A Project Report on leverage analysis at Satish Sugar ltd

A study on leverage analysis at Satish Sugar ltd

Chapter Contents Page no

1 Executive Summary

2 Objective of the study

3 Methodology of data collection

4 Profile of the Sugar Industry

5 Company Profile

6 Product Profile

7 Organization chart

8 SWOT analysis

9 Department wise study

Administration Department

Finance Department

Human Resource Department

Quality control Department

Stores department

Production Department

Marketing department

10 Analysis & interpretation of leverages and cost analysis

11 Findings

12 Suggestion

13 Conclusion

14 Bibliography

15 Annexure

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EXCUTIVE SUMMARY

All round development of all communities is at the heart of the activities of Satish sugars Ltd. [SSL]. Established with the principal objective of serving the society the through economic development and the motto being “Growing with farmers” SSL Has today grown to become a dynamic group of companies that makes a fine case of youthful spirit and far-sighted vision. The Group has covered the path of success adopting innovative approach and has left in its wake rays of hope for the people of Gokak and the surrounding regions.

Mr. Satish L.Jarkiholi the man at the helm set the path of the group to widespread economic activities with an unwavering commitment and conviction Employment generation and community development were the primary goals behind the imitation to the activities of the group.

The Satish sugars Ltd was established in 2000-01 promoted by Mr.Satish.L.Jarkiholi The production capacity of the industries is 5000 TCD per day and it manufacture of sugar and by products like molasses and bagasse, generation of power, distillation.

SATISH SUGARS



Objective of the study:

To study the organization.

1) To conduct the organization study and understand the practical aspects..

2) To know the effect on income of the firm due to change in sales volume

3) To provide the management with the information regarding financial result if a specified level of activity or volume fluctuates

4) To Understand the cost incurred on manufacturing, administration, selling and distribution of the company.

Methodology of information collected

1)Primary sources:

Primary sources include information collected through discussion with the concerned department persons and external gide.

2 Secondary sources:

The secondary data is collected for the three year from 2007/2008/2009. This data is collected from Annual report and published Data source data provided the company.

The relevant supporting data is collected from Broacher, websites of the company .



Profile of Sugar Industry

INTRODUCTION

India is the second largest producer of sugar in the world. The

Indian sugar industry is the second largest agro industry located in the

rural India. The Indian sugar industry has a turnover of Rs.500 billion per

annum and it contributes almost Rs.22.5 billion to the central and state

exchequer as tax, and excise duty every year. It is the second largest agro

processing industry in the country.

There are 493 sugar mills operating in India with an aggregate

installed capacity of 16.2 million tones. Of these 152 are in private sector,

271 in the co-operative sector and 70 in public sectors.

About 50 million sugar cane farmers and a large number of

agricultural laborers are involved in sugar cane cultivation and ancillary

activities, constituting 7.5% of the rural population. The industry provides

employment to about 2 million skilled/semi-skilled workers and 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 and potable uses,

and can be used to manufacture Ethanol, an eco friendly and renewable

fuel for blending with petrol.

The sugar industry in the country uses only sugar cane as input;

hence, sugar companies are established in large sugar cane growing states

like Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamil Nadu and

Andhra Pradesh. In the year 2005-06, these six states contributed more

than 85% of total sugar production in the country



BRAZIL

Sugar may gain as Brazil devotes more than 55% of its crops to

ethanol. Rising oil prices have increased demand for alternative fuels, such as

sugar based ethanol which can be mixed with gasoline to cut fuel costs. This

will continue to keep sugar prices at higher level.

EUROPE

EU is dismantling a preferential scheme for sugar improved from

ACP countries cutting the price t pays by 36% over the next four years

starting this month. This will be creating a level playing field for all and also

help n sustaining sugar prices in the world.

UNITED STATES OF AMERICA

The U.S. may allow 22% more refined sugar and specially sugar to be

imported. The supply will probably come from Central America or Brazil.

The import quota of raw sugar imported in 12 months is ending on September

30th of this year.

MEXICO

The United States and Mexico have ended a heated decade – long

dispute over sugar and sweetener trade lifting all barriers from 2008 under the

North American free trade agreement. The two countries agreed to reciprocal

free tariff free import quotes prior to 2008. The deal allows free trade from

2008 in the products that go to make coke and other soft drinks and is also

heavily used in the baking industry. It includes the U.S. accepting 500000

tones of sugar imported from Mexico tariff-free between 2006 and 2007 and

Mexico taking 500000 tones of hight – fructose core of syrup from U.S

producer.



AUSTRALIA

The Queensland govt’s sugar industry innovation Fund (S11F) has been

successfully motivating sugar industry participant to adopt innovative

management system & technologies. It has enabled increased production of

value added product from sugar.

Fostered the development of more efficient supply chain & will help

secure a brighter future for cane farm families, Allied Business and

communities

SOUTH AFRICA

Concession made by the EU to cut back on its sugar exports & allow

imports From the world s poorest nations are sure to sweeten South African –

based sugar produced. Under the, which were announced last year, the EU is

to cut sugar production & export, and the continent on an unlimited on an

basis to the world s 48 poorest countries. However, also means that the profits

the made the profits made through sugar exports from Africa will benefit the

European food companies.

MALAYSIA

Refined sugar may be allowed to be imported soon to overcome a

shortage. The Govt has received proposals from several parties to import

refined sugar .The ministry has asked for more details like volume & most

important – the price.

PAKISTAN

Pakistan plan to keep raw/refined sugar imports duty free for another

year to avoid any price spiral, as the current sugarcane crop won’t meet

domestic demand. The country needs a harvest of over 53 million tones to

meet its annual sugar demand.



VIETNAM

The Vietnam sugar & sugar–cane Association (VSA) has filed a pet ion with

the Govt, asking it to stop licensing sugar import because domestic demand is

more. The existing 36 sugar plants have output 1000000.



Chapter 2

Company Profile.

