bannari amman sugars limited
TRANSCRIPT
CHAPTER 1
INTRODUCTION TO THE PROJECT
1.1 FINANCIAL STATEMENT ANALYSIS
Financial statements generally refer to four basic statements-the Income Statement,
the Balance Sheet, the Statement of Retained Earnings and the Sources and Uses of Funds
Statements. The Financial Statements, taken together, give the accounting picture of the
firm’s operation and financial position. The importance of financial analysis is to make a
detailed study about the cause and effect of the profitability and financial condition of the
company.
ANALYSIS AND INTERPRETATION
Analysis and interpretation of final statements refers to the process of determining the
significant operating and financial characteristics from the accounting data with a view to
getting an insight of an enterprise. By establishing a strategic relationship between the items
of a balance sheet and income statement and other operative data, the financial analysis
explains the meaning and significance of such items.
The terms ‘analysis’ and ‘interpretation’ are complimentary to each other, though
sometimes they are used distinctively. Analysis is used to mean the simplification of data by
methodical classification of data given in the financial statements and the term interpretation
means explaining the meaning and significance of the data so simplified. However, analysis
is useless without interpretation, and interpretation becomes difficult without analysis. Hence,
as the objective of analysis is to study the relationship among the various items of financial
statements by interpretation, many to cover both analysis and interpretation together use it
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1.2 METHODS OF FINANCIAL ANALYSIS
There are various tools and techniques to do financial analysis. The main objective or
any analytical method is simplification and presentation of data in a more comprehensive
manner. However, no one type of analysis is sufficient to support overall findings, or to serve
all types of users. The most important tools of financial analysis are as follows:
1. Comparative Financial Statements
2. Common Size Statements
3. Trend Ratios or percentage
4. Ratio Analysis
5. Fund Flow Analysis
6. Cash Flow Analysis
In this report two comparative analysis, Ratio analysis and Cash flow analysis has
been carried on.
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1.3 NEED FOR THE STUDY
A comparative analysis of financial statements reveals the trend in the progress and
position of enterprise.
To know the company’s cash investment in various activities and their effect on the
cash balance.
To reveal the cash position of the company for the past financial years.
1.4 OBJECTIVE OF STUDY
To make a detailed study about the cause and effect of the profitability and effect of
the profitability and financial condition of the company.
To know the operational efficiency as well as the financial position of the company.
To know the cash transactions and the balance of cash for two financial years.
1.5 SCOPE OF THE STUDY
The study will act as a basis for analyzing the financial position of the company.
The company can come to know where their concentration was and where they have
to concentrate.
The study will be a basis for analyzing the financial health of the Company in terms
of liquidity, profitability and efficiency in utilization resources.
1.7 LIMITATIONS OF THE STUDY
The figures taken from the financial statement for analysis were historical in nature,
time value of money is not being considered.
The reliability and accuracy of calculations depend on the information found in the
balance sheet of the company.
The findings of the study could be taken only as guidelines and cannot be applied
directly to other companies of the same industry
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1.6 METHODOLOGY
RESEARCH DESIGN
The nature of the research is descriptive research to provide a systematic description
that is as factual and accurate as possible.
SOURCE OF DATA
The study depends on both primary and secondary data.
Primary data is collected through informal interview with the employees and workers
of the company regarding the performance and operation of the company.
Secondary data is collected through Annual Reports, Company source and various
websites.
PERIOD OF THE STUDY
The period of the study for financial performance analysis was 5 years (i.e.) 2005-
2009.
TOOLS AND TECHNIQUES
The present study aims at analyzing the financial performance of BANNARI
AMMAN SUGAR LTD . The tools used were
1. Comparative Technique
2. Trend Analysis
3. Cash Flow Analysis
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Chapter -2
Industry profile
2.1 Introduction
Sugars are a major form of carbohydrates and are found probably in all green plants. They
occur in significant amounts in most fruits and vegetables. There are three main simple
sugars sucrose, fructose and glucose. Sucrose is in fact a combination of fructose and glucose
and the body quickly breaks down into these separate substances.
The Need For Energy
All energy stored in food is derived originally from the sun and it is made by green
plant life. The sun's energy acts upon the green chemical "chlorophyll" in the leaves of plants
to produce sugars and starches from the carbon-dioxide in the atmosphere and the water from
the roots by a process known as Photosynthesis. These carbohydrates (starches and sugar)
acts as a plants food and energy supply. The energy need of human body is largely dependent
on the carbohydrates that are derived from plants.
A Balanced Diet
A balanced diet can come from a variety of different foods, calculated to give the desired
levels of carbohydrates, proteins, fats, vitamins and minerals. Nutritional scientists advocate
that carbohydrates should provide at least 50% of over energy requirements.
2.2 History
The discovery of sugarcane, from which sugar as it is known today, is derived dates
back unknown thousands of years. It is thought to have originated in New Guinea, and was
spread along routes to Southeast Asia and India. The process known for creating sugar, by
pressing out the juice and then boiling it into crystals, was developed in India around 500 BC.
Its cultivation was not introduced into Europe until the middle-ages, when it was brought to
Spain by Arabs. Columbus took the plant, dearly held, to the West Indies, where it began to
thrive in a most favourable climate.
It was not until the eighteenth century that sugarcane cultivation was began in the United
States, where it was planted in the southern climate of New Orleans. The very first refinery
was built in New York City around 1690; the industry was established by the 1830s. Earlier
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attempts to create a successful industry in the U.S. did not fare well; from the late 1830s,
when the first factory was built. Until 1872, sugar factories closed down almost as quickly as
they had opened. It was 1872 before a factory, built in California, was finally able to
successfully produce sugar in a profitable manner. At the end of that century, more than thirty
factories were in operation in the U.S.
2.3 Manufacturing Process and Technology
Sugar (sucrose) is a carbohydrate that occurs naturally in every fruit and vegetable. It is a
major product of photosynthesis, the process by which plants transform the sun's energy into
food. Sugar occurs in greatest quantities in sugarcane and sugar beets from which it is
separated for commercial use. The natural sugar stored in the cane stalk or beet root is
separated from rest of the plant material through a process known as refining.
For sugarcane, the process of refining is carried out in following steps
Pressing of sugarcane to extract the juice.
Boiling the juice until it begins to thicken and sugar begins to crystallize.
Spinning the crystals in a centrifuge to remove the syrup, producing raw sugar.
Shipping the raw sugar to a refinery where it is washed and filtered to remove
remaining non-sugar ingredients and colour.
Crystallizing, drying and packaging the refined sugar
Beet sugar processing is similar, but it is done in one continuous process without the raw
sugar stage. The sugar beets are washed, sliced and soaked in hot water to separate the sugar -
containing juice from the beet fibre. The sugar-laden juice is then purified, filtered,
concentrated and dried in a series of steps similar to cane sugar processing.
For the sugar industry, capacity utilization is conceptually different from that applicable to
industries in general. It depends on three crucial factors the actual number of ton of sugarcane
crushed in a day, the recovery rate which generally depends on the quality of the cane and
actual length of the crushing season.
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Since cane is not transported to any great extent, the quality of the cane that a factory receives
depends on its location and is outside its control. The length of the crushing season also
depends upon location with the maximum being in south India.
Sugarcane in India is used to make sugar, khan sari or gur. However, sugar products
produced worldwide are divided into four basic categories: granulated, brown, liquid sugar
and invert sugar.
2.4 Types of sugar
Type Usage Special characteristic
Regular sugar house hold use, food
processing
Easier for bulk handling, not susceptible
to caking
Fruit sugar Dry mixes like gelatine
desserts, pudding mixes and
drink mixes.
uniformity of crystal size prevents
separation or settling of smaller crystals at
the bottom of the box
Bakers special baking industry
Superfine sugar sweetening fruits and iced-
drinks
dissolves easily
Confectioners or
Powdered Sugar
icings, confections and
whipping cream
Coarse sugar making of fondants,
confections and liquors
highly resistant to colour change or
inversion at high temperatures
Sanding sugar to sprinkle on top of baked
goods
large crystals reflect light and give the
product a sparkling appearance
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2.4 By-products of Sugarcane
The Sugar mill produces many by-products along with sugar. A typical sugarcane complex of
3000 tcd capacity can produce 345 ton of sugar, 6000 liters of alcohol, 3 ton of yeast, 15 ton
of potash fertilizer, 25 ton of pulp, 15 ton of wax, 150 ton of press-mud fertilizer and 750KW
of power from bagasse.
