Sip Nirani Sugars

ACKNOWLEDGMENT

I am the student of “Sana College of Information Science & Management

BBA III semester” very grateful to all the people who have provide their precious

time and advice for making this project successful.

Firstly, I am very grateful to “The Nirani Sugars Ltd.” for giving me an

opportunity to make this project in their organization.

I am thankful to “Mr. S.V.Kariyannavar (CEO) of Nirani Sugars Ltd,

Mudhol” for permitting me to do my project in their organization.

I sincerely express my thanks to my company project guide “Mr. M.S.

Heggalagi Manager (PMP)” of Nirani Sugars Ltd, Mudhol. For his strong support

and inspiration during my project period.

I am heartily thankful to all the Executives of the company for their valuable

guidance and for sharing their experience in completing this project successfully.

I am heartily thankful to my internal guide “Prof.Pradeep Gupta” and all

faculty members of my institution for their valuable guidance in completing this

project successfully.

I express my sincere thanks to our Director “Prof.Uttam Kinnange” for

providing us all the facilities to complete the report and study successfully.

THOUDAM ALEX SINGH

BBA 3rd Semester

NIRANI SUGARS LTD.MUDHOL

DECLARATION

I, the undersigned, hereby do declare that the project report entitled “The Study of

Organization in Nirani sugars ltd. Mudhol” prepared and submitted in partial

fulfillment of the requirement of the degree of Bachelor of Business Administration;

Awarded by the Karnataka University, Dharwad. Is my original work. The

empirical findings in this report are based on data collected by me.

This has not been previously submitted for the award of any Degree, Diploma

or Associate ship or any other similar titles.

Place: HUBLI

Date: THOUDAM ALEX SINGH

BBA 3rd Semester

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CONTENTS

S.NO TITLES PAGE NO

1.

CHAPTER – I

1) EXECUTIVE SUMMARY

2) OBJECTIVES OF STUDY

3) THE WORKING CAPITALPURPOSE

4) SCOPE OF STUDY

5) LIMITATION OF THE STUDY

6) METHODOLOGY

1-12

2.CHAPTER – II

COMPANY PROFILE 13-18

3.

CHAPTER – III

PRODUCTION PROFILE 19-24

4.CHAPTER – IV

STUDY OF DEPARTMENTS 25-46

5CHAPTER – V

WORKING CAPITAL MANAGEMENT47-51

6CHAPTER – VI

DATA REPORT52-62

7 FINDINGS AND RECOMANDATION 63-64

8 SUGGESTION AND CONCLUSION 65-66

9 BIBLIOGRAPHY 67

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CHAPTER - I

1) EXECUTIVE SUMMARY

This summer project “A STUDY OF WORKING CAPITAL IN NIRANI

SUGARS LTD.” deals to ascertain this efficiency of working capital management of

the company.

Working capital may be regarded as lifeblood of business. Working capital is

needed to meet the day-to-day requirement of the business unit. The utilization of

working capital assets is possible only by efficient working capital management. This

study on working capital management is conducted in Nirani sugars Ltd.

Working capital management not only shows the financial efficiency of

business, but also its credit worthiness, which has gained importance in these days of

credit squeeze. Therefore, study of the management of working capital is very

necessary. Objective of the project was to study the pattern and procedures followed

for managing various components of working capital, so as to evaluate the efficiency

of working capital management. So, this study intends to comprehensively evaluate

the inventory, receivables, creditors and cash management. The study also aims to

analyze the alternative sources of working capital financing employed by Nirani

sugars Ltd.

Desk Research method is adopted for this study. The required information was

collected through secondary sources.

Secondary data were collected from various sources including the annual

reports of the company for the year 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09,

2009-10.

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2) OBJECTIVES OF STUDY

1) To study the overall working of the organization. i.e. study of all

department & organization structure

2) To study the efficiency of working capital management of the company

3) To study the efficiency of cash, inventory and receivables management of

the company

4) To understand and analyze the working capital position of Nirani Sugars Ltd.

During the period of 2004-2010

3) THE WORKING CAPITAL PURPOSE

For purchasing raw materials, components and spare parts

For paying wages and salaries

To increase day-to-day expense and overhead costs like fuel, power and office

expense etc.

To meet selling costs of packaging, advertising etc…

To provide credit facilities to customers

4) SCOPE OF STUDY

Since the decision regarding working capital are of an operating nature not one

time decision, the scope of the study is regarded towards identifying important areas

of control and to establish model for better control of the various components of

working capital.

The study would also attempt to identify the various sources available for

financing of working capital.

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The study gives a fair idea of improvement in efficiency of working capital

management and also to have proper control over the components of working capital

and managing of efficiency.

5) LIMITATION OF THE STUDY

This study deals only with the data made available. Hence the result of this

study cannot judge the business of the firm in general

The study have been influenced by the limitation of the ratio analysis

The study extensively uses the data provided is the financial reports of the

firm which may also have their own limited perspective

The analysis made on the working capital management is for a particular

period of time the current assets and current liabilities will change for an

analysis made at any other of time.

6) METHODOLOGY

Desk Research method is adopted for this study. The required information was

collected through secondary sources.

Secondary data were collected from various sources including the annual

reports of the company for the year 2004-05, 2005-06, 2006-07, 2007-08, and 2008-

09, 2009-10.

Ratio analysis is the major tool for analyzing the working capital management

of Nirani Sugars Ltd... And also the information for 6 years is collected.

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INDUSTRIAL PROFILE

India is the largest consumer & second largest producer of sugar in the world.

The Indian sugar industry second large agro industry Located in the rural India.