INTRODUCTION

The Company was established with an all-encompassing view of

around development of all communities. Satish Sugars Ltd. (SSL) established

with the principal objective of serving the society through economic

development, SSL has today grown to become a dynamic company that

makes a fine case of youthful spirit and farsighted vision. The Company has

covered the path of success adopting innovative approach and has left in its

wake rays of hope for the people of Gokak and the surrounding region.

Mr. Satish.L.Jarkiholi, the man at the helm, set the path of the

Company to widespread economic activities with an unwavering commitment

and conviction. Employment generation and community development were

the primary goals behind the initiation to the activities of the Company.

Today, it provides employment to nearly 500 people and has transformed the

lives of thousands of families in the region. Indirectly has helped farmer

community to stand with pride & self-respect and lead to financial stability of

their families.

The journey of SSL spanning diverse activities such as sugar mill,

agriculture research, organic farming and community development makes a

impressive tale. For every major stride taken by the Company, the community

has taken a corresponding progressive step. Inspired by its success so far, the

SSL has charted out ambitious plans for the future. Its projects in the anvil

include a power generation unit, distillery unit, Aircraft charter and Aviation

Pilot training & maintenance center.

Most of these projects are community centric in nature and have the

objective of creating a vibrant social atmosphere in Gokak. It’s this vision of

community-oriented business model is what sets Satish Sugars Ltd. Apart

from the rest. It also spurs us to strive for people development even harder.



The Satish Sugars Ltd. is one of the sugar producers in the state of Karnataka.

The Company was incorporated on 12th April, 2000 as Khandari Sugar plant

in the name of Gokak Power, Distilleries & Sugars (P) Ltd., (Annexure – II)

and name was modified to Satish Sugars Ltd. (Annexure – IV)

In 2004-05, the unit adopted Vacuum Pan Technology keeping in

view its economic viability, efficiency and higher return on investment. The

initial capacity of the reformed unit was 1250 TCD and in the trial season, the

unit processed 51,406 tons of sugarcane in 2004-05 and registered a profit of

Rs. 1.76 crore on a turnover of around Rs. 9.2crore. SSL has set a target of

two lakhs tones of cane crushing for the year 2005-06 with a turnover of

Rs.20.00crore and a net profit of Rs.2.50 crore.

SSL has distributed seeds and fertilizers to needy farmers on a credit

at low rate interest. This way, it has developed more than 2,500acres of land

in 2004-05 and is developing 5,000acres in 2005-06 under the Registered

cane Area Program. The Company has set an ambitious target of achieving a

processing capacity of 10lakhs tones in the next five years. The future plans

of the Company include generation of 20MW power from by-products and

setting up of 30KL distillery unit.

SSL is arduously working for the development of sugarcane

cultivators. It regularly sponsors the visit of farmers to various states and

National level agriculture fairs and organizes seminars and workshop on

improved methods of sugarcane cultivation. Free training on scientific

farming to children and encouragement to students with special talent in areas

of education, culture and sports are other prominent community development

activities undertaken by the company

In view of the above, Mr. Satish Jarkiholi has developed sufficient

exposure to become a successful entrepreneur. His foresight in the sugar and

allied industries enabled him to take the following steps well in advance, even

while executing the Khandsari Sugar Unit and keeping in mind the

Government of India’s incentive scheme of 1977 to Khandsari sugar units to

adopt vacuum pan technology, Mr. Jarkiholi had envisaged changing the



technology along with suitable expansion even while implementing the Sugar

Unit.

BOARD OF DIRECTORS

Mr. Satish.L.Jarkiholli Chairman & M.D

Smt. S. S. Jarkiholli Director

Mr. Pradeep.M.Indi Director

Mr. Vittal.R.Parasannavar Director

Auditors:

Mr. B.B.Amanagi

Chartered Accountants

Belgaum

Bankers:

Indian Bank

Corporation Bank

VISION AND MISION



Mission

Satish Sugars Group has set the goal of becoming a vibrant dynamic

and professionally managed group of companies having a turnover of over

Rs.1000 crore with a net profit of 5% by 2015, 25% of the net profit will be

spent on a board-spectrum of community development activities such as

Education, Healthcare, Culture, Sports and Social Welfare. This is in line

with the group’s motto of placing community before self and Social services

before.

Vision

“To become the most efficient processor of sugar & the largest marketer of

sugar and compete globally

PRODUCT PROFILE

SUGAR

The sugar produced in Satish Sugars Limited factory is both refined

confirming to EC II grade with negligible sulphur content as well as

plantation grade white sugar. The EC II grade sugar meets the European

standards of refined sugar (Color of less than 45 IU)

Sugar is a sweet, white or brown, usually crystalline substance

obtained mainly from sugar cane or sugar beets and used commonly in food

products. Sugar means something sweet in form of taste.

Formula: 12CO2 + 11H2O = C12 H22O11 + 12O2

Carbon dioxide + water = sucrose + oxygen

In chemistry, sugar refers to any of the class of carbohydrates to

which this substance belongs. The chemist knows as “sucrose” one of the

family of sugars otherwise known as saceharides as the name implies, contain

carbon and hydrogen plus oxygen in the same ratio as in water.



The government controls sugar capacity additions through industrial

licensing determines the price of the major input sugar cane, decides the

quantity that can be sold in the open market, fixes the prices of the levy

quarter sugar and determines maximum stock levels for wholesalers etc.

BY- PRODUCTS OF SUGARCANE:

The sugar mill produces many by-products along with sugar. A

typical sugarcane complex of 3000 TCD capacity can produce 345 ton of

sugar, 6000 liters alcohol, 3 ton of yeast, 15 ton of potash fertilizer, 25 ton of

pulp, 15 ton of wax, 150 ton of press-mud fertilizer and 750KW of power

from Bagasse.

i. MOLASSES

Molasses is the final effluent obtained in the preparation of sugar by

repeated crystallization. It is the product from a refining process carried out

yield sugar. Sucrose and invert sugars constitute a major portion (40 to 60%)

of molasses. The yield of molasses per ton of sugarcane varies in the range of

3.5% to 4.5%.

