A Study On FINANCIAL STATEMENT ANALYSIS

With reference to

NCS SUGARS LIMITED

LATCHAYYAPETA, SEETHANAGARAM, VIZIANAGARAM
A Project Report submitted to Andhra University, Visakhapatnam In Partial fulfillment for the Award of the Degree of MASTER OF BUSINESS ADMINISTRATION Submitted by M.PRASADA RAO (Regd. No: 111228802066)

Under the Esteemed guidance of Mr.N.K.MAHESH

Asst. Professor

Department of Management Studies Dr. LANKAPALLI BULLAYYA P.G. COLLEGE Andhra University Visakhapatnam-530003 (2011 2013)
1

DECLARATION

I here by declare that this project work entitled A Study on financial statement analysis with reference to N C S Sugars Limited, Seethanagaram, is a bonafide work done by me for the award of the degree of Master of Business Administration(MBA), from Andhra University, done under guidance of Mr.N.K.MAHESH, Assistant Professor, Department of Management Studies, during the academic years 2011-2013 and has not been submitted to any other University or Institution for the award of any Degree or Diploma

Date: Place: Visakhapatnam

M.PRASADA RAO Regd . No 111228802066

CERTIFICATE

This is to certify that the project work entitled A Study on financial statement analysis with reference to N C S Sugars Limited, Seethanagaram, is a bonafide work done by M. PRASADA RAO a student of MBA, Department of Management Studies, Dr. Lankapalli Bullayya PG College, Visakhapatnam, for the award of the degree of Master of Business Administration(MBA)from Andhra University, under my guidance, during the academic years2011-2013.

Place: Visakhapatnam Date:

N.K.MAHESH Asst. professor & Project guide Dept of Management Studies Dr.Lankapalli Bullayya PG College Visakhapatnam

Dr. R.V.H SRIKANTH Head of the Dept, Dept of Management Studies Dr.Lankapalli Bullayya PG College Visakhapatnam

ACKNOWLEDGEMENT It is great pleasure to take the opportunity to acknowledge and express my gratitude to all those who helped me throughout my project First and foremost, I thankful to Prof. K.V.S. PATNAIK, Director Dr.Lakapalli Bullayya P G College, Management Studies ,Dr.G.S.K. CHAKRAVARTY, Dean, Management Studies. Dr. Lankapalli Bullayya P G College, for giving me permission for taking up my project work. I also thank Dr. R.V.H.SRIKANTH, Head of the Department, Dr .Lankapalli Bullayya P G College, for giving me the opportunity to take up my project work and helping me out throughout. I would also like to thank Mr.N.K.MAHESH, Asst Professor, Department of Management Studies, for his valuable guidance and support for the completion of my project work. I would like to express my sincere gratitude to the management and staff of N C S Sugars Limited, Seethanagaram for giving me permission to do my project work in their organization and helping me meticulously in all the aspects of my project work. Finally I would also like to thank all my staff members in the Department of Management Studies, Dr. Lankapalli Bullayya P G College, for their enduring support throughout my MBA Programme.

(M.PRASADA RAO) Date: Place : Visakhapatnam.

CONTENTS
PAGE NO:

CHAPTER 1
INTRODUCTION

1-15

CHAPTER 2

16-35

INDUSTRY PROFILE

CHAPTER 3

36-49

COMPANY PROFILE

CHAPTER 4
THEORETICAL FRAME WORK

5O-72

CHAPTER 5

73-111

DATA ANALYSIS AND INTERPRETATION

CHAPTER 6
SUMMARY FINDINGS SUGGESTION BIBLIOGRAPHY

112-114

CHAPTER I
INTRODUCTION

INTRODUCTION
Accounting process involved recording, classifying and summarizing various business transactions. The aim of maintaining various records is to determine profitability of the

enterprise from operation of the business and also to find out is financial position. Financial statements are in term reports, presented annually and reflect a division of the life of an enterprise in to more or less arbitrary accounting period more frequently a year. Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing between the items of the balance sheet and profit and loss account. There are various methods or techniques used in analysis financial statements such as comparative statements, trend analysis, common size statements, schedule of changes in working capital, funds flow and cash flow analysis Cost Volume Profit Analysis and Ratio Analysis. According to American accounting association accounting is the process of identifying measuring and communication economic information to permit informed judgments and decision by the mass of information. It involves identification of the transaction in financial character to be express in monetary terms, recording of such transaction in the book of original entry in the chronological order, posting the entries of books of original entry to the appropriate accounts in the ledger, balancing of accounts preparation of trial balance to conform the arithmetical accuracy of the accounts so prepared and preparation of final accounts, popularly referred to a financial statement. Financial management is planning, organizing, directing and controlling various financial activities of the organization. In order to perform all the managerial functions effectively and efficiently, sufficient past and present information about the firm and its operations should be equipped along with their changes overtime, and this financial information can be derived from the basic financial statements. A substantial portion of information required in financial decision making is found in financial statements, particularly, the income statement and the balance sheet. Financial statements help in forecasting the financial effects of planning.

Analysis of financial statements refers to the process of the critical examination of the financial information contained in the financial statements. The process of dissection, establishing
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relationships and interpretation thereof to understand the working and financial position of a firm is termed as the analysis of financial statements. Even it is a process of establishing and identifying the financial weaknesses and strength of the firm. Financial management is that managerial activity which is concerned with planning controlling of the firms financial resources. Financial management in a broad sense provides a conceptual analytical framework for financial decision making which covers both acquisitions of funds as well as their allocation. Thus, apart from the issues involved in acquiring external funds, the main concern of financial management is the efficient and wise allocation of funds to various users, defined in a broad sense, it is viewed as an integral part of overall management. Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. The financial analysis can be undertaken by management of firm or by parties outside the firm viz., owners., creditors , investors and others. It is the process of analyzing financial performance of a company in a systematic manner. There are many tools of the financial analysis is viz; Ratio analysis, funds flow analysis, cash flow analysis, common size statement, CVP analysis etc. Out of all the techniques of financial analysis ratio analysis is a very popular technique. and

NEED FOR THE STUDY

Need for the study includes the following: Financial statements are an important source of information for evaluating the performance and prospects of a firm.

If properly analysis and interpreted, financial statements can provide valuable insights into a firms performance.

Financial statement analysis may be done for a variety of purposes, which may range from a simple analysis of the short-term liquidity position of the firm to a comprehensive assessment of the strengths and weakness of the firm in various areas.

It is helpful in assessing corporate excellence, judging creditworthiness, forecasting bond ratings, evaluating intrinsic assessing market risk.

What is the financial position of a firm at a given point of time? How has the firm performed financially over a given period of time? What has been the sources and uses of cash over a given period? To answer these questions these analysis is very useful to us.

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SCOPE OF FINANCIAL STATEMENT ANALYSIS

The study is totally included in finance. So the finance scope wide the scope of the study understand below points 1. The study is confined to seethanagaram area. 2. The study as done only in financial department. 3. The study is only concentrated on ratio analysis. 4. The study only depended on printed balance sheets. 5. The study confined only on financial activities.

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MEANINGS AND DEFINITIONS

The terms financial analysis also known as analysis and interpretation of financial statements refers to the process of determining financial strength and weaknesses of the firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data According to John N.Myer The financial statements provide a summary of the accounts of a business enterprise, the balance sheet reflecting the assets, liabilities, and capital as on a certain date and the income statement showing the results of operations during a certain period. The term financial statement generally refers to following basic statements: The income Statement. The Balance Sheet. A Statement of Retained earring. A Statement of Changes in financial position.

