Saurashtra University: Liquidity of Co-Operative Milk Producers' Unions of Gujarat State, Thesis PHD

Saurashtra University
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Vala, Shivubhai C., 2011, A Comparative Study of Profitability vis-à-vis

Liquidity of Co-operative Milk Producers' Unions of Gujarat State, thesis PhD,
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"A COMPARATIVE STUDY OF

PROFITABILITY VIS-À-VIS LIQUIDITY OF
CO-OPERATIVE MILK PRODUCERS’ UNIONS
OF GUJARAT STATE"
A THESIS
SUBMITTED TO
THE SAURASHTRA UNIVERSITY
For The Degree of

DOCTOR OF PHILOSOPHY
Under
The Faculty of Commerce
Rajkot
Submitted By
Vala Shivubhai Chamanbhai
Lecturer in B.B.A.
Harivandana College,
Rajkot
Under
The Guidance of
Dr. Sanjay J. Bhayani
Associate professor
Smt. R.D. Gardi Dept. of Business Management
Saurashtra University,
Rajkot - 360005
FEBRUARY - 2011
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"A COMPARATIVE STUDY OF

PROFITABILITY VIS-À-VIS LIQUIDITY OF
CO-OPERATIVE MILK PRODUCERS’ UNIONS
OF GUJARAT STATE"
A THESIS
SUBMITTED TO
THE SAURASHTRA UNIVERSITY
For The Degree of

DOCTOR OF PHILOSOPHY
Under
The Faculty of Commerce
Rajkot
Submitted By
Vala Shivubhai Chamanbhai
Lecturer in B.B.A.
Harivandana College,
Rajkot
Under
The Guidance of
Dr. Sanjay J. Bhayani
Associate professor
Smt. R.D. Gardi Dept. of Business Management
Saurashtra University,
Rajkot - 360005
FEBRUARY - 2011
Please purchase PDFcamp Printer on http://www.verypdf.com/ to remove this watermark.
Mr. SHIVUBHAI C. VALA [M.COM]

RESEARCH SCHOLAR
DEPARTMENT OF BUSINESS MANAGEMENT
SAURASHTRA UNVIERSITY
RAJKOT – 36005.
STATEMENT OF DECLARATION
I, the undersigned, Mr. SHIVUBHAI C. VALA, a student of Doctor

of Philosophy, Department of Business Management, Saurashtra
University, Rajkot, hereby acknowledge that the research work in this
thesis is my own endeavour and that the work being done under the
guidance of Dr. SANJAY J. BHAYANI, Associate Professor,
Department of Business Management, (MBA Programme) Saurashtra
University, Rajkot.
That the appropriate data and the required informations were

procured from the milk dairy units under the research work. I, therefore
acknowledge that the thesis has not been in any case submitted to any
other institution of higher learning for any degree award.
Mr. SHIVUBHAI C. VALA [M.COM]

Date:
Dr. SANJAY J. BHAYANI

ASSOCIATE PROFESSOR,
DEPARTMENT OF BUSINESS MANAGEMENT,
(MBA Programme)
SAURASHTRA UNIVERSITY,
RAJKOT – 36005.
CERTIFICATE OF ACKNOWLEDGEMENT
This is to certify that Mr. SHIVUBHAI C. VALA has carried out

the research work as presented in this thesis under my guidance and
supervision and that the presentation is his own original contribution.
Further, that the work as embodied in this presentation has not

been previously submitted to any institution for any degree award.
Dr. SANJAY J. BHAYANI

ASSOCIATE PROFESSOR,
DEPARTMENT OF BUSINESS MANAGEMENT,
(MBA Programme)
SAURASHTRA UNIVERSITY,RAJKOT.
DATE:
PREFACE
With great pleasure I hereby present my thesis entitled,

