a project report on estimation of working capital reqiurements krishna sugar factory athani

CONTENTS

SL. NO PARTICUALARS PAGE .NO

1 EXECUTIVE SUMMARY 1-3

2 INTRODUCTION TO THE STUDY 4

3 INDUSTRY PROFILE 5-8

4 ORGANIZATION PROFILE 9-31

5 WORKING CAPITAL MANAGEMENT 32-44

6 OBJECTIVES OF THE STUDY 45

7 ANALYSIS OF THE STUDY 46-65

8 FINDINGS 66

9 SUGGESTIONS 67

10 CONCLUSION 68

11 BIBLIOGRAPHY 69

The Krishna Co-operative Sugar Factory Limited, Athani

EXECUTIVE SUMMARY

INDUSTRY PROFILE:

The advent of modern sugar industry 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 and the production during the same period increased from 1.20 lakh

tones to 9.34 lakh tones under 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.

Total sugar industries in India are 506 out of which 67 are public sector companies, 157 are

private sector companies and 282 are co-operative societies. Total sugar industries in

Karnataka are 40 out of which two are public sector companies,18 are private sector

companies,19 are co-operative societies and one is joint venture.

COMPANY PROFILE:

The Krishna Co-Operative Sugar Factory Limited, Athani, is a co-operative society

registered under Karnataka co-operative societies Act in 1969. The Plant is located at

Sankonattii Village of Athani in Belgaum district. The registration number of the company is

DSK/REG/01/80-81 dated 10-03-1981. The industrial license number of the factory is

L.I.667 (1988) dated 02/11/1988.

The founder of this organization was Late Sri. A.B.Jakanur Ex Min.of Karnataka. At present

it has an attractive campus with magnificent buildings over it. There are totally 18,103

shareholders of TKCSFL and it has paid up share capital of Rs.18.39 Crores. During the year

2007-08, it has earned a net profit of Rs.18.34 lakh. During the same year it has produced

7.00 lakh Quintals of sugar and it has crushed 5.60 lakh Tonnes of cane.

There are 610 workers in TKCSFL. It is paying salary of Rs. 1500,000 per month to its

workers. Total Turnover of sugar is Rs.60.03 crores.

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NEED FOR THE STUDY:

Whether a manufacturing unit or non-manufacturing one, working capital is is the life-line of

every concern. Without adequate Working Capital there progress in the industry. Inadequate

Working Capital means shortage of raw materials, labour, etc., resulting in partial utilization

of available machine capacity. Moreover, research and development in the industry will be at

low ebb and essential innovations fail to appear. Inadequate Working Capital frustrates the

objectives of the enterprise through lack of funds and contributes towards the failure of a

business. On the other hand, more Working Capital may lead to less control over worker’s

performance, inefficient store-keeping, excessive stocks of raw material and finished goods,

delay in the flow of work-in-progress and lack of coordination in the enterprise. So the

amount of Working Capital in every concern should be neither more nor less than what is

required.

OBJECTIVES OF STUDY:

To study the sources and application of fund of TKCSFL

To examine how the working capital requirements is estimated

A study on the interpretation of working capital on the basis of calculations and

estimations

To study the system of inventory management, receivables management and cash

management.

To identify weakness and short comings if any as a result of the survey and to offer

suggestions

METHODOLOGY:

DATA COLLECTION METHOD:

1. PRIMARY DATA: The information is collected from the personal interaction

With the Accounts officer & workers of the union

2. SECONDARY DATA: This is collected through

A) .Annual Reports of the TKCSFL



B) Related Information from Internet.

FINDINGS:

The current and quick ratios are satisfactory i.e. 2.09 and 0.267 on an average

respectively. So the firm’s liquidity position is good. It shows that it is able to meet its

current obligations.

The cash reserves maintained by the company are good. But as compared to financial

status it is not at remarkable extent. This is serious liquidity crunch to the company.

However the company is much safer side because of their outstanding due to farmers,

who have also hold shares of company. Another point is farmers are not aggressive to

recover their dues.

Proportion of cash to sales maintenance of the cash balance is inadequate. As a rule

when sales increase cash also increase, but at a decreasing rate. It shows that

inadequate of cash balance.

SUGGESTIONS:

The inventory turnover ratio of the company was more than 75%. The firm should

search for new customers, and also the firm should focus on it’s foreign exports.

When we analyzed the proportion of cash in sales and current assets, the cash is not

sufficient to meet the current expenses. So the firm should maintain sufficient cash

balance and bank balance through effective credit policies. The major drawback for

the insufficient of cash is that, the inventory has not been selling fast. So the firm

should force to think about it.

As it is well known fact that sugarcane grown is not only produces sugar. It can

produce many other products also like molasses, cartons, electricity and beverages

therefore company need to focus in these areas also.

CONCLUSION:

When I analyzed the financial performance, the firm’s commitment to meet short

obligations is good i.e. liquidity position of the company is good. And in respect cash

balance, the firm has not sufficient balance. As a result of that, it may affect the working



capital, so totally the firm is struggling to meet its current expenses. And with regard to

resources, the firm is not utilizing the assets properly. And similarly the firm has a

maintained high inventory.

INTRODUCTION TO STUDY

The aim of the present study is to examine the Small Scale Industry practices in Working

Capital management and to evaluate management performance for the same purpose. “Since

the efficiency of the Working Capital management is determined by the efficient

administration of its various components- cash, accounts receivable and inventory, the study

attempts to determine the management of each component”.

“Working Capital in a business enterprise may be compared to the blood in a human body:

Blood gives life and strength to the human body. Similarly Working Capital injects life and

strength- profits and solvency - to the business organization”. Working Capital refers to short

term funds required for the purpose of business operations. The funds used for meeting day to

day expenses like, purchase of raw materials, payment of wages and other expenses, stocking

of goods, granting of credit to customers and maintenance of the minimum balance. It is not

necessary that the funds should be in the form of cash only. It can be in the form of near cash

items like, marketable securities, inventories and account receivable



INDUSTRY PROFILE

INTRODUCTION TO SUGAR INDUSTRY:

The Indian sugar industry is a key driver of rural development, supporting India's

economic growth. The industry is inherently inclusive supporting over 50 million farmers and

their families, along with workers and entrepreneurs of almost 500 mills, apart from a host of

wholesalers and distributors spread across the country.

The industry is at a cross roads today, where it can leverage opportunities created by

global shifts in sugar trade as well as the emergence of sugarcane as a source of renewable

energy, through ethanol and cogeneration. While some of these opportunities have been well

researched in the past, there was a need to assess the potential for India and to develop a

comprehensive and actionable roadmap that could enable the Indian industry to take its

rightful place as a food and energy producer for one of the world's leading economies.

India is second largest producer of sugarcane next to Brazil. As per last year data,

about 4 million hectares of land is under sugarcane with an average yield of 70 tones per

hectare. India is largest producer of sugar including traditional sugar sweetener, Khandasari

and Gur equivalent to 26 million tones 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 position 7 out

of last 10 years.

Traditional Khandasari and Gur are consumed mostly by the rural population in the

early 1930’s nearly 2/3rd of sugarcane production was utilized for production of alternate

sweetener, Gur & Khandasari. With better standard of living and high income, the sweetener

demand has shifted to white sugar. About 1/3rd of sugarcane production is utilized by the Gur

& Khandasari sectors. Being in the small scale sector, these two sectors are completely free

from controls and taxes, which are applicable to the sugar sector.



PROFILE OF THE SUGAR INDUSTRY:

Sugar mills with cane crushing capacity and sugar production per unit in various

countries

Country No. of Units Avg. cane crushing

per day

Avg. production per

day

Thailand 45 10307 140540

Australia 28 9216 183321

Brazil 213 9168 64018

South Africa 13 6877 137769

Mexico 67 4749 71015

Colombia 10 4590 214900

Cuba 150 4229 45538

Hawaii 9 4111 44111

Mauritius 16 3195 42970

India 506 2527 35000

The advent of modern sugar industry 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 and the production during the same period increased from 1.20 lakh

tones to 9.34 lakh tones under 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.

Total sugar industries in India are 506 out of which 67 are public sector companies, 157 are

private sector companies and 282 are co-operative societies. Total sugar industries in



Karnataka are 40 out of which two are public sector companies, 18 are private sector

companies, 19 are co-operative societies and one is joint venture.

Government enacted the Sugar Development Fund Act & Rules, which provides for levy of

per quintal of sugar known as Sugar Development Fund (SDF). The SDF is utilized for

granting term loans to sugar mills modernization and grants for research projects in the sugar

besides creation of buffer stocks as and when required to ensuring price stability.

Government de-licensed sugar sector in August 1998. It is now open to entrepreneurs to set

up mills without license but at distance of 15 kms away from the existing factory. Sugar units

free to expand their capacity and also put up higher capacity new units. This should help to

consolidate and expand their capacities wherever cane potential exists.

SUGAR INDUSTRY IN INDIA

Most of the sugar industries are located in U.P, Bihar, Maharashtra, A.P., Karnataka

and T.N. The sugar industry is one of the largest organized industries with total capital

investment of more than Rs.500 crores. It employees more than 2.5 lakhs of workers besides

creating extensive indirect employment over 25 to 30 million cultivators of sugar cane,

dealers in sugar and confectioneries.

When sugar industry was granted tariff protection the history of sugar industry started

again before 1932, which gave driving force to growth of industry. Again the government in

1951 provided incentives by fixing minimum prices of cane and maximum prices of sugar.

This incentive scheme increased the production of sugar but discouraged the cane production.

