1

A Project Report On

Working Capital Management in Contract Broiler Farming Sector

for

‘’OM CHICKS INDIA PVT. LTD.’’

By

"MR. PRASAD GANESH GAVHANE”

Under the guidance of "Prof. Kiran Patil”

Submitted to
"Savitribai Phule Pune University"

In partial fulfillment of the requirement for the award of the degree of

Master of Business Administration (MBA)
ALARD

Alard Institute of Management Sciences, Pune

 2

DECLARATION BY THE CANDIDATE

I undersigned ,Mr.PRASAD GANESH GAVHANE declare that the project entitled -“A

Study On Working capital management in contract broiler farming company which

named as OM CHICKS INDIA PVT. LTD. is the record of work carried out by me, under

the guidance of MR. POPAT CHAVHAN (FINANCE MANAGER ) and has not formed the

basis for the award of any degree, diploma, associate ship, fellowship, titles in this or any

other university or other institution of higher learning. I further declare that the material

obtained from other sources has been duly acknowledged in the project.

Date: - / /2019 Mr. Prasad G. Gavhane

Place: Pune
 3

CERTIFICATE OF THE RESEARCH GUIDE

Certified that the work incorporated in the project“A Study On Working capital

management in contract broiler farming company submitted by Mr. Prasad Ganesh

Gavhane carried out by the candidate under my supervision /guidance. Material obtained

from other sources has been duly acknowledged in the project.

Date: / / 2019 Research Guide Name

Place: Pune
 4

ACKNOWLEDGEMENT

I hereby take immense pleasure to express my gratitude towards OM CHICKS INDIA PVT.

LTD. Khutbav, Pune- 412203 “for giving me an opportunity for the summer internship

project at their esteemed organization. I express my hearty thanks to Alard Institute of

Management Science and SavitribaiPhulePune University for providing the platform for

getting the practical knowledge during 2019-2020.I am grateful to Director of Alard Institute

of managementSciencefor expert guidance. I remain indebted to my respected guide Prof.

Kiran Patil and all teachers for helping, guiding and monitoring me to complete this work.I

would also like to thank those who supported me and provided prompt help for the

completion of this project successfully.

Mr. Prasad G. Gavhane

 5

INDEX

Sr.
Detailed Contents Page No (only
No
as Guidelines)
1 INTRODUCTION 6
OBJECTIVE 7
SCOPE 8-9

2 INDUSTRY / SECTOR PROFILE

INTRODUCTION ( limited to 05 pages) 10

3 COMPANY PROFILE; Actual data of respective industry)

COMPANY HISTORY 11-12
VISION MISSION 13-14
ACHIEVMENTS ACCOLADES 15-18
GLOBAL PRESENCE 18-25
OTHER DETAILS 25-33
4 PRODUCT PROFILE 34

5 LITERATURE REVIEW: 35-43

BACKGROUOND SOURCES, INTERNET REFERENCES, MODELS (if any), any
44-61
other supportive information.

6 RESEARCH METHODOLOGY 62
RES OBJECTIVES, RES DESIGN, RES TOOL, TYPE OF RES,

SAMPLING, SAMPLING BREAK UP AND SIZE, SAMPLE FRAME

DATA COLLECTION- PROCEDURE DISPLAYING FLOW CHART

7 DATA ANALYSIS AND INTERPRETATION

TABLES AND GRAPHICAL REPRESENTATION ALONG WITH
44-60
INTERPRETATION.
OBSERVATIONS /FINDINGS/ SUGGESTIONS/ RECOMMENDATIONS/
8 63-64
CONCLUSION
9 LIMITATIONS 65
APPENDIX 66
I BIBLIOGRAPHY 66
ANNEXURE- QUESTIONNAIRE, ANNUAL REPORTS, ANY OTHER
ii
DATA FROM COMPANY/MEDIA.
 6

INTRODUCTION

Effective financial management is the outcome, among many other things of proper,

management of investment of funds in business funds can be invested for permanent or long-term

purposes, such as acquisition of fixed assets, diversification and expansion of business, renovation or

modernization of plants an machinery and research & development.

Funds are also needed for short-term purpose, i.e., for current operations of the business, for
example, in a manufacturing concern, procurement for raw material, payment if wages, general

expenses. All the goods so manufactured in a given time period, may not be sold in that time frame

itself.

Hence, some goods remain in stock, like raw material, semi finished goods, finished

marketable goods, etc., Funds are thus blocked in a various types of inventory. Every after, sales, may

not necessarily be cash sales, even credit sales may be present. It again constitutes to blockage of

funds.

Working capital refers to a firm's investment in short-term assets, viz., cash, short-term

securities, debtors, etc., It can also be regarded as that portion of the firm's total capital which is
employed in short-term operations. It refers to all aspects of current assets and current liabilities. In

simple terms, working capital is the investment needed or day-to-day operations.

Change in its value or without affecting the operations of any firm. Current liabilities are those

liabilities, which are intended to be paid within a year out of the current assets or the firm's earnings.

The main aims of working capital management is to manage the current assets and current

liabilities in such a way that satisfactory level of working capital is maintained. This is due to the fact
that if working capital management of the firm is inefficient, it is likely to become insolvent or even may

be forced to bankruptcy. The current assets should be large enough to cover its current liabilities to

ensure a reasonable margin of safety.

 7

OBJECTIVES OF WORKING CAPITAL MANAGEMENT

The primary objective of working capital management is to ensure smooth operating cycle of the

business. Secondary objectives are to optimize the level of working capital and minimize the cost of
such funds.

The superior objective of financial management is wealth maximization and that can be gained by

profit maximization accompanied with sustainable growth and development. For sustainable growth
and development, the objectives of all the stakeholders including customers, suppliers, employees, etc

should be aligned to the growth of the organization.

A) SMOOTH WORKING CAPITAL OPERATING CYCLE

1. It means raw material should be present on the requirement and it should not be a cause to stoppages

of production.

2. All other requirements of production should be in place before time.

3. The finished goods should be sold as early as possible once they are produced and inventoried.

4. The accounts receivable should be collected on time.

5. Accounts payable should be paid when due without any delay.

6. Cash should be available as and when required along with some cushion.

B) LOWEST WORKING CAPITAL

Working capital here refers to the current assets less current liabilities (net working capital). It should
be optimized because higher working capital means higher interest cost and lower working capital

means a risk of disturbance of operating cycle.

C) OPTIMAL RETURN ON CURRENT ASSET INVESTMENT

The return on the investment made in current assets should be more than the weighted average cost of
capital so as to ensure wealth maximization of the owners. In other words, the rate of return earned

due to investment in current assets should be more than the rate of interest or cost of capital used for

financing the current assets.

 8

D) MTNTMTZE RATE OF INTEREST OR COST OF CAPITAL

The cost of capital utilized on working capital should be minimized so as to achieve higher profitability.

If the investment in working capital involves bank finance, interest rates should be negotiated with the

bank.

Cost can be minimized by utilizing long-term funds but in a proper mix. While deciding the mix of
working capital, the fundamental principle of financial management should be kept in mind that fixed

assets and permanent assets should be financed by long term sources of finance of approximately

same maturity and short-term or temporary assets should be financed by short-term sources of
finance.

SCOPE OF WORKING CAPITAL MANAGEMENT

Working capital plays a vital role in business. This capital remains blocked in raw materials, work in

progress, finished products and with customers.

The needs for working capital are as given below:

i. Adequate working capital is needed to maintain a regular supply of raw materials, which in turn
facilitates smoother running of production process.

ii. Working capital ensures the regular and timely payment of wages and salaries, thereby improving
the morale and efficiency of employees.

iii. Working capital is needed for the efficient use of fixed assets.

iv. In order to enhance goodwill a healthy level of working capital is needed. It is necessary to build a

good reputation and to make payments to creditors in time.

v. Working capital helps avoid the possibility of under-capitalization.

vi. It is needed to pick up stock of raw materials even during economic depression.

vii. Working capital is needed in order to pay fair rate of dividend and interest in time, which increases
the confidence of the investors in the firm.
 9

IMPORTANCE OF WORKING CAPITAL:

It is said that working capital is the lifeblood of a business. Every business needs funds in order to run

its day-to-day activities.

The importance of working capital can be better understood by the following:

i. It helps measure profitability of an enterprise. In its absence, there would be neither production nor

profit.

ii. Without adequate working capital an entity cannot meet its short-term liabilities in time.

iii. A firm having a healthy working capital position can get loans easily from the market due to its

high reputation or goodwill.

iv. Sufficient working capital helps maintain an uninterrupted flow of production by supplying raw

materials and payment of wages.

v. Sound working capital helps maintain optimum level of investment in current assets.

vi. It enhances liquidity, solvency, credit worthiness and reputation of enterprise.

vii. It provides necessary funds to meet unforeseen contingencies and thus helps the enterprise run

successfully during periods of crisis.

 10

COMPANY PROFILE

Om chicks, known for its finest quality and taste is already a favorite among many Indian households.

Reared from the finest breed of carefully selected chicks,om chiks is the leader in the Indian broiler

chicken market.

Om chiks innovation and efforts to maintain consistency, highest quality and hygiene standards are

well appreciated by the many that savor the taste of its good chicken. A well controlled process

ensures you get nothing but the freshest of chicken straight from the farms. Grown in natural conditions

with nutrition rich feed, you can be assured that every bite is tender and juicy.

This superior quality chicken is now available at affordable prices. Through a nationwide network of

over 25,000 retail outlets. The next time you are out shopping, look out for the om chicks Chicken sign

in any of your neighborhood chicken stores. And always ask your retailer for om chiks.
 11

COMPANY HISRORY

Om Chicks (india) Private Limited is a Private incorporated on 25 May 2011. It is classified as Non-

govt company and is registered at Registrar of Companies, Pune. Its authorized share capital is Rs.