Molasses is mainly used for the manufacture of ethyl alcohol

(ethanol), yeast and cattle feed. Ethanol in turn used to produce portable

Liquor and downstream value added chemical such as acetone, acetic acid,

butonol, acetic anhydride, MEG, etc. Some of the alcohol based chemicals

like MEG, acetic acid, etc., face stiff competition from production through

the petrochemical route. The government controls the export of molasses

through export licenses issued for every quarter. Molasses and alcohol-based

industries were decontrolled in 1993 and are being controlled by respective

state government policies. Nearly 70% of molasses produced are consumed

by the industrial alcohol manufactures and the remaining 30% is consumed

by the portable alcohol sectors.

ii. BAGASSE



Bagasse is a fibrous residue of cane stalk that is obtained after crushing

and extraction of juice. It consists of water, fiber and relatively small quantities of

soluble solids; the composition of Bagasse varies based on the variety of sugarcane,

maturity of cane, method of harvesting and the efficiency of the sugar mill, the

usual Bagasse composition is given as under:

Content Range %

Moisture 46-52

Fiber 43-52

Soluble solids 2-6

Bagasse is usually as a combustible in the furnaces to produce steam, which

in turn used to generate power; it is also used as raw material for production

of paper and as feedstock for cattle.

iii. ETHANOL

The company produces alcohol from the molasses (Molasses is the

brown colored residue after sugar has been extracted from the juice. Molasses

still contains some quantity of sugar, but this sugar cannot be extracted by

usual technology) left after the extraction of sugarcane juice, which can be

used both for potable purpose as well as an Industrial chemical. Further, this

alcohol can be purified to produce fuel grade ethanol that can be blended with

petrol.

iv. BIO-FERTILIZERS

The residue product from distillery operations blended with chemicals is sold

as bio-fertilizers.

Chapter 3


Structure

Strategy System

StyleSkills

Staff

Shared

Values


MC KINSEY 7S MODES

7-S MODEL

The 7-S model of Mc Kinsey is a Value Based Management (VBM)

model that describes how one can holistically and effectively organize a

company. Together these factors determine the way in which a corporation

operates.

The first three elements are strategy, structure and system are

considered as hardware of success, the meet four elements are style, staff,

skills and shared values/super ordinate goals are the software of any

company.

According to the 7’s MODEL



1) STRATEGY

The way in which a business aims to improve its positions relation to

its competition is embodies in its strategy or the way of doing something in

an organization.

In SSL, introduce new technologies and products strategies importance

in time with national objective to improve quality reliability of products there

by attaining the international standards.

2) SYSTEM

System refers to how the production system, distribution, information

system and security system is maintained in its company.

Production System

The process of production consists of input as sugar cane and output

as the sugar. First the Cane will be crushed in five mills. Juice will be



transferred to boiling Stations. In the boiling station, for the purpose of

purification Sulphur and lime powder will be added in proper proportion.




Plantation White Sugar Process

Weighted and Prepared Cane

Cane Milling / Crushing

Sulphatation

ClarificationPress Mud

Bio Composing Juice Evaporation

Syrup

A Plan Boiling

A Massecuite



Cetrifugation

Sugar

A Molasses Drying and Cooling

B Massecuite Packed as plantation white Sugar

Centrifugation

B Sugar used in a boiling as seedB Molasses

C Massecuite

Centrifugation

Final Molasses

C Sugar used in a boiling


Distribution System

The distribution system of the sugar produced is in the following system.

Indirect sales are made outside the country and the depot sales are also

made.

The producers are also sold directly to the consumer or sold to the

wholesales.

Information System

Structure of Information System


CHAIRMAN

MANAGING

SENIOR GENERAL

HEAD OF THE DEPARTMENT

SECTION


Security System

The SSL has strict Security system. In the maintenance of accounts

after the record have closed, the records are kept in the room is opened only

with permission of higher authority. If the visitors went to inter they have to

take prior permission with the authority and after entering they are not

suppose to go any dept other them the department from whom they took the

permission.

3) STRUCTURE:

The following departments carry out the general admission of the company

and are in the order of downward communication in the company. The

information flows from the top level of management to the lower levels.



ORGANIZATIONAL STRUCTURE

BOARD OF DIRECTORS

CHAIRMAN AND MANAGING DIRECTOR

EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR

GENERAL MANAGER

ASST.GENERAL MANEGER

MANAGER COMPANY MANAGER MANAGER MANAGER MANAGER CHIEF MANAGER

TECHNICAL SECRETARY CANE HRD ADMIN LEGAL DISTLR

ASST. MANAGER

C E C C (CANE) LAISIONING LAISIONING MANAGER

DY.CE DY.CE ZONAL INCHARGE BLR DELHI DISTLR

FIELD ASST GEN ADMIN EXECUTIVES

ENG CIVIL STORE VEHICLES

ETP

ASST MANAGER ASST MANAGER NEW PROJECT

(A/CS) (COMPRL) COORDINATOR ETP MARKETTING PROJECT CO

OFFICER

ORDINATOR

TRAINING HR WELFARE TIME OFFICE SECURITY GUEST HOUSE

4) STYLE



The style, which is portrayed to outside world, is derived from the

style and behaviors exhibits inside organization. The internal style of the

organization effects new staff feels thinks and does their jobs. Therefore an

organization is reflection of its structure.

5) SHARED VALUES/SUPER ORDINATE GOALS.

Shared values are reefers to company policies. In Gokak Sugar Company

limited the following policies are maintained.

Safety Policy

Quality Policy

Environment policy

T.P.M Policy [ Total Productivity Management]

Safety Policy

We at SSL engaged to producing white crystal sugar will always aim

to providing absolute safety to every person employed in the company from

any risk and danger by adopting safe working methods.

Safety objectives

We believe that accidents are preventable.

We will fallow all the rules regarding safety.

Our policy is to maintain safety beyond compromise.

We believe that rules are sacred and must be observed.

Our Motto-No. accidents due to human failure.

Quality Policy



We at SSL, engaged in producing while crystal Sugar will always

strive for product, Quality by adopting latest technology disciplined quality

management system. continuous improvement in working methods etc. it

wants to be market leader in its field of operation following innovative

techniques.