The Indian sugar has a turnover of rs.500 billion per annum & it contributes almost

rs.22.5 billion to the central & state exchequer as tax’s & excise duty every year. It is

the second largest agro-processing industry in the country after cotton textiles. With

453 operating sugar mills in different part of the country, Indian sugar industry has

been a focal point for a socio-economic development in the rural areas. About 50

million sugarcane farmers & a large number of agricultural labors are involved in

sugarcane cultivation & ancillary activities, constituting 7.5 % of the rural population.

Besides, the industry provides employment to about 2 million skilled/semi-skilled

workers & others mostly from the rural areas. The industry not only generates power

for its own requirement but surplus power for export to the grid based on by-product-

bagasse. It also produces ethyl alcohol, which is used for industrial &portable uses, &

can be used to manufacture ethanol, an ecology friendly &renewable fuel for blending

with petrol.

The sugar industry in the country uses only sugarcane as input; hence Sugar

Company’s have been established in large sugarcane growing states like Uttar

Pradesh, Maharashtra, Karnataka, Gujarat, and Tamil Nadu & Andhra Pradesh. In the

year 2005-06 these six states contributed more than 85 % of total sugar production in

the country; Uttar Pradesh, Maharashtra & Karnataka together contribute more than 65

% of total production.

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The given chart shows the state manner wise production in India for 2003-04 &

2005-06.

Sugar production by state in India

Source: Indian sugar magazine December 2005, published by sigma.

The government de-licensed the sugar sector in august 1998, thereby removing the

restrictions on expansion of existing capacity as well as on establishment of new units,

with the only stipulation that a minimum distance of Kms would continue to be observed

between an existing sugar mill & a new mill.

State 2003-04 % of total 2005-06 % of total

Uttar Pradesh 5.65 28.06% 4.55 33.60%

Maharashtra 6.22 30.86% 3.18 23.44%

Karnataka 1.87 9.28% 1.12 8.24%

Gujarat 1.25 6.22% 1.07 7.87%

Tamil Nadu 1.64 8.16% 0.92 6.80%

Andhra Pradesh 1.21 6.01% 0.89 6.54%

Haryana 0.64 3.16% 0.58 4.30%

Punjab 0.59 2.91% 0.39 2.88%

Uttaranchal 0.50 2.47% 0.39 2.86%

Bihar 0.41 2.03% 0.27 2.02%

Others 0.17 0.85% 0.20 1.46%

Total 20.14 100.00% 13.55 100.00%

There are 566 installed sugar mills in the country with a production

capacity of 180 lack mts of sugar, of which only 453working.These mills are located

in 18 states of the country. Around 315 of the total installed mills are co-operative

sector, 189 in the private sector & 62 in public sector.

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Sugarcane availability

Sugarcane occupies about 2.7% of the total cultivated area & it is one of

the most important cash crops in the country. The area under sugarcane gradually

increased from 2.7 million hectors in 1980-81 to 4.3 million hector in 2003-04, mainly

because of much larger diversion of land from other crops to sugarcane by the farmer

for economic reason. The sugarcane area however declined in the year 2005-06 to 3.9

million hector & to 3.7 million hector in 2004-05, mainly due to drought & insect

attacks. From a level of 154 MMT in 1980-81, the sugar production increased to 241

MMT IN 1990-91 & further to 296 MMT in 2000-01. Since then it has been hovering

around 300 MMT until last year. In the season 2004-05, however, sugarcane

production decline to 236 MMT mainly due to deficiency & insect attacks. Not only

sugarcane acreage & sugarcane production has been increasing, ever drawl of

sugarcane by the sugar industry has also been increased over the period. In India,

sugarcane is utilized by sugar mils as well as by traditional sweeteners like jiggery &

khadisakhar producers.

The chart given below gives data on sugarcane utilization for different purposes:

SUGARCANE UTILIZATION

(% of sugarcane utilization for)

Year White

Sugar

Gur &

Khandsari

Seed, feed

& chewing

1990-1991 33.4 54.8 11.8

2000-2001 50.7 37.4 11.8

2001-2002 59.7 28.8 11.5

2002-2003 57.4 31.5 11.1

2003-2004 68.9 20.1 11.1

2004-2005 56.1 32.5 11.4

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Sugar production:

Most of the sugar in India is manufacture & sold as “plantation white

sugar” which is produced by double sulphitation process, while the norms in

developed & emerging nations is refined sugar which is produced by the phosphitation

process.

Most of the mills in India are not equipped to make refined sugar mills

which are designed to produce refined sugar can manufacture sugar not only from

sugarcane but also from raw sugar which can be imported. Therefore, such mills can

run their production all the year round, as opposed to single state mills, which are

dependent upon the seasonal supply of sugarcane.

International sugar industry demand & supply

Brazil & India are the largest sugar producing countries followed by china, USA, Thailand, Austria, Mexico, Pakistan, and France & German. Global sugar production inched from approximately 125.88 MMT in 1995-96 to 149.4 MMT in 2002-03 & then declined to 143.7 MMT in 2003-04, where as consumption increased steadily from 118.1 MMT in 1995-96 to142.8 MMT in 2003-04 as shown in below given chart. The word consumption is projected to grow to 160.7 MMT by 2012 & 176.1 MMT by 2015.

The worlds largest consumers of sugars are India, china, Brazil, USA, Russia, Mexico, Pakistan, Indonesia, Germany & Egypt. According to USDA foreign agriculture service, the consumption of sugar in Asian countries has increased at a faster rate, as a direct result of increasing population, increasing per capita income & increased availability.

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World sugar trade

World trade in raw sugar is typically around 22MMT & white sugar around 16MMT. Brazil is the largest importer followed by EU, Thailand, Australia & Cuba. The largest importers are Russia, Indonesia, UK, South Korea, Japan, Malaysia, and the Middle East & North Africa.

