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SUMMER TRAINING PROJECT REPORT
ON
FINANCIAL ANALYSIS
OF
BAJAJ HINDUSTHAN LIMITED
SUBMITTED BY
NEETHU PILLAI
01119201709
STUDENT OF
LINGAYA’S LALITA DEVI INSTITUTE OF MANAGEMENT & SCIENCES
MANDI ROAD,NEW DELHI-110047
FOR THE PARTIAL FULFILLMENT
OF
BACHELOR OF BUSINESS MANAGEMENT
UNDER THE SUBMISSION
OF
Dr.Rakesh kumar gupta
SUBMITTED TO
GURU GOBIND SINGH INDRAPRASTHA
UNIVERSITY
DELHI,INDIA
1
CERTIFICATE
Certified that this project report “FINANCIAL ANALYSIS OF BAJAJ HINDUSTHAN
LIMITED” is the bonafide work of NEETHU PILLAI who carried out the project work
under the supervision of Mr Bhuwan Ganglasya (Asst. Manager)
Signature
HEAD OF THE DEPARTMENT
(DR RAKESH KUMAR GUPTA)
BBA
Lingaya’s lalita devi institute of management and sciences
Mandi road , new delhi
2
DECLARATION
I hereby declare that the project work entitled “FINANCIAL
ANALYSIS OF BAJAJ HINDUSTHAN LIMITED” submitted to the GURU GOBIND
SINGH INDRAPRASTHA UNIVERSITY,DELHI is a record of an original work done
by me under the guidance of. Mr Bhuwan Ganglasya (Asst. Manager Faculty Member),
LINGAYA’S LALITA DEVI INSTITUTE OF MANAGEMENT AND
SCIENCES,MANDI ROAD,NEW DELHI and this project work has not performed the
basis for the award of any Degree to the best of my knowledge.
NEETHU PILLAI, O1119201709
SIGNATURE OF STUDENT
3
ACKNOWLEDGEMENT
I owe a great many thanks to a great many people who helped and supported
me during the writing of this report. My deepest thanks to Lecturer, MS GAYATRI (the
Guide of the project for guiding) for correcting various documents of mine with attention
and care. She has taken pain to go through the project and make necessary correction as
and when needed. I express my thanks to the HOD of BBA for extending his support.
Thanks and appreciation to MS GAYATRI for her support. I would also like to thank my
Institute and my faculty members without whom this project would have been a distant
reality.
4
PREFACE
In this report Summer training is an integral part of the BBA program. Each student is
required to undergo research with any topic after 4 th semester. As complementary to that,
every student has to prepare & submit a report on the research work conducted by the
student.
I had privilege to do project with an objective related to the corporate world. ”
The present report is entirely an outcome of internal records of the company. This report
is at continuation of the above tradition.
5
CONTENT
CHAPTER TITLE PAGE NO. 1 Certificate
2. Declaration 3 Acknowledgement 4 Introduction
4.1 financial analysis4.1.1 goals4.1.2 methods4.2 bajaj hindusthan ltd4.2.1 company history4.2.2 vision & mission4.2.3 board of directors4.2.4 milestones4.2.5 products4.2.6 financial results4.2.7 dividends4.2.8 operations4.2.9 expansion of power capacity4.2.10 subsidiaries operations4.2.11 name of entities4.2.12 plant locations
5 Objectives 6 Research methodology
types of research 1.1 data collection methods
7 presentation and analysis .financial analysis & operations of the company1.1 results of operations1.2 turnover1.3 analysis of sales1.4 other income1.5 other expenses1.6 ebidta1.7 interest & finance charges1.8 depreciation & amortization1.9 provision for tax1.10 balance sheet1.11 capital1.12 equity share susupense1.13 reserves & surplus
6
1.14 loan funds1.15 fixed assets1.16 investments1.17 inventories1.18 debtors1.19 significant non-recurring
income,expenditure and other items1.20 division-wise operations1.21 distillery division1.22 power division
8 limitations 9 Findings and suggestions 10 Conclusions and recommendations 11 Bibliography 12 LIST OF TABLES
Table1:financial resultsTable2:result of operationsTable3:balance sheetTable4:balance sheetTable5:profit and loss accountTable6:cash flow statementTable7:consolidated balance sheetTable8:consolidated profit &loss accountTable9:consoloidated cash flow statement
7
EXECUTIVE SUMMARY
The process of evaluating businesses, projects, budgets and other finance-related entities
to determine their suitability for investment. Typically, financial analysis is used to
analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in.
When looking at a specific company, the financial analyst will often focus on the income
statement, balance sheet, and cash flow statement. In addition, one key area of financial
analysis involves extrapolating the company's past performance into an estimate of the
company's future performance.
In this project I have done the finanacial analysis of bajaj hindusthan limited. The Bajaj
Group came into existence during the turmoil and the heady euphoria of India's freedom
struggle. Late Shri Jamnalal Bajaj ji, founder of the Bajaj Group, was a confidante
and disciple of Mahatma Gandhi and was deeply involved in the effort for freedom.
Kamalnayan, the eldest son of Jamnalal Bajaj, succeeded his father in 1942, at the
age of twenty-seven. Putting the nation before business, he devoted himself to the later
only after India achieved independence in 1947. But when he did so, he put his heart and
soul into it. Within a short while, he not only consolidated the Bajaj Group, but also
diversified into various manufacturing activities elevating the Bajaj Group to the status it
enjoys till this day.
Bajaj Hindusthan was established in 1931. since then it has been weaving a success
story as India’s number one intergrated Sugar Company with Sugar, Industrial Alcohol
(including ethanol) and Power as its key products. The Company has fourteen sugar mills
[including four of its 75% subsidiary – Bajaj Hindusthan Sugar and Industries Ltd.
(BHSIL)] with distilleries at six locations (including one of BHSIL) and bagasse-based
power generation plants at all the locations, spread across the length and breadth of UP,
the largest sugar producing state in India. The Company has a strong track record of
profitability – have declared dividend in 73 out of BHL’s 76 years of existence. It has
nurtured a tradition of strong relationships with farmers for mutual benefit and they are
very much a part of our family. We have forayed into a relatively value-additive business.
In this project report we have given the complete financial analysis of the company.
8
INTRODUCTION
Before giving explanations about the financial analysis about the company it is
necessary to explain about what is financial analysis. The process of evaluating
businesses, projects, budgets and other finance-related entities to determine their
suitability for investment. Typically, financial analysis is used to analyze whether an
entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a
specific company, the financial analyst will often focus on the income statement, balance
sheet, and cash flow statement. In addition, one key area of financial analysis involves
extrapolating the company's past performance into an estimate of the company's future
performance.
1 . FINANCIAL ANALYSIS
Financial Analysis refers to the assessment of a business to deal with the planning,
budgeting, monitoring, forecasting, and improving of all financial details within an
organizational performance.
Financial referred to as financial statement analysis or accounting analysis) refers to an
assessment of the viability, stability and profitability of a business, sub-business
or analysis (also project).
It is performed by professionals who prepare reports using ratios that make use of
information taken from financial statements and other reports. These reports are usually
presented to top management as one of their bases in making business decisions.
Continue or discontinue its main operation or part of its business;
Make or purchase certain materials in the manufacture of its product;
Acquire or rent/lease certain machineries and equipment in the production of its
goods;
Issue stocks or negotiate for a bank loan to increase its working capital
Make decisions regarding investing or lending capital;
Other decisions that allow management to make an informed selection on various
alternatives in the conduct of its business.
9
1.1 GOALS
Financial analysts often assess the firm's:
1.1.1. Profitability -its ability to earn income and sustain growth in both short-term and
long-term. A company's degree of profitability is usually based on the income statement
which reports on the company's results of operations;
1.1.2. Solvency - its ability to pay its obligation to creditors and other third parties in the
long-term;
1.1.3. Liquidity - its ability to maintain positive cash flow while satisfying immediate
obligations;
Both 1.1.2 and 1.1.3 are based on the company's balance sheet, which indicates the
financial condition of a business as of a given point in time.
1.1.4. Stability- the firm's ability to remain in business in the long run, without having to
sustain significant losses in the conduct of its business. Assessing a company's stability
requires the use of both the income statement and the balance sheet, as well as other
financial and non-financial indicators.
1.2 METHODS
Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):
1.2.1 Past Performance - Across historical time periods for the same firm (the last 5
years for example)
1.2.2 Future Performance - Using historical figures and certain mathematical and
statistical techniques, including present and future values, This extrapolation
method is the main source of errors in financial analysis as past statistics can
be poor predictors of future prospects.
1.2.3 Comparative Performance - Comparison between similar firms.
These ratios are calculated by dividing a (group of) account balance(s), taken from
the balance sheet and / or the income statement, by another, for example :
Net income / equity = return on equity(ROE)
10
Net income / total assets = return on assets (ROA)
Stock price / earnings per share = P/E ratio
Comparing financial ratios is merely one way of conducting financial
analysis. Financial ratios face several theoretical challenges:
They say little about the firm's prospects in an absolute sense. Their
insights about relative performance require a reference point from other
time periods or similar firms.
