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FOOD INDUSTRY IN INDIA Introduction Propelled by the increasing disposable income, the food sector has been witnessing

a marked change in consumption pattern. Currently, India is the worlds second largest producer of food in the world and the food processing industry is the one of the largest industries in India. In terms of production, consumption, export and expected growth, India is ranked fifth in the world. Indias food industry is valued at US$ 180 billion of which the food processing industry is estimated at US$ 67 billion, according to a report Food Processing and Agri Business, done by KPMG. The industry size has been estimated at US$ 70 billion by the Ministry of Food Processing, Government of India. The food processing industry contributed 6.3 per cent to Indias GDP in 2003 and had a share of 6 per cent in total industrial production. The industry employs 1.6 million workers directly. The industry is estimated to be growing at 9-12 per cent during the period 2002 to 2007. Value addition of food products is expected to increase from the current 8 per cent to 35 per cent by the end of 2025. Fruit & vegetable processing, which is currently around 2 per cent of total production will increase to 10 per cent by 2010 and to 25 per cent by 2025. The highest share of processed food is in the dairy sector, where 37 per cent of the total produce is processed, of this only 15 per cent is processed by the organized sector. The food processing industry in the country is on track to ensure profitability in the coming decades. The sector is expected to attract phenomenal investments of about Rs 1,400 billion in the next decade. Exports Exports of agricultural products from India are expected to cross around US$ 22 billion mark by 2014 and account for 5 per cent of the worlds agriculture exports, according to the Agricultural and Processed Food Products Export Development Authority (APEDA). Exports of floriculture, fresh fruits and vegetables, processed fruits and vegetables, animal products, other processed foods and cereals stood at Rs 17728.71 from September 2010-2011, according to DGCIS annual data published by APEDA. India will be setting up a global platform for spice trade. The organization named World Spice Organisation (WSO) will be headquartered in the Kochi, Kerela. Spice related organizations across the world will be coordinating prices across the world and address the issue of food safety regulations through WSO. Spices The export of spices and spice-based value added products during April-February 2010-11 was US$ 1,323.28 compared to the US$ 1,063.44 in the same period last year.

Fishery Fish production of the country has been growing continuously with improvement in productivity and utilisation of untapped resources. The total fish production is 6.4 million metric tonnes (mmt) of which 3.4 mmt is inland and 3.0 mmt is marine production. The Fishery sector contributes about 1.21 per cent of the total GDP and 5.37 per cent of the GDP from agriculture sector and provides employment to 14 million people. Food Processing FDI inflows to Food Processing Industries has set a target of USD 25.07 billion to be achieved by 2015. Food processing industry is accounts for 32 per cent share in the entire food industry. It comprises of 2 per cent of fruits and vegetables and 15 per cent of processed milk. This industry contributes to 6.3 per cent of the GDP and about 13 per cent to export production. The food processing industry is expected to witness a growth of 10 per cent in the recent years to come. The food processing sector attracted US$ 130 million of foreign direct investment (FDI) in the first eight months of the fiscal as compared to total FDI of US$ 1.2 billion. Besides attracting FDI through schemes like mega food park, the government has also extended several fiscal incentives during this financial year to enhance FDI in food processing sector, including full exemption from excise duty for specified equipments to preserve, store or transport apiary , horticultural, dairy, poultry, aquatic and marine produce and meat and its processing products. Beverages According to a report published by market research firm RNCOS in August 2009, titled "Indian Non-Alcoholic Drinks Forecast to 2012", the Indian non-alcoholic drinks market was estimated at around US$ 4.43 billion in 2008 and is expected to grow at a CAGR of around 15 per cent during 2009-2012. As per the report, the fruit/vegetable juice market will grow at a CAGR of around 30 per cent in value terms during 2009-2012, followed by the energy drinks segment which will grow at a CAGR of around 29 per cent during the same period. Major Investments
y

Himalaya International, an agriculture export-oriented company, its setting up the first unit of its food processing plant set up at Vadnagar in Gujarats Mehsana district with an investment of US$ 29 million. The unit has started commercial production. Nestle India has opened its ninth manufacturing facility in Himachal Pradesh. The overall investment in the facility will be anywhere between US$ 90-110 million and will manufacture chocolates and noodles.