Quality Objectives

Production of best quality sugar satisfying domestic and international

norms.

Strive to conduct the operation by preserving the quality of the

environment.

Motivation of employees through training and retraining for

improving Operational performance.

Environment Policy

The SSL is committed to comply with the requirement of relevant

environment regulation and the standards by implementing environment

management system and continually improve its effectiveness.

Total Productive Management Policy

The SSL is committed in maximizing limited is committed in maximizing

over all plants effectiveness to make Gokak Sugar Company a World class

company through total productive manufactured by.

Prompting automates maintains culture.

Involving all employees and building culture.

Minimizing the losses and reduced the cost.



6) STAFF

Good hard working citizens play essential role in the development of

nation. The employee is responsible for the success or failure of company.

The company has totally 650 workers are working is the company.

They are categorized as following.

1) Permanent workers 400

2) Seasonal workers 110

3) Probationary worker 40

4) Daily wage worker 100

650

Company is paying salary of Rs. 25 lakhs per month to its workers.

7) SKILLS

Skills here refer to how the training will be given to the employees

and employees. The training will be given in 2 months they are.

a) On the job:

This is one of the oldest method, under this method, the individual place is on

the regular job and taught the skill necessary to perform that job on the job

training has the advantage of giving first hand knowledge and experience

under the actual working conditions. This is given to employees.

b) Off the job:

In this methods trainee is separated from the job situations and his attention is

focused upon learning the material related to his future job performance.

There is an opportunity for the trainees.

Chapter 33

FUNCTIONAL DEPARTMENTSFUNCTIONAL DEPARTMENTS



FINANCE DEPARTMENT

ENGINEARING DEPARTMENT

ACCOUNTS DEPARTMENT

CANE DEPARTMENT

PROCESS DEPARTMENT

HRD DEPARTMENT

MAINTENANCE DEPARTMENT

PURCHASE DEPARTMENT

STORE DEPARTMENT

PERSONAL AND ADMINISTRATIVE DEPARTMENT

FINANCE DEPARTMENT



Finance department is very important in an organization. It is not just

confined to raising funds, but extends beyond it to control the over utilization

of funds and helps to monitor the utilization of funds raised. This function

influences the operation of other essential functioning areas of the firm such

as production, marketing and personal.

FUNCTIONS OF FINANCE DEPARTMENT:

Preparation of finance reports

Preparation of annual budgets

Budgetary control

Scrutinizing of purchase bills and proposals

Passing of all payment bills

Maintenance of sales ledger

Maintenance of all subsidiary books under the co-operative

societies acts like cashbook, debtors, and salary register.

Preparing of cost sheet

Direction of internal auditing.

There is an important section in finance department, which is the

computer section. Computer section is newly modernized and has expert

computer operators, which does the following functions:

Maintaining records of sundry debtors of sugar

Preparation of daily raw cane purchase bills

Preparation of pay bills

Daily generation of sales Cheque remittance etc.,

PREPARATION OF FINAL ACCOUNTS

The profit and loss account is prepared every month by highly

experienced accountants. This enables effective monitoring of financial

position and preparation of final accounts after the accounting year.

A BRIEF OUT LOOK OF THE FINANCIAL STATUS

Share capital 40.50 Crores



Member deposits 3.25 Crores

Raw material consumed year 24.24 Crores

Every year sales 17.70 lakhs

Profit for the year ended was lakhs rupees…

The balance sheet and the profit and loss account of the firm for the

past few years are shown as below in the table.. From which we analyze the

growth and development of the firm and also we obtain information regarding

sources of funds and their allocation

ENGINEERING DEPARTMENT

In SSL the engineering department looks after mechanical,

civil construction, improving production method. Simplifying of work

and power generation and also deals with good working condition

maintains of go down, installation of machinery etc.

ACCOUNTS DEPARTMENT

The SSL Gokak Sugar Company’s growth in terms of

turnover and profitability besides investment in the block of assets and

working capital has been satisfactory over a period of time. Unless proper

accounting of the various transitions of the company’s taking place out

systematically, the real control on the various functional areas of the

company will be lost to the management.

All the transactions of the company will be accounted on accrual

basis only except where deviations are permitted by the management

through its accounting policies.

Main Functions are as follows

Registration and scrutiny of sale orders pertaining to equipment and

spare parts.



Preparation and submission of invoice to customers for payment.

Accounting of sales and sales realization.

Receipt of cash, cheque and bank drafts etc and issue of official

receipts for the same.

Follow up or watch of transfer or receipt of funds to and from regions

or district offices.

Operation of bank accounts.

Maintenance of journal, expense ledger and balance sheet.

Preparation of trail balance, profit and loss account and balance sheet.

CANE DEPARTMENT

In SSL cane department deals with registration of Sugar Cane

with growers, good quality maintains, developing high yields and also

term loans and subsides to the farmers who are growing sugar cane for

this company and now giving seeds of sugar cane to grow variety sugar

cane and this department has consultant to consult sugar cane and I/P.

SSL has some Developmental Programmes for Cane

The unit is undertaking cane development programmes which will

be a part of its activities.



They are.

1. Loans are provided to formers to take up new variety of

cane activities.

2. Subsides are provided to farmers.

3. Press mud and by products is supplied to farmer on

fertilizers free to work

PROCESS DEPARTMENT

Process department is given integral part of the organization. It

looks afterward of different process of sugarcane into the consumer sugar.

Process of Cane

Cane will be crushed in five mills. Juice will be transferred to

boiling Stations. In the boiling station for the purpose of purification

Sulphur and lime powder will be added proportionality.

By- products obtained and used for

The following by products are obtained from the process.

1. Molasses: This is the mother licker obtained of the sugar mesquite

crystals.

2. Press mud: The product gains in the settlers.

3. Bagasse: Bio product obtains after the crushing of cane in the mill

without Juice.