10,000,000 and its paid up capital is Rs. 9,900,000. It is inolved in Agricultural and animal husbandry

service activities, except veterinary activities.[This class includes specialized activities, on a fee or

contract basis, mostly performed on the farm.]

Om Chicks (india) Private Limited's Annual General Meeting (AGM) was last held on 30 September

2018 and as per records from Ministry of Corporate Affairs (MCA), its balance sheet was last filed on

31 March 2018.

Directors of Om Chicks (india) Private Limited are Rajendra Tukaram Thorat, Vanita Rajendra Thorat

and Om Chicks (india) Private Limited's Corporate Identification Number is (CIN)

U01400PN2011PTC139652 and its registration number is 139652.Its Email address is

trajuomchick@gmail.com and its registered address is TREASURE PARK, 'C' BUIDING, FLAT NO.

1201,
SANG NAGAR, ARANYESHWAR PUNE MH 411009 IN.
 12

MORE INFORMATION

27AABCO4908R1ZV
GST IN CIN
U01400PN2011PTC139652

Date of Incorporation 25 May, 2011

Status Active

Company Category Company limited by Shares

Company Sub-category Non-govt company

Company Class Private

Business Activity Agriculture and Allied Activities

Authorized Capital 100.0 lakhs

Paid-up Capital 99.0 lakhs

Paid-up Capital % 99.0

Registrar Office City Pune

Registered State Maharashtra

Registration Number 139652

Registration Date 25 May, 2011

Listing Status Unlisted

AGM last held on 30 Sep, 2017

Balance Sheet last updated on 31 Mar, 2017

Authorised Capital 10,000,000

Paid Up Capital 9,900,000

 13

VISION &MISSION

VISION

OM CHICKS INDIA Group look forward to making big strides in our more recent ventures, which

include our Contract Broiler Farming core business and our Poultry farming & feed business.

Today, A growing economy is expected to increase consumer spending power and in turn lead to
higher consumption patterns. This is likely to boost demand for our poultry Farming as well as Poultry

Feed products. The Om Chicks Group is looking to leverage the potential offered by the development

of the retail sector as well as the demand from hotels and restaurants.

We will also be leveraging new opportunities or need-gaps that could arise in the market in the near

future. Our operating systems are powered by the strong advanced infrastructure apart from

exceptionally knowledgeable & dedicated people. This fine balance between the human element and

technological expertise has been our biggest strength.

 14

MISSION

"Premium quality Broiler feed for Better Performance"

Our mission is to focus on our contract Broiler Farmers delight by providing quality Broiler feed and
good technical services under supervision of veterinarian Doctors. We have doing continuous
improvements in all aspects of our Quality with the help of our experienced and skilled professional
team. We have to become great workplace and reliable productivity of Broiler and best of best service
provider.

We believe in...

• Delight of our contract Broiler farmers, suppliers and at all employees those are hard workers.
• Transparency in all processes with our internal working team and external customers.
• Continuous development and learning process for new one.
• Innovation in products and services for Better Productivity.
• Sharing of knowledge among our contract Broiler farmers and employees.
• Admiring achievements, skills and talent by rewarding broiler production teams.
• Professionalism with team work.
• Best quality for commercial Broiler poultry feed, Layer feed & Breeder Feed.

We Promise to...

• To provide appropriate and balanced nutritional solutions to customers.

• To provide consistent quality of all its products throughout the year in all climatic conditions.
• To provide technical services to farmers to enable them to run their business profitably.
• To continue and upgrade its research and development activities constantly to provide better
products & technical aspects for poultry farming

In addition, we are publishing a bi-monthly technical Bulletin "ANAND WARTHA" with technical
inputs, advancement in poultry farming and Knowledge to help the Farmers. The Bulletin is published
in local language Marathi.

We also organize technical seminars in all our operational areas for farmers to aware them poultry
related latest technical information.
 15

ACHIEVEMENTS

The 2017 broiler production is projected at 4.5 million tons which is approximately seven

percent more from last year possibly because of rising domestic demand for poultry meat. The growth
in the broiler segment is expected to remain strong due to consumer preference for poultry, increasing

income levels, and changing food habits. The live market sales of broiler meat still constitute more than

90-95 percent of total volume of sales; the processed chicken meat segment comprises only about 5%
of total production. More than 80 percent of India's poultry output is produced by organized commercial

farms. Major poultry companies have vertically integrated operations which comprise approximately 60-

70 percent of the total chicken production. Major companies/ integrators, own hatcheries, feed mills,

and primary processing facilities and often provide credit, extension services, and veterinary medicine

to the contractual farmers. Integrators contract with multiple smaller farmers who rear the chicks to

slaughter weight. The live birds are then either purchased by the integrators for slaughter and further
processing or by a wholesaler who distributes them via live markets. Broiler production is mainly

concentrated in the states of Tamil Nadu, Andhra Pradesh, Maharashtra, Uttar Pradesh, and

Telangana. The Cobb breed constitutes around 65-70 percent of the broiler market. The grandparent
stock for Vencobb is owned by one major enterprise which sells parent stock to multiple integrators

throughout India. Other popular breeds in India include Ross, Marshall, Hubbard, Hybro Avian, and

Anak. The size of the poultry farms varies significantly from small farms with just 200 birds to large

farms of more than 50,000 birds. Most of the poultry farms are simple open sheds while only a few

large poultry integrators have controlled-environment housing with automatic feeding and drinking

systems. High capital costs and unreliable power supplies restrict large scale adoption of the controlled

environment poultry barn model in India. The broilers in India are usually reared for 35-40 days to a

market weight of 1.8 to 2.2 kg. The feed conversion ratio for broilers has reportedly improved

considerably over the years to 1.65 from 2.2 in the 1990s. Supply-demand situations generate
significant seasonal fluctuation in broiler prices: prices may rise in summer due to reduced production

but decline during certain Hindu festivals. The major industry players attempt to support prices by

reducing chick placements when demand falls. Global share of major broiler meat producers (2016) 3.2
Market size and placement of birds: The average bird placement in broiler segment is 65-70 million

birds per week. Five major players (Suguna in Coimbatore, Venky's and Om chicks in Pune, CP,

Sneha, and Shalimar in Kolkata) constitute 60 per cent of the broiler meat market. The average live wt
of 1.8-2.2 Kg. Broiler meat production has been growing in India at a rate of 7-8 per cent. One third of

the production is carried out by 14% 13% 14% 5% 4% 4% 2% 2% 2%

 16

2% 17% 21% Brazil European Union China India Russia Mexico Argentina Turkey Thailand Indonesia

Others United States 10 individual farmers while two third by contract farmers (integration farmers).

Average farm size is 7000-8000 birds. Birds' placement depends on feed prices, status of disease

outbreaks, financial status of farmers and the profitability related to the prevailing demand and price of

final product in the market. Feed price constitutes around 80 percent of the total production cost and

therefore is the major component in changing production and marketing scenario of poultry and poultry

products. At lesser feed prices, more farmers are willing to enter into the business and most of them

would want to place more birds. In absence of any suitable market information, it becomes hard to

assess the demand much well in advance every year emphasizing the importance of availability of

suitable market information. The industry should work together to assess the actual market size and

must introduce a mechanism where demand patterns of the population can be assessed. (Credit: GAIN
report, 2016).

Broiler Poultry- Growth Rate S.No. Year Poultry Production (million tons) % annual poultry

production growth rate 1. 2011-12 2.48 13.22% 2. 2012-13 2.68 8.01% 3. 2013-14 1.92 -28.50% 4.

2014-15 3.05 59.16% 5. 2015-16 3.26 6.75% 6. 2016-17 3.46 6.13% The poultry meat growth is

showing fluctuations as the data collection is being standardized and now, commercial poultry and

other than commercial poultry data is also gathered.

Broiler Poultry Growth Rate

SR. NO Year

Poultry Production % annual Production

(Million Tons) growth Rate

1 2011-12 2.48 13.22%

2 2012-13 2.68 8.01%

3 2013-14 1.92 28.50%

4 2014-15 3.05 59.16@%

5 2015-16 3.26 6.75%

6 2016-17 3.46 6.13%

 17

Feed consumption of Bird

Feed Cumulative Average Body Average Body

Age
Consumed Per Feed Weight Per Bird (kg) Weight Gain Per
(Week)
Bird (kg) Consumed (kg) Bird (kg)

Week 1 0.163 0.163 0.179 0.137

Week 2 0.365 0.528 0.45 0.271

Week 3 0.631 1.159 0.868 0.418

Week 4 0.921 2.08 1.406 0.538

Week 5 1.186 3.266 2.013 0.607

Week 6 1.389 4.655 2.637 0.624

Sr. No Historic and Modern

Number of Hatcheries 11,405 (1934) 323 (2001)i24i

Incubator Capacity 276 million eggs (1934) 862 million eggs (2001)[34]

Hatchery Average Incubation Capacity 24,224 eggs (1934) 2.7 million eggs (2001)1241

Annual Broiler Production 366 million broilers (1945) 8.4 billion broilers (2001)1341

Average live weight 3.03 pounds (1945) 5.06 pounds (2001)1341

Live weight price 36 cents per pound (1948) 39.3 cents per pound (2001)1341
 18

Feed Conversion Efficiency Feed 4.70 lbs feed per lb live weight1.83 lbs feed per lb live weight
(1925) (2017)[2§i
conversion ratio

Mortality 18% (1925) 4.5% (2017)[2a

GLOBAL PRESENCE

The poultry sector has undergone major structural changes during the past two decades due to the

introduction of modern intensive production methods, genetic improvements, improved preventive

disease control and biosecurity measures, increasing income and human population, and urbanization.

