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Asia Pacific Journal of Research Vol: I. Issue XXVI, April 2015

ISSN: 2320-5504, E-ISSN-2347-4793

www.apjor.com Page 65

PROFITABILITY PERFORMANCE OF SELECTED SUGAR COMPANIES IN INDIA:

AN EMPIRICAL STUDY

Dr.P.Mohanasundaram1

ABSTRACT

A business needs profit for its existence, expansion and diversification. A business enterprise can

discharge its obligations to the various segments of the society only through profit. Profitability is the

ability of a firm to generate earnings or revenues in excess of expenses. The primary objective of a

business undertaking is to earn profit and continuing profitability is a primary measure of the overall

success of a company. It is a necessary condition for survival. An analysis of profitability reveals how the

position of profits stands as a result of total transactions made during a year. The profitability is analysed

through the computation of various ratios. Actual profitability is highly sensitive and it affects by product

prices, quantities, cost of production, capital, size, market share and growth of the company. Further,

corporate policy relating to various functions will affect profitability some of them are relevant in short run

while others have impact in the long run.

By keeping this in mind, this article is an attempt to analyse the profitability of the selected sugar

companies for a period of five years from 2008-09 to 2012-13. Five sugar companies have been selected

purposively based on total assets among 24 listed sugar companies in NSE Listings as on 31st December,

2013. Profitability of the selected five sugar companies has been analysed by using Gross Profit Ratio,

Operating Profit Ratio, Net Profit Ratio, Return on Capital Employed, Return on Assets, Return on

Shareholders’ Fund and Return on Equity Shareholders’ Fund. The results of analysis revealed that the

overall profitability of Shree Renuka Sugars Ltd, Balrampur Chini Mills Ltd and Bannari Amman Sugars

Ltd is satisfactory and the overall profitability of Sakthi Sugars Ltd and Dhampur Sugars Ltd is not

satisfactory during the study period.

KEYWORDS: Profitability, Gross Profit Ratio, Return on Assets, Net Profit Ratio and Return on

Capital Employed

I. INTRODUCTION

The primary objective of a business undertaking is to earn profit and continuing profitability is a

primary measure of the overall success of a company. It is a necessary condition for survival. Profitability

is the ability of a firm to generate earnings or revenues in excess of expenses. An analysis of profitability

reveals how the position of profits stands as a result of total transactions made during a year. The efficiency

of business is measured by the amount of profit earned. The profit of a business can be measured by

studying the profitability of investment in it and the ability of given investment to earn a return from its

1 Associate Professor of Commerce, Valluvar College of Science and Management, Karur, Tamilndu.


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use. This ability is referred to as lending power or operating performance of the concerned investment.

Profitability is a relative term and its measurement can be achieved by profit and its relation with the other

objects by which the profit is affected. It is the best of efficiency, powerful motivational factor and the

measure of control in any business. It is the necessary to benchmark the efficiency of capital and assets,

return to shareholder as well as predicting financial distress. An efficient use of financial resources is

necessary to avoid financial distress. The prediction and prevention of financial distress is one the major

factors, which will help to avoid bankruptcy. The profitability is analysed through the computation of

various ratios. The selection of the ratios for the analysis of profitability is determined by the nature of data

available and requirement of analysis.

By keeping this in mind, this article is an attempt to analyse the profitability of the selected sugar

companies for a period of five years from 2008-09 to 2012-13. Five sugar companies have been selected

purposively based on total assets among 24 listed sugar companies in NSE Listings as on 31st December,

2013. Profitability of the selected five sugar companies has been analysed by using Gross Profit Ratio,

Operating Profit Ratio, Net Profit Ratio, Return on Capital Employed, Return on Assets, Return on

Shareholders‟ Fund and Return on Equity Shareholders‟ Fund.