One ratio holds little meaning. As indicators, ratios can be logically
interpreted in at least two ways. One can partially overcome this problem
by combining several related ratios to paint a more comprehensive
picture of the firm's performance.
Seasonal factors may prevent year-end values from being representative.
A ratio's values may be distorted as account balances change from the
beginning to the end of an accounting period. Use average values for
such accounts whenever possible.
Financial ratios are no more objective than the accounting methods
employed. Changes in accounting policies or choices can yield drastically
different ratio values.
Financial analysts can also use percentage analysis which involves reducing a
series of figures as a percentage of some base amount.For example, a group
of items can be expressed as a percentage of net income. When proportionate
changes in the same figure over a given time period expressed as a
percentage is known as horizontal analysis.Vertical or common-size analysis,
reduces all items on a statement to a “common size” as a percentage of some
base value which assists in comparability with other companies of different
sizes.As a result, all Income Statement items are divided by Sales, and all
Balance Sheet items are divided by Total Assets.
Another method is comparative analysis. This provides a better way to
determine trends. Comparative analysis presents the same information for
11
two or more time periods and is presented side-by-side to allow for easy
analysis.
Most businesses produce annual and monthly financial statements and comply with
record-keeping requirements, yet financial statement analysis is often overlooked or not
performed on a systematic and timely basis so as to obtain insight into the financial
performance of the business. Other businesses seek to interpret and assess their financial
statements yet lack the tools to do so. To assist decision makers, analysis-one provides a
structured framework of financial analysis tools to analyse financial statements and
deliver actionable insight from the business intelligence contained within.
Financial ratio analysis is employed for Income Statement Analysis and Balance Sheet
Analysis and is incorporated in the Financial Scorecard Tool, to provide a unique picture
of a company's financial position. Key financial ratios measured by analysis-one
represent standard performance measures used by the accounting profession on a daily
basis, and seek to analyze the income statement and balance sheet from a variety of
financial performance perspectives, which include - Profitability, Liquidity, Efficiency,
Asset Usage and Gearing.
Financial analysis tools within analysis-one, include: Financial Ratio Analysis,
Breakeven Analysis, Cash Flow Analysis, Forecasting, Variance Analysis and Sensitivity
Analysis.
Financial statements are prepared to meet external reporting obligations and also for
decision making purposes. They play a dominant role in setting the framework
managerial decisions. But the information provided in the financial statements is not an
end in itself as no meaningful conclusions can be drawn from these statements alone.
However, the information provided in the financial statements is of immense use in
making decisions through analysis and interpretation of financial statements.
When computing financial ratios and when doing other financial statement analysis
always keep in mind that the financial statements reflect the accounting principles. This
means assets are generally not reported at their current value. It is also likely that many
12
brand names and unique product lines will not be included among the assets reported on
the balance sheet, even though they may be the most valuable of all the items owned by a
company.
These examples are signals that financial ratios and financial statement analysis have
limitations. It is also important to realize that an impressive financial ratio in one industry
might be viewed as less than impressive in a different industry.
Our explanation of financial ratios and financial statement analysis is organized as
follows:
Balance Sheet
o General discussion
o Common-size balance sheet
o Financial ratios based on the balance sheet
Income Statement
o General discussion
o Common-size income statement
o Financial ratios based on the income statement
Statement of Cash Flows
The balance sheet reports a company's assets, liabilities, and stockholders' equity as of a
specific date, such as December 31, 2010, September 28, 2010, etc.
The accountants' cost principle and the monetary unit assumption will limit the assets
reported on the balance sheet. Assets will be reported
(1) only if they were acquired in a transaction, and
(2)generally at an amount that is not greater than the asset's cost at the time of the
transaction.
This means that a company's creative and effective management team will not be listed as
an asset. Similarly, a company's outstanding reputation, its unique product lines, and
brand names developed within the company will not be reported on the balance sheet. As
13
you may surmise, these items are often the most valuable of all the things owned by the
company. (Brand names purchased from another company will be recorded in the
company's accounting records at their cost.)
The accountants' matching principle will result in assets such as buildings, equipment,
furnishings, fixtures, vehicles, etc. being reported at amounts less than cost. The reason is
these assets are depreciated. Depreciation reduces an asset's book value each year and the
amount of the reduction is reported as Depreciation Expense on the income statement.
While depreciation is reducing the book value of certain assets over their useful lives, the
current value (or fair market value) of these assets may actually be increasing. (It is also
possible that the current value of some assets–such as computers–may be decreasing
faster than the book value.)
Current assets such as Cash, Accounts Receivable, Inventory, Supplies, Prepaid
Insurance, etc. usually have current values that are close to the amounts reported on the
balance sheet.
Current liabilities such as Notes Payable (due within one year), Accounts Payable, Wages
Payable, Interest Payable, Unearned Revenues, etc. are also likely to have current values
that are close to the amounts reported on the balance sheet.
Long-term liabilities such as Notes Payable (not due within one year) or Bonds Payable
(not maturing within one year) will often have current values that differ from the amounts
reported on the balance sheet.
Stockholders' equity is the book value of the company. It is the difference between the
reported amount of assets and the reported amount of liabilities. For the reasons
mentioned above, the reported amount of stockholders' equity will therefore be different
from the current or market value of the company.
14
By definition the current assets and current liabilities are "turning over" at least once per
year. As a result, the reported amounts are likely to be similar to their current value. The
long-term assets and long-term liabilities are not "turning over" often. Therefore, the
amounts reported for long-term assets and long-term liabilities will likely be different
from the current value of those items.
2. BAJAJ HINDUSTHAN LIMITED
2.1 Company history
Bajaj Hindusthan Limited (BHL) was incorporated on 23rd November, 1931 under the
name - The Hindusthan Sugar Mills Limited – on the initiative of Jamnalal Bajaj - a
businessman, confidante, disciple and adopted son of Mahatma Gandhi. He sought
Gandhiji's blessings in this new venture, which, apart from being a sound commercial
proposition would also meet a national need. Till then, there were barely thirty sugar
factories in the country.
The site selected for the first plant was at Golagokarannath, district Lakhimpur Kheri in
the Terai region of Uttar Pradesh (UP), an area rich in sugar cane. The original capacity
of the factory was 400 tons of cane crushed per day (tcd). Subsequently, this capacity was
increased in stages and is currently 13,000 tcd. The distillery Unit at this plant
commenced production during the end of World War II in 1944. In the initial few years,
the major output was in the form of power alcohol as an additive to petrol, which was
then in short supply. The unit was the first to supply alcohol-mixed petrol to the army.
In 1967, a new Company - Sharda Sugar & Industries Limited - was established as a
subsidiary of Hindusthan Sugar Mills Limited. Under this new subsidiary, a sugar plant
with a cane crushing capacity of 1400 tcd was set up in 1972 at Palia Kalan, a large cane
supplying centre at a distance of about 70 kilometres from Golagokarannath. The
objective of this new Unit was primarily to help the cane growers of the area supply their
15
produce to the new location closer to their fields, thereby cutting down on transportation
costs. The capacity was subsequently increased in stages to reach the present 11,000 tcd.
In the year 1988, The Hindusthan Sugar Mills Limited was renamed as Bajaj Hindusthan
Limited and shortly thereafter in 1990, Sharda Sugar & Industries Limited was
amalgamated with Bajaj Hindusthan Limited.
The Company embarked on an aggressive Greenfield expansion drive in 2003-2007,
starting with a plant at Kinauni, near Meerut (UP), which was completed in a record time
of just seven months as against the industry norm of 18-24 months. This facility
commenced commercial production in November 2004.
At the end of the expansion project in 2007, BHL had ten sugar manufacturing locations
across UP with a cane crushing capacity of 96,000 tcd and was also the country’s largest
ethanol producer with an output of 480 KL/ day.
In an acquisition move, the Company took over the Pratappur Sugar and Industries
Limited (PSIL), district Deoria, Eastern UP in December 2005. This Plant, in operation
since 1903, had a crushing capacity of 3,200 tcd, which was increased to 6,000 tcd in the
subsequent sugar season 2006-07.
PSIL was subsequently renamed Bajaj Hindusthan Sugar and Industries Limited (BHSIL)
and became a subsidiary of BHL. This acquisition provided BHL a strategic foothold in
the sugar-deficient region of Eastern UP and reaffirmed the consolidation that took place
in the sugar industry.
BHSIL embarked upon significant new expansions. While the capacity of its existing
sugar plant at Pratappur was enhanced, three new sugar units were also set up in virgin,
cane-rich areas of East UP at Rudauli (district Basti), Kundarkhi (district Gonda) and in
Utraula (district Balrampur). BHSIL then, had a crushing capacity of 40,000 tcd and a
distillery with the capacity to manufacture 160 kilo-litre per day of ethanol. The total
industrial alcohol/ ethanol capacity of the Company, including its subsidiary, was 800
KL/ day.
