CHAPTER I11
FINANCIAL PERFORMANCE OF PRIMARY
CONSUMER COOPERATIVE STORES IN KERALA
3.1 Introduction
In the previous chapter we have examined the origin and progress of
consumer's cooperative movement in India with the support of national and
state level data. The discussion broadly infers that over the years, the number
and turnover of consumer cooperatives have increased significantly, but
profitability steadily came down. Multiple factors behind this would have led to
this situation. But it is immature to make a precise conclusion about the
performance at tlus stage unless we go for a detailed examination of the
behaviour of relevant financial ind:icators.
In order to serve this purpo:se, 24 primaq consumers' cooperative stores
were selected dividing the entire state into three regions, namely, southern
region, central region and northern region. The regions were grouped mainly
based on geographical criteria, a criterion followed in many similar studies.
From each region, eight stores we:re randomly selected. The number of stores
were finalised at eight in each region since the population of stores in each
region was of not much variation. From these 24 stores, information on major
financial parameters like paid-up share capital, purchases, sales turnover, gross
profit, net profit etc. were collectetl for a ten year period from 1990-91 to 1999-
2000. Below an attempt is made to examine the broad trends in the behaviour of
financial parameters of the sample stores.
3.2 Paid-up Share Capital
Capital base is the most important component of any organisation and
the term capital consists of vari<ousconcepts like authorised capital, issued
capital and paid-up capital. As far as a consumer cooperative store is
concerned, the term paid-up capital is more important and it consists of
individuals contributions and govenunents' contributions (See tables 3.1 and
Table 3.1
Paid-up Share Capital of the sample primary consumers' cooperative stores for
the period from 1990-9 1 to 1999-2000
(Rs. lakh)
Southern Region
Total
1 Average
Central Region
Total
1990-'91
5.45
/
0.68
7.28
1991-'92
5.88
,
0.74
1992-'93
6.25
1993-'94
Year
Northern Region sand unit
Average
Average Total Average
0.91
5.51
0.69
18.24
0.76
8.23
1.03
5.71
0.71
19.82
0.83
0.78
8.37
1.05
6.39
080
21.01
0.88
6.66
0.83
8.40
1.05
6.46
0.81
21.52
0.88
1994-'95
8.90
1.11
9.15
1.14
6.79
0.85
24.84
1.04
1995-'96
1 1.3 1
1.41
9.77
1.22
7.24
0.91
28.32
1.18
1996-'97
12.27
1.53
12.04
1.51
7.42
0.93
31.73
1.32
1997-'98
12.39
1.55
14.56
1.82
11.20
1.40
38.15
1.59
1998-'99
12.44
1.56
14.69
1.84
11.37
1.42
38.50
1.60
1999-'00
12.86
1.61
15.03
1
I
-
-
1
1.88
/
12.14
1
1.52
1
40.03
1
1.67
1
Source: Researcher's compilation from the records of the selected primaty
consumer's cooperative stores.
Table 3.2
Share capital contribution by the government towards the sample primary
consumers' cooperative stores for the period from 1990-91 to 1999-2000
(Rs. lakh)
v-
Southern Region
Year
Central Region
Northern Region
Total
Average
Total
I
Total 1 Average
Unit
Average Total Average
1990-'91
1.03
0.13
4.85
0.61
2.17
0.27
8.05
0.34
1991-'92
I.11
0.14
5.43
0.68
2.17
0.27
8.71
0.36
1992-'93
1.08
0.14
5.49
0.69
2.59
,032
9.16
0.38
1993-'94
1.06
013
5.48
0.69
2.53
0.32
9.07
0.38
1994-'95
1.04
0.13
6.18
0.77
2.78
0.35
10.00
0.42
1
0.19
6.78
0.85
2.69
0.34
10.99
0.46
/
0.19
9.00
1.13
2.63
0.33
13.12
0.55
I
1995-'961
I
1.52
-
1996-'97
1 49
1997-'98
1.47
0.18
11.44
1.43
5.64
0.71
18.55
0.77
1998-'99
1 45
0.18
11.38
1.42
5.64
0.71
18.47
0.77
-
1999-'00
1.45
0.18
1 1 32
,
1.42
5.32
0.67
18.09
0.75
Source: Researcher's compilation from the records of the selected Primary
Consumer's Cooperative Stores.
From table 3.1 it is seen that in 1990-91 the total paid-up capital of the
sample stores stood at Rs. 18.24 lakh, the average being Rs. 0.76 lakh. It is also
noted that compared to the southern region and northern region, central region
had higher share in paid-up capital. This is due to a higher government
contribution in the central region compared to other regions as evident from
table 3.2. The broad trends in table 3.1 suggest that over the reference period
paid-up capital significantly increased in all the regions, the level of increase
being 2.36 times, 2.06 times and 2.20 times respectively in south, central and
northern regions. This explains that the consumer cooperative stores gained
strength over the years. It is also interesting to note that over the years, the
government's connibution has significantly increased in central and northern
regions. For instance, the govemrnent contribution to the central region which
stood at Rs. 4.85 lakh in 1991 reached Rs. 11.32 lakh by the end of 2000. In the
case of northern region government assistance remained stagnant between
1990-91 and 96-97. But in subsequent year, it almost doubled. Two probable
reasons can be attributed for this. One argument is that distribution of essential
articles undertaken by the consumer cooperative stores increased in these
regions and liberal assistance were provided under the integrated Cooperative
Development Project and NCDC Sponsored Consumer Scheme. In southern
region these two factors were absent or marginal and the government assistance
remained stagnant which is also evident from table 3.2. The govenunent's
contribution to the share capital which stood at Rs.1.03 lakh for the sample
units in southern region increased only by Rs. 42,000 over a decade. The trends
reveal that the government's contribution and the prosperity of a consumer
cooperative store are complimentary in nature. While this is a positive point,
the increased share by the government in the paid-up capital of the consumer
cooperatwe stores may go against the concept of self reliant cooperatives and
the autonomy of cooperatives.
3.3 Capital employed
In the earlier paragraphs, we have explained the trends in paid-up
capital. Now we can widen the concept of capital employed by incorporating
other components of capital such as reserve funds and long-term borrowings.
Over the years. the capital employed maintained an increasing trend, which is
natural also.
Table 3.3
Capital Employed by the sample primary consumers' cooperative stores for the
period from. 1990-9 1 to 1999-2000
(Rs. lakh)
Source: Researcher's compilatior~from the records of the selected Primary
Consumer's Cooperative Stores.