Molasses
Molasses is the final effluent obtained in the preparation of sugar by repeated crystallization.
It is the end product from a refining process carried out to yield sugar. Sucrose and invert
sugars constitute a major portion (40 to 60%) of molasses.
The yield of molasses per ton of sugarcane varies in the range of 3.5 to 4.5%.
Molasses is mainly used for the manufacture of ethyl alcohol (ethanol), yeast and cattle feed.
Ethanol is in turn used to produce portable liquor and downstream value added chemicals
such as acetone, acetic acid, butane, acetic anhydride, MEG, etc. Some of the alcohol based
chemicals like MEG, acetic acid, acetone etc., face stiff competition from production through
the petro-chemicals route.
Bagasse :
Bagasse is a fibrous residue of cane stalk that is obtained after crushing and extraction of juice. It consists of
water, fibres and relatively small quantities of soluble solids. The composition of bagasse varies based on the
variety of sugarcane, maturity of cane, method of harvesting and the efficiency of the sugar mill. The usual
bagasse composition is given below.
Content Range %
Moisture 46-52
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Fibre 43-52
Soluble solids 2-6
Bagasse is usually used as a combustible in the furnaces to produce steam which in turn is
used to generate power. It is also used as raw material for production of paper and as feed
stock for cattle.
By making use of bagasse, sugar mills have been successful in reducing dependence on state
electric boards for power supply. For example, Ballarampur Chini Mills procured 95% of its
total power requirement for FY98 from captive generation from steam turbines.
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Chapter-3
Company profile
3.1 Bannari Amman Sugars Limited is an India-based integrated sugar manufacturing
company. Bannari Amman Sugars is an offshoot of the legendary Bannari Amman Group
which is one of India's largest industrial conglomerates.
The Group's business activities include areas like manufacturing, trading, distribution, and
financing. Bannari Amman Group manufacturing and trading business includes production of
sugar, alcohol, liquor, granite, and cotton yarn. Further, its trading activities include
distribution of automobiles and related auto parts of renowned brands and financing.
Furthermore, the service sector includes business portfolios like wind power energy,
education, health care, and real estate.
Manufacturing units of Bannari Amman Sugars are -
Bannari Amman Sugars Limited, has five sugar producing units -
Unit 1 - is at Sathyamangalam of Erode District, Tamil Nadu State, with sugar
crushing capacity of 4000 TCD. This unit started its commercial production in
1986 and was the first sugar industry of India. It produces 100MT of Refined
Sugar per Day
Unit-2 - is near Nanjangud in Mysore District of Karnataka State. This unit
started its commercial operation in 1992 and presently have sugar crushing
capacity of 7500 TCD per Day. This ISO 9001:2000 certified unit also
produces 60,000 liters of industrial alcohol per day
Unit-3 in kollegal near chamrajanagar district this unit strated in 2006.
Unit-4 -is at Kolunthampattu of Thiruvannamalai District, Tamil Nadu State,
with sugar crushing capacity of 5000 TCD. This unit started its commercial
production in 2008.. It produces 100MT of Refined Sugar per Day
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Unit-5 in Thirukkovilur near Viluppuram district this unit strated in 2009.
Distillery unit - produces over 60,000 liters of industrial alcohol and extra neutral
spirit per day from sugarcane molasses
Bio-Compost Fertilizer Unit - is prepared by mixing nutrient rich press mud from
sugar mills with nitrogen, phosphorous and potassium rich spent wash obtained from
its distillery unit. Bio-compost helps in maintaining soil fertility
Bio diesel unit - produces 3000 litres of Bio Diesel per Day, from multi feed stock
viz., Jatropha, Pungan seeds etc.
Bannari Amman Sugars have registered net sales of Rs. 79286.65 lakh for the year ended
31st March 2008-2009 and the company's net profit stands at Rs. 9153.22 lakh for the same
period, said Mr. S.V. Bala Subramanian, Chairman & Managing Director, Bannari Amman
Sugars.
Bannari Amman Sugars products include the following -
Refined crystalline Sugar for food and pharmaceutical industry
Fertilizers and Pesticides
Industrial Alcohol
Bio-diesel
3.2 OBJECTIVE OF ORGANISATION
Identify and improve the process to have a continuo’s up gradation of the quality of
the end product.
Serve in the best interest of cane growers and shareholder.
Maximise productivity by optimizing all inputs.
Expand and diversify utilisation by product in a planned manner.
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3.3 Board of Directors :
Chairman : DR. S.V Balasubramaniam
Vice chairman : V. Venkata reddy
Directors : S. G. Subrahmanyam
S.V. Alagappan
S.V. Arumugam
P.L. Sivanappan
E.P. Muthu Kumar
A.K .Perumalsamy
T .Gundan
B.Saravanan
Auditors : P.N. Ragharendra Rao & co (chartered accountant)
Internal auditors : Vatsan & Gita (chartered accountant)
Cost auditors : M. Nagarajan
Company secretary : C. Palaniswamy
Bankers : Punjab national bank , Bank of Baroda, Canara Bank, Federal Bank
Limited, Karur vysya bank limited, Union Bank of India, Indian Overseas Bank, State
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Bank of Travancore, State Bank of India, Lakshmi Villas’ Bank Limited, State Bank of
Hyderabad, Bank of India
Figure-1
3.4 ORGANISATION STRUCTURE
CHAIRMAN
MANAGING DIRECTOR
VICE PRESIDENT SUGAR CANE
GENERAL MANAGER/TECHNICAL
DEPUTY GENERAL MANAGER
PERSONAL MANAGER
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Figure-2
Department functions
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ASST. GENERAL MANAGER-CANE
SR MANAGER-CANE
DY GENERAL MANAGER-CANE
DY MANAGER-CANE
CANE DEPARTMENT
OFFICER-YARD AND TRANSPORT
CANE OFFICERS SECTION INCHARGE
WEIGHBRIDGE OPERATOR
MANAGER-DIVISION HEADS
Figure-4
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ADMINISTRATIVE DEPARTMENT
SR.MANAGER-HRD
GUEST HOUSE AND TELEPHONE
AUTO SECTION HR OFFICE LABOUR WELFARE OFFICE
TIME OFFICE
ASST.SECURITY OFFICE
MAIN ACCOUNTS
ASST. MANAGER ACCOUNTS
ACCOUNTS STAFFS
ASST.GENERAL MANAGER-ADMN. SR.MANAGER-ACCOUNTS
ELECTRONIC DATA PROCESSER
CANE ACCOUNT
OFFICER CANE ACCOUNT
ACCOUNTS STAFFS
SECURITY
Figure-5
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ENGINEERING DEPARTMENT
SR.MANAGER -ENGINEERING DY.GENERAL MANAGER- CO-GENERATION
DCS OPERATOR
DY MANAGER MECHANICAL
DY MANAGER RO PLANT
SHIFT ENGINEER
ELECTRICIAN
LAB-CHEMIST
WORKER
DY MANAGER MECHANICAL
SHIFT ENGINEER
WORKER
DY MANAGER ELECTRICAL
DCS OPERATOR
ELECTRICIAN
Figure-6
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MANUFACTURING DEPARTMENT
ASST.GENERAL MANAGER-PROCESS
MANAGER-PROCESS
DY MANAGER-PROCESS
ASST.MANAGER GODOWN
GODOWN STAFF
LABOURERS
MICROBIOLOGISTSHIFT CHEMIST
WORKER
LAB-IN-CHARGE
LAB CHEMIST
FIGURE-7
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DISTILLERY
ASST.GENERAL MANAGER
DEPUTY MANAGER
SHIFT CHEMIST
WORKER
FUTURE PLAN OF ACTION
In sugar unit-1 necessary steps are being taken up to identify technologies viz power
tiller drawn implement for small farmers, mini tractors drawn implements for medium
to large holding and popularising the same with farming community for the benefit of
farmers effort are being taken to mechanise cane harvesting operation by identify
suitable tractor drawn machine as well as medium size international machine suitable
for Indian condition.
In the distillery division is Tamil Nadu in depth study is in progress to adopt new
technologies for spent wash utilization with energy conservation.
CORPORATE SOCIAL RESPONSIBILITY
BANNARI AMMAN has provided resources infrastructure and motivation and direction in
the establishment of the following facilities benefiting the rural public in the command area.