"A Comparative study of profitability vis-à-vis liquidity of co-operative
milk producer's unions of Gujarat State" to the students of commerce
and business management. Profitability and liquidity are the basic
requirements for the survival of an enterprise and for the prosperity of
employees and for the welfare of the customers and the society at large
and also for the development of the economy so I was encoareged to
make research on profitability and liquidity of co-operative milk dairies.
Research is not an existing bag of techniques. Research is not a

fishing expedition or an encyclopedic gathering of assorted facts.
Research is a purposeful investigation providing a structure for diagnosis
of the problem. There are three parts involved in any investigation (1)
The implicit question posed or the problem raised. (2) The explicit
answer or the solution proposed. (3) Collection, analysis and
interpretation of the information leading from the question (problem) to
the answer (solution). This third part is the defense that justifies the
recommendation and is viewed as research.
Through research a research maker can quickly get a synopsis of

the current scenario indicating for future action and decisions.
In the context of co-operative milk dairies and their profitability

cum liquidity which is the subject chosen for research by the researcher.
The implicit question posed or the problem raised is : Are the
co-operative dairies capable enough by the required profitability cum

liquidity to survive against the encroachment of private dairies at present
and in future under the delicencing policy of government for dairy
industry which has come into existence after 1991 due to New Industrial
and Economic policy of 1991 granting to the industries liberalization,
privatization and globalization.
To find out the answer to this problem of survival of co-operative

dairies the researcher has collected information regarding present
problems faced by co-operative dairies and to find profitability and
liquidity position of the some co-operative dairies of Gujarat.
Information & data of last eight years have been collected and treated
under Ratio Analysis method to highlight present profitability and
liquidity condition of the co-operative dairies and to get a synopsis of
the current scenario indicating for future actions and decisions.
India is basically, an agricultural country, and mostly depends

upon the weather. Animal Husbandry is one of the branches of the
agriculture moreover, the Indian culture is self – reliant, self sufficient
and contended. In it’s past, every family domesticated cows to fulfill
their own need but dairy industry was not developed as a business, or
as a profession. With the advent of the 19th century, the condition was
getting changed and in real sense, the people of India adopted Dairy
industry professionally.
“Amul” is the pioneer of the Dairy co-operative in Gujarat and

in India also. Before the birth of Amul Dairy Anand, there was no
systematic marketing for milk in India. As milk is perishable item, milk
producer’s farmers had to sell their milk to the middlemen for whatever
they were offered. Middlemen bought the milk from milk producers at a
lower price and sold it to cities with the huge margin of profit. Many
times, milk producers were compelled to sell cream and ghee at throw
away prices. Thus, the middlemen exploited the milk producers, farmers.
Eventually, the Kaira District co-operatives milk producers, Union

ltd. Which is known as “Amul Dairy” – Anand was started in 1946. In
the starting, the Amul Dairy collected just 250 liters of milk per day
with the help of two co-operative societies of the union. Due to Amul
Dairy, farmers were obtaining fair and sufficient reward on the basis of
fat content of the milk. They were paid promptly also. So, more and
more farmers jointed the union, and the union got much strength. It turned
today into 11,00,540 litres of milk per day in the year 2007-08, being
collected from 1113 village co-operative societies with the help of
6,31,633 farmer members Late Tribhuvandas Patel and Dr.V. Kurien
have given the name of “Amul” as excellence in Asia and have brought
the ‘White Revolution” in Gujarat as well as in India. And the milk
producers also supported and co-operated their efforts nicely and
realized the spirit of co-operation in a real sense.
This research study has total nine chapters. This research study
is aimed for the finding out the performance and efficient level of the
co-operative dairy and milk supply units in Gujarat State. Economic
development based on the growth of basic industries which includes
co-operative milk dairy industry. The main objective of the research is
to find out; whether profitability and liquidity of cooperative dairy and
milk supply units working in Gujarat has improved during the period of
the study. The efficient level of co-operative dairy and milk supply unit
is determined with the help of published accounting data in this research
work.
This research work has been completed under able guidance of