From table 3.3, it is seen that the total capital employed in all the sample
stores together came to Rs. 1.10 crore of which about 70 percent was
contributed by the central region In the terminal year it almost doubled and
reached just above Rs.2 crore, the: share of central region being 58.70 percent.
Compared with table 3.1 it is also seen that in the initial year, the paid-up
capital came to 16.36 percent of the total capital employed, which accounted to
19.04 percent in the terminal year. This naturally leads to the inference that
capital base is broadened not with paid-up capital but with borrowings, reserves
and other funds. A detailed analysis of its composition will definitely reveal
this. However, it is not attempted here.
3.4 Current Assets
Next to capital base, the subsequent important indicator is the
composition and trends in the current assets which mainly consist of cash in
hand, cash at bank. stock in trade and credit sales to customers.
Table 3.4
Current Assets of the sample primaq consumers' cooperative stores for the
period from 1 990-9 1 to 1999-2000
(Rs.lakh)
Source: Researcher's compilation from the records of the selected Primary
Consumer's Cooperative Stores.
The details of current assets available in table 3.4 show that current
assets notably increased in all the three regions over the reference period. The
current assets whlch stood at Rs. 5.87 lakh per store in southern region made a
notable shift in 1995-96 to Rs. 14.67 lakh. In the case of central region the
current assets per store in 1990-91 which remained at Rs.11.97 lakh gradually
increased to Rs 18.01 lakh in 1993-94 and to Rs. 22.17 lakh in 1996-97.
Almost similar trends continued in the northern region also. For the entire
sample years, the per store current assets increased by 1.88 times over a period
of ten years. While evaluating the current assets position in toto it is to be
specially noted that there is a steep rise in current assets either in 1995-96 or
1996-97. An enquiry into these trends revealed that it is mainly due to a rise in
cash at bank as a consequence of the release of assistance under Integrated
Cooperative Development Programme. Occasional rise in stock also have led
to a rise in current assets. However, a rise in current assets as a consequence of
over-stock is not a healthy trend.
3.5 Net Working Capital
Net working capital is technically defined as the difference between
current assets and current liabilities. This is very important for any organisation
because it provides liquidity for Jay-to-day operations of the organisation or
store. The volume of working capital and the operations of a stores are
positively related. From the working capital details available from table 3.5 it is
seen that per store working capital of the sample units increased from Rs.4.49
lakh in 1990-91 to Rs. 9.46 lakh in 1999-2000. Further, a very interesting
observation in the volume of working capital is its uneven distribution in these
three regions
Table 3.5
Net Working Capital of the sample primary consumers' cooperative stores for
the period from 1990-9 1 to 1999-2000
(Rs. lakh)
Southern Region
Central Region
Total
Average
Total
1990-'91
15.22
1.90
56.13
7.02
36.35
4.54
107.70
4.49
1991-'92
14.75
1.84
40.70
5.09
35.68
4.46
91.13
3.80
1992-'93
19.33
2.41
71.54
8.94
41.78
5.22
132.65
5.53
1993-'94
26.48
3.31
102.30
12.79
45.27
5.66
174.05
7.25
1994-'95
32.28
4.03
83.32
10.42
52.33
6.54
167.93
7.00
'1995-'96
32.13
81.73
10.22
61.95
7.74
175.81
7.33
1996-'97
38.40
4.80
114.76
14.35
68.19
8.52
221.35
9.22
1997-'98
33.83
4.23
1998-'99
32.06
4.01
1999-'00
33.47
418
Year
I
/
1
4.02
-
,
Northern Region Grand Unit
Average Total Average Total Average
Source: Researcher's compilation from the records of the selected Primary
Consumer's Cooperative Stores.
W h ~ l eper store working capital in 1990-91 stood at Rs. 1.90 lakh in
southern region, it came to Rs. 7.02 lakh in central region and Rs.4.54lakh in
the northern region. This may be due to the higher involvement of consumer
stores in public distribution system in the central and northern regions, because
involvement in public distribution system requires more liquidity. Further,
higher liquidity even Influence the level of operations also. In the terminal year
of the study also, the trends are not much different, which indicate that the
consumer cooperative stores are playing a relatively better role in central region
and northern region compared to southern region. The earlier tables also
support this claim. So far our discussions were centered around capital
concepts. Next. we shall start with the operational details like purchases, sales,
cost of goods sold. establishmer~tand contingency charges, trade expenses,
profits etc.
3.6 Purchases
The mandate of a consumer cooperative store is to reach the essential
and consumer articles to the needy people at reasonable prices. Hence
availability of these goods decide the popularity and profitability of a consumer
cooperative store. With this objective in mind, consumer cooperatives make
bulk purchases of grocely items, stationaly articles, textiles, consumer durable
etc. for fiuther transaction (see table 3.6). It is seen from the table that in 199091, a store in southern region made purchases worth Rs.15.52 lakh, which
increased to Rs. 26.54 lakh in 3999-2000, the percentage increase being 71.
Compared to the southern region, the purchase behaviour of central region and
northern region are distinct and voluminous. In the case of central region, the
average purchases of a store in 1990- 91 reached Rs.183.54 lakh, compared to
Rs. 15.52 lakh in southern region. The purchases became maximum in 1977-98
in the central region. In the case of northern region, the per store purchases
made a multiplication of 2.51 tinies over the reference period, the absolute
figures respectively being Rs.30.83 lakh and Rs. 77.47 lakh in the initial and
terminal years
Table 3.6
Purchases made by the sample primary consumers' cooperative stores for the
period from 1990-9 1 to 1999-2000
(Rs. lakh)
Southern Region
Central Region
Total
Total
Northern Region
Year
Average
Average
Total
Grand
Unit
Total Average
Average
1
15.52
1468.30 183.54 246.67
1
15.85
1925.69 240.71
281.67
35.21 2334.16 97.26
1992-'93 149.93 / 18.74
1991.93 248.99
334.34
41.79 2476.20 103.18
1990-'91 124.13
30.83
1839.10 76.63
I
1991-'921 126.80
I
I
Source: Researcher's compilation from the records of the selected Primary
Consumer's Cooperative Stores.
Definitely there are concrete reasons behind these trends, which are explained
in the forthcoming paragraphs. Considering the 24 sample stores together the
purchases stood at Rs. 18.39 crole in 1990-91 which increased to Rs. 27.61
crore in 1995-96 and Rs. 42.88 crore in 1997-98. It is evident here that the
purchases which were progressing only at a marginal rate between, 1990-91 and
95-96 made a rapid rise in later years, which is an indication that the purchases
were promoted to meet the changing tastes and preferences of the customers.