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CHAPTER- 2

COMPANY PROFILE

INTRODUCTION

M/s Nirani sugars Ltd, Promoted by Mr.Murugesh R Nirani. B.E, D.B.M. a technical Graduate and local MLA of Bilagi and Minister of large and Medium Scale Industry Govt of Karnataka. He comes from an agricultural family from Bilagi Taluk of Bagalkot Dt. He started as an industrialist with setting up of a modern Khandasari Unit at Mudhol. He is also very actively involved as a Managing Director of Bilagi sugars mill Ltd, a new 2500 TCD sugar and Co-gen plant at his constituency Bilagi. The new unit is completed and commenced commercial production in December 2005. He has also been recognized and awarded Bharat Udyog Ratna award from Govt of India. He has also taken over

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a sick mini cement plant of 100 TPD capacities at Mudhol area, which has now been put into commercial operation with a capacity of 200 TDP within a short span of time. Nirani sugars Ltd.is presently operating a sugar mill of 5000 tones cane / day (5000 TCD). This sugar mill was originally established as a khandasari sugar factory of 500 TCD in the year 1997-98. In fact this was the most modern khandasari sugar factory & was first in the country to have started with high pressure boiler, turbo generator set with captive power generation, multiple effect pressure evaporator system with falling film evaporators etc. it successfully produced goods quality white crystal sugar. But as khandasari unit, it had its own constraints due to technical limitations and govt policies.

Subsequently, making use of the govt. of India’s liberalized policy, vide govt of India notification DCS /S/14/97 dated 2-6-98, which permitted conversion of khandsari sugar Readopting vaccum evaporation & vaccum pan boiling systems along with related changes. NSL did not lose time to expand the capacity to 5000 TCD, side by side taking development measures to increase cane area & cane availability. Today NSL is a regular sugar factory with 5000 TCD capacity with improved efficiencies.

But however, NSL could not enjoy the economy of scale. According the company conceived a project to expand the sugar mill to 2500 TCD with cogeneration of power of 16MW. In order to reach the minimum viable capacity for a sugar unit, as per govt of India’s norms. While the same was in conceptual stage, the industrial scenario started changing. The industry in general started realizing that the sugar mills with cogeneration of power should have still higher capacities up to 10000 TCD. This has been widely recognized & appreciated by the policy makers at all levels, & the financial institutions. Further, it is also recognized that the stand alone sugar mills, even with viable capacity may find it difficult to operate profitably on a sustained basis in a view of the exposure to the international market. The industry has to with stand the pulls & pressures or ups & downs of the global market, which fluctuates depending upon the sugar scenario in different part of the world.

Having regard to the above. The new sugar projects in the country are coming up with a capacity of 5000 TCD & more with the facility of cogeneration of power. A number of existing mills in the country are expanding to even bigger capacities like 7500 TCD, 10000 TCD & so on.

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Falling in line with the above, NSL thought it prudent to make an upward revision and accordingly enhance the capacity to 5000 TCD from 2500 TCD as conceived earlier.

The cogeneration of power permits generation of surplus power, which is encashable and thus helps increase of income to the industry substantially on a sustained basis. The profitability of the cogeneration plant increases with increase in the size of the plant. Bigger cogeneration plants are feasible only with bigger sugar mills, either as forward integration or with back up support for fuel.

The market and the price for the power produced are assured as the surplus power so generated is under written by KPTCL through “power purchase Agreement”. The govt of Karnataka also shares the aforesaid viewpoint & encourages cogeneration of power by sugar factories using bagasse as a fuel. In support of this, the govt has announced a capital subsidy of Rs. 25 lakhs per MW of surplus power, for such cozen projects.

More importantly, it is important to note that private companies have come forward to purchase power from cozen. Plants offering even higher prices than those offered by electricity corporations of the state. In fact NSL has already entered into an agreement with TATA power trading company Ltd. For sale of power at a price of Rs3.61 per unit.

Having appreciated the above, it is imperative for NSL to go for expansion of the sugar mill from the present capacity of 5000 TCD to 10000 TCD. While doing so, it makes sense to update the technologies & modernize the entire plant. It needs no emphasis that the expansion project would be meaningful only if associated with the cogeneration of power & in turn associated with energy saving devices.

To match the sugar mill expansion from 5000 TCD to 10000 TCD, NSL proposes to double its cogeneration capacity also from 16MW to 48MW.

15


COMPANY PROFILE

Name of the company : NIRANI SUGARS LIMITED. MUDHOL

Address : Nirani Sugars Limited.

Vinayak Nagar, Sy No-166

Near Kulali Cross,

Jamakhandi Road

Mudhol – 587313

Dist: Bagalkot

Regd. Office : # 2053, High Point- II

45 Palace Road,

Bangalore – 560 001

Branch Office : Bijapur

Status of Company : Sole trading concern.

Constitution of the firm : Registered under companies act 1956

Financial Institutions : K.S.I.D.C, IDBI, BOI,

K.S.F.C

Bankers of the Company : I.C.I.C.I Bank Jamakhandi

S.B.I Mudhol Branch.

Indian Bank Lokapur.

Grameen bank Mudhol.

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Products : Sugar (L30, M30, S30)

Molasses, Press Mud, Bagasse, Electricity.

Press Mud / Filter cake : This is also another type of product.

Sugar Storing Capacity : 3 lakh Bags.

AIMS AND OBJECTIVES

To make available good working condition and opportunity development with proper training and high moral.

To produce good quality sugar at acceptable prices to meet the increasing demand.