The social responsibility activities that are executed by BANNARI RURAL FOUNDATION
with the assistance provided by the company are us under.
1. 65 eye campus benefiting 2520 patients’
2. Special medical campus for physically challenged in rural areas
3. Construction of building and providing equipment at hospital and rehabilitation
centess
4. Providing toilet facilities in school and rural house holding.
5. Supply of furniture and other essential to schools in rural areas.
6. Rain water harvesting and tree planting programmes.
EXPENDITURE ON R&D:
Capital – Rs 192660500.
Recurring - Rs 1118110.
Total – Rs 193778610
Total R&D expenditure as a percentage of total turnovers – 2.6%
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FOREIGN EXCHANGE EARNING AND OUTGO
1. Activities relating to export initiatives’ taken to increase exports, development of new
export markets for product and service ; and export plans ;
2. Refined sugar and less than 45 CUMSA sugar are exported in the current year and the
product are well received in the international markets , efforts are being taken to
increase the export of granite products.
3. Total foreign exchange used and earned
Total foreign exchange used -1769.48 lakhs
Total foreign exchange earned – 10545.11 lakhs.
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4.1ABOUT THE WORKING CAPITAL
Meaning
“Working capital is the amount of funds necessary to cover the cost of operating the
enterprise”.
“Circulating capital means current assets of a company that are changed in the
ordinary course of business from one from to another, as for example, from cash to
inventories, inventories to receivables, receivables into cash”.
3.2. Concepts of Working Capital
There are two concept and working capital
i) Gross working capital
ii) Net working capital
In the broad sense, the term working capital refers to the gross working capital and
represents the amount of funds invested in current assets.
Thus, the gross working capital is the capital invested in total current assets of the
enterprise. Current assets are those assets which in the ordinary course of business can be
converted into cash with in a short period, normally one accounting year.
In a narrow sense, the term working capital refers to the networking capital.
Networking capital is the excess of current assets over current liabilities or say:
Networking capital may be positive or negative. When the current assets exceed the
current liabilities the working capital is positive and the negative working capital results
when the current liabilities are more than the current assets. Current liabilities are those
liabilities which are intended to be paid in the ordinary course of business within a short
period of normally one accounting year out the current assets or the income of the business.
Examples of current liabilities are,
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Net Working Capital = Current Assets – Current Liabilities
Constituents of Current Assets
1. Cash in hand and bank balances
2. Bill receivables
3. Sundry Debtors (less provision for bad debts)
4. Short – term loans and advances
5. Inventory of stocks, as :
a. Raw materials
b. Working process
c. Stores and spares
d. Finished goods
6. Temporary investments of surplus funds
7. Prepaid expenses
8. Accrued incomes
3.4. Constituents of Current Liabilities
1. Bills payables
2. Sundry creditors or account payable
3. Accrued or outstanding expenses
4. Short – term loans, advances and deposits
5. Dividends payables
6. Bank overdraft
7. Provision for taxation if it does not amount to appropriation of profits
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The gross working capital concept is financial or going concern concept whereas net
working capital is an accounting concept of working capital. These two concepts of working
capital are not exclusive, rather both have their own merits. The gross concept is sometime
preferred than the net concept of working capital for the following reasons ;
1. It enables the enterprise to provide correct amount of working capital at the right time.
2. Every management is more interested in the total current assets with which it has to
operate than the sources from where it is made available.
3. The gross concept takes into consideration the fact that every increase in the funds of
the enterprise would increase its working capital.
4. The gross concept of working capital is move useful in determining the rate of return
on investments in working capital.
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Figure-8
4.2Classification of Working Capital
Classification of Working Capital
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On the Basis of Concept On the Basis of Time
Gross Working Capital
Net Working CapitalPermanent or Fixed
Working CapitalTemporary or
Variable Working Capital
Regular Working Capital
Reserve Working Capital
Seasonal Working Capital
Special Working Capital
Permanent of Fixed Working Capital
Permanent or Fixed working capital is the minimum amount which is required to
ensure effective utilization of fixed facilities and for maintaining the circulation of current
assets. There is always a minimum level of current assets which is continuously required by
the enterprise to carry out its normal business operations.
Temporary or Variable Working Capital
Temporary or variable working capital is the amount of working capital which is
required to meet the seasonal demands and some special exigencies. Most of the enterprises
have to provide additional working capital to meet the seasonal and special needs.
IMPORTANCE OF WORKING CAPITAL
Solvency of the Business
Adequate working capital helps in maintaining solvency of the business by providing
uninterrupted flow of production.
Goodwill
Sufficient working capital enables an business concern to make prompt payments and
hence helps in creating and maintaining goodwill.
Easy Loans
A concern having adequate working capital, high solvency and good credit standing
can arrange loans from banks and others on easy and favourable terms.
Regular Supply of Raw Materials
Sufficient working capital ensures regular supply of raw materials and continuous
production.
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Regular Payment of Salaries, Wages and other Day – to – Day
Commitments
A company which has ample working capital can make regular payment of salaries,
wages and other day-to-day commitments which raises the morale of its employees, increases
their efficiency, reduces wastages and costs and enhances production and profits.
Exploitation of favourable market conditions
Only concerns with adequate working capital can exploit favourable market
conditions such as purchasing its requirements in bulk when the prices are lower and buy
holding its inventers for higher prices.
Ability to face crises
Adequate working capital enables a concern to face business crisis in emergencies
such as depression because during such periods, generally there is much pressure on working
capital.
Quick and regular return on investments
Every investor wants a quick and regular return on his investment sufficiency of
working capital enables a concern to pay quick and regular dividends to its investors as there
may not be much pressure to plough back profits. This gains the confidence of its investors
and creates favourable market to raise additional funds in the future.
High Morale
Adequacy of working capital creates an environment of security, confidence, high
morale and creates overall efficiency in a business.
3.6. The need or objects of working capital
1. For the purchase of raw materials, components and spares
2. To pay wages and salaries
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3. To incur day-to-day expenses and over head costs such as fuel, power and office expenses
etc.,
4. To meet the selling costs as packing advertising etc.,
5. To providing credit facilities to the customers
6. To maintain the inventories of raw materials, work in progress, stores and spares and
finished stock.
Working capital analysis or measuring the working capital
1. Ratio analysis
2. Funds flow analysis
3. Budgeting
Ratio Analysis
A ratio is a simple arithmetical expression of the relationship of one number to
another. The technique of ratio analysis can be employed for measuring short-term liquidity
or working capital position of a firm. The following ratios may be calculated for this purpose.
Funds flow Analysis
Funds flow analysis is a technical device designated to study the sources from which
additional funds were derived and the use to which these sources were put. It is an effective
management tool to study changes in the financial position (working capital) of a business
enterprise between beginning and ending financial statements dates. The funds flow analysis
consists of
i. Preparing schedule of changes in working capital,
ii. Statement of sources and applications of funds
iii.
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Working Capital Budget
A budget is a financial and / or quantitative expression of business plan and policies
to be pursued in the future period of time. Working capital budget, as a part of total budgeting
process of a business is prepared estimating future long term and short-term working capital
needs and the sources of finance them, and then comparing the budgeted figures with the
actual performance for calculating variance, if any, so that corrective actions may be taken in
future. The objective of a working capital budget is to ensure avail ability of funds as and
when needed, and to ensure effective utilization of these resources. The successful
implementation of working capital budget involves the preparing of separate budget for
various demand of working capital, such as cash inventories and receivables etc.,
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4.3Factors Determining Working Capital
Nature of Industry
Demand of Industry
Cash requirements
Nature of business
Manufacturing time
Volume of sales
Terms of purchase and sales
Inventory turnover
Receivable turnover
Business cycle
Current assets
Valuation to sales
Production cycle
Credit control
Liquidity and profitability
Inflation
Seasonal fluctuations
Profit planning and control
Repayment ability
Cash reserves
Operation efficiency
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Factors Affecting Working Capital
Nature of Industry
The composition of an asset the industry of the size of a business and the industry
which it belongs. Small companies have smaller proportions of cash, receivables and
inventory than large corporations. A public utility, for example mostly employs fixed assets
in its operations, while merchandising department depends on inventory and receivables
needs for working capital are thus determined by the nature of the enterprise.
Demand of Industry
Creditors are interested in the security of loans. They want their obligations to be
sufficiently covered. They want the amount of security in assets which are greater than the
liability.