FLOWCHART OF SUGAR MANUFACTURING

Weighted cane – Hauled to crushing yard



Cane unloaded on to the carrier

Cane cut into pieces

Crushed in successive mills

Juice treated with lime and Dry chaff fed into boilers

Surplus & heated as fuel

Subsider

Scum Clear juice

Evaporat

Concentrated Syrup

Filter cake used As manure Clear juice Surplus syrup to vacuum pans

Boiler to mane cite

Centrifugal

Sugar Molasses

Bagging

Dispatching Power Alcohol Portable Alcohol

HUMAN RESOURCE DEVELOPMENT DEPARTMENT

The activities carried out are planning for human resources,

requirements, welfare, and safety, training and legal matters. It even helps in



providing necessary manpower and skills towards successful implementation

of quality system. It also organizes the training activities of the employees.

Security and Administration is for overall security maintenance of

school, hospital and village administration. SSL caters for education up to

class X (10th) both State Syllabus and CBSE for the benefits of employee’s

children. They have started the officer’s club, social club, and welfare center,

playground and parks, gardens, open era theaters etc. and many more.

AREA OF FUNCTION OF SATISH SUGARS LTD

Man power planning

Recruitment and selection

Placement, training and development

Wage and salary administration

Performance appraisal industrial relations

Health and safety measures

Employees state insurance benefits

Disciplinary actions

Promotions, demotion and dismissal

FUNCTIONS:



1. Selection and recruitment of trainee workman, clerical staff and

supervisory staff.

2. Induction of clerical supervisor staff.

3. Issue and badly of workman.

4. Issue of punching cards.

5. Attendance recording.

6. Leave Management.

7. Wage administration.

8. Bonus calculations and payments.

9. Performance appraisal of supervisory staff.

10. Promotion and transfer of workman and clerical staff.

11. Sanitation of management.

12. Carry out safety promotional activities.

13. Reporting of accidents.

14. Checking canteen activities.

MAINTENANCE DEPARTMENT

Totally there are 27 workers



The members of filters are 12

The numbers of helpers are 13

There is only one welder.

Maintenance department is a Mechanical department in which all the

machines of this firm are repaired. If there are any major problems the

machines are repaired by General-Shift-Workers. General-shift-workers are

fixed for only one major problem, the general shift workers and other workers

work in shift wise

PURCHASE DEPARTMENT

Purchasing procedure very considerably according to the needs of

the organization and authority delegated to purchase managers the success of

organization is based on effective inventory management system and UN

interrupted production schedule. This is achieved with adequate purchasing

function.

OBJECTIVES

1) To receive purchase requisition from the stores department

production centers or any other authorized sources.

2) To invite quotation from a number of suppliers.

3) To make arrangements for the purchase of appropriate quantities

at any given times.

4) To ensure the purchase of the correct quality under trade or brand

name by sample, description.

5) To follow up the orders placed.

6) To receive incoming suppliers, verity quantity tests and inspects

them.

7) To arrange for the storage and issue of materials.



STORES DEPARTMENT

In this department all types of materials are stored. The purchase

department purchases the materials and these materials are sending to stores

department. Storekeepers send the sample of material to the lab for testing

purpose. If the material satisfies all the tests specifications then the material

will be stored and the transactions, which are related to this, are done in this

department. Otherwise the goods will be rejected and sent back. The

explanation should be given for the rejection of goods.

The purpose officer receives the order slip from the marketing

officer and this order slip will be sent to store department to check the raw

material essential; to fulfill the order for a particular product of produce it.

Further the stock statement is sent to the purpose department, which contents

the quantity that is the raw materials required for a particular product or

produce it. From this the purpose officer will come to know that how much

quantity is required. And whenever there is not much stock in stores

department the store keeper will inform the purpose officer and in turn he will

give instruction to purchase that particular materials.

PERSONNEL AND ADMINISTRATION DEPARTMENT

PERSONNEL DEPARTMENT:

Objectives:

1. To look after the welfare of the employees.



2. It deals with appointments, job training to new employees.

3. They deal with safety health measures of the employees.

4. They provide necessary help or aid to the employees.

5. Control over the day to day activities.

Workers get their week off but the staff gets holidays on

Sunday. This department sanctions leaves to the employees. The

employees get leave on national festival .

Different wages are paid to the different labors depending on their

experience, skill, performance and work. Wages are paid promptly and

the incentives are also paid during the festivals. This department has

direct contact with labors and sometimes personnel department acts like a

bridge between the labor and the management.

ADMINISTRATION DEPARTMENT

The Administration Department looks after the administration of the

company.

This department consists of the top-level management.

1. Administration Department has an aerial lockout over all the

departments.

2. Progress of the entire department is sent to this department. So

that the administration department prepares the progress sheet

after the end of certain period.

3. Administration function includes training of administrative

staff.

4. This department looks after the wages and salaries of the staff.

5. This department has to answer for any Enquire done by the

Govt.

6. This department controls over the flow of funds along with the

accounts department.



Chapter 5

SWOT ANALSIS

STRENGTHS:

Raw material is available easily in near locations.



Well established since long time.

Strong network from all aspects-location, transport and

infrastructure.

Good financial supports whenever needed are provided by

both State and Central Governments.

Location in the heart of the city.

Concept of Multi joint-products

New power plant, which is constructing now, is needed for

future growth.

Sound Management.

WEAKNESS:

There is less power to management to take decisions

directly.

Absent of motivating incentives.

Lot of training required for all levels of employees.

Company has been facing stress-related issues.

Decrease in the production of row materials due to natural

calamities like, Flood etc.

OPPORTUNITIES:

Implement change in technology.

Establishment of New Units.

Frame proper policies and procedures.



THREATS:

Competition by other units

Decrease in Sugar growth.

Diversified resources such as raw materials due to many

sub unit initializations.

Government Regulations.

Future planes:

The company has to improve its canteen facility; it must

arrange a good building to canteen.

It looks pretty awesome if company makes uniform for all

workers.

The company has to consider internal experienced employee

also while making a higher postings.

Making of company shares as LISTED is good decision in

today’s competitive world.