16
With the commissioning of three bagasse-based power co-generation plants at
Kundarkhi, Rudauli and Utraula, BHSIL had an aggregate power generation capacity of
95.8 MW. Combined with the power generation capacity of 325 MW from BHL, the
Company’s total generation capacity is 420.8 MW. After meeting its own energy needs,
the Company has a surplus of 90 MW. It supplies a significant part of this surplus power
to the UP state grid.
In December 2010, BHSIL was amalgamated with BHL
The Company’s growth initiative has been led by a strategic focus of attaining global
scales of manufacturing and cost competitiveness. Such benchmarking provides BHL
advantages of cost and higher domestic market share where demand is expected to
outstrip supply for the next few years. BHL is in a unique position. While its planning
and processes are benchmarked against global practices, its activities are directed at
contributing to the Indian rural economy at a local, grassroots level, primarily in the
uplifting of the farmers. The Company embarked on an expansion, the scales of which
are unprecedented worldwide, providing tremendous opportunities of employment,
infrastructure and community development and contributing to the growth of the rural
economy of UP.
2.2 Mission and vision
Mission
To be the leader in our chosen business area, create an organisation that all our
constituents are proud to be associated with, set benchmarks that will become the
standard for others to emulate and through ethical business practices create wealth for our
stakeholders.
vision
17
To transform bajaj hindusthan ltd. into a dynamic and vibrant business entity where
growth is an ethos and the long-term value creation for our stakeholders is the paramount
objective.
2.3 Board of directors
Mr. Shishir Bajaj, Chairman & Managing Director
Mr. Shishir Bajaj, Chairman & Managing Director of the Company, belongs to the
promoter - Bajaj Group. After completing his MBA from New York University majoring
in finance, Mr. Bajaj joined the Company in 1974 and since then has been been
shouldering the overall responsibility of the Company. He is holding the position of
Managing Director of the Company since July 1988.
Mr. Kushagra Nayan Bajaj, Vice Chairman and Joint Managing Director
Mr. Kushagra Nayan Bajaj is the Jt. Managing Director of the Company. A Bachelor of
Science in Economics, Political Philosophy and Finance from the Carnegie Mellon
University, Pittsburgh, USA, he earned his Master of Science in Marketing from the
Northwestern University, Chicago, USA.
Mr. Bajaj was Chief Executive of the Company between August 2001 and April 2007,
responsible for overall operations.
Mr. D.S. Mehta
Mr. D S Mehta has been on the Board of Bajaj Hindusthan Ltd since January 1986. He
holds directorship in various other Bajaj group companies. He graduated with an honours
degree in commerce from Mumbai University and he is an alumnus of Sydenham
18
College. He is a fellow member of both the Institute of Chartered Accountants of India
and the Institute of Company Secretaries of India. He has been associated with the Bajaj
group of companies since 1966 and has more than 30 years experience in corporate law,
taxation, finance and investment.
Mr. M.L. Apte
Mr. M.L. Apte, an industrialist having interest in sugar business is associated with Bajaj
Hindusthan Ltd. as Director for over 33 years. A former Sheriff of Mumbai, he was also a
former President of Maharashtra Chamber of Commerce, Bombay Chamber of
Commerce, Cricket Club of India, Indian Sugar Mills Association, Member of the Indian
Cotton Mills Federation and former Chairman of the Textiles Committee. He is currently
the Chairman of the Apte Group of Companies and a Director of Grasim Industries Ltd.
and Tata Asset Management Pvt. Ltd.
Mr. Ravindrakumar V. Ruia
Mr. Ravindrakumar V Ruia is the Executive Director of the Dawn Mills Company
Limited and is actively associated with the day-today affairs of Dawn Apparels Limited,
subsidiary of the Dawn Mills Co. Ltd. as its Director. Mr. Ruia joined the Board of Bajaj
Hindusthan Ltd. in April 2001. He is also a Director of Special Paints Ltd., Sigma Paints
(Karnataka) Ltd. apart from various other Ruia group companies.
He is also Committee Member of The Bombay Mill owners' Association, Indian Cotton
Mills Federation and Bombay Textile Research Association and is associated with
various public charity trusts as Trustee.
Mr. D. K. Shukla
19
Mr. Dinesh Kumar Shukla, is a B. A. and M. S. W. He retired as an Executive Director
(Personnel) in February, 2003 from Life Insurance Corporation of India (LIC). During his
tenure with LIC, he occupied positions like Regional Manager - Marketing, Group
Pension and Superannuation Schemes of LIC at Kolkata (Eastern Zone) as well as In-
charge of 3 LIC divisions viz. Raipur, Jabalpur and Bhopal. Mr. Shukla has been
associated with the company as nominee of LIC since October, 2001 and also as a
member of the Audit Committee. After withdrawal of his nomination by LIC in
November, 2008, Mr. Shukla has been re-inducted as a director of the Company in
December, 2008.
Mr. Alok Krishna Agarwal
Mr. Alok Krishna Agarwal has been a member of Board of Directors of Bajaj Hindusthan
Limited since April 2007. He is the founder managing partner of Juris Consultus, New
Delhi. He was admitted to the Bar Council of India in 1988. He is an associate member of
the Bar Council of Delhi, the Supreme Court Bar Association, the International Bar
Association, the Indo American Chamber of Commerce and Federation of Indian
Chambers of Commerce and Industry.
Dr. Sanjeev Kumar, Director (Corporate and Legal Affairs)
Dr. Sanjeev Kumar, Director (Corporate and Legal Affairs) has been a member of Bajaj
Hindusthan Limited since March 2009. He was formerly the Group President of
corporate and legal of the Company since June 2004. He obtained a Masters in
Commerce in 1979, a Doctorate in 1996, an LL.B. in 2001, a Diploma in intellectual
property rights laws in 2001 and a Diploma in Literature. In addition, Dr. Sanjeev Kumar
has been a Cost Accountant since 1981 and a Company Secretary since 1982. Dr. Sanjeev
Kumar has approximately 26 years of professional experience.
2.4 Milestones
2001 onwards
20
New 7,000 TCD plant near Meerut commenced operations in November 2004.
First unit to crush 20 million quintals of cane during the drought year 2002-03.
Achieved record profit of Rs. 283.51 million in FY 2003.
Turnover up by 25% (on annualised basis).
Production up by 25%.
Crushing of sugar cane up by 26%.
GOI changes the free to levy sugar sale ratio from 70:30 to 85:15.
1991-2000
LOI received to increase cane capacity to 10,000 MT per day for Gola unit
Construction Board Ltd. amalgamated with bajaj hindusthan ltd.
Palia capacity increased to 5,000 TCD
The cement plant is sold to J K Udaipur Udyog Ltd. for Rs. 1475 million
Board of directors decide to dispose of the cement unit.
1981-1990
Company applies for a license to increase capacity from 4,800 TCD to 10,000 TCD
Complete decontrol of cement effective March 1, 1989
Sharda Sugar & Ind. Ltd. receives LOI to expand its capacity from 1,400 TCD to
5,000 TCD.
The company changes its name to bajaj hindusthan ltd.
Capacity of cement plant increased from 4 to 6 million tons per annum
Bonus shares issued of Rs. 1.12 million in the ratio of 4:1
Expansion of Gola plant from 3,600 to 4,800 tons completed
Golden jubilee year
Sharda Sugar & Ind. Ltd. amalgamated with bajaj hindusthan ltd.
2.5 Corporate social responsibility..
Looking beyond balance sheets..
21
2.5.1 Bajaj school at maqsoodapur
The CSR philosophy of Bajaj Hindusthan is driven by the consistent and unflinching
commitment of the Company’s businesses to function ethically and to contribute to the
economic and social development of the community it operates in. This improves the
quality of life of the workforce and employees’ families as well as that of the local
population, including sugarcane growers, and the society in general. It also contributes to
enhance the qualify of the physical environment.
BHL’s establishment of the “Bajaj Public school” at its Maqsoodapur (district
Shahjahanpur) manufacturing Unit in UP is in pursuit of this philosophy, Bajaj
Hindusthan has plans to impart high quality education at an affordable cost to the
children of its employees and its cane growers, members of the local community and
society at large through this School.