II. INDIAN SUGAR INDUSTRY: AN OVERVIEW

Sugar consumption rate is highest in India as shown in the statistics received from USDA Foreign

Agricultural Service. However, as per production is concerned, India has notched up 2nd position

following Brazil, the largest sugar producer in the world. The Indian sugar industry uses sugarcane in the

production of sugar and hence maximum number of the companies is likely to be found in the sugarcane

growing states of India including Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Andhra

Pradesh. Uttar Pradesh alone accounts for 24% of the overall sugar production in the nation and

Maharashtra's contribution can be totalled to 20%. There are 453 sugar mills in India. Co-operative sector

has 252 mills and private sector has 134 mills. Public sector boasts of around 67 mills. Jobs in Indian Sugar

Industry have created ample employment opportunities in rural India. Today the Indian Sugar Industry has

absorbed about 5 lakh rural people. The cultivation of sugarcane employs about 4.5 core farmers which is

the first phase of the sugar production. Indian Sugar mills may be cooperatives, public or private

enterprises. The industry today provides employment to about 2 million skilled/semi skilled workers and

others mostly from the rural areas.

Indian sugar production has reached 188 lakh tonnes by end Feb‟13 which is a tad below last year‟s

output by 0.31%. According to the Indian Sugar Mills Association estimates about 246 lakh tons was

produced for the sugar season 2012-13. Indian sugar production is poised to increase to 29.8 million metric

tons in the next year due to an expected increase in sugarcane production. Sugar production had for a third

consecutive year strong growth in 2012/13 after moving through a downward cycle in 2008/09 and

2009/10. India's total centrifugal sugar production in 2012/13 was 29.75 million metric tons, which

includes 435,000 tons of Khandsari sugar. In 2012/13 gur production was higher at 4.4 million tons due to

firm prices. Sugar production till March-end of the current 2012-13 sugar year is down 2 per cent at 23.05

million tonnes, the Indian Sugar Mills Association said. In the corresponding last year, sugar output stood

at 23.45 million tonnes. Average recovery or the amount of sugar produced from the cane crushed stood at

10.09 per cent during the current season, about 0.2 per cent lower than last year. Maharashtra has produced

7.7 million tonnes of sugar, about 4 per cent lower than last year. In Uttar Pradesh, sugar output stood at

6.75 million tonnes, marginally higher than corresponding last year‟s 6.67 million tonnes. Karnataka has

produced 3.29 million tonnes of sugar till March 2013, about 7 per cent lower than last year. Tamil Nadu‟s

sugar output is down 3 per cent at 1.35 mt. With an estimated opening balance of sugar of around 75 lakh

tons, as on 1st October, 2014 for the next sugar season and sugar production as estimated above, there will

more than sufficient sugar to take care of domestic requirement, of around 245 lakh tons next year.


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III. REVIEW OF LITERATURE

Chandrakant Janardhana Joshi1., (1991) analyzed the financial performance of sugar

Factories (From 1960 to 1987) in Kolhapur District of Maharashtra. The objectives were to measure the

liquidity, solvency, efficiency, working capacity, profitability and socio-economic developments. The

study revealed that the financial performance depends on internal and external factors; internal factors are

factory maintenance, employee behaviour, liquidity, solvency and profitability. The external factors were

social, economic and political. The study concluded with remarks that the units should enhance their

equity capital; introduce cane development programme, man power planning and plant modernization.

Mahadev Powa2., (1997) analyzed the raising and utilization of finance by co- operative sugar

factories (From 1961 to 1993) of five co-operative sugar factories at the micro and the macro level. The

objective was to interpret the data with the help of ratios - liquidity, solvency, efficiency and profitability.

The findings of the research were, the use of chemical fertilizer made much harm to the soil; there was a

need of innovation of modern technology and plant modernization; and there was a need of man power

policy, accounting producers and inventory control.

Basavraj and Benni2., (2005) studied the physical and financial performance of twelve co-

operative sugar factories during 2001-02 with the help of Ratio Analysis and Multivariate

Econometric Technique Method. The study revealed that the physical and financial performance indicators

influenced the total performance of sugar co-operative factories and concluded with a remark that in the

total sugar production cost, cane conversion cost was greater than the cane cost.

IV. NEED OF THE STUDY

Effectiveness of financial performance has got direct bearing on shareholders, investors and

investment analysis to identify the determinants of corporate performance. Analysis of financial

performance is a process of identifying the financial strengths and weaknesses by establishing proper

relationship between various financial facts and figures as given in the set of financial information of an

enterprise. Analysis of financial performance is effectively used to predict, compare and evaluate the firm‟s

earning ability.