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NATURE The financial statements are prepared on the basis of recorded facts. The recorded facts are those which can be expressed in monetary terms. The statements are prepared for a

particular period, generally one year. The transactions are recorded in a chronological order as and when the events happen. The financial statements by nature are summaries of the items recorded in the business and there statements are prepared periodically generally for the accounting period.

The following points explain the nature of financial statements: Recorded Facts: The term Recorded facts; refers to the data taken out from the accounting records. The records are maintained on the basis of actual cost data. The figures of various accounts such as cash in hand, cash at bank, bills receivables, Sundry debtors, fixed assets are taken as per the figure recorded in the accounting books. As the recorded facts are not based on replacement costs the financial statements do not show current financial condition of the concern. Accounting Conversions: Certain accounting converters are followed while preparing financial statements. The conversion of valuating inventory at cost or market price, whichever is lower, is followed. The valuing of assets at cost less depreciation principle for balance sheet purposes statements comparable, simple and realistic. The accountants make certain assumption while making accounting records. One of these assumptions is that the enterprise is treated as a going concern.

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IMPORTANCE

Financial statements contain a lot of useful and valuable information regarding profitability financial position and future prospective of business concern. The utility of financial statement to different parties may be summarized as follows:

1. Management: The financial statements are useful for assessing the efficiency of different cost centers. The management is able to decide the course of action to be adopted in future.

2. Creditors: The trade creditors are to be paid in a short period. The CRS will be interested in current solvency of the concerns. The calculations of current ratio and liquid ratio will enable the creditors to assess the current financial position of the concerns in relation to their debts.

3. Investors: The investors include both short-term and long term investors. They are interested in the security of the principal amounts of loan and regular payments by the concern. The investors

will not only analyze the parent financial position but will also study the future prospectus and expansion plans of the concern.

4. Government: The financial statements are used assess tax liability of business enterprises. The Government studies economic situation of the country from these statements. These statements enable the government to find out whether business is following various rules and regulations or not.

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OBJECTIVES

Goals financial statements are supposed to accomplish. The intent of financial statements is to provide information useful in economic decision making. In particular, the data should be useful in making investment and credit decisions Financial statements should provide a reliable indication of a company's financial position, operating results, and changes in financial position. Also, statement components and categories should aid in decisions. Financial statements may provide information in addition to that specified by authoritative requirements and regulatory groups .Inasmuch as management knows the most about the business, it is encouraged to identify certain circumstances and explain their financial effects on the enterprise .

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ADVANTAGES There are various advantages of financial statements analysis. o The major benefits that the investors get enough idea to decide about the investments of their foundation the specific company. o Secondly, regulatory authorities like International Accounting Standards Board can ensure whether the company is following accounting standards or not. o Thirdly, financial statements analysis can help the government agencies to analyze the taxation due to the company. o Moreover, company can analyze its own performance over the period of time through financial statement analysis. o Simplifies financial statements ratio analysis simplifies the comprehension of financial statements. Ratios tell the whole store of changes in the financial conditions of the business o Facilitates inter firm comparison ratio analysis provides data for inter-firm comparison. Ratios highlight the factor associated with successful and un successful firms. They also reveal strong firms and weak firms, over-valued and under-valued firms. o Makes intra-firm comparison possible ratio analysis also makes possible comparison of the performance of the different divisions of the firms. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future. o Helps in planning ratio analysis helps in planning and forecasting. Over a period of time, a firm or industry develops certain norms that may indicate future success or failure.

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LIMITATIONS
Financial statements are relevant and useful for the concern, still they do not present a final picture of the concern, and otherwise misleading conclusions may be drawn. The financial statements suffer from following limitation:

1. Ignoring of non-monetary aspects: These statements are prepared with the help of accounting information which mainly consider monetary aspects only. The value of business depends both on qualitative and quantitative factors.

2. Historical cost: The statements are prepared on the basis of historical cost. The values of fixed assets are at there original cost less depreciation. The balance sheet value are not shown the value of assets may be sold more over they do not reflect the market value which is as important factor in determining the solvency of an enterprise.

3. Personal Judgment: In preparing financial statements certain items are left to the personal Judgment of the accountant. If any accountant is not following accounting principles correctly his

judgment will give wrong picture.

4. Conversion of Conservation: Due to conversion of conservation the income statement may not disclose true income of the business. This is due to ignorance of probable incomes and accounting probable losses.

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COMPANY PROFILE
NCS Sugars Limited, the flag ship company of the NCS Group of Companies, was incorporated on the 6th June, 2002. NCS Sugars Limited is one of the sugar factories of the erstwhile Nizam Sugars Limited, a state-owned sugar factory, acquired by the NCS Group. Latchayyapeta unit is one of the sugar mills operated and owned by NSL. It was set up in the year 1995 with a crushing capacity of 2500 TCD by replacing two units at Bobilli (850 TCD) and Seethanagaram (600 TCD) that had been taken over by Government of AP in 1986. The Sugar Mill is located in the eastern part of AP about 800 Km north east of Hyderabad and 1 Km to the north of the Village of Latchayyapeta. It is 6 KM from Bobilli, a town with a population of 75000, in Seethanagaram Mandal, Vizianagaram dist A.P.

Latchayyapeta has good transport facilities. It is located 115 km north of the airport and is one of Indias major seaports at the city of Visakhapatnam .Latchayyapeta is the principal industrial employer in the region. The factory operations under the new management of NCS Sugars had commenced on 17th January 2003. The plant has been allotted a zone of about 43000 acres of agricultural land consisting 17 mandals, 820 villages and about 22 000 potential farmers in the zone. The major thrust is given for cane development and uplifting farmers living standards by increasing their per capita income. This in turn will result in sufficient quantity of cane needed for optimum utilization of our facility to crush up to 6000 MT per day, during the seasons. The existing potential for cane production and supply is of the order of 3.5 to 4 lakhs mt. Cane development programmes, irrigation and use of organic and / or chemical agents could increase both the acreage and yield and supply an additional 50-65,000 mt in a short time horizon. This level of supply would sustain the 2500 TCD plant at Latchayyapeta, allowing for 10% of total production to be retained for seed and 1% for household use by cane growers. The company completed 1st year of operations on 30th April 2003 with sugarcane crushing of 2.25 lakhs MT. With a growth that consistently established, now NCS Sugars Limited is a full fledged sugar manufacturing unit with the state- of art technology managed by a crew of professionals from various capacities, poising towards a crushing capacity up to 6000 TCD. NCS Sugars Limited is the first company to import Raw Sugar to India for the first time during 2004-05 and processed into white sugar, which has predominantly compensated the
18

domestic need as well. Thus, NCS has changed the Sugar Manufacturing business from seasonal to throughout the year. NCS Sugars Limited has also ventured into co-generation of power up to 20MV, by using the bagasse from the sugar unit, which is an eco-friendly venture that could take care of the electricity requirements of AP TRANSCO. This is the FIRST Sugar Factory to have associated with 22000 farmers covering half the district of Vizianagaram. ACHIEVEMENTS AND AWARDS: The Best Cane Development award for 2007, presented in R & D workshop at Vijayawada by Acharya NG Ranga Agricultural University & Commissioner ate of sugar, Government of Andhra Pradesh. 2nd place in Best Cane Development Award by SISSTA-2007.