These changes offer tremendous opportunities for poultry producers, particularly smallholders, to

improve their farm income. Evidence from case studies shows that it is difficult to see a bright future for

smallholder poultry production in a rapidly changing industry structure; however, smallholders can still

compete with larger producers with savings that smaller units can achieve because of foregone or

cheaper overheads, lower labour costs per unit and, possibly, more intensive supervision, leading to
relatively high-profit efficiencies.

Smallholders also have problems meeting high demands for food safety, traceability and compliance,
because of high coordination costs and high transaction and marketing costs. Increasingly it appears

that smallholders' ability to maintain their competitiveness in these types of markets is dictated by their

ability to establish market trust and reputation along the marketing and distribution channels.
 19

Changes in the structure of the poultry sector in developing countries

over the last four decades, there has been rapid growth in livestock production and a rapid change in

how animal products are produced, processed, consumed and marketed. Growth in livestock
production in both developed and developing countries has been led by poultry. From the 1990s to

2005, consumption of poultry meat in developing countries increased by 35 million tonnes - almost

double the increase that occurred in developed countries.

The increase in poultry meat consumption has been most evident in East and Southeast Asia and in

Latin America, particularly in China and Brazil.The share of the world's poultry meat consumed in

developing countries rose from 43 to 54 percent between 1990 and 2005, which accounted for 36

percent of the large net increase in meat consumption in developing countries over this period. Further,

the proportion of the world's poultry meat produced in developing countries rose from 42 to 57 percent.
It is estimated that production and consumption of poultry meat in developing countries will increase by

3.6 percent and 3.5 percent, respectively, per annum from 2005 to 2030 because of rising incomes,

diversification of diets and expanding markets, particularly in Brazil, China and India.

The trends described above, and our current knowledge of smallholder involvement, raise a critical

issue: for once, a sector in which the poor are heavily involved is growing. In fact, pork and poultry are

the prominent growth sectors of developing-country agriculture. If the poor fail to remain active or

participate in this sector, they will miss a tremendous opportunity to improve their livelihoods. If they

participate, farm income could rise dramatically; however, the conditions under which this could occur

are unclear. Although the above-mentioned issues are real, it has also been suggested that the

principal reason for the exit of smallholders from livestock production in developed countries is that

they are not competitive enough, with the larger operations that benefit from both technical and

allocative economies, embodied in genetic improvement of animals and feeds or improved organization

- especially in the case of poultry and pig production where profitable adoption simply requires larger

farm sizes. This is a particularly difficult issue for smallholders, as it conveys a sense of inevitable
economic doom propelled by technological progress. Most livestock production experts do not look

much beyond this explanation when assuming the inevitability of livestock industrialization in

developing countries. In this reading, we try to disentangle the issues and provide empirical evidence
drawing on case studies, involving household surveys, which capture various factors
 20

affecting profitability, including transaction costs and efforts to mitigate environmental externalities, for

different sized producers in a number of countries.

1. Demand-side factors affecting the global poultry sector: Growth of the poultry industry has been

both demand and supply driven. The factors that can cause the demand curve to shift are: (1)

increases in income; (2) increases in the price of poultry substitutes such as pork or beef; (3) increases

in the preference for poultry; and (4) decreases in the price of poultry complements. Factors influencing

this shift are growth in population, increases in real per capita incomes, income elasticity of demand,

urbanization and variations in real prices. Additionally, in many countries, the population's tastes and

preferences for food products are changing, resulting in a shift away from "inferior" goods towards

those considered "superior". The regions where annual income growth rates are highest, such as Africa
(4.2 percent), Asia (3.5 percent) and Latin America (2.3 percent), are also those where the population

growth rates are highest (between 1.2 percent and 2.2 percent)

GDP growth, unweighted annual average, %

World's ten fastest-growing economies*
Annual average GOP growth, % 6
2001-2010* 2011-2015*

Angola 11.1 China 9.5 Asian countries

China 10.5 India 5
8.2 "yr

Myanmar 10.3 Ethiopia 8.1

Nigeria 8.9 Mozambique 7.7

Ethiopia 8.4 Tanzania 7.2 / African countries

Kazakhstan 8.2 Vietnam 7.2

Chad 7.9 Congo 7.0

Mozambique 7.9 Ghana 7.0
2
Cambodia 7.7 Zambia 6.9

5*
Rwanda 7.6 Nigeria 00 1970s 1980s 1990s 2000s 2011-15*

’Excluding countries with less than 10m population and

Sources: The Economist; IMF [rag and Afghanistan t2010 estimate [Forecast
 21

Moat consumption gonerally In with higher income

Per capita moat consumption (kg per yoar)

350

Q Argentine
300
Mfl
250
• Taiwan

200 • Mexico
South • Korea
China Africa
150
Saudi Arabia

100
Turkoy

• Central Amanca & Caribbean

Pakisti
Bangln
Sub-Saharan Afnca

5.000 10,000 15.000 20.000 25.000

Per capita GDP (dollars per person)

Note: Data are 2000-11 averages lor selected developing countries. Loganthmic growth
curve basod on both developing and dove toped countries. GDP « Gross Domestic Product.
Source: USDA. Economic Research Service using USD A Agncdturat Protections to2022
and supporting data

As income increases, meat consumption tends to increase. High expenditure elasticity in poultry

indicates its dominance in the diet both in the developed and the developing world. There is generally a
positive relationship between per capita consumption of poultry products and per capita incomes. This

positive relationship supports the general economic theory which suggests that as incomes increase,

particularly in developing countries, people will increase their consumption of high income-elastic food.

Throughout the world, this shift has traditionally involved the substitution of meat for starches. This

additional meat can be produced either domestically by the reallocation of resources or by import.

2. Supply-side factors affecting the global trends of the poultry sector:Technology change in the

poultry industry has been very rapid. The move from free-ranging to confined poultry operations

dramatically increased the number of birds that one farmer could manage.

This shift facilitated the substitution of capital for labour in animal production, and led to a significant
increase in labour productivity. Technology change in the poultry industry, led by advances in
 22

breeding that improved animal size, fecundity, growth rate and uniformity, has enabled farmers to
increase output per unit of feed, produce more birds per year, improve animal disease control and
decrease mortality. In terms of management techniques, the move to enclosed production systems in
which animals of different ages are segregated and raised apart has had a positive impact on disease
control.

The ability to use vaccines and pharmaceuticals to control the spread of poultry diseases helped
expand the large-scale operations, allowing farmers to achieve significant economies of scale and unit-
cost reductions. Further, the introduction of evaporation shed cooling in hot climates (e.g. in Thailand)
has had a tremendous impact on the industrialization of the sector
 23

The move towards increased processing of birds into a variety of convenience foods has further

accelerated the growth of the poultry industry. Concurrently, there has been a major structural change

in the poultry industry throughout much of the world. Specifically, the commercial poultry industry in the

developed world and in many developing countries has moved towards large-scale vertically integrated

broiler operations that contract grow-out operations to smaller farmers. Today, the commercial poultry

industries in most countries are moving towards such large-scale vertically integrated operations.

These operations are characterized by a high level of vertical control (ownership) or coordination

among suppliers of production inputs, poultry growers, poultry processors and marketers
 24

Typical Operation of a Vertically

Integrated Poultry Firm
Coen, toy boa n
moal. other food
ingredient*

Pnmary Brooder
Company
Mi ied
Food
MM Furlhar
Brooder Pracaamaig
Chick*
npMM t' MOtriMOf
Retail
f|M
Food
Service
inmmwm
mam imtitubon
E sport
Hatching Egg*

■MfMMU

Hal chary

Broiler
Gfowoul
Chick* Market
nt C HICKEN
Ready
Broilcm
KIIQML Cwt»r> couc

The specific degree of integration, however, varies among countries and firms. For the most part,

integrated poultry operations involve most or all of the following segments: breeding flocks, hatchery,

feed mill, production units, assembly of live birds or eggs, poultry slaughtering or packing plants, further

processing units, delivery vehicles and distribution centres. Feed mills and further-processing

segments are not always included in the integration, although they are an essential part of the

production system. In some countries, it was the feed industry which was responsible for the initial

integration of the poultry industry. In other countries, it was either the breeding company or the

hatcheries which were responsible for the integration. In still other countries, integration was based on

the potential market for further processing and fast food, as processors sought to add value to their

business and become closer to the final customer. The move towards vertical integration appears to

mirror the stabilization of the economy and the growth of the urban market.
 25

The expansion of these large integrated operations has tended to occur in countries with developing or

existing urban markets that supply the major cities. However, in some countries, integrated operations

are moving closer to the source of inputs; Brazil is an example. In countries where live chickens are still

sold mostly in informal markets, such as India, Indonesia and Viet Nam, forward linkages are also

becoming evident, particularly as these countries are faced with the highly pathogenic avian influenza

(HPAI) situation and concern is growing about the poultry-to-human spread of the virus (Indonesia and

Vietnam). Although there is a move to integrated operations in a number of developed and developing

countries, for many developing countries production practices are such that the majority of producers
still maintain small flocks which are kept outdoors and are exposed to outside influences. At the same

time, these small backyard producers may be interspersed with large-scale commercial operations,

giving rise to highly concentrated regions of production near urban areas. Poultry products are among
the most perishable, so they have to be produced in close proximity to the demand.
 26

Researchers from the International Food Policy Research Institute, read that In Asia, Latin America

and Africa the geographical concentration of poultry operations tends to be around major cities. Poultry

distribution patterns can be explained by the distribution of human population, i.e. where there is a

dense human population then there is likely to be a dense poultry population. Growing concentrations

of animals in large units near cities are associated with greater pollution and increased risk of

transmission of both zoonotic and other diseases. Notably, HPAI began in areas with high poultry

population density, such as China, Indonesia, Thailand and Vietnam. Increasing concerns over

environmental and health externalities associated with concentrated and intensive poultry production

near urban areas are causing countries to rethink zoning issues.