2.5.2 Bajaj hindusthan’s CSR initiatives win CII’s national award
As part of its Corporate Social Responsibility initiative, Bajaj Hindusthan Ltd. is working
hard at the grassroots level towards the development of natural and human resources and
their efficient and judicious use. Under the related activities, the company has initiated
22
and integrated community development programs for stressed farmers in the suicide-
prone zone of Wardha district in the Vidarbha region, focusing particularly on water
harvesting and its efficient utilization. Under the integrated water resources development
programme, BHL constructs Check Dams, Percolation Tanks and Ponds/ Farm Ponds,
besides working on the revival of rivers through the dredging and widening of river beds,
bori bandhs, inter-linking of water bodies through link water channels/ canals, wells and
bore wells, recharging through rain water, gabion structures and farm bunds, etc. Along
with water harvesting measures, the company is equally emphatic on the efficient use of
water in the agriculture sector. It promotes micro irrigation systems like drip and
sprinkler irrigation systems, horticulture plantation, dairy farming and less water-
intensive short duration cash crops. Dedicated efforts have seen us reach 101 villages of
Wardha district and consequently, 8380 acres of agricultural land and 4473 farmers have
directly benefitted. All these programs are being planned and implemented through an
experienced professional team under the Kamalnayan Jamnalal Bajaj Foundation based at
Wardha.
Appreciating BHL’s efforts, NABARD has now joined hands with us for the promotion
of horticulture (Wadi Project) and the Confederation of Indian Industries (CII) too has
recognized our water harvesting efforts. BHL has won the CII’s National Award for
Excellence in Water Management 2010 in the category “Excellent Water Efficient Unit -
Beyond the Fence 2010”.
2.6 Products
2.6.1 From sugarcane to sugar crystals- the process of making sugar
Sugarcane, is broadly classified into three varieties early, general and unapproved. Cane
is sowed during February and October every year. The first seed growth is known as the
plant and subsequent growth after harvesting from the stem is known as Ratoon. The
early variety has more sugar content than the general variety.
23
Every farmer within the command area of the Mill is provided with a calendar, which
tells him when he can expect a Mill Supply Ticket (Purchy), against which he will deliver
the sugarcane.
He then harvests the cane and transports it either in a bullock cart or tractor trolley to the
mill. Cane is also bought at the mill's own centers within the command area. This cane is
then transported in trucks or through rail to the mill.
Cane is weighed using an electronic weigh bridge and unloaded into cane carriers. It is
then prepared for milling by knives and shredders. Sugarcane juice is then extracted by
pressing the prepared cane through mills. Each mill consists of three rollers:
1. Extracted juice mixed with water is weighed and sent to the boiling house for
further processing. Residual bagasse is sent to boilers for use as fuel for steam
generation
2. This juice is heated and then treated with milk of lime and sulphur dioxide. The
treated juice is then further heated and sent to clarifiers for continuous settling.
The settled mud is filtered by vacuum filters and filtered juice is returned to be
further processed while the oliver cake is sent out
3. The clear juice is evaporated to a syrup stage, bleached by sulphur dioxide and
then sent to vacuum pans for further concentration and sugar grain formation.
Crystals are developed to a desired size and the crystallized mass is then dropped
in the crystallizers to exhaust the mother liquor of its sugar as much as possible.
This is then centrifuged for separating the crystals from molasses. The molasses is
re-boiled for further crystallization
Thus, the original syrup is desugarised progressively (normally three times) till finally, a
viscous liquid is obtained from which sugar can no longer be recovered economically.
This liquid, which is called final molasses, is sent to the distillery for making alcohol.
The sugar thus is separated from molasses in the centrifuge is dried, bagged (50 Kg and
100 Kg), weighed and sent to storage houses.
24
Sugar is made in different sizes and accordingly classified into various grades i.e. large,
medium and small.
2.6.2 By- products of the sugar making process
. Molasses:
Molasses is the only by-product obtained in the preparation of sugar through repeated
crystallization. The yield of molasses per ton of sugarcane varies in the range of 4.5% to
5%. Molasses is mainly used for the manufacture of alcohol, yeast and cattle feed.
Alcohol in turn is used to produce ethanol, rectified spirit, potable liquor and downstream
value added chemicals such as acetone, acetic acid, butanol, acetic anhydride, MEG etc.
The state government controls the export of molasses through export licenses issued
every quarter. Molasses and alcohol-based industries were decontrolled in 1993 and are
now being controlled by respective state government polices. Nearly 90% of molasses
produced is consumed by the industrial alcohol manufacturers and the remaining 10% is
consumed by the potable alcohol sector.
Bagasse:
Bagasse is a fibrous residue of cane stalk that is obtained after crushing and extraction of
juice. It consists of water, fibre 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. Bagasse is usually used as a
combustible in furnaces to produce steam, which in turn is used to generate power. It is
also used as a raw material for production of paper and as feedstock for cattle.
By making use of bagasse sugar mills have been successful in reducing dependence on
State Electric Boards, for their power supply as it can procure up to 90-95% of its total
power requirement through captive generation from steam turbines.
Fly ash:
25
Fly Ash is the residual output from the boiler furnace after bagasse has completely burnt
out. This fly ash is used as a substitute for firewood. It is rich in potassium and is also
used by local farmers for cultivation.
Press Mud:
Press mud, also known as oliver cake or press cake, is the residual output after the
filtration of the juice. It is mixed with spent wash from the distillery and cultivated to
produce high quality bio-manure.
2.7 Financial results
The summarized financial results of the company for the year ended September 30, 2010 are presented below:Table1
2009-10 2008-09
sales and other income 3,028.98 1814.89
profit before interest, depreciation and taxation 613.82 595.29
interest(net) 301.34 187.08
depreciation and amortisation 257.44 202.21
profit before taxation 55.04 206
provision for taxation(net) 0.1 0.66
provision for deferred tax 3.19 49.11
profit after tax 51.75 156.23
disposable surplus after adjustments 204.56 161.14
transfer to reserve for molasses storage tanks 0.33 0.16
transfer to general reserve 10.03 40
transfer to debenture redemption reserve - 27.5
26
proposed dividend 13.4 12.38
corporate dividend tax on proposed dividend 2.22 2.1
balance carried to balance sheet 178.58 79
On a stand alone basis the company achieved a turnover of Rs.3,028.98 crore as
compared to Rs.1814.89 crore in the previous year. The profit after tax stood at rs.51.75
crore as compared to the profit of Rs.156.23 crore in the previous year. On consolidated
basis , the turnover is Rs.3,340.68 crore as compared to Rs.2,333.52 crore in the previous
year. The profit after tax and minority interest is Rs.44.06 crore as compared to Rs.61.78
crore in the previous year.
2.8 Dividend
The board of directors of the company recommend , for consideration of shareholders at
the 79th annual general meeting , payment of dividend of 70% (re 0.70 per share)on
equity shares of the face value of re 1/- each for the year ended september30,2010. the
dividend paid during the previous year was also 70% .
2.9 Operations
The merger of subsidiary BHSIL with the company has further consolidated BHL’S
leadership position in the Indian sugar industry. Post amalgamation the company now has
14 sugar factories with an aggregate sugarcane crushing capacity of 1,36,000 TCD , six
distilleries having capacity to produce industrial alcohol of 800 kilolitres per day and co-
generation plants having power generation capacity of 428MW.
The operations during the financial year ended september30,2010 at all the fourteen sugar
mills of the company, six distilleries and co-generation facilities were satisfactory.
Despite volatile conditions , the company had achieved commendable results during the
year 2009-10.
During the sugar season 2009-10 , the sugarcane crop acreage reduced in u.p
primarily due to deficient rainfall and relatively low sugar prices during the previous few
sugar
27
Seasons.. to meet the perceived shortfall in sugar production and with a view to
optimize its sugar production capacity utilization, the company had imported an
aggregate of 5,27,805 MT of raw sugar. However owing to a ban imposed in inward
transportation.
2.10. Expansion of power capacity
Modification of boilers for use of alternate fuel
The conversion of bagasse fired boiler into multifuel boiler at our gangnauli,kinauni
&.maqsoodapur sugar units has been completed and put in operations successfully. Now
we have option to run the boiler on alternate fuels i.e with coal separately, with bagasse
separately and jointly with bagasse & coal as a fuel for the purpose of power export.
New coal fired power plants
Sugar industry in India /of late has witnessed an intense volatility in sugar prices.
Considering the cyclical nature of industry the company constantly endeavours to evolve
a business model that can insulate itself from the vagaries of cyclicality of sugar business.
Since the year 2003, the company had expanded its sugar capacity rapidly from 24000
TCD to the present capacity of 1,36,000 TCD.
The power industry in India has been characterized by energy shortages as the gap
between demand and supply of power has been increasing. U.P government has also
announced U.P energy policy 2009 inviting private participation in the power sector to
generate over 32,000 MW of power by 2014. The company has been in the business of
power generation through the co-generation bagasse fired power generation plants
28
located at all its sugar units of which major part around 75%-80% was used for captive
purpose and surplus sold to the Uttar Pradesh government.
Phase1-450 MW
In the first phase the company had commenced project for an aggregate power generating
capacity of 400 MW comprising of 80MW thermal power plants at five locations on the
unused land available in the vicinity of the sugar mills of the company at khamberkhera,
barkhera, maqsoodapur, kundarkhi and utraula all located in the state of uttar
Pradesh.Subsequently the capacity of these thermal power plants were upwardly revised
to 450MW.
