL COST RATIO OF
TIRUCHIRAPPALLI DISTRICT CO-OPERATIVE MILK
PRODUCERS’ UNION LTD
Amount in Rupees
Year
Trade Cost
Amount
Total Cost
Amount
Ratio/Result
1997-1998
5795859
453869558
1.27%
1998-1999
6357038
633609296
1.01%
1999-2000
8321447
709338112
1.17%
2000-2001
8441047
765180569
1.10%
2001-2002
9060095
804710033
1.12%
2002-2003
10176062
821917484
1.24%
2003-2004
10338461
981512468
1.05%
2004-2005
10450781
1186313951
0.88%
2005-2006
12350781
1354949371
0.97%
2006-2007
13012581
1318238045
0.98%
2007-2008
14012831
1497673097
0.94%
Source: Annual reports of Tiruchirappalli District Co-operative
milk producers’ union Limited from 1997-1998 to 2007-2008
170
Fig
Fi 3.42 TRA
RADE COST
ST TO TOT
TAL COST
T RATIO OF
O
TIR
RUCHIRAP
PPALLI DI
DISTRICT CO-OPER
C
RATIVE MILK
M
PRODUC
CERS’ UNI
NION LTD
'
EF % D# F $
'
'
'
'
'
'
'
'
'
'
'
'
'
'
'
'
'
'
C D
Table
le 3.22 and figure
fi
3.422 sstate that the
th percentag
tage of Trade
de cost agains
inst
T
Total
Cost. Trade
T
expe
penses can be controlled
led and reduc
uced to grea
eater extentt to
t
in
increase
prof
rofitability. First
F
Seven years trade
de expensess are higherr compared
c
d tto
laast four year
ears.
171
TABLE 3.23SALES IN LITERS OF THE TIRUCHIRAPPALLI
DISTRICT MILK PRODUCERS UNION LIMITED
Month
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
April
62632
78044
80199
84937
83100
72064
72361
76629
81830
91706
98163
May
62883
78881
80727
85368
81838
72039
72026
73434
81453
90122
97804
June
71146
83076
81467
86940
82964
73083
73578
74865
82157
92506
98644
July
72834
82810
81847
82782
82935
72717
73241
75175
82120
91645
100284
August
75189
82981
83317
81214
82143
73443
73421
78438
84758
93848
102496
Sept
76218
79770
84524
80940
82466
74915
81821
78200
84137
93412
102598
Oct
76686
78713
82459
81248
80491
72406
71790
76268
83281
93484
104482
Nov
77128
79161
76537
80369
79360
70520
70139
77207
83177
94995
104655
Dec
78626
77891
77848
80921
71994
70509
70531
78823
85018
95933
104746
Jan
79121
77486
81121
81874
70561
70290
71446
81094
85802
98313
109225
Feb
79662
80293
83784
83059
71810
72279
75082
83102
88522
102729
109336
March
80862
81325
84939
84187
72325
73445
75433
84026
90560
100045
112016
Total
892987
960431
978787
993839
941987
867710
883869
937261
1012815
1138738
1244449
Average
74415
80036
81564
82820
78499
72309
73656
78105
84401
94895
103704
Source: Annual report of Tiruchirappalli district Co-operative Milk producers’
Union limited
The above table 3.23 shows the original data of the sale values (in liters)
Tiruchirappalli co-operatives milk producers union limited for the period 19971998 to 2007-2008. It indicates the monthly wise sales position in liters for the
period of April to March in the union. In the year 2000-2001 is maximum
amount of sale (993839) in liters which is gradually decreased during the
period 2001-2002, 2002-2003, 2003-2004 and 2004-2005. But from the year
2005-2006 to 2007-2008 it is gradually increased to 145923 liters.
172
The lowest sales values of the union is 70139 liters in month of
November 2003 and the highest sales values of 112016 liters in the month of
March 2008 of Tiruchirappalli district milk producers’ union limited. It also
indicates union has not been continuously maintained the adequate sales
strategies and sales techniques in the study period.
CORRELATION ANALYSIS BETWEEN THE PROCUREMENT AND
SALES VALUES OF MILK IN TIRUCHIRAPPALLI DISTRICT
CO-OPERATIVE MILK PRODUCERS’ UNION LIMITED
In order to ascertain the relationship of the correlation in between the
procurement and sales values for the study periods from 1997- 1998 to 20072008 Tiruchirappalli district co-operative milk producers’ union limited has
been applied Pearson’s correlation coefficient method of formula.
Where ‘r’ refers to Karl pearson’s correlation efficient of the variables.
‘dx’ refers to deviations of X series from an assumed mean. ‘dy’ refers to the
deviation of Y series from an assumed mean.
x
=
sum of the deviations of x series from an assumed mean.
y
=
sum of the deviation of y series form an assumed mean
x2
=
y2
=
xy
=
sum of the squares of the deviations of x series from an
assumed mean.
sum of the squares of the deviations of y series from an
assumed mean.
sum of the product of the deviation of x and y series from
their assumed means.
173
TABLE 3.24 CORRELATIONS BETWEEN THE PROCUREMENT
AND SALES VALUES (IN LITERS) OF MILK IN TIRUCHIRAPPALLI
DISTRICT CO-OPERATIVE MILK PRODUCERS’ UNION LIMITED
Year
Variable of
‘X’
procureme
nt of milk
Rs.
In lakhs
x
x2
Variable
of ‘Y’
sales of
milk Rs.
In lakhs
y
y2
xy
1997-1998
3849.12
-4244.25
18013742.94
4861.96
-5135.19
26370176.33
21795030.15
1998-1999
5558.94
-2534.43
6423335.42
6445.67
-3551.48
12613010.19
9000977.45
1999-2000
6037.55
-2055.82
4226395.87
7556.26
-2645.89
7000733.89
5439473.57
2000-2001
6331.06
-1762.31
3105736.53
7436.30
-2560.85
6557952.72
4513011.56
2001-2002
6366.66
-1726.71
2981527.42
8290.23
-1706.92
2913575.88
2947355.83
2002-2003
6508.93
-1584.44
2510450.11
8312.22
-1684.93
2838989.10
2669670.48
2003-2004
8051.34
-42.03
1789.29
9823.46
-173.69
29929.01
7300.19
2004-2005
9960.63
1867.26
3486659.90
11971.92
1974.77
38997116.55
3687409.03
2005-2006
10442.88
2349.51
5520197.24
12728.77
2731.62
7461747.82
6417968.50
2006-2007
10639.22
2545.85
6481352.22
13475.82
3478.37
12099057.85
8855408.26
2007-2008
12337.63
4244.25
18013742.94
15132.34
5135.19
26370176.33
21795030.15
X=
86083.96
x=
-2943.13
x2=
70764927.21
Y=
97391.59
y=
-4136.23
y2=
131900760
xy=
83809631
Source: Annual Reports of Tiruchirappalli District Co-operative milk
producers’ union Limited.