Declining poultry prices- Collectively, the changes outlined above have led to a decline in world meat
prices over time, particularly for poultry. However, prices are expected to rise as a result of the rising

price of maize. Between the 1980s and the 1990s, real prices of poultry declined at a rate of 3 percent

per year. This decline continued but at a slower rate. The downward trend in prices was brought about

by a number of factors, such as improvements in the efficiency of production of large-scale poultry

operations and rapid technological progress, as in the case of the United States of America.

It is important to note that there was an increase in poultry prices between 2003 and 2004, which could

be attributed to a reduction in export supplies caused by several outbreaks of H5N1 HPAI. In

2004/2005, as HPAI outbreaks were reported in some 40 countries previously not infected by the virus,

poultry prices noticeably dropped - by 11 percent. Poultry prices are expected to increase over the

period 2005 to 2030 at 0.2 percent per year, reflecting increasing demand in China and subSaharan

Africa, and increasing prices of feed grains such as maize.

Consumers as a whole have benefited from the livestock industrialization process, as a result of
reduction in meat prices. It is known that poultry meat and eggs contain protein and micronutrients,

such as vitamins from group B, iron and zinc, which could provide an important contribution to the

health and nutrition of consumers. For the urban poor, the fall in prices meant an increase in their
purchasing power, leading to greater economic access to poultry and other meat. Moreover, especially

in the case of poor households engaged in small-scale backyard poultry raising (which is likely to be

their main source of animal protein), responding to increased demand probably also leads to higher
levels of home consumption.
 27

Increased trade in poultry products further increases demand: Broiler products dominate the

international poultry trade. The Russian Federation dominates in terms of broiler imports, followed by

Japan and the European Union.

Major Broiler Meat Importers

1400

2
o
T
E
T5
C
«
§
o
£
2001 02 03 04 05 06 07 08 09 10 11 12 «►— 13
►Japan ■Saudi Arabia Mexico
‘European Union •Russia

Source: Foreign Agricultural Service. Official USDA Estimates Starting from August
2013. Production. Supply and Distnbution (PSD) numbers for “European Union" reflect
the addition of Croatia to the former EU-27 Croatia data no longer exists in the PSD after
1998/99; therefore, compansons to data, including World Totals, will differ from those
published prior to July 2013.

Brazil and the United States of America dominate in terms of broiler exports. China is emerging as an

active broiler exporter. Brazil has overtaken the United States of America in terms of chicken-meat
exports, expanding by 21 percent from 2000 to 2005, largely due to increases in production and in

demand from foreign markets.

 28

1996 world poultry exports, by market share 2001 world poultry exports, by market share
United United
Steles Brazil
UN States
‘V.

11N

2007 world poultry exports, by market share 2019 world poultry exports, by market share
Thailand

Brazil
Brazil 44X
HI

States
10 . States

12%
Settle* lAPtB. »*h
riHllat protKOont
 29

The United States of America's market share of chicken meat exports decreased by 7 percent over the

same period, because of lower import needs in the Russian Federation. The United States Department

of Agriculture predicts that there will be continued higher demand for Brazilian products because of

their competitiveness and aggressive market promotion efforts by Brazilian poultry exporters in new

markets. According to FAO 2007 report, trade in poultry meat is projected to increase at a faster rate

than production and consumption.

Rise of large-scale retail outlets

The emergence of large-scale retail outlets, including supermarkets and hypermarkets, in developing

countries reflect a structural change that alters the way in which meat and dairy products are
assembled, inspected, processed, packaged and supplied to consumers.

As a result, livestock markets tend to be divided between the "wet" markets for fresh and warm meat

and supermarket outlets for processed, frozen, packaged and branded meat. The relative

significance of each market segment is closely linked to the purchasing power of households and

individuals, their demand for leisure, their preferences with respect to the form and texture of meat

upon purchase, and the relative value or price premium they are willing to pay for a safer product.

Wet markets are still the main output market for live broilers produced by smallholders and

independent commercial producers. There are, however, no guarantees that these markets will

continue to offer economic opportunities for smallholders over the longer term, even if they are

relatively efficient producers, because of large fluctuations in live broiler prices, changing consumption

patterns and habits, and the rapid expansion of the large-scale retail sector with its demands for

product consistency and known safety.

Increased concerns over sanitary and phytosanitary issues and food safety

Increasing international trade and globalization are also important drivers of change in the poultry

sector. More precisely, they influence the relative competitiveness of producers and production
systems in supplying the rising demand for poultry products, particularly in international markets.

Increased and long-distance trade requires compliance with standards and regulations and SPS
 30

requirements to ensure food quality and safety, as well as public intervention and investment and

private costs. Food control and certification systems must be of a high standard. In addition to the

health and safety standards and regulations agreed by international bodies (such as the World

Organisation for Animal Health (OIE) for animal and human health measures, the Codex

Alimentarius Commission for human health measures, and the International Plant Protection

Convention for plant health measures), technical requirements may be imposed by retailers. These

may include demands for particular meat cuts, carcass size and weight, leanness of meat, egg colour

or labelling with particular information or in specified languages.

Large retailers require a reliable supply of agricultural products from their suppliers (producers) with

consistency in volume and in quality; hence, they vertically integrate to reduce production risk and
transaction costs.

Producers who become part of this integrated chain may face a change in contractual arrangements

(e.g. becoming dedicated contract farmers) with increased levels of assistance and higher prices for

quality products, but with increased risk if contracts are not met or the retailer closes down. This

applies particularly where the farmer must specialize to satisfy volume, safety and quality
requirements.

Smallholders can find it increasingly difficult to compete with large-scale producers if they are required
to make investments to meet the needs of a retailer. For smallholders to stay involved in this fast-

growing segment of the market, they need to integrate into high-value chains through contract farming

or other forms of institutional arrangements that have process-based food-safety systems in place and
can deliver a form of branding. If smallholders choose to operate independently, it will be harder for

them to remain involved over time as markets become more demanding in terms of information about

the quality of the product at the time of sale and as market chains become complex.

Changing structure of the industry and supply chains associated with the retailing/marketing of

poultry products in developing countries:

Under conditions of clearly specified quality and safety standards, and high risk and uncertainty in

output and input markets, vertical integration is a well-known strategy to resist shocks in input and
 31

output prices, especially for small producers operating in a market, subject to price instability. It is also

an efficient way to provide technical assistance to the producers and to diffuse new technologies. For

example, the Charoen Pokphand Group in Thailand has been promoting new housing and manure-

management systems over the last six years, resulting in drastic shifts in production among its contract

farmers. Let's take a look at their crisp video to understand how CP chicken products are made:

The introduction of contractual production arrangements within a framework of vertical coordination

reduces transaction costs associated with information and secures benefits from market ownership and

control over product quality and safety by controlling technical inputs and processes at all levels. Large

retailers and large commercial firms in developing countries are increasingly tending towards vertical

coordination. All or most aspects of production (from parent stock to processing) are owned or
controlled by an individual company known as the "integrator". Under production contracts, the

integrators agree to supply the major inputs, such as day-old chicks (DOCs), feeds, veterinary care and

medicines, and technical services. The integrators also arrange for the marketing of live broilers.

Integrators bear all input and output price risks and share production risks with the broiler growers.

However, the growers typically do not have a share in the benefits of increasing output prices (nor do

they share in losses resulting from falling output prices).

Integrators operate in all aspects of production, including raising parent flocks, rearing DOCs and

mixing feeds. Conversely, the broiler producers supply the labour, land, sheds, water, electricity and

management skills needed for production. They, in turn, receive a growing fee per bird based on

performance indicators such as feed conversion ratio, harvest recovery and average live weight.

Compensation, additional to the growing fee, is given to growers who surpass the performance

standards. In the case of growers who fall below the standards, corresponding amounts per bird are

subtracted from the fee. Company field representatives are assigned to visit farms on a regular basis to

assist producers with their management and help them to achieve maximum performance and

efficiency. Contract broiler farmers have virtually no problem marketing live birds, as the integrators

arrange for the lifting of live birds from the broiler farms too. The integrator, who owns the birds, will

either sell the live broilers to big wholesale traders or process the birds as chilled chicken to be sold to
consumers. In the case of independent broiler growers, output is sold to traders, wholesalers or

retailers, or directly to consumers. Lack of negotiating power and lack of access to market information

contribute to high transaction costs for independent farmers. Further, lack of facilities for collective
action or other institutional arrangements makes it more difficult for smallholder producers to reduce
 32

transaction costs. However, overcoming these constraints is not impossible for smallholders if they

have the ability and incentives to integrate into a more dynamic private sector business.

Impact of structural changes on profitability of small-scale producers - results from case

studies

The main concern with regard to the forces promoting the scaling-up of livestock production in

developing countries is that they might drive small-scale producers out of business altogether, and the

question of whether the displacement is being accelerated by policy distortions, externalities or

structural factors such as transaction costs that disproportionately affect small-scale farms. If true

economies of scale resulting from technology, management or transport are driving the incentives for

larger-scale poultry farming, then other things being equal, we would expect larger farms to be more
profit efficient and have higher or equal unit profits compared to small farms. In such circumstances,

the larger farms could eliminate competition from small farms over time by cutting their profit margins.