VISION

To establish production 60000 T.C.D at Mudhol.

To produce 40 Megawatt electricity.

To produce 12,000 liters of distillery unit.

To produce 10,000 ton Bio fertilizers.

MISSION

We will provide products of superior quality at competitive price and ensure

sustained profitability and growth.

We will protect the interest of all concerned promoters, shareholders,

customers, distributors, employees and community.

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ORGANIZATION STRUCTURE

Chairman&MD : Murugesh R Nirani. (B.E.Civil)

Board of Directors : H R Nirani.Advocative

Kamala M Nirani

L R.Nirani

S R.Nirani

Administration : Sangamesh R Nirani (ExecutiveDirector)

R.V. Vatnal (Technical Director)

S.V. Karriyannavar (CEO)

S.C. Iitnal (GM of Plant)

M.R. Dabade (Dy GM Production)

M.S. Heggalagi (Manager, PMP)

B.S. Khandekar (GM Cane)

M.M. Hiremath (Finance)

S.C. Salagare (Chief Engineer)

S.G. Yaragatti (Stores purchase officer)

M.R. Agnihotri (Personnel officer)

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CHAPTER 3

PRODUCT PROFILE

BY-PRODUCTS OF SUGAR INDUSTRY

The factory produces about 184400 Tones of plantation crystal white sugar. As per statute from Govt of India the sugar can be packed in 100 Kg net Gunny bags and 50 Kg net Polythene bags. As per the Indian sugar standards the sugar can be graded in 3 grades by size and color namely L, M, S (Size) and 29, 30 (color).

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Sugar Cane

Fuel Gases Bagasse

Utilization as Fuel for CO-GEN

Sugar

Direct Utilization

Filter Mud

Composite Fertilizer

Protein From Cane Juice

Distillery Industry

Fibrous Products

Furnace Ash

Molasses

EthanolRectified Spirit


The factory envisages producing M30 and s30 grades. The storage of sugar will be done in a warehouse built in masonry and roofed with AC sheets. The size of the warehouse will be suitable to store about 50% of a season’s production.

The molasses which is a by product, is a highly viscous liquid.

The total production of molasses in a season will be about 40,480 Tone. Two steel

storage tanks of capacity 4000 tone each will be added. This can accommodate about 2

month’s production. As the demand for molasses is high, it is proposed to sell the

molasses to distilleries as raw material to produce alcohol.

Beside the finished goods and molasses storage space is required for Bagasse,

ash and filter mud. Adequate open will be provided for these in the factory for easy

and smooth working of the factory.

Main Product-White Crystal Sugar

The main product of the sugar manufacturing process is white crystal sugar.

This white crystal sugar is manufactured in the following grades:

1) L-30 [Large size sugar]

2) M-30 [Medium size sugar]

3) S1-30 [small size sugar]

PERFORMANCE OF NSL

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1. TABLE SHOWING PRODUCTION OF SUGAR

2. TABLE SHOWING PRODUCTION OF BAGASSE

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YEAR SUGAR (in Qtls)

2005-2006 47,995

2006-2007 1,62,446

2007-2008 2,65,148

2008-2009 3,43,132

2009-2010 4,55,765


3. TABLE SHOWING PRODUCTION OF MOLASSES

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YEAR BAGASSE (in Qtls)

2005-2006 142322.22

2006-2007 402859.12

20007-2008 684097.67

2008-2009 759807.39

2009-2010 897842.98

YEAR MOLASSES (in Qtls)

2005-2006 17895.70

2006-2007 49700.00

20007-2008 90781.42

2008-2009 143572.53

2009-2010 187673.87


4. TABLE SHOWING SUGAR RECOVRY

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PRODUCTION


CHAPTER 4

STUDY OF DEPARTMENTS

24

YEAR SUGAR RECOVRY (%)

2005-2006 10.09 %

2006-2007 12.11 %

20007-2008 11.62 %

2008-2009 12.09%

2009-2010 13.87%


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FUNCTIONAL DEPARTMENTS

1. Human Resource Department

2. Marketing Department

3. Purchase Department

4. Cane Development Department

5. Production Department

6. Finance Department

7. Sales and Distribution Department

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1. HUMAN RESOURCE DEPARTMENT

The Human Resource department is the primarily concerned with the human

constitution of an organization. It is concerned with the manpower recruitment,

remuneration, promotion, retirement etc., all related to human resource or labors of the

organization.

The Human Resource Department refers to the systematic approach to the

problem of selection, training motivating and retaining personnel in any organization.

It also considers with planning, organizing, directing the personnel functions in the

organization.

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The department is also concerned with recruitment, selection and placement.

1 Development and training to the workers.

2 Development evaluation of the workers.

3 Wage and salary administration.

In Nirani Sugars the personnel manager takes all the above responsibilities and

undertakes the activities concerned with him.

Suitable candidates are selected to a particular job according to their

qualification and experience.

There is no necessary to give training to the workers on separate machine other

than actual production process. Hence training is given on the job only.

Manager and supervisor are continuously inspecting every worker to access

their performance and there is a better scope for hard workers.

TIME OFFICE

Time office is one of the important sections of administration department. This

section maintains the attendance of workers. It also shows records of particular

workers about his working hours, dit, etc. it evaluates the workers punctuality,

discipline and uniforms and maintains documents and records for the future reference

purpose.

FUNCTIONS

1. Showing the absenteeism report of HOD.

2 .To receive the attendance cards from the workers.

3. To put attendance of the workers in he muster role.

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In time office there are 4 types of leaves.

SICK LEAVE: employees are eligible to take have on the sickness. 8 days sick leave

shall be granted with full wages.