However, increased volume of purchases may not be reflected in the
profitability of stores, unless it is; transformed into sales as mentioned earlier.
The succeeding paragraphs explain the broad trends of sales turnover.
3.7 Sales Turnover
Table 3.7
Sales Turnover made by the sample primary consumers' cooperative stores for
the period from 1990-91 to 1999-2000
(Rs.lakh)
Year
I*-#
Southern Region
Central Region
Northern Region
Grand
Total
Average
Total
Total
Total Average
1990-'91 132.97
1
16.62
1507.82
1991-'92 136.90
/
17.11
1988 09
19.80
200735
1993-'94 170.64 / 21.33
2173.51
1994-'95 170.17
21.27
2136
1995-'96 186.67
23.33
2198
25.06
3070.
25.56
3581.
1998-'99 209.62
26.20
3335.46
1999-'00 222.15
27.77
2951.78
1992-'93 158.39
I
1996-'97 200.49
,
Average
Average
Unit
1
1997-'98 204.44
1
Source: Researcher's compilation from the records of the selected Primary
Consumer's Cooperative Stores.
From table 3.7 it is seen that all the sample stores together made a sales
volume of Rs. 19.01 crore in 1990-91, the shares of southern region, central
region and northern region respectively being 6.99 percent, 79.28 percent,
13.73 percent. In the terminal year of the study, these shares remained at 5.79
percent, 76.97 percent and 17.24 percent. Further, over the years, volume of
sales made an increase of 101.64 percent. From this we may infer that the
volume of transactions of consumer cooperative stores made notable increase in
recent years. These trends were also observed for national and state level data
explained in the prevlous chapter
From the above paragraphs, it is clear that there are significant regional
variations in the sales volume. The sale volume of central region is no way
comparable to southern region, or even northern region. An attempt was also
made to identify the reasons behind these trends. A microscopic look into the
said issue made it clear that out of eight stores in the central region, two stores
(namely CR2, CR5) are involved in the wholesale distribution of ration articles.
The share of these two stores in the total sales volume of the central region in
1990-91 came to 87.63 percent ancl in 1999-2000 to 76.94 percent. Further, one
and
store in this region CR3 is involved also in the distribution of Indane L.P.G.
Servo oil of the Indian Oil Corporation. Hence we may infer that the prosperity
of a consumer store very much depends on its involvement in the distribution of
essential articles. Looking from one angle it is important also, because equitable
distribution of essential articles was the major reasons behind the starting
consumer cooperatives. However, i t was also unfortunate to learn that the stores
involved in the wholesale distribution of rationing articles discontinued the
practice since 2000 mainly due to the revamping of Public Dishibution System
and the gradual shift to targeted public distribution system. In the case of
northern region, all stores other than stores NR2 ad NR5 evenly performed. In
addition to this, a university canteeln run by one of the stores supplemented the
turnover. Xn the case of southern region, these trends were absent and
consequently turnover was very iow.
3.8 Cost of Goods Sold
Cost of goods sold in an important indicator of any trading concern
because it gives a crude indication towards the level of profit made by the
concern in comparison with sales turnover. The details on cost of goods sold is
available from table 3.8.
Table 3.8
Cost of Goods Sold by the sample primary consumers' cooperative stores for
the period from 1990-9 1 to 1999-2000
(Rs. lakh)
Southern Region
Central Region
Northern Region
Year
Total
Average Total Average Total
Grand
Average Total
Unit
Average
1990-'91 122.49
15.3 1
1468.29, 183.54
245.78
30.72
1836.56
76.52
1991-'92 126.43
15.80
1933791 241.72
279.79
34.97
2340.01
97.50
-
1992-'93
145.49
1993-'94 15792
1
1
18.19
1955.54 244.44
334.01
41.75
2435.04
101.46
19.74
211944
372.29
46.54
2649.65
110.40
264.93
Source: Researcher's compilation from the records of the selected Primary
Consumer's Cooperative Stores.
It is seen that the per store costbigooas s g d stood at Rs. 15.31 lakh in
,..
...
..
southern region. Rs. 183.54 lakh in central region, and Rs.30.72 lakh in
northern region, the total sample average being Rs. 76.52 lakh in 1990-91. Over
the reference period, the cost of goods sold of these three regions respectively
increased by 1.67 times, 1.95 times and 2.45 times. The supremacy of central
region is naturally due to the higher sales turnover made by the stores in this
region because of the reasons mentioned earlier.
3.9 Trade Expenses
While cost of goods sold explains the real cost of the goods sold, trading
expenses represent the direct expenses incurred for transporting the goods
purchased from the manufacturers or wholesale dealers to the store, unloading
expenses and other related expenses. From table 3.9 it is seen that this expense
amounts to Rs. 1.24 lakh for the entire sample, which increased by 2.73 times
over a period of ten years and reached Rs. 3.39 lakh. It is also seen from the
table that compared to the southern region and central region, the rate of
increase is more in northern region. The per store trading expenses is multiplied
by 5.15 times over the reference period, the absolute figures in the initial year
and terminal year respectively beirig Rs. 0.58 lakh and Rs. 2.99 lakh. A likely
reason for this trend may be the canteen activity undertaken by one sample
store in this region (NR4). This store deals with large volume of items and
involve significant expenditure on trading expenses account. Fwther, another
sample store (NR3) had eight branches, with ration shop business also. This led
to higher trading expenses as a consequence of higher transportation cost.
Table 3.9
Trade Expenses incurred by the sample primary consumers' cooperative stores
for the period fiom 1990-9 1 to 1999-2000
Southern Regon
Year
(Rs. lakh)
Centrar Region
Northern Region
1
; Total 1 Average
I
1990-'91
i
2.24
/
Total Average
-
0.28
22.93
2.87
I
Total
1
Grand
Unit
Average Total Average
4.60
0.58
29.77
1.24
1991-'92
2.53
0.32
30.10
3.76
6.72
0.84
39.35
1.64
1992-'93
2.24
0.28
29.26
3.66
7.80
0.98
39.30
1.64
-
1993-'94
2.62
0.33
28.81
3.60
10.04
1.25
41.47
1.73
1994-'95
2.99
0.37
26.60
3.33
12.47
1.56
42.06
1.75
1995-'96
3.40
/
0.43
30.03
3.75
13.65
1.71
47.08
1.96
1
0.39
4670
5.84
16.82
2.10
66.70
2.78
/
0.64
58.07
/
0.65
55.42
0.77
51.33
1996-'97
3.18
-
I
1997-'98
5.09
1998-'99
5.24
I
1999-'00
6.17
1
Source: Researcher's compllatlon from the records of the selected Primary
Consumer's Cooperative Stores
3.10 Establishment and Contingency Charges
There is a conunon belief that the financial performance of any
organisation is very much influenced by the establishment and contingency
charges which include the salary of the secretary and staff, office expenses like
rent, lighting etc. It is also believed that over the years, this expense is
escalating throughout. Hence in the succeeding lines an attempt is made to
examine the influence of establishment and contingency charges in different
regions
Table 3.10
Establishment and Contingency Charges incurred by the sample primary
consumers' cooperative stores for the period from 1990-91 to 1999-2000
I
1 Southern Region
Year
Central
~ o t a/Average
~
TO
1990-'91
7.93
0.99
13.93
1991-'92
8.94
112
14.58
1992-'93
10.03
/
1.25
18.