Small farms can stay in business by using family labour valued below market price; this works well in

developing countries where there are limited employment opportunities in other sectors. But as soon as

employment opportunities in other sectors rise, many smallholder producers will opt out.

Fairoze et al., 2006 findings say that in Thailand, large independent broiler farms made higher profits

than medium-sized independent farms. Fee contract farmers in the Thai broiler sample had similar per

unit profits at large and small scales. In Brazil, as in the case of Thailand, small and large broiler farms

have similar average profits per kg. This may reflect the fact that in the Brazilian case, the majority of

small and large-scale farms are contracted to vertically integrated operations. Much of the inputs are
supplied by the integrator and in most cases the small and large-scale farms are using similar if not the

same technology. Moreover, small-scale farms do not explicitly cost family labour, allowing them to

maintain their unit profits close to large farms. There is, however, a growing concern that smallholders
might be excluded from the process of contractual arrangements, as integrators would prefer to

contract with large-scale farmers so as to minimize production and transaction costs associated with

searching for and screening prospective farms, negotiation of contracts, delivery of inputs and services,
monitoring of growers' management on farm, and enforcing contract terms.

Tiongco et al. (2006) observed that an integrator's transaction costs are incurred on a per grower

basis and do not depend on the size of the farm. Moreover, small farms usually require more
 33

technical assistance from the integrator per unit of output. For example, a farm visit may require the

same amount of time regardless of the scale of production. It was also observed that there was no

significant difference between small and large farms in terms of the growing fees paid by integrators

per unit of output. Holding the growing fee per unit constant, integrators would rather contract with

larger producers to lower their cost of procurement or to lower the cost of default.

Smallholders will have at least a chance to compete with larger-scale producers, as they have the

ability to produce at a lower per unit cost of production or at least achieve profits per unit of output that

are similar to those of large-scale farmers. If smallholders are not able to sustain a rate of productivity

growth equal to or greater than that of large farms under these conditions, they will have a hard time

remaining in business.

There are, basically, five elements that are essential to ensure smallholders' access to markets. First,

producers need access to extension services or technical assistance so that they stay up to date with

the specialized techniques needed to ensure the safety of high-value products. Second, they need

access to good infrastructure so as to be able to manage flows between chain links quickly, so as to

meet the rigid deadlines imposed by buyers and reduce transportation and distribution costs. Third,

they need access to good sources of information so as to be well informed of changing market

demands and to be able to integrate this information rapidly across the supply chain. Fourth,

producers need to have the ability to produce products that are certifiably safe and of good quality.

Certification systems need to be not only consistent but also credible, to meet buyer and customer

demands. Lastly, producers need to have good mechanisms for coordination of their supplies to the

markets so as to ensure the timely delivery of high-quality products. If market failures are preventing

smallholders' access to these important elements, it is very possible that they will lose much of their

current market access unless some sort of institutional arrangement can be made to address the

problems.
 34

PRODUCT
PROFILE

PRODUCT NAMES:-

1) Pre-Starter Feed( at 0-11 age)

2) Starter Feed ( at 12-21 age)

3) Grower Feed ( at 22-27 age)

4) Finisher F1 Feed ( at 28-32 age)

5) Finisher F2 Feed (at 33-42 age)

PRODUCT INFORMATION:-

Feed ingredients for poultry diets are selected for the nutrients they can provide, the absence of
anti-nutritional or toxic factors, their palatability or effect on voluntary feed intake, and their cost.

The key nutrients that need to be supplied by the dietary ingredients are amino acids contained in

proteins, vitamins and minerals. All life functions also require energy, obtained from starches, lipids

and proteins.

Feed ingredients are broadly classified into cereal grains, protein meals, fats and oils, minerals,

feed additives, and miscellaneous raw materials, such as roots and tubers. These will be discussed

in separate headings below. More information on measuring the nutrient composition of ingredients

and the process of formulating poultry feeds is available in the section on feed formulation.

Cereal grains

The term "cereal gains" here includes cereal grains, cereal by-products and distillers dry grains

with solubles (DDGS). Cereal grains are used mainly to satisfy the energy requirement of poultry.

The dominant feed grain is corn, although different grains are used in various countries and
 35

regions of the world. For instance, in the US, Brazil and most Asian countries corn is by far the

most important energy source for all poultry feed, whereas wheat is the predominant supplier of

dietary energy for poultry diets in Europe, Canada, Australia, New Zealand and the Russian

Federation. Of course, in reality, a feed manufacturer will use any grain in a poultry diet if it is

available at a reasonable price. For instance, in some parts of the US and China wheat is often

used in place of corn if its price is below that of corn. In Australia, sorghum is a key grain during the

summer season instead of wheat, while in the Scandinavian countries barley and rye are used

when these grains are at the right price. Although the amounts and types of cereal grains included

in poultry diets will depend largely on their current costs relative to their nutritive values, care must

be taken to avoid making large changes to the cereal component of diets as sudden changes can

cause digestive upsets that may reduce productivity and predispose the birds to disease.

Corn (maize)

Wheat

i4
%
 36

Table 1. ME value and key nutrient composition of cereal grains

Protein ME Calcium Available P

Ingredient (%) (kcal/kg) (%) (%) Lysine (%)

Wheat 13.0 3153 0.05 0.20 0.5

Corn 8.5 3300 0.05 0.20 0.3

Sorghum 9.0 3263 0.02 0.15 0.3

Barley 11.5 2795 0.10 0.20 0.4

Rye 12.5 2734 0.05 0.18 0.5

Triticale 15.4 3110 0.05 0.19 0.4

Oats 12.0 2756 0.10 0.20 0.4

The quality of cereal grains will also depend on seasonal and storage conditions. Poor growing or

storage conditions can lead to grains with a lower than expected energy content or contamination

with mycotoxins or toxin-producing organisms such as fungi and ergots. Genetic and environmental

factors also affect not only the content of nutrients in grains but also the nutritive value, which takes

into account the digestibility of nutrients contained in an ingredient in the target animal.

In addition to the cereals themselves, their by-products, such as wheat bran, rice bran and DDGS,
are used widely in poultry feed. Cereal by-products are typically high in fibre, or non-starch

polysaccharides (NSP), which are poorly utilised in poultry and are low in ME.

Protein meals
Protein is provided from both vegetable and animal sources, such as oilseed meals, legumes and
abattoir and fish processing by-products.

Vegetable protein sources

Vegetable protein sources usually come as meal or cake, the by-product of oilseed crops. The

main oilseed crops include soybean, rapeseed/canola, sunflower, palm kernel, copra, linseed
 37

peanut and sesame seed. After the oil is extracted, the remaining residue is used as feed

ingredient. Oilseed meals make up 20-30% of a poultry diet. Inclusion levels do vary among

formulations for different species and for the same species in different regions.

Soybean

Canola seed

Lupins (lupinus angustifolius)

The main vegetable protein sources used in Australian poultry diets are soybean and canola. Other

sources like cottonseed, sunflower, peas and lupins may be included in poultry feed formulations if
these are available at a reasonable price.

Many oilseeds and legumes contain anti-nutritive factors. Some of these anti-nutritive factors can

be destroyed by heat and are used in heat-treated meals. New cultivars of some oilseeds and
legumes have been developed that are naturally low in anti-nutritive factors (ANF), permitting

higher levels of the unprocessed grains to be included in poultry diets without ill-effect. The typical

energy values and nutrient composition of vegetable protein sources are shown in Table 2.
 38

Table 2. ME values and Nutrient composition of vegetable protein sources

Protein Calcium Available

Ingredient (%) ME (kcal/kg) (%) (%)

Soybean meal 48.0 2557 0.20 0.37

Canola meal 37.5 2000 0.66 0.47

Cottonseed meal 41.0 2350 0.15 0.48

Sunflower meal 46.8 2205 0.30 0.50

Peas 23.5 2550 0.10 0.20

Lupins 34.5 3000 0.20 0.20

Animal protein sources

The main animal protein sources used in poultry diets are meat meal, meat and bone meal, fish

meal, poultry by-product meal, blood meal and feather meal. Although the production of animal

protein for human consumption has been under continual pressure and marred by much

controversy, the world-wide and domestic consumption of animal protein continues to grow and

much of the future supply of meat protein will come from poultry. With increased animal protein

production there will be increased demand for feed and, in particular, a demand for ingredients high

in protein and energy.

The animal industry evolved as a means of adding value (i.e. higher nutrient level and availability,

flavour, variety, etc.) to ingredients that were of marginal food value for humans. These ingredients

include grains that are of poor quality or damaged by harvest or storage conditions; as well as a
means of recycling by-products of brewing, vegetable oil, meat, milk and egg production.

Approximately 50% of the live market weight of ruminants and 30% of poultry is byproduct. These

by-products are rendered, ground and available as a feed source.

Animal protein meals are usually defined by inputs. Those specifically used in poultry diets include
meat (no bone) or meat and bone meal from ruminants and/or swine; blood meal; poultry by-

product meal; feather meal; and fish meal. There are specific limitations now assigned to these

products with regards to inputs used and guarantees with respect to minimum nutrient
 39

levels. For example meat and bone meal may be specifically from ruminants and must be free of

hair, wool and hide trimmings, except where it is naturally adhering to heads and hoofs. The

products are rendered, which is a biosecure process that evaporates water, extracts fat and yields

a finished ground product high in protein (which has no resemblance to the raw product) and

minerals. The products are marketed with guarantees as to minimum protein, phosphorus and

calcium levels.