CASUAL LEAVE: 10 days casual leave shall be granted with full wages or pay

including DA to the every workman.

PRIVILEGED LEAVE: 15 Days privileged leave shall be granted with full wages or

pay including DA to the every workman for every completed year.

SECURITY OFFICE: Security officer also one of the important section of the

administration department. There are totally 39 guards.

DUTIES OF SECURITY OFFICER

1 Maintain the silencing in the factory area.

2 Time maintenance of workers.

3 Raw materials are checked according to the voucher.

4 Incoming materials are checked, if they are right, they will records

inward and seal the bill and leave inside.

5 If out going material from the industry that person must and should have

got pass and it is entered in outwards.

6 If goods are returnable, it will be entered in return A/C book.

7 All times of A/C’s are submitted to M.D. daily.

FACILITY TO WORKERS

1 Availability of rest house with TV facility.

2 Availability of quarters.

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3 Providing 2 wheelers for employees who are visiting the field to supervise

and check the availability cane.

4 Executive levels are provided with 4 wheelers.

5 Weekly one holiday of any in a week

NATIONAL HOLIDAYS

The industry can give the leave for the national holidays; fair days of national

holidays should be given to the employees, such as Independence Day, Republic Day,

and Gandhi Jayanti etc.

DUTIES OF TIME OFFICE:-

1 Maintenance of clock

2 Sequencing the punching cards

3 Siren maintenance ( signal value )

4 Observation of employees

5 Maintaining Notice Board

6 Accepting leave letter application

7 Over time requisition

8 Absent statement

SHIFT WORKING:-

In a shift of 8 hours factory is providing 4 types of shifts:-

1st shift 4 am – 12 pm

2nd shift 12 pm – 8 pm

3rd shift 8 pm – 4 am

General shift 8.30 am – 5.30 pm

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OBJECTIVES

1. To maintain good relation between employer and employees.

2. To maintain good industrial relation.

3. To select right person at right job.

4. To cope with a chain.

5. To develop employees in organization.

6. To full utilization of human resource.

FUNCTIONS

Recruitment

Job analysis and job description

Promotion

Wages and salary administration

Training and development

Records and incentives

Welfare maintenance

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H. R. D

NUMBER OF WORKERS

Officers - 24

Regular - 172

Trainees - 351

Daily wages with order - 17

Total - 564

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2 .MARKETING DEPARTMENT

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MARKETING PROCESS

The term marketing has been derived from the word MARKET. Market is

generally understood as a place or geographical area where buyers and sellers meet

and enter in to transactions involving transfer of ownership of goods, service, and

securities.

Features of Marketing

1 It is consumer oriented.

2 It starts and ends with consumer.

3 Marketing is a system

4 It is a goal oriented.

5 Exchange process is the essence of marketing.

6 It is the guiding element of business.

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MARKETING

Marketing is a social and managerial process by which individual and

group obtains what they need and what through creating, offering and exchanging

products of values with others. This marketing is important element in every

organization, which should be maintained compulsory in a systematic manner.

This section will take care of all sale transactions like sale of sugar,

molasses, Bagasse and scrap material. This section works by 7 employees including

sales manager. The factory has sold the sugar according to central government

notification. The central government sends the notice to the factory every month

regarding sale of sugar, without notice the sugar is not sold to anybody. The

government is giving permission for a particular period, particular for sale of sugar.

The sugar is sold to the buyer who quotes highest price. In this section, some records

like sale of sugar register, molasses register, Bagasse registers and scrap material

registers are maintained.

PRODUCT OF SALE

The organization undertakes selling activities in two methods:-

1 FREE SALE: - free sale of sugar is being done to bulk purchases on the basis

of tenders called, collected, negotiated and sold.

2 LEVY SALE: - This is being sold to the government of Karnataka on levy

basis. The government then distributes the same to the public through public

distribution outlets at predetermined reasonable price.

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3. PURCHASE DEPARTMENT

Purchase success and failure of any company depends on the cost of materials,

the proper buying of materials and procurement of materials at the right time from the

right source is having greater importance in any business. There is a need for separate

department for buying the materials known as purchasing department.

The purchase section also connected to administrative department. In this

section 3 workers are working including purchase officers. This section is purchasing

all types of materials for the factory, plant and machinery.

This department also maintains the quality of raw materials, by taking the

sample of cane to laboratory test then if the raw material will below standard then will

be rejected, otherwise the raw material will be purchased at the particular price.

FUNCTIONS

Receiving purchasing requisition

Determining the volume of materials to be ordered

Placing orders

Inviting tenders and quotations from different suppliers

Checking and passing bills for payment.

Receiving and inspecting materials.

QUALITIES

Good knowledge of industry and material used in the industry.

Administrative and organizing ability

Knowledge and contract of law

Knowledge of economic principles and demand and supply

Knowledge of government policies

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RESPONSIBILITIES

Purchasing of materials at right time and in proper way from right

source.

Receiving of materials.

Storing of materials.

Issuing of materials.

Accounting of materials.

Keeping proper records of material purchased.

Properly planned for material required.

Co-ordination and co-operation between different departments.

4. CANE DEVELOPMENT DEPARTMENT

37


OBJECTIVES

To get high yield of sugarcane to the factory in right time.

To improve variety of cane

To provide all facilities like seeds, fertilizers, unloading and loading

charges

To maintain registration of cane, gang and cultivated area.

To undertake seed distribution programme

The soil of this area is varying alluvial fertile soil is there on the bank of Krishna

and Ghataprabha rivers. Further upwards, there is a medium deep black soil, vary

fertile well drained light to medium clay soil, which has received heavy application if

from yard Manu science last 10-12 years also is presently in some parts.