CG Foods set up by Singapore-based Cinnovation Group will US$ 9 million for establishing a manufacturing plant in Gujarat. The investment will be made over the period of next three years. Spar hypermarkets and supermarkets, the worlds largest food retail chain, will be opening its outlest in Delhi after having set up five stores in southern cities such as Bangalore, Mangalore and Hyderabad.

Government Initiatives In the budget 2011-12, the Union Finance Minister, Shri Pranab Mukherjee announced to set up 15 more mega food parks (MFPs) and also urged that the states should reform the Agriculture Produce Marketing Act (APMC) to improve the supply chain. He also added that in the 11th Five year plan, the number of food parks will be increased to a total of 30. The budget also allocated US$ 135 million to the Food Processing Ministry from the existing US$ 90 million. As a measure to boost investment in agriculture the minister extended the Viability Gap Funding Scheme (VGFS) for public private partnerships (PPP) for setting up modern storage capacity besides giving infrastructure status to cold chains. Vision 2015 was announced by the Government of India, which suggested the strategy to ensure faster growth of the food processing sector. The Vision 2015 provides for enhancing the level of processing of perishable to 20 per cent, enhancing value addition to 35 per cent. Looking Ahead According to an industry body and E&Y study on the Indian food industry called 'Flavours of Incredible India Opportunities in the Food Industry', published in October 2009, investment opportunities in the Indian food industry are set to shoot up by a huge 42.5 per cent to US$ 181 billion in 2015 and to US$ 318 billion by 2020. 2.3 SCOPE OF THE STUDY Receivables means Collecting the debt owed to the company, by thecustomers arising from the sale of goods or services in the ordinary course of businessmoney owned by customers/ individuals/ corporation to another entity in exchange forgoods and services that have been delivered or used by not yet paid for receivableusually come in the form of operating lines of credit and are usually due within arelatively short time period. The sale of goods on credit is an essential part of any modern andcompetitive economic system like India. Credit sale and therefore receivables aretreated as marketing tools to aid the sale of goods. The study aims at analyzing thedebtors and outstanding or amount of its company. It is hoped that this study will helpthe company in reducing its investment in Accounts Receivables.

FINANCIAL RATIOS: Financial ratios are useful indicators of a firm's performance and financialsituation. Most ratios can be calculated from information provided by the financialstatements. Financial ratios can be used to analyze trends and to compare the firm'sfinancials to those of other firms. In some cases, ratio analysis can predict futurebankruptcy. Financial ratios can be classified according to the information they provide. The following types of ratios frequently are used: Liquidity ratios Asset turnover ratios Use and Limitations of Financial Ratios Attention should be given to the following issues when using financial ratios. y A reference point is needed. To be meaningful, most ratios must be compared to historical values of the same firm, the firm's forecasts, or ratios of similar firms. Most ratios by themselves are not highly meaningful. They should be viewedas indicators, with several of them combined to paint a picture of the firm'ssituation. Year-end values may not be representative. Certain account balances that areused to calculate ratios may increase or decrease at the end of the accountingperiod because of seasonal factors. Such changes may distort the value of theratio. Average values should be used when they are available. Ratios are subject to the limitations of accounting methods. Different accounting choices may result in significantly different ratio values. RESEARCH METHODOLOGY This project study is aimed at analyzing the receivable management and its impact at GTC (P) Ltd. RESEARCH: Systematic and organized effort to investigate a scientific problem. Identify the problem. Gather information. Analyze the data. Take corrective action and solve the problem. RESEARCH METHODOLOGY:

It is the way to systematically solve the research problem. This study onReceivable Management is an analytical study because the facts and information thatis readily available are being used to make critical evaluation of receivableManagement at GTC (P) Ltd. RESEARCH DESIGN: Research design is a blue print or a planned procedure for conducting research program. RESEARCH DESIGN USED IN THE STUDY: ANALYTICAL RESEARC The researcher has to use facts or information already available and analyze those facts to make a critical evaluation of the Receivable Management. DATA COLLECTION METHOD: Nature of Data The data collected is secondary in nature. This is due to the nature of analysis, which only call for secondary data. Source of Data The source of data is the various years balance sheet, profit and lossaccount and statements provided by the GTC (P) Ltd. They were used forthe analysis and for preparing reports. The records maintained by the companywhere referred to get the required information. TOOLS AND TECHNIQUIES FOR ANALYSIS : Various tools and techniques are used for the analysis are as follows. FINANCIAL ANALYSIS: Trend Projection Comparative Statement Ratio Analysis Ageing schedule STATISTICAL ANALYSIS: Trend Analysis Correlation Analysis PERCENTAGE ANALYSIS: Is this study is used to find the variation percentage i.e., the increase and decrease which is helpful to have a look over in the trend. COMPARATIVE STATEMENT: Comparative financial statement is a statement of the financial