Leverage analysis

Leverage means: Is the employment of an asset/sources of a finance for which firm pays fixed cost/ fixed return. Leverage may be defined as relative change in profit due to the change in sales. A high degree of leverage



implies that that a large change in profit occurs due to a relatively small change in the sales if earnings less the variable cost exceeds the fixed return requirement the leverage is called “favorable” when they do not the result is “unfavourable”leverage.

Important of leverages:

1.Leverages is to set forth a framework for the financing decision of firm.

2 The sources may be for the purposes of exposition, classified into those which carry a fixed of return.

3The ordinary shareholders is affected by the magnitude of debt in the capital structure of the firm.

4 The fixed returns on some source of finance have implication for those who are entitled to variable return.

Types of leverage:

1)Operating leverage

2)Financial leverage

3)Combined leverage

Income statement

Particulars 2006/7(Amt in Rs.)

2007/08(Amt in Rs.)

2008/09(Amt in Rs.)



Sales 5,34,094,000.00 9,28,124,000.00 1,41,841,5149.00

Less: variable cost 5,77,590,00.00 1,19,614,000.00 9,68,234,69.00

Contribution 4,76,335,000.00 8,08,510,000.00 1,32,159,16.00

Less: fixed cost 4,23,695,000.00 6,40,888,000.00 1,00,878,9979.00

EBIT 5,26,400,00.00 1,67,622,000.00 3,12,801,701.00

Less: interest 2,00,500,00.00 7,33,780,00.00 1,43,377,399.00

EBT 3,25,900,00.00 9,42,440,00.00 1,69,424,302.00

Less: Tax 3,87,2000.00 1,09,090,00.00 1,13,300,00.00

Net profit 2,871,80,00.00 8,33,350,00.00 1,58,094,302.00

1)Operating leverage: The operating leverage affects a firm operating profit. It result from the existence of fixed operating expenses in the firms income stream.



The degree of the leverage is defined as the percentage of change in the earnings before interest and taxes relative to given percentage change in sales.

Operating leverage refers to the use of fixed cost in the operation of a firm from will not have operating leverage. if its ratio a firm given sales produce same percentage change in operating profit. if the firm has fixed cost the percentage change in operating profit would be more for given percentage change in sales. Operating profit of a highly levered firm would increase at a faster rate for any given increase in sales. However if sales falls it will suffer a more loss.

Formula: Degree of operating leverages=Contribution/EBIT

Here EBIT indicates earning before interest and taxes

Degree of Operating leverage

Year Contribution EBIT DOL=contribution/EBIT

2006/07 4,76,335,000.00 5,26,400,00.00 9.04

2007/08 8,08,510,000.00 1,67,622,000.00 4.82

2008/09 1,32,159,1680.00 3,12,801,701.00 4.22



s

INTERPRETATION:

Table reveals:

The degree of operating leverage very much greater than first for all years of the study period. This high degree of OL indicates higher indicates high senility of EBIT to change in sales. The DOL is very much higher indicating a very high operating risk. In view of this there is need to reduce operating risk by reducing fixed costs ,increasing sales changing sales mix etc.

2)Financial leverage: The use of the fixed charges sources of funds such as debt and preference capital along with the owner’s equity in the capital structure as financial leverage.

The financial leverage employed by a company is intended to earn more return on fixed charge funds more than their costs. The surplus will increase on the return on the owners equity.

The role of the financial leverages in magnify the return of the shareholders is based on the assumption that the fixed charge

funds can be obtained at a cost lower than the firms rate of return on net assets.

Degree of financial leverage can be calculated by using the following formula.

DFL=EBIT/EBT



Where:

DFL=Degree of financial leverage

EBIT=Earning before interest and tax

EBT=Earning before tax.

Degree of Financial leverage

Year EBIT EBT DFL=EBIT/EBT

2006/07 5,26,400,00.00 3,25,900,00.00 1.61

2007/08 1,67,622,000.00 9,42,440,00.00 1.77

2008/09 3,12,801,701.00 1,69,424,302.00 1.84



INTERPREATION:

Table 2 reveals that:

The DFL is slightly higher 1 for all the years of the study. This low degree of financial leverage indicates a low sensitivity if EBT to change in EBIT. It also indicates low financial risks. in view of this the firm needs to maintain this so as to keep this level of low financial risk constant.

3)Combined leverages: The operating leverage has its effects on operating risk and measured by the percentage change in EBIT due to percentage change in sales. The financial leverage has its effects on financial risk and is measured by the percentage change in EPS due to percentage change in EBIT.

The degree of combined leverage can work in either direction. It will be favorable if sales increase and unfavorable when sales decrease because change in sales will result in more than proportionate returns in the form of EPS.

Formula: Degree of combined leverage =Operating leverage* financial leverage.

Degree of combined leverage

Year DCL=DOL*DFL TOTAL

2006/07 9.0489*1.615219 14.61595

2007/08 4.82341*1.778595 8.578892

2008/09 4.22501436*1.846262 7.8004828



Leverages objectives:

1) To ascertain the minimum sales to cover the cost and avoid losses.

2)To ascertain the sales volume necessary for the business to achieve the profit.

3) To study the operating leverage to evaluate the investment in debts through the financial leverage.

Findings of leverages

1 In this organization the operating leverage is very much higher than first year compared to all the periods of the study2)It was 9.04 in the year 2006/07 which has decreased to 4.82 in the year.2007/08 and again decreased to 4.22 in the year of 2008/09.3 )The financial leverage is slightly higher than first in all the years of the study. It was 2006/07 -1.61, 2007/08-1.77 and 2008/09-1.84.

Suggestions



The firm should maintain the sales to total cost proportion as it was maintained in the year 2007-08 and 2008-09.

The firm should maintain the it’s operating leverage at the current level.

Firm’s financial leverage is fluctuating year by year in the periods of the study, so it should manage it’s fixed financial obligation at the required level,so that it is favorably financial levered.

Cost analysis



Introduction of cost Accounting

Introduction : There is a quick deriving worlds of economic activity in this modern world. When the competition is the deciding fate of commercial and industrial units. Price of commodity or a service is the instrument to measure its success or failure. if price is a policy cost is the determent of this price. It is the cost which makes a unit to flourish or kiss the dust. That is why every management should keep abreast of its cost structure.