Dr. Sanjay J. Bhayani, Associate Professor, Smt. R. D. Gardi
Department of of Business Management (MBA Programme), Saurashtra
University, Rajkot his motivation, kind co-operation and encouragement
helped me a lot in completing this research study. I would like to thank
Dr. Pratapsinh L. Chauhan, Professor and Head, Department of
Business Management, (MBA Programme), Saurashtra University,
Rajkot, Dr. Daxaben Gohil, Professor and Head, Department of
Commerce, Saurashtra University, Rajkot. Dr. Shaileshbhai
Parmar,Associate Professor Department of Commerce, Saurashtra
University, Rajkot. Dr. Hitesh J. Shukla, Department of Business
Management, (MBA Programme), Saurashtra University, Rajkot,
Faculties & staff of Department of Business Management,
(MBAProgramme), Saurashtra University, Rajkot,
At this moment how can I forget Dr. Maheshbhai B. Chauhan

the trustee of Harivandana College and also senior syndicate member
of Saurashtra University Rajkot for inspiring and encouraging me to do
research for obtaining Ph.D degree. I also thank Mr. Sarveshwar M.
Chauhan, the compus director of Harivandana College Rajkot for his
co-operative approach. I am also thankful of the staff member of
Harivandana College for their ready help. I also want to thank all the
General Managers and staff of various dairies for providing me the

complete information and numerical data of their dairies.
I would also like to thank my father – Chamanbhai, my mother -

Gunvanteeben, my wife - Veena, My childran Hitesha,Niyati,Adity and
My brother Gopal and his wife Priti and other members of my family
for their support and patience during the whole process. I thank them
for their co-operation and understanding.
My Ph.D work would have not been completed wihout the help
of my friends and elders like, Dr. Tushar D. Jatakia, Bhavdeep R. Barad
and Mr. Mahendra S. Mehta to whom I am really thankful.
Mr. SHIVUBHAI C. VALA

[M. Com.]
CONTENTS Page No
CH - 1 INTRODUCTION TO CO-OPERATIVE (01)

MOVEMENT AND DAIRY INDUSTRY
This chapter covers Meaning, significance and History of co-
operation then the Co-operative movement at world level, India level
and Gujarat level. Definition of co-operation, types of co-operative
society, advantages and limitations of co-operative societies. In this
first chapter of dairy industry we also discussed the history of dairy
industry and then co-operative dairy industry.
CH - 2 THE CONCEPT AND MEASUREMENT OF (71)

PROFITABILITY
This chapter deals with meaning and concept of profitability.
Comparing it with profit and productivity and mentioning the different
methods of measuring the profitability under Ratio Analysis criteria.
CH - 3 THE CONCEPT AND MEASUREMENT OF (100)

LIQUIDITY
Here, I have discussed meaning and concept of liquidity and tried
to show the connection and relation between profitability and liquidity
which is inverse to some extent. I have chosen ratio analysis as the base
for measuring liquidity in various ways.
CH - 4 RESEARCH METHODOLOGY (117)

In the fourth chapter of this thesis, the researcher has given the
information about his research work. The title of the thesis, the problem
of research topic, Method of data collecting , hypothesis of research,
limitations, chapter plan, review of literature, bibliography etc.
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CH - 5 THE SAMPLE PROFILE (139)

Fifth chapter of my research work is sample profile. In this
chapter researcher has talked about all selected dairies. It’s history, it’s
growth and it’s present situation etc.
CH - 6 ANALYSIS OF PROFITABILITY (183)

There are many ways of measuring profitability but in the current
study the researcher has chosen the ratio analysis method as it is simple
to understand and accurate in results. The ratios of profitability which
have been selected and used are very much similar to the Du Pont Chart
of profitability.
CH - 7 ANALYSIS OF LIQUIDITY (244)

For liquidity measurement, the short and sweet method is of Ratio
Analysis , so the researcher has adopted this method by employing
several different ratios indicating liquidity of the different co-operative
dairies.
CH - 8 A STUDY OF RELATIONSHIP BETWEEN

PROFITABILITY & LIQUIDITY (283)
In this chapter it is seen how profitability and liquidity are
inversely related to some extent during business operation but ultimately
they are complementary.
CH - 9 SUMMARY OF FINDING AND SUGGESTIONS