/
1.38
20.59
1.59
21.
1.69
23.
I
1993-'94
1 1 01
1
1994-'95
12.70
I
1995-'96
13.55
1996-'97
16.59
1997-'98
18.49
1998-'99
1999-'00
/
1
/
2.07
1
27.29 i
2.31
34.
19.31
2.41
35.
19.98
2.49
35.47
Source: Researcher's compilation from the records of the selected Primary
Consumer's Cooperative Stores.
In the case of southein region, the per store establishment and
contingency charges which stood at Rs. 0.99 lakh in 1990-91 gradually
increased and reached Rs.2.49 lakh in 1999-2000, the percent of increase being
151.51. Store-wise enquiry revealed that in southern region, establishment and
contingency charges are more
in
istore SR7, followed by store SR4. Some
arithmetic suggested that per employee monthly salary on an average worked
out to Rs. 825 in 1991 and Rs. 21075 in 1999-2000, the rate of increase being
2.15 times over a per~odof ten years.
In the case of central region, the establishment and contingency charges
increased by 2.54 tlmes over the reference period, the major cost contributing
stores are CR5 and CR3. In northern region, the establishment and contingency
charges increased by 2.82 times. the finns with the high establishment and
contingency charges are NR3 followed by NR4. While trying to link with the
establishment and contingency charges wit11 the sales turnover (table 3.7) it is
crystal clear that the rate of growth of sales and the rate of hike in establishment
expenses are directly related. Considering these facts, one cannot judge that a
hike in establishment and contingency charges is always bad. It can be treated
as unproductive only if it is incapable of generating incremental revenue.
So far we have covered the major financial parameters like paid-up
capital, capital employed, purchases. sales turnover, cost of goods sold etc. and
examined the broad trends. The ultimate results will be reflected in the residual
of financial analysis, gross profits and net profit. Hence in the succeeding
paragraphs an attempt IS made to examine the profitability of the sample stores
spread over ten years
3.1 1 Profit
The gross profit data available from table 3.1 1 explain that per store
profit increased from Rs. 1.80 lakh in 1990-91 to Rs. 4.12 lakh in 1999-2000,
an increase above 2.28 times. Regon-wlse. the increase is found to be above
1.83 times in southern region, above 2.14 times in central region, and above
2.73 times in northern region
Table 3.1 1
Gross Profit of the sample primaxy consumers' cooperative stores for the period
from 1990-91 to 1999-2000
(Rs. lakh)
I
/
1991-'92
Southern Region
Centr
8.94
Source: Researcher's cornpilati0111from the records of the selected Primary
Consumer's Cooperative Stores.
Compared to other regions. the rate of growth is more and consistent in
northern region. The higher loyalty of the people in this region towards
cooperation and the diversificatio~l~
of activities by the stores in this region may
be the probable reasons. This is paltially reflected in the customer perceptions
presented in the next chapter. Even though the unit profit is high in central
region, there are wide fluctua~:ionsin the volume of profit. But these
explanations on profitability will be incomplete and disguising unless we look
into the behav~our of net profit which 1s a more important indicator for
profitability performance
Table 3.12
Net Profit of the sample primary consumers' cooperative stores for the period
frotn 1990-9 1 to 1999-2000
(Rs. lakh)
Southern Region
Centr;
Total
Average
Total
010
-2.10
0.07
3.61
Year
1990-'91
0.82
1
,
I
1991-'92, 0.52
1992-,931
1
1.48
-
0.18
0.61
-
1993-'94
1.37
1994-'95
/
0.18
1.32
2.67
0.33
1.89
1995-'96
2.22
0.28
-3.84
1996-'97
-1.13
- 0 14
-2.69
1997-'98
-3.79
-0.47
5.48
1998-'99
-1.04
/
-0.13
2.17
1999-'00
- 0 12
1 -0.02
0.42
Source: Researcher's compilation from the records of the selected Primary
Consumer's Cooperative Stores.
The net profit details given in table 3.12 give a little troublesome picture. It
is unfortunate to realise that the per store profitability is negative in the
southern region since 1996. This may be due to the shifts in the preferences of
customers towards other forms of markets like supermarkets, margin free stores
etc. which are flourishing in the southern region of Kerala. Even though the unit
turnover is very high in central region. the volume of net profit consistently
came down in the region also.
111
the years 1995-96 and 1996-97, the average
profitability became negative As mentioned earlier, the northern region
maintained a reasonably good trend in net profit also, may be due to the reasons
explained earlier. Ultimately it is inferred that the profitability of the primary
consumer stores are declining over the years and moving towards a bleak
future. T h s trend may be due to a rise in expenses, a fall in sales or may also
due to changing preferences of the customers. These issues require more
detailed examination which is not in the current agenda.
3.12 Regional Variations
- A Synoptic View
In the earher paragraphs we tried to highlight the behaviour of selected
financial parameters and also to bring out the regional peculiarities. The
e s the inter-regional variations are sumrnarised in table
regional p e c u l ~ a r ~ t ~and
3.13.
Table 3.13
Highlights of region-wise performance of Primary consumers' cooperative
stores in Kerala
Parameter
Paid-up
share
capital
Southeni Region
Central Region
Share capital
contribution by
the government
was at a low level
of 1 1.28 percent
in 1999-2000
In 1999-2000 the
government's
contribution was
at a high level of
75.32 percent.
1 Northern Region
The govenunent
has contributed
43.82 percent of
the total paid-up
capital in 19992000
Contd
Parameter
Southern Regloll
Capital
employed
1
(c)
Current
assets
Capital enlployed
per store in 19992000 reached Rs. region was Rs.