174
82703063
r
=
8365.26 x 10714.20
82703063
r
=
89627068.69
r
=
0.922746489
The above table 3.24 reveals the Karl Pearson’s correlation analysis in
between the total procurement value and sales value from the study period, and
shows the high positive correlation at +0.922746489; during the study period
from 1997- 1998 to 2007- 2008 in Tiruchirappalli district co-operative milk
producers’ union limited. In which the results indicate the positive relation
between the two variables (procurement and sales) in the study period.
175
3.4
STRUCTURAL
PERFORMANCE
EQUATION
OF
REGRESSION
MODEL
TIRUCHIRAPPALLI
FOR
DISTRICT
COOPERATIVE MILK PRODUCERS’ UNION LIMITED
In hierarchical regression, the predictor variables are entered in sets
of variables according to a pre-determined order that may infer some causal
or potentially mediating relationships between the predictors and the
dependent variable (Francis, 2003). Such situations are must required in
social sciences. The logic involved in hypothesizing mediating relationships
is that “the independent variable influences the mediator which, in turn,
influences the outcome” (Holmbeck, 1997). However, an important precondition for examining mediated relationships is that the independent
variable is significantly associated with the dependent variable prior to
testing any model for mediating variables (Holmbeck, 1997). The extent to
which the introduction of the hypothesis mediated variable reduces the
magnitude of any direct influence of the independent variable on the
dependent variable. Hence the researcher empirically tested the hierarchical
regression for the model conceptualized in the figure 3.43, with in the
AMOS graphics environment. The path diagram for the hypothesized
mediated model is given in the
path diagram. The analyses conducted by
the parameter estimates are then viewed within AMOS graphics. Figure 3.43
displays the standardized parameter estimates.
176
Fig 3.43 STRUCTURAL EQUATION REGRESSION MODEL FOR
OVERALL PERFORMANCE OF TIRUCHIRAPPALLI DISTRICT
COOPERATIVE MILK PRODUCERS’ UNION LIMITED
DCMPU - PERF MODEL
DIMENSIONS: PF- PROFIT, SUB- SUBSIDY, SA-SALES (BUSINESS INCOME), TD-TOTAL
DEBT, TI-TOTAL NON BUSINESS INCOME, TC –TOTAL COST,
SF-SAREHOLDERS’FUND
177
The figure 3.43 standardized parameter estimates for mediated model
explains the existing relationships between the mediating factor Total cost and
Shareholders fund. R2 Value -.17stated that the mediating factor, Total Cost.
The visual representation of the results suggests that the relationship between
various dimensions of overall performance of Tiruchirappalli District
cooperative milk producers union limited and mediated factor. The Profit
=0.35, followed by subsidy = .18, Sales (Business Income) = -.18, Total Debt =
1.59, and Non Business Income = 6.77. R2 Value = .17 for mediating factor.
The Profit, Subsidy, Sales resulted significant impact on mediated factor Total
Cost. Total Debt and Non Business Income are not significant on mediated
factor. This model represents Tiruchirappalli District cooperative milk
producers union limited should concentrate more on controlling Total cost,
besides concentrating on profit, subsidy, sales, total debt and Non business
Income for increasing shareholders fund. R2 value .17 states that the Total cost
is a mediating factor. Tiruchirappalli District milk cooperative producers union
limited should make efficient use of cost management strategy for their growth
of their business. The researcher concludes that the total cost is a mediating
factor which determines the performance of Tiruchirappalli District milk
cooperative producers union limited which is scientifically proved by the
researcher with the help of the above (Fig 3.43) structural equation model.
Hence milk cooperative producers union limited should adopt effective Total
Cost management strategy for their growth of their business as a part of
economic development of our nation.
178
POSTERIOR DIAGNOSTIC PLOTS OF DCMPU - PERF MEDIATED
REGRESSION MODEL
To check the convergence of Bayesian MCMC method the posterior
diagnostic plots are analyzed. The following figure (Figures.3.44) shows the
polygon distribution for the mediating dimension with other dimension across
the 50,000 samples.. The Bayesian MCMC is diagnostic plot reveals how the
normality of all figures achieved, so the structural equation model fit is
accurately estimated.
3.44 Posterior frequency polygon distribution of the Total Cost and
Share -holders Fund
179
To determine how long it takes for the correlation among the samples to
die down, autocorrelation plot which is the estimated correlation between the
sampled value at any iteration and the sampled value k iterations later for k =
1,2,3,….is analyzed for DCMPU - PERF. The figure 3.45 shows the
correlation plot of the DCMPU - PERF for the mediated factor of COST with
other dimensions across 50,000 samples. The figures exhibits that the lag 35
and beyond, the correlation is effectively 0. This indicated that by 80 iterations,
the MCMC procedure has essentially forgotten its starting position. Forgetting
the starting position is equivalent to convergence in distribution. Hence, it is
ensured that convergence in distribution is attained, and that the analysis
samples are indeed samples from the true posterior distribution.
FIG 3.45 - Posterior correlation plot of the DCMPU - PERF Model
regression model for the mediated factor Total Cost and Share holders Fund
180
To check the convergence of Bayesian MCMC method the posterior
diagnostic Trace plots are analyzed. The trace plot also called as time-series
plot shows the sampled values of a parameter over time. This plot helps to
judge how quickly the MCMC procedure converges in distribution. The
following figure (Figures.3.46) shows the Trace Plots for the mediating
dimension with other dimension across the 50,000 samples. The figure
exhibits rapid up-and-down variation with no long-term trends or drifts. If
we mentally break up this plot into a few horizontal sections, the trace
within any section would not look much different from the trace in any other
section. This indicates that the convergence in distribution takes place
rapidly. The Bayesian MCMC is diagnostic plot that reveals how normality for
all the figures the normality is achieved, so the structural equation model fit is
accurately estimated.
Fig – 3.46 Posterior trace plot of the DCMPU - PERF regression model for
the mediated factor Total Cost and Shareholders Fund
181
Even though marginal posterior distributions are very important, it
does not reveal relationships that may exist among the two parameters.
Hence to visualize the relationships among pairs of Parameters in three
dimensional the following figures(figure 3.47) provides bivariate marginal
posterior plots of the DCMPU - PERF model for the mediated factor Total
Cost with other dimensions across 60000 samples. From the three figures it
reveals that the three dimensional surface plots also signifies the
interrelationship between the mediating variable Total Cost with the other
dimensions
3.47 Three-dimensional surface plot of the marginal posterior distribution of
the mediating factor Total Cost with the SF
182
The following figures (figure 3.48) displays the two-dimensional plot of
the bivariate posterior density across 50 000 samples. The following figure
(Figures3.48) shows the two-dimensional plot of the bivariate posterior for the
mediating dimension with other dimension across the 50,000 samples. The
figure reveals that the sample responses are normally distributed.