In the present scenario, the sugar industry is suffering from various problems. Of them, problem

relating to financial aspects like inadequate working capital, inappropriate capital structure, excess or low

liquidity, low profit margins, low return on equity and financial health affect the overall performance of

sugar industry. It is hope that the present study would be useful to government and management of the

sugar companies for taking various decisions relating to finance and investments. It is felt that these

problems could be solved efficiently by making a detailed analysis.

V. OBJECTIVE OF THE STUDY

To measure the profitability performance of Selected Sugar Companies in India by using

accounting ratios.

VI. HYPOTHESIS OF THE STUDY

1 Chandrakant Janardhana Joshi (1991), “ Analysis of the Finance of Sugar Factories in Kolhapur District of

Maharashtra”. Ph.D. thesis submitted to Shivaji University, Kolhapur.

2 Mahadev G. Powar (1997), The Raising and Utilization of Finance by Co operative Sugar Factories in Satar District of

Maharashtra, Ph.D. thesis submitted to Shivaji University, Kolhapur.

2 Basavraj S. Benni (2005), “Econometric Analysis of Financial and Physical Performance Indicators of Sugar Factories in

Kolhapur District”, Co-operative Sugar, Vol.37, No.3, November 2005.


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There is no positive trend in profitability performance of selected sugar companies in India during

the study period.

VII. RESEARCH METHODOLOGY

The Methodology adopted for the study is given below.

Period of study:

This study is conducted on the basis of financial data of selected sugar companies for a period of

five years from 2008-2009 to 2012-2013.

Data collection

The study is based on secondary data. The required financial data have been collected from annual

reports of five selected sugar companies and websites. Other statistical information relating to sugar

industry has been collected from journals, magazines and websites –www.indiansugar.com,

www.isosugar.org and www.agritech.tnau.ac.in.

Sampling Design

The sample of the present study is five sugar companies in India. As on 31st December-2013, there

are 24 listed sugar companies in NSE listings3. Among them, top five sugar companies namely Shree

Renuka Sugars ltd., Balrampur Chini Mills ltd., Dhampur Sugars ltd., Sakthi Sugars ltd., and Bannari

Amman Sugars ltd., have been purposively selected for the present study based on Total Assets.

Data analysis

For analysing the profitability performance of selected sugar companies in India, The financial data

collected from secondary sources are analyzed with the help of various profitability Ratios such as Gross

Profit Ratio, Operating Profit Ratio, Net Profit Ratio, Return on Capital Employed, Return on Assets,

Return on Shareholders‟ Fund and Return on Equity Shareholders‟ Fund and descriptive statistics such as

Mean, Standard Deviation, Co-efficient of variation.

VIII. PROFITABILITY PERFORMANCE OF THE SELECTED SUGAR COMPANIES IN INDIA

In this section, profitability performance of selected five sugar companies has been analysed by

using various accounting ratios. Descriptive statistics like mean, standard deviation and co-efficient of

variation have been also used for analysing the profitability of the selected sugar companies from 2008-09

to 2012-13.

Gross Profit Ratio (GPR)

Gross Profit Ratio is one of the very important ratios for measuring profitability of a company. GPR

measures the relationship between gross profit and net sales and it is usually represented as a percentage.

This ratio shows the margin left after meeting manufacturing costs. It measures the efficiency of production

as well as pricing. The table 1 shows the results of Gross Profit Ratio Analysis of five selected sugar

companies.

3 Source: www.moneycontrol.com

http://www.indiansugar.com/

http://www.isosugar.org/

http://www.agritech.tnau.ac.in/


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TABLE 1

GROSS PROFIT RATIO OF SELECTED SUGAR COMPANIES

FROM 2008-09 TO 2012-13 (In Percentage)

Year

Shree Renuka

Sugars

Ltd

Balrampur

Chini Mills

Ltd

Dhampur

Sugar Mills

Ltd

Sakthi

Sugars

Ltd

Bannari

Amman Sugars

Ltd

2008-2009 19.59 29.74 -5.21 21.10 29.97

2009-2010 16.44 17.02 20.11 15.34 27.51

2010-2011 10.03 13.64 13.46 9.84 23.69

2011-2012 13.38 27.71 24.42 17.04 31.65

2012-2013 11.23 13.82 -11.33 9.13 30.02

Mean 14.1340 20.3860 8.2900 14.4900 28.5680

S.D. 3.9029 7.7635 15.7624 5.03163 3.10189

C.V. 27.6136 38.0825 190.1375 34.7248 10.8579

Source: Computed from secondary data.