14.87 lakh in
5.97 lakh
1999-2000
--
per store reached
Rs. 4.35 lakh
1 Current assets per
Average current
assets in a store
I store varied i l l
1
/ between Rs. 5.87 ranged in
between Rs. 7.78
1 lakh and Rs.
lakh and Rs.
22.17 lakh during
the study per~od
In 1999- 2000,
net working
stood at Rs. 4.18 capital per store
reached Rs. 13.72
lakh in 1999lakh
Current assets per
store varied in
between Rs. 6.89
lakh and Rs.
16.14 lakh during
the ten year
period.
Net working
capital per store
in 1999-2000
reached Rs. 10.49
lakh
Stores CR5 and
CR2 having
dealership in
wholesale ration
articles accounted
for high volume
of purchases
There was
consistent growth
in the volume of
purchases.
During the ten
years period
purchases
increased by
151.28 ercent.
decade, purchase
Sales
turnover
Central
Per store sales
turnover in 1999- 1 sales turnover per
2000 reached Rs. store stood at Rs.
27 77 lakh
368.97 lakh
I-(
Sales turnover
per store
recorded
consistent growth
and it reached Rs.
82.61 lakh in
1999-2000.
Contd . .
v
Parameter
(g) Trade
expenses
/ Southern
/ increased by
1
1
and
contingency
charges
--
per store
97 43 percent
increased by
during the decade 123.69 percent
over the reference
period
1 reference period
I this expense
1 increased by
/ 151.51 percent
decade trade
expenses
increased by
415.5 1 percent.
During tlie ten
year period this
expense
increased by
154.59 percent.
Establishment
and contingency
charges increased
by 181.74 percenl
Gross profit
moved within
range of Rs.
Gross profit
1
Profit
I
/
I
Gross profi t
varied in bet\\ eel1
Rs. 1.12 lakh and
Rs. 2. I l lakli.
Since 1996-97
there was net loss
in t h ~ region
s
maintained net
profit was
negative in 1990- profit for all the
9 1, 95-96 and 96- years except
1991-92.
97
Table 3 . 1 3 clearly brings out tlie inter-regional variations in the
behaviour of financial parameters. An attempt is also made to reassure this
claim and also to validate our liypotliesis that "there are regional variations in
the financial performance of prima~yconsumer cooperative stores in Kerala
with the support of ANOVA (RBD type) and critical difference test
*In order to examine the variabilit? it is dcsirablc to divide the experimental units into
homogenous groups of units knonu as blocks. The treatments are randomly allocated
s
gives rise to a design known as Randomised
separately to each of thcse blocks. T h ~ pl-occdorc
Block Design (RBD) which can be dcfincd as an arrangement o f t treatments in r blocks. The
Table 3.14Results of ANOVA
F Ratio1
Particulars
Block
Treatment
1.87
28.93
6.81*
22.13
1.24
19.67*
Net working capital
Purchases
42.64**
64.21*
28.64**
32.35**
Sales turnover
52.24**
61.25**
1
8.61
26.52*
1 Establishnnent and
1
64.21'.
! contingency charges
I
-
Paid-up share capital
-
Capital employed
-
Current assets
-
-~
Trade expenses
1
i Profit
89.24..
1
(
2.14
11.25
Note: Years arc treated as blockmnd regions are treajed as treatments.
* Significant at 5 per cent level
** Significant at I per cent level
L
analysis of RBD 1s thc one similar to ;~nalysisof a t1t.o \\.a). classification. The following
formulae can be employed for ANOVA
-
Correction factor (CF) =
Total sum of squares =
i
(G.T.)~
Wlicr,: G.T. =
rt
i
1
yi j
j
1y . J.2 - C F
j
Sum of squares duc to trcatmoit
I
=
1TIr
-
?
- C.F.
R~~
--- - C.F.
Sum of squares due to blocks (or rcpl~cut~ons)
=
J
t
Sum of squares due to error = total S S - Trcatlncnt S.S. - Block S.S
Y , = value of the variatc for the i* trcatmcllt in thc jIh block (i = 1.2, . . . t, j = 1, 2,
~ i '= Y,: = R:
. . . r)
Table 3.15
Critical Difference Analysis
7
7
I
Homogeneous Group
Particulars
Block
Treatment
Paid-up share cap~tal 1 - Single group
s,c
Capital employed
Y3.Y4,Y7,Yx
S,C
Current assets
.Single group
S,N
Net working capital
Y~,YA,Y~
S,N
Purchases
~ I . Y ~ . Y ~ , Y ~ Y ~ , . Y ~ , Y ~ , Y ss ,, c
Sales turnover
Y ~ . Y z , Y 4 , YY~~ , Y I I , Y ~ , Y I O
S,N
Trade expenses
Single group
S,N
Establishment and
YI.'I'~,Y.I,Y~Y7,YX,Y9,YI0 Single group
contingency charges
Profit
- Single group
Single group
r--
ANOVA
Replications of
Treatments
n-l
Total
Where S,', S,' and S,.' arc the mcaa squares for replications. trcatmcnts and error respectively.
If the calculated valuc of F is greater tlinn ihc tnblc valuc of Fa. (t-I) (r-I), (t-I), where a
denotes the level of significance. the h\pothesis tio is rcjcctcd and it can be inferred that the
treatment effects arc sig~~ificantly
ditycrunt from OIIC anotlicr.
**The critical diffcrcncc (CD) can be calculated as.
C.D.= SEd s ta. error d.f.
The degree of freedom for t arc tllosc as for mar. The treatment means are given as,
TJr, (i = 1. 2. . . . 1). Thcsc mcalls can bc comparcd with thc help of critical difference. Any
if their difference is larger than the critical
two treatment means arc said to difir s~g~~ifica~~tl!.
difference. The effect of the i" trcntmcnt 1s estimated using the principle of least square and is
A
t.
YIj
Ti
r
=--xy-f
i
rt
From table 3.14 it is seen that the F ratio is significant even at 1
percentage level for variables like net working capital, purchases. sales turnover
and establishment and contingency charges. Capital employed is significant at
5 per cent level. This indicates that there are significant differences in the
behaviour of majority of variable:; over the years, which further strengthen the
view that the behaviour of prima~yconsulner cooperative societies is subjected
to fluctuations. The above argument was further established in our earlier
analysis also. Similarly, it is worth to examine whether there are any significant
variations between the regions. From table 3.15, it is found that in many cases
southern and central regions fo~lneda single group and in certain cases southern
and northern region foniied a single group. Hence there are variations in the
regional perfonnance and hence our liypotliesis that there are regional
variations in the fillancia1 perfoi-~na~ice
of primary consumers' cooperative
societies in Kerala may be accepted.