We will see later on how contradictory government. Policies have adversely affected the

growth of sugar industry. Unfortunately, government policy has been that of control and re-

control from time to time creating an environment inimical (hostility, unfriendly) to the

growth of sugar industry. Up to 1957-58 both consumption and production of sugar rose to

20 lakhs tones each. During 1969’s production of sugar rose to 35lakshs tones and during

1970’s it was in between 40 to 50 lakh tones. And during 2000-01 it was in-between 80 to 90

lakhs tones.



INDIAN SUGAR INDUSTRY AT GLANCE:

No of sugar factories established 574

Total capital employed Rs. 50,000 crores

Total annual turnover Rs. 25,000 crores

Total payment to cane growers Rs. 18,000 crores

Contribution to central & state exchequers Rs. 1700 crores+800 crores

Direct employment : rural educated Rs. 5.00 Lakhs

Farmers/families involved in sugar cane

(7.5% of rural population)

Rs. 45 million

In global economy, the Indian sugar industry has achieved a number of milestones

Largest Sugar Producer in 7 out of 10 years

Second Largest Area under Cane/Cane production

Amongst the cost effective industries with its field cost (Sugar cane) being the second lowest,

despite small land-holding and low productivity

Fourth efficient processor of sugar despite low capacity of its sugar plants as compared very

large-size plants in other parts of the world



GOVERNMENT POLICY:

The present policy of decontrol 10% of production by each unit is supplied for public

distribution system I as levy sugar at Govt. notified prices admittedly bellow 20% of the

actual cost of production. The levy sugar is I to the public irrespective of their economic

status. The balance 90% is sold in the free market against monthly/ issued by the

Government. This policy has been continuing since 1967-68 except for brief periods of de-

control during the years of surplus production and accumulated sugar stocks. Government

announces the Statutory Minimum price (SMP) for sugarcane every year based on

recommendations of the Commission for Agricultural Cost & Prices (CACP).

ORGANISATIONAL PROFILE

The Krishna Co-Operative Sugar Factory Limited, Athani (Krishna Sahakari Sakkare

Karkhane Niyamit, Athani.) is a co-operative society registered under Karnataka co-operative

societies Act in 1969. The industrial license number of the factory is L.I.667 (1988) dated

02/11/1988. The Krishna Co-Operative Sugar Factory Limited, Athani is a co-operative unit.

It is situated near Sankonatti village, at a distance of about 6 Km from Athani town. The

factory at present has an attractive campus with magnificent buildings over it.

Agriculture continues to be an extremely important sector in our country. Cooperative

system, as one of its main pillars providing vital support services, is crucial for the

transformation of agriculture. It is how inspired the founder Late Sri. A B Jakanur, an

agriculturist and a co-operator, to establish this factory during 2000-01 with the financial

support from cane growers of this area and the State Government, with an initial crushing

capacity 2500 TCD and as a stand-alone sugar industry. This factory had faced a lot of

problems all these years in coming out as a viable unit. Though this factory had emerged in

this area with a meager beginning, it had not only provided a source of income for forming

community but also created a sustainable employment opportunity in this rural area.

After a lot of dispute on location of plant, near Sankonatti village, the construction work

started in year 1990 and comp elected in the year 2000. The factory was inaugurated by Co-

Operative minister of Karnataka State Sri H Vishwanath on 24/03/2002. The regular



production was started from 24/03/2002, and the first season lasts from 24/03/2002 to

09/04/2002.

The factory started on 24/03/2002 with initial Crushing capacity of 2500 TCD with total

expenditure of Rs.46.95 Crore. The area of operation covered 22 villages from Athani

Taluka,

At present total sugar cane supplied to this sugar industry is from 15,000 acres with average

yield per acre of 25 MT.

The entire plant and Machinery has been supplied by M/s Triveni Engineering and Industries

Limited New Delhi, Rs. 28.17 Crore long-term loan was borrowed from the Co-operative

Banks. The factory had created a financial set backs due to the lack of professionalism both

in technical and financial managements and not adopted the range of different bi-product

activities and had suffered due to a weak governance on efficiency, effectiveness, adaptability

and internal and external accountability in the management. However this cooperative and

rural based industry must succeed if the poor farmers and the rural unemployed youths have

to be prosperous.

AREA OF OPERATION:

The area of operation of the society shall be confined to the villages of Athani, and Raibag

Taluka of Belgaum District and Jamakhandi Taluka of Bagalkot District of Karnataka State.

OWNERSHIP PATTERN:

A. The authorized share capital of the Society shall be Rs.18.37 crores divided in to

total

17971 shares of RS.2, 000/-each as under.

i) Rs.3, 00, 29,000/-divided in to 13048 shares of the face value of Rs.2, 000/-each

reserved for the grower members called as “A” Class.

ii) Rs.5, 98,000/-divided in to 89 shares each reserved for Co-operative Institutions

called as “B” Class.



iii) Rs.14, 08, 50,000/- from one Government share issued to Government of

Karnataka called as “C” Class.

iv) Rs.71, 66, 000/- divided in to 4, 309 shares of face value of Rs.2, 000/-each

reserved for non-grower members called as “D” Class

Name of the Company

The Krishna Sahakari Sakkare Karkhane

Niyamit Athani

Date of Incorporation/Registration No. DSK/REG/01/80-81 Date : 10-03-1981

Nature of Constitution Co-operative Sector

Factory code no. 40501

Date of commencement of commercial production of sugar 12/6/2002

Crushing capacity 2500 TCD

Project Cost 48.86 crores



Activity under taker

Production of sugar and its by Products like

Molasses ad Bagasse

Working period 180-210 days

Type unit Large scale Agro based manufacturing unit

Main raw material Sugar cane

Labour employed 61O

Areas of operations 22 villages

BOARD OF DIRECTORS:

1) Shri P.C. Savadi : Chairman

2) Shri M.B. Patil : Vice Chairman

3 Shri A.P. Akiwate : Director

4) Shri C.H. Patil : Director

5) Shri B.M. Patil : Director

6) Shri B.M. Kavatakoppa : Director

7) Shri S.A. Mudakannavar : Director

8) Shri G.K. Butali : Director

9) Shri M.K. Kubasad : Director

10) Shri V.G. Telasang : Nominee Director

11) Smt. P.B.Reddy : Nominee Director

12) Shri V.M.Shinge : Nominee Director



13) Shri P.R.Mahajan : Nominee Director

14) Shri I.M. Maniyar : Managing Director

STAFF: The employees are responsible for the success or failure of company.

There are totally 530 workers in the company.

No. of Workers

1) Permanent worker 320

2) Seasonal workers 290

610

Company is paying salary of Rs. 21, 00, 000 per month in season and 15,00,000 per month in

off Season to its workers.

WORKERS SHIFT SYSTEM:

Sugar manufacturing process is continues process it needs employees to take care of

the operations 24 hours. So company employs its workers in 3 different shifts and also

provide weekly off on routine basis. The shift system of the company is as follows.

Shifts Timings Break

I 4:00 am to 12:00 pm 30 min

II 12:00 pm to 8:00 pm 30 min

III 08:00 pm to 4:00 am 30 min

GENERAL AND ADMINISTRATION

8:00 am to 12:00 pm 60 min

1:00 pm to 5:00 pm



CENTRAL OFFICE

10:00 am to 2:00 pm 30 min

02:30 pm to 5:30 pm

JOB SPECIFICATION IN TKCSFL ATHANI

Every organization is made not made up only machineries but also consists of

people. Hence manpower is very essential and improvement in the production industry .So

TKCSFL ATHANI is having manpower sufficiently.

DepartmentsOrder Daily Wages Enhancement No Change Total

Engineering

Department121 60 57 09 247

Production

Department88 37 31 09 165

Cane development


Administration


Civil Department0 0 0 28 28

Time Office2 2 0 00 04



Stores

Department 14 29 0 0 43

Vehicle


Total 274 151 119 66 610

COMPETITORS:

Ugar sugars

Hira sugars

Renuka sugars

Datt sugars (Maharashtra)

Panchaganga sugars (Maharashtra)

Athani farmer’s sugar factory

Dkssk chikkodi

INFRASTRUCTURE FACILITIES:

Nearer to raw materials

Good transportation facilities.

Nearer to river place (Krishna River)

Good networking.

Proper accommodation for its employees

ACHIEVEMENTS/AWARDS:

STAI, SISSTA & DSTA in their recent 10th annual convention at Chennai held on 11-08-

2007 have honored this sugar factory with the most prestigious award as the “THE BEST

EFFICIENCY & PERFORMANCE SUGAR FACTORY” in the country for the year

2006-07. Hon’ble Union Minister gave the award for agricultural, food & Civil Supplies, in



presence of Hon’ble Chief Minister of Tamilnadu. The TKCSFL Athani has also bagged First

place for Best Cane Development Award, SISSTA-2007.

The companies have the Honor of achieving the Highest Sugar Recovery @ 11.68% in

Southern part of India for the year 2008-09.

2.7 VISION & MISSION OF THE ORGANIZATION:

“To continue to remain the best performer among sugar manufacturing companies in India &

to provide more value to the shareholders by means of efficient capacity utilization of its

sugar, power and distillery based facilities.”

VISION:

The vision statement of The Krishna Co-operative Sugar Factory Limited is “We are

dedicated to deliver overall value to our customers by delivering high quality products,

exceptional financial performance to our share holders & complete satisfaction to cane

growers, employees & stakeholders”.