Cost accounting defined as the “Cost Accounting is defined as the body of concepts methods and procedures used to measure analyses or estimate the cost profitability and performance of individual products department and other segments of a company’s operations for either internal or external use of both and to report on these questions to the interested parties. Is called cost Accounting.

Advantages to the management:

1 It discloses profitability of activities.

2 It helps in cost control.

3 It helps In inventory control.

4 It aids in formulating policies.

5 It helps In decision making.

Scope of cost Accounting: Means what exactly we study in cost accounting. So the scope of the cost a accounting is wide. It covers the following aspects.

1)Cost ascertainment2)Cost presentation

3)Cost control.

Costing means: Techniques and process of ascertaining costs. These techniques are the rules and regulations to govern or regulate the process of ascertaining the costs or services. Therefore these rules and regulations are carried from unit to unit immediately to the industry and to the formation of the policy.

Cost Accountancy: Cost Accountancy as the application of costing and cost accounting principles methods and ascertainment of profitability as well as presentation of information for the purpose of managerial decision making. Is called cost Accountancy.



Advantages of cost Accountancy:

1) The cost accountancy are to ascertain the cost of production profitability of the industry and help in controlling the cost.

2) It is widely used term which includes costing cost accounting and cost accountancy.

Importantances of cost Accountancy:1) The main purpose of the cost accounting is to provide detailed

cost information to the management.2) Maintains of cost accounts is voluntary.3) It is estimated price.4) Costs are classified into direct and indirect or element wise.5) It shows the detailed profit and loss of each product, department

process etc.

Cost analysis means: Cost means the essential parts or components of goods or services or jobs. In otherworld’s elements of cost is part of the total cost and includes the main item of expenditure incurred for production of goods services and jobs.

Importance of cost analysis:1)It helps the management for implementing cost control and decision making.2)It helps for calculation of cost of production.3)It helps for valuation of work in progress.

Cost Sheet: Cost sheet is a document which provides for the presentation of the estimated detailed cost in respect of a cost cadre or a cost unit. The statement summaries the cost of manufacturing a particular list of product and discloses,1 The prime cost 2.Work cost 3.Cost of production 4 Total cost.

Purposes of cost sheet:1)It gives the breakup of total cost by element and sub divisions.2)It discloses the total cost as well as the cost per unit of production.



3)It helps for comparison’s4)It helps for preparation of tenders and quotations.5)It helps for fixing selling price.

Specimen of cost sheet for the period of 31 st march 2007

Particulars Total cost per unit

Direct materials:

Opening stock of raw materials 3,54,930,00.00 _

Add: Purchases of raw material 1,80,550,00.00 _

Carriage inwards - -

Less: Closing stock 2,80,0000.00 -

Material consumed 5,63,480,00.00

Add: Factory over heads:

1)Consumption of chemicals

3,29,1000.00

2)Power, fuel and water 4,73,7000.00

3)Repairs and Maintenance 6,89,9000.00

4)Industrial tour exp 1,72,000.00

Add: Opening work in progress 3,71,5000.00 1,88,140,00.00

Less: Closing stock - 2,80,0000.00

Work cost =1,601,4000.00

Add: Administrative overhead - -

1)insurance 1,38,000.00

2)Rent 1,50,1000.00

3)Rates,Taxes&other fees 7,92,000.00



4)Printing and stationery 1,40,2000.00

5)Director fees 4,20,000.00

6)Auditors fees 25,000.00

Cost of production = 4,27,8000.00

Add: Opening stock of goods 4,89,5000.00

Less: closing stock =9,17,3000.00

Add:Purchage of manufactured goods

_ 1,07,20000.00

=1,54,7000.00

Less:Clo-stock -

Cost of goods sold =1,54,7000.00

Add: Selling distribution overheads

1)Advertisement - 9,06,000.00

Cost of sales: - =2,45,3000.00

Profit and loss

Sales 5,34,097,000.00

Specimen of cost sheet for the period 31st march 2008





Direct materials

Add: Purchases of raw materials

3,021,7000.00

2,35,65000.00

Prime cost 5,37,82000.00 5,378,2000.00

Less:Clo-Stock - 7,40,6000.00

Total - =4,63,76000.00

Add: Factory Over head.

1)Consumption exp

2)Power &fuel

3)Repairs

4)Industrial exp

Total

-

1,24,330,00.00

7,07,700,00.00

2,88,05000.00

4,36,8000.00

=9,90,59000.00 9,90,.0059000

Add: Opening Progress - 2,80,.000000

Total 1,018,59000.00

Less:Clo-stock in progress 7,40,6000.00

Work cost - =9,44,53000.00

Add: Administrative exp.

1)Insurance

2)Rent

3)Rates

4)Printing and stationery

5)Director fees

6)Audit fees

8,75,000.00

1,43,9000.00

6,36,1000.00

1,14,3000.00

90,000.00

64,000.00

Total 1,15,720,00.00

Add: Opening stock of goods 6,16,1000.00 1,77,33000.00

Add:Purchage of manufacture exp - 3,096,9000.00




Direct materials


3,021,7000.00

2,35,65000.00

Prime cost 5,37,82000.00 5,378,2000.00

Less:Clo-Stock - 7,40,6000.00

Total - =4,63,76000.00

Add: Factory Over head.

1)Consumption exp

2)Power &fuel

3)Repairs

4)Industrial exp

Total

-

1,24,330,00.00

7,07,700,00.00

2,88,05000.00

4,36,8000.00

=9,90,59000.00 9,90,.0059000

Add: Opening Progress - 2,80,.000000

Total 1,018,59000.00

Less:Clo-stock in progress 7,40,6000.00

Work cost - =9,44,53000.00

Add: Administrative exp.