In the above section we have exanlined the behaviour of major financial
indicators and noted the trends. Iiowever. one of the objectives of our study,
i.e. to examine the financial perfonnance of consumer cooperatives in Kerala
will be complete only if we go for a detailed analysis of this. In order to analyse
the financial parameters, different techniques are available, of which the ratio
analysis is the most popular and widely used. Hence below an attempt is made
to workout the relevant financial ~atiosof primary consumer cooperative stores
in three regions and to interpret tht: values.
3.13 Ratio Analys~s
In the kit of a financial analyst. various ratios are available for examining
the financial performance of
arl
organisation. Majority of these ratios are
framed for corporate sector organlsations and the interpretations are also made
accordingly. However. below all attempt is made to estimate ten ratios which
explain the financial perfoi~nanceof priiilaiy consumer coope~ativesocieties in
a better way.
Table 3. I6
Financial ratios in the framework of a pritnary consumer cooperative society
I I
Ratio
I
Fortnula
1
1
Purpose
In order to know the sales
turnover ratlo
generating capacity of long
Ciiptti~let~iployed
tenn investment
r
I I
2.
Total assets
turnover ratio
I
I
I
I
asset ratio
1 1
4.
To determine the level of
asset utilisation
i
1I
Stock turnover
(times)
Net sales
Total tangible assets
Cost ol goods sold
1i
I
of stock in current assets
Cull.ent assets
I
Average inventory
iI
In order to know whether
the investment in inventory
is effectively used
t
To detennine the general
Curlelit l ~ a b ~ l ~ t l e s
liquidity of the store
Contd
I
6.
1 Qulck assets
1
i1
Quick assets
-
Cutrent liabilities
/ To measure the extent to
I
I which the liquid assets are
available to meet quick
liabilities
Cost of goods sold
1
ratio
T
1 1
I\et sales
1
8.
9
Gross profit ratlo
Net profit ratio
To deteLine the operating
1 efficiency of management
-.
This indicates the margin of
Gross profit
profit on sales effected
het sales
I
!
II
1
10.h
Stock
i
;
;
) / producf~vity
I
Net profit
-
net sales
,;-ofit ratio x
I
i
Stock turtlover ratio
To determine the portion of
sales which is left over after
deduction of all expenses
This cross force of profit
margin and stock turnover
signifies the efficiency of
sales management.
3.14 Capital Employed Turnover Ratio
This ratio indicates the ability of generating sales per rupee of long tern
investment. Naturally a higher value suggests more ability for generating
turnover. In the case of souther11rcgior~.the ratio maintained consistant increase
from 11.46 to 23.35. Over the \ears. increase in the ratio was found to be
consistent also. In the case of centtal region, this ratio vaned between 19.71 and
26.64 over the years. Compared to southern region, there are fluctuations in the
behaviour of this ratio in central re,gion
Table 3.17
Capital Employed Turnover ('Times) in the sarnple primary consumers'
cooperative stores for the period from 1990-91 to 1999-2000
(in percentage)
-~-
-
Northeni
Year
1990-'911
11.46
1991-'92
15.50
,
I
1992-'93
/
16.83
:
f -'
I
Pooled
19.71
14.09
15.09
34.99
17.92
22.80
2 1.55
19.32
19.23
7
1
-
1993-'94
/
19.86
18.99
20.08
25.68
22.48
20.23
26.63
23.35
20.26
29.12
24.24
23 00
26.64
19.42
23.02
22.54
26.21
---- A--~
21 49
24.82
19.40
22.72
18.98
21.76
1
1994-'95
21.67
1995-'96
22.00
1
!
!
-
1996-'97
1997-'98
1
i
199~99
1999-'00
--I
A-
Source: Researcher's compilatron
For instance, the ratio \\l\icl\ was 19.71 in 1990-91 went up to 34.99 in
1991-92 and in the succeeding year came down to 21.55. Fluctuations are clear
in the behav~ourof this ratio
ill
not-thenl region also. Further, in the northern
region this ratio made a decline fi-o~n1996-97. These variations are mainly due
to the changes in the compositiun of capital employed and also due to the
erratic variations in turnover. Considering the trends, we are not in a position to
infer that the relat~onshipbetween capital employed and turnover are closely
associated.
3.15 Total Assets Turnover Ratio (in times)
Table 3.18
Total Assets Turnover (Times) ill the sample primary consumers' cooperative
stores for the period fio~n1990-91 to 1999-2000
(in percentage)
I
Year
/
Southenl
Region
i
Central
Keg1011
/
,
Region
I
Pooled
/
Source: Researcher's cornpilatio~l
The above ratio explai~ledthe relation between capital employed and
~ d
are also related. It is a simple
turnover. Similarly total assets a ~ turnover
numerical wisdom that total assets and turnover are positively related. That
means increase in assets leads to increased turnover. This ratio of the entire
sample stores suggest that the turnover multiplied by five times compared to
assets. However there are clear cut regional differences. In southern region, this
ratio is reasonably low because of low sales turnover in the region. On the other
hand in central region, the ratio varied in between 7.71 and 13.65. This is
mainly due to very high sales tun\ over contributed by stores CR5 and CR2. In
northern region, the rel;itionsl~lpis rlloderate.
3.16 Stock to Current Assets Ratio
Stock to Current Assets in the salnple yriina~yconsumers' cooperative stores
for the period horn 1990-91 to 1999-2000
(in percentage)
+-
--
Source: Researcher's cotnpilatlol~.
This ratio indicates the share of stock in trade in current assets. The ratio
will definitely vary according to tl~ecllanging stock position and it is difficult to
fix a criterta. However. the practlce observed is, for a healthy concern this ratio
will be around 20-25 which infers tllat the stock accounts hardly 25 percent of
the current stocks. For the sample stores, this ratio varied between 29.72 and
35.64. This leads to the inference that the level of stock is little higher than the
desirable level. This may be due to the decline in turnover due to different
reasons or also may be due to o\,er purcl~ases.Among the regions, the ratio is
higher in central region and lotver i n nol.thet-tl region. A higher ratio in central
region even after good tunlover is due to heavy stocks maintained by two stores
CR5 and CR2, which is a statutory requirement for them. This is also hue
which is supplemented by the store level data. The northern region exhibited a
healthy ratio because of the customer inclination towards cooperative stores in
that region.