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OBJECTIVES OF THE STUDY

The study has been undertaken with the following specifics objectives. To review the Sugar Industry in India with reference to NCS Sugars Ltd. To describe the significance of financial statement analysis for measuring financial Performance. To compare the financial performance of NCS Sugars Ltd. over the years by using Different financial statements analysis techniques. To summarize and to suggest strategies for the better financial performance of NCS Sugars Ltd

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RESEARCH METHODOLOGY

Methodology is a systematic procedure of collecting information in order to analyze and verify a phenomenon. The collection of information is done two principle sources. They are as follows:

Primary Data Secondary Data

Primary data It is the information collected directly with out any references. In this study it is gathered through interviews with concerned officers and staff, either individually or collectively, sum of the information has been verified or supplemented with personal observation conducting personal interviews with the concerned officers of finance department of NCS Sugars Ltd

Secondary data The secondary data was collected from already published sources such as, pamphlets of annual reports, returns and internal records, reference from textbooks and journals relating to financial management. The data collection includes. a. Collection of required data from annual records of NCS Sugars Ltd b. Reference from textbooks and journals relating to financial management.

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LIMITATIONS OF THE STUDY

Financial analysis is a powerful mechanism of determining financial strengths and weakness of a firm. But they analysis is based on the information available in the financial statements. Thus, the financial analysis suffer from serious inherent.

Some important limitations are:-

Since the procedure and policies of the company will not allow to disclose confidential financial information, the project has to be completed with the available data given to us.

The study is carried basing on the information and documents provided by the organization and based on the interaction with the various employees of the respective departments.

There was no scope of gathering current information, as the auditing has not been done by the time of project work.

Financial analysis is based upon only monetary information and non-monetary factors are ignored.

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CHAPTER-II
INDUSTRY PROFILE

23

INDUSTRY PROFILE

India has been as the original home of sugarcane and sugar. Indians knew the art of making sugar since the fourth century. However the advent of modern sugar industry in India dates back to mid 1930s when a few vacuum pan units were established in the tropical belts of Uttar Pradesh and Bihar. The Sugar industry is predominantly localized in Uttar Pradesh, particularly in the districts of Meerut, Saharanpur, Bijnour, Bereilly, Muzaffarnagar, Moradabad, Bihar and in the eastern coastal districts of Andhra Pradesh. If we refer to the historical events in the Sphere of Sugar Industry, Uttar Pradesh and Bihar occupied the predominant position as far as the location pattern of the industry is concerned and still these States are enjoying the same position. The reasons for such heavy concentration in the States of Utter Pradesh and Bihar are manifold. The unique position which Utter Pradesh enjoys in respect of cane cultivation is due to the advantages conferred by the rich and fertile alluvial soil of the Genetic plain, the bulk of which contains adequate quantities of lime and potash, the presence of thin varieties of cane admirably suited to the climate conditions of the region and the existence of cheap and extensive irrigation facilities. The concentration of sugarcane crop in compact blocks enables the sugar factories to get supplies of sugarcane direct from the fields. Moreover, the cost of the cane cultivation is less and the cultivators are not accustomed to raise alternative crops like groundnuts, chilies, plantains, etc. In recent years the sugar industry spreading to other parts of India, notably in the southern states on Maharastra, Karnataka, Andhra Pradesh and so on. Since sugar mills got to be near the sugar fields, Sugar mills are getting established near places where Sugarcane can be and is grown. Also, the consumption of sugar is widespread and sugar is demanded practically in all areas. And, therefore there is in recent years tendency in the case of sugar industry towards its dispersal in different parts of the country. India is the largest consumer and second largest producer of sugar in the world. The sufficient and well distributed monsoon rains, rapid population growth and substantial increases in sugar production capacity have combined to make India the largest consumer and second largest producer of sugar in the world.

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The Indian Sugar industry has not only achieved the singular distinction of being one of the largest producer of white plantation crystal sugar in the world but has also turned out to be a massive enterprise of gigantic dimensions. With over 516 sugar factories located throughout the country, the sugar industry is amongst the largest agro processing industries, with an annual turnover of Rs150bn. It plays a major role in rural development and its importance for India stretches far beyond the role of a sweetener supplier. The Sugar factories located in various parts of the country work as nuclei for development of rural areas by mobilizing rural resources and generating employment, transport and communication facilities. Over 45mn farmers, their dependants and a large mass of agricultural labor are involved in sugarcane cultivation, harvesting and ancillary activities constituting 7.5% of the rural population. The sugar industry employs over 0.5mn skilled and unskilled workmen, mostly from the rural areas. Since the beginning of planning era, sugar industry operated under a policy of partial control in 1950-51 and 1951-52, followed by a continuous period of six years of decontrol between 1952-53 and 1957-58. This policy was followed under the pragmatic leadership of the Minister of Food, Sri Rafi Ahmed Kidwai. However, with his departure, the perception of decontrol was lost. After altering between control and the Government adopted the policy of partial decontrol in 1967-68, which has since been the mainstay of Government policy except for two short periods of decontrol in the 1970s. Under this policy, the Government procures 40% of production at controlled prices based on the Statutory Minimum price for sugarcane, for supply through the Public Distribution System and the balance 60 % is allowed to be sold by the mills in free market subject to the monthly release mechanism. The details of past Government policies for sugar industry are provided in annexure 1. The levy quota for sugar mills has been brought down from the peak levels of 70% in 1968-69 to the present levels of 40% as a gradual process of deregulation of sugar industry. The number of operating sugar mills in the country has increased from 29 in sugar year (SY) 1930-31 to 412 by 1996-97 (sugar year = October 1st to September 30th). The addition in number of mills was at its peak during seventies when nearly 100 mills were added between 2007
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and 2008 to increase the number of operating units to 516. The development of industry in the past is as given in table below.

CENSUS OF SUGAR MILLS AND CRUSHING ACTIVITY IN INDIA Sugar year (oct-sept) 1930-31 1940-41 1950-51 1960-61 1970-71 1980-81 1990-91 1996-97 2000-01 2003-04 2006-07 2007-08 Number of operating Sugar mills 29 148 139 174 215 315 385 412 423 453 504 516 Average capacity ton Crushed per day 644 750 882 1172 1394 1718 2088 2656 3000 3200 3561 3586

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SUGARCANE IN THE WORLD COUNTRY AREA (Million ha) BRAZILL INDIA CHINA THAILAND PAKISTAN MEXICO COLOMBIA AUSTRALIA USA PHILIPPINES INDONESIA CUBA SOUTH AFRICA ARGENTINA MYANMAR BANGLADESH TOTAL 5.343 4.608 1.328 0.970 1.086 0.639 0.435 0.423 0.404 0.385 0.350 0.654 0.325 0.295 0.165 0.166 20.42 PRODUCTION (Million tons) 3865.2 289.6 92.3 64.4 52.0 45.1 36.6 36.0 31.3 25.8 25.6 22.9 20.6 19.2 7.5 6.38 1333.2 PRODUCTIVITY (Tons/ha) 72.3 62.8 65.5 66.4 47.9 70.6 84.1 85.1 77.5 67.1 783.1 35.0 63.4 65.2 45.4 41.2 65.2