Position of a business, which are prepared in such a way as to provide, at a timeperspective to the various element embodied in such a statements. These statementsmainly include two types of analytical statement namely Comparative balance sheet Comparative income statement They facilitate comparison among two or more similar firms, preferable in thesame industry. Comparison may be regarding profitability and financial position.Comparative financial statement shows the following information for analyticalpurposes: Actual data in absolute money, as given in the financial statement for the period under consideration Increase or decrease in various items in money value Increase or decrease in various items in terms of percentage RATIO ANALYSIS: Ratio: The term ration refers to the numerical or quantitative relationshipbetween two figures. A ratio is the relationship between two figures, and obtainedby dividing the former by the latter. Ratios are designed to show how one numberis related to another. It is worked out by dividing one number by another. Percentage If 100 multiply the quotient obtained, the unit of expression is termed as percentage Ratio can be expressed in two ways Times Percentage Times: When another divides one value, the unit used to express the quotient is termed as Time. CURRET RATIO: Current Ratio is expresses relationship between current assets and currentliabilities. It is the most common ratio for measuring liquidity. Being related toworking capital analysis, it is also called the working capital ratio. The current ratio isthe ratio of total current assets to current liabilities.

The current ratio of a firm measures its short-term solvency. It is ability tomeet shortterm obligations. As a measure of short-term financial liquidity, itindicates the rupees of current sales available for each rupees of current liability orobligation. The higher the current ratio, the larger the amount of rupees available perrupee of current liability, the more the firms ability to meet current obligations andthe greater the safety of funds of short-term creditors. Formula Current Assets Current Ratio= ---------------------------Current Liabilities Current Assets Which assets are easy to converted cash or which assets are easy to realizedwithin one year, is called current assets. The currents assets of a firm representthose assets, which can be in the ordinary course of business converted onto cashwithin period not exceeding one year. Examples Cash in hand Cash at bank Debtors Bills Receivable Prepaid Expenses Stock Current Liabilities Current liabilities are those amounts which are payable within a period of one year. Examples Creditors Bills payable Bank Overdraft Outstanding Expenses

QUICK RATIO Quick ratio is also known as liquid ratio or acid test ratio or near moneyratio. It is the ratio between quick or liquid assets and quick liabilities. It indicatesthe relation between strictly liquid assets whose value is almost certain on thehand, and strictly liquid liabilities one the other. Formula Liquid Assets Liquid ratio =----------------------------Current Liabilities Liquid Assets Liquid assets means, which assets are immediately convertible into cash without much loss. Liquid Assets = Current Assets (Stock and Prepaid Expenses) Liquid Liabilities Liquid liabilities means liabilities which are payable within a short period. Liquid Liabilities = Current liabilities Bank Overdraft DEBTORS TURNOVER RATIO This is also called Debtor Velocity or Receivable Turnover. A firmsells goods on credit and cash basis. When the firm extends credits to itscustomers, book debts (Debtors or Account Receivable) are created in the firmsaccount. Debtors expected to be converted into cash over short period and thusincluded in current assets. A debtor includes the amount of Bills Receivable andBook Debts at the end of accounting period. It is most essential that a reasonablequantitative relationship not been able to collect within a reasonable time its fundsare unnecessarily locked up in receivables. In such case short term loans have tobe arranged for paying off its current liabilities. The liquidity position of the firmdepends on the quality of debtors to a great extent. The purpose of this ratio is to measure the liquidity of the receivables or to find out the period over which receivables remain uncollected. Financial analysts to judge the liquidity of a firm use two ratios. They are Debtors turnover ratio Debt collection period ratio Formula Net Credit Sales Debtors Turnover ratio= -------------------------------------------Average Accounts Receivables Account Receivable = Debtors + Bills Receivables Average Account Receivable = Opening Stock + Closing Stock ---------------------------------------------2 DEBT COLLECTION PERIOD This ratio indicates the extent to which the debts have been collected in time. It gives the average debt collection period. The ratio is very helpful to the lenders because it explains to them

whether their borrowers are collection money within a reasonable time. An increase in the period will result in greater blockage of funds in debtors. Formula Days in the year Debt collection period =-----------------------------Debtors Turnover Ratio