Phase 2- 1980 MW at lalitpur
The company was awarded 1,980MW ultra mega thermal power project at lalitpur , Uttar
Pradesh . This project is proposed to be implemented through lalitpur power generation
company limited(LPGCL), a SPV created for this purpose by the government of U.P. The
approximate cost of project is estimated at around Rs.12000 crore. The company had
entered into a memorandum of understanding(MOU) with government of uttar Pradesh
and have acquired LPGCL from UPPCL to make it a subsidiary of the company with
effect from December10,2010.
Phase III – 1,980 MW at bargarh
The company has also been awarded another 1,980 MW ultra themal power project at
bargarh , district chitrakoot, uttar Pradesh. The cost of project is estimated at around
Rs.12000 crore. A memorandum of understanding has been executed with government of
uttar Pradesh in this regard. The bargarh TPP shall be implemented through another SPV-
Bajaj power generation private limited(BPGPL), a subsidiary of the company.
Bio-gas/ power from press mud
In addition to the bagasse and molasses , the sugar mill operations also generate sufficient
amount of press mud. At six out of fourteen units of the group, distilleries are attached to
29
the sugar plant. In these cases , such press mud is partly utilized gainfully in compost
taking with bio-methanated effluent for distilleries to accomplish zero discharge and rest
is sold at very nominal price. At other locations the entire quantity is sold at nominal
prices. The company has at time experienced great difficulty for disposal of the press
mud(approximately 4% of cane crushed).
With around 30-35% biomass content , press mud has the potential to be converted into
biogas through anaerobically . Keeping above in consideration and also in order to utilize
the press mud valuably the company has actively considered tapping renewable energy
from industrial waste. It was considered desirable to utilize the surplus press mud
generated in the sugar units which do not have a distillery attached by gainfully converted
it into biogas which in turn can also be consumed advantageously in power generation
through gas engine.
2.11 Subsidiaries’ operations
2.11.1 Bajaj hindusthan sugar and industries limited
During the year bajaj hindusthan sugar and industries limited(BHSIL), a 75% subsidiary
of the company has ceased to be a subsidiary of the company pursuant to the scheme of
amalgamation of BHSIL with the company with effect from april1,2010 fixed as
appointed date.
2.11.2 Bajaj eco-tec products limited
Bajaj co-tec products limited(BEPL) is a wholly owned subsidiary of bajaj
hindusthan limited engaged in manufacture of medium density fibre
boards(MDF) boards and pencil boards and particle boards from sugarcane
bagasse .
During the financial year ended march 31 , 2010 BEPL recorded a turnover of
RS.154.63 as against Rs.59.48 crore during the previous year. The net loss after
30
tax for the year was reduced to Rs.50.57 crore as agaibst Rs.73.95 recorded
during the previous year.
2.11.3 Bajaj aviation private limited
Bajaj aviation private limited is a wholly owned subsidiary of bajaj eco-tec
products limited and therefore is a subsidiary of the company. During the year
ended September 30,2010,it generated an income of Rd.1.76 crore and posted
profit after taxation of Rs.0.67 crore.
2.11.4 Bajaj energy private limited(BENPL) (formerly bajaj eco-chem products
private limited)
During the year the proposed plans of carrying on the business of manufacture
and sale of specialty chemicals through this subsidiary were abandoned. The
entire pre-operative expenditure aggregating to Rs.0.63 crore on the aforesaid
project has since been written off. The name of the company was therefore
changed from bajaj eco-chem products private limited to bajaj energy private
limited with effect from march 19,2010. After obtaining approval of
government of uttar Pradesh , these five under construction power projects
were assigned to be developed by bajaj energy private limited. As per the terms
and conditions stipulated by the government of u.p , BHL is obligated to hold
26% of the equity of his SPV. Also BHL and this SPV shall have the joint
responsibility for setting up these projects .
The project has been appraised by SBICAP trustee company limited on behalf
of a consortium of lenders and financial closure for debt aggregating to
Rs.1740 crore has been achieved. The equity requirement for the project has
been estimated at Rs.580 crore . Till date , BHL has subscribed equity to the
tune of Rs.137.81 crore and Rs.149.88 crore has been subscribed by an entity
belonging to the promoters of BHL.
2.11.5 Bajaj internacional participacoes limitada(subsidiary in brazil)
31
During the year too, no business as envisaged to be undertaken through this
wholly owned subsidiary in brazil could be commenced. The amount invested
by the company had remained deployed in bank deposits.since the company did
not see any opportunity of commencing business soon,the process of its
winding up and repatriation of capital has been initiated.
2.11.6 Bajaj hindusthan(Singapore)private limited
During the year bajaj hindusthan (Singapore) pte.ltd, a wholly owned subsisiary
of the company in Singapore decided to commence operations of trading in
commodities like sugar, coal etc. The company also plans to acquire a coal
mine located in Indonesia.
To meet the fund requirements of its business, BHL has further invested a sum
of us$27 million equivalent to Rs92.3 crore in this subsidiary.
The financial year of this subsidiary has been changed from October-september
period to april-march period with effect from march 31,2010. No business
operations has been commenced upto march 31,2010. With the aggregate
expenditure during the period amounting to Rs.0.03 crore , the net loss for the
period was Rs.0.03 crore and accumulated carried forward loss upto march
31,2010 is Rs0.12 crore.
2.11 Persons constituting group within the definition of”group” as defined in the
momopolies and restrictive trade practices act , 1969 , for the purpose of
regulation 3(1)(e)(i) of the securities and exchange board of India
(substantial acquisition of shares and takeovers) regulation , 1997, include
thw following:
32
Sr.no Name of the entity
1. A.N Bajaj pvt.ltd(formerly known as krishnavijay paper and board
pvt.ltd)
2. Abhitech developers pvt.ltd
3. Anandmayi trust
4. Apoorv trust
5. Bajaj allwyn realty pvt.ltd
6. Bajaj capital ventures pvt.ltd
7. Bajaj consumer care employees welfare fund, udaipur
8. Bajaj consumer care employees welfare fund, varanasi
9. Bajaj consumer care ltd
10. Bajaj corp.ltd
11. Bajaj ebiz pvt.ltd
12. Bajaj hindusthan limited employees educaton welfare fund
13. Bajaj hindusthan limited employees family planning welfare fund
14. Bajaj hindusthan limited employees general medical aid fund
15. Bajaj hindusthan limited employees sports & cultural activities welfare
fund
16. Bajaj hindusthan limited managerial staff medical aid fund
17. Bajaj infrastructure development co.ltd
33
18. Bajaj infrastructure finance corporation pvt.limited
19. Bajaj international realty pvt.ltd
20. Bajaj logistics pvt.ltd
21. Bajaj power ventues pvt.ltd
22. Bajaj trustee company pvt.ltd
23. Bhoomipooja shelters pvt.ltd
24. Bhoomivijay properties pvt.ltd
25. Carbery infrastructure pte.ltd
26. Esugarindia clearing corporation ltd.
27. Esugarindia ltd
28. Global world power projects pvt.ltd
29. Golden shore investing FZE
30. Golden shore investing limited
31. Jagruti chinni pvt.ltd
32. kalakruti real estates pvt.ltd
33. KNB enterprises pvt.ltd(formerly known as parvati chinni pvt.ltd)
34. Kruti real estate pvt.ltd
35. kushagra trust
36. kushagra trust no.2
34
37. Lambodar sugars pvt.ltd
38. Megha khandsari pvt.ltd
39. N.H.M marketing pvt.ltd
40. New horizon investments ltd.
41. Shishir bajaj family trust
42. Shishir bajaj HUF
43. SKB roop commercial pvt.limited(formerly known as Roop sugars
pvt.ltd)