MISSION:

At TKCSFL, Athani, they believe in growth through quality, innovation and Research

and Development in Agriculture. Their mission is to reduce the overheads and increase the

profitability by maximum utility of raw material by way of producing various products.

To encourage agro-based co-operative industry

To develop co-operative movement in rural sector

To encourage the farmers to grow sugarcane for production of sugar and its by-products

OBJECTIVES OF TKCSFL, ATHANI

To give the good market rate to the farmers who supply the sugar cane to their

factory.



To keep the good relations with the customers and. farmers and to maximize their

satisfaction.

Maximum utilization of man power and production capacity and proper utilization of

raw material for good recovery.

To promote the economic and social betterment among the members through self-help

and mutual aid in accordance with the co-operative principles specified in the first

schedule of the Act.

To encourage self-help, thrift and co-operation amongst member

To acquire lands either by way of purchase or otherwise for cultivation of sugar cane

and other crops and for erection of buildings, godowns, staff quarters, administrative

blocks etc., and for installation of machinery.

To manufacture sugar jaggery and their by-products out of sugar-cane grown and

supplied by members of the society and other and to sell the same to the best

advantage.

To undertake such other activities as are identical and conducive to the development

of the society.

To acquire and install machinery for the utilization of the by-products and buy raw

material and sell finished product in the course of utilizing and marketing the by-

products.

PRODUCT PROFILE:

The main and direct product of the sugarcane is sugar. The factory has byproducts like

distillery, arrack, co-generation, press mud and ethanol etc.

SUGAR:

The factory initially started crushing at the rate of 2500 Tonnes crushing per day (TCD). It is

needless to emphasis here that this factory has its own credibility and enjoys its own sanctity

in the sugar industry.



The TKCSFL Athani produces the sugar which can be classified as shown in the table below.

The sugar is divided in to three types based on the crystal size; they are large, medium, and

small. The production of these is dependent on the crushing capacity of the factory. To

produce large sized crystals it takes more time, which in turn affects the crushing. As the size

increases the impurity increases and colour of the crystals decreases.

TYPE OF SUGAR PRODUCED IN TKCSFL ATHANI:

DISTILLATION:

The unit uses molasses, which is waste in the production of sugar, as raw material for

distillation. This molasses has about 40% to 45% of sugar in it. The yeast strain used in

fermentation process is Sacchromyces Uvarum.

BAGASSES:

The fibrous material of sugar cane which after extraction of juice comes out from mill house

is called Bagasse and is used as fuel for Boilers. In TKCSFLthey use the Bagasse for high

pressure boilers to generate steam. Thus generated steam is used to produce electric power by

using Extraction Turbo Generation set. Thus produced power is used to run the factory and

excess power is exported through KEB Grid.

CO-GENERATION:


TYPE OF SUGAR SIZE (IN MICRONS) %AGE PRODUCTION IN

2007

LARGE (L30) 1400 NILL

MEDIUM (M30) 1120 10-15%

SMALL (S30) 600 85-90%


The factory started producing Power by using Bagasse in the year 2002 with the initial

capacity of 6 MW... It installed turbo generator set of capacity 6 MW in the year 2002. As on

2006 the Factory has the total capacity of 6 MW, out of which 4 MW is used for in-house

consumption and the remaining power is transported.

PRESS MUD:

The press mud is obtained in the process of juice purification process. It is used as

manure. In K S K N, the press mud is sold to the farmers.

PROCUREMENT:

The factory obtains the sugarcane, which is required from more than 1000 farmers and by the

company farms and others raw materials which are required for the operation is taken from

the vendor, here vendors will be evaluated on the basis of price and quality and then the

required raw materials will be taken for the efficient vendors.

The transport of sugar cane from farmers to the factory will be engaged through Lorries, who

will be taken through bidding at the time of harvesting, and also farmers themselves supply

by their own bullock carts or by tractors.

CANE WEIGHMENT:

There are 12 outlaying weigh bridges situated round about Athani for delivering the

sugarcane from the farmers. Double check has been provided over the weighment of cane

transported from out stations.

OPERATIONS:

The sugarcane, which is carried by Lorries or other, will be directly fed to the machine where

the initial process starts. At the starting point there are knives, which cut sugar cane bunches

into individual sugar cane.

After this in the next step there are sharp cutter, which cuts the sugarcane bunches into very

small pieces. Then it will go to trade marbs (a series of rollers used for crushing purpose) for

crushing. Then the juice produced will go for further processing and the Bagasse will be left

out there itself. Then they add flocculent [used for mud setting] milk sanitation etc and then



after it will go through pans and Masscuite for this Masscuite they will add sodium Hydro

Sulphite (to bleach the Masscuite) and it will be separated out and the molasses will be sent

to distillery and then white sugar will be bagged.

ORGANISATION STRUCTURE:

Babasabpatilfreepptmba.com Page 20COMPUTER

GEN ACCOUNT CANE ACCOUNT SALES CASH

GODOWN SECTION

CHIEF ENG. CHIEF CHEMIST DIST. CHEMIST CO-GEN

TOOL ROOM & DIESEL PUMP

CANE YARD AGRL DEV

BOARD OF DIRECTORS

CHAIRMAN& VICE CHAIRMAN

MANAGING DIRECTOR

GENMGR(S)

GENMGR

(P)

GENMGR(DS)

CIVIL

ENG.

STOREKEEPER

MEDICAL OFFICER

HEAD TIME

KEEPERCHIEF

C.D.O

CHIEF ACCOUNTS

OFFICER

OFFICESPDT

LWO WATCH WARD

GADSECTION

ESTSECTION

MEETINGSECTION

INWARD &OUTWARDSECTION

SHARESECTION

TYPINGSECTION

GUESTHOUSE

LEGALSECTION

PURCHASESECTION


FUNCTIONAL DEPARTMENTS

Functional heads

1) Managing Director (M.D)

2) Chief Engineer

3) Chief Chemist

4) Chief Accountant

5) Cane Development Officer (C.D.O)

6) Office Superintendent

7) Accountant (Cane)



8) Labour Welfare Officer (L.W.O)

9) Civil Engineer

10) Accountant (General)

11) Store Keeper

12) Sales Officer

13) Purchase Officer

14) Time Keeper

15) Gudown Keeper

16) Cashier

17) Security Head

BRIEF ABOUT FINANCE AND ACCOUNTS DEPARTMENT:

Finance plays a vital role in the functioning of all industrial units. Finance is the lifeblood of

the organization. In sugar Industry Finance and accounts Department has very vital roles.

The financial plan basically deals with raising and proper utilization of funds. The funds can

be raised by issue of shares as well as by raising loans through various sources. The finance

manager supported with accounts manager and an accounts assistant manages finance

department.

FUNCTIONS: -

They look after the overall financial requirements of the company.

They see that a proper inflow and outflow of income and expenditure is maintained.

Accounting of sales and sales realization

Receipt of cash, cheque and bank drafts etc and issue of official receipts for the same

Maintenance of journal, expense ledger and general ledger

Costing and accounting is framed and maintained.



Yearly budget is framed so that each department can meet their cash requirements.

Budget prepared is based on sales forecasting, expenses forecasting, cost forecasting,

purchase forecasting etc.

Registration and scrutiny of sale orders pertaining to equipment and spare parts

FINANCE DEPARTMENT CONSISTS OF FOLLOWING SECTIONS: -

General Accounts Section.

Cane Accounts Section.

Sales Section.

Cash Section.

An Accounts Officer is the head of this department. Accountant, sales manager, and head

cashier assist him.

AS FUNCTIONING OF EACH SECTION IS SUMMARIZED FOLLOWS:

GENERAL ACCOUNTS SECTION:

General Accounts are looking after the passing of bills and payments. Management is also

done by General account section and preparation of financial statements i.e., Balance sheet,

profit and loss account is attended by general accounts section.

CANE ACCOUNTS SECTION: -

The Bills and payment concerned to procurement of sugar cane, is attended by cane accounts

section. Payments like cane bills, transport and harvesting bills etc., are prepared and passed

in cane accounts section.

SALES SECTION:



It is looking after sales of sugar and by products molasses, Rectified spirit and other scrap

materials. It is keeping records concerned to all sales section.

CASH SECTION:

It is looking after the payments of all general bills and salary bills apart from cane payment

and it is also looking after receipt of cash and cheque payment. All accounts are maintained

in usual manner.

Various records and books kept are: -

General ledger

Sub ledger

Subsidiary

Cash book

Bank book

Vouchers

Each branch prepares trading and profits and loss account and Balance Sheet as on 31 st March

every year. And the government Auditor audits the accounts.

BANKS (TO PAY BILLS OF THE SUGARCANE SUPPLIERS)



PURCHASE DEPARTMENT

Purchase officer heads Purchase Department. He is responsible for purchasing the

spare parts required for the industry. The storekeeper is responsible for stacking; maintaining

and issuing required materials to the concerned section.

The important functions of this department are: - Purchasing materials

Calling quotations

Preparing C.S.Q (comparative statement quotation)

Placing before meeting for decision

Placing orders for supply of materials.

Passing bills to Accounts section for payment.