CREDITORS TURNOVER RATIO This is also known as Account payable or Creditor Velocity. A business firm usually purchases on credit goods, raw material and services from other firm. The amount of total payables of a business concern depends upon the purchases policy of the concern, the quantity of purchases and suppliers credit policy. Longer the period of outstanding payables is, lesser is the problem of working capital of the form. But when the firm does not pay of its creditors within time, it may have adverse effect on the business. Credit turnover indicates the speed with which the payments for credit purchases are made to the creditors. It signifies the credit period enjoyed by the firm paying creditors. Formula Net Purchase Credit Turnover Ratio = ------------------------------------Average Accounts Payable Account payable = Creditors + Bills Payable Opening Stock + Closing Stock Average Account Payable = ----------------------------------------------------2 DEBT PAYMENT PERIOD This ratio gives the average credit period enjoyed from the creditors. Formula Debt payment period = Days in the year Creditors Turnover Ratio AGEING SHEDULE: The company monthly prepares the Ageing Schedule to monitor and control its book debts. The monthly ageing schedule is prepared according to the outstanding days. These ageing

schedules have been analyzed to come out with average outstanding days of the book debts of the company. CORRELATION CO - EFFICIENT ANALYSIS A measure of the strength of linear association between two variables. Correlation will always between -1.0 and +1.0. If the correlation is positive, we have a positive relationship. If it is negative, the relationship is negative. Use the Correlation transformer to determine the extent to which changes in the value of an attribute (such as length of employment) are associated with changes in another attribute (such as salary). The data for a correlation analysis consists of two input columns. Each column contains values for one of the attributes of interest. The Correlation transformer can calculate various measures of association between the two input columns. You can select more than one statistic to calculate for a given pair of input columns. The data in the input columns also can be treated as a sample obtained from a larger population, and the Correlation transformer can be used to test whether the attributes are correlated in the population. In this context, the null hypothesis asserts that the two attributes are not correlated, and the alternative hypothesis asserts that the attributes are correlated. The Correlation transformer calculates any of the following correlationrelated statistics on one or more pairs of columns. Formula r= NXY (X) (Y) [N X2 - ( X)2] [N Y2 - ( Y)2]) N= Number of values or elements X = First Score Y = Second Score XY = Sum of the product of first and Second Scores X = Sum of First Scores Y = Sum of Second Scores X2 = Sum of square First Scores Y2 = Sum of square Second Scores TREND ANALYSIS

The procedure by which the time related factors that influence the values observed in the time series are identified and segregated is called Time series Analysis.The general long term movement, which increases or decreases in the time series values over an extended period of years, is called Trend or Secular Trend. TREND ANALYSIS The procedure by which the time related factors that influence the values observed in the time series are identified and segregated is called Time series Analysis.The general long term movement, which increases or decreases in the time series values over an extended period of years, is called Trend or Secular Trend. It is a set of observation taken at specified time interval, usually at Equal Intervals from a sufficiently long period of time. They help in making estimates of futures. The estimate made for the future period is forecasts. This is the best method for obtaining the trend values. It provides a convenient basis for obtaining the line of best fit in a series. Line of the best fit is a line from which the sum of the deviation of various points on either side in zero. Further the sum of the squares of these deviations would be the least as compared to the sum of squares of the deviations obtained by using other lines. For this reason the sum of squares of the deviations of various points from the line of the Best Fit is the least. The straight line trend has an equation of the type Y = a+bX Where Y ----Estimated values of the trend X ---Deviation in time period a & b - - - - Constraints Merits: This method gives the trend values for the entire time period. It can be used to forecast future trend because trend line establishes a functional relationship between the values and the time. This method is a completely objective method

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