Fig 3.48 - Two-dimensional plot of the bivariate posterior density for the
regression weights TC to SF
183
The research model DCMPU - PERF, while many management scientists are
most familiar with the estimation of these models using software (e.g.,
LISREL, AMOS), The researcher adopt Bayesian approach for estimation and
inference in AMOS 16.0 environment. The table 3.23 shows the Bayesian
convergence distribution of DCMPU - PERF mediated regression model. In
this research, the researcher has adopted for the procedure of assessing
convergence of MCMC (Markov Chain Monte Carlo) algorithm of maximum
likelihood. To estimate the MCMC convergence, the researcher adopted two
methods namely, convergence in distribution, convergence of posterior
summaries. The values of posterior mean accurately estimate the DCMPU -
PERF Cost mediated SEM model. From the above table the highest value of
Convergence Statistics (C.S) is 1.00 which is less than the 1.002 conservative
measures (Gelman et al, 2004).
184
TABLE 3.25 - BAYESIAN CONVERGENCE DISTRIBUTION OF DCMPU - PERF MEDIATED
REGRESSION MODEL
A
A
B C
DD
EF
DD
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DIMENSIONS: PF- PROFIT, SUB- SUBSIDY, SA-SALES (BUSINESS INCOME), TD-TOTAL DEBT, TI-TOTAL NON BUSINESS INCOME,
TC –TOTAL COST, - SF-SAREHOLDERS’FUND
187
3.4.1 INTEREST – SALES MEDIATED REGRESSION MODEL OF
TRICHIRAPPALLI DT CO-OP., MILK PRODUCERS’ UNION LTD
FIG 3.49- INT - SA MODEL MEDIATED REGRESSON MODEL OF
TRICHIRAPPALLI DT CO-OP., MILK PRODUCERS’ UNION LTD.
Dimensions: MFC-MANUFACTURING COST, STAFF COST OR
SALARY COST, AC- ADMINISTRATION COST, TRADE COST,
SA-SALES, IRP – INTEREST COST.
188
The figure 3.49 standardized parameter estimates for mediated model
explains the existing relationships between the mediating factor Interest cost
and Sales. R2 Value -.39 stated that the mediating factor is interest. The visual
representation of the results suggest that the relationship between dimensions
of cost and mediated factor. The Manufacturing cost =0.00, followed by staff
cost = -.01, Administration cost = 1.62, Trade cost = .77 R2 Value -.39 for
mediating factors. The Manufacturing cost, Staff Cost, Trade cost resulted
significant impact on mediated factor, Interest. Administration cost is not
significant on mediated factor. This model represents Tiruchirappalli District
cooperative milk producers union limited may concentrate more on controlling
Interest , besides concentrating on Manufacturing Cost, Power and Fuel Cost,
Other Administration Cost, and Selling Costs for reporting reasonable Business
Income(Sales).The key cost factor to be controlled is Interest Expenses as
otherwise the companies are in maximum likelihood report negative results.
189
POSTERIOR DIAGNOSTIC PLOTS OF DCTU - PERF MEDIATED
REGRESSION MODEL (Interest and Sales)
To check the convergence of Bayesian MCMC method the posterior
diagnostic plots are analyzed. The following figure (Figures3.50) shows the
polygon distribution for the mediating dimension with other dimension across
the 50,000 samples. The Bayesian MCMC is diagnostic plot reveals that for all
the figures the normality is achieved, so the structural equation model fit is
accurately estimated.
Fig 3.50 - Posterior frequency polygon distribution of the Interest and
Sales
190
To determine how long it takes for the correlation among the samples to
die down, autocorrelation plot which is the estimated correlation between the
sampled value at any iteration and the sampled value k iterations later for k =
1,2,3,….is analyzed for INT - SA. The figure 3.51 shows the correlation plot of
the INT - SA for the mediated factor of interest with other dimensions across
50,000 samples. The figures exhibits that the lag 35 and beyond, the correlation
is effectively 0. This indicated that by 80 iterations, the MCMC procedure has
essentially forgotten its starting position. Forgetting starting position is
equivalent to convergence in distribution. Hence, it is ensured that convergence
in distribution is attained, and that the analysis samples are indeed samples
from the true posterior distribution.
Fig 3.51 - Posterior correlation plot of the INT-SA Model regression
model for the mediated factor
191
To check the convergence of Bayesian MCMC method the posterior
diagnostic Trace plots are analyzed. The trace plot also called as time-series
plot shows the sampled values of a parameter over time. This plot helps to
judge how quickly the MCMC procedure converges in distribution. The
following figure (Figures.4.52) shows the Trace Plots for the mediating
dimension with other dimension across the 50,000 samples. The figure
exhibits rapid up-and-down variation with long-term trends or drifts. If we
mentally break up this plot into a few horizontal sections, the trace within
any section would not look much different from the trace in any other
section. This indicates that the convergence in distribution takes place
rapidly. The Bayesian MCMC is diagnostic plot reveals that for all the figures
the normality is achieved, so the structural equation model fit is accurately
estimated.
Fig 3.52 - Posterior trace plot of the INT-SA regression model for
the mediated factor Interest and Sales
192
Even though marginal posterior distributions are very important, they
do not reveal relationships that may exist among the two parameters. Hence
to visualize the relationships among pairs of Parameters in three
dimensional the following figures(figure 3.53) provides bivariate marginal
posterior plots of the INT - SA model for the mediated factor Interest with
other dimensions across 60000 samples. From the three figures it reveals
that the three dimensional surface plots also signifies the interrelationship
between the mediating variable Stock with the other dimensions
3.53Three-dimensional surface plot of the marginal posterior distribution
of the mediating factor Interest with the Sales
193
The following figures (figure 3.54) displays the two-dimensional plot of
the bivariate posterior density across 50 000 samples. The following figure
(Figures.3.54) shows the two-dimensional plot of the bivariate posterior for the
mediating dimension with other dimension across the 50,000 samples. The
figure reveals that the sample responses are normally distributed.
3.54 - Two-dimensional plot of the bivariate posterior density for the
regression weights Interest and Sales
194
The research model INT-SA, many management scientists are most
familiar with the estimation of these models used it for analysis purposes (e.g.,
LISREL, AMOS). The researcher adopts Bayesian approach for estimation and
inference in AMOS 16.0 environment. Since offers numerous methodological
and substantive advantages over alternative approaches. The table 3.24 shows
the Bayesian convergence distribution of INT-SA mediated regression model.
In this research, the researcher has adopted for the procedure of assessing
convergence of MCMC (Markov Chain Monte Carlo) algorithm of maximum
likelihood. To estimate the MCMC convergence, the researcher adopted two
methods namely, convergence in distribution, convergence of posterior
summaries. The value of posterior means accurately estimate the INT-SA
mediated SEM model. From the above table the highest value of Convergence
Statistics (C.S) is 1.00 which is less than the 1.002 conservative measures.
195
Table 3.26 - BAYESIAN CONVERGENCE DISTRIBUTION OF INT-SA MEDIATED REGRESSION MODEL
A
DD
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196
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197
CCABBD
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F
3.4.2 RECEIVABLES MANAGEMENT – SALES MEDIATED
REGRESSON MODEL OF TRICHIRAPPALLI DT CO-OP., MILK
PRODUCERS’ UNION LTD.