(313)
All the outcomes of the research made have been clearly stated
and discussed in this chapter and the future plan of action for encoun-
tering the problems and challenges has been suggested by the researcher.
⇒ BIBLIOGRAPHY (361)
List of Tables
Table No :6.1 Page No - 188
Sales of the selected dairies under the study For period of (2000-01 to
2007-08) eight years.
Table No : 6.2 Page No - 189
Profit of the selected dairies under the study for period of (2000-01
to 2007-08) eight years.
Net Profit Ratio of the selected dairies under the study for the period of
(2000-01 to 2007-08) eight years.
Return on Equity Shareholders’ Fund Ratio of the selected dairies un-
der the study for the period of (2000-01 to 2007-08) eight years.
Milk Procurment Expenses to Total Expenses Ratio of the selected
dairies under the study for the period of (2000-01 to 2007-08)
eight years.
Salary to Total Expenses Ratio of the selected dairies under the
study for the period of (2000-01 to 2007-08) eight years.
Administrative & General Expenses to Total Expenses Ratio of the
selected dairies under the study for the period of (2000-01 to2007-
08) eight years.

Marketing & Distribution Expenses to Total Expenses Ratio of the
selected dairies under the study for the period of (2000-01 to 2007-
08) eight years.
Interest to Total Expenses Ratio of the selected dairies under the
Total Assets Turnover Ratio of the selected dairies under the study
for the period of (2000-01 to2007- 08) eight years.
Table 6 - (A) Page No - 198
Analysis of Variance (ANOVA) Test On Net Profit Among sub-groups
of Co-operative Milk Dairies.
Table 6 - (B) Page No - 210
Analysis of Variance (ANOVA) Test On Return On Net Worth Among
sub-groups of Co-operative Milk Dairies.
Current Ratio of the selected dairies under the study for the period
of (2000-01 to 2007-08) eight years.
Liquid Ratio of the selected dairies under the study for the period
of (2000-01 to 2007-08) eight years.
Acid Test Ratio of the selected dairies under the study for the
period of (2000-01 to 2007-08) eight years.
Net Working Capital Turnover Ratio of the selected dairies under
the study for the period of (2000-01 to 2007-08) eight years.
Table 7 - (A) Page No - 254

Analysis Of Variance Test (Anova) On Current Ratio Among Sub-
Groups Of Co-Operative Milk Dairies.
Table 7-(B) Page No - 263

Analysis Of Variance Test (Anova) On Liquid Ratio Among Sub-
Groups Of Co-Operative Milk Dairies.
Table 7- (C) Page No - 271

Analysis Of Variance Test (Anova) On Acid Test Ratio Among Sub-
Groups Of Co Operative Milk Dairies.
Table 7-(D) Page No - 280

Analysis Of Variance Test (Anova) On Net Working Capital Turn-
over Ratio Among Sub-Groups Of Co-Operative Milk Dairies.
Table 8.1 Page No - 296

Co-Relation Between Profitability & Liquidity Of Rajkot Co-operative
Milk Producers’ Union

Co-Relation Between Profitability & Liquidity Of Rajkot Co-operative

Co-Relation Between Profitability & Liquidity Of Valsad Co-operative

Co-Relation Between Profitability & Liquidity Of Valsad Co-operative

Co-Relation Between Profitability & Liquidity Of Mehsana Co-
operative Milk Producers’ Union

Co-Relation Between Profitability & Liquidity Of Mehsana Co-

Co-Relation Between Profitability & Liquidity Of Surat Co-operative

Co-Relation Between Profitability & Liquidity Of Surat Co-operative

Co-Relation Between Profitability & Liquidity Of Baroda Co-

Co-Relation Between Profitability & Liquidity Of Baroda Co-

Co-Relation Between Profitability & Liquidity Of Ahmedabad Co-

Co-Relation Between Profitability & Liquidity Of Ahmedabad Co-

Co-Relation Between Profitability & Liquidity Of Anand Co-operative

Co-Relation Between Profitability & Liquidity Of Anand Co-operative
List of Charts
Chart No : 6.1 Page No - 199
Sales of the selected dairies under the study for period of
(2000-01 to 2007-08) eight years.
Sales of the selected dairies under the study for period of
(2000-01 to 2007-08) eight years.
Profit of the selected dairies under the study for period of
(2000-01 to 2007-08) eight years.
Profit of the selected dairies under the study for period of
(2000-01 to 2007-08) eight years.
Net Profit Ratio of the selected dairies under the study for the
Net Profit Ratio of the selected dairies under the study for the
Return on Equity Shareholders’ Fund Ratio of the selected dairies
under the study for the period of (2000-01 to 2007-08) eight years.
Return on Equity Shareholders’ Fund Ratio of the selected dairies

under the study for the period of (2000-01 to 2007-08) eight years.