3.17 Stock Turnover (Times)
Stock turnover ratio belong~ngto the category of activity ratios indicates
whether the investment in in\.enro~yis effectively used. The average stock
m o v e r of the stores varied bet\veen 12.71 and 16.29 in southern region,
between 21.99 and 38.33 in centrill region and 15.19 and 19.34 in northern
region, for the entire sample the range varied between 18.51 and 23.02 over the
reference period.
A higher
i.;lticl
is desirable because it is a signal of sales
turnover that has taken place \ v i r l ~ the available stock. From the computed
ratios, it is seen that the ratio is inorc in central region, followed by northern
region and the southern region.
Stock Turnover (Times) in the s;tn~pleprinlaty consumers' cooperative stores
for the period 11.o11i1990-9 1 to 1999-2000
(in percentage)
7
Northern
Region
Pooled
15.19
18.70
35.57
16.74
22.18
27.06
19.34
20.41
Year
I
1990-'9 1
1991-'92
/
14.24
I
.-
I
1992-'93 /
14.83
I
'
1993-'94
/
14 56
1994-'95
/
1271
:
-
-----t--18.51
21.99
18.79
1995'96
20.49
1996-'97
23.02
&
.--.-
I
1997-'98
15.71
I
1998-'99 i
I
1999-'00 i
14.31
I4I2
32.14
!
3168
.--A
1
21.37
20.90
17.01
20.94
Source: Researcher's cotnl~il;\tic~~~
These trends are consistent wit11 the earlier claini that the turnover is maximum
in central region, followed by nortlrertl and southeni regions
3.18 Current Ratio
Current ratio is one of tllc most popular ratios in any accounting
framework and it shows the stol.c's ability to meet its short-term liabilities.
Conventionally a ratio 2: 1 is treatcd as the standard norm which implies that
current assets should be at least double ol'cunent liabilities. A very high current
ratio is also hannful because it reduces profitability with high liquidity. To put
in other words. the problem is of l~cluitlity\.ersus profitability
Current Ratio tn the sample prl~~lilry
co~~sutliers'
cooperative stores for the
period fro1111990-9 I to 1999-2000
Year
1
~outllern
Region
/,
(in percentage)
Central
Regiotl
I
Northern
Region1
Average
1
Source: Researcher's colnpilatiol)
For the satnple stores. the ratio is extremely high compared to the
standard norms. But one has to be little cautious that the standard norm of 2:l
which is conventtonally follo\vetl
ill
a corporate organisation can not be
accepted as such in a yrima~ycorisulllers store. One can only state that the
trends in current ratlo 1s extre~llel\ Sa\ourable in all regions. Specifically, the
ratio is very high in ltottl~erli regloll. Inay be due to very high cost as a
consequence of steady sales.
vet); high current ratio ensures sufficient
.-\
liquidity to the stores to meet curl-ent and short obligations. This is in one way
against the conventtonal belief
tllilt
the prinlaty consut~iers'cooperative stores
are experiencing shortages in ordcr to dispose of sllort-tenn claims. Sometimes
this may be due to the absetice of \\ell designed business development plans.
3.19
Quick Asset Ratio
A ratio closely related to cul.renl ratio is quick assets ratio. It shows the
ability of a store to meet its curretlt liabilities immediately.
Quick Ratio in the sample pril11;111consumers' cooperative stores for the period
ti.0111 1900-9 I to 1999-2000
I
year
1
-
Southet~l '
Reg~on I
,
I
(in percentage)
,
Cet~ttal I Northern
.
.
-
I<eglon
Source: Researcher's cornl~il;~tlon.
/
Region
Pooled
/
In majortty of the cilses. the behaviour of current ratio and quick ratio
are consistent. Also, as mentioned earlier. a vely higt~ratio is also equally
harmful because
it
affects the profitability. Among the regions, in southern
region and central regioti, the ~ a t i ois around the prescribed limit, but in
northern region, it is extreolel\. l ~ i g li ~n earlier years mainly because of the
canteen business in store NKJ ;111dreceipt of ICDI' assistance in the later years
of the reference per~od
Coming to the oper;~tion;llaspects, the relevant ratios are direct operating
ratio, trade expenses as a pel.celltage of sales and establishment and
contingency charges as a perce1lt;lge of sales tunlover which are available from
tables 3.23. 3.24 and 3 15.
3.20
Direct Operating Ratlo
Direct
operating
ratio explains t l ~ e cost involved for transacting a
business of rupees hundred. Tlus is a test of the efficiency of management in
their business operatio~is.Froill [able 3.23, it is seen that this ratio varied
between 93 and 94 over the reli.rence period, considering all the three regions
together. The ratio is found to be least in nol-thern region and southern region.
In central region eventllougll tlie turnover is high, the rate of profit is low
because a higher turno\er is r.cstilted as a consequence of public distribution
system activities undet-ti~krnb). t ~ stores.
o
CR5 and CR2 for which margin is
nominal.
Table 3.23
Direct Operating Ratio in the saulple psin~aryconsumers' cooperative stores for
the period iron1 1990-9l to 1999-2000
(in percentage)
.
-
-
.
--
..
Source: Researcher's cornl)ilat~on.
Direct operating ratio cspresses o ~ d ythe cost of goods sold as a
percentage of net sales. III additlo11to this, triding expenses and establishment
and contingency charges also influence profitability. Their relation with sales
turnover is given rrr tables 3.24 u t ~ t l3.25. Normally this ratio will be around
two percent. Frorn table j.24. rt
1s
seen that in all regions, the trade expense
ratio is not significantly different iro~nthe cor~veutionalnorm. Compared to the
,111dcol~til~gency
charges as a percentage of
trade expense ratio. establisllr~ler~t
sales turnover is found to be high p;irticularly in southern region. The reason for
this trend is clear and direct. Over the years, the salary of the employees has
undergone periodic revisions and hike which is a common occurrence evely
where. But correspondingly sales volume never increased at that high rate.
These facts were explained earlier also when we discussed the behaviour of
establishment and contingency charges (table 3.10).
Table 3.24
Trade expenses as a percentage of sales turnover in the sample primary
consumers' cooperative stores for the period from 1990-91 to 1999-2000
(in percentage)
Central
Region
Northern
Region
Pooled
1990-'9 1
1.52
1.76
1.65
1991-'92
1.51
2.26
1.87
Year
Southern
Region
1992-'93
1.41
1.46
2.21
1.69
1993-'94
1.54
1.33
2.49
1.79
1994-'95
1.76
1.25
2.70
1.90
;; ;::
1.98
1995-'96
1996-'97
1.59
1997-'98
2.49
1998-'99
2.50
1999-'00
2.78
2.06
2.50
1.66
3.47
2.54
1.74
3.61
2.71
-
Source: Researcher's compilation.