44. Vishwarupe trust
45. Yugadikrit trust
46. Bajaj eco-tec products ltd.
47. Bajaj aviation pvt.ltd
48. Bajaj internacional participacoes ltda.
49. Bajaj hindusthan( singapore) pte.ltd
50. Bajaj energy pvt.ltd(formerly known as bajaj eco-chem products pvt.ltd)
51. Lalitpur power generation company ltd.
52. Bajaj power generation pvt.ltd(formerly known as kashyap properties
pvt.ltd)
2.12 PLANT LOCATIONS
Sugar mills
35
1.Golagokarannath , district lakhimpur kheri, uttar Pradesh
2. palia kalan, , district lakhimpur kheri ,uttar Pradesh
3. kinauni, district meerut, uttar Pradesh
4. Thanabhawan,district muzaffarnagar, uttar Pradesh
5. Budhana, district muzaffarnagar , uttar Pradesh
6. Bilai, district bijnor, uttar Pradesh
7. Barkhera , district pilibhit, uttar Pradesh
8 Khambarkhera, district lakhimpur, uttar Pradesh
9 Gangnauli , district saharanpur, uttar Pradesh
10. Maqsoodapur, district shahjahanpur, uttar Pradesh
11. Pratappur,district deoria, uttar Pradesh
12. Rudauli,district basti, uttar Pradesh
13. Utraula, district balrampur, uttar Pradesh
14. Kundarkhi,district gonda, uttar Pradesh
Distillery
1. Golagokarannath , district lakhimpur kheri, uttar Pradesh
2. Palia kalan, , district lakhimpur kheri ,uttar Pradesh
3. kinauni, district meerut, uttar Pradesh
4. Khambarkhera, district lakhimpur, uttar Pradesh
36
5. Gangnauli , district saharanpur, uttar Pradesh
6. Rudauli,district basti, uttar Pradesh
Co-generation
1. palia kalan, , district lakhimpur kheri ,uttar Pradesh
2. Barkhera , district pilibhit, uttar Pradesh
3. Khambarkhera, district lakhimpur, uttar Pradesh
4. kinauni, district meerut, uttar Pradesh
5. Thanabhawan,district muzaffarnagar, uttar Pradesh
6. Budhana, district muzaffarnagar , uttar Pradesh
7. Bilai, district bijnor, uttar Pradesh
8. Gangnauli , district saharanpur, uttar Pradesh
9. Maqsoodapur, district shahjahanpur, uttar Pradesh
10. Golagokarannath , district lakhimpur kheri, uttar Pradesh
37
OBJECTIVES OF THE STUDY
To learn how to make a business report.
To understand the Financial analysis of Bajaj Hindusthan limited.
To study about the accounting policies and standards adopted by BHL.
To get knowledge about the functioning of finance and accounts department
***** ***** ***** *** ****** ******
38
RESEARCH METHODOLOGY
Research is an original contribution to the contribution to the existing stock of knowledge
making for its advancement. It is the pursuit of the truth with the help of study.
Observation for knowledge through objective and systematic approach of finding solution
to a problem is research. The systematic approach concerning generalization and the
formulation of a theory is also research.
The manipulation of things, concepts and symbols for the purpose of generalization to extend, correctly and verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art.
D.Slesinger and M.Stephenson
1 TYPES OF THE RESEARCH
39
The basic types of research are as follows:
1. Descriptive research: The purpose of this research is sales promotion activities
in telecom with special reference to idea cellular.
2. Analytical research: In this research the researcher has to use facts or
information strategy already available and analyze these to make a critical
evaluation of the material.
3. Quantitative research: It is concerned with the qualitative phenomenon is
phenomena relating to or involving quality or kind.
4. conceptual research: It is related to some abstract ideas or theory.
5. empirical research: It is data based research coming with conclusions, which are
capable of being verified by the observation and experiment.
6. Diagonostic research: such a research follow case study method or in depth
approaches to reach the basic casual relation.
7. Exploratory research: The objective of this research is the development of
hypothesis rather than their testing.
The research methodology includes the information regarding the sample size design,
data collection methods and the analytical tools used .
Here also the same is explained in detail regarding the sample size , collection methods
and analytical tools used in this research.
1.1 Data collection methods
There are so many ways in which data shall be collected. The methods that have been
used for collecting the data are:
1.1.1 Primary research
1.Questionnaire method
2.Direct interview method
1.1.2 Secondary research
Books
Internet
40
Articles
Newspapers
Magazines
In this research, Firstly I have studied the company history, Co’s Growth, co’s products,
govt. policies for sugar industry, global & Indian scenario of sugar, risks & concerns for
better understanding of accounting policies & accounting procedures. After that I started
my project of “Financial analysis of Bajaj hindusthan limited .”
Define the problem and research objectives
The first step calls for the researcher to define the problem carefully and agree on the
research objective. An old age saying-
“A problem well defined is half solved.”1.1.3 Data Collection Data’s collected through Personal interviews, Co’s Balance Sheets, Internet sites, Books
etc.
PRESENTATION AND ANALYSIS
1 .THE FINANCIAL ANALYSIS AND OPERATIONS OF THE COMPANY
A scheme of amalgamation of Bajaj Hindusthan sugar and industries limited
(hereinafter referred to as ‘Amalgamated company’) with the company under sections
391 to 394 of the companies act , 1956 was sanctioned by Hon’ble high court having
judicature at Bombay vide order dated November 26,2010.
Current year figures includes the stand-alone figures of Bajaj hindusthan limited for the
period from October 01,2009 to September 30,2010 and the figures of Bajaj Hindusthan
sugar and industries limited(Amalgamated company) for the period from April 01, 2010
to September 30,2010. Further the assets and liabilities as on September 30,2010 of the
41
company also includes assets and liabilities of the Amalgamated company as per the
scheme of amalgamation.
Table 2
cane crushing MMT 8.467 5.425
Raw sugar processing MMT 0.327 _
Sugar recovery % 9.24 9.09
Sugar production-from cane M.T 782,118 493,468
- from raw sugar M.T 315,262 _
Industrial alcohol production K.L 94,719 32,070
Molasses production M.T 442,433 267,241
Power generation M.W 448,901 276,300
During the year the production of sugar and molasses has increased to 10,97,380MT
and 4,,42,433 MT as compared to 4,93,268MT and 2,67,241 MT respectively in previous
year recording a growth of 122% and 65% respectively. This was mainly due to higher
availability of sugarcane and processing imported raw sugar. Similarly industrial alcohol
ethanol production was higher at 94,719 KL as compared to 32,070 KL in previous year
recording a growth of 195%. Power generation was also higher at 4,48,901 MW as
compared to 2,76,300 MW in previous year recording a growth of 62% largely due to
higher quantum of bagasse available from the crushing of sugarcane.
Looking to the reduced sugarcane crop acreage in sugar season 2009-10, the company
took necessary steps to ensure availability of cane so that mills can operate at optimum
capacity. Though, cane crop acreage reduced in u.p, the quality of sugarcane improved ,
42
resulting into higher production of sugar and other related products i.e molasses and
alcohol. Recovery of sugar from sugarcane was also higher this year at 9.24% as against
9.09% in the previous year. The farmers have gain shifted from other crops to sugarcane
crop this year due to higher fair and remunerative price(FRP), State advisory price(SAP)
fixed by the central government and state government respectively and incentive paid to
cane growers by the sugar mills.
1.1 Results of operations
Table 3
Particulars 2009-10 2008-09
Revenue 3,028.98 1814.89
Earnings before interest,depreciation(EBIDTA) 613.82 595.29
Interest&finance charges(net) 301.34 187.08
cash profits 312.48 408.21
Depreciation & amortisation 257.44 202.21
Profit before tax 55.04 206
provision for taxation 3.29 49.77
Profit after tax 51.75 156.23
Basic earning per share(Rs) 2.51 10.3
Diluted earning per share(Rs) 2.51 9.39
1.2 Turnover
Increase in revenue is due to higher quantum of sugar sold , higher sales realization of
sugar and revenue of amalgamated company for the period from april1,2010 to
september30, 2010.
1.3 Analysis of sales
43
During the year the company sold 9,26,966 MT of sugar as against 6,72,180 MT during
the previous year, registering an increase of 38%. The company also sold 54,602 MT of
molasses as against 71,120 MT in the previous year , reporting a downfall of 23% due to
more molasses used for production of alcohol during the year.
1.4 Other income
Other income for the year was Rs.155.38 crore against Rs.231.15 crore in the previous
year.
The major component of other income was gain due to foreign exchange fluctuation of
Rs.47.73 crore, lease rent at RS.15.84 crore. Provision no longer required/credit balance
appropriated of Rs.32.19 crore and profit on sale of long term investment of Rs.16.61
crore.
1.5 other expenses
During the year other expenses were Rs.246.27 crore as against Rs.138.28 crore in the
previous year. The increase in other expenses was largely due to higher crushing of
sugarcane and processing of raw sugar during the year.
1.6 Earnings before interest, depreciation, tax and amortization
The EBIDTA achieved for the year was Rs.613.82 crore as against Rs.595.29 crore in
the previous year. The increase in EBIDTA margins was mainly on account of higher
volume of sales, higher realization of sugar and power sale as compared to previous year.
1.7 Interest & finance charges
Increase in interest expenses was mainly due to higher loans and additional working
capital utilized for making early cane price payments to growers as compared to the
previous year. This year company also held higher stocks of sugar and alcohol due to
higher production and lower demand of sugar.
1.8 Depreciation & amortisation
44
The depreciation for the year increased from Rs.202.21 crore to Rs.257.44 crore mainly
due to depreciation on revaluation of assets of the company as on april01,2010 and
depreciation on assets of amalgamated company i.e Bajaj hindusthan sugar and industries
limited w.ef april01,2010.
1.9 Provision for tax
Provision for taxation includes current tax of Rs.16.35 crore , deferred tax liability of
Rs.3.19 crore and wealth tax of Rs.0.10 crore.