dairies under the study for the period of (2000-01 to 2007-08) eight
years.

dairies under the study for the period of (2000-01 to 2007-08) eight
years.


study for the period of (2000-01 to 2007-08) eight years
Administrative & General Expenses to Total Expenses Ratio of the
08) eight years.
Administrative & General Expenses to Total Expenses Ratio of the se-

lected dairies under the study for the period of (2000-01 to 2007-08)
eight years.
08) eight years.

selected dairies under the study for the period of (2000-01 to 2007-08)
eight years.


of (2000-01 to 2007-08) eight years.
of (2000-01 to 2007-08) eight years.
Liquid Ratio of the selected dairies under the study for the period
of (2000-01 to 2007-08) eight years.
Page No. 361
Page No. 362
Page No. 364

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Saurashtra University

Re – Accredited Grade ‘B’ by NAAC

Vala, Shivubhai C., 2011, A Comparative Study of Profitability vis-à-vis

A copy can be downloaded for personal non-commercial research or study,

This thesis cannot be reproduced or quoted extensively from without first

Saurashtra University Theses Service

"A COMPARATIVE STUDY OF

For The Degree of

"A COMPARATIVE STUDY OF

For The Degree of

Mr. SHIVUBHAI C. VALA [M.COM]

I, the undersigned, Mr. SHIVUBHAI C. VALA, a student of Doctor

That the appropriate data and the required informations were

Mr. SHIVUBHAI C. VALA [M.COM]

Dr. SANJAY J. BHAYANI

This is to certify that Mr. SHIVUBHAI C. VALA has carried out

Further, that the work as embodied in this presentation has not

Dr. SANJAY J. BHAYANI

With great pleasure I hereby present my thesis entitled,

Research is not an existing bag of techniques. Research is not a

Through research a research maker can quickly get a synopsis of

In the context of co-operative milk dairies and their profitability

co-operative dairies capable enough by the required profitability cum

To find out the answer to this problem of survival of co-operative

India is basically, an agricultural country, and mostly depends

“Amul” is the pioneer of the Dairy co-operative in Gujarat and

Eventually, the Kaira District co-operatives milk producers, Union

This research work has been completed under able guidance of

At this moment how can I forget Dr. Maheshbhai B. Chauhan

General Managers and staff of various dairies for providing me the

I would also like to thank my father – Chamanbhai, my mother -

Mr. SHIVUBHAI C. VALA

CH - 1 INTRODUCTION TO CO-OPERATIVE (01)

CH - 2 THE CONCEPT AND MEASUREMENT OF (71)

CH - 3 THE CONCEPT AND MEASUREMENT OF (100)

CH - 4 RESEARCH METHODOLOGY (117)

CH - 5 THE SAMPLE PROFILE (139)

CH - 6 ANALYSIS OF PROFITABILITY (183)

CH - 7 ANALYSIS OF LIQUIDITY (244)

CH - 8 A STUDY OF RELATIONSHIP BETWEEN

CH - 9 SUMMARY OF FINDING AND SUGGESTIONS

Table No : 6.8 Page No - 230

Table 7 - (A) Page No - 254

Table 7-(B) Page No - 263

Table 7- (C) Page No - 271

Table 7-(D) Page No - 280

Table 8.1 Page No - 296

Table 8.2 Page No - 297

Table 8.3 Page No - 299

Table 8.4 Page No - 300

Table 8.5 Page No - 301

Table 8.6 Page No - 302

Table 8.7 Page No - 303

Table 8.8 Page No - 304

Table 8.9 Page No - 306

Table 8.10 Page No - 307

Table 8.11 Page No - 308

Table 8.12 Page No - 309

Table 8.13 Page No - 310