There are some challenges associated with the use of animal protein sources. First, food safety is

the most important concern people have about the recycling of animal protein meals back through

animals as feed ingredients. This is based on the links between the prion disease bovine

spongiform encephalopathy (BSE - mad cow disease) and a variant Creutzfeldt-Jakob disease in

humans. Importantly for poultry production though, researchers have been unable to demonstrate

the transfer of prions to poultry (Moore J et.al. (2011) BMC Res Notes. Vol.4, p.501) and no

symptoms of disease have been observed in birds up to five years after direct challenges. The

proteins (prions) associated with BSE are not destroyed by traditional methods of rendering and

are capable of causing disease when BSE contaminated meat and bone meals are injected

cerebrally into ruminants.

As a consequence of the public's concerns about BSE, Australia does not allow the use of ruminant

by-products in feed for ruminants; however, ruminant by-products are available for use in poultry

feed.

In addition to BSE contamination, there are concerns that animal protein meals are responsible for

food borne pathogen contamination, such as Salmonella. Typically these bacteria are destroyed by
rendering and possible recontamination is often negated by pelleting of manufactured feeds. In

most cases, if poultry acquire Salmonella it is likely to be from an environmental source other than

feed. It is possible for animal protein meals to be contaminated

 40

with high levels of heavy metals, dioxins and PCBs (pesticides); however, meals are monitored and

regulated to minimise this contamination.

Secondly, with respect to feeding the animal protein meals, the important practical issue is the

variability in available nutrients (those that can be absorbed and retained by the bird) and limits to

incorporation to maintain a diet balanced for all nutrients, particularly calcium and phosphorus.

Table 3 shows the determined averages that are used in determining nutrient levels for meat and
bone, blood, feather and poultry meals.

Table 3. ME values Nutrient levels in selected animal protein meals

Nutrient Meat & Bone Blood Feather Poultry

ME (MJ/kg) 11.2 15.2 13.7 13.1

Protein (%) 50.4 88.9 81.0 60.0

Fat (%) 10.0 1.0 7.0 13.0

Calcium (%) 10.3 0.4 0.3 3.0

Phosphorus(%) 5.1 0.3 0.5 1.7

Lysine (%) 2.6 7.1 2.3 3.1

Methionine (%) 0.7 0.6 0.6 1.0

Cystine (%) 0.7 0.5 4.3 1.0

Animal protein meals provide a good source of essential amino acids (e.g. lysine and methionine)

and are also good sources of energy and minerals (particularly calcium and available phosphorus).
However, there can be significant variation in availability (absorption and retention) of amino acids

due to the day to day variation in inputs as well as processing conditions (temperature, moisture,

pressure and time). The variation within processing plants can often be greater than variation
between plants. It is important for users to establish strict criteria as to the quality of product and

work with their suppliers to ensure these criteria are met. Quality should include measurements

that indicate moisture; nutrient availability

 41

(particularly essential amino acids); levels of minerals (for example, calcium can vary from 812%;

phosphorus from 4-6%); and stability of fat (all meals should be stabilised with an antioxidant).

The most accurate way of measuring the 'feed value' of an ingredient is to use an animal assay or

bioassay. However, these assays are extremely time consuming and expensive. One of the most

promising predictors of nutrient level and availability is near-infrared reflectance spectroscopy. This

technology is rapidly being adopted by feed manufacturers and enables rapid screening of
incoming products for a wide variety of measurements (moisture, protein, amino acid availability,

fat, etc.). In most cases the samples can be prepared, scanned and results assessed in a few

minutes. However, calibrations are still being established for meals and further research is required
to classify the cause of variation in feed value.

Animal protein meals have a long history in poultry nutrition. Utilisation of this valuable feed

ingredient is important in minimising loss (nutrient and economic value) in the production of safe,

high quality poultry meat, eggs and bioproducts.

The typical ME values and nutrient composition of common animal protein sources are shown in

Table 4.

Table 4. ME values and nutrient composition of selected animal protein sources

Protein ME Calcium Available P Lysine

Ingredient (%) (kcal/kg) (%) (%) (%)

Meat meal 50.0 2500 8.00 4.00 3.6

Fish meal 60.0 2720 6.50 3.50 5.3

Poultry by-product meal 60.0 2950 3.50 2.10 3.4

Blood meal 80.0 2690 0.28 0.28 6.9

Feather meal 85.0 3016 0.20 0.75 1.7

Fats and oils

Fats and oils, collectedly termed lipids, are regularly used in poultry feed to satisfy the energy need
of the animal as lipids have more than twice the amount of ME compared with carbohydrates or

proteins per kg weight. Lipids are also an important carrier for fat soluble vitamins (A, D, E, and K)

as wells for the provision of an essential fatty acid, linoleic acid, in the
 42

diet. A variety of fats and oils are used in feed, including lipids of animal origins (usually fats, i.e.,

tallow, lard, except fish oil) and lipids of vegetable origin (usually oils, i.e., soy oil, canola/rapeseed

oil, sunflower oil, linseed oil, palm oil, cottonseed oil).

In practical feed formulation, the level of lipids rarely exceeds 4% in compound feed. However,

even a small decrease in digestibility can cost dearly in terms of dietary energy. Like any other

nutrient, a varying proportion of lipids are undigested depending on their sources and the species
and age of the animal to which they are fed. Some of the data are summarised in Table 5.

Table 5. Lipid source and bird age on total tract digestibility of lipids

Lipid source Digestibility (%) Bird age (week) Digestibility (%)

Tallow 73.6 1 53.2

Soy oil 85.0 2 80.7

Tallow-soy blend 75.4 3 85.9

Poultry fat 82.1 5 85.7

Palm oil 77.2 Average 76.4

It is surprising that nearly a quarter of dietary lipids are lost in the excreta of chickens. The

significance of this can be seen from the fact that even with a seemingly small amount of inclusion,
say 2.5% added fat in feed, it contributes as much as 7-9% of the dietary energy of a typical poultry

diet. Thus, any improvement in digestibility, which may be achieved via the use of appropriate

additives, such as enzymes, acidifiers and emulsifiers, will have a significant impact on the energy
content of diets.

Minerals and vitamins

Minerals are vital for normal growth and development in poultry, such as bone formation and body

processes such as enzyme activation. Some minerals such calcium and phosphorus are required
in large quantities. For example, laying hens require between 3.5-4% calcium, 0.3-0.4% available

phosphorus and 0.2% sodium in their diets for egg production. Other minerals, such as copper,

iron, manganese, zinc, selenium, cobalt, iodine and molybdenum, are required in milligram
quantities but deficiency of these minerals will lead to serious health problems in mild cases and

death in severe cases.

 43

Similarly, vitamins are essential for the body systems of poultry. Both fat soluble (A, D, E, K) and

water soluble (biotin, choline, folic acid, niacin, riboflavin, thiamine, pyridoxine, pantothenic acid

and B12) are needed in the diet to maintain proper health and wellbeing of poultry.

Some vitamins and minerals are provided by most ingredients but the requirements for vitamins

and minerals are generally met through premixes added to the diet. Diets may also contain

additives for specific purposes. These are discussed in more detail in the section on feed additives.
 44

WORKING CAPITAL MANAGEMENT WITH COMAPATIVE STUDY

CONCEPTS/DEFINITIONS OF WORKING CAPTIAL

There are two concepts of working capital, namely:

1. Gross Working Capital

2. Net Working capital

The term, gross working capital is synonymous with working capital management, which

means the total current assets.

The term, Net defines in two ways:

• The most common definition is the difference between current assets and current liabilities.

• Net working capital can also be defined as that portion of firm's current assets, which is

financed with long-term funds.

Meaning of Working Capital

Working capital may be regarded as the lifeblood of a business. Its effective provisions can do

much to ensure the success of business, which its inefficient management can lead not only to loss of
projects but also the ultimate downfall of what otherwise, might be considered as promising concern.

Thus, its management is considered as one of the most important aspects of firm's Financial

Management.

The term working capital stands for that part of the capital which is required for the financial

working of the company is simple words; we can say that working capital is the investment needed for

carrying out day to day operations of the business smoothly.

Working capital refers to a firm's investment in short term assets, viz. Cash short-term

securities, Accounts receivable (debaters) and inventories of raw materials, work in progress and

finished goods.
 45

It can be regarded as that portion of the firm's total capital, which is , employed in short-term

operations. Funds thus invested in current assets keep revolving false and are being constantly

concerted in to cash and this cash flow out again in exchange for other current assets. Hence, it is also

known as revolving or circulating capital.

According to gene Stenberg , "circulating means current assets of a company that are

changed in the ordinary course of business from one form to another, as for example form cash from

cash to inventories, inventories to receivables, receivables into cash".

These are invariably a time lag between the sale of goods and the receipt of cash. There is

therefore need for working capital in the form of current assets to deal with the problem arising out of

lack of immediate realization of cash against goods sold. Therefore sufficient working capital is
necessary to sustain sales activity.

Classification of working capital

Working capital can be classified into two ways.

1) On the basis of concept.

2) On the basis of time.

Concept of working capital

1) Gross working
capital.

2) Net working capital

Gross working capital

 46

The gross working capital refers to the firms' investment in the total current assets of the

enterprise. The current assets are those assets with in the ordinary course of business can converted

into cash with in the short period of normally one accounting year.

Net working capital

The net working capital can be defined into ways the most common definition of working capital is

difference between current assets and current liabilities.

Net working capital can also be defined as that portion of firm's current assets. Which are financed with
long- term funds?

Need for working capital

The need for working capital to run the day to day activities cannot be over emphasized we will hardly

find a business firm, which does not require any amount of working capital. Indeed, every firm differs in

these requirements of the working capital.

The main objective of financial decision making is to maximize share holders wealth and to

endeavor this firm should earn sufficient returns requires a successful sales activity.