Table 1 Shows the GPR of the sample sugar companies, the Bannari Amman Sugars Ltd posted

higher the level of GPR (28.5680%), followed by Balrampur Chini Mills Ltd (20.3860%), Sakthi Sugars

Ltd (14.4900%), Shree Renuka Sugars Ltd (14.1340%) and Dhampur Sugars Mills Ltd (8.2900%).

From the standard deviation of Gross Profit Ratio of the sample sugar companies, it is found that

the Dhampur Sugars Mills Ltd posted higher level of deviation of GPR (15.7624%), followed by

Balrampur Chini Mills Ltd (7.7635%), Sakthi Sugars Ltd (5.03163%), Shree Renuka Sugars Ltd (3.9029%)

and Bannari Amman Sugars Ltd (3.10189%).

Co-efficient of variation shows that the Dhampur sugar mills Ltd has maximum variability of GPR

(190.1375%), whereas it is 38.0825% for Balrampur Chini Mills Ltd, 34.7248% for Sakthi Sugars Ltd,

27.6136% for Shree Renuka Sugars Ltd and 10.8579% for Bannari Amman Sugars Ltd.

Operating Profit Ratio (OPR)

The ratio measures the relationship between operating profit and net sales. The main objective of

computing this ratio is to determine the operational efficiency of the company. The operating profit ratio

indicates how much profit a company makes after paying for variable costs of production. The table 2

shows the results of Operating Profit Ratio Analysis of five selected sugar companies.

TABLE 2

OPERATING PROFIT RATIO OF SELECTED SUGAR COMPANIES


Year

Shree Renuka

Sugars

Ltd

Balrampur

Chini mills

Ltd

Dhampur

Sugar Mills

Ltd

Sakthi

Sugars

Ltd

Bannari

Amman Sugars

Ltd

2008-2009 13.32 26.64 18.24 17.50 24.73

2009-2010 16.83 18.29 20.43 16.77 26.58

2010-2011 11.77 10.38 8.57 8.32 17.50

2011-2012 11.67 12.82 13.15 11.65 19.15

2012-2013 9.34 8.03 -20.28 7.01 20.72

Mean 12.5860 15.2320 8.0220 12.2500 21.7360

S.D. 2.7655 7.4284 16.4770 4.7764 3.8109

C.V. 21.9728 48.7684 205.3977 38.9910 17.5327



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Table 2 Shows the OPR of the sample sugar companies, the Bannari Amman Sugars Ltd posted higher

the level of OPR (21.7360%), followed by Balrampur Chini Mills Ltd (15.2320%), Shree Renuka Sugars

Ltd (12.5860), Sakthi Sugars Ltd (12.2500%) and Dhampur Sugar Mills Ltd (8.0220%).

From the standard deviation of OPR of the sample sugar companies, it is found that the Dhampur

Sugar Mills Ltd posted higher level of deviation of OPR (16.4770%), followed by Balrampur Chini Mills

Ltd (7.4284%), Sakthi Sugars Ltd (4.7764%), Bannari Amman Sugars Ltd (3.8109%) and Shree Renuka

Sugars Ltd (2.7655%).

Co-efficient of variation shows that the Dhampur Sugar Mills Ltd has maximum variability of OPR

(205.3977%), whereas it is 48.7684% for Balrampur Chini Mills Ltd, 38.9910% for Sakthi Sugars Ltd,

21.9728% for Shree Renuka Sugars Ltd and 17.5327% for Bannari Amman Sugars Ltd

Net Profit Ratio (NPR)

Net Profit Ratio establishes a relationship between net profit after taxes and sales. This ratio shows

the earnings left for shareholders as a percentage of net sales. A reasonable gross profit ratio is necessary to

earn adequate net profits. It measures the overall efficiency of profitability, pricing, administrative, selling

and financial performance. This ratio provides a valuable understating of the cost and profit structure of the

company. The table 3 shows the results of Net Profit Ratio Analysis of five selected sugar companies.