1.10 Balance sheet
The summarized balance sheet as at September 30,2010 is as under:
Table4
financial year ended september30 2010 2009
sources of funds
shareholder's funds
capital 19.14 17.69
equity share suspense 3.7 0
equity warrants 0 18.9
stock option outstanding 15.3 0
reserves and surplus 3,098.82 2,257.08
sub total 3,136.96 2,293.67
loan funds 5,543.13 3,075.15
deferred tax liability 83.43 108.04
total 8,763.52 5,476.86
application of funds
fixed assets including CWIP 5,571.19 2,763.78
investments 1,113.39 549.11
current assets,loans &advances 3,987.87 3,034.42
less:current liabilities & provisions 1,908.93 870.45
45
net current assets 2,078.94 2,163.97
total 8,763.52 5,476.86
1.11 Capital
The company has allotted 1,45,00,000 new equity shares on January 4,2010 to the
promoter group of the company in terms of warrants allotted to them on may18,2009 on
preferential basis carrying right to subscribe for and be allotted one(1) fully paid equity
share of face value Re1 each per warrant, at a price of Rs.52.14 per equity share in
accordance with the SEBI preferential issue guidelines.
1.12 Equity share suspense
Equity share suspense of Rs.3.70 crore represent the face value of an aggregate of
3,70,00,000 equity shares of Re.1 each of the company to be allotted in accordance with
the terms and conditions of the scheme of amalgamation of Bajaj hindusthan sugar and
industries limited with Bajaj hindusthan limited as sanctioned by hon’ble high court
having judicature at Bombay vide order dated November 26,2010.
1.13 Reserves and surplus
Securities premium account increased by Rs.806.63 crore represent Rs.722.05 crore was
credited in accordance with the scheme of amalgamation being the aggregate of excess of
the fairvalue of net assets of amalgamated company over the paid up value of equity
shares to be issued and allotted.
1.14 Loan funds
Loan funds increased to Rs.5,543.13 crore as against Rs.3,075.15 crore in the previous
year mainly due to further loan taken for fulfillment of working capital requirement and
loan funds of the amalgamated company.
1.15 Fixed assets
46
Gross block increased from Rs.3,407.48 crore to Rs.6,509.87 crore was mainly due to
revaluatiom of certain assets of the company and assets of malgamted company w.e.f
April 01,2010.
1.16 Investments
During the year company invested Rs.137.00 crore in Bajaj energy private
limited(subsidiary) by subscribing to 69,90,000 equity shares of Rs.10each at a premium
of Rs186 per share and Rs92.31 crore in Bajaj hindusthan(Singapore) pte.ltd(subsidiary)
by subscribing to 2,70,00,000 equity shares of $1 each.
1.17 Inventories
The inventory of sugar at the end of the year was 4,60,097 MT equivalent tp 181 days’
sales as compared to 95 days sales in the previous year. This was due to higher
production , raw sugar processed into white sugar and gradual liquidation of stocks due to
demand being met by import of white sugar and gradual liquidation of stocks due to
demand being met by import of white sugar allowed by the government.
1.18 Debtors
In line with the company’s focus on effective working capital management , vigorous
efforts were made to recover dues from debtors. The debtors at the end of the year were
equivalent to 20 days’ sales as compared to 6 days sales in the previous year.
1.19 Significant non-recurring income , expenditure and other items
1.19.1 Income
The profit on sales of investment of Rs.16.61 crore and the provisions no longer required
/ credit balance appropriated,Rs.32.19 crore, were of a non-recurring nature.
1.19.2 Expenditure
47
The loss on assets sold/discarded , Rs.0.10 crore is of a non-recurring nature.
1.19.3 Contingent liabilities
The status of contingent liabilities as at september30,2010 has been reviewed by the
management. Efforts are being made for speedy settlement of pending cases.
1.20 division wise operations
Table 5:Crushing details of plants during the year 2009-10 :
2009-10 2008-09
Plant location zone Cane crushing
Sugar recovery
Sugar
production
Cane
crushing
Sugar
recovery
Sugar
production
Gola
gokarannath
Central
u.p
1.184 9.68 114583 0.857 9.53 81637
Palia kalan “ 1.161 8.69 100797 0.857 9.31 79816
Kinauni Western
u.p
1.224 9.00 110100 0.788 8.72 68645
Thanabhawan “ 0.777 9.03 70208 0.541 8.77 47479
Budhana “ 0.981 9.37 91964 0.578 8.84 51038
Bilai “ 0.871 10.15 88528 0.470 10.04 47141
Gangnauli “ 0.454 9.07 41188 0.187 8.47 15851
khambarkhera Central
u.p
0.796 9.11 72607 0.529 9.16 48351
Barkhera “ 0.643 8.95 57538 0.344 8.79 30187
Maqsoodapur “ 0.376 9.20 34605 0.274 8.46 23123
Pratappur Eastern
u.p
- - - -
Rudauli “ - - - -
Utraula “ - - - -
Kundarkhi “ - - - -
48
total 8.467 9.24 782118 5.425 9.09 493268
1.21 Distillery division
The distillery division produced 94719 kilolitres of industrial alcohol/ethanol against
32070 kilolitres in the previous year registering an increase of 195%. Likewise
alcohol/ethanol sales aggregated 63123 kilolitres in the previous year registering an
increase of 96%. In value terms the sale of industrial alcohol/ethanol during the year was
rs.162.82 as against Rs85.81 crore in the previous year registering an increase of 90%.
Increase in production and sale was due to availability of more sugarcane resulting onto
higher production of molasses.
1.22 Power division
The sale of power was at Rs51.97 crore in the current year as against Rs22.62 crore
recorded in the previous year registering anm increase of 130% mainly due to availability
of more bagasse from sugarcane crushing.
1.23 Balance sheet as at September 30,2010
Table 6:
Rs.crore As at sept30,2010
As at sept30,2009
sources of fundsshareholders fundscapital 19.14 17.69equity share suspense 3.7equity warrants 18.9stock option outstanding 15.3reserves&surplus 3,098.82 2,257.08
3,136.96 2,293.67
loan fundssecured loans 4,429.77 1,956.73
49
unsecured loans 1,113.36 1,118.425,543.13 3,075.15
deferred tax liability 83.43 108.04total 8,763.52 5,476.86ii.application of fundsfixed assetsgross block 6,509.87 3,407.48less:depreciation 1029.96 774.98net block 5,479.91 2,632.50capital work in progess 91.28 131.28
5,571.19 2,673.78investments 1,113.39 549.11current assets,loans&advancesInventories 1921.36 800.45sundry debtors 163.1 28.57cash&bank balances 479.2 112.35loans&advances 1,424.21 2,093.05
3,987.87 3,034.42
less:current liabilities &provisionscurrent liabilities 1,716.95 683.03provisions 191.98 187.42
1,908.93 870.45net current assets 2,078.94 2,163.97TOTAL 8,763.52 5,476.86
1.24 profit and loss account for the year ended september30,2010
Table 7:
RS,CRORE 2009-10 2008-09
INCOMEGross sales/income from operations 2970.27 1655.75less:excise duty 96.67 72.01net sales/income from operations 2,873.60 1583.74other income 155.38 231.15
3,028.98 1814.89
EXPENDITUREraw materials consumed 2,765.64 816.76manpower cost 146.82 120.83
50
other expenses 246.27 138.28interest&finance charges 301.34 187.08depreciation&amortisation 257.44 202.21increase/decrease in stocks -743.57 143.73
2,973.94 1608.89 profit for the year before taxation 55.04 206less:provision for taxationcurrent tax 16.35 33.09deferred tax 3.19 49.11wealth tax 0.1 0.1fringe benefit tax _ 0.56
19.64 82.86less:MAT credit entitlement 16.35 33.09
3.29 49.7751.75 156.23
profit for the yearadd:balance bought forward 79 6.53excess/(short)provision for tax -1.62dividend paid of earlier year -1.02corporate dividend tax on dividend paid -0.17debenture redemption reserve 75
152.81 4.91204.56 161.14
Transfers to:reserve for molasses storage tanks 0.33 0.16general reserve 10.03 40debenture redemption reserve 27.5proposed dividend 13.4 12.38corporate dividend tax on proposed dividend 2.22 2.1balance carried to balance sheet 178.58 79
basic earning per share net profit/weighted average no.of shares 51.75/206,133,823 154.6/150,148,207
basic earning per share in rupees(face value re1/-each) 2.51 10.3diluted earning per share
net profit/weighted average no.of shares 51.75/206,133,823 154.61/164,648,207diluted earning per share(face value re1/-each) 2.51 9.39
51
1.25 Cash flow statement for the year ended September 30,2010
Table 8:
2009-2010 2008-2009
A.Cash flow from operating activitiesnet profit before exceptional items and taxation adjustment for 55.04 206Depreciation & amortisation 257.04 (gain)/loss due to foreign exchange fluctuation -14 0provision for foreign exchange fluctuation 0 -83.65loss/(surplus)on sale of fixed assets(net) -0.15 1.26interest&finance charges 415.2 295.06dividend/income from current investment received -3.59 -0.47profit on sale of investment -16.61 0interest received -113.86 -107.98employee's compensation expenses(ESOP cost) -0.88 0