FIG 3.55 - RM -SA MODEL MEDIATED REGRESSON MODEL OF
TRICHIRAPPALLI DT CO-OP., MILK PRODUCERS’ UNION LTD.
DIMENSIONS: LB- LAND & BUILDINGS, PM- PLANT & MACHINERY,
FUR-FURNITURE, SD- SUNDRY DEBTORS, CASH, ST- STOCK, SA-SALES
198
The figure 3.55 standardized parameter estimates for mediated model
explains the existing relationships between the mediating factor Sundry
Debtors and Sales. R2 Value .42 stated that the mediating factor Debtors. The
visual representation of the results suggest that the relationship between
dimensions of Asset and mediated factor. R2 Value .42 for mediating factor.
This model represents Tiruchirappalli District cooperative milk producers
union limited may concentrate more on Receivable Management, besides
concentrating on cash management, inventory management and fixed asset
Management for reporting reasonable Business Income (Sales). Hence the
Tiruchirappalli District cooperative milk producers union limited should
concentrate on effective receivable management technique to increase the
profitability through sales.
199
POSTERIOR DIAGNOSTIC PLOTS OF DCTU - PERF MEDIATED
REGRESSION MODEL (RM –SA)
To check the convergence of Bayesian MCMC method the posterior
diagnostic plots are analyzed. The following figure (Figures.3.56) shows the
polygon distribution for the mediating dimension with other dimension across
the 50,000 samples. The Bayesian MCMC is diagnostic plot reveals that for
achieving the normality for all the figures the structural equation model fit is
accurately estimated.
Fig 3.56 - Posterior frequency polygon distribution of the Receivables
management and Sales
200
To determine how long it takes for the correlation among the samples to
die down, autocorrelation plot which is the estimated correlation between the
sampled value at any iteration and the sampled value k iterations later for k =
1,2,3,….is analyzed for RM - SA model. The figure 3.57 shows the correlation
plot of the RM-SA for the mediated factor of Sundry Debtors with other
dimensions across 50,000 samples. The figures exhibits that the lag 35 and
beyond, the correlation is effectively 0. This indicated that by 80 iterations, the
MCMC procedure has essentially forgotten its starting position. Forgetting
starting position is equivalent to convergence in distribution. Hence, it is
ensured that convergence in distribution is attained, and that the analysis
samples are indeed samples from the true posterior distribution.
Fig 3.57 - Posterior correlation plot of the RM -SA Model regression
model for the mediated factor
201
To check the convergence of Bayesian MCMC method the posterior
diagnostic Trace plots are analyzed. The trace plot also called as time-series
plot shows the sampled values of a parameter over time. This plot helps to
judge how quickly the MCMC procedure converges in distribution. The
following figure (Figures.3.58) shows the Trace Plots for the mediating
dimension with other dimension across the 50,000 samples. The figure not
exhibits rapid up-and-down variation with long-term trends or drifts. If we
mentally break up this plot into a few horizontal sections, the trace within
any section would not look much different from the trace in any other
section. This indicates that the convergence in distribution takes place
rapidly. The Bayesian MCMC is diagnostic plot reveals that for all the figures
the normality is achieved, so the structural equation model fit is accurately
estimated.
Fig 3.58 - Posterior trace plot of the RM -SA regression model for the
mediated factor Inventory and Sales
A B
B
B
B
B
CDA EDF
202
Even though marginal posterior distributions are very important, they
do not reveal relationships that may exist among the two parameters. Hence
to visualize the relationships among pairs of Parameters in three
dimensional the following figures(figure 3.59 and figure 3.60) provides
bivariate marginal posterior plots of the
RM-SA model for the mediated
factor Sundry Debtors with other dimensions across 50000 samples. From
the three figures it reveals that the three dimensional surface plots also
signifies the interrelationship between the mediating variable Debtors with
the other dimensions.
203
Fig 3.59 and Fig 3.60 - Three-dimensional surface plot of the marginal
posterior distribution of the mediating factor Sundry Debtors with the sales
204
The following figures (figure 3.61) displays the two-dimensional plot of
the bivariate posterior density across 50 000 samples. The following figure
(Figures.3.61) shows the two-dimensional plot of the bivariate posterior for the
mediating dimension with other dimension across the 50,000 samples. The
figure reveals that the sample responses are normally distributed.
Fig 3.61 - Two-dimensional plot of the bivariate posterior density for the
regression weights sundry debtors and Sales.
205
The research model RM -SA, while many management scientists are
most familiar with the estimation of these. (e.g., LISREL, AMOS), the
researcher adopts Bayesian approach for estimation and inference in AMOS
16.0 environment. Since it offer numerous methodological and substantive
advantages over alternative approaches. The table 3.25 shows the Bayesian
convergence distribution of RM - SA mediated regression model. In this
research, the researcher has adopted for the procedure of assessing convergence
of MCMC (Markov Chain Monte Carlo) algorithm of maximum likelihood. To
estimate the MCMC convergence, the researcher adopted two methods namely,
convergence in distribution, convergence of posterior summaries. The value of
posterior means accurately estimate the RM -SA mediated SEM model. From
the above table the highest value of Convergence Statistics (C.S) is 1.00 which
is less than the 1.002 conservative measures (Gelman et al, 2004).
206
TABLE 3.27-BAYESIAN CONVERGENCE DISTRIBUTION OF RM -SA MEDIATED REGRESSION
MODEL
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DIMENSIONS: LB- LAND & BUILDINGS, PM- PLANT & MACHINERY, FUR-FURNITURE, SD- SUNDRY
DEBTORS, CASH, ST- STOCK, SA-SALES
208
3.5 HYPOTHESES VERIFICATION
3.5.1 HYPOTHESES VERIFICATION OF OVERALL PERFORMCE OF
TIRUCHIRAPPALLI DISTRICT COOPERATIVE MILK PRODUCERS
UNION LTD
REGRESSION MODEL RESULTS FOR OVERALL PERFORMANCE
OF THE TIRUCHIRAPPALLI DISTRICT COOPERATIVE MILK
PRODUCERS UNION LIMITED (DCMPU - PERF MODEL) (See
figure 3.43)
Standardized parameter estimates for mediated model explains the
existing relationships between the mediating factor Total cost and Shareholders
fund. R2 Value -.17 stated that the mediating factors Total Cost. The Profit
0.35, followed by subsidy .18, Sales (Business Income) -.18, Total Debt = 1.59,
and Non Business Income = 6.77. R2 Value = .17 for mediating factor. The
Profit 0.35, followed by subsidy .18, Sales (Business Income) -.18 resulted
significant impact on mediated factor, Interest. Total Debt 1.59 & Non
Business Income 6.77 is not significant. This model represents Tiruchirappalli
District cooperative milk producers union limited should concentrate more on
controlling Total cost, besides concentrating on profit, subsidy, sales, total debt
and Non business Income for increasing shareholders fund. R2 value .17 states
that the Total cost is a mediating factor. Tiruchirappalli District milk
cooperative producers union limited should make efficient use of cost
management strategy for the growth of their business. The researcher has
empirically analyzed the objectives with the help of hypotheses Sand statistical
tools for the study. The study reveals that the conceptual research models are
209
empirically proved. These findings are interpreted in the final chapter for future
research and policy formulation.