Purchase department hierarchy


SLNO NAME OF THE BANK

1 THE BDCC Bank Ltd, Athani

2 THE BDCC Bank Ltd, Satti

3 THE BDCC Bank Ltd, Halyal

4 THE BDCC Bank Ltd, Konnur

5 THE BDCC Bank Ltd, Kulgod

6 THE BDCC Bank Ltd, Gokak

7 THE BDCC Bank Ltd, Ankali

8 THE BDCC Bank Ltd, Kalloli

9 THE BDCC Bank Ltd, Kabbur

10 THE BDCC Bank Ltd, Gudas

11 THE BDCC Bank Ltd, Harugeri

12 THE BDCC Bank Ltd, Mudalagi

13 THE BDCC Bank Ltd, Ghataprabha

14 THE BDCC Bank Ltd, Shiraguppi

15 THE BDCC Bank Ltd, Yaragatti


Procedure of purchasing

1. Determination of purchase budget

In the beginning of the year the purchase manager, with the help of production

planning department, prepares a purchase budget. This budget guides him in knowing what

and when he has to buy and also quantity.

2. Determination of quantity

The stock availability in each location is determined and compared with the actual

requirements. After receiving the sales order, raw materials needed are scheduled according

to these order level.

3. Purchase order: After satisfy with the quality of materials and reputation of the supplier, purchase

order is sent to the supplier. Purchase order includes the date of order, description of

materials to be supplied. The copies of this order are sent to the Administrative office,

Accounts departments and to the Storekeeper.

4. Receiving and issuing raw materials: -

The department heads and the storekeeper check the quality and quantity of raw

materials received respectively. The storekeeper enters the details of purchased materials in

the store receipt book. Then the general manager passes the amount for payment.

PRODUCTION DEPARTMENT


PURCHASE MANAGER

GODOWN SUPERVISORS

STORE KEEPERS

ASSISTANTS


Production management refers to the application of management principles to the

production function in a factory. In other words production management involves application

of planning, organizing, directing and controlling the production process.

A well-organized production function can offer competitive advantage to a firm

in the following areas.

Higher quality

More inventory turns

Shorter new product lead time

Greater flexibility

Shorter manufacturing lead time

Better customer satisfaction

Reduced wastage

Laboratory

The factory is having well equipped lab, and the main activity of the lab is to check

the content of sugar cane & fixing the correct shape & size of sugar. The lab prepares hourly

reports which advice on the addition of the other chemicals in production

CHEMICAL SECTION

Structure:

CHIEF CHEMIST

MANUFACTURING CHEMIST

DEPUTY CHEMIST

LAB IN CHARGE

LAB BOY

PRODUCTION PROCESS:



The main Raw material in the production of sugar is

SUGAR CANE

The raw materials has to go through following stages before it become finished product. The

process in each stage is as under:

STAGE:1 SUGAR CANE SUPPLY:

The harvested and transported sugar can received is weighed on the weigh Bridge. It is

unloaded and kept on the feeder tables. It is fed to the cane carrier as per the requirement.

Note: 4500 tons received, 1000 tons stocked and 3500 tons crushing per day.

STAGE:-2 MILLING OF CANE/ EXTRACTION OF JUICE:

This cane is passed through leveler and fibrizor by making the fine making the fine chips. It

is crushed through series of mills. Imbibitions hot water is added prior to the last mill to

extract more possible sugar. The Bagasse from the last will is carried through Bagasse

conveyor and required quantity of Bagasse is fed to the boilers and excess quality is sent for

storage.

STAGE:-3 CLARIFICATION AND EVAPORATIONS:

The juice from all the mills is pumped to juice weighting scale. It is heated to about 70-77’o

c in the juice heaters. It is taken to continuous juice sulphitor in which milk of lime and

sulphur di-oxide gas are adjusted to maintain ph 7.0. It is again heated in juice heaters to

about 100 to 105’oc and sent to continuous clarifier. Clear juice is taken to multiple effect

evaporators to concentrate up to 60oc Brix.

The settled mud from the bottom of the clarifier is taken to mud mixer to mix with beguile

and taken to continuous vacuum filer. The filtrate is transferred to raw juice receiving tank

for treatment. The adhered mud on the screens is scraped and sent out as filter cake, which

will be used for composting the manure.

STAGE:-4 SUGAR MANUFACTURE AND CRYSTALLIZATION PURING:



The concentrated syrup from evaporator is taken to syrup sulpthitor to adjust Ph 4.8 to 5.2.

This is stored in the supply tanks and fed to “A” masscult boiling by taking B-seed as a

footing. It is concentrated to 92o Brix and dropped to the crystallizer. This masscult is

purged in the centrifugal machines. The adhered crystals are scraped to hopper and treated

with hot air and cold air blower. It is sent to grader the size for gradation. This graded sugar

is stored in SILOS. Weighed and bagged sugar bags are transferred to respective godowns

for stacking.

STAGE 5:- FURTHER PROCESS:

While purging A- massecuite the A-light molasses received is sent to supply tanks and fed to

‘B’- masscult boiling with b-grain as footing. This is purged in the centrifugals. This sugar

is used as B- seed and excess is melted and fed to ‘A’- masscult’s. White purging low purity

B- Heavy molasses obtained is used for boiling C- massecuite with C- grain as footing.

This C- massecuite is taken for purging in Centrifugal machines. The final molasses is

separated, weighed and sent to storage tanks. C.F.Magma is sent to melt supply tanks and fed

to ‘A’ massecuite boiling. C-light molasses obtained is tired in supply tanks and used for C-

massecuite boiling and C- graining also 0.

STORES DEPARTMENT

This department is headed by storekeeper. To keep the stores and required materials

for the factory section wise in a proper way and to maintain their registers and big cards of

indents (order goods)

Functions:

1) To make the materials requisition for the purpose of knowing the quantity materials.

2) To make purchase order or in simple terms the tenders.

3) To make approval memo for verification of materials.

4) The main function of store department is to prepare a Bin Card.

5) The store Department issues material with reference with store requisitions.

6) To make classification & codification of materials.

7) Receipts of materials.

8) Inspect it with ordered quantity, quality and if any other specifications.



9) Some of the materials like chemicals are to be sent to laboratory for inspection and

testing.

10) Getting indents from departmental head and issuing it.

11) To make purchase returns if the materials are rejected.

12) To maintain minimum level of materials.

13) Informing purchase department when materials require.

In stores there are two sections

1) Transport Entry table.

2) Store Receipt Table

1) Transport Entry Table

They maintain records the receipt of materials at what data, at what time, vehicle

number, and quantity in kg. Acknowledgement from vehicles etc

2) Store receipt Table

The store keeper maintain the records of receipt of materials, serial no made of

transport, purchase order reference, bill no, the name of the supplier etc. the store

keeper has given proper conditions to the materials to identify the materials.

MARKETING AND SALES DEPARTMENT

The American Marketing Association offers the following formal definition:

Marketing is an organizational function and a set of processes for creating, communicating,

and delivering value to customers and for managing customer relationships in the ways that

benefit the organization and its stake holders.

It can be viewed Marketing Management as, an art and science of choosing target

markets and getting, keeping, and growing customers through creating, delivering, and

communicating superior customer value.

Channel of distribution

Most producers do not sell their goods directly to the final users. Between them stands

set of intermediaries performing a variety of function Those intermediaries constitute a

marketing channel.



Marketing channels are sets of interdependent organizations involved in the process

of making a product or service available for use or consumption.

Marketing channel decisions are among the most critical decisions facing

management. The channel chosen intimately affects all the other marketing decision. The

company’s pricing depends on whether it uses mass merchandisers or high quality boutiques.

The firm’s sales force and advertising decisions depends upon how much training and

motivation dealers need. In addition, the company's channel decisions involve relatively long

term commitments to other firms.

Role of marketing manager

1) To collect information for sale forecasting.

2) Pricing the products as per the demand.

3) To appoint new dealers and distributors

4) .To have full and perfect knowledge of marketing conditions and policies

5) Marketing department also looks after dispatching goods to the vendors

Functions of sales department

1. Sales officer is responsible for selling the products.

2. To look after dispatch of the ordered products.

3. Suggestion, ideas, complaints, feedback from the market to the company.

4. Stocking planning, godown maintenance.

Release mechanism of sugar

The sale of sugar is controlled by the Chief Director of sugar, New Delhi through

release mechanism.

Sugar industry is basically a seasonal industry. Hence the sugar will be produced during the season and the sugar thus produced will have to be marketed throughout the year by the sugar mills.

The Directorate of sugar will release monthly sugar sale quota for the sugar factories

in India and the sugar thus released for the specific month will have to be sold and dispatched

before the end of the month.

In case any factory not able to sell the entire quantity of the sugar released for the

particular month, the remaining quantity will be treated as lapsed. So every factory tries to

sell their sugar quote of the month within the validity period.



Sales procedure

Procedure adopted for sale of sugar and power

1. Sugar

Domestic Sale of Sugar

The sugar is sold in the domestic market through tender system. Sugar tenders will be called

periodically from the various sugar traders. The traders are intimated well in advance about

the grade and quality being offered in tender over telephone. The sugar tender is some times

conducted at Karnataka Sugar Institute, Belgaum and also at factory site. The officer of KSI

will be present at the time of tenders. The rates will be collected over telephone from the

various parties along with grade and quantity of sugar required by them. The parties who

have offered higher price will be allotted the sugar and they will be instructed to take the

sugar delivery within the stipulated period. The sugar will be sold against 100% payment.

The rate of domestic price of sugar in the state and the rate of neighboring sugar factories will

be compared while selling the sugar in tenders.

Export of Sugar

When the international price of sugar is remunerative compared to domestic price of

sugar, the company exports some of the stock of sugar. The sugar export is mainly

undertaken through the mercantile exports or through EXIM Corporation New Delhi. The

price for export sugar is negotiated taking into account, the prevailing international sugar

price and the price being offered by various sugar factories for export of sugar. Once the rates

are finalized, the company will enter into agreement with the party. Then the party will

obtain a release orders from chief Director of sugar, New Delhi and necessary excise bond

from the concerned authority. After completing all the necessary formalities, sugar will be

delivered to the party for export against full payment of the consignment. After the export

shipment is completed necessary documents in proof of export of consignment will be

collected from the parties. The same will be submitted to the excise department.