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Significance of Sugar industry

Sugarcane and sugar beet are two main sources of white crystal sugar in the world. Out of the worlds total white crystal sugar production about 70% comes from sugarcane and 30% from sugar beet. More than 100 countries in the world cultivate sugarcane while 35 countries produce sugar from sugar beet. About 12 countries produce sugar both from sugarcane and sugar beet. Worldwide sugarcane occupies an area of 20.42 million hectares with a total production of 1333.2 million tones and productivity of 65.2 tones per hectare. Asia has the highest area (9.08 million hectares) and contributes 42% towards worlds sugarcane production. The main By-products of sugar industries are Molasses Bagasse Filter cake 1. Molasses is used to produce chemicals, spirit and alcohol. 2. Bagasse is the raw material for manufacturing paper. 3. Filter is used for manure. Sugar is not only for domestic purpose but also it is used as semi industrial goods for the manufacturing of foodstuff. So sugar industry has direct or indirect effect on other industries. The different types of significances of Sugar industry are. Sugar industry Multi-product complexes: There are 516sugar mills in operation in the country. A few more are in the pipeline. The existing mills have to diversify into sugar-ethanol cum-electricity generation complexes. Around 1000 such complexes will have to be established to process 3750 million tones of cane into value added products, with an investment of Rs.1, 32,650 cores. With 3750 million tones of sugarcane, the country can produce 16 million tones of sugar, 10 million tones of jiggery/gur, 246.15 billion liters of ethanol and 298.35 billion KWH of surplus electricity after providing for captive consumption.

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Profile of Indian Sugar Industry Number of factories Cane price per ton Annual payment for cane No. of cane farmers Sugar production Value of sugar output Annual tax contribution exchequer Employment activities Fuel Ethanol of 5% blend(value) Current export of con-generated Rs.600 cores per annum Rs.750 cores per annum including ancillary 516 Rs.1250 50 million 50 million 22 million tones(raw value) Rs.27,000 cores per annum Rs.2,700 cores 2 million people

power(value)

The production of 246.15 billion liters of ethanol can successfully replace 147.69 billion liters of petrol/diesel valued at Rs.4, 92,300 corers. With conjunctive utilization of 33 million tons of domestic production of petroleum products with 246.15 billion liters of ethanol the country can manage without any import of petroleum products. The production of 246.15 billion liters of ethanol for utilization as fuel for automobiles has to be treated as deemed exports. This will control the emission of carbon monoxide, nitric oxide and other particulars to the atmosphere under permissible limits and protect the people from serious health disorders in the urban centers. Sugar Industry-Employment generation: Additional sustainable employment for around 76 million persons will be generated in the agricultural sector to redeem over 300 million people suffering under the clutches of poverty. The additional inflow of Rs.3, 10,000 corers in to the rural sector as sugarcane prices and wages for agricultural labor will dramatically recharge the springs of the economy. The agricultural residue generated from the crops can be processed and converted into valuable feed for over 150 million mulch animals to generate additional revenue of Rs.3,00,000 corers annually.
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The sugarcane sector can thus additionally generate products and services worth Rs.8, 81,805 corers. The country can manage the demand for automobile fuel with conjunctive use of ethanol with the domestic availability of petroleum products. The country can generate sustained employment and save around 20,000 dollars per annum on the import bill. Ethanol production can be stepped up to over 300 billion liters to meet further increases in demand for fuel for automobiles. The country can thus comfortably manage any increase in demand for fuel for automobiles and emerge with comfortable trade surpluses. Role of sugar industry in the generation of electricity: The country has to step up generation of electricity by over 1, 00,000 MW to meet the ever increasing demand. The additional generation of electricity, namely, 298.35 billion KWH valued at Rs.89, 505 corers has a ready market and will provide a powerful thrust to generate additional products and services worth Rs.27,52,278 corers in other sectors of the economy. Progress of sugar industry under five year plans: The planning commission estimated the requirements of white sugar in the country by 1955-56 at 1.5 million tons per annum. The rated capacity of the industry in 1950-51 of 1.54 million tons of sugar per annum was considered sufficient to meet the demand, provided the measures were taken to utilize the idle capacity by shifting the unfavorably located factories to more suitable sites to expand un-economic units and to increase the supply of the sugarcane to factories so as to raise the average number of working days from 100 to 120. It was visualized that no new factory needs be established during the period of the plan for meeting the estimated requirements. In April 1956 were 147 sugar factories registered under the Industries Act, 1951, with an annual capacity of about 1.69 million tons of sugar. In addition there were 13 factories, which were lying idle for the last several years. Their capacity was about 51, 000 tons per annum. Thus there were 160 sugar factories with an annual capacity of about 1.74 million tons. Of these, 143 with a rated capacity of about 1.68 million tons of sugar per annum worked during the 1955-56 season. On the recommendations of the Development Council for sugar industry, the planning Commission fixed the targets of capacity and production to be achieved by 1960-61 at 2.50

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million tons and 2.25 million tons of sugar respectively. The later figure was linked with estimated domestic requirements of sugar in the final year of the plan. It was not possible to attain the capacity target of 2.50 million tons envisaged in the second plan mainly due to the acute shortage of foreign exchange which made it necessary to curtail imports of sugar mill machinery and to keep the expansion of the industry in abeyance till the manufacture of sugar mill machinery was undertaken in the country. In the sugar industry, the stage of self-sustained growth was reached by the end of the second plan period. The third envisaged expansion of sugarcane output of 100 million tons, mainly through an improvement in sugarcane yield per acre of land. After making an allowance for diversion of sugarcane for jiggery manufacture and other miscellaneous use, about 35 million tons of sugarcane was expected to be available for sugar production. To cope with crushing of these supplies, expansion of capacity to 3.5 million tons per year was projected under the third plan. Through out of the plan period the production of sugar in the country was expected to meet the internal demand in full and the surplus was expected to be exported. At the close of the plan the production of sugarcane stood at 119.6 million tons and sugar production increased to 35.6 lakh tons. The number of factories at the end of the third plan was 200. The production programme for the sugar industry envisaged an output level of 47 lakh tons to be achieved by 1973-74, partly through the establishment of new units primarily in the co-operative sector. There was a bumper sugar production of 42.50 lakh tons during the year 1969-70, against the previous seasons production of 35.50 lakh tons. Including the carry-over from the 1968-69 season, the total available quantity was 55.54 lakh tons. The total off-take, including 2.5 lakh tons earmarked for exports, was 35.50 lakh tons. This left a carry-over stock of about 20 lakh tons. But sugar production fell in 1970-71 and 1971-72 to 37.4 and 31.1 lakh tons respectively. With the raise in open market price of sugar, its production in 1972-73 again short up and stood at 38.8 lakh tons. In the final year of the fourth plan (1973-74), sugar production further rose to 39.5 lakh tons.