Cash Requirements
Cash is one of the current assets which is essential for successful operations of the
production cycle. Cash should be adequate and properly utilized. It would be wasteful to hold
excessive cash. Unlike illiquid assets, its value is clear cut and define.
Nature of Business
The nature of a business is an important determinant of the level of the working
capital. Working capital requirements depends upon the general nature or type of business.
Time
The level of working capital depends upon the time required to manufacture goods. It
he time is longer, the size of working capital is greater, moreover the amount of working
capital depends upon inventory turnover and the unit cost of the goods that are sold. The
greater this cost, the bigger is the amount of working capital.
Volume of Sales
This is the most important factor affecting the size and component of working capital.
A firm maintains current assets because they are needed to support the operational activities
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which result in sales. The volume of sales increases, there is an increase in the investment of
working capital in the cost of operations in inventories and in receivables.
Terms of Purchases and Sales
If the credit terms of purchases are more favourable and those of sales less liberal
cash will be invested in inventory with more favourable credit terms, working capital are
directly related to each other. As the volume of sales increases, there is an increase in the
investment of working capital in the case of operations, in inventories and in receivables.
Inventory Turnover
If the inventory turnover is high, the working capital requirement will be low. With a
better inventory control, a firm is able to reduce its working capital requirements. While
attempting this it should determine the minimum level of stock which, it will have to
maintain thorough out the period of its operations.
Receivable Turnover
It is necessary to have an effective control of receivables, a prompt collection of
receivable and good facilities for setting payables result into low working capital
requirements.
Business Turnover
The business turnover of the organisation directly calls for systematic planning for
production. The exploitation of the available business can be achieved only when sufficient
raw materials are store and supplied. Hence business turnover will also influence the working
capital.
Business Cycle
Business expands during periods of prosperity and declines during the period of
depression. Consequently, more working capital is required during periods of depression.
During marked upswings of activity, there is usually a need for larger amounts of capital to
cover the lag between the collection and increased sales and to finance purchase of additional
material to support growing business activity.
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Value of Current Assets
A decrease in the real value of current assets as compared to their book value reduces
the size of the working capital. If the real value of current assets increase there is increase in
working capital.
Variations in Sales
A seasonal business requires the maximum amount of working capital for a relatively
short period of time.
Production Cycle
The time taken to convert raw materials into finished product is refereed to as the
production cycle or operating cycle. The longer the production cycle, the greater is the
requirement of working capital.
Credit Control
Credit control includes such factors as the volume of credit sales, the terms of credit
sales, the collection policy etc., with a sound credit control policy, it is possible for a firm to
improve its cash inflow.
Liquidity and Profitability
If a firm desires to take a greater risk for bigger gains or losses it reduces the size of
its, sales. If it is interested in improving its liquidity, it increase the level of its working
capital.
Inflation
As a result of inflation, size of the working capital is increased in order to make it
easier for a firm to achieve a better cash inflow. To some extent, this factor may be
compensated by the rise in selling price during inflation.
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Seasonal Fluctuations
Seasonal fluctuations in sales affect the level of variable working capital. Often the
demand for products may be of a seasonal nature. Yet inventories have got to be purchased
during certain seasons only. The size of the working capital in one period may, therefore be
bigger than that in another.
Profit Planning and Control
The level of working capital is decided by the management in accordance with its
policy of profit planning and control. Adequate profit assists in the generation of cash.
Repayment Ability
A firm’s repayment ability determines level of its working capital. The usual practice
of a firm is to firm to prepare cash follow projections accordingly to its plans of repayment
and to fix working capital levels accordingly.
Cash Reserves
It would be necessary for a firm to maintain some cash reserves to enable it to meet
contingent disbursements. This would provide a buffer against abrupt shortages in cash flows.
Operational and Financial Efficiency
Working capital turnover is improved with a better operational and financial
efficiency of a firm with a greater working capital turnover it may be able to reduce its
working capital requirements.
Changes in Technology
Technology developments related to the production process have a sharp impact on
the need for working capital.
Firm’s Policies
33
These affect the levels of permanent and variable working capital changes in credit
policy, production policy etc are bound to affect the size of working capital.
Size of the firm
A firm’s size, either in terms of its assets or sales, affects its need for working capital.
Bigger firms, with many sources of funds, may need less working capital as compared to
their total assets or sales.
Attitudes of Risk
The greater among of working capital, the lower is the risk of the liquidity.
Whenever there is current strain, it has to be immediately diagnosed on the basis of
the red signals which manifest themselves in the operations. The cause should be ascertained
by making through study of the components of current assets and current liabilities. If stock is
not moving fast and if there is an excess inventory built-up corrective steps should be taken to
sell the stock or bring down its level.
34
TABLE -1
COMPARETIVE OF FINANCIAL HIGHLIGHTS
(Rs -in lakhs)
2004-05 2005-06 2006-07 2007-08 2008-09
Turn over
Other income
Total income
Raw material
Traded goods
Excise duty on stock
Overheads & other expense
PBDIT
Depreciation
Interest
Pre-last profit
Tax
Post tax profit
Equity capital
52273.24
914.57
53278.10
26961.48
1877.65
112.20
15892.93
8433.84
2705.14
1135.37
4593.33
1280.65
3312.68
953.97
44933.92
621.23
45991.50
18654.02
-
137.07
17532.88
9941.67
3200.10
1115.36
5626.21
1265.57
4360.64
953.97
59427.12
283.81
59812.12
23960.08
-
439.06
21316.84
14974.26
4307.00
1095.60
9571.66
1874.17
7697.49
953.97
82265.05
537.69
82561.81
39071.60
1350.20
241.96
26560.44
15337.61
3734.83
767.42
10835.36
1806.54
9028.82
953.97
73468.34
2182.59
75641.35
38375.83
21.45
712.75
28402.72
8128.60
3481.86
730.68
3916.06
318.20
4234.26
1143.97
Source; Annual Report
35
HIGHLIGHTS OF FINANCIAL YEAR 2008-09:
Total cane crush was 33.10 lakh tonnes.
20 MW co-generation plant at sugar unit-1 had generated 153.45 million unit of
power of which 110.48 million units were exported to Tamil Nadu government grid.
Distillery unit in Tamil Nadu had produced 18.22 lakh Bltrs of rectified spirit 156.93
lakh B ltrs of neutral spirit and 0.06lakh Bltrs of fuel oil.
36
TABLE-2
FINANCE SUPPORT FROM VARIOUS BANKS AND FINANCIAL
INSTITUTION:
Name of bank/ financial institution Particular of loan
1. Punjab national bank consortium
consists of
Punjab National Bank.
Bank Of Baroda.
Canara Bank.
The federal bank Ltd..,
The Karur Vysya bank Ltd..,
Union Bank of India.
2. Canara bank & the lakshmi vilas bank
Ltd..,
3. Government of India
4. Government of India
5. Government of India
6. Punjab national bank
Cash credit and other working capital limits/
Demand loan aggregating to
Rs 23589.07 laksh sanctioned to the company
sugar unit- 1 and sugar unit-2
Cash credit loans aggregating to
Rs – 180 laksh sanctioned to the company
distillery division at Tamil Nadu.
Sugar development loan of
Rs- 1800 laksh.
Sugar development fund loan of Rs- 1550.78
laksh.
Sugar development fund loan of
Rs – 1590 laksh.
Term loan at Rs- 1500 laksh , letter of
37
guarantee obtained in favour of government of
India for sugar development fund loan of Rs-
1240 laksh.