2. Export of Power to the KPTCL Grid

In addition to the above company is also receiving its revenue from its power plant.

Company is having a power plant of 6.0 MW capacities. It is using about 4.0MW for its

own/captive consumption; the excess power of about 2.0MW is being exported to the

KPTCL.



WORKING CAPITAL MANAGEMENT:

The aim of the present study is to examine the Small Scale Industry practices in Working

Capital management and to evaluate management performance for the same purpose. “Since

the efficiency of the Working Capital management is determined by the efficient

administration of its various components- cash, accounts receivable and inventory, the study

attempts to determine the management of each component”.

“Working Capital in a business enterprise may be compared to the blood in a human body:

Blood gives life and strength to the human body. Similarly Working Capital injects life and

strength- profits and solvency - to the business organization”. Working Capital refers to short

term funds required for the purpose of business operations. The funds used for meeting day to

day expenses like, purchase of raw materials, payment of wages and other expenses, stocking

of goods, granting of credit to customers and maintenance of the minimum balance. It is not

necessary that the funds should be in the form of cash only. It can be in the form of near cash

items like, marketable securities, inventories and account receivable

CONCEPT OF WORKING CAPITAL:

Like most other financial concepts, the concept of ‘Working Capital’ is used in different

connotations by different writers. Obviously, it is understood either as the total current assets

or as the excess of current assets over current liabilities. The former is referred to the gross

working Capital and the latter the net Working Capital.

So there are two concepts in Working Capital:

Gross Working Capital.

Net Working Capital

Gross Working Capital is the total of all current assets, viz. cash, marketable securities

account receivable and inventory Net Working Capita refers to excess of current assets over

current liabilities. Both of these concepts have their own importance. “The gross concept is a

going concern concept in which management is particularly interested because for the

productive utilization of fixed assets all the currents are necessary.



The net concept is useful to gauge the financial soundness of a form and is of special interest

to sundry creditors and suppliers of short-term loans and advances. It creates confidence

among the creditors about the security of their amounts”.

No special distinction is made between the terms ‘total current assets’ and ‘Working Capital’

by some authors “ Working Capital is nothing but total of current assets. It is a substitute for

Working Capital, though not a perfect one”

“Working Capital is the capital circulating into cash over an operating cycle. Working Capital

is equated with all the current assets”.

“Working Capital and current assets are interchangeable”.

The precise meaning of current assets and current liabilities

CURRENT ASSETS:

Current assets are those assets which are used in the current operation of a business such as

inventories, receivables, cash and bank balances and easily convertible securities. These

assets generally change their form within an accounting period. “Current assets have a short

life span. Cash balance may be held idle for a week or two, accounts receivable may have a

life span or 30 to 60 days, and inventories may be held for 30 days 100 days”.

CURRENT LIABILITIES:

Current liabilities are those claims of outsiders which are expected to mature for payment

within an accounting year and include creditors, bill payable, bank-overdraft, outstanding

expenses, outstanding tax and income received in advance. “Current liabilities are those

liabilities where liquidation is reasonably expected to require the use of existing resources

properly classifiable as current assets, or the creation of other current assets, or the creation of

other current assets, or the creation of other current liabilities”.



FACTORS AFFECTING WORKING CAPITAL NEEDS:

The Working Capital requirements of a form depend on many factors. It is a common

proposition that the size of Working Capital is a function of sales. Sales alone do not

determine the size of Working Capital. But it is constantly affected by the crisis- crossing

economic currents flowing in a business. The nature of the firm’s activities, the industrial

health of the country, the availability of materials, the ease or tightness of the money market

are all parts of these shifting forces.

Realizing the complication involved in Working Capital estimates, Gerstenberg observes,

“Although no definite rule can be established for determining Working Capital requirements,

we can arrive at some general principles. Certain influences, some inherent in the nature of

the business and the others arising out of business management policies, affect each of the

items of current capital.

The following factors affect not only the requirements of Working Capital but also influence

to a great extent the composition or structure of Working Capital. It is believed that any

attempt at Working Capital management could be improved upon with greater understanding

of the underlying factors.

THE FOLLOWING FACTORS ARE IMPORTANT:

Nature of business

Period of manufacture and cost of production,

Volume and terms of purchase,

Size of business unit,

Capacity utilization,

Degree of specialization,

Seasonal variations,

h) Coordination between production and distribution,



i) Business cycles,

j) Management policy,

k) Miscellaneous factors such as government policies, transport and communication system

and economic and political environment.

FINANCING OF WORKING CAPITAL:

In that GFEL, it was financing the working capital from the following five common

sources. They are:

1. SHARES: The TKCSFL has issued the equity shares for raising the funds. The Equity

Shares do not have any fixed commitment charges and the dividend on these shares is to be

paid subject to the availability of sufficient funds. These funds have been injected from the

company’s own personal resources, from the members and from the third party investors.

2. TRADE CREDITORS: The trade creditors refer to the credit extended by the suppliers of

milk in the normal course of business. The firm has a good relationship with the trade

creditors. So that suppliers send the milk to the firm for the payment to be received in future

as per the agreement or sales invoice. In this way, the firm generates the short-term finances

from the trade creditors. It is an easy and convenient method to finance and it is informal and

spontaneous source of finance for the firm.

3. FACTORING OR ACCOUNTS RECIEVABLE CREDIT: Another method of raising

short-term finance in The Krishna Co-Operative Sugar Factory Limited, Athani, is through

accounts receivables credit offered by the commercial banks. A commercial bank has

provided finance by discounting the bills or invoices of its customers. Thus, a firm gets

immediate payment for sales made on credit. The factor is also a financial institution, which

offers services relating to management and financing of debts arising out of credit sales.

Factors render services varying from bill discounting facilities provide commercial banks to

the total take over of administration of credit sales including maintenance of sales ledger,

collection of accounts receivables, credit control, and protection from bad debts, provision of

finance and rendering of advisory services to the firm’s clients.



4. LINE-OF-CREDIT: The business is well capitalized by equity and is has a very good

collateral, the business (the firm) might quality fore one. A line-of-credit allows firm to

borrow funds for short-term needs when they arise. The funds are rapid once the collections

of accounts receivables that result from the short-term sales peak. Lines-of-credit typically

are made for one year at a time and expected to be paid it for 30 to 60 consecutive days some

times during the year to ensure funds are used for short-term needs only.

5. SHORT-TERM LOAN: The firm has borrowed the funds from the commercial banks to

finance for the working capital needs. The short-term loans duration is less than one year.

They provide a wide verity of loans to meet the specific requirements of a concern. The

different forms in which the banks normally provide loan and advances are

Loans

Cash credits

Overdraft

COMPONENTS OF WORKING CAPITAL:

The components of working capital are:

Cash management

Receivables management

Inventory management

CASH MANAGEMENT:

Cash is the liquid form of an asset. It is the ready money available in the firm or with

the business, essential for its operations. A firm needs the cash for the following three

purposes:

Transaction motive: The firm must and should keep the funds for transactions like purchase,

sales etc. These activities, which are not known in advance, are not considered while

preparing a cash budget.



Precautionary motive: The firm also keeps funds for the safeguard against uncertainties,

which are an integral part of business operations.

Speculative Motive: To tap profits from opportunities arising from fluctuations in

commodity prices, security prices, interest rates etc. The company with surplus cash is in a

better position to exploit such situations.

Cash Flows: The flow of cash into and out of the business over a period refers to cash flow.

Cash inflow can be in the form of cash received from customers, lenders and investors. Cash

outflow can arise because of payments made to employees (salaries), suppliers and creditors.

Positives Cash flow: When cash inflow exceeds outflow it results in positive cash flows.

Positive cash flow is beneficial to the business, the only thing to be cautious about is the

opportunity cost, incurred as a result of idle money.

Negative Cash flows: Negative cash flows arise when cash outflow exceeds inflows. This

can be due to various reasons.

A good cash management has a major impact on the overall working capital management. It

is required to meet the business obligations in the firm. The benefits of good cash

Management are:

Control of financial risk

Opportunity for profit

Increased customer, supplier, and shareholder confidence

The cash management is commonly deals with the following aspects.

Cash planning or identifying sources of cash flows

Managing the cash flows

Optimum cash level

Identifying various avenues to invest surplus cash



TYPES OF WORKING CAPITAL:

While planning for the Working Capital one has to keep in mind different classification of

Working Capital. They are:

Permanent of fixed Working Capital: Permanent Working Capital is the minimum amount

of current assets, which is needed to conduct a business even during the dullest season of the

year. This amount varies from year to year, depending upon the growth of a company and

the stage of the business cycle in which it operates. It is the amount of funds required to

produce the goods and services, which are necessary to satisfy demand at a particular point. It

represents the current assets, which are required on a continuing basis over the entire year. It

is maintained as the medium to carry on operations at any time.

Temporary or variable Working Capital: Temporary or variable or fluctuating Working

Capital is the amount of Working Capital which is required to meet seasonal in nature, it

means the blocking of Working Capital in stock and it will take time to convert it into cash.

In order to meet special exigencies like, launching of extensive marketing campaign, for

conducting research etc., special Working Capital is required.