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Plan

Annual

sugar

production

in

million tons First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth 2.03 2.53 3.56 4.70 5.70 6.20 8.27 14.8 19.1 21.3

The fifth plan proposed to set up sugar production from 3.40 million tons at the end of the fourth plan to 5.7 million tons by the end of the fifth plan. Additional capacity was to be encouraged primarily in the co-operative sector, emphasis being laid on integrated and large plans to secure the advantages of economies of scale. This was to facilitate economic utilization of by-products of the industry leading to an overall improvement in its performance. Significant advance was also expected to be made in the diversification of raw material base with the production of beet sugar, programs for the cultivation of sugar beet formed a part of the agricultural development plan. Sugar production in 1980-81 stood at 5,148 thousand tons. There were 307 sugar factories with the installed capacity of 6 million tons. During the sixth plan period, mainly due to year-to-year fluctuations of sugarcane production, sugar industry underwent severe stress and strain. Sugar production fluctuated from 51 lakh tons to 84 lakh tons during the sixth plan period. The seventh plan target is to increase sugarcane production from 180 million tons in 1984-85 to 217 tons in 1989-90. The capacity and production targets for sugar production at the end of the seventh plan period are projected at 10.7 million tons and 10.2 million tons respectively.
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Output objectives have generally been met, though at the end of the Eighth plan in 199697 actual production is estimated to have fallen short of the target of 14.8 million tons of plantation white sugar due to short-term crop fluctuations. The end of the Ninth Five-year plan in 2001-02 has set the target for output set at 19.1 million tons. During the 10th plan period, the annual incremental growth in consumption has been at 9 lakh tons per annum. For the first time the Indian Government has fixed a target of 15 lakh tons per annum for export in this period. However, production target was fixed at 21.3 million tons keeping in view, the large carry forward stocks at the beginning of the period and to correct the demand-supply distortions presently caused. These targets are achievable looking at the performance of the industry in the past with a production of 18.5 million tons achieved in 200001. The tenth plan targets an annual GDP growth rate of 8 percent. While the target looks ambitious, growth rate of 6-6.5 percent is achievable. As sugar consumption is income-driven, the Tenth plan period should prove positive for the sugar sector. Problems of Sugar Industry: In view of fairly strict Government control on sugar and its byproducts, the industry faces some problems while receiving a certain amount of protection from the Government. The factory has to make available a fairly large share of its product at a controlled rate for marketing through Government channels (levy sugar). It can sell a specific quantity in the free market when the Government announces the release quota, which limits the profitability of the factory. Sometimes there is compulsion for export the international market price is lower than the local market price. The price of molasses is fixed by the Government at a very low level (Rs.60/ton) thus reducing the income of the industry. The average production of sugar and recovery of sugar is fairly low in many states and is detrimental to the industry as a whole. In many States recovery is between 8 to 9 percent as against about 11 percent in Maharashtra. In many States sugarcane production is very low, i.e. around 40 tons per hectare or more in some states like Maharashtra, Andhra Pradesh etc. Variation in rainfall has a tremendous effect on this industry like any other agro industry. However the major factor affecting the profitability of the sugar industry is the increasing cost of
33

inputs coupled with limitations regarding the sale of products described above. The cost of labor, irrigation, transport, seed material and chemicals has gone up considerably during the last few years. Hence the farmers have to consider maximizing the use of land by integrating sugarcane production with other operations. CONSUMPTION

The Indian sugar consumption has steadily increased at 3.5 percent since 1996.

Typically, sugar consumption is driven by the GDP growth and this has been the case for India as well. The per capita consumption has seen a steady growth of 2.1 percent CAGR over this period, while the population has grown at a CAGR of 1.4 percent.

Gur and Khandsari are the major alternate sweeteners that are consumed in India.The increase in per capita sugar consumption has been at the expense of Gur and Khandsari consumption. The usage of sugarcane for producing sugar as compared to Gur and Khandsari is a relevant indicator of the shift in consumption trends.

Sugar Industry occupies an important place among organised industries in India. Its main raw-material is sugarcane. The special thing for all kinds of the raw material is that it should contain the highest percentage of the content for which it is used as raw material. But the quality of sugarcane of our country is not so good and researchers are trying to update it but due
34

to lack of interest and proper attention from the government side, they are not succeeded yet today. Per hectare production of the sugarcane is also not improving which is a matter of great concern. It is probably due to lack of land fertility and lack of irrigation facilities. Other countries of the world such as Cuba, Fizzy & Caribbean's, which are very small in comparison to India, are producing much more sugarcane per hectare than India. The share of India in the total production of sugarcane in the world is 37%. But the production of sugarcane is only 15 tones per acre whereas in Java it is 56 tones and in Hawaii it is 52 tones i.e. almost four times than India. The production cost of sugar is also high due to inferior quality of Indian sugarcane. Since sugar mills are running to loss so they are unable to pay the cane grower growers timely. So the quality improvement in cane grower is the need of the time. The sugar policy of the Government has been seriously lacking a long-term perspective. Controls, decontrols, partial controls, etc. have been used in past in an adhoc manner. It is necessary to assure supply of sugar to poorer sections at reasonable rate. But government policy on cane prices, control of price of sugar, dual pricing etc. have been designed and implemented for the benefit of sugar mill owners and distributors and rarely for benefits of cane growers or for benefit of consumers of sugar. Much of the illness and problems of sugar industry are the result of the government's policy.

By-products

The sugar industry is beginning to diversify into multiple by-products, to enhance the value addition for every MT of cane that is crushed.

In India, alcohol is currently produced from molasses. Alcohol is used as a raw material for industrial uses, for production of potable alcohol and as fuel ethanol. Fuel ethanol can be used as a substitute for gasoline. The realization from fuel ethanol is dependent on the government mandated price, which is paid by the oil marketing companies. In addition to this, fuel ethanol has the potential to generate revenues through carbon credits, as is the case with bio-diesel.

35

India needs to produce an additional 5 million MT of sugar by 2017 to address the domestic demand. This can be achieved through capacity expansion both at the farm side and the mill side.

The farm side capacity expansion can be driven by increasing the area under cane as well as farm productivity improvements. The farm productivity improvements would be enabled through increased yields, as well as increased sucrose content of cane. Both of these would be driven by research and development, which will focus on developing seed varieties, advanced farm practices and improved infrastructure for cultivation, harvesting and transportation. The mill side capacity expansion will by driven by improved mill efficiency as well as necessary increase in mill capacities.

There is a high variability in yields across regions in India, due to climactic conditions and variability in farm practices. Tropical areas have higher yields as compared to sub tropical areas. Tamil Nadu has the maximum yield in India, and is in fact higher than all the other major sugar geographies. On the other hand, India's minimum yield is in Bihar, which is amongst the lowest in the world.

