Capital Budgeting, Risk and Return, NPV etc

1. CORPORATE FINANCE
PROJECT
Comparative Analysis of Saras Dairy, Ajmer
Submitted to: Section – K
Mrs. Shegorika Mam Submitted by:
Heena
Sanju
Bharti

2. ACKNOWLEDGEMENT
“ The pleasure that follows the successfull completion of an
assingment would remain incomplete without a word of
gratitude for the people and without whose cooperation the
achievement would remain a distant dream. It is not a mere
formality to place a record the tireless efforts, ceaseless
cooperation, constant guidance and encouragement of the
people closely associated with the assingment but a distinct
necessity for the authencity and readibility of the project.”
The management theories learnt in a year are brought into
practice. We have tried to make best use of their opportunity.
The work bears the imprint of many persons under whom we did
this project.
We are thankful to Mrs. Shegorika Mam, for her scholarly
guidance, advice and encouragement and also for providing
neseccary facilities to carry out the dissertion in prescribesd
period.
Finally, We are indebted to our family, friends and those people
who had helped us in completing this project.

3. INTRODUCTION
Ajmer Zila Dugdh Utpadak Sahakari Sangh Ltd. Ajmer is a
cooperative registered organisation registered under Cooperative
act with Registrar of Cooperative, Govt. of Rajasthan. AZDUSS
Ltd. Ajmer was established in the year 1972 keeping in mind the
interest of the cattle rearers to implement dairy development
activities in the Ajmer district, under Operation Flood Program.
The main objective of organisation are:
1. To eliminate the role of intermediaries and give cattle rearer's
good value for the milk and prevent them from exploitation.
2. To help in financial development of the villages and cattle
rearers.
3. To help in the social and financial development of the rural
milk producers.
4. To increase the milk producing capacity of the cattle.
5. To make available pure, healthy and high quality milk products
to constomers.
AZDUSS recieves direction and assistance from Central Govt. ,
State Govt., RCDF Ltd. Jaipur and National Development Board,
Anand from time to time. Presently the dairy plant has a capacity
to process 1.50 lakh liter milk; prepare 10 M.T. milk powder and
9.0 M.T. ghee per day. Besides these the plant also prepares
chhach, lassi, dahi, shrikhand, paneer and other milk products.
The plant has a capacity to pack 2.50 lakh liter milk per day.
The Ajmer plant of saras (AZDUSS Ltd. Ajmer) has been certified
under internationally accepted quality and food. safety
management systems in accordance with ISO 9001-2000 with
HACCP.

4. Two categories of products produced by AZDUSS, Ajmer are:
1. Short term products:
• Milk Flavoured, Standard, Gold, Double Tond, Tond
• Chach- plain, chach- namkeen
• Lassi
• Curd
2. Long term products:
• Gulab- jammun
• Ghee
• Ras- gullah
• Sri- Khandh
• Panner
It's competitors are:
• Amul
• Relaince dairy
It is a government organised company which works for the welfare of rural
people. It covers 65% market share in all over Ajmer district.

5. AZDUSS, Ajmer Balance Sheet ending March 31,08,09

6. 2008 2009
Sources of funds
Shareholder's
funds
Share capital 1255477 1405477
Reserves and 10330723 11586200 11360807 12766284
Surplus
Loan Funds
Secured loans 15213175 13672040
Unsecured loans 6963200 22176375 7413353 21175393
TOTAL 33762575 33941677
Application of
funds
Fixed Assets
Gross Block 22784260 25837493
Less Depreciation 11180547 12176557
Net Block 11603713 13660936
Capital WIP and 1565027 13168740 1872298 15533234
Advance against
Capital Expentidure
Investments 4387009 3214903
Current Assets,
Loans and
Advances
Inventories 2811812 2664052
Sundry debtors 3372115 5073006

7. Cash and Bank 36446 39956
Balances
Loans and Advances 15273303 21493676 14349296 22126310
Less Current
Liabilities and
Provisions
Liabilities 5391109 7002059
Provisions 89664 110408
5480773 7112467
Net Current Assets 16012903 15013843
Miscellaneous 193923 179697
Expenditure
Total 33762575 33941677

