Analysis of the Financial Framework of Agro-Processing Industries in Gujarat

Abstract

This research looks at several agro-processing plants in Gujarat to see how they contribute value and how much. There has also been an analysis of the state's agro-processing enterprises' financial feasibility. Processing units may be operational even while using just a fraction of their capacity, according to the break-even study. About 53% of the total value has been added in the processing industry. Following the baking and confectionery industries in terms of value addition, the fruits and vegetable processing industry has achieved the greatest at 133%. The majority of processing businesses have a low fast ratio (acid test) and a high current ratio, according to financial viability ratios obtained from financial accounts. This means that many companies have a lot of unsold inventory. When comparing small and big entities, financial ratios favour the former. The number of backward and forward links is directly proportional to the size of the company. There are 85 backward links and 123 forward linkages in the average processing business. Factors related to demand, not supply, mainly determine the spatial concentration of processing businesses within the state. The study's findings include a number of policy recommendations, such as concentrating on raw material producing regions for industrial development, prioritising small-scale industries to encourage micro-enterprises in rural areas, and promoting supporting and intermediate industries to boost value-adding activities. In addition, it promotes an affordable and ample supply of raw ''materials'' by bolstering direct links through suitable contract farming models, a liberal credit policy to upgrade processing units, and the support of small industry associations or consortia for coordinated advertising and promotion.