36

Problems of Sugar industry in India are as follows

SICK UNITS: One of the major problems of the industry is the existence of a large no. of sick units. They are unable to run at break-even units. The reason attributed to this use of outdated machines resulting in-efficiency and high cost structure. In Northern India this problem is particularly accurate a distressing. Various reasons, which cause a unit to sick-lower recovery, are factory equipment, duties and disagreement between partners of people in the management. The worsening industrial relations prevail which in their turn lead to stoppage of work. Break down of transport facilities to carry cane from the fields to the factory at the proper time and disputes between cane growers and sugar producers results in uncertainty in the supply of raw materials. REGULAR MEASURES: On the food front, sugar industry has attracted much public attention than any other industry over the years because it is an agro based industry and an essential item of mass consumption. So, naturally all section of people i.e., legislations, politicians, kisen leaders, labor leaders and public at large in intervene to extent pressures and pulls often in different directions. Sugar has been put to most rigid control to which no other industry has been subjected. PAYMENT OF HIGHER PRICES OF CANE: The sugar mills have to pay much higher price for the purchase of cane than what is statutory fixed for instance, in 1974-75 crushing season, sugar mills in central and western up had paid of Rs 1450 per quintal of cane, those in east U.P. and Bihar had to pay Rs 1350 per quintal as against the notified statutory cane price Rs 850 per quintal. DENIAL OF FAIR RETURN: A study of finances of 77 sugar factories for the peri od of 1965-66 to 1970-71 made by Reserve Bank of India points out declining trend in profitability of these companies. Their sales that showed arise of 13.3% in 1966-67 rose only by 8.5% and 0.4% during 1960-70 and 1970-71 respectively. But the rates are divided and maintained. In recent years a fair rate of investment has been denied to sugar industry.
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HIGH EXCISE AND OTHER DUTIES: Basic consist had shot up due to the various statutory provisions like the implementation of the second wage board. Award rate of depreciation under the income tax rules increased can fright charges etc., the local levies in certain states have gone up. In Haryana, for instance, cane less had been double in co-operative sectors. Packing charges and price of consumable stores also substantially. GOVERNMENT CONTROLS: Government control over all aspects of the production and sale of sugar extends to the level of wholesalers in the distribution chain. All sugar wholesalers need to obtain a license issued by the government notifications for the amount of inventories they can maintain. Government of India regulates & controls the rates of sugarcane supplied to the mills by farmers. The Statutory Minimum Price (SMP) announced by GOI year is used as a benchmark by the State Governments to fix their State Advised Price (SAP). The SAP could be a recovery linked average or just a flat rate. Government enforces a dual pricing policy for the sugar industry. Presently 40 % of the production is sold at a fixed price to the government, which is used for PDS and other market operations. The government controls supply of sugar in the open market through monthly sugar release notifications based on market conditions and thus influencing the open market prices to a great extent. Sugar exports were governed by the Sugar Export Promotion Act,1958, which stipulates that the Government can use 20 percent of the countrys total production for sale abroad The Government de-canalized exports in 1997 allowing private parties to export sugar. The government has also put sugar imports on Open General License (OGL) allowing private parties to import sugar. The GOI charges a higher excise duty on free sale sugar in comparison to levy quota, so as to recover the subsidy provided for PDS supply. In addition, under the Sugar Cass Act 1982, a case is charged to sugar sold in the domestic market, which directly goes to Sugar Development Fund (SDF).

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Currently the government levies an excise duty of Rs. 6386 per ton on levy sugar and Rs.9785 per ton on free sale sugar. In addition Rs.140 per ton is levied as cases for domestic sale of sugar. The Government of India has recently handed over powder to the state governments to control movement of molasses. The state governments used to control pricing of molasses and bagasse. In last few years, these controls are dispended with the molasses based alcohol however continues to be under the licensing provisions. GROWTH OF SUGAR INDUSTRY IN ANDHRA PRADESH: Sugar industry is mostly located in the regions, which are fertile and suitable for growing sugar. Andhra Pradesh is one among fertile regions of India and has been a sugarcane cultivating state for long time. Sugar industry continuous to play an important role in economy of the Andhra Pradesh state, as sugarcane is one of the important commercial corps. The installed capacity of 38 sugar factories is 54000 in 23 co-operative mills. 10700 T.C.D. in public sector units and 20250 T.C.D. in 7 private mills. There are 140 khandasari mills in the state. During the season of 1987 to 1988, the sugar factories in the state crushed 56 lakh tons of sugarcane with an average recovery of 9.43%. The factories produced about 5.28 lakh tons of sugar. The co-operative sugar mills, alone, crushed 25.07 lakh tons of sugarcane and produced 2.22 lakh tons of sugar. In the public section Nizam sugar factory and the private sector mills account of to the remaining crushing and production. The 67 Khandasari units crushed 8.23 lakh tons of sugarcane in 1987-88. India has been divided into three areas based on the sugar recovery attained by the factories. The factories where the recovery is more than 10% are grouped into high recovery area, where the recovery varies between 9 and 10%. The cane crushed by centrifugal factories in Andhra Pradesh also increased due to the increase in the production of sugarcane. In the year 1971-72, 2490 thousand tons was crushed in the average crushing season of 104 days, this figure increased to 5657 thousand tons in 120 days. The total average under sugarcane cultivation as 7000 hectares in the year 1950-51 contributing about 7% of the total average under sugarcane cultivation in India. The sugarcane
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average in Andhra Pradesh reached to a peak level in the year 1974-75. i.e., 19500 hectares, representing a growth rate of almost of 300% over that of 1950-51. This type of growth was not witnessed since 1974-75. During the recent years, this is decreasing and this figure has come down to 13200 hectares since 1985-86 and 15000 hectares in 1987-88. The total sugar production in India in 1950-51 was 11.34 lakh tons and for Andhra Pradesh it was only 0.25 lakh tons making 0.2 % total production. In 1985-86, the total production of sugar in India has gone up to 70,160 tons and for A.P., it was 9,575 tons. This was increased to 10,286 tons in the year 1987-88. But in the year 1986-87 the production was come down to 8,808 tons. Andhra Pradesh had been supply state as far as sugar is consumed till 1977-78 during which year the total production was 5,645 tons leaving a supply production of more than 150 tons i.e., total production was 199 thousand tons. This is due to lower production of sugar with in the state because of poor supply of cane to the factories. Transport of cane is not easily supplied to the factories due to lack of road facilities. Therefore, farmers are making sugar in their near fields. The cane price also is not favorable. Too instance, the cost of sugarcane price is risked due to new types of measures. The price for sugarcane fixed by the factory is low, which is not economical and it is the reason for the short production in Andhra Pradesh. But in sugar production, Andhra Pradesh has a favorable position. Recently Government of Andhra Pradesh announced to establish 6 more factories. If the price of sugarcane is increased and loans to farmers raised, the position will be more stable and it will be in an increasing trend. Based on the estimation of 6% GDP growth rate and 2% population growth rate for the period 1998-99 to 2000-01, the demand for sugar is expected to grow at the rate of 7% for the corresponding period. This will lead to increase in demand for sugar from 15.5 mn ton in 199899 to 17.75 mn ton in 2000-01. The per capita consumption of sugar is expected to increase from 15.5 kg in 1997-98 to 16.6 kg in 1998-88 and 17.7 kg in 2000-01. For the season 1998-99, imports are estimated at 0.8 mn ton. It is expected to drop for season 1999-2000 to 0.6 mn ton and to 0.4 mn ton in 2000-01. By estimating sugar cycle to top in season 1999-2000 by clocking a growth of 7% and then witness a drop in production for the season 2000-01, the closing stock will come down to
40