Hypotheses mediated INTEREST- SALES MODEL (See figure 1.2)
Hypothesis 1: The Manufacturing cost dimension positively influences the
Business Income (Sales) so as to create wealth for the investors.
Hypothesis 2: The Staff cost dimension positively influences the Business
Income (Sales) so as to create wealth for the investors.
Hypothesis 3: The Administration cost dimension positively influences the
Business Income (Sales) so as to create wealth for the investors.
Hypothesis 4: The Trade cost dimension positively influences the Business
Income (Sales) so as to create wealth for the investors.
Hypothesis 5: The Manufacturing cost dimension positively mediated by
interest towards increase in Business Income (Sales) to create wealth for the
investors.
Hypothesis 6:
The staff cost dimension is mediated by Interest towards
increase in Business Income (Sales) so as to create wealth for the investors.
Hypothesis 7: The administration cost dimension is mediated by Interest
towards increase in Business Income (Sales) so as to create wealth for the
investors.
Hypothesis 8: The Trade cost dimension is mediated by Interest towards
increase in Business Income (Sales) so as to create wealth for the investors.
210
Hypothesis 9: The Manufacturing cost, staff cost, Administration Cost and
Trade Cost dimensions mediating dimension Interest positively influence the
outcome of Business Income (Sales) to create wealth.
3.5.2 HYPOTHESES VERIFICATION OF MEDIATED INTERST SALES MODEL RESULTS FROM INTEREST – SALES MEDIATED
REGRESSION MODEL OF TRICHIRAPPALLI DT CO-OP., MILK
PRODUCERS’ UNION LTD (See figure 3.49)
Standardized parameter estimates for mediated model explains the existing
relationships between the mediating factor Interest cost and Sales. R2 Value .39 stated that the mediating factor interest. The Manufacturing cost 0.00,
followed by staff cost -.01, Trade cost = .77resulted significant impact on
mediated factor, Interest. Administration cost 1.62 is not significant. This
model represents Tiruchirappalli District cooperative milk producers union
limited shall concentrate more on controlling Interest, besides concentrating on
Manufacturing Cost, Power and Fuel Cost, Other Administration Cost, and
Selling Costs for reporting reasonable Business Income (Sales).
211
Hypotheses formulated for RECEIVABLE MANAGEMENT – SALES
Model (See figure 1.3)
Hypothesis 1: The land and Building dimension positively influences the
Business Income (Sales) so as to create wealth for the investors.
Hypothesis 2: The Plant and Machinery dimension positively influences the
Business Income (Sales) so as to create wealth for the investors.
Hypothesis 3: The Furniture dimension positively influences the Business
Income (Sales) so as to create wealth for the investors.
Hypothesis 4: The stock dimension positively influences the Business Income
(Sales) so as to create wealth for the investors.
Hypothesis 5: The Cash dimension positively influences the Business Income
(Sales) to create wealth for the investors.
Hypothesis 6: The land and buildings dimension is mediated by Sundry
Debtors towards increase in Business Income (Sales) so as to create wealth for
the investors.
Hypothesis 7: The Plant and Machinery cost dimension is mediated by Sundry
Debtors towards increase in Business Income (Sales) so as to create wealth for
the investors.
212
Hypothesis 8: The Furniture dimension is mediated by Sundry Debtors towards
increase in Business Income (Sales) so as to create wealth for the investors.
Hypothesis 9: The stock dimension is mediated by Sundry Debtors towards
increase in Business Income (Sales) so as to create wealth for the investors.
Hypothesis 10: The Cash dimension is mediated by Sundry Debtors towards
increase in Business Income (Sales) so as to create wealth for the investors.
Hypothesis 11: The Land and Buildings, Plant and Machinery, Furniture, stock
and Cash dimensions mediating dimension Sundry Debtors positively influence
the outcome of Business Income (Sales) to create wealth for the Business.
3.5.3 HYPOTHESES VERIFICATION OF MEDIATED RECEIVABLES
MANAGEMENT - SALES MODEL RESULTS FROM REGRESSION MODEL
OF TRICHIRAPPALLI DT CO-OP., MILK PRODUCERS’ UNION LTD (See
figure 3.55)
Standardized parameter estimates for mediated model explains the
existing relationships between the mediating factor Sundry Debtors and Sales.
R2 Value .42 stated that the mediating factor Debtors. The visual representation
of the results suggest that the relationship between dimensions of Asset and
mediated factor. R2 Value .42 for mediating factor. This model represents
Tiruchirappalli District cooperative milk producers union limited shall
concentrate more on Receivable Management, besides concentrating on cash
management, inventory management and fixed asset Management for reporting
reasonable Business Income (Sales). Hence the Tiruchirappalli District
213
cooperative milk producers union limited may concentrate on effective
receivable management technique to increase the profitability through sales.
Hypotheses formulated for overall dimensions for performance of share
holders’ wealth (fig 1.4)
Hypothesis 1: The profit dimension positively influences the Shareholders’
Funds.
Hypothesis 2: The Subsidy dimension positively influences the Shareholders’
Funds.
Hypothesis 3: The Sales dimension positively influences the Shareholders’
Funds.
Hypothesis 4: The Debt dimension positively influences the Shareholders’
Funds.
Hypothesis 5: The Non Business Income dimension positively influences the
Shareholders’ Funds.
Hypothesis6: The profit dimension is mediated by Total Cost to create wealth
for the investors.
Hypothesis 7: The Subsidy dimension is mediated by Total Cost to create
wealth for the investors.
Hypothesis8: The Sales dimension is mediated by Total Cost towards increase
to create wealth for the investors.
214
Hypothesis 9: The Debt dimension is mediated by Total Cost to create wealth
for the investors.
Hypothesis 10: The Non Business Income dimension is mediated by Total Cost
to create wealth for the investors.
Hypothesis 11: The profit, Subsidy, Sales, Debt, and Non Business Income
dimensions mediating dimension Total Cost to create wealth for the investor.
215
CHAPTER IV
FINDINGS, SUGGESTIONS AND CONCLUSION
4.1 INTRODUCTION
The findings obtained from trend analysis, ratio analysis and the statistical test
performed on the hypotheses, the structural equation mediated models interest
– sales model, Receivable Management - sales model and total cost –
shareholders fund regression models are given. Based on the findings the
overall performance picture are summarized for the investors, shareholders,
and executives for taking decision on investing and/or diversifying into a new
business activity. It will bring the scope for future research.
4.2 FINDINGS FROM TREND ANALYSIS
The trend plot of Manufacturing Cost elucidates the original data, and the
fitted trend line, the output also displays the fitted trend equation Yt =
319362690 + 77203204*t. The Manufacturing Cost has increased from
56318067 rupees in 1998 to 198961939 rupees in 2008. This is an increase
of 142643872
rupees. The long-run trend for the Manufacturing Cost is
increasing.