Financial ratio
table -3
Financial ratio 2004-05 2005-06 2006-07 2007-08 2008-09Other income/turnover
Overheads/turnover
Interest/turnover
PBDIT/turnover
NP/turnover
Cash profit/turnover
ROCE(PBDIT)/average capital employed %
Capital output ratio
Turnover/average capital employed
1.75
29.09
2.17
16.13
8.79
13.96
19.15
118.72
1.38
37.91
2.48
22.13
12.52
19.64
19.99
90.37
0.48
33.62
1.84
25.20
16.11
23.25
29.66
117.70
0.65
30.69
0.93
18.64
13.17
17.71
28.08
150.59
2.97
37.06
0.99
11.06
5.33
10.07
11.35
102.57
Sources ; Annual Report-2009
38
COMPARATIVE OF BALANCE SHEET RATIO
TABLE-4
(Rs-in lakhs)
Balance sheet ratio 2004-05 2005-06 2006-07 2007-08 2008-09Debt equity ratio
Debtor’s turnover(day)
Inventory turnover(days)
Current ratio
Quick ratio
Average turnover ratio(total revenue/total assets)
0.55
52
195
1.35
0.50
1.16
0.62
44
169
1.51
0.51
0.92
0.49
40
108
2.62
1.21
1.26
0.26
32
89
2.76
1.43
1.36
0.31
41
138
2.37
1.24
0.91
Source ; Annual report-2009
PER SHARE DATA
table-5
2004-05 2005-06 2006-07 2007-08 2008-09
EPS(Rs)
CEPS(Rs)
Dividend on equity
Dividend on preference(Rs)
Dividend payout %
Book value
Net indebtedness
34.73
63.08
3.60
-
11.70
179.74
99.25
45.71
79.26
4.50
-
11.13
220.39
135.63
80.69
125.84
7.00
-
9.89
294.69
143.68
89.69
127.45
7.00
3.00
11.09
364.67
94.62
37.01
67.45
7.00
9.00
26.72
393.10
120.76
39
Source: Annual report 2009
FINANCIAL RESULT
TABLE-6
Financial result
2008-09 2007-08
Profit for the year before depreciation
(less) depreciation
Profit before tax
(less) provision income tax
Fringe benefit tax
MAT credit entitlement
Deferred tax
Profit after tax
Add: surplus brought forward from previous
year
Amount available for appropriation
Appropriations :
Provision for diminution in value of
investment.
Transfer to general reserve
Divided on preference capital
Dividend on equity capital
Provision fofr tax on dividend
Surplus carried over to balance sheet
7397.92
3481.86
14570.19
3734.83
3916.06
441.55
20.57
-441.02
-339.30
10835.36
461.00
14.80
-
630.74
4234.26
1630.05
9028.82
1103.37
5864.31 10132.19
0.51
3000.00
166.14
800.78
164.33
1732.55
0.48
7500.80
55.38
800.78
145.50
1630.05
5864.31 10132.19
Source ; Annual Report-2009
40
BALANCE SHEET AS AT 31.3.2009
table-7
At 31.3.08
Rs- in laksh
Schedule
no
At 31.03.09
Detail
Total
Rs in laksh
2989.97
40572.76
SOURCE OF FUND’S
SHAREHOLDER FUND’S
Share capital
Reserve and surplus
1
2
2989.97
43825.26
43562.73 46815.23
11064.27
5608.07
Loan fund’s
Secured loan’s
Unsecured loan’s
3
4
2145.23
14778.07
16672.34 36203.30
60335.07 TOTAL 83018.53
APPLICATION OF FUND’S
FIXED ASSETS
41
60958.47
22746.89
38211.58
718.92
Gross block
Less depreciation
Net block
Capital works in progress
5 63395.71
26050.81
37344.90
6323.45
38930.50
342.69
23497.72
7160.13
4850.79
230.89
7428.87
Investment
CURRENT ASSETS
Inventories
Sundry debtors
Cash and bank B/s
Other current assets
LOANS AND ADVANCE’S
31046.45
8347.26
9359.32
2236.49
9676.54
43668.35
1750.75
43170.40
16388.56 (Less) current liability and provision
60660.06
17585.96
26781.84
5819.96
NET CURRENT ASSETS
Deferred tax liability
43080.10
5480.67
60235.07 TOTAL 83018.53
Source ; Annual Report-2009
42
ANALYSIS
From the above balance sheet, there has been a increase in the loans and advances of
the current asset of Rs. 16298.26 in lakhs. Also there has an increase in the inventories of the
company by Rs 7548.73 in lakhs. The over all current asset has been increased by Rs.
43080.10 in lakhs.
The fixed asset has been by Rs. 4737.85 in lakhs. Investment has been increased by
Rs. 1408.06 in lakhs.
In the liability side of the balance sheet, current liability has been increase by Rs.
11974 in lakhs. The total loan has been increased by Rs. 19530.96 in lakhs.
Also the company has mobilized fund for Rs. 46815.23 in lakhs.
As a whole, there was an increase in the asset and liability of the company for Rs.
17585.96 in lakhs
43
Profit and loss account for the year ended 31.03.09
Table- 8
(Rs in lakhs)
Year ended schedule no year ended 31.03.09
31.03.08 details total
81701.99
2138.28
79563.71
2460.41
82024.12
537.69
82561.81
39071.60
1350.20
26560.44
241.96
767.42
3734.83
71726.45
10835.36
1161.00
Income
Sales Less excise duty
Stock adjustment
Other income
Total
Expenditure
Raw material purchased
Trade goods purchased
Manufacturing and other expenses
Excise duty in share
Interest
Depreciation
Profit before tax
Provision for taxation
Income tax
13
14
15
16
17
18
67945.10
1909.87
66035.23
7423.53
38375.83
21.45
28402.72
712.75
730.68
3481.86
441.55
73458.76
2182.59
75641.35
71725.29
3916.06
44
14.80
-
630.74
1806.54
9028.82
1103.37
10132.19
0.48
7500.00
800.18
55.38
145.50
1630.05
89.51
Fringe benefit tax
Mat credit entitlement
Income tax deferred
Profit after tax
Add : surplus brought forward from previous year
Appropriation
Provision for diminution in value of investment
General reserve provision for
-equity dividend
Preference dividend
Tax on dividend
Balance carried over to balance sheetEPS (Rs)
20.57
441.02
339.30
0.51
3000.00
800.78
166.14
164.33
-318.20
4234.26
1630.05
5864.31
4131.76
1732.35
35.31
Source; Annual Report-2009
45
4.4CASH FLOW STATEMENT
Cash flow analysis is an analysis based on the movement of cash and bank balances.
Under cash flow analysis, all movements of cash, rather than the movement of working
capital would be considered. Such movements of cash are depicted in a statement called Cash
Flow Statement. It is a statement of changes in financial position prepared on cash basis.
While preparing cash flow statement, two types of cash flows, viz., actual cash flows and
notional cash flows are identified. Actual cash flows refer to the actual movements of cash
into or out of business. Purchase of fixed assets for cash, borrowing from bank or financial
institutions, redemption of debentures, etc., are a few examples of cash flows. But notional
cash flows result only in the case of increase or decrease in current assets. Notional cash
flows result in indirect cash movements into or out of business.
Principal sources and application of cash in a business
Principal sources of cash include
1. Issue of shares and debentures for cash,
2. Sale of fixed assets and investments for cash,
3. Borrowing from banks and other financial institutions,
4. Cash from operations or trading profits,
5. Decrease in current assets [notional cash inflows]: For example, credit sale of
goods involves creation of assets in the form of debtors and bills receivable. When
payment is received [cash inflow] from the customer, there will be reduction in
[debtors and bills] current assets. Thus, decrease in current assets involves cash
inflows.
6. Increase in current liabilities [notional cash inflows]: For example, purchase of
goods on credit results in the creation of creditors and bills payable. Here, it is
assumed that creditors have given a loan of cash, which has been used to acquire
the goods supplied by them.
46
Application of cash include
1. Redemption of shares and debentures by cash,
2. Purchase of fixed assets and investments by cash,
3. Repayment of loans,
4. Cash lost in operations or trading losses,
5. Increase in current assets,
6. Decrease in current liabilities.
47
TABLE-9
Cash flow statement for the year ended 31.03.09
Year ended 31.03.09 year ended 31.03.08
(Rs in laksh)
A. Operating activities
Net profit before tax and extra ordinary items
Add : adjustment for
Depreciation
Interest charged
Loss on sales of fixed assets
Less : investment income
Interest
Dividend
Profit on sales of fixed assets
Profit on sales of investment
Add : adjustment for
Inventories
Debtors
Other current assets
Current liabilities
Cash generation from operation
3481.86
730.68
47.52
527.60
25.39
10.03
0.10
7546.73
1187.13
3230.58
702.61
3916.06
4260.06
563.12
7613.00
-11261.77
-3648.77
3734.83
767.42
72.56
410.94
19.29
5.29
-
3588.60
644.98
576.20
3304.07
10835.36
4574.81
435.52
14974.65
1505.71
13468.94
48
Less income tax
Cash flow before extraordinary items
Net cash from operation activities
B. Investing activities
Interest received
Dividend received
Purchase of fixed assets
Purchase of investment
Sales of fixed assets
Sales of investment
Net cash used in investing activities
C. Financing activities
Increase in borrowing
Increase in share capital
Increase in reserve
Interest paid
Dividend paid
Net cash from financing activities
Net increase in cash and cash
Equivalent (A+B+C)
Opening cash balance
Closing cash balance
4856.79
9359.32
602.77
-4251.44
-4251.54
527.60
25.39
8315.47
1409.68
58.28
1.20
9112.68
19530.96
-
150.60
806.55
1001.66
17872.75
4508.53
4508.53
1588.32
4850.79
2448.33
11020.61
11020.61
410.94
19.29
10049.58
0.06
80.72
-
9538.70
4239.24
2636.00
5387.47
642.23
761.44
1780.56
3262.47
49
Source; Annual Report-2009
ANALYSIS
During the year 2007-2008 there was a profit of Rs. 3916.06 in lakhs. Where as in the next
financial year (i.e.) 2008-2009 the company has gained a profit of Rs. 10835.36 in lakhs. By
comparing the two years cash flow statement the company’s operating activity has been
increased from Rs.- 4251.54 in lakhs to Rs.11020.61 in lakhs.