3.3 mn ton by September 30th 2001 from the present level of 5.4 mn ton by September 30th 1998. NATIONAL FEDERATION OF CO-OPERATIVE FACTORY LTD The National Federation of Co-operative Sugar Factories Ltd., completed 27 years of its successful working as on 30th June 1988. Like earlier years, the federation continued work as per it subjective. As far as licensing is concerned though the fresh guidelines for 7th plan show that the preference will be given to Co-operative sector, it is apprehended that, very few factories may be established in the Co-operative sector due to increase in the grower share capital and due to non availability of sufficient cane for the first crush of the factory with in a radius of 40 kms. Therefore, the federation has been repeatedly pleading with government to direct the State Government to subsidize the short fall in the growers share capital and to change the parameters for joining on the access of recovery. So that proper incentives can be availed by new units and expansion projects. Co-operative sugar factories in Andhra Pradesh: Andhra Pradesh has a pride of place in having pioneered in the organization of cooperative sugar factories in the country. The first co-operative sugar factory in the State is ETIKOPPAKA sugar factory, started its production in 1951-52 seasons. The main aim of organizing industry in co-operative sector is to up-lift the riots in backward areas. There are at present a number of co-operative sugar factories. Six new co-operative sugar factories have completed the construction and gone into production during the year 1983-84. Originally the factories have entered agreement with machinery supplies in the last quarter of 1972 and first quarter of 1977. As per the original schedule the factories were expected to go into crushing by 1978-79. Due to several factors like non-availability of funds, non-processing of loan applications by the central financing institutions and for non-availability of the incentives due to de-central of sugar, the sugar factories could not compile to the construction in time. Consequent to this, the project has been escalated from Rs.600 lakhs to Rs.900 lakhs. Though the State Government, have undertaken the project cost, the government could not be in a position to fulfill commitment fully due to stringent financial position.
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The Andhra Pradesh State Federation of Co-operative sugar has the unique distinction of having as one of its members, the Etikoppaka co-operative sugar factory, which is the first project, set up in the country as an experiment in the co-operative sector for sugar production. The federation has been playing effective role in the organization and proper development of co-operative sector of the industry in the state. The contribution of co-operative sector to the state production has been significant, being over 25%. From the every start, the federation realized the importance of cane development. For the success of industry it has been taking necessary measures for the development of quality cane. In the light of the financial assistance provided by the National co-operative development corporation and to make more service to the factories, the federation has engaged technical express in the field of sugar technology, finance and engineering. The federation has a programme to economic the expenditure to the factories undertaking bulk purchases of important items of consumables required by individual factories and also to keep initialization between the factories by supplying un-required items of one factory to another factory in need and there by reduce inventories. It is also under advice consideration to centralize the sales activity by operating at two or three centers for all co-operative sugar factories so that they should get the benefit of the economy. The federation has undertaken the field men on the factories in the development of cane and cultivation. The federation is encouraging factories to participate in seminars and refresher courses conducted from time to time for the benefit of managing directors, accounts staff engineers, chemists and agricultural officers etc., of the co-operative sugar factories. This goes a long way in making the managerial and supervisory staff, of the factories more equipped in respective field of activity. The federation also assists the factories in the recruitment of technical staff, claiming incentives to all other matters connected with the running of the factory. The progress of the co-operative sector the sugar industry during the past two of decades can be seen from the figures. As compared to 34 co-operative sugar factories producing only 17.47 percentage of the total sugar production in 1961-76 there were many as 194 co-operative sugar factories in operation during 1986-87 producing 5.9% of the total output to the country.

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SUGAR MILLS IN ANDHRA PRADESH (DISTRICT WISE) DISTRICT PRIVATE PUBLIC SECTOR Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 1 Nil 1 1 Nil Nil Nil 3 l l l l l l l CO-OP SECTOR 1 Ni 1 Ni Ni 1 Ni 2 1 1 Ni 1 Ni Ni 1 1 1 11 TOTAL 5 4 5 4 3 2 2 2 1 1 1 1 1 1 1 1 1 38

Visakhapatnam SECTOR 4 West Godavari East Godavari Krishna Vizianagaram Nizamabad Medak Chittor Guntur Srikakulam Nalgonda Kadapa Anantapur Nellore Karimnagar Kurnool Khammam Total 4 5 4 3 1 2 Nil Nil 1 Nil Nil Nil Nil Nil Nil Nil 24

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CHAPTER III
COMPANY PROFILE

44

BRIEF HISTORY OF THE ORGANISATION

Sri R.V.G.K. Rangarao landlord, Rajah of Bobbili and Ex. Chief Minister for joint capital of madras had established a Sugar factory named as Sri Rama Sugar Mill at Bobbili under private sector in the year 1937. He also started another sugar factory near Bobbili at seethenagaram for the benefit of the surrounding cane growers. They started factory with 850 MT per day crushing capacity at Bobbili and 650 MT per day at seethanagaram. Due to losses incurred by the factory the operations are closed in the year 1978-79. Then the representation made by the cane growers resulted the Government of Andhra Pradesh to under take the factory and marged with Nizam Sugar factory Ltd. Under autonomous control of Government. In 1986 the former Chief Minister Sri N.T. Ramarao has declared as a Government Company. The Nizam Sugar successfully run the factory till 1990, due to told machinery and poor performance of the production the Government has decided to construct new factory in between seethanagaram and Bobbili for the benefit of both factory cane growers as well as workers then the Government has started construction and stone laid by Sri N. janardhana Reddy who was the Chief Minister of Andhra Pradesh. According to the construction and execution works have been completed in the year 1995 and the new factory was inaugurated with 2500capacity by our Honorable Chief Minister Sri N. Chandrababu Naidu on December 28th 1995. due to heavy loses incurred during the construction period the company has not over come the debts hence the Government has taken decision to privatization the entire Nizam Sugar factories. According the pross of privatization and other matters entrusted to call tenders and finalization of privatization process as per the guide lines of the World Bank. The N.C.S. estates Ltd has quoted highest bid and shaken over the Nizam Sugar factory at Latchayyapet in the name and style of the N.C.S. Sugars Ltd. And was inaugurated the factory on 18th December 2002 under the new management.

NARAYANAM CHELAMAYYA & SONS (NCS):N.C.S. group of companies are well established multi-core business group over the last 2 decades with corporate Head Quarters in Hyderabad the Group is engaged in diverse business