OPERATING CYCLE:

The operating cycle can be said to be at the heart of the need for Working Capital. “The

continuing flow from cash as advances to suppliers, to inventory, to accounts receivable and

back into cash is what is called the operating cycle”. In other words, the terms cash cycle

refers to the length of time necessary to complete the following cycle of events. Fuel, power

and office expenses to meet selling costs, such as packing, advertising etc

The aim of such an approach is not only directed towards management of Working Capital

fund inflows and outflows, but also directed to refine the balancing judgment between

liquidity and profitability.



ADEQUACY OF WORKING CAPITAL:

A business enterprise should have enough Working Capital. Without adequate Working

Capital it cannot be run effectively a manufacturing concern is sure to collapse if it is run for

longer period without or with meager amount of Working Capital. Therefore, the enterprise

has to maintain adequate Working Capital can avail following advantages:

It enables the enterprise to enjoy uninterrupted flow of production by obtaining the raw

material well in time.

It enables an enterprise to avail cash discounts on the purchase and hence, it reduces costs,

It enables to make regular payments of salaries, wages and other day to day commitments

which raise the morale of its employees, increases their efficiency, reduce-wastage and costs,

It enables to extend favorable credit terms to customers,

It will help to maintain the good will and credit worthiness which is essential for raising the

loans from banks and others on easy and favorable terms,

It helps to exploit favorable market conditions such as, purchasing its requirements in bulk

when the prices are lower and by holding its inventories for higher prices,

This gains the confidence of its investors and creates a favorable market to raise additional

funds in the future and

It creates an environment of security, confidence, high morale and overall efficiency in a

business, etc.

INADEQUACY OF WORKING CAPITAL:

At the same time inadequacy of Working Capital will affect business prospects adversely.

Goodwill of the firm will be at stake if the Working Capital gap is not bridged. Shortage of

Working Capital or inadequacy of Working Capital will affect profitability. Liquidity and

soundness of a business enterprise, it can cause following damages:



It stagnates growth. It becomes difficult for the enterprise to undertake profitable projects for

non-availability of the Working Capital funds,

It becomes difficult to implement operating plans and achieve an enterprise’s profit target,

An enterprise may not be able to take advantage of cash discount facilities,

An enterprise will not be able to pay its dividends because of the non availability of funds,

An enterprise may have to borrow funds at exorbitant rates of interest,

Operating inefficiencies creep in when it becomes difficult even to meet day-to-day

commitments,

An enterprise loses its reputation when it is not in a position to honor its short term

obligations. As a result, an enterprise faces tight credit terms.

SHORT-TERM BANK CREDIT - A SOURCE OF FINANCE:

There are four categories of sources of Working Capital namely;

Trade credit

Bank credit

Current provisions and non-bank short term borrowing, and

Long term source comprising equity capital and long-term borrowings

Trade credit and short-term credit are the primary sources for financing Working Capital, in

our country. According to an estimate, both these sources together finance about three

fourth of the Working Capital requirements of an industry”.

FORMS OF CREDIT:

After getting the overall credit limit sanctioned by the banker, the borrower draws funds

periodically. The following forms of credit are available to him.



Loan arrangement: Under this arrangement, the amount of the loan is credited by the bank

to the borrower’s account and the interest is payable on the balances outstanding.

Overdraft arrangement: The borrower is allowed to overdraw in his current account with

the bank up to a stipulated limit and the interest is payable on the actual loan utilized.

Cash credit arrangement: The borrower can draw to a stipulated limit based on the security

margin. Usually, such credit is allowed against Pledge or hypothecation of goods but the

borrower can provide alternative securities also in conformity with the terms of advance.

Bills purchased and bills discounted: This arrangement is of relatively recent origin in

India. With the introduction of the New Bill Market Scheme in 1970 by the Reserve Bank of

India, a bank credit is made available through discounting of bills by banks. This scheme

intends to link credit with the sale and purchase of goods. To popularize this scheme, the

discount rates are fixed lower than those of cash credit.

Term loans: Bank advance loans for 3 to 7 years payable in yearly or half yearly

installments.

PRINCIPLES OF WORKING CAPITAL MANAGEMENT

E. L. Walker’s Capital Propositions and James C. Van Home’s elucidation of the same.

These propositions are also known as the principles dealing with risk factors and serve as the

basis of Working Capital theory.

Principle-1

The first principle is concerned with the relationship between the levels of Working Capital

and sales. Briefly, it may be stated as follows: if Working Capital is varied relative to sales,

the amount of risk that a form assumes is also varied and the chances of gain or loss are

increased This principle implies that a definite relation wrists between the degree of risk and

the rate of return. That is the more the risk that a firm assumes, the greater is the possibility of

gain or loss. The opportunity for gain is enhanced by choosing an appropriate asset and

liability structure.



The firm’s return on investment will be comparatively large when there are a low proportion

of current assets to total assets and a high proportion of current liabilities to total liabilities.

This strategy, no doubt, will result in a low level of Working Capital and relatively great

profitability but the firm assumes a risk of technical insolvency, i.e., the inability to meet its

cash obligations. Therefore, the risk involved with various levels of current assets and current

liabilities must be evaluated in relation to the profitability associated with those levels.

Principle -2

As already stated above, the main purpose of management is determining the ideal level of

Working Capital. This principle serves as a basis for determination and is applicable to

investments made not only in various components of Working Capital but also in fixed

assets. Stated precisely, it is as follows: capital should be invested in each component of

Working Capital as long as the equity position of the firm improves.

Principle - 3

The third principle is concerned with the risk resulting from the type of capital used to

finance Working Capital directly affects the amount of risk that a firm assumes as well as the

possibility of gain or loss, and cost of capital

Principle - 4

As stated above, the extent of the of debt depends upon the level of risk a management

wishes to undertake. It should be noted that the risk is not only associated with the amount of

debt used relative to equity but also related to the nature of the contacts negotiated by the

borrower. The dates of maturity and restrictive clauses of the contracts are the most important

characteristics of debt contracts that directly affect the firm’s operations.



The greater the disparity between the maturities of a firm’s short -term debt instruments and

its flow of internally generated funds, the greater the risk and vice versa.

Incidentally, management is not compensated for assuming the risk referred to in this

concept; therefore, under no circumstances should the risk be assumed.

On the whole, a management has to determine the liquidity of the firm on the basis of

information about risk and opportunity. Costs of holding liquidity. The degree of liquidity,

desirable is a function of profitability of insolvency of various levels of liquidity, the

opportunity cost of maintaining those levels and the cost of bankruptcy. Therefore, the

behavior of the management should be influenced not only by the risk and the opportunity

costs associated with the various levels of liquidity, but also by the cost of bankruptcy. Thus

the management must behave in a manner consistent with the maximization of shareholder’s

wealth.

FACTORS INFLUENCING WORKING CAPITAL REQUIREMENTS

Nature of business – This is one of the primary factors influencing the working capital

requirements of a firm. The Krishna Co-Operative Sugar Factory Limited, Athani, is a

manufacturing firm, has a longer operating cycle for manufacturing the products, and

investing more funds in its current assets. Therefore, it requires much more working capital.

Market conditions – The level of competition existing in the market also influences working

capital requirement. When competition is high, the company should have enough inventories

of finished goods to meet a certain level of demand. Otherwise, customers are highly likely

to switch over to competitor’s products. It thus has greater working capital needs. When

competition is low, but demand for the product is high, the firm can afford to have a smaller

inventory and would consequently require lesser working capital. But this factor has not

applied in these technological and competitive days.



ESTIMATION OF WORKING CAPITAL REQIUREMENTS

Managing the working capital is a matter of balance. The firms must have sufficient funds on

hand to meet its immediate needs. The Krishna Co-Operative Sugar Factory Limited, Athani,

is manufacturing oriented organization; the following aspects have to be taken into

consideration while estimating the working capital requirements. They are:

Total costs incurred on material, wages and overheads.

The length of time for which raw material are to remain in stores before

They are issued for production.

The length of the production cycle or work-in-process, i.e., the time taken for conversion

of raw material into finished goods.

The length of sales cycle during which finished goods to be kept waiting for sales.

The average period of credit allowed to customers.

The amount of cash required paying day-today expenses of the business.

The average amount of cash required to make advance payments

The average credit period expected to be allowed by suppliers.

Time lag in the payment of wages and other expenses.



OBJECTIVES OF STUDY

To study the sources and application of fund of TKCSFL

To examine how the working capital requirements is estimated

A study on the interpretation of working capital on the basis of calculations and

estimations

To study the system of inventory management, receivables management and cash Ma

nagement.

To identify weakness and short comings if any as a result of the survey and to offer

suggestions



ANALYSIS AND INTERPRETATION OF DATA :

TABLE 1: CALCULATION OF WORKING CAPITAL

Particulars 2005-06 2006-07 2007 – 08

Current Assets

Inventories 193771415 624968314 717284971.5

Sundry debtors 11081938.99 25182025.76 5727392

Cash 72521 325153.45 28456.45

Bank 27143285.9 26566127.5 14554932.44

Other assets 939201052 12356005.85 16419308.96

Loans & advances 37226454.5 4315300.17 4315300.17

Receivables from govt. 1859709 1859709 1859709

1210356376.39 693712926.73 76019007

Current Liabilities

Sundry creditors 1893901.5 18503328 11822912

Term loans

DCC bank 51010105.66 61987719 68212128

Others

Statutory payable 2640680 5336185 8322361



Excise duty 551827 551827 551827

Net Working Capital 1154259862.23 607333867.73 48500689

The Net Working Capital has been increased in 2006 – 2007, when compared to other years.

This is due to huge rise in inventories ………….