TABLE 3

NET PROFIT RATIO OF SELECTED SUGAR COMPANIES


Year

Shree Renuka

Sugars

Ltd

Balrampur

Chini mills

Ltd

Dhampur

Sugar Mills

Ltd

Sakthi

Sugars

Ltd

Bannari

Amman Sugars

Ltd

2008-2009 5.28 13.17 0.54 -6.77 16.86

2009-2010 6.42 5.62 5.94 7.54 16.23

2010-2011 7.44 0.29 0.38 -4.67 6.50

2011-2012 1.32 4.95 1.86 -4.33 8.92

2012-2013 0.81 0.14 1.54 -7.47 10.64

Mean 4.2540 4.8340 2.0520 -3.1400 11.8300

S.D. 3.0151 5.3104 2.2637 6.1185 4.5540

C.V. 70.8768 109.8552 110.3168 -194.8567 38.4954


Table 3 shows the NPR of the sample sugar companies, the Bannari Amman sugars Ltd, posted

higher the level of NPR (11.8300%), followed by Balrampur Chini Mills Ltd (4.8340%), Shree Renuka

Sugars Ltd (4.2540%), Dhampur Sugars Mills Ltd (2.0520%) and Sakthi Sugars Ltd (-3.1400%).

From the standard deviation of NPR of the selected sugar companies, it is found that Sakthi Sugars

Ltd posted higher level of deviation of NPR (6.1185%), followed by Balrampur Chini Mills Ltd

(5.3104%), Bannari Amman Sugars Ltd (4.5540%), Shree Renuka Sugars Ltd (3.0151%) and Dhampur

Sugar Mills Ltd (2.2637%).

Co-efficient of variation shows that the Dhampur Sugars Mills Ltd has maximum variability of

NPR (110.3168%), whereas it is 109.8552 for Balrampur Chini Mills Ltd, 70.8768% for Shree Renuka

Sugars Ltd, 38.4954% for Bannari Amman Sugars Ltd and it is -194.8567% for Sakthi Sugars Ltd.

Return on Capital Employed (ROCE)

Return on capital employed establishes the relationship between the profit and the capital

employed. It is an important ratio to measure the overall profitability and efficiency of a company. This

ratio helps to find out how efficiently the long term funds supplied by capital contributors have been


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utilised. It also helps in devising future business policies for expansion and diversification. The table 4

shows the return on capital employed of five selected sugar companies for the study period.

TABLE 4

RETURN ON CAPITAL EMPLOYED OF SELECTED SUGAR COMPANIES


Year

Shree Renuka

Sugars

Ltd

Balrampur

Chini mills

Ltd

Dhampur

Sugar Mills

Ltd

Sakthi

Sugars

Ltd

Bannari

Amman Sugars

Ltd

2008-2009 5.70 10.55 0.27 -4.01 14.99

2009-2010 5.60 4.99 4.56 4.79 15.91

2010-2011 11.73 0.23 0.62 -5.00 4.26

2011-2012 1.46 5.77 2.09 -2.92 8.52

2012-2013 1.37 0.14 1.28 -5.94 10.52

Mean 5.1720 4.3360 1.7640 -2.6160 10.8400

S.D. 4.2339 4.3464 1.7102 4.2900 4.7882

C.V. 81.8619 100.2399 96.9501 -163.9908 44.1716


Table 4 Shows the ROCE of the sample sugar companies, the Bannari Amman Sugars Ltd posted

higher level of ROCE (10.8400%), followed by Shree Renuka Sugars Ltd (5.1720%), Balrampur Chini

Mills Ltd (4.3360%), Dhampur Sugars Mills Ltd (1.7640%) and Sakthi Sugars Ltd (-2.6160%).

