Dutch Lady

Topics: Milk, Balance sheet, Finance Pages: 13 (4834 words) Published: July 22, 2009
The listed company that our group chose is Dutch Lady Milk Industries Berhad (DLMI). Dutch Lady Milk Industries Berhad (DLMI) is incorporated in 1963 and operating based on dairy business. Dutch Lady is the first dairy company who listed in Bursa Malaysia and the top three companies in Malaysia which produce dairy product. Royal Friesland Company, in Netherlands is the holding company of Dutch Lady and the second largest holding Dutch Lady shares is Permodalan National Berhad. The primary activities of Dutch Lady are manufacture dairy products and distribute locally or export. During the 45 years of management, the business operation of Dutch Lady has been well expanded throughout Malaysia. The chilled plant of Dutch Lady is one of the most advanced compared to others in South East Asia. The 10-acre factory site of Dutch Lady is located at Petaling Jaya, Malaysia. A wide range of products Dutch Lady produced, from dairy products to juicy drinks, yoghurt and infant nutrition products. For example, Infant Formula, Growing-up Milk, Powdered Milk, Condensed Milk, UHT (ultra high temperature) Milk, Sterilised Milk, Pasteurised Milk, Cultured Milk, Yoghurt and Fruit Juice Drinks. There are sub-brandings used for different products besides Dutch Lady such as Frisian Flag, Frisolac, Completa, Calcimex and Joy. The quality control of the products is vital deliberation for the company. And Dutch Lady continuously granted with ISO 9001 certification since 1995 which assure the quality of the products. Besides this, Dutch Lady also develops a HACCP (Hazard Analysis Critical Control Point) System to emphasis on food safety. The corporate vision is to maximize the wealth of the owner, design nutritious product to develop a healthy life of customer and acknowledge a dedicated team of employees to achieve goals. Dutch Lady is recognized as the favored brand of dairy products in Malaysia and awarded the ninth Reader's Digest Super Brands Gold Award.

3. Identify and discuss the sources of finance that the company is using In the business world, money is the vital resources, lifeblood of an organization for expansion, growth and continuing of business. So financing is important for every organization. The fund raise can be either internally or externally. The internal sources comprises of retained profit, sales of assets and so on. While an external source is the funds come from outside the organization such as capital share, trade credit, overdraft, leasing, debenture and others. There are three types of financing: short-term finance which is less than 1 year for temporary out of fund or liquidity problem, medium-term finance which borrowing period within 1 year to 5 years and long-term finance which the borrowing period more than 5 years, normally used for long-term investment.

a) Trade credit
Trade credit is an important source of short-term financing for every business. A business not actually pays their payment once they receive the goods. It is an ordinary business transaction that the company purchases on credit. They are given a period of days to pay the debt, the most common is around 30-60 days. However, there are some of the company might not be able to pay the debt after the end of the period of given. Therefore, there might be a charge on fee or interest or even take the business to court to get the money back. It also will lead to a bad reputation on business. A trade discount will be granted if prompt payment made by the debtor. 1Trade credit is used in the business because the buyer is not aware of the real costs involved- if he were, he might turn to other sources of trade finance. However, other forms of capital are not always available, and for a company that has borrowed as much as possible trade credit may be the only choice left. This is an important source of capital for many small companies. A company which provides credit to another is in fact putting itself in the...
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