TABLE 2: STATEMENT SHOWING INCREASE & DECREASE IN WORKING

CAPITAL:

Particulars

Increase in Current Assets

Inventories 431196899 92316657.5

Sundry debtors 14100086.77 -

Cash 252632.45 -

Bank - -

Other assets - 4063303.11

Loans & advances -

Receivables from govt. - -

Decrease in Current Liabilities



Sundry creditors - 66804156

Term loans - -

DCC bank

Others

Statutory payable - -

Excise duty - -

Decrease in working capital 546925994.5 -

Total 992475612.72 163184116.61

Particulars

Decrease in Current Assets

Inventories -

Sundry debtors - 19424634

Cash - 296697

Bank 577158.4 12011195.06

Other assets 926845046.15 -

Loans & advances 32911154.33 -

Receivables from govt. - -



Increase in Current Liabilities

Sundry creditors 16609426.5 -

Term loans 10977613.34 6224409

DCC bank 2695505 2986176

Others

Statutory payable - -

Excise duty - -

Increase in working capital - 62534882.96

Total 990615903.72 103477994

TABLE 3: COMPUTATION OF WORKING CAPITAL:

Year Current Assets Current Liabilities Working Capital

2005-06 25,88,44,064 12,83,39,937 13,05,04,127

2006-07 72,30,11,048 32,37,78,891 39,92,32,157

2007-08 81,24,64,742 39,73,58,597 41,51,06,145



Working Capital

130504127

399232157 415106145

050000000

100000000150000000200000000250000000300000000350000000400000000450000000

2005-06 2006-07 2007-08

Year

Wo

rkin

g C

ap

ital

WorkingCapital

Interpretation: It was in positive in the following 3years i.e., from 2005-06 to 2006-07 and

in 2007-08 it has been in comparatively high positive terms i.e., amount of Rs. 41,51,06,145.

It indicates that, in the 2007-08, the working capital has met its current obligations...

CURRENT RATIO: Current ratio is also known as ‘working capital ratio’ which compares

the total current assets of the business unit to its current liabilities. This ratio measures its

short-term solvency, which only reflects its ability to meet short-term obligation. The higher

the ratio the greater the business unit’s ability to meet current obligation and more the safety

of funds of the short-term creditors Thus, a current ratio of 2:1 is considered satisfactory.



Current Assets

Current ratio = ———————

Current liabilities

TABLE 4 : COMPUTATION OF CURRENT RATIO

Year Current Assets Current Liabilities Ratio

2005-06 25,88,44,064 12,83,39,937 2.01

2006-07 72,30,11,048 32,37,78,891 2.23

2007-08 81,24,64,742 39,73,58,597 2.04

Ratio

1.9

1.95

2

2.05

2.1

2.15

2.2

2.25

2005-06 2006-07 2007-08

Year

Rat

io

Ratio

Interpretation: The Current Ratio for the year 2005-06 is below standard ratio. It is

increased to 2.01 to 2.23 for 2006-07, which is above standard ratio. For the year 2007-08 it

is decreased to 2.23 to 2.04, which below standard ratio. It indicates that, the firm is able to

meet its current obligations.

QUICK RATIO:



It establishes a relationship between quick, or liquid assets and current liabilities. An asset is

liquid if it can be converted into cash immediately or reasonably soon without a loss of value.

Cash is the most liquid asset. Inventories are considered to be less liquid.

Quick assets (current assets - Inventory)

Quick ratio = ————————————————

Current liabilities

TABLE 5 : COMPUTATION OF QUICK RATIO:

Year Current Assets Current Liabilities Ratio

2005-06 4,95,54,229 12,83,39,937 0.380

2006-07 7,64,04,609 32,37,78,891 0.235

2007-08 7,04,60,447 39,73,58,597 0.177

Ratio

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

2005-06 2006-07 2007-08

Year

Rati

o

Ratio

Interpretation: The ideal ratio is 1:1. The Quick ratio of current assets & liabilities are

below the standard ratio. It indicates that the firm’s liquidity position is good.



CURRENT ASSET TURNOVER RATIO:

Assets are used to generate sales. Therefore, a firm should manage its assets efficiently to

maximize sales. The relationship between sales & assets is called assets turnover.

Sales

Current asset turnover ratio= ______________

Current assets

TABLE 6 : COMPUTATION OF CURRENT ASSET TURNOVER RATIO:

Year Sales Current Assets Ratio

2005-06 94,06,20,046 25,88,44,064 3.63

2006-07 79,13,32,804 72,30,11,048 1.09

2007-08 40,96,02,092 81,24,64,742 0.50

Ratio

0

0.5

1

1.5

2

2.5

3

3.5

4

2005-06 2006-07 2007-08

Year

Rati

o

Ratio



Interpretation: The above table exhibits how the current assets were efficiently utilized in

generating sales. In the above table the ratio shows that, the firm has utilized the currents

assets properly.

WORKING CAPITAL TURNOVER RATIO:

Net sales

Working capital turnover ratio = ————————

Net working capital

TABLE 7: COMPUTATION OF WORKING CAPITAL TURNOVER RATIO:

Year Net Sales Net working Capital Ratio

2005-06 94,06,20,046 1,15,42,59,862 0.81

2006-07 79,13,32,804 60,73,33,868 1.30

2007-08 40,96,02,092 73,12,59,661 0.56



Ratio

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2005-06 2006-07 2007-08

Year

Rat

io Ratio

Interpretation: The ratio is fluctuating. That was high in 2006-07, 1.30.and it was negative

in 2005-06 i.e. 0.81 and 2007-08 i.e.0.56 it indicates that the working capital has been

utilized effectively in 2006-07.

INVENTORY MANAGEMENTS:

Inventory management is one of the components of working capital. This management is

concerned with the effective management of stock or inventory. Inventory consisting of raw

material, work-in-progress and finished goods, represent a significant proportion of total

current assets.

In the case of TKCSFL, the inventory consisting only finished goods these finished goods

consist of sugar, molasses& bagasse these inventories are not sold then and there but

disposed of as per the company act guidelines for sugar and it’s by products. The

effectiveness of working capital is depends on this inventory managements effective.



So, effective management of particular in working capital in general can also be evaluated by

the computing inventory related ratios. Inventory turnover ratio reflects the relationship

between costs of goods old during or given period and the average inventory. This ratio helps

the average inventory. This ratio helps in determining the liquidity of a business concern in as

a much as it indicates the rate at which the inventories are converted into sales and then into

cash ultimately

This ratio is calculated by the following ratio.

Cost of goods sold

Inventory turnover ratio = ————————

Average inventory

Where,

Cost of goods sold = Sales - Gross profit

Opening stock + Closing stock

And average inventory = ------------------------------

2

365

Inventory holding period = ———————————

Inventory turnover ratio

TABLE 8: COMPUTATION OF INVENTORY TURNOVER RATIO:

Year Sales Average Inventory Ratio

2005-06 26,40,87,564 10,11,41,647 2.61

2006-07 69,74,45,272 67,11,26,643 1.03

2007-08 84,53,40,822 73,42,01,254 1.15



Inventory turnover ratio

0

0.5

1

1.5

2

2.5

3

2005-06 2006-07 2007-08

year

ratio Ratio

Interpretation: A higher rate of inventory turnover ratio reduces investment in inventory and

thus reduces the requirement of working capital. Hence efforts should be made to magnify

the ratio to get the benefits, reduction in investment on stock and reduction in requirement of

working capital.

The above table reveals that, the turnover of inventory in 20005-06 was 2.61 were as in 2006-

07 there was a increase of 1.03 come up to, in 2007-08 there was a decrease of 1.15, this

shows of finished goods inventory is more in 2006-07which reflects more sales in 2006-07.

TABLE 9: COMPUTATION OF PROPORTION OF INVENTORY TO CURRENT

ASSETS:

Year Inventory Current Assets Percentage



2005-06 19,37,21,415 25,88,44,064 0.74

2006-07 62,49,68,314 72,30,11,048 0.86

2007-08 71,72,84,972 81,24,64,742 0.88

Percentage

0.65

0.7

0.75

0.8

0.85

0.9

2005-06 2006-07 2007-08

Year

Percentage

Interpretation: The above table exhibits how the current assets were efficiently utilized in

generating sales. In the above table the ratio was found near to1. It shows that, the firm has

utilized the currents assets properly.

TABLE 10: COMPUTATION OF PROPORTION OF CURRENT ASSETS AND

FIXED ASSETS:



Year Fixed assets Current Assets Ratio

2005-06 50,68,16,681 25,88,44,064 1.95

2006-07 47,00,50,942 72,30,11,048 0.65

2007-08 45,46,52,642 81,24,64,742 0.56

Ratio

0

0.5

1

1.5

2

2.5

2005-06 2006-07 2007-08

Year

Ratio

Interpretation: The table shows the proportion of current assets and fixed assets undertaken

by the unit. The above table clears that proportion of investment in fixed assets is more than

proportion of investment in current assets. The ratio ranges between 0.56:1 to 0.65

TABLE 11: COMPUTATION OF SIZE OF INVENTORY:



Year Inventory Indices(04-05=100)

2004-05 23,78,03,265 100

2005-06 19,47,71,415 81.90

2006-07 62,49,68,314 262.7

2007-08 71,72,84,972 301.5

Indices(04-05=100)

0

50

100

150

200

250

300

350

2004-05 2005-06 2006-07 2007-08

Year

Indices(04-05=100)

Interpretation: The above table throws light on investment in total inventory and the

progressive base year percentage growth in total inventory. The growth rate in inventory was

on a downward trend in 2005-06 as compared to 2004-05 by 81.90% respectively. In 2006-07

the trend was on a upward by 262.7% as compared to 2005-06. In 2007-08 the trend was on a

upward by 301.5% as compared to 2006-07. However, the size of inventory had that leads to

the increase in output and sales has a positive impact on its growth in unit.