From the standard deviation of ROCE of the selected sugar companies, it is found that the Bannari

Amman Sugars Ltd posted higher level of deviation of ROCE (4.7882%), followed by Balrampur Chini

Mills Ltd (4.3464%), Sakthi Sugars Ltd (4.2900%), Shree Renuka Sugars Ltd (4.2339%) and Dhampur


Co-efficient of variation shows that the Balrampur Chini Mills Ltd has maximum variability of

ROCE (100.2399%), whereas it is 96.9501% for Dhampur Sugar Mills Ltd, 81.8619% for Shree Renuka

Sugars Ltd, 44.1716% for Bannari Amman Sugars Ltd and it is -163.9908% for Sakthi Sugars Ltd

Return on Assets (ROA)

This ratio is an indicator of how profitable a company is relative to its total assets. ROA

helps to measure the efficiency of management in terms of generating earning by using its assets. The table

5 shows the return on assets of five selected sugar companies for the study period.

TABLE 5

RETURN ON ASSETS OF SELECTED SUGAR COMPANIES


Year

Shree Renuka

Sugars

Ltd

Balrampur

Chini mills

Ltd

Dhampur

Sugar Mills

Ltd

Sakthi

Sugars

Ltd

Bannari

Amman Sugars

Ltd

2008-2009 14.39 21.34 9.04 10.37 21.99

2009-2010 14.66 16.23 15.68 10.66 26.06

2010-2011 18.56 8.12 14.07 8.92 11.45

2011-2012 12.87 14.94 14.80 7.87 18.28

2012-2013 15.81 8.34 16.84 5.58 20.49

Mean 15.2580 13.7940 14.0860 8.6800 19.6540

S.D. 2.1226 5.6154 3.0041 2.0676 5.3941

C.V. 13.9114 40.7090 21.3268 23.8203 27.4453



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Table 5 shows the ROA of the sample sugar companies, the Bannari Amman Sugars Ltd posted

higher level of ROA (19.6540%), followed by Shree Renuka Sugars Ltd (15.2580%), Dhampur Sugars

Mills Ltd (14.0860%), Balrampur Chini Mills Ltd (13.7940%) and Sakthi Sugars Ltd (8.6800%).

From the standard deviation of ROA of the sample sugar companies, it is found that the

Balrampur Chini Mills Ltd posted the higher level of deviation of ROA (5.6154%), followed by Bannari

Amman Sugars Ltd (5.3941%), Dhampur Sugar Mills Ltd (3.0041%), Shree Renuka Sugars Ltd (2.1226%)

and Sakthi Sugars Ltd (2.0676%).


ROA (40.7090%), whereas it is 27.4453% for Bannari Amman Sugars Ltd, 23.8203% for Sakthi Sugars

Ltd, 21.3268% for Dhampur Sugar Mills Ltd and 13.9114% for Shree Renuka Sugars Ltd.

Return on Shareholders Fund (ROSF)

It is desired to work out of the profitability of the company from the shareholders‟ point of

view. The term net profit here means „Net Income after Interest and Tax‟. It is different from the „Net

Operating Profit‟ which is used for computing the „Return on Total Capital Employed‟ in the business. The

table 6 shows the return on shareholders‟ fund of five selected sugar companies for the study period.

TABLE 6

RETURN ON SHAREHOLDERS FUND OF SELECTED SUGAR COMPANIES


Year

Shree Renuka

Sugars

Ltd

Balrampur

Chini Mills

Ltd

Dhampur

Sugar Mills

Ltd

Sakthi

Sugars

Ltd

Bannari

Amman Sugars

Ltd

2008-2009 14.50 19.27 0.80 -12.12 21.62

2009-2010 11.35 12.75 11.25 12.84 20.98

2010-2011 23.04 0.54 1.71 -14.25 7.33

2011-2012 4.72 12.25 5.88 -8.01 12.97

2012-2013 2.89 0.30 4.67 -17.92 15.13

Mean 11.3000 9.0220 4.8620 -7.8920 15.6060

S.D. 8.0947 8.3270 4.1326 12.1315 5.9312

C.V. 71.6345 92.2966 84.9979 -153.7190 38.0059


Table 6 Shows that the ROSF of the sample sugar companies, the Bannari Amman Sugars Ltd

posted higher level of ROSF (15.6060%), followed by Shree Renuka Sugars Ltd (11.3000%), Balrampur

Chini Mills Ltd (9.0220%), Dhampur Sugars Mills Ltd (4.8620%) and Sakthi Sugars Ltd (-7.8920%).