523.55 306.43operating profit before working capital changes 578.59 512.43adjustment for:trade&other receivables 48.74 -206.87inventories -1,209.38 -163.21trade payables 8.23 -76.85cash generated from operations -573.82 219.2direct taxes paid -40.25 -13.04net cash from/(used in)operating activities 614.07 206.16B.Cash flow from investing activitiespurchase of fixed assets -219.67 -60.81dsale of fixed assets 2.69 5.54purchase of investments -4700.5 -650.13sale of investments 4512.83 -589.28loans&advances -61.44 -55.47dividends received 3.59 0.47interest received 113.86 107.98net cash used in investing activities -348.64 63.14C cash flow from financing activitiesproceeds from borrowings(net of repayments) 1674.18 -466.21issue of convertible warrants 18.9issue of equity shares & premium thereonon issue of QIP 723.18on conversion of equity warrants 56.7issue expenses(QIP) 19.87interest paid -391.95 -316.56dividend paid(including tax thereon) -15.58 -9.83
52
net cash from/(used in) financing activities 1,323.35 -70.39net increase/(decrease)in cash and cash equivalents 360.64 72.63cash&cash equivalents as at oct01(opening balance)earmarked for specific purposes 34.82 1.61other balances 77.53 38.11
112.35 39.72
cash and cash equivalents on amalgamation 6.21cash and cash equivalents as at september 30(closing balance)earmarked for specific purposes 3.18 34.82other balances 476.02 77.53
479.2 112.35
1.26 consolidated balance sheet as at September 30,2010
Table 9:
RS.CROREAS at sept30,2010 As at sept30,2009
1.sources of fundsshareholder's fundscapital 19.14 17.69equity share suspense 3.7 -equity warrants 18.9stock options outstanding 15.3 16.18reserves & surplus 2,845.67 2060.74
2883.81 2113.51minority interest 202.97 65.06loan fundssecured loans 5076.38 2865.78unsecured loans 1273.37 1190.48
6349.75 4056.26deferred tax liability 83.45 48.61total 9520.38 6283.44
2.application of funds
fixed assetsgross block 6866.8 5295.13less:depreciation 1109.77 1059.83net block 5757.03 4235.3capital work in progress 930.61 154.8
6687.64 4390.1
investment 693.9 0.12
53
current assets,loans&advancesinventories 1967.43 956.44sundry debtors 152.87 49.86cash&bank balances 525.77 127.27loans&advances 1435.1 1859.39
4081.17 2992.96less:current liablities &provisionscurrent liabilities 1749.18 902.7provisions 193.15 197.04
1099.74net current assets 2138.84 1893.22
total 9520.38 6283.44
1.27 Consolidated profit & loss account for the year ended September 30,2010
Table10:
RS.CROREAS at sept30,2010 As at sept30,2009
incomegross sales/income from operations 3304.8 2115.29less:excise duty 103.37 89.34net sales/income from operations 3201.43 2025.95other income 139.25 307.57
3340.68 2333.52
expenditure 3219.08 1073.46raw materials consumd 183.89 165.33manpower cost 387.16 218.44other expenses 368.12 278.13interest&finance charges 344.03 345.66
depreciation&amortisation (998.67 147. 35
increase/decrease in stocks 3503.61 2228.37
profit/(loss) for the year before taxation -162.93 107.15exceptional items:surplus on cessation of subsidiary -194.93 -profit before the year before taxation 32 105.15less:provision for taxationcurrent tax 16.6 33.18deferred tax -9.4 44.68
54
wealth tax 0.11 0.1fringe benefit tax - 0.78
7.31 78.74less:MAT credit entitlement 16.52 33.13
-9.21 45.61
profit for the year 41.21 59.54less:minority /interest -2.85 -2.24income attributed to consolidated group 44.06 61.78add:balance brought forward -176.1 -154.08excess/short provision for tax -0.03 "(1.62)dividend paid of earlier year -1.02corporate dividend tax on dividend paid -0.17debenture redemption reserve 75
102.32 -155.7-58.26 -93.92
transfers to:reserve for molasses storage tanks 0.35 0.2general reserve 10.03 40debenture redemption reserve - 27.5proposed dividend 13.4 12.38corporate dividend tax on proposed dividend 2.22 (176.10balance carried to balance sheet -84.26basic earning per sharenet profit/weighted avg no.of shares 44.03/206133823 60.6/150148207basic earning per share in rupees 2.14 4.01diluted earning per sharenet profit/weighted avg no.of shares 44.03/206133823 60.16/164648207diluted earning per share in rupees 2.14 3.65
1.28 Consolidated cash flow statement for the year ended September 30,2010
Table 11
2009-10 2008-09cash flow from operating activitiesnet profit/(loss) before exceptional items and taxation -162.93 105.15adjustment for:depreciation&amortisation 344.03 345.66(gain)/loss due to foreign exchange fluctuation -14provision for foreign exchange written back - -121.12loss/(surplus) on sale of fixed assets -0.25 1.27interest&finance charges 448 .13 358.74dividend received -3.71 -0.47profit on sale of investment -16.62 -interest received -80.01 -80.61
55
employee's compensation expenses -0.88 -676.69 503.47513.76 608.62
operating before working capital changesadjustment for:trade and other receivables -34.1 -225.8inventories -1595.53 -164.07trade payables 396.21 -30.95cash generated from operations -719.66 187.8direct taxes paid -39.63 (14.22_)net cash from/(used in) operating activities -759.29 173.58cash flow from investing activitiespurchase of fixed assets -1011.8 -166sale of fixed assets 2.78 5.6purchase of investments -4571.29 -589.28sale of investments 4587.84 589.23loans and advances -61.4 -46.07dividend eceived 3.71 0.47interest received 80.01 80.61exchange fluctuation reserve on consolodation -0.53 0.62net cash(used in) investing activities -970.68 -124.82cash flow from finanacing activitiesproceeds from borrowings 2302.68 -427.67issue of convertible warrants - 18.9issue of equity shares&premium theeonom issue of qip 723.18on conversion of equity warrants 56.7 -minority interest 211.88 -issue expenses -19.87interest paid -427.21 -380.23dividend paid -15.58 -9.83net cash from/(used in) financing activities 2128.47 -95.52net increase/(decrease) in cash and cash equivalents 398.5 -46.76cash and cash equivalents as at oct1earmarked for specific purposes 35.98 2.92other balances 91.29 171.11
127.27 174.03cash and cash equivalents as at sept30earmarked for specfic purpose 14.51 35.98other balances 511.26 91.29
525.77 127.27
56
LIMITATIONS
Time was the main constraint
High Cost
Limited flexibility for modification as per requirement
Required special training for using SAP
57
User cannot be used multipurposely
user required for completing the specific task
.
FINDINGS AND SUGGESTIONS
FINDINGS
During the Summer Training at Bajaj Hindusthan Limited I get knowledge of accounting
policies and system of accounting and procedure . I also get the knowledge of functioning
and general administration of finance & accounts department.
58
CONCLUSIONS AND RECOMMENDATIONS
RECOMMENDATIONS
Bajaj hindusthan limited is India’s largest sugar and ethanol manufacturing company.
The company has many weakness and strengths. The main weakness is that one should
have a good knowledge about SAP for accounts. Strengths is that the company has a
good functioning in finance and accounts department. I want to recommend to the bajaj
hindusthan limited is that the company should take measures to avoid that weakness.
C ONCLUSION
59
The summer training period in Bajaj Hindusthan Limited is a great experience for me.
The project report on “Financial analysis of bajaj hindusthan limited” provided me
platform to interact with accounting policies of a company and learn about the accounting
system of the organisation.
During the study on “financial analysis of “Bajaj hindusthan limited”. I get knowledge of
accounting policies of the company, system of accounting and procedure in SAP. I also
get the knowledge of functioning and general administration of finance & accounts
department.
In this report I also understand how company maintains their accounts. In this report I
also attached some print screen of SAP as samples.
I met many people but Mr. Sanjay Kumar Goyal (HOD Finance & Accounts) and Mr.
Bhuwan Ganglasya (Asst. Manager) in account department of BHL encouraged and
motivated me a lot and provides me with very useful information.
This project enhanced my knowledge as well as increased my confidence also.
BIBLIOGRAPHY
Source: F.O. Licht's International Sugar and Sweetener Report dated Oct. 29th 2008
Source: F.O. Licht's International Sugar and Sweetener ReportWorld Sugar Balances - Report dated Oct 29th 2009-10.
BHL Annual Report
Source: Religare Technova
www.Bajaj Hindusthan Limited.com
www.answers.com
60
www.wikipedia.com
Books: Accounting Standards And Corporate Accounting Practices-T.P.GHOSH
Financial and Management Accounting-Dr. S.N.Masheshweri
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