RECEIVABLE MANAGEMENT:

Trade credit is the most prominent force of modern business. It is considered or an essential

marketing tool, acting as a bridge for the movement of goods through production and

distribution stages to ultimate consumers. The management of amount receivables is an

important part of working capital management part of working capital management is an

undertaking, which sell their goods on credit. Accounts receivables include book debts, and

bills receivables. The level of accounts receivable of an undertaking is determined with

reference to the volume of credit sales and the average period between sales and realization

from the customer like inventories.

In the context of dairy union the finished products – sugar and their by products on the basis

of cash and credit system. So the question of credit sales which leads to accounts receivables

does not arise but the factory providing credit facilities to the farmers by way of supplying

fertilizers. This credit given by factory can be recovered by the sugar which is provided by

farmers. Therefore the scope of amounts receivables management in dairy unit is very

limited.

RECEIVABLE TURNOVER RATIO:

This ratio is also known as “Debtors turnover ratio” which related credit sales of business

unit to trade debtors. This ratio indicates the rate at which cash is generated by turnover of

receivables or debtors. It measures the liquidity of the business unit.

By and large the amount of trade debtors and bills receivables depends upon the extent of

sales, credit facilities extended and the effectiveness of collection policy in force. The DTR is

ascertain how many days of average sales are locked up in the amounts owning by debtors as

depicted in the balance sheet.

Credit sales Total sales

RTR = ———————— or ————————

Average debtors closing debtors



Ex:

In the year 2006 - 07

Total sales

RTR = ————————

Closing debtors

79, 25, 85,774.00

= ————————

26001540.16

= 30.48

365

Average collection period = -----------------------

RTR

365

= ----------

30.48

= 11.81 days



TABLE 12: COMPUTATION OF RECEIVABLE TURNOVER RATIO:

Year Sales Closing debtors RTR Average

collection

Period

2005-06 40,96,02,092 1,10,81,938 36.96 9.87

2006-07 94,06,20,046 2,51,82,026 37.35 9.77

2007-08 79,13,32,805 57,27,392 138.16 2.64

0

20

40

60

80

100

120

140

160

2005-06 2006-07 2007-08Year

Valu

es

RTR

AveragecollectionPeriod

Interpretation: In the above chart, the Debtor turnover ratio is low in all years i.e. it was

36.96 in 2005-06. As a result of that, the payment period will increase. But a very low is

dangerous. Lower the DTR it affects increases in working capital.



TABLE 13: COMPUTATION OF PROPORTION OF RECEIVABLES TOCURRENT

ASSETS:

Year Total Receivables Current Assets Percentage

2005-06 3,73,02,784 25,88,44,064 14.4

2006-07 6,95,56,533 72,30,11,048 9.61

2007-08 5,73,74,008 81,24,64,742 7.06

Percentage

0

2

4

6

8

10

12

14

16

2005-06 2006-07 2007-08

Year

Percentage

Interpretation:

Total receivables

Percentage of total = ————————— x100

Receivables to total current assets



Total current assets

Total receivable includes the sundry debtors, loan and advances.

The above table indicates that 14.4% of the total current assets were kept in receivables in

2005-06. This share decreased up to 9.61% during the period of 2006-07. Further the trend

was towards declined to 7.06% during the period of 2007-08.

TABLE 14: COMPUTATION OF SIZE OF TOTAL RECEIVABLES:

Year Total Receivables Indices(04-05=100)

2004-05 2,77,12,355 100

2005-06 3,73,02,784 134.6

2006-07 6,95,56,533 251

2007-08 5,73,74,008 207

Indices(04-05=100)

0

50

100

150

200

250

300

2004-05 2005-06 2006-07 2007-08

Year

Valu

es Indices(04-05=100)



Interpretation: The table throws light on the position of total receivables. It is evident from

the table that, there was an increased in the size of receivables up to 134.6% during 2005-06.

In the year 2006-07 the trend was again increased i.e. 251%. Further decreased to 207 for the

year 2007-08

CASH MANAGEMENT: Cash is another significant element of working capital it includes

cash in hand and bank balances. Without cash no business unit can survive at any time during

its life cycle. Cash occupies an important place in the structure of working capital in order to

maintain good trade and credit, cash is needed for repayments that must be made on

scheduled time. Hence quantum of cash should be neither more nor less than the

requirements. This optimum level depends on various factors such as manufacturing cycle,

the sale and collection cycle, age of the enterprise, the liquidity of other current assets, debt

redemption etc.

CashPercentage of cash to current assets = ———————— x 100

Total current assets

TABLE 15: Computation of Proportion of Cash to Total Current Assets:

Interpretation: From the table it can be derived the fact that the average cash to current

assets ratio is the lowest at 10.51 in 2005-06. However, the ratio has decreased of 5.04% in

2005 – 06. But there was increased by 1.85 % in the year 2007-08. The proportion of total

assets to cash there was high in the year of 2005-06. In the total, the average cash balance to


Year Cash Current Assets Percentage

2005-06 2,72,15,806 25,88,44,064 10.51

2006-07 3,64,67,361 72,30,11,048 5.04

2007-08 1,51,03,607 81,24,64,742 1.85


total current assets is very low. It shows inadequate cash balance or situation is undesirable

from the point of profitability and liquidity of the unit.

CASH RATIO:

It is the method for measuring the liquidity of the factory by calculating the ratio between

cash & all current liabilities. It is also known as Cash Asset Ratio.

Cash

Cash Ratio = _________________

Current liabilities

TABLE 16: COMPUTATION OF CASH RATIO:

Year Cash Current

Liabilities

Ratio

2005-06 2,72,15,806 12,83,39,937 0.212

2006-07 3,64,67,361 32,37,78,891 0.112

2007-08 1,51,03,607 39,73,58,597 0.038


Ratio

0

0.05

0.1

0.15

0.2

0.25

2005-06 2006-07 2007-08

Year

Rat

io

Ratio


Interpretation:

From the table it can be derived the fact that the average cash to current liabilities ratio is the

lowest at 0.212 in 2005-06. However, the ratio has decreased of 0.112% in 2006 – 07. But

there was decreased by 0.038 % in the year 2007-08.

FINDINGS:

The current and quick ratios are satisfactory i.e. 2.09 and 0.267 on an average

respectively. So the firm’s liquidity position is good. It shows that it is able to meet its

current obligations.

The cash reserves maintained by the company are good. But as compared to financial

status it is not at remarkable extent. This is serious liquidity crunch to the company.

However the company is much safer side because of their outstanding due to farmers,

who have also hold shares of company. Another point is farmers are not aggressive to

recover their dues.

Proportion of cash to sales maintenance of the cash balance is inadequate. As a rule

when sales increase cash also increase, but at a decreasing rate. It shows that

inadequate of cash balance.

When analyzed the financial performance, the firm’s commitment to meet short term


balance, the firm has not sufficient balance. As a result of that, it may affect the

working capital, so totally the firm is struggling to meet its current expenses. And

with regard to resources, the firm is not utilizing the assets properly. And similarly the

firm has a maintained high inventory.

The current assets turnover ratio of the firm was greater than 1.It was 1.74on an

average. It shows that, the firm has been utilized the current assets properly.

The size of the inventory is more than 75% of the working capital as compared to the

last three year. It shows that the inventory has not been disposed off in those years i.e.



goods might be stably in the warehouse due to may be either decreased in sales or

higher purchase of raw materials.

SUGGESTIONS:

The inventory turnover ratio of the company was more than 75%. The firm should

search for new customers, and also the firm should focus on it’s foreign exports.

When we analyzed the proportion of cash in sales and current assets, the cash is not

sufficient to meet the current expenses. So the firm should maintain sufficient cash

balance and bank balance through effective credit policies. The major drawback for

the insufficient of cash is that, the inventory has not been selling fast. So the firm

should force to think about it.

With regard to resources (assets) the firm has not been utilized the assets properly in

making sales. So it is forced to think for proper utilization of that to have sufficient

cash balance.

The firm has invested more on fixed assets. By investing in fixed assets is useless

because they cannot be converted into cash. Major problem of the firm is that it does

not have sufficient cash balance, so I personally feel that the firm better to invest in

current assets instead of having high inventory.

As it is well known fact that sugarcane grown is not only produces sugar. It can

produce many other products also like molasses, cartons, electricity and beverages

therefore company need to focus in these areas also.



CONCLUSION:

When I analyzed the financial performance, the firm’s commitment to meet short


balance, the firm has not sufficient balance. As a result of that, it may affect the working

capital, so totally the firm is struggling to meet its current expenses. And with regard to

resources, the firm is not utilizing the assets properly. And similarly the firm has a

maintained high inventory.



BIBLIOGRAPHY:

Prasanna Chandra : Financial Management theory and practice,

Tata, McGraw – Hill Publishing Co. Ltd.,

New Delhi, 1998

M. Y. Khan and P. K. Jain : Financial management, Tata McGraw Hill

Publishing Co. ltd. Financial Management,

The Institute of Chartered Accountants of

India, New Delhi.

N. Vinayakam and I.B. Sinha : Management Accounting, Himalaya

Publishing House

N. K. Agarwal : Management of Working Capital,

Sterling Publishers, Pvt. Ltd.



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