The main function of cane development department is to arrange for raw

material, which is required to the factory. For this the order is received by priority

basis (that is growers who grows sugar cane first in his lead). They also provide a

loading gang with 8 to 10 members per village and also a bonded tractor for

transportation.

SUGAR CANE VARIETIES

At present COC-671, COC-8011 is very popular sugar cane varieties growing in

this area. The factory had introduced a new variety of sugar cane that is COC – 86032

two years back. Here more than 85% of sugar cane is of variety COC – 671 which is

mainly grown in this area.

38


S.LNAME OF THE

VARIETY

AREA IN HA

(P)(R)

1 COC-671 1153 ha 60.02%

2 CO-8011 480 ha 24.99%

3 CO-86032 1921 ha 14.99%

5. PRODUCTION DEPARTMENT

The production department is center of the organization. The main function of

the production department:-

To maintain close and co-ordinates relationship with all others.

To upgrade the technical efficiency of the production.

To flow up the daily production schedule of as per plan.

To produce the future needs of the company and to promote the organization.

OBJECTIVES:-

To plan and meet the production requirements as per customer specification

through the continuous improvement in the planning processing and optimum

utilization of resource.

To identify control the customer supplied products.

To produce for future needs and customers specification.

In every sugar industry production is divided in to two sections.

Engineering section

Manufacturing section

39


PRODUCTION PROCESS

Step 1. Weighing of sugar cane, it means, when the sugar cane comes to the factory.

After weighing of sugar cane the unloaded carrier cane weigh bridge.

Step 2. In the next step sugar cane go to the cane cutter machine and it cuts the fine

pieces after that, there are 3 mills and 5 mills tandem that is sequential mill.

Step 3. After the milling of sugar cane there is a separation of baggasse and juice

milk, baggasse will be used as a fuel. There are 7 boilers. They used as a fuel and there

is production steam and steam is used to produce the electricity.

Step 4. The juice, weighing takes place and there are mixing the juice and there is

addition of phosphoric. After heated of juice milk 75 C that juice is called as raw

juice.

Additional of milk of lime and SO2 is called Sulfur and this again goes to juice

heater it heated up to 104 C.

Step 5. Then the next step, the juice sent to clarifier and in that there is a separation of

dust and clear transferals juice.

Clear juice sends to “Bhoomi Labh”. This is the produce fertilizer. Clear juice

will be thick. It calls as syrup. Again add to the milk and SO2 then it is called syrup

suplitation.

Step 6. Sulpitation comes to the pan boiling station and this there are 3 categories, A,

B and C first of all the sulpitation goes to the “A” category.

And the pan boiling directly goes to pan crystal. Raw sugar goes to the

centrifugal machine routed to the high speed of around 1200 rpm. It will be separated

sugar crystal and molasses.

Step 7. In this, the sugar crystal downs and passes through grass happer. In the grass

happer the sugar goes to the one place to another place.

40


After there is gradation, in that there are 3 grades. It will be divide the 3 grades:-

high grade, small grade, low grade.

Step 8. And then the sugar goes to the different vessels. In that, package of sugar. In

this there are 2 types packing exporting and domestic is different.

FINISHED PRODUCTS

Finished product is sugar. There are 3 types of finished sugars, High Quality,

Middle Quality and Low Quality.

These are 3 types of bye products

Molasses

Bagasse

Filters mud

ENGINEERING SECTION

This section is assisted by workshop. It maintains all the work connected with

plant and machinery.

41


WORKSHOP

In this workshop machinery work is done. The spares, materials are fabricated

using the lathe machines in the workshop, shaping like square cutting etc is also done

in the workshop. Following machines are used in this workshop.

o 2 lathe machines for round job

o 1 redial drilling machines for drilling hole

o 1 shaping machine of 32* for right angle planning

o 1 hacksaw machine for cutting

o 1 grinding machine for tool grinding

MANUFACTURING SECTION

The manufacturing section again divided in to 3 sub sections.

Laboratory

Manufacturing process

Go down

LABORATORY:-

The factory has a separate well equipped laboratory. The main activity of the

lab is to check the content of sugar in the sugarcane and also fixing the correct shape

and size of sugar. The lab prepares hourly reports which advice on the addition of

other chemicals in his production.

42


6. CHEMICAL DEPARTMENT

CHEMICALS USED IN PRODUCTION

43


Caustic Soda (Sodium Carbonate)

Washing soda (Sodium Bicarbonate)

Common salt (sodium Chloride)

Phosphoric Acid (To maintain the PH)

Ammonium Bi-fluoride

Formalin quality maintain and preservative

Mill sanitation chemical to prevent the generation of bacteria and germs

Hydrous - Used for Color

Viscosity - Used for reducer

Misopropile - Used for Alcohol

44


7.FINANCE

45


8. SALES AND DISTRIBUTION DEPARTMENT

SALES MANGEMENT PRACTICE

The marketing department of Nirani Sugars is working in two ways.

1. Free Scale

2. Levy Scale

The out put of the factory produced is sold to public and Government in the

ratio of 40 : 60 all the functions of marketing department are generally done by the

sales manager who is in charge of assistant manager.

The factory has big market area for sugar in Bagalkot, Bijapur and Belgaum

Districts, little in local area covered by local sugar dealers. The bi-products are also

sold in large volume to biscuits, chocolate and wine industries and also are used by

distilleries.

SALESMANSHIP AT NIRANI SUGARS

It is the duty of marketing manager to appoint sales representatives salesmanship is

not necessary at Nirani Sugar, because the reasons are:-

Because their product is available at ever corner of the district

As the product is not a lectury one so it is not necessary to appoint sales man.