Also the company’s investment activity has been increased from Rs.9112.68 in lakhs to
Rs. 9538.70 in lakhs. The company’s financial activities had increased the cash position by
issue of equity shares of Rs. 364.1 in lakhs and by borrowing cash of Rs. 2840.7 in lakhs
Overall cash balance has been increased from Rs. 120.04 in lakhs to Rs. 553.01 in lakhs.
50
POWER AND FUEL CONSUMPTION:
table-10
Current year Previous year
Electricity
a. Purchased units
Total amounts
Rate per units
b. Own generation
1. Through diesel generator units
Units per ltr of diesel oil
Cost per units (Rs)
2. Through steam turbine/generator units
Units per ltr of fuel oil/gas
Cost per unit / cost of bagasse
776343
3591942
4.63
483652
3.19
10.03
88707248
-
Own bagasse is used
648569
3101151
4.78
418777
3.17
9.95
76555195
-
Own bagasse is used
Source; Annual Report-2009
51
SCHEDULES :
TABLE-11
As at 31.3.08
As at 31.3.09details
Total Rs in laksh
2900.00
2100.00
5000.00
953.97
-
190.00
1846.00
2989.97
506.25
-
3115.88
SCHEDULE-1SHARE CAPITAL AUTHORISED
27000000 equity share of Rs -10 each
21000000 redeemable preference shares of Rs -100 each.
ISSUED SUBSCRIBED NAD PAID UP
11439100 equity share of Rs- 100 each
1846000 – 9 % redeemable non-cumulative shares of Rs- 100 each.
PENDING ALLOTMENT
1900000 equity share of Rs- 10 each to the member of m/s maheswara sugar ltd as per the scheme of amalgamation
1846000 – 9% redeemable non- cumulative preference share of Rs -100 each.
TOTAL
SCHEDULE -2RESERVE AND SURPLUS
Capital reserve Government subsidy Balance as per last balance sheet
Add: received durning current year
EQITY SHARE PREMIIUM
Balance as per last balance sheet
506.25
150.00
8503.85
2900.00
2100.00
5000.00
1143.97
1846.00
-
-
2989.97
656.25
52
5387
8503.35
22433.11
7500.00
29933.11
1630.05
40572.76
240.23
-
5200.02
5440.25
5624.04
110624.27
4643.12
134.95
-
830.00
5608.02
Add : as specified in the scheme of amalgamation
GENERAL RESERVE
Balance as per last balance sheet
Add: transfer from profit and loss account
Surplus in profit and loss A/C
TOTAL
SCHEDULE -3
SECURED LOAN FROM BANKS
Cash credit loans
Loan under SEFASU notified by the central government
Term loans
FROM OTHERS
Sugar development fund
TOTAL
SCHEDULE -4UNSECURED LOANS
Loan under sales tax deferral scheme
Sugar development fund
Short term loan
From company
TOTAL
-
29933.11
3000.00
7611.21
4762.50
4061.63
8503.35
332933.11
1732.55
43825.26
16435.34
4989.89
21425.23
4643.12
134.95
10000.00
-
14778.07
53
2173.65
1.61
19244.07
248.93
12.11
444.45
175.97
2.30
20127.83
366.65
8.44
22.45
61.86
459.40
105.06
299.06
286.32
4.86
35.70
731.00
SCHEDULE-6
INVENTORIES(as certified by managing director )
Stores and spare parts
Loose tools
FINISHED GOODS
Sugar
Molasses
Bagasse
Granite products
Alcohol
Bio-compost
PROCESS STOCK
Sugar
Molasses
Granite product
Press mud
RAW MATERIAL STOCK
Wet sugar
Granite blocks
Molasses
Press-mud
Bio-products
26880.95
216.69
58.10
459.95
159.87
2.69
303.65
5.31
26.37
34.70
-
357.18
204.91
5.35
30.30
2293.41
5.06
27778.25
370.03
597.54
54
6.23
23499.72
2273.42
4886.71
7160.13
33.30
267.52
816.49
3698.49
34.99
4850.79
3.09
0.33
55.73
-
-
106.23
65.51
230.89
OTHERS
Fertiliser & chemical
TOTAL
SCHEDULE-7
SUNDRY DEBTOR’S(unsecured- considered good)
Exceeding six months
Other debts
TOTAL
SCHEDULE -8
CASH AND BANK BALANCE’S
Cash on hand
Cheque in transit Balance with scheduled banks
In current accounts
In deposit accounts
In unpaid dividend accounts
Total
SCHEDULE-9
OTHER CURRENT ASSETS
Standing crop (at cost)
Stock of stamps
Interest receivable
Carbon credit sale income receivable
Government subsidies receivable
Interest subsidies receivable
Income receivable
TOTAL
31046.45
3730.05
4617.21
8347.26
34.96
-
451.01
8830.88
42.47
9359.32
2.33
0.32
35.94
178.61
1214.14
742.79
62.36
2236.49
55
1698.76
791.64
122.46
213.11
4503.11
-
99.79
7428.87
6329.42
2307.47
84.23
1332.60
436.53
34.99
1563.74
12088.98
856.16
145.50
3297.92
SCHEDULE-10
LOANS AND ADVANCES(unsecured- considered goods recoverable in cash or in kind for value to be received)
Advance for purchase and capital expenses
Other advance
Deposits with state/central government etc..
Prepaid expenses
Advances payment of income tax
MAT credit entitlement
Income tax deducted at sources.