8. Profit and Loss Account- of AZDUSS, Ajmer for the Year ended March 31

9. 2008(in cr) 2009(in cr)
Income
Sales and services 21952918 26677600
Other income 982022 400193
(schedule 12)
22934940 27117793
Expenditure
Purchase of finished 3276680 7370452
goods(Net)
Manufacturing and 16880780 17095192
other expenses
Interest and 2144683 1806772
financial charges
(Schedule- 14)
Depreciation for the 1013201 943432
year
Withdrawn from 539138 381781
revaluationReserve
474063 561651
22776206 26834067
Profit before 158734 283726
Taxation
Provisions for - -
taxation
Profit after taxation 158743 283726
Investment - 46896
Allowance Written
back
Debenture - 20833
redemption reserve

10. written back
Research and - 70000
development
reserve written back
Profit brought 253676 295185
forward
Amount available 412410 716640
for appropriation
Appropriations
Transfer to:
Debenture - 145833
Redemption reserve
Capital Redemption 160000 10000
reserve
Contigency Reserve - 70000
General Reserve - 50000
Dividends:
Paid - preference -52371 -52459
Proposed- equity -88048 -105657
-140419 -158116
Tax on dividends -20817 -29015
-161236 -187131
Balance carried to 91174 253676
balance sheet
Schedule- 12 other
income
Dividend from trade 6531 87850

11. investments
Dividend from 888 100182
subsidiary
companies
Interest from non 612 1042
trade investment
Profit on the sale of 9456 -
assets
Profit on sale of 730231 -
investments
Miscellaneous 234304 251119
982022 440193
Schedule-14
Interest and
Financial charges
On debentures 247440 153650
On other fixed 1065652 1111499
interest bearing
loans
On others 1822490 1549036
3135582 2814185
Less Interest during 8936 225614
contsruction
Interest on advances 572645 438054
to companies
Interest on deposits, 409318 990899 343745 1007413
BookDebts, loans
and others
2144683 1806772

12. Profitability ratios and assets turnover ratios:
1. Profit margin
2. Asset turnover
3. Return on assets
4. Return on equity and
5. Earnings per share
1.Profit margin:
PM=(profit after tax/ sales)*100
For 2008:
Profit margin = 158734/21952918*100
= 0.72%
For 2009:
Profit after tax=283726/26677600*100
=1.06%
2.Asset turnover:
ATO= sales/ average total assets
For 2008:
Asset turnover= 21952918/(33762575+33941677)/2
= .648 times
For 2009:
Asset turnover= 26677600/(33762575+33941677)/2
=.788 times
3.Return on assets or return on investment:
ROI = (Profit after tax/average total assets)*100
For 2008
= (158734/33852126)*100
=.4689%
For 2009
= (283726/33852126)*100
= .838%
4. Return on equity:

13. For 2008:
ROE= (profit after tax/ average shareholder's equity)*100
= (158734/12176242)*100
= 1.3%
For 2009:
ROE= (283726/12176242)*100
= 2.33%
5.Earnings per share:
For 2008:
EPS= profit after tax/ weighted no. Of equity shares
EPS = 158734/1255477 crore shares
EPS = Rs. 0.1264
For 2009:
EPS= 283726/1405477
EPS= Rs. 0.2019
Liquidity Ratios:
1. Current Ratio: current assets/ current liabilities
For 2008:
CR= 21493676/5480773
CR =3.92
For 2009:
CR= 22126310/7112467
CR = 3.11
2. Quick ratio:
QR: quick assets/ current liabilities
quick assets = current assets- inventories
For 2008:
QR= 18681864/5480773
QR = 3.41
For 2009:
QR= 19462258/7112467
QR = 2.736
3.Debtors turnover ratio:
For 2008:
DTR= sales/ average debtors
= 21952918/4222560.5
= 5.19
For 2009:

14. DTR= 26677600/4222560.5
= 6.318
4.Average Debt collection period:
For 2008:
= average debtors/ Sales / 360 days
= 4222560.5/21952918/360
= 69.24 days
For 2009:
= 4222560.5/26677600/360 days
= 56.98 days
5.Inventory turnover ratio:
For 2008:
ITR= cost of goods sold/ average inventories
= 22776206/2737932
= 8.32 times
For 2009:
= 26834067/2737932
= 9.8 times
Solvency ratio:
1.Debt to equity ratio:
For 2008:
= (secured loans+ unsecured loans)/ shareholder's equity
= 22176375/11586200
= 1.91
For 2009:
= 21175393/12766284
= 1.65
2. Liabilities to equity ratio:
For 2008:
= (debt+ current liabilities)/shareholder's equity
= 15213175+5480773/11586200
= 1.786
For 2009:
= 13762040+7112467/12766284
= 1.635