Mysore Sugar Company Limited, Mandya

Mysore Sugar Company Limited, Mandya

CHAPTER-2INDUSTRY PROFILE ANDCOMPANY PROFILE

2.1 INDUSTRY PROFILE

2.1.1 INTRODUCTION India has been known as the original home of sugar and sugarcane. Indian mythology supports the above fact as it contains legends showing the origin of sugarcane. India is the second largest producer of sugarcane next to Brazil. Presently, about 4 million hectares of land is under sugarcane with an average yield of 70 tons per hectare. India is the largest single producer of sugar including traditional cane sugar sweeteners, khandsari and Gur equivalent to 26 million tons raw value followed by Brazil in the second place at 18.5 million tones. Even in respect of white crystal sugar, India has ranked No.1 position in 7 out of last 10 years.

Traditional sweeteners Gur & Khandsari are consumed mostly by the rural population in India. In the early 1930s nearly 2/3rd of sugarcane production was utilized for production of alternate sweeteners, Gur & Khandsari. With better standard of living and higher incomes, the sweetener demand has shifted to white sugar. Currently, about 1/3rd sugarcane production is utilized by the Gur & Khandsari sectors. Being in the small scale sector, these two sectors are completely free from controls and taxes which are applicable to the sugar sector. The advent of modern sugar processing industry in India began in 1930 with grant of tariff protection to the Indian sugar industry. The number of sugar mills increased from 30 in the year 1930 - 31 to 135 in the year 1935-36 and the production during the same period increased from 1.20 lakh tones to 9.34 lakh tones under the dynamic leadership of the private sector. The era of planning for industrial development began in 1950-51 and Government laid down targets of sugar production and consumption, licensed and installed capacity, sugarcane production during each of the Five Year Plan periods.

2.1.2 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 favorable 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 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. 2.1.3 MANUFACTURING PROCESS 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.

2.1.4 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 ingredienats and color. Crystallizing, Drying and Packing 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 fiber. 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. 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, khandsari or Gur. However, sugar products produced worldwide are divided into four basic categories: granulated, brown, liquid sugar and invert sugar. Granulated: Granulated sugar is the pure crystalline sucrose. It can be classified into seven types of sugar based on the crystal size. Most of these are used only by food processors and professional bakers. Each crystal size provides unique functional characteristics that make the sugar appropriate for the food processor's special need.