TOTAL
SCHEDULE-11
CURRENT LIABILITIES AND PROVISIONS
a. Current liabilities
Purchase and service
Expense
Advance from customer’s
Other’s
Purchase tax payable
Unpaid dividend
Interest accrued but not due on loans
b. Provisions
Proposed dividend
Tax on proposed dividend
Income tax
7757.22
2897.37
66.85
205.98
258.02
42.47
1487.81
966.92
164.33
3738.93
2750.26
917.70
134.24
248.75
4978.11
441.02
206.46
9676.54
12715.78
56
4299.58
16388.56
5910.81
90.85
5819.96
48224.70
439.90
4171.01
6753.90
202.68
8945.74
-
48.55
513.31
4391.58
232.91
35.25
0.15
3.45
5377.98
2360.83
TOTAL
SCHEDULE-12
DEFERRED TAX LIABILITIES
Deferred tax arising on accounts of depreciation
Less: deferred tax rising on accounts of disallowance of expenses
TOTAL
SCHEDULE-13
SALE’S
Sugar
Molasses
Granite product
Alcohol
Bio-compost
Power
Bio-diesel
OTHER’S
Fertiliser’s & chemical Add : own consumption
Molasses
Bagasse
Granite product
Bio-compost
Alcohol
Press mud
Steam
Power
4870.18
17585.96
5497.34
16.67
5480.97
35526.15
276.31
4278.83
6181.03
223.74
8518.36
21.98
66.81
146.67
4384.34
359.01
22.96
0.16
3.41
5492.10
2442.00
57
-
81701.97
16100.31
304.39
37.71
821.99
240.10
0.65
167.48
11.89
-
23.75
-
404.11
472.36
3.77
-
7.45
Bio-diesel
TOTAL
SCHEDULE-14
STOCK ADJUSTMENT
a. Opening stock
Sugar
Molasses
Bagasse
Granite product
Alcohol
Bio-compost
Process stock
Sugar
Molasses
Granite product
Press mud
Raw material
Wet sugar
Granite blocks
Molasses
Press mud
Bio-products
Other’s
Fertiliser’s & chemical Add : opening stock of Maheswara sugar ltd as on appointed data as per the scheme of amalgamation
19244.07
248.93
12.11
444.45
175.97
2.30
366.65
8.44
22.45
61.86
105.06
299.06
280.32
4.86
35.70
6.23
1.24
67945.10
58
183.85
8.57
72.94
2.53
18864.05
19244.07
248.93
12.11
444.45
175.75
2.30
366.65
8.44
22.45
61.86
105.06
299.06
286.32
4.86
6.23
21324.46
2460.41
Sugar
Molasses
Process stock sugar
molasses
TOTAL
b. Closing stock
Sugar
Molasses
Bagasse
Granite product
Alcohol
Bio-compost
Process stock
Sugar
Molasses
Granite product
Press mud
Raw material
Wet sugar
Granite product
molasses
Press mud
Other’s
Fertiliser’s &chemicals
(B MINUS A)
SCHEDULE -15
-
-
-
-
26880.95
216.69
58.10
459.95
159.87
2.69
303.65
5.31
26.37
34.70
-
357.18
204.71
5.35
2.16
21324.46
28747.99
7423.53
59
3.20
19.29
410.93
35.07
-
-
-
69.20
-
537.69
33686.82
1846.36
238.11
1506.05
1484.63
294.22
15.41
39071.60
22.28
1532.87
3020.50
OTHER INCOME
Contract receipts
Dividend
Interest receipts (TDS-Rs 105.55 lakhs)
Agricultural income
Import license receipts
Carbon credit sales income
Subsidies from government
Miscellaneous income
Profit on sales of investment
TOTAL
SCHEDULE -16
RAW MATERIAL PURCHASED
Sugarcane price
Purchase tax
Sugarcane cess
Molasses
Granite product
Wet sugar
Press mud
TOTAL
SCHEDULE-17MANUFACTURING AND OTHER EXPENSES
Purchase of fertiliser’s &chemicals
Consumption of stores and spares
Power and fuel
-
25.39
527.60
20.97
60.25
178.61
1241.30
122.37
0.10
2182.59
34428.52
808.83
90.80
1081.82
1923.08
25.77
7.01
38375.83
11.78
1927.34
3178.64
60
4538.02
2041.42
5377.98
151.78
1132.27
17817.12
1497.93
101.94
374.18
1974.05
25.30
291.70
4.24
457.67
291.68
1070.59
288.18
1222.71
170.26
36.09
1717.24
281.41
1.20
1018.71
256.73
133.73
36.40
Bagasse for co-generation
Other fuel co-generation
Steam
Water charge’s
Packing materials
Salaries wages and allowances
Contribution to provident and other funds
Staff welfare expenses
Rent
Rates and taxes
Lease hire charges for equipment
Granite processing charges
Insurance charge
Repair and maintenance
Building
Plant and machinery
Vehicles
Others
Effluent disposal expenses
Directors sitting fee
Freight and transport
Cane development expenses
Travelling expenses
Agricultural expenses
1877.28
122.73
231.87
269.89
1705.51
183.48
57.74
4490.28
2637.36
5492.10
74.88
1286.70
2231.88
31.53
247.41
5.11
391.83
67.23
2216.62
331.09
0.96
896.32
277.22
164.27
19.82
61
32.50
36.28
21.23
71.60
685.36
345.61
74.35
335.88
85.25
29.62
5.87
0.44
5.05
381.41
34.60
24.02
15.35
1.50
67.27
26560.44
710.20
57.22
767.22
Printing & stationery
Telephone telex & fax charge
Advertisement
Other administration expenses
Transport on out ward
Selling and distribution expenses
Sales commission
Donation
Financial and bank charges
Legal and professional charges
Auditors remuneration
Cost audit fee
Internal audit fee
Managerial remuneration
Exchange fluctuation A/c
Loss tools
Irrevocable advance written off
Bad debts written off
Loss on sales/ discard of fixed assets
TOTAL
SCHEDULE-18
INTEREST
Fixed loans
Others loans
TOTAL
37.19
45.29
14.53
91.88
827.30
328.30
59.07
445.91
100.64
71.88
10.72
0.61
5.60
167.71
148.52
12.91
-
13.04
37.49
28402.72
595.81
134.89
730.68
Source : Annual Report-2009
62
Table-12
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31.3.2010
(Rupees in Lakhs)
Sl No. ParticularsYear ended 31.3.2010 (Audited)
Year ended 31.3.2009 (Audited)
1. a.Net Sales/ Income from operations 70810.40 54671.37
b.Other Income 295.28 557.93
Total Income (a + b) 71105.68 55229.30
2. Expenditure:a. (Increase)/Decrease in Stock-in-Trade and Work-in- Progress
2276.14 -6514.65
b. Consumption of Raw Materials 33726.11 37672.47
c. Purchase of traded goods 21.45
d. Employees Cost 2956.28 2399.59
e. Depreciation 3408.23 3481.86
f. Power and Fuel 4939.27 3479.66
g. Other Expenditure 9755.99 10180.68
h. Total 57062.02 50721.06
3. Profit from Operations before Other Income, Interest and Exceptional Items(1-2)
14043.66 4508.24
4. Other Income 103.99 138.50
5.Profit before Interest and Exceptional Items (3 + 4)
14147.65 4646.74
6. Interest 958.14 730.68
7.Profit after Interest but before Exceptional Items ( 5 - 6)
13189.51 3916.06
8. Execeptional Items -- --
9.Profit/(Loss) from Ordinary Activities before Tax(7 + 8)
13189.51 3916.06
10.. Tax expenses: 1512.29 462.12
63
a. Provision for Taxation
b. MAT Credit Entitlement (707.30) (441.02)
c. Provision for Deferred Tax 401.75 (339.30)
d. Total 1206.74 (318.20)
11.Net Profit/(Loss) from Ordinary Activities after Tax ( 9- 10)
11982.77 4234.26
12. Extraordinary Items (net of tax expenses Rs. ) -- --
13. Net Profit/(Loss) for the Period (11-12) 11982.77 4234.26
14.Paid-up Equity Share capital(Face value Rs.10/- per share)
1143.97 1143.97
15.Reserves excluding Revaluation Reserves as per Balance Sheet of Previous Accounting Year
54270.48 43825.26
16. Earning Per Share (EPS)
a. Basic and diluted EPS before Extraordinary items for the period, for the year to-date and for the previous year (Rs.)
103.05 35.31
b. Basic and diluted EPS after Extraordinary items for the period, for the year to-date and for the previous year (Rs.)
103.05 35.31
17. Public Shareholding
- Number of Shares 5179424 5182753
- Percentage of Shareholding 45.28 45.30
18. Promoters and Promoter group Shareholding:
a. Pledged/Encumbered
- Number of Shares NIL NIL
- Percentage of Shares (as a % of of the total share holding of promoter and promoter group)
N.A. N.A.
- Percentage of Shares (as a % of of the total share holding of the company)
N.A. N.A.
b. Non-encumbered
- Number of Shares 6260276 6256947
- Percentage of Shares (as a % of of the total share holding of promoter and promoter group)
100 100
- Percentage of Shares (as a % of of the total share holding of the company)
54.72 54.70
64
Notes:
1. The above results have been taken on record by the Board of Directors at their
meeting held on 25rd June 2010.
2. The Board of Directors have recommended dividend of Rs.10/- per share on Equity
Share of Rs. 10/- each and Rs. 9/- per share on Preference Share of Rs. 100/- each for
the year ended 31.3.2010
3. During the quarter ended 31st March 2010, six investor complaints were received,
which were promptly attended to by the company. No complaints were pending either
at the beginning (or) at the end of the quarter.