As the product is an essential one salesman are not required to approach the customers

at their door step and induce them to purchase their product.

46


CHAPTER 5

WORKING CAPITALWORKING CAPITAL MANAGEMENTMANAGEMENT

INTRODUCTION:

The aim of the present study (project) is to examine the Working Capital

management. “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

47


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:

1. Gross Working Capital.

2. Net Working Capital.

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

securities account receivable and inventory. Net Working Capital 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”.

48


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 NSL 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.

FINANCING OF WORKING CAPITAL

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

common sources. They are:

1. SHARES: The NSL 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.

49


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 NSL is through accounts receivables credit offered by the

commercial banks and factors. 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

50


of a concern. The different forms in which the banks normally provide loan and

advances are –

Loans

Cash credits

Overdraft

DATA ANLYSISS

ANLYSIS 0F WORKING CAPITAL MANAGEMENT

Working Capital management involves deciding upon the amount and

composition of current asset and how to finance the asset. This decision involves trade

off between risk and profitability.

Working Capital Balances are measured from the financial dates of the

company’s balance sheet. A study of the causes for changes of working capital that

take place in the balance from time to time is necessary. These changes can be

measured in rupee amount and also in percentage by comparing current assets, current

liabilities and working capital over the given period.

The importance tools of Working Capital are,

I. Ratio Analysis of Working Capital

II. Funds Flow Analysis of Working Capital

III. Working Capital Budget

51


CHAPTER-6

DATA REPORTDATA REPORT

CALCULATOIN OF GROSS WORKING CAPITAL

TABLE – 01

TABLE SHOWING GROSS WORKING CAPITAL OF NIRANI SUGARS LTD

Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Current Assets

Cash and Bank

Balance21347 16680 9679 9217 13618

16321

Other Current Assets 6300 6300 6300 6300 ------- ----------

Loans & advances 18663 32726 42916 56818 34813 31645

Inventories 92717 89713 96322 33818 84221 98769

Sundry Debtors 69265 76180 45153 583 2408 2789

Gross Working

Capital208292 221599 200370 106758 135060

149524

INFERENCE

The gross working capital has fluctuated with the growth of the business over a

period of 2004-2010. There is a fluctuating in the current assets of the company.

CALCULATION OF NET WORKING CAPITAL

52


TABLE – 02

TABLE SHOWING NET WORKING CAPITAL NIRANI SUGARS,

LTD.

Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Current

Assets208292 221599 200370 106758 135060

149524

a) Current

Liabilities 327456 451021 499078

524,2

3973665

53879

Net Working

Capital

(a-b)-119164 -229422 -298708 -417481 61395 95645

INTERPRETATION:

The net working capital table indicates that excess current asset is available at the

disposal of the company for the operational requirements.

53


GRAPH SHOWING NET WORKING CAPITAL IN DIFFERENT YEARS.

INTERENCE

The graph shows that there is a decrease in the working capital in the year 2007-08

In this year Inventories, Debtors and Loans & advances are increases, Due to increase

in the production Capacity of the Co, so in this year Working capital is increase from

Rs 29387228 to Rs 157043223.

54


1) Statement of changes in working capital (2004and2005)

(Rs in Lakhs)

ParticularsAs @

01/4/04As @

31/3/05Effect of wc

IncreaseDecrease

A. Current assets

Cash and bank balance 2,44,36 2,13,47 - 3089

Other current assets 79,00 63,00 - 1600

Loans and advances 2,94,34 1,86,63 -- 10771

Inventories 8,91,91 9,27,17 3526 --

Sundry debtors

7,23,76 6,92,05--

3171

Total current assets 22,33,37 20,82,32

B. Current liabilities

Current liabilities 27,46,63 31,53,27--

40664

Provisions 88,64 1,21,29--

3265

Total current liability 2835,27 32,74,56

Net current assets(A-B)-

601,90 -11,92,24 3526 62560

Increase or decrease in working capital

59034 59034

Total working capital -60190 -60190 62560 62560

55


Interpretation

The statement shows that the changes in working capital in the year 2003-2004

and 2004-2005. The changes in capital of two years is Rs. 59034 in 2004 - 2005 so

its shows the working capital decreased of Rs 59034 in 2004 -2005 which compare to

2003 -2004hear due to decreased the firm is no satisfactory with its working capital.

2) Statement of changes in working capital (2005and 2006)

(Rs in Lakhs)

ParticularsAs @

01/4/05As @

31/3/06Effect of wc

DecreaseIncrease

A. Current assets

Cash and bank balance 2,13,47 1,66,80 4667

Other current assets 63,00 63,00

Loans and advances 1,86,63 3,27,26 14063

Inventories 9,27,17

8,97,13 3004

Sundry debtors

6,92,05 7,61,80 6975



Current liabilities 31,53,27 44,11,54 125827

Provisions 1,21,29 98,67 2262

Total current liability 32,74,56 45,10,21

Net current assets(A-B) - -22,94,22 23300 33498

56


11,92,24 Increase or decrease in working capital

110198 110198

Total working capital -119224

-119224 133498 33498

Interpretation

The statement shows that the changes in working capital in the year 2004-2005

and 2005-2006. The changes in capital of two years are Rs. 11098 in 2005- 2006 so

its shows the working capital decreased of Rs 110198 in 2005- 2006 which compare to

2004-2005 hear due to decreased the firm is not satisfactory with its working capital.