2.1.5 TYPES OF SUGARGranulated Sugar: Most of these are used only by food processors and professional bakers and are not available in the supermarket. The types of granulated sugars differ in crystal size. Each crystal size provides unique functional characteristics that make the sugar appropriate for the food processor's special needRegular Sugar, Extra Fine or Fine Sugar: "Regular" sugar, as it is known to consumers, is the sugar found in every home's sugar bowl and most commonly used in home food preparation. The food processing industry describes "regular" sugar as extra fine or fine sugar. Fruit Sugar: Fruit sugar is slightly finer than "regular" sugar and is used in dry mixes such as gelatin desserts, pudding mixes and drink mixes. The uniformity of crystal size prevents separation or settling of smaller crystals to the bottom of the box, an important quality in dry mixes and drink mixes.Bakers Special: Bakers Specials crystal size is even finer than that of fruit sugar. As its name suggests, it was developed specially for the baking industry. Bakers Special is used for sugaring doughnuts and cookies as well as in some commercial cakes to produce fine crumb texture.Superfine, Ultrafine, or Bar Sugar: This sugar's crystal size is the finest of all the types of granulated sugar. It is ideal for extra fine textured cakes and meringues, as well as for sweetening fruits and iced-drinks since it dissolves easily. Confectioners (Powdered) Sugar: This sugar is granulated sugar ground to a smooth powder and then sifted. It contains about 3% corn starch to prevent caking. Confectioners sugar is available in three grades ground to different degrees of fineness.Coarse Sugar: The crystal size of coarse sugar is larger than that of "regular" sugar. Coarse sugar is normally processed from the purest sugar liquor. This processing method makes coarse sugar highly resistant to colour change or Inversion (natural breakdown to fructose and glucose) at high temperatures. All nations across the world are concerned about the rate of increase in the global warming. India through its large sugarcane industry can play a significant role in mitigating the same.The recent awareness of the advantages ofusing green fuel for generation of power and use ofgasohol to reduce automobile emissions have led to setting up of a number ofco-generation plants in various sugar mills and the Government of India is takingsteps to encourage manufacture of Ethanol for the purpose of doping motor fuel to reduceair pollution.The Indian sugar industry can therefore, make an intelligent use of this opportunity for its sustainable growth.It is observed that this can be possible through change in its presentproductmix.The various likely options are the setting up of: Manufacture of sugar, alcohol and power from sugarcane. Sugar, power and alcohol chemical complexes.- Gasohol power complexes from sugarcane.As on date there is no Ethanol - Power complexes existing in the country or probably elsewhere and setting up of these will require large initial investments. Similarly, there are very fewsugar mills in the country at present, which are co-generating, power and producing downstream chemicals fromalcohol due to poor economy of scales. With steps being taken to rapidly modernize the Indian sugar industry, it is now possible to save large quantities of Bagasse for use as fuel to produce power. Similarly, with the decision to encourage mixing gasoline with ethanol as an oxygenate the demandfor ethanol is expected to rise rapidly. In view of poor capacity utilization of the existing distilleries mostly annexed to the sugar mills, availability of necessaryfeedstock will facilitate meeting the increase in demand for gasohol. The process in the existing sugar mills, therefore,can bemodifiedthroughnominalinvestmentssuch that if required, the productionofsugar canbesuitablycurtailed withoutaffecting the economyof sugar mill or reducing any off take of sugarcane.India is the original home of sugarcane and it had a flourishing sugar industry in the ancient time. But the modern sugar manufacturing industry dates back from 1903 when some modern sugar mills were established in Bihar. But the real development of the industry took place only after 1932. India is currently the largest sugarcane producer in the world accounting for 10% of world production. Sugar is a growing industry with the cane area, yield and recovery of sugar increasing, over the decades though there are cyclic variations from year to year. The most of sugar mills until now incinerates sugar cane waste instead of maximizing electricity generation.The factory or the sugar industry occupies the important place in the country. Sugar factories are located in the rural areas and the focal point so economical activities in their surroundings. This is one industry where the contact between industry and agriculture increase. Direct and intimate which is contributing to the rural Development Program of our country. Sugarcane is a tropical grass belonging to; the some genus as sorghum and maize. The trash free mill able sugarcane stalk contains about 73% solids. The solids in turn comprise of soluble solids, mainly sucrose and fiber, the woody fiber of the cane is known as Bagasse and is about 30% of the weight of sugarcane. Thin Bagasse is being used as the fuel for the boilers in the sugar mills. With the emergency of the new techniques for the manufacture of sugar generation of power. Bagasse based co-generation of electricity has assumed new and significant relevance. It is an important source of energy, which needs to be fully, utilized the national in the context of ever increasing demand for energy.The fuel value of Bagasse is approximately equivalent to; that of two barrels of fuel 0il. Storage of large volume of combustible Bagasse has been difficult in sugar company premises, and also the disposal of the large quantities otherwise in cumbersome, most of the sugar plant boilers has been designed to use almost all Bagasse generated by the factory. Despite being use of the largest producers of cane in the world and hailing over 400 sugar mills working in the country. And sugar industries in India are facing lot of problems. Those are, Inadequate supply of sugarcane. High cost of production. Short crushing season. Inefficient management. Unfavorable government policy. Some companies using Old and outdated technology. Less sugar price in the sugar market. With numerous advantages like reduction in transportation of fuel and reduction in transmission losses, cogeneration in sugar industry also raises a futuristic source in the way of India self-reliance in the power sector particularly in the rural areas. Rural Electrification Corporation limited is a government of India enterprise funding the electricity boards for rural electrification project. REC encourages the co-generation of surplus electricity from sugar industries with the objectives of developing rural power centers. Indian is the second largest producer of sugarcane next to Brazil. Presently, about 4 million hectares of land is under sugarcane with an average yield of 70 tons per hectare. More over Indian sugar industry have spread over mainly in rural areas; as such major share of benefits should flow to words rural population. Besides present position of the industries shake less the policy of supporting farming economy by increasing sugar cane prices will ultimately raise the sugar crop. So emphasis has to be to words cane development both by yield and quality. So at this junction it would be appropriate to consider, if no full liberalization at least partial by eliminating some of the undesirable constraints, by which would help industry in the closing environment when India needs to increase its foreign earnings, n the world market.Sugar is the most important agro based industry of India has its marked place in the countrys economy. The reforms under the liberalization policies of government of India are fast taking place and changing the industrial sense in the country. However it appears that the winds of liberalization and deregulation which are blowing presently through other industrial sectors have by passed the sugar industry, moreover Indian sugar industry had spread over mainly in rural areas; as such major share of benefit should flow to words rural population. Besides, present position of the industry is Shaklees. The policy of supporting farming economy by only increasing sugarcane prices will ultimately raise the sugar cost so emphasis has to be to words cane development both by yield and quality. So at this juncture it would be appropriate for government to consider.The Indian sugar industry has always been highly regulated by the requirements of a license foe setting up or the expanding of a sugar factory restriction and control on the sale and dispatches of sugar, fixation of statutory minimum cane price payable, fixation of levy sugar price, restriction on import and export, on restriction on stock holding and so forth. With the government decision to liberalize of restriction has adversely affected the industry.