4. Previous year figures have been re-grouped wherever necessary.
65
TABLE-13
SEGMENT REPORTING UNDER CLAUSE 41 OF THE LISTING AGREEMENT WITH STOCK EXCHANGE FOR THE YEAR ENDED 31ST MARCH 2010
(Rupees. in Lakhs)
ParticularsYear ended 31.03.2010 (Audited)
Year ended 31.03.2009(Audited)
1SEGMENT REVENUE ( Net Sales/Income from each segment)
a) Sugar 54843.14 39878.17
b) Power 17864.70 16631.06
c) Distillery 7908.82 6364.38
d) Unallocated 4094.09 4647.78
Total 84710.75 67521.39
Less:Inter Segment Revenue 13900.35 12850.02
Net Sales/Income from Operation 70810.4 54671.37
2SEGMENT RESULTS ( Profit before Tax and Interest from each segment)
a) Sugar 4233.78 (6153.12)
b) Power 7993.35 6896.64
c) Distillery 1372.62 3202.85
d) Unallocated 491.78 625.31
Total 14091.53 4571.68
Less: Interest 958.14 730.68
13133.39 3841.00
Add: Un-allocable income 56.12 75.06
Total Profit Before Tax 13189.51 3916.06
3CAPITAL EMPLOYED (Segment Assets minus Segment Liabilities)
66
a) Sugar 52636.03 57463.01
b) Power 6731.93 11409.42
c) Distillery 9890.18 6113.57
d) Unallocated 4494.06 3960.95
Total 73752.20 78946.95
ANALYSIS AND INTERPRETATION
CURRENT RATIO
Current Ratio may be defined as the relationship between current assets and current
liabilities. This ratio is also known as working capital ratio. It is used to make on analysis of
a short term financial position or liquidity of a firm. It is a calculated by dividing the total
current assets by total current liabilities. The formula for calculating current ratio is
Current Assets
Current Ratio = * 100
Current Liabilities
TABLE-14
Year 04-05 05-06 06-07 07-08 08-09
Current ratio 1.35 1.51 2.62 2.76 2.37
CHART-1
67
Analysis
Current ratio was increased in the year of 04-08 but in the year 08-09 current ratio was
decreased . The current ratio is an index of the concern’s financial stability of the company
and through the current ratio of a company show’s their stability in finance and should
sustain their current ratio. High ratio mean’s excessive dependence on long term sources of
raising funds.
Here I interpret the current ratio decreased shows the poor financial performance of the
company. Due a lack of sugarcane
68
CURRENT ASSETS TURNOVER RATIO
The ratio is calculated to ascertain the efficiency of current assets of the concern.
Observes that the current assets turnover is to give an overall impression of how rapidly the
total investment in current assets is being turned with a decrease in sales. Higher ratio is
generally an index of better efficiency and profitability of the concern.
Sales
Current Assets Turnover ratio = x 100
Current Assets
TABLE-15
year Sales Current assets Ratio
2007-08 82561.81 26781.84 308.27
2008-09 75641.35 43080.10 175.58
69
CHART-2
Analysis and interpretation:
Current asset turnover ratio has decreased in the year 08-09 when compared to the year 07-08
due to the decrease in the sales in the corresponding year.
QUICK RATIO:
TABLE-16
Year 04-05 05-06 06-07 07-08 08-09
Quick ratio 0.50 0.51 1.21 1.43 1.24
CHAT-3
70
Analysis:
The above chart indicates the low performance in the year 08-09. From the year 04-08 quick
ratio has increased steeply. But in the year 08-09 the quick ratio has been decreased due to
the down turn of the sugar industry.
WORKING CAPITAL TURNOVER RATIO
This ratio measure the efficiency with which the working capital is being used by a
firm. A higher ratio indicates efficient utilization of working capital and a low ratio indicates
otherwise. But a very high working capital turnover ratio is not a good situation for any firm
and hence care must be taken while interpreting the ratio. Working capital turnover ratio
indicated the velocity of the utilization of networking capial.
71
Cost of goods soldWorking Capital Turnover Ratio =
Net Working Capital
Table-17
year Sales Working capital Ratio
2007-08 82561.81 26781.84 3.08
2008-09 75641.35 43080.10 1.75
CHART-4
Analysis
The working capital turnover ratio has decreased in the year 2007-08. The decrease in
working capital turnover ratio is due to the decrease in the sales.
CURRENT ASSETS TO FIXED ASSETS
This ratio is calculated by dividing the total of current assets by the amount of fixed
assets in terms of percentage would be
Current Assets
Current Assets to Fixed Assets Ratio = x 100
Fixed Assets
72
TABLE-18
Year Current assets Fixed assets Ratio
2007-08 26781.84 38930.50 68.79
2008-09 43080.10 43668.35 98.65
CHAT-5
Analysis :
The above chart shows the ratio between current assets and fixed assets. Both the current and
fixed assets have increased in the years 07-08 and 08-09. In the year 08-09 current and fixed
assets were more or less equal.
73
EPS:
TABLE-19
YEAR 04-05 05-06 06-07 07-08 08-09
EPS 34.73 95.71 80.09 89.69 37.01
CHAT-6
Analysis
EPS (Earning per share) is uneven in the last 5 years. In a year 08-09 EPS was 37.01 it was
lower than the year of 07-08, because of the slide in the share market.
74
TURNOVER
TABLE-20
YEAR TURN OVER
04-05 52273.24
05-06 44933.92
06-07 59427.12
07-08 82265.05
08-09 73468.34
CHART-7
Analysis :
From 2005 to 2008 the company’s turnover has increased steeply but in the year 2009 it
decreased, because of the increase in sugarcane and oil price. The turnover of the company in
the year 2008 is Rs.82265.05 (in lakhs) and in the year the 2009 it slides down to
Rs.73468.34 (in lakhs).
75
RAW MATERIAL
TABLE-21
YEAR RAW MATERIAL
04-05 26961.48
05-06 18654.02
06-07 23960.08
07-08 39071.60
08-09 38375.83
CHART-8
Analysis
Raw material utilisation has increased steeply in the year 07-08 when compared to the
previous years. In the year 2008-09 there is a slight decrease in the raw material
consumption.
76
AVERAGE TURNOVER RATIO
TABLE-22
YEAR 04-05 05-06 06-07 07-08 08-09
AVERAGE TURNOVER
RATIO 1.16 0.92 1.26 1.36 0.91
CHAT-9
Analysis
Average turnover ratio of the year 2008-09 has decreased when compared to the previous
year due to the lack of sugarcane in the region. Turnover ratio indicates the growth of the
company depends on the production capacity.
77
DEBT EQUITY RATIO
TABLE-23
YEAR DEBT EQUITY RATIO
04-05 0.55
05-06 0.62
06-07 0.49
07-08 0.26
08-09 0.31
CHAT-10
Analysis:
The debt equity ratio is determined to ascertain the soundness of the long term financial
policies o the company. It is also known as a external- internal equity ratio and the ratio
indicates the extent to which the firm depends upon outsiders for its existences. Debt equity
ratio was decrease from 04-08 and some increase in the last year of 08-09
Problem identification
78
The cost of input’s especially sugarcane price rose steeply adding to the adverse
condition.
Lack of sugarcane in the surrounding region
Sugar industry is subject to various uncertainties viz rainfall government policies
regulation etc.., the increase in the cost of sugarcane price is not related to the price of
sugar.
The cost of sugarcane cultivation is ever increasing without mechanism and
consequently sugarcane cultivation is excepted to be lower in the coming season.
79
FINDINGS
The following findings have emerged after the analysis and interpretations of data
from the records of BANNARI AMMAN SUGARS LTD..,
The comparative of all balance sheet and schedule are indicates that the company has
not performed well in the all activities (because lack of sugarcane) the profit has also
decreased double from previous year.
Also the company has increased its operating and non operating expenses for that
level. Where as in the next operating year the company has reduced its expenses and
also increased its sales to a greater extend.
The company has recovered its loans and advances are increase from the year by year.
Also the company has mobilized fund by issuing bonds and invested in the fixed
assets which is also a reason for increase in sales.
From the financial highlight, it is clear that the company is in the prosperity which
means the company’s property is increasing continuously.
Also the company’s cash position was increasing during the period of study which
indicates the company’s operating efficiency.
80
SUGGESTIONS
The company’s performance is getting fluctuation over a period of time. If they could
continue this, the shareholders will not benefited
By looking into the dividend declared by the company, it is clear that the company
gives more importance to the shareholders wealth.
The company may try to repay their long term loans and advances sooner so that they
may avoid paying interest in huge amount.
The company is constantly increasing its current liabilities. If this continues for a
period of time, the company will be not free from its liabilities.
The cash position of the company is maintained properly. This will help the company
to meet out their immediate payment to their creditors.
81
BIBLIOGRAPHY
From Company: Annual report 2008-09.
Text book: Accounting for Management, Survey of Indian Industry.
Internet: Google search.
82