The trend plot of staff cost demonstrates the original data, and the fitted
trend line, the output also displays the fitted trend equation Yt = 3753446 +
4153350*t. The staff cost has increased from 4567897 rupees in 1998 to
44726233 rupees in 2008. This is an increase of 40158336 rupees. The
long-run trend for the staff cost is increasing.
216
The trend plot of Administrative proves the original data, and the fitted
trend line, the output also displays the fitted trend equation Yt = 2220043 +
189512*t. The Administrative cost has increased from 1425193 rupees in
1998 to 4068354 rupees in 2008. This is an increase of 2643161 rupees.
The long-run trend for the Administrative cost is increasing.
The trend plot Trade cost confirms the original data, and the fitted trend
line, the output also displays the fitted trend equation Yt = 520569 +
773572*t. The trade cost value has increased from 5795859 rupees in 1998
to 14012831 rupees in 2008. This is an increase of 8216972
rupees. The
long-run trend for the trade cost is increasing.
The trend plot of interest cost explains the original data, and the fitted trend
line, the output also displays the fitted trend equation Yt = 6801641 +
876936*t. The Interest cost value has increased from 6646011 rupees in
1998 to 16152968 rupees in 2008. This is an increase of 9506957 rupees.
The long-run trend for the Interest cost is increasing.
The trend plot of Land and Building reveals the original data, and the fitted
trend line, the output also displays the fitted trend equation Yt = 49546334
+ 666849*t. The value of Land and Building has increased from 49640811
rupees in 1998 to 56097412 rupees in 2008. This is an increase of 6456601
rupees. The long-run trend for the Land and Building is increasing.
The trend plot Plant and Machinery personifies the original data, and the
fitted trend line, the output also displays the fitted trend equation Yt =
217
35201327 + 2119523*t. The Plant and Machinery value has increased from
39344977 rupees in 1998 to 56728356 rupees in 2008. This is an increase of
17383379 rupees. The long-run trend for the Plant and Machinery is
increasing.
The trend plot of Furniture serves as an evidences for the original data, and
the fitted trend line, the output also displays the fitted trend equation Yt =
5548922 + 378774*t. The value of Furniture has increased from 5792784
rupees in 1998 to 9112061 rupees in 2008. This is an increase of 3319277
rupees. The long-run trend for the furniture is increasing.
The trend plot of Investment proves the original data, and the fitted trend
line, the output also displays the fitted trend equation Yt = 2855844 +
230290*t. The Investment value has increased from 3411134 rupees in
1998 to 5465873 rupees in 2008. This is an increase of 2054739 rupees.
The long-run trend for the Investment is increasing.
The trend plot of current asset shows the original data, and the fitted trend
line. The output displays the fitted trend equation Yt = 139929637 +
7380058*t. The current asset value has increased from 122439711rupees in
1998 to 227215641 rupees in 2008. This is an increase of 104775930
rupees. The long-run trend for the current asset is increasing.
The trend plot of Debtors gives an idea about the original data, and the
fitted trend line. The output displays the fitted trend equation Yt =
92345231 + 4660526*t. The Debtors value has increased from 80571575
218
rupees in 1998 to 131619882 rupees in 2008. This is an increase of
51048307 rupees. The long-run trend for the Sundry Debtors is increasing.
The trend plot of cash and bank confirms the original data, and the fitted
trend line. The output displays the fitted trend equation Yt = 765706 +
4856320*t. The cash and bank has increased from 9431759 rupees in 1998
to 61349106 rupees in 2008. This is an increase of 51917346 rupees. The
long-run trend for the cash and bank balance is increasing.
The trend plot of inventory shows the original data, and the fitted trend line.
The output displays the fitted trend equation Yt = 8486910 + 1019578*t.
The Inventory value has increased from 2063621 rupees in 1998 to
13247688 rupees in 2008. This is an increase of 11184067 rupees. The
long-run trend for the inventory is increasing.
The trend plot of trade income shows the original data, and the fitted trend
line, the output also displays the fitted trend equation Yt = 5943417 +
6200144*t. The above chart shows the amount of Trade Income (in rupees)
from 1997-1998 to 2007-2008. The value has increased from 20856678
rupees in 1998 to 82569341 rupees in 2008. This is an increase of 61712663
rupees. The long-run trend for the trade income is increasing.
The trend plot of Miscellaneous Income demonstrates the original data, and
the fitted trend line, the output also displays the fitted trend equation Yt =
125884 + 169159*t. The Miscellaneous Income value has increased from
208950 rupees in 1998 to 1876233rupees in 2008. This is an increase of
219
1667283 rupees. The long-run trend for the Miscellaneous Income is
increasing.
The trend plot of gross profit shows the original data, and the fitted trend
line, the output also displays the fitted trend equation Yt = 33565822 +
4085896*t. The gross profit has increased from 48545959 rupees in 1998 to
132006874 rupees in 2008. This is an increase of 83460915 rupees. The
long-run trend for the Gross Profit is increasing.
The trend plot of Net Profit elucidates the original data, and the fitted trend
line, the output also displays the fitted trend equation Yt = 9261366 +
2463854*t. The Net Profit has decreased from 1922136 rupees in 1998 to
71060473 rupees in 2008. This is decrease of 69138337 rupees. There after
i.e. in the year 2006- 2007 and 2007-2008 the milk producers union earns
profit. Therefore the long-run trend for the Net Profit is increasing.
The trend plot of Long Term Debt proves the original data, and the fitted
trend line, the output also displays the fitted trend equation Yt = 77075416 4314910*t. The Long term Debt decreased from 66300793 rupees in 1998
to 27163145 rupees in 2008. This is a decrease of 39137648 rupees. The
long-run trend for the Long Term Debt is decreasing.
The trend plot of Short Term Debt demonstrates the original data, and the
fitted trend line, the output also displays the fitted trend equation Yt =
102905779 + 6608182*t. The short term debt has increased from 93920465
rupees in 1998 to 194621639 rupees in 2008. This is an increase of
220
100701174 rupees. The long-run trend for the Short Term Debt is
increasing.
The trend plot of subsidy proves the original data, and the fitted trend line,
the output also displays the fitted trend equation Yt = 5873294 + 370364*t.
The subsidy value has increased from 1000600 rupees in 1998 to 2235467
rupees in 2008. This is an increase of 1234867 rupees. The long-run trend
for the subsidy is increasing.
The trend plot of total cost confirms the original data, and the fitted trend
line, the output also displays the fitted trend equation Yt = 3601750053 +
99213052*t. The total cost value has increased from 453869558 rupees in
1998 to 1497673097 rupees in 2008. This is an increase of 1043803539
rupees. The long-run trend for the total cost is increasing.
The trend plot of sales highlights the original data, and the fitted trend line,
the output also displays the fitted trend equation Yt = 390703233 +
95087566*. The sales value has increased from 486196683 rupees in 1998
to 1513234408 rupees in 2008. This is an increase of 1027037725 rupees.