For a successful sales activity the firm has to invest sufficient funds in current assets current

assets are needed because sales do not concept into cash instantaneously. There is always an
"operating cycle" involved in the conversion of sales into cash.

OPERATING CYCLE
 47

Operating cycle is the time duration required to convert sales after the conversion of resources

into inventories into cash. In other words, an operating cycles refers to length of time necessary to

complete

The following cycle of events.

1) Conversion of cash into raw materials.

2) Conversion of raw materials into work in progress.

3) Conversion of work -in-progress into finished goods.

4) Conversion of finished goods into accounts

receivables.

5) Conversion of accounts receivables into cash.

Working Capital

Progress

Cash

Raw material Finished

Goods Account
Sales
Receivable
 48

Cash
material

Finishe
Sales
d
goods

receivable

OPERATING CYCLE

On the basis of time:

1) Permanent or fixed working capital

2) Temporary or variable working

capital
Permanent working capital:

Permanent working capital is the minimum amount or minimum level ofCurrent assets. Which

is continuously required by the enterprise to carry out its normal business operation? For e.g., every
enterprise has to maintain a minimum level of raw materials. Work - in - progress, finished goods and

cash balance for paying Wages, salaries, rent etc. during the year. This minimum
 49

level of current assets is called permanent or fixed working capital as this part of capital is permanently

blocked in current assets.

Regular working capital is the amount of working capital needed for the continuous operations of the

business of the company without any breakage

TEMPORARY OR VARIABLE WORKING CAPITAL

Temporary working capital is the amount of working capital, which is required to meet the seasonal and

special needs of the business.

1) Seasonal working capital refers to that financial requirement that crop up during a particular
season behind the regular working capital most businesses require at stated intervals large amount of

current assets to fill the demands of the seasonal busy periods.

2) Special working capital refers to that part of the working capital, which is required to meet special

extengencies such as launching of extensive marketing campaigns or conducting research etc.,

The individual composite items of working capital of current asset and current liabilities.

WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES

CURRENT ASSETS:

Current assets are those, which can be converted into cash within one year without effecting

the operations of the firm.

List of current assets:

1) Cash in hand & bank

balance

2) Bills receivables
4) Short term loans and advances
3) Sundry debtors
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5) Investments

a) Government other trustee securities

b) Fixed deposits with the banks

6) Inventories of stock

a) Raw Materials

b) Work in progress

c) Stores and spares

d) Finished goods

7) Prepaid expenses

8) Accrued income CURRENT LIABILITIES

Current liabilities are those, which are intended to be paid in the ordinary course of business

within a short period of normally one year out of the current assets of the income of the business,

List of current liabilities:

1) Bills payable

2) Sundry creditors or accounts

payable

3) Short term borrowings

a) Banks

b) Others
b. Public deposits maturing one year
a. Unsecured loans
 51

c. Deposits from dealers, selling

against.

4) Dividends payable

5) Bank overdraft

6) Accrued or outstanding expenses

7) Provision for taxation

8) Sales tax and excise tax.

Theme of working capital

Working capital management is considered as one of the most important aspects of firm's

financial management. The goal of working capital management is to manage the firm's current assets
and current liabilities in such a way that the satisfactory level of working capital is maintained. Each of

the current assets should be managed efficiently in order to maintain the liquidity the firm while not

keeping too high of any one of them.

The success of business concerns among other things depends upon the manner in which its
working capital is managed. The interaction between the current assets and current liabilities is there

fore the main theme of the theory of working capital.

It is a task of financial manager to maintain an appropriate level of working capital. i.e., enough

current assets to pay neither off current liabilities, either excess nor less because in either case the

result could be the failure of the business. Excessive working capital impairs firm's profitability, as ideal

investment earns nothing. On the other hand, inadequate amount of working capital can threaten the

solvency of the firm because of its inability to meet its current obligations.

Optimum Working Capital Position:

 52

The firm should maintain a sound working capital position. It should have adequate working

capital to run its business operations. Both excessive as well as inadequate working capital positions

are dangerous from the firms point of view. Excessive working capital means idle funds, which earn no

profits for the firm. Paucity of working capital not only impairs the firm's profitability but also results in

production interruption and inefficiencies.

The danger of excessive working capital is as follow:

It results of unnecessary accumulation of inventories. Thus, chances of inventories handling,

wastage, theft and losses increase.

It is an indication of defective credit policy and slag credit collection period. Consequently
higher incidence of bad debts results, which adversely affects profits.
It makes management complacent, which degenerates into managerial inefficiency.

Tendencies of accumulating inventories tend to make speculative profits grow; this may tend

to make dividend policy liberal and difficult to cope with when firm is unable to make speculative profits.

Inadequate working capital is also is as follows:

It stagnates growth. It becomes difficult for the firm to undertake profitable projects due to

inadequate of funds.
It becomes difficult to implement operating plans and achieve firms profit targets.

Operating inefficiencies creep in and it becomes difficult even to meet day - to - day
commitments.

Fixed assets are not efficiently utilized for the lack of working capital funds. Thus the firm's

profit would deteriorate.

 53

Paucity of working capital fund renders the firm unable to avail attractive credit opportunities.

The firm's losses its reputations when it is not in a position to honor it short - term obligations.

As a result, the firm tight credits terms.

OVERALL WORKING CAPITAL

Financing of working Capital

There are different types of financing polices in vague for financing working capital

requirement. The requirements of working capital may be for fixed working capital and variable working
capital requirements.

The fixed proportion of working capital should be generally financed from the fixed capital sources

while the variable working requirement of a concern may be met the short-term sources of capital.

of financing of working capital are as follows.

The various

sources Sources of Working

Short term financing Short Spontaneous
Capital Long -term
term Credits Loan from financing Trade
financing Finance
Banks Commercial Papers Creditors
Institutions Debentures
Outstanding
Public Deposits Factoring
Expenses Shares

Working Capital Policies:

 54

The financial manager should determine the optimum level of currents assets. So that the

wealth of shareholders is maximized. A firm needs fixed current assets to support a particular level of

output. However, to support the same level of output, the firm can have different levels of current

assets to fixed assets. Dividing current assets by fixed assets give CA / FA ratio.

Conservative Working Capital Policy:

It firm's maintains higher investment on current assets to a constant investment on fixed

assets, i.e., assuming a constant level of fixed assets, a higher CA/FA ratio indicates conservative
current assets policy it implies greater liquidity and lower risks.

"Aggressive Working Capital Policies"

If a business firm maintains the lower level of current assets to constant fixed assets that is a

lower CA/FA ratios means an aggressive current policy. Assuming other factors constant. It indicates

higher risks and poor liquidity.

Average Working Capital Policies:

If a business firms maintains moderated level of current assets to constant fixed assets. That

is the current assets policy of the most of the firm may fall between in conservative and aggressive

working capital policy, which is called average working capital policy, It indicates moderate liquidity and

risks. Working capital can be done in the following main methods:

Cash Management

Receivable Management
Inventory Management
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INVENTORY MANAGEMENT:

The proceeding two chapters basic strategies and consideration in managing current assets

namely, cash and receivables, are stocks of product of a company is manufacturing for sale and
components that make up a product. Inventories like receivables are also a significant portion of must

firm's assets and accordingly require substantial investment. To keep these investments from

becoming unnecessarily large, inventories must be managed efficiently. The various forms in which
inventories exist in a manufacturing company are

a) Raw materials:

Raw materials are those basic inputs that are converted into finished products through the

manufacturing process. Raw material inventories are those units, which have been purchased and
stored for future productions.

b) Work-in-progress:

The 'work-in-progress is that stage of stock, which is in between raw materials and finished

goods. They are semi-finished products that need more work before they become finished products for
sale. The quantum of WIP depends on the time taken in the manufacturing process. The greater time

taken in the manufacturing, the more will be the amount of work-in-progress.

c) Finished goods:

Finished goods inventories are those completely manufactured products, which are ready for

sale. Stocks of raw material and work-in-progress facilitate production while stock of finished goods is
required for smooth marketing operations.
 56

The level of three kinds of inventories to a firm depends on the nature of its business. A manufacturing

firm will have substantially high level of all three kinds of inventories.

A fourth kind of inventory:

Firm also maintain suppliers. Suppliers include office and plant cleaning material oil, fuel, light

bulbs etc. These materials do not directly enter into production, but are necessary for production

process. Sally these supplies are small part of inventory and do not involve significant investment.

Therefore a sophisticated system of inventory control may not be maintained for them.

NEED FOR HOLDING FOR INVENTORY:

❖ These are generally three major motives for holding inventories.

❖ The transaction motive which emphasis the need to maintain inventories to facilitate smooth
production and sale operation.

❖ The precautionary motive, which necessitates holding of inventories top guard against at the

risk of unpredictable changes in demand and supply forces and other factors.

❖ The speculative motives which increase the decision to increased are reduce inventory levels

to take advantage of price fluctuations.

❖ A company should maintain adequate stock of material as it not possible fro a company to

procure raw material whenever it is needed and also for a continuous and smooth and

interrupted production process.

Objectives of Inventory Management:

The main objectives of inventory management of are optional and financial 1.

Operative objectives mean that the material and spares should be available in

sufficient quality to achieve interrupted

Production and sale operation.
 57

2. Financial objectives means that investment in inventories should not remain idle and minimum

working capital should be locked in it.

Both inadequate and excessive inventories are not desirable. They are to danger points with in

which the firm should operate. The objective of inventory management should be to determine and

maintain the optimum level of inventory management. The optimum level will lie between two danger

points of excessive and inadequate inventories.