Nearly 29 sugar factories producing 0.12 million tons sugar in 1930-31 the sugar sector has grown to 423 factories and is expected to produce around a million tons of Sugar during 1999-2000. The impressive growth in the number of sugar factories and sugar production could be attributed so the growth of the cooperative sector in the sugar industry. The cooperative sector of the sugar industry had hardly any presence as late 1955-56. When the cooperative sector was comprised of three sugar factories and could produce only 0.02 million ton sugar. This was merely 1.2% of the total. However, the scenario is entirely different during 1999-2000, when 250 cooperative sugar factories are expected to produce around 10.3 million tons of sugar out 18.2 million tons which is around 57% of the total.In 1989-90, the country produced 222,628,000 tons of sugar from 3, 40,500 hectares under cultivation or 65.383 kg/hectare. The northern state of utter Pradesh is the leading producer of cane, accounting for over 97 million tons or 44.6% of the total. Maharashtra and Tamilnadu are the second and third ranking sugarcane producers, with 34,008,000 tons or 13.5% of total 21,918,000 tons or 11.2% of total, respectively, Bagasse, the fibrous residue of the sugar cane used for raising steam in boilers, accounts for approximately 30% of the weight.Sugar mills are privately owned, publicly owned and owned by cooperatives of the 491 licensed sugar factories, 288 are in the cooperative sector, accounting for 59% of the factories installed and 62.4% of the national output of sugar most of the remaining mills are in private hands.Asia produced 40.4 million tons sugars. Out of this, India has produced 18.2 million tons. The sugar producers of an Asia are a major reckoned with and India is a major player in this. In India reforms are going on at a very fast place and during the coming years -Indian sugar production will reach new heights.