The long-run trend for the sales is increasing.
The trend plot of total asset shows the original data, and the fitted trend line,
the output also displays the fitted trend equation Yt = 343760177 +
2292035*t. The value of total asset has increased from 286278625 rupees in
1998 to 352292717 rupees in 2008. This is an increase of 66014091 rupees.
The long-run trend for the Total Asset is increasing.
221
The trend plot of total debt stand as an evidence for the original data, and
the fitted trend line, the output also displays the fitted trend equation Yt =
81846582 + 4220937*t. The value of total debt has increased from
93415020 rupees in 1998 to 140222344 rupees in 2008. This is an increase
of 46807324 rupees. The long-run trend for the Total Debt is increasing.
The trend plot of Non Business Income shows the original data, and the
fitted trend line, the output also displays the fitted trend equation Yt =
6069301 + 6369304*t. The Non Business Income has increased from
21065628 rupees in 1998 to 84445574 rupees in 2008. This is an increase of
63379946 rupees. The long-run trend for the Non Business Income is
increasing.
The trend plot of shareholders fund enlightens the original data, and the
fitted trend line, the output also displays the fitted trend equation Yt =
134176528 + 3265002*t. The value of shareholders fund has increased
from 176232909 rupees in 1998 to 171198673 rupees in 2008. This is a
decrease of 5034236 rupees due to accumulated loss during the preceding
years and the same had been set off and carried forward. The long-run trend
is increasing.
222
4.3 FINDINGS FROM RATIO ANALYSIS
The current ratio is found to be fluctuating during the study period. During
the period 2005 – 2006, the current ratio was very low due to the heavy
interest paid on outstanding. Prompt settlement of dues and decline in the
interest amount, have resulted in increase in the current ratio in 2006–2007.
though the current assets have increased the current liabilities have reduced
in 2006 – 2007 the period.
It is evident that during the study period, the concern has not achieved the
conventional quick ratio of 1: 1. The quick ratio was found to be the lowest
in the year 1997-98 (0.02) due to increase in current liabilities. The quick
ratio was found to be the highest in the year 2002- 2003 (0.34).
Inventory turnover ratio of the union has been high and fluctuating during
the study period. It has been the minimum (32.65 times) in the year 200304. It has been maximum (212.07 times) in the year 1997-1998.
Average collection period has been high and fluctuating during the study
period. It has been the highest (61 days) in the year 1997-1998. It has been
lowest (32 days) in the year 2007-2008. The results show negative sign in
the collection of debts. The years 2006-07 and 2007-08 show positive sign
in the collection of debts.
223
Average payment period shows the less liquid position of the union. The
higher Average Payment Period indicates that payments were not made in
stipulated time (usually 10 to 15 days) to the suppliers of milk except 200607, who were basically poor farmers. Hence, it was not possible for the
farmers to depend on dairying activities alone to eke out their living.
The performance of total assets in generating sales was high during the
years 2007 - 2008 and it has been very low during the year 1997-1998.
Afterwards, an improvement in the Total Assets Turnover can be witnessed
which means betterment in the performance of total assets. The
performance of current assets in generating sales was high during the years
2006 - 2007 and it has been very low during the year 1997-1998.
Afterwards, an improvement in the current Assets Turnover can be
witnessed which means betterment in the performance of total assets. This
shows that the Union is improving in its performance in terms of assets. On
comparing the two ratios it could be found that the performance of current
assets in generating sales was better than the total assets.
Working capital turnover ratio shows fluctuation during the study period. It
was found 59.72 during the year 2004 which shows that the capacity of
working capital generate the volume of sales in the year 2004.
The gross profit ratio during the study period is highly fluctuating. The
Gross profit ratio indicates the inefficiency of the union in terms of sales
during 2004-05 to 2006-07 as it was inadequate to cover the operating
224
expenses (administration and office expenses, selling and distribution
expenses) and provide for fixed charges. The Gross profit ratio during the
1997-98, 2003-04 and 2007-08 of the study period indicates the improved
efficiency of the union in terms of procurement, sales and meeting the
operating and fixed charges.
During 1998-99, 99-00, 02-03 and 05-06 of the study period the net profit
shows negative result. The main reason for the loss was high establishment,
administration and processing cost. From the year 2007-08 the net profit
ratio shows a positive result but is found to be very low.
In an annual report salaries and wages are given together but about 70 to
75% of these wages are related to purchasing, storing and processing of
milk. As far as salaries and wages are concerned there is some scope for
reduction of such expenses without harming deserving employees. Trichy
District Milk Producers Union Ltd successfully controlled staff cost (salary
and wages) during 1998-1999 among the study period.
In the past eleven years often the milk procurement, storing and processing
expenses were 80% and above of the total input. It was less than 80% only
in these three years (2001-2002, 2002-2003 and 2005-2006). Hence the
Trichy District Milk Producers Union Ltd should make use of efficient cost
management policy to control the Manufacturing cost to increase the profit.
225
Administrative or general expenses can be controlled and reduced to some
extent to increase profitability. During 1998-1999 to 2002-2003 the
administration cost was more than .40% and in the rest of the years the cost
was from .25% to .35%.
Existence of Interest expenses denotes unavoidable borrowed fund to carry
business. The larger the borrowed fund more will be the expenditure after
interest and lower will be the profitability. Interest expenditure is
unavoidable due to higher volume of business. In the initial years it
increases and later it decreases. Economic use of borrowed fund leads to
decrease in interest expenditure. This industry should reduce borrowed fund
and also make efficient use of utilization fund by their curtailing interest
expenditure and make progress in profitability.
226
4.4 FINDINGS FROM REGRESSION ANALYSIS & STRUCTURAL
EQUATION MODEL
REGRESSION MODEL FOR COST DIMENSIONS – SALES
Standardized parameter estimates for mediated model explains the
existing relationships between the mediating factor Interest cost and
Sales. R2 Value -.39 stated that the mediating factor interest. The
Manufacturing cost 0.00, followed by staff cost -.01, Trade cost =
.77resulted
significant
impact
on
mediated
factor,
Interest.
Administration cost 1.62 is not significant. This model represents
Tiruchirappalli District cooperative milk producers union limited should
concentrate more on controlling Interest, besides concentrating on
Manufacturing Cost, Power and Fuel Cost, Other Administration Cost,
and Selling Costs for reporting reasonable Business Income (Sales).
REGRESSION MODEL FOR ASSET DIMENSIONS – SALES
Standardized parameter estimates for mediated model explains the
existing relationships between the mediating factor Sundry Debtors and
Sales. R2 Value .42 stated that the mediating factor Debtors. The visual
representation of the results suggest that the relationship between
dimensions of Asset and mediated factor. R2 Value .42 for mediating
factor. This model represents Tiruchirappalli District cooperative milk
producers union limited may concentrate more on Receivable
Management, besides concentrating on cash management, inventory
227
management and fixed asset Management for reporting reasonable
Business Income (Sales). Hence the Tiruchirappalli District cooperative
milk producers union limited may concentrate on effective receivable
management technique to increase the profitability through sales.