-
Table 3.25
Establishment and contingency charges as a percentage of sales turnover in the
sample pnmary consumers' cooperative stores for the period Erom 1990-91 to
1999-2000
I
Year
Southern
Region
1
Central
Region
1
(in percentage;
Northern
Region
I
Pooled
Source: Researcher's compilation.
So far we have covered all relevant ratios discussed in financial analysis
and the ultimate result will be reflected in the profitability trends. In order to
examine the profitability trends, the unavoidable ratios are gross profit ratio and
net profit ratio. Hence these two are computed and discussed below.
3.21 Gross Profit Ratio
According to the norms laid down by the expert group, consultancy and
promotion cell, (NCCF) gross profit margin as a percentage to sales should be
in between 6.5 percent to 7.5 percent. For the sample stores, the gross profit
ratio varied in between 4.39 percent to 5.13 percent during the reference period.
Table 3.26 shows that in the case of gross profit ratio there are clear-cut
regional variations. Among the regions, this ratio is higher in southern region,
followed by northern region. In southern region the gross profit ratio varied in
between 5.87 percent and 7.66 percent. The probable reason for this higher
level of gross profit ratio may be the practice of continuing the conventional
trading in grocery items, textiles etc. It is interesting to note that eventhough
gross profit ratio is higher in southern region, the volume of sales turnover was
comparatively low in this region.
Table 3.26
Gross Profit Ratio of the sample primary consumers' cooperative stores for the
period from 1990-9 1 to 1999-2000
7
7
7
I
I
Year
/
Southern
Region
1998-'99
6.70
1999-'00
7.58
I
(in percentage)
Central
Region
Northern
Region
Pooled
1.32
6.50
5.13
Source: Researcher's compilation.
I
I
In northern region, the gross profit ratio varied in between 4.78 percent
and 6.50 percent during the reference period. In central region, the gross profit
ratio was extremely low and remained at less than 1.64 percent level during the
ten year study period. Among the sample stores in central region, two stores
CR5 and CR2 were operating with a very low margin of less than one percent
on account of the reasons explained earlier.
3.22 Net Profit Ratio
As per the norms laid down by the consultancy and promotion cell,
NCCF, the consumer cooperative stores should earn a net profit margin 0.5
percent to 1.0 percent. 'The trends of net profit (see table 3.11) were explained
earlier. As against the conventional belief that satisfactory gross profit ratio will
lead to satisfactory net profit ratio, it is surprising to observe that (see tables
3.26 and 3.27) southern region with higher rates of gross profit ratio during the
reference period could not sustain positive net profit ratio since 1996-97.
The net profit ratio in southern region was very adverse during 1997-98,
as it was negative. In northern region, the net profit ratio was comparatively
better than other regions for the reasons explained earlier. The central region
with gross profit ratio of less than 1.64 percent for the reference period had
been able to maintain positive net profit ratio for seven years within the ten year
study period. The microscopic examination of the net profit ratio of the central
region clearly suggests that the ratio of net profit varied in between -0.17
percent and + 0.18 percent during the study period. On enqujr, it was revealed
that the lower rate of net profit ratio was the consequence of lower volume of
sales turnover. The fact that, southern region with higher gross profit ratio (see
table 3.26) could not sustain that trend in the case of net profit ratio (table 3.27)
highlights the need for expanding the volume of sales turnover in the primary
consumer cooperative stores.
Table 3.27
Net Profit Ratio of sample primary consumers' cooperative stores for the period
from 1990-91 to 1999-2000
7
7
I
year
I
Southern
Region
1
Central
Region
I
(in percentage)
I
I
I
No*ern
Region
Average
I
I
Source: Researcher's compilation
In a consumer cooperative store, the purchases, its transactions and stock
in trade very much influence profitability. Hence it is a recent practice to
compute stock productivity also, which is the cross-force of gross profit margin
and stock turnover.
3.23 Stock Productivity
The stock productivity is an indicator of efficiency in inventoxy control
and sales management Consumer's cooperative stores cannot survive unless
they achieve a stock productivity of at least 80 percent and preferably 100 to
120 percent m the present cost structure. In the developed countries, minimum
stock productivity has been kept around 500 percent (Amin 2001)'. The stock
productivity of sample stores (table 3.27) varied in between 94.02 percent and
114.74 percent. Among the three regions the stock productivity is more and
consistent in northern region
Table 3.28
Stock Productivity in the sample primary consumers' cooperative stores for the
period from 1990-9 1 to 1999-2000
1
Year
/
Southern
Region
(in percentage)
Central
Region
Northern
Region
Pooled
Source: Researcher's compilation
I
Amin, G.H. (2001). "Consumer Cooperatlvcs in Llberalised Economy", The Cooperator. Vol.
XXXIX, No. 1.October. P 174.
During the reference period, the stock productivity in northern region
varied in between 118.16 percent and 139.05 percent, indicating that inventory
control and sales management practices of this region are comparatively better
than southern region and central region. In the central region, stock productivity
steadily improved from 66.5 1 percent in 1990-9 1 to the highest level of 139.79
percent in 1997-98, which later fell to 1 17.36 percent in 1999-2000. The higher
rate of stock turnover and the lower rate of gross profit ratio is one of the
features noticed in the central region. Eventhough the gross profit ratio in
southern region is high as compared to other regions, the stock productivity is at
the lowest level in this region, which tells that the rate of stock turnover plays
an important role in determining the level of stock productivity. In order to
enhance stock productivity of consumer's cooperative stores, the composition
of sales mix is to be decided in accordance with the requirements and
preferences of customers.
In this chapter we have examined the financial performance of selected
primary consumers' cooperative stores. The performance of selected parameters
reveal clear-cut inter-regional variations. Further, ratio analysis tells that the
performance of the selected stores is not very exciting. This is evident from the
negative or meagre net profit. Eventhough the purchases and sales made a
remarkable increase. it cannot be treated as a final figure unless the inflation
factor is also taken into account. Thus, it is worthwhile to examine the reasons
behind the gloomy performance. Different reasons can be attributed, but one
may be the attitudes of the customers towards the primary consumers'
cooperative stores. This is attempted in the succeeding chapter.