2.2 COMPANY PROFILE

The Mysore Sugar Company Limited is a government of Karnataka enterprise. The companys principal business activity is the manufacture sugar and Alcohol. The company is also engaged in the processing of by products from sugar manufacturer and marketing sugar and other products. The government of Karnataka owns about 51% of the equity capital of Mysore Sugar Company Limited. The remaining shares are held by the financial institution and about 14,000 farmers. The Maharaja of Mysore and his Diwan, Sir Mirza Ismail, established the Mysore Sugar Company in January 1933. This is the first sugar factory in MYSORE state was built in Mandya town, which is about 100km from Bangalore, on the way to Mysore. It was designed by BharathaRatna Sir M. Vishveswaraiah. This famous engineer was also responsible for K.R.S Dam and a reservoir, which turned the dry, arid district of Mandya into prosperous sugar cultivation belt within a year of its founding. The plants were imported from Scotland and installed. Operations were begun soon after, in its very first year the company earned a net profit of Rs 300 lakhs. This is one of oldest plant is located in a good cane area and has a potential of crushing about 1.4 million tons of cane per annum. The Company beginning with 400 tones of milling plant, the factorys capacity was periodically expanded to the present 5000 tons per day. In the near future capacity will be further expanded to 8000 tons. The district of Mandya produces about 4 million tons of sugarcane every year. Unlike other part of India, Sugarcane here available up to 9 months in a year.2.2.1 NATURE OF THE BUSINESSAgriculture Industry: Sugar Industry is mainly depends upon the Agriculture sugar cane is the main raw material for the manufacturing of sugar. Therefore, these sugar factory activities are depended on agriculture.Some time sugar industry may face the non-availability of raw sugar cane due to some reasons like, failure of the crops, Low Production; failure of monsoon etc., Due to this reason sugar Industry production is vary from year to year.Seasonal Crop: Basically sugar industry highly depends on sugar cane. Mandya district is situated in southern dry zone with moderate temperature and humidity; Rainfall varies from 760mm to 880mm, Due to this reason sugar cultivation starts between the months June to August of every year. Basically sugar cane harvesting starts after 9-10 months. Therefore the cane availability is very high in the month of April and May. 2.2.2 VISION, MISSION AND QUQLITY POLICYVision:In concern to the vision of Mysore Sugar Ltd., this company has a great vision to moderate the plants and implementing new plants like co-generation plants, which costs are around 90 cores to increase the production capacity and utilize the high availability of sugar cane. And it also has a long cherished tradition of curing for the people who work in its various units by implementing welfare measures.Mission: The Mysore Sugar Co. Ltd. highly concentrates the increase the production capacity of the factory by establishing co-generation plant. Mysore Sugar Co. Ltd., employed number of field officers to educate the farmer to cultivate sugarcane scientifically.Quality policy: The Mysore Sugar company assures if its products by ensuring strict compliance with the approval standards and documents systems, use of quality raw materials and components, as also proper keep of machinery.Companys quality policy includes Selecting the right kind of raw material and accessories. Adopting stringent quality control at various process of manufacturing. Strict adherence to specification with emphasis on consistent quality in all areas of operations. Planning Program for acquiring samples in order to ensure standard quality. Product design to fully meet customer requirements including quality, design, economy etc.The Quality management system is designed to meet the requirement of the international standard for each and every order it is been into consideration.2.2.3 PRODUCT PROFILE The factory obtains the sugarcane, which is procured from more than 14000 farmers. And other raw materials that are required for the operation taken from the vendors & these vendors will be evaluated on the basis of price and quality and then the required raw material will be taken from the efficient vendors. The transport of sugarcane from farmers to the factory will be engaged through Lorries, who will be taken through bidding and also farmers themselves supply by their own bullock carts or by tractors.

For the purchase of other raw materials manager will receive the material requisition slip from the usage department, which should be signed by all the department heads and by the general manager. Then the purchase department will evaluate the list of vendors and the tabulated comparative statement will be sent to the usage department. Then on the basis of the opinion of the usage department the purchase department will send a file to the management, than on the basis of this file the purchase department will place the purchase order.The company main product is sugar, it produces Two types of sugars are as follows.

Brown SugarsIt also called Golden Yellow Sugar White moist granulated sugar blended with small quantities of pure sugars syrups selected for color and taste can also be produced boiling refinery cane syrups until brown sugar crystals form used in baked goods, meat glazes, and condiments.

Raw sugarIn the form of dry, brown sugar crystals (the color being due to presence of impurities) obtained from the evaporation of clarified sugar cane juices imported for processing into refined sugar. This product is not sold to consumers because it does not meet Canadian standards for health and hygiene.Different Types of By-Products in Mysore Sugar Co Ltd:BAGASSE MOLASSES