1)Insurance

2)Rent

3)Rates

4)Printing and stationery

5)Director fees

6)Audit fees

8,75,000.00

1,43,9000.00

6,36,1000.00

1,14,3000.00

90,000.00

64,000.00

Total 1,15,720,00.00

Add: Opening stock of goods 6,16,1000.00 1,77,33000.00

Add:Purchage of manufacture exp - 3,096,9000.00




Direct materials


6,42,035,489.00

Less: Closing stock of raw materials

6,24,148,423.00

Materials consumed - 1,26,618,3912.00

Add: Factory over head

1)Power and fuel

2)Canteen Exp

3)Factories boiler charges

4)Insurance to Factory

3,14,588,50.00

8,36,716.00

1,10,170.00

1,04,9067.00

Total: prime cost - 3,34,548,03.00

Add: Opening work in progress - -

Less: Closing work in progress - -

Works cost - 3,34,548,03.00

Add: Administrative overhead:

1)Audit fees

2)Building maintains exp

3)Computer Repairs

4)consultation fees

5)Credit Rating fees

6)Director sitting fees

7)Employees accident insurance

8)Govt fees

9)incentive to employees

10)Legal charges

50,000.00

1,47,223.00

2,00,935.00

6,42,000.00

3,87,497.00

50,000.00

1,50,000.00


Findings of leverages and cost sheet:1) In this organization the operating leverage is very much higher in the first year compared to all the periods of the study2) It was 9.04 in the year 2006/07 which has decreased to 4.82 in the year.2007/08 and again decreased to 4.22 in the year of 2008/09.3) The financial leverage is slightly higher in first year compare to other years. It is 1.61 in the year of 2006-07, 1.77 in the year of 2007/08 and 1.84 in the year of 2008/09.

4) The Administrative expenses have been increasing trend in every year from 2007 to 2009 at the years.

5) The cost of material consumed is very high compared to previous year, in the year 2009 is showing very high and in the year 2007 is showing low.

.

Suggestions : The fixed cost is very much higher it constitute the major part in total cost.

The firm should maintain the it’s operating leverage at the current level.

Firm’s financial leverage is fluctuating year by year in the periods of the study, so it should manage it’s fixed financial obligation at the required level, so that it is favorably financial levered.

In the year 2009 the administrative cost is very much

4



Direct materials


6,42,035,489.00

Less: Closing stock of raw materials

6,24,148,423.00

Materials consumed - 1,26,618,3912.00

Add: Factory over head

1)Power and fuel

2)Canteen Exp

3)Factories boiler charges

4)Insurance to Factory

3,14,588,50.00

8,36,716.00

1,10,170.00

1,04,9067.00

Total: prime cost - 3,34,548,03.00

Add: Opening work in progress - -

Less: Closing work in progress - -

Works cost - 3,34,548,03.00

Add: Administrative overhead:

1)Audit fees

2)Building maintains exp

3)Computer Repairs

4)consultation fees

5)Credit Rating fees

6)Director sitting fees

7)Employees accident insurance

8)Govt fees

9)incentive to employees

10)Legal charges

50,000.00

1,47,223.00

2,00,935.00

6,42,000.00

3,87,497.00

50,000.00

1,50,000.00


high ,so it should be control.

Conclusion

This project helps to know that the company

operating in significant manner and the sales of the company increased



from year to year and considerably profit also increased and some year

the fixed cost is more so it needs to reduce its fixed cost.

The firm is favorably financial levered since it managed to keep its

fixed financial obligations at the required level but its operating risk is

very high because of high fixed costs and high operating leverage.

This study helps to ascertain the cost per unit total cost production and

to know the administrative expense. Cost sheet is the very important

tool that analyses the cost of the company. Through this cost sheet we

can improve in estimated cost sheet.

Bibliography



Financial Management by books used from which I have taken help

for the theory part of the study:

M.V. Khan & P.K. Jain

www.satishsugars.co.org

www.google.co.in

PART 8


http://www.google.co.in/

http://www.satishsugars.co.org/


Annexury

Profit and Loss Account 2007-08

PARTICULARS YEAR 2007

YEAR 2008

SALES 5,340.97 9,281.24

EXPENDITURE

COST OF RAW MATERIAL 4,143.67 6,089.77

MANUFAFACTURE EXP. 577.59 1,196.14

PROFIT BEFORE INTEREST 619.70 1995.32

INTEREST 200.50 733.78

DEPRICIATION 93.28 319.11

PROFIT BEFORE TAX 325.90 942.42

TAXATION 38.72 109.09

PROFIT AFTER TAX 287.18 833.33

ADD PROFIT FORWARD EARLIAR YEAR 14.99 302.17

PROFIT AVAILABLE FOR APPRPPRITION

302.17 1135.51



BALNCE SHEET 2007-08

PARTICULAR YEAR2007 YEAR2008

SHARE HOLDERS FUNDS

a) Share Capital

b) Share Application Money

c) Reserves and Money

Total

2871.39

44.80

302.17

3218.36

2871.39

406.80

1135.51

4413.71

Loans nad Funds

a) Secured Loans

b) Unsecured Loans

Total

4405.86

20.10

4425.96

8291.64

950.67

9242.32

Total Funds 7644.33 13656.03

APPLICATION FUNDS

1) Fixed Assets

a) Gross Block

b) Less Depreciation

c) Net Block

d) Work In Progress

5632.90

180.06

5452.84

00

9514.47

499.17

9015.29

224.31

Total 5452.84 9239.61

2) Investments 3.17 53.75



CURRENT ASSETS LOANS ADVANCES

A) Inventaries

B) Sendry Debtors

C) Cash and Bank Balance

D) Other current Assets

E) Loans and Advances

Total

Less Current Liabilities and Provisions

a) Current Liabilities

b) Provisions

Total

3334.40

338.44

263.59

147.75

510.36

4594.56

2443.44

37.09

2480.53

6114.67

402.69

882.96

129.23

530.45

8060.02

3671.46

155.82

3827.28

Net Current Assets 2114.02 4232.73

4)MISC. ASSETS 74.28 129.93

5) TOTAL ASSETS 7644.33 13656.03




Documents

A Project Report on leverage analysis at Satish Sugar ltd