From the standard deviation of ROSF of the selected sugar companies, it is found that the Sakthi

Sugars Ltd posted the higher level of deviation of ROSF (12.1315%) and followed by Balrampur Chini

Mills Ltd (8.3270%), Shree Renuka Sugars Ltd (8.0947%), Bannari Amman Sugars Ltd (5.9312%) and

Dhampur Sugar Mills Ltd (4.1326%).


ROSF (92.2966 %), whereas it is 84.9979 % for the Dhampur Sugar Mills Ltd, 71.6345% for Shree

Renuka Sugars Ltd, 38.0059% for Bannari Amman Sugars Ltd and it is -153.7190% for Sakthi Sugars

Ltd.

Return on Equity Shareholders Funds (ROESF)

The Profitability from the point of view of the equity shareholders will be judged after taking into

account the amount of dividend payable to the preference shareholders. The table 7 shows the return on

equity shareholders‟ fund of five selected sugar companies for the study period.


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TABLE 7

RETURN ON EQUITY SHAREHOLDERS FUNDS OF SELECTED SUGAR

COMPANIES FROM 2008-09 TO 2012-13 (In Percentage)

Year

Shree Renuka

Sugars

Ltd

Balrampur

Chini mills

Ltd

Dhampur

Sugar Mills

Ltd

Sakthi

Sugars

Ltd

Bannari

Amman Sugars

Ltd

2008-2009 14.50 19.27 0.74 -12.12 21.32

2009-2010 11.35 12.75 11.19 12.84 20.98

2010-2011 23.04 0.54 1.62 -14.25 7.33

2011-2012 4.72 12.25 5.82 -8.01 12.97

2012-2013 2.89 0.30 4.31 -17.92 15.13

Mean 13.4025 11.2025 4.7360 -5.3850 15.6500

S.D. 7.6089 7.7946 4.1439 12.4230 6.7568

C.V. 176.1424 69.5791 87.4979 -230.6964 43.1744


Table 7 shows that the ROESF of the sample sugar companies, the Bannari Amman Sugars Ltd

posted higher level of ROESF (15.6500%), followed by Shree Renuka Sugars Ltd (13.4025%), Balrampur

Chini Mills Ltd (11.0025), Dhampur Sugars Mills Ltd (4.7360%) and Sakthi Sugars Ltd (-5.3850%).

From the standard deviation of ROESF of the selected sugar companies, it is found that the Sakthi

Sugars Ltd posted the higher level of deviation of ROESF (12.4230%), followed by Balrampur Chini Mills

Ltd (7.7946%), Shree Renuka Sugars Ltd (7.6089%), Bannari Amman Sugars Ltd (6.7568%) and Dhampur


Co-efficient of variation shows that the Shree Renuka Sugars Ltd has maximum variability of

ROESF (176.1424%), whereas it is 87.4979% for the Dhampur Sugar Mills Ltd, 69.5791% for Balrampur

Chini Mills Ltd, 43.1744% for Bannari Amman Sugars Ltd and it is -230.6961% for Sakthi Sugars Ltd.

IX. SUGGESTION AND CONCLUSION

In this paper, by using various profitability ratios, it is found that the profitability performance of

Dhampur Sugar Mills Ltd and Sakthi Sugars Ltd is not satisfactory. Hence, it is suggested to those sugar

companies that they may enhance their profitability through procuring raw materials at cheap rate,

acquiring debt at low interest and effective cost control. It is also suggested that the steps can be taken to

control the cost of goods sold and operating expenses to enhance the profitability. On the basis of the

finding of the present study, constructive suggestion has been offered to the sugar companies under study.

If the suggestion is seriously considered by the management of the selected sugar companies, there will be

an improvement in profitability performance of the selected sugar companies.

X. REFERENCES

1. Prasanna Chandra, (2008), Financial Management, Tata Mc grew-Hill Publishing Company

Limited, New Delhi.

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profitability performance of selected sugar companies …apjor.com/downloads/020620159.pdf ·...

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