REGRESSION MODEL FOR OVERALL PERFORMANCE OF THE
TIRUCHIRAPPALLI DISTRICT COOPERATIVE MILK
PRODUCERS UNION LIMITED.
Standardized parameter estimates for mediated model explains the
existing relationships between the mediating factor Total cost and
Shareholders fund. R2 Value -.17 stated that the mediating factor Total
Cost. The Profit 0.35, followed by subsidy .18, Sales (Business Income)
-.18, Total Debt = 1.59, and Non Business Income = 6.77. R2 Value =
.17 for mediating factor. The Profit 0.35, followed by subsidy .18, Sales
(Business Income) -.18 resulted significant impact on mediated factor,
Interest. Total Debt 1.59 & Non Business Income 6.77 is not significant.
This model represents Tiruchirappalli District cooperative milk
producers union limited should concentrate more on controlling Total
cost, besides concentrating on profit, subsidy, sales, total debt and Non
business Income for increasing shareholders fund. R2 value .17 states
that the Total cost is a mediating factor. Tiruchirappalli District milk
cooperative producers union limited should make efficient use of cost
management strategy for the growth of their business. The researcher
concludes that the total cost is a mediating factor which determines the
performance of Tiruchirappalli District milk cooperative producers
228
union limited which is scientifically proved by the researcher with the
help of (Fig 3.56) structural equation model. Hence milk cooperative
producers union limited should adopt effective Total Cost management
strategy for their growth of their business to be part of economic
development of our nation.
Fig. 4.1 STRUCTURAL EQUATION REGRESSION MODEL FOR
PERFORMANCE
OF
TIRUCHIRAPPALLI
DISTRICT
COOPERATIVE MILK PRODUCERS’ UNION LIMITED
(COST- SF MODEL)
Subsidy
Total
Debt
Non Business
Income
Shareholders
Equity
Total
Costs
Total
Sales
Profit
(Business Income)
229
The conceptual model empirically proved by AMOS graphic
environment. Strategic cost control will influence the shareholders fund in any
new entrepreneur who like to start a business in diary sector, may follow above
cost - SF mediated model. This model paves the way for strategic management
in profitability of District milk cooperative producers union limited operating
in cooperative producers’ union sector in India. The conceptual mediated
model is empirically examined through AMOS. This model will help the
shareholders for investing their resources with diversification of business. The
essence of model reveals the real picture of monetary value in the
macroeconomic environment. The above findings of the research will ensure
normality of the business of the milk cooperative producers union. It is a new
approach for applying the strategic management for sustainability of District
milk cooperative producers union in India. This research reveals another key
finding to control the Interest expenses & effective inventory management
technique for creation of wealth. The researcher concludes total cost
management technique alone protect the interests of the shareholders.
230
4.5
SUGGESTIONS
TO
DISTRICT
MILK
COOPERATIVE
PRODUCERS UNION LIMITED
The researcher suggested that the Tiruchirappalli District cooperative
milk producers union limited should concentrate more on controlling Interest,
besides concentrating on Manufacturing Cost, Power and Fuel Cost, Other
Administration Cost, and Selling Costs for reporting reasonable Business
Income (Sales). Interest cost includes Interest on NDDB loan, Interest on Govt.
loan, Interest on security deposit, and Interest on working capital.
Interest cost is in increasing trend which indicates unavoidable
borrowed fund to carry business. The larger the borrowed fund more will be the
higher interest. Economic use of borrowed fund leads to decrease in interest
expenditure. Tiruchirappalli District cooperative milk producers union limited
should concentrate more on receivable Management, besides concentrating on
cash management, inventory management and fixed asset Management for
reporting reasonable Business Income (Sales). Their level of receivables is
increasing mainly because of the slow paying related (government) enterprises.
The Tiruchirappalli District Cooperative Milk Producers Union
Limited
should employ collection agents to collect the debts. Hence the Tiruchirappalli
District cooperative milk producers union limited may concentrate on effective
receivable management technique to increase the profitability through
increasing sales.
231
Total cost has been segregated into manufacturing cost, Staff cost,
Administration, Trade cost and Interest cost in the present study. Reduce the
cost of procurement, processing and marketing of dairy products through
economy of scale approach will leads to increase profitability.
The administrative cost is in increasing trend and the same cannot be
controlled without controlling the total cost since the cost of administration are
common to all commodities produced on a firm.
The trade cost shows upward trend because of rise in the transportation
cost due to increase in diesel and gas prices. The reason increasing trend of
labour (staff cost) cost because of increases in prices paid for hired labour.
Comprehensive utilization of labour will support to reduce the cost. The
researcher concludes that the total cost is a mediating factor which determines
the performance of Tiruchirappalli District milk cooperative producers union
limited which is scientifically proved by the researcher with the help of (Fig
3.56) structural equation model. Hence milk cooperative producers union
limited should adopt effective Total Cost management strategy for their growth
of their business which will be a part of economic development of the nation.
232
4.6 SCOPE FOR FUTURE RESEARCH
In terms of future research, the researcher may analyze to identify the
strength and weaknesses of the district cooperative milk producers union vis-àvis competitors. The customer satisfaction or service quality or service loyalty
can be studied to identify the customer needs for services and the utility value
of the services offered by the district cooperative milk producers union limited.
A comparative study of financial performance across the countries can throw
more light on divergence in business strategies and suggest formulation of key
business strategies in tune with the global conditions.
233
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WEBSITE ADDRESS
www.aavinmilk.com/
www.en.wikipedia.org/wiki/Aavin
www.ahrq.gov › About AHRQ
www.nigms.nih.gov › About NIGMS
www.ed.gov/about/bdscomm/list/naciqi.html
www.nddb.org/
www.krishakayog.gov.in/NDDB.pdf
www.apnacircle.com/en/company/national-dairy-development-board
www.agritech.tnau.ac.in/banking/crbank_tcmpf.html
www.tn.gov.in/policynotes/pdf/dairy_development.pdf
www.getit.in/listing/trichy-dist-co-op-milk-producers.../424145/
www.en.wikipedia.org/wiki/Cooperative
www.co-operative.coop/
www.nccf-india.com/
APPENDIX
ABBREVIATIONS
AMOS
-
Analysis movement on structure
CFA
-
Confirmatory factor analysis
MCMC
-
Markov chain Monte Carlo model
CS
-
convergence statistics
LISREL
-
Linear structural relation
SEM
-
Structural equation model
INT-SA Model
-
Interest and sales model
DCMPU-PERF Model
-
District Co-Operative Milk
Producers’ Union and
Performance Model.
RM – SA Model
-
Receivable management and Sales model
SA
-
sales model
AC
-
Administrative cost
MFC
-
Manufacturing cost
NBI
-
Non business income
TD
-
Total debit
TS
-
Total sales
SUB
-
Subsidy
PF
-
Profit
SF
-
Share holder fund