PRESS MUD DISTILLERY

LIQUOR ARRACK

HIGH EFFICIENCY CO-GENERATION OF ELECTRICITY

Bagasse:It is the by-product left behind after crushing of Sugar cane. It is used as fuel in the sugar factory boilers. Excess Bagasse finds use as a raw material in paper manufacture. Press MUD: It is the by-product generated by Cane juice filtration during sugar manufacture press mud is used as a fertilizer in sugar cane cultivation, because of its rich manure properties.Molasses: It is a by-product of sugar refining chiefly used for alcohol production. The entire Molasses output is routed to the distillery unit.Arrack: The Company is a major supplier of Arrack. In earlier years, the company catered to the arrack demand of 13 districts in Karnataka.Distillery Unit:The Company produces industrial and potable spirits totalling around 100 lakhs litre per annum. The Company production of industrial spiritmainly sold to chemical industries, hospitals, educational institutions and research centre.Acetic Acid Plant: The acetic acid plant was established to supply acetic acid to the Mysore acetate & Chemicals, as their raw material.2.2.4 AREA OF OPERATIONThe Mysore Sugar Company Ltd. has a wide regional operation. As a public ltd., industry its marketing operation its decision is taken by the Government of Karnataka. It has to conduct operation within 40km around the Mandya district. But its marketing operation is conducted Regional, National as well as global wide as per the Government instruction.2.2.5 OWNERSHIP PATTERN The Mysore Sugar Ltd. is a Government Undertaking Company. The Government of Karnataka owns about 51% in the equity share capital of the Mysore Sugar Ltd., The remaining 49% of the equity shares are held by other financial institutions and about 14,000 farmers.2.2.6 COMPETITORS INFORMATION The Mysore Sugar Co. Ltd., is a Government Undertaking Company, So, all the strategies are done by government itself. For some extent it is facing competition from private Sugar factories like Sri Chamundeshwari Sugar Co. PVT Ltd., S C Mallaiah sugar Co. PVT LTD, Bannari Amman Sugar Co PVT LTD. and other Khandasari Mills and the local Jaggery Mills . While there are competitions, the Mysore Sugars Co. Ltd., carrying its activities without threats because farmers of this region has believed about company.2.2.7 FUTURE GROWTH AND PROSPECTSThe management has a future plan for expansion. Due to increase in the supply of sugar cane it has decided to increase the cane crushing capacity from 5000 to 7000 metric tons per year 1. Planning for the further automation.1. Planning to expand plant capacity from 5000 TCD to 7000 TCD.1. Promoting lift irrigation projects.1. Planning for the expansion of Co-generation of power.1. Planning to improvise the infrastructure facility and construct quarters and buildings.

2.2.8 SWOT ANALYSIS OF THE COMPANY SWOT is an acronym used to describe the particular Strength, weakness, opportunities and Threats that are strategic factors for a specific company. SWOT analysis not only results in the identification of corporations distinctive competencies, the particular capabilities and resources that a firm possesses and the superior way in which they are used.

STRENGTHS A strong goodwill and reputation. ISI certificate confirmed by the bureau leades to quality product and service. A strong quality control department. Adoption of new technology and machineries. Financial Assistance by State Government. Location in the heart of the city. It has a wide distribution network. The company very talented and skilled employees at all the level.

WEAKNESS Sales promotional are not very effective. Weak in financial strategy as well as financial department. Political interference. Crisis between management and employees. The efficiency of the commitment of the workers are not checked effectively because of which the workers can take undue advantage.

OPPORTUNITIES Rapid growth of agriculture Sector. Awareness among the farmer for quality Sugar Cane. Increase export share in the market. Increase the divers product line. Implement change in technology.

THREATS Gambling of Monsoon. Crisis between management and farmer for regarding price fixation. High competition from private companies. Decrease in sugar cane growth.

2.2.9 FINANCIAL STATEMENT

Profit & Loss Account For The year Ended 31st march 2012

PARTICULARS2012

Sales and other income363409741

Other income24261033

Increase /(decrease) in stock of finished goods & WIP(70168825)

TOTAL INCOME317501949

Manufacturing and other expenses477423243

Administrative expenses8212467

financial expenses299971877

Depreciation12434314

Amortisation of intangible expenses10348729

TOTAL EXPENSES808390630

PROFIT/(LOSS) for the year(490888681)

Extraordinary items9369169

Prior period adjustment(269115193)

Less: provision for taxationNet profit (loss) for the yearOpening balance B/D(12917)(702106940)

(2691151811)

PROFIT AFTER TAX(3393258751)

Balance sheet for the year Ended 31st march 2012

PARTICULARS2012

I.SOURCE OF FUND

1.SHARE HOLDERS FUND

a)capital87343000

b)Reserve and surplus47956000

2.LOAN FUNDS

a)secured loans1324319995

b)Un secured loan1842202489

TOTAL3301821484

2.APPLICATION OF FUND

1.FIXED ASSET

a)Gross block477362208

b)less depreciation311403636

c)Net block165958573

2.INVESTMENT1702000

3.CURRENT ASSETS,LOANS&ADVANCES

a)inventories222175729

b)sundry debtors22480128

C)cash and bank balance121580773

d)loans and advance88582620

CURRENT LIABILITIES&PROVITIONS

a) current liabilities & provision1706531370

NET CURRENT ASSETS(1251712120)

4.a)Miscellaneous expenditureP&L A/C _G/R3369392991

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