The firm should not over invest in inventories as excess a level of inventories consumes funds

of a firm which cannot be used for any other purpose, and there it involves an opportunity cost, carrying

costs such as costs of storage, handling, insurance and inspection. These costs will impair the firm's

profitability further maintaining inadequate inventory are

• Production holds-up

• Failure to meet delivery commitments

• Inadequate raw materialism work-in-progress inventories will result infrequent production

interruptions. Thus the efficient inventory management should ensure a continuous supply of

materials to facilitate uninterrupted production.

• Maintain sufficient stock of raw materials in periods of short supply and anticipate price

changes.

• Maintain sufficient finished goods inventory for smoothes sales operations and efficient

customer service.

• Minimize the carrying cost and time.

• Control investments in inventories and keep it at an optimum level.

• Costs associated with inventory.

The costs associated with Managing Inventory

The analysis inventory management by calculating inventories to total current assets,

inventory turnover ratio. Holding period of the inventory and change in sales and inventory.

CASH MANAGEMENT
 58

Cash , the most liquid asset, is of vital importance to the daily operations of business firms,

while the proportion ot corporate assets held in the form of cash is very small, often between 1 &3

percent its efficient management is crucial to the solvency of business in very important sense cash is

the focal point of fund flows in business. In view of its importance, it is generally referred to as the" Life

Blood of a business enterprise".

Need for holding cash: John May nard Keynes put forth, there are possible motives for holding cash.

Transaction Motive:

Firms need cash to meet their transactions needs. The collection of cash (from sale of goods

and services, sale of assets and additional financing) is not perfectly synchronized with the
disbursement of cash (for purchase of goods and services acquisition of capital assets and meeting

other obligation.) Hence, some cash balance is required as a buffer.

Precautionary Motive:

There may be some uncertainty about magnitude and timing of cash inflows from sale of

goods and services, sale of assets and issuance of securities. Like wise there maybe uncertainty about

cash out flows on account of purchases and other obligation. To protect it against such uncertainties, a

firm may require some cash balance.

Speculation Motive:

Firm would like to tap profit making opportunities arising form fluctuations is commodity prices,

security prices, Interest rates and foreign exchange rates. Cash rich firm is better prepared to exploit
such bargains. Hence firms, which have such speculative earnings, may require additional liquidity.

Goals of cash management:

 59

Precisely speaking, the primary goal of cash management in firm is to trade off between

liquidity and profitability in order to maximize long-term profit. This is possible only when the firm aims

at optimizing the use of funds in the working capital pool. This overall objective can be translated in to

the following operation goals.

V To satisfy day business requirements

V To provide for schedule major payments

V To face unexpected cash drains

V To seize potential opportunities for profitable long tern investments

V To meet requirement of bank relationships

V To build image of credit worth ness

V To earn on cash balances

V To build reservoir for net cash in flows till the availability of better uses of funds by

conscious planning.

V To minimize the operating cost of cash management Importance of cash management:

Cash management is one of the critical areas of working capital management and assumes

greater significance because it is most liquid asset used to satisfy the firms obligations but it is a sterile

asset, as it does not yield anything. Therefore finance manager has to manage cash that the maintains

its liquidity position without jeopardizing if profitability.

Problem of prognosticating cash flows accurately and absence of perfect to incidence between

the in flows and out flows of cash added to the significance of cash management. In view of above, at
one time affirm may experience dearth of cash because payment of taxes, dividends, seasonal

inventory etc., Build up while at other times, it may have surfeit of cash stemming out of large sales and

quick collections of receivables.

It is interesting to observe that in real life management spends his considerable time in

managing cash, which constitutes relatively small portion of firm's current assets. This is why in recent

years a number of new techniques have been evolved to minimize to cash holding of the firm.

RECEIVABLES MANAGEMENT:
 60

The term "receivables" refer to the debt owned by the customers for goods purchase from the

firm or services rendered by the ordinary of business.

The firm is said to have granted trade credit to customers when it sells its products or services
and does not receive cash for it immediately.

Trade credit is an essential marketing tool as a bridge for the movement of goods from

production and distribution stage to customers finally. Receivables are also known as accounts

receivables, trade receivables or book debts.

The purpose of maintaining or investing in receivables is to meet competition and to increase

the sales and projects.

Basic features of receivables arising out of credit

They involve an element of risk as cash payment has yet to be received.

They are based on economic value, which is passed to the buyer immediately at the time of

sale of goods, services while the seller expects an equivalent value to be received later on.

They imply futurity as payment for goods or services received by the buyer will be made by him

at future date.

Granting and creating debtors amount to the blocking of firms funds. Thus, there is a need for

careful analysis and proper management of receivables as substantial amounts are tied up in trade
debtors.

Objectives of receivables management:

 61

The purpose of credit management is not to max sales (if so, firms would sell on credit to all);

nor to min risk (if so, firms would sell on credit to anyone).

The objective of the firm is to manage its credit a way that sale are expanded to such an
extend to which risk remain with is an acceptable limit.

Main Objectives are:

Obtain optimum values of sales.

Control the cost of credit and keep it at

minimum.

COMPONENTS OF WORKING CAPITAL:

The working capital in OM CHICKS PRODUCTS consists of different components like

inventory, Sunday debtors, cash and bank balance, current liabilities etc which are shown in the

following table along with amount invested in each for the period of 5 years.

The structure of working capitals is presented in the table for the purpose of effective analysis

of current assets; current assets liabilities and networking capital have been calculated. Each

component of current assets and current liabilities and expressed as a proposition to total assets total

liabilities.
 62

RESEARCH METHODOLOGY

The data have been collected form both the primary and secondary sources. The data was

collected from the officials of the organization. However, the entire study was based on the secondary
data, which are collected from the books, records, journals and profiles of the organization

In order to analyze the financial position of the unit, various techniques of financial

management such as working capital requirements and funds flow statements have been used here to

arrive at just logical conclusion the figures contained in the annual reports.

Primary data:

The primary data collect the information of company balance sheet from 2004
to 2008. The various methods for finding primary data re observation survey experimentation
and mutual interactions.

The study is based on the analysis of data which was collected from the previous
years’ annual reports from secondary sources. It is collected from the sources like financial
statements of OM CHICKS INDIA PVT. LTD. PUNE.

Secondary data

Any data that was gathered earlier for some other purpose is called secondary data.
Advantage in using secondary data is that it is more economical and time saving.

However, the entire study was based on the secondary data, which are collected from
the books, records, journals and profiles of the organization
 63

NEED OF STUDY:

Management of working capital is very important for the success of a business. It has been

emphasized that a business should maintain a sound working capital position and also that there
should not be an excessive level of investment in working capital.

In recent times it has acquired a greater level of importance. It is reflected by the fact that

financial managers spend a great deal of time in managing current assets and current liabilities.

Arranging short term financing, negotiating favorable credit terms, controlling the movement of cash,

administering accounts receivables and monitoring the investment in inventories, consume a great deal

of their time.

There are numerous aspects of working capital management, which make it an important

function of the financial manager. It maintains proper liquidity & also helps in increasing the profitability
of the concern.

SCOPE OF STUDY:

The objective of financial decision-making is to maximize the shareholder's wealth. In order to

achieve this, sufficient profits are necessary which ion turn are d n les. There is invariably a long
gestation period between manufacturing and marketing cycle of business operations. Current assets

are required because sales are not converted in cash instantaneously.

 64

There is always an OPERATING CYCLE that is involved in conversion of sales into cash. The

continuing flow from cash to suppliers, inventory to accounts receivable and back into cash in

'operating cycle'.

In simple terms, an operating cycle refers to the length of time necessary to complete the

following cycle of events:

1. Conversion of cash into inventory,

2. Conversion of inventory into receivables &

3. Conversion of receivable into cash.

There is hardly a running business firm, which does not require working capital. Even a fully

equipped manufacturing concern is sure to collapse without.

1. An adequate supply of raw materials to process,

2. Cash to meet the wage bills,

3. The capacity to wait for the market for its finished products,
4. The ability to grant credit to tits customers

Similarly, a commercial enterprise is virtually a useless without merchandise to sell. Working

capital, thus, is the life-blood of a business. As a matter of fact, any organization, whether profit-

oriented or otherwise, will not be able to carry on, day-to-day activities without adequate working

capital.

OBJECTIVES:

Primary Objective:-

To evaluate the financial performance of the company by using

Working capital and funds flow statement.

 65

❖ To analyze the working capital performance of the company for the last six years that is 2000-

200 1 to 2005-2006.
❖ To find out net working capital every current year.

Secondary Objectives:-

❖ To find out funds from operation was current year.

❖ To give suitable suggestions or recommendations based on the

Findings.

LIMITATIONS OF STUDY:

❖ The information used is primary from historical annual reports like profit and loss account,

Balance sheet and Company Details.

❖ Limited time span was major constraint.

Since financial matters are sensitive in nature the same could be acquired easily.
 66

APPENDIX

Working capital is the amount of an organization requires, ensuring smooth functioning of its day to day

operations, 'running cash' is the business term using by organizations. It is calculated by obtaining the
net difference between current assets and current liabilities in an organization (current assets -

current liabilities).

The corporate finance literature traditionally focused with study of long term financial decisions.

Analyzing investments, capital structure, dividends and company valuation were the favourite topics

among the researchers. As we study investments, two types of investments can be identified. Short

term and long term are sub-categories of the investments.

BIBLIOGRAPHY

BOOKS REFERRED

• 1 ) Khan M.Y. Jain P.K. - Financial Management(2008) - Tata Mc Graw Hill

Publishers - New Delhi4)Maheshwari.Dr.S.N. - Management Accounting and Financial
Control(2006) - Sultan Chand and Sons Company Journals - OM CHICKS INDIA PVT.LTD. AND
VENKATESHWARA HATCHERIES

• Main Economic and Social Indicators - GOOGLE