3) STATEMENT SHOWING CHANGES IN THE WORKING CAPITAL IN

(2006-07) (Rs in

Lakhs)

ParticularsAs @ 01/4/06 As @ 31/3/07

Effect of wc Increase

Decrease

A. Current assets

Cash and bank balance

1,66,80 96,79 7001

Other current assets

63,00 63,00

Loans and advances

3,27,26

4,29,16 10190

Inventories 8,97,13

9,63,22 6609

Sundry debtors 7,61,80

4,51,53

31027

57


Total current assets

22,15,99 20,03,70


46415

Current liabilities 4

4,11,54 48,75,69

1642

Provisions 98,67 1,15,09

Total current liability

45,10,21

49,90,78

Net current assets(A-B)

-22,94,22 -29,87,08 16799 86085


69286 69286

Total working capital

-229422 -229422 86085 86085

Interpretation

The statement shows that the changes in working capital in the year 2005-

2006 and 2006-2007. The changes in capital of two years are Rs. 69286 in 2006-

2007 so its shows the working capital decreased of Rs 69286 in 2006- 2007 which

compare to 2005-2006 hear due to decreased the firm is not satisfactory with its

working capital.

58


4) Statement of changes in working capital in (2007and 2008)

(Rs in Lakhs)

Particulars As @ 01/4/07

As @31/3/08

Effect of wc

Decrease

Increase A. Current assets Cash and bank balance 96,79 92,17 4,62

Other current assets63,00 63,00

Loans and advances 4,29,16 5,68,18 13902

Inventories 9,63,22 3,38,40 6,24,82

Sundry debtors 4,51,53 5,83 4,45,70



Current liabilities 48,75,69 51,72,04 2,96,35

Provisions 1,15,09 70,35 4474

Total current liability 49,90,78 52,42,39 18376 137149

Net current assets(A-B) -29,87,08 -417481


118773 118773

Total working capital -29,87,08 -29,87,08 137149 137149

59


Interpretation


2007 and 2007-2008. The changes in capital of two years is Rs. 118773 in 2007- 2008

so its shows the working capital decreased of Rs 118773 in 2007- 2008 which


working capital.


(Rs in Lakhs)

ParticularsAs @

01/4/08As @

31/3/09

Effect of wc

IncreaseDecrease

A. Current assets

Cash and bank balance 92,17 13618 4401 Other current assets 63,00 - 63,00

Loans and advances 5,68,18 34813 22005

Inventories 3,38,40 84221 50381

Sundry debtors 5,83 2408 1825

Total current assets 10,67,58 135060

B. Current liabilities Current liabilities 51,72,04 66597 450607 Provisions 70,35 7068 33

Total current liability 52,42,39 73665

60


Net current assets(A-B) -417481 61395 507214 28338


478876 478876

Total working capital 61395 61395 507214 507214

Interpretation



2008 so its shows the working capital increased of Rs 478876 in 2008- 2009 which


working capital


(Rs in lakhs)

Particulars As @ 01/4/09

As @31/3/10

Effect of wc

Decrease

Increase A. Current assets Cash and bank balance 13618 16321 2703

Other current assets-------- --------

Loans and advances 34813 31645 3168

Inventories 84221 98769 14548

Sundry debtors 2408 2789 381

Total current assets 135060 149524


61


20665

Current liabilities 65665 45000

Provisions 8000 8879 879

Total current liability 73665 53879 24214 24214

Net current assets(A-B) 61395 95645


34250

Total working capital 95645 95645 24212 24212

Interpretation



2010 so its shows the working capital decreased of Rs 34250 in 2009- 2010 which


working capital

FINDINGS

62


1. The net working capital during the year 2004-05 is -119164




5. The net working capital during the year 2008-09 is 61395

6. The net working capital during the year 2009-10 is 95645

7. The increase net change in working capital from 2004-2010 is (95645+119164)

214809

63


RECOMMANDATION

As this factory is well managed in itself it doesn’t need much of recommendations.

But I will like to provide some of my suggestions and I hope it could further help this

factory to improve.

Especially one person must be employed who must sit with the workers and

look out for what further changes they want in the existing system. It means

start the Human Resource department for knowing problems of workers as well

as employees.

Workers must be given more liberty to meet the higher officials and talk about

their difficulties.

Improve the payment method as the payment is poor to the cane growers.

It should see that the facilities to workers are somewhat improved and brought

up to the expectations of the workers.

Worker-management meet should be conducted regularly to handle the

grievances of the workers and other matters.

64


SUGGESTIONS

1. Whether the company’s expectations for employees are extremely high or simply

average, the company should always be clear and precise in communicating their

official desires.

2. Actively train, educate, and adviser the staff: It is seen that the overwhelming

majority of employees want to learn more, enlarge their education, and become more

valuable to their employers

3. The management should ensure that the Promotion of employees is based on a fair

and transparent process i.e. the employees with the same qualification, work ability

and experience should be promoted at the same time.

4. The organization should give importance to factors like Pay and rewards as the

employees feel that they are not being paid adequately for their performance on job.

65


66


CONCLUSION Nirani Sugars Ltd is one of the best sugar factories. It takes care of all the

employees, workers. It has a good management. There are well qualified staffs,

engineers in each every department who are highly experienced in those fields in

which they are working. After all the study I came out with the following conclusion,

that the organization sounds good when it has good financial background,NSL has a

sound financial background of promoters including chief promoters which will help

to raise required equity.

NSL has got one of the integrated sugar co-gen projects in Karnataka which will help

to reduce national problem of power shortage also.

67


BIBLIOGRAPHY

1. Financial Management by M.Y. Khan & P.K. Jain

2. Financial Management by I.M. Pandy

3. Internet websites

www.niranisugars.com

www.google.com

www.sugarindustry.com

68

http://www.sugarindustry.com/

http://www.google.com/

http://www.niranisugars.com/


69

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