45

activities like manufacture international trading development of port based infrastructure bulk transportation, information Technology etc., The N.C.S. estates private Limited one of the group companies owns a distillery at samarlakot, East Godavari District engaged in manufacture or extra neutral alcohol which uses in the manufacture of Indian made liquor. The distillery has an installed capacity of 20 KL per day. Two of the group Co, s N.C.S. storage systems private Ltd. And GOWTHAMI Liquid storage Pvt. Ltd., both are located at Kakinada, deep water port provide storage infrastructure for handling and storage of liquid commodities including petroleum A,B & C, class products and other hazardous & Non-Hazardous chemical edible oils etc., The group also operates similar facilities under the name and style of Konakan storage system private limited. At Karwar port in Karnataka and Cochin port in Kerala for handling and storage of host liquid products. All the storage tanks terminals have the good infrastructure to handle Multiproducts. The group trading division deals in exports and imports with main focus on exports of specialized products like molasses, alcohol and import of edible oils etc., this division is aggressively active in trading and has reached customers who play a major role in the global market of molasses and alcohol. The NCS Sugars Ltd. Initially it was Nizam sugar ltd constructed in 1993 to 1994 and the sugar processing work carried out till December 16th 2002 by the Nizam sugars Government body during the privatization process this unit was sold by Nizam sugars to the NCS group of companies. Basically the Sugar Industry is a Seasonal Industry and the Industry will be in operation per a period of 6 to 7 months from November to April or May. This industry considered to a labour oriented industry. Before the privatization process i.e. before 16th December 2002. it was under Nizam Sugars Ltd. Having the manpower strength of 600 workmen approximately (inclusive of permanent and seasonal employees.) After privatization the NCS group absorbed only 336 employees and maintaining till date. As explained above sugar industry is a seasonal industry, Agro based industry. This sugar unit capacity is 2500 TCD (Tons Cane Per day).
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Crushed capacity from 1994 to till 2003. During this seven years period the unit crossed maximum amount of cane in one season is around 2.5 lakhs tons. After privatization the NCS management did some technical modification inside the plant when even necessary and they could able to increase the capacity from 2.5 lakhs tons to 3.22 lakhs tons. During the season 2007 - 2008 they crushed 4.35 lakhs tons with some manpower. In general when we look into the sugar industry organization structure the following department can be seen. 1. cane department 2. maintenance department 3. process department 4. administration department As explained above the cane dept is the most important department in sugar industry the raw materials are sugarcane produced in the fields. The cane department should be organized very well and they should ensure to procure the allotted quantity of cane with the expected recovery quality from the fields. After privatization NCS group of company giver the highest priority to the cane department and introduced new variety of sugar cane seeds for higher output having better resistant of pests and cane with stand drought situation. With the above by planting the latest variety of sugarcane in the fields, the raw materials quantify will be multiplied by one and half of two times than the existing. The last season i.e. 2006-2008 season this unit has crushed 3022 lakhs tons of cane and established a new record of production with the manpower of 336 with slight modification in production area. From the above it is evident that after privatization the NCS group absorbed suitable required number of employees and utilized manpower in right direction in right time high spirits resulted highest rate of crushing closed off season with better recover without any enhancing manpower.

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From the above is under stood that after privatization process NCS group absorbed 60% manpower utilized then fully in season and established its capacity this could possible only with the best H.R policies. To keep up the spirits of workmen management had polices of A) Making the salaries and wages in time B) Fulfilling the all statutory rules and regulations. CAPACITY AND LOCATION:The NCS sugars Ltd. Latchayyapet is located at seethanagaram mandal, Vizianagaram District of Andhra Pradesh. The capacity of plants is 2500 TCD (Tons crushing per day). MAN POWER DATA: OFFICERS Supervisor-B Supervisor-C Clerical Grade- 1 Clerical Grade-2 Clerical Grade- 3 Clerical Grade- 4 Work men Highly skilled Skilled - A Skilled - B Semi Skilled Un Skilled -1 Un Skilled -2 Total PERMANENT 3 1 1 6 20 2 5 13 15 13 1 79 SEASONAL 2 29 1 20 81 52 40 225 OTHERS 48

ALUMNI OF THE COMPANY: Chairman Managing Director Directors : Sri Narayanam Narasimha Murthy : Sri N.Nageswara Rao : Sri N. Murali : Sri N. srinivasa Chief Executive Officer Personal Manager : Sri C.V. Krishnayya : Sri M. Gangaraju Garu

ANNUVAL GENERAL MEETING:Every month will be conducted meetings with M.D. and other department heads whenever the MD arrival to the plant. The sugar unit at latchayyapeta commencing crushing on 25th December 1995 inaugurated by Sri N. Chandra Babu Naidu Honorable Chief Minister of Andhra Pradesh as a public sector as government policy and incurring heavy losses of this unit (NSF) this sugar unit was privatized and sold to NCS sugars companies. In the year December 2002 NSC was of privatized and the new management is established new machinery in place of old machinery and modified as modern plant and increased 4000 TCD rated capacity. The NCS management is giving more subsidies incentives on cane development and see the growth of growers as well as industry. This year the availability of raw material the company wishes to expansion of the unit from 2500-4000 TCS which is planning to commence for 2008-2009 season.

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VARIOUS DEPARTMENTS & THEIR FUNCTIONS IN NCS SUGARS LTD: PRODUCTION DEPARTMENT:

The production department is the key department for the organizations development if it performs well the company will grow, if the department not performs well it may be leads to organization wealth decrease. The entire income incurred to the organization from product sales only. Thats why this department has such importance. The function of this department is to produce sugar and its byproducts from the cane as well as from raw sugar.

Particulars of cane crushed:

Duration

2009-10

2010-12

No of Days

175

189

Cane Crushed(Tonnes)

11,96,365

12,83,994

Sugar Produced(Qts)

13,95,11s0

13,93,770

Recovery (%)

11.14

10.85

Turnover (Rs in Lakhs)

22,319

16,792

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NCS Sugars Limited Total Production: Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Production (in quintals) 11,26,400 13,09,340 9,23,650 10,75,620 12,24,740 13,95,110 13,93,770

FINANCE AND ACCOUNTS DEPARTMENT:

The main function of financial development is to arrange the funds for salaries, wages for the employees and daily wages, to arrange payment to the sugar cane growers for the purchase of other considering goods, oils, chemicals, spare parts of the machinery and they have to receive sale proceeds by way of selling products.

Finance Department Chart

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PERSONNEL DEPARTMENT:

The main function of personnel department is to look after with manpower planning, recruitment, selection, placement, induction, promotion, and transfer, demotion, separation, layoff, retrenchment, training, wage & salary administration.

The personnel functions also include the welfare aspects of labour are concerned with the conditions of work and elements such as the provision of canteens, housing, transport, medical, education and health & safety provisions.

CANE DEPARTMENT: The functions of this department are followed by under the directions of the cane manager. The main function of this department is procuring raw material and supply to the production department for crushing to produce sugar. In addition to this function here they give incentives to the formers and so on. Key functions: (Raw Material Supply Fixing Incentives Fixing Cane price Bills Payment to farmers) Procuring and supply of raw material: Provide incentives to the farmers: Fixing of cane price Bills paid through accounting department Central government fix the price of the sugar cane across India called as Fair and remunerative price (FRP) formerly known as statutory minimum price(SMP) is rs1312 per tonne and purchase tax rs6o, in addition to this the company paid 378rs to encourage the farmers towards sugar cane production.

Supportive/off seasonal functions:

Technology development Controlling methods of sugar cane diseases Awareness programs

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ENGINEERING DEPARTMENT:

This is the department for maintaining all machineries, which are used in the production process. Here the chief engineer is the head of the department and he is the responsible person for the function in that department. The key function of the engineering department is maintaining of machineries. The maintaining types are: Periodic maintenance Break down maintenance General maintenance Checking of the machineries at time to time and observing the performance of the machinery in the process function are also the functions of the department. Another function of this department is managing production process, Machinery installation.

PURCHASE AND STORES DEPARTMENT:

This department is managed by material manager. He is the responsible for all the functions in the department. The main function of this department is purchasing the general items like material oil, lubricant of nuts and bolts, electrical items basing on the requirement of general department. The time for item required to supply that item is maximum 1 week, its called as pipe line. The company mostly purchase items from Gujarat , Karnataka. They prefer brand items only and go to manufacturer directly to purchase. They go to traders for purchase in few cases. The stores department function is to store the purchased items safely based on the item or chemical.

SALES DEPARTMENT:

The sales department is controlling by the deputy general manager (accounts). The company goes to two types of sales as per the central government orders, those are free sales and levy sales.

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Sales

Levy sales
Levy sales:

Free sales

10% of the total production is goes to levy sale. This sugar is for the public distribution. The price for levy sales is fixed by the central government of India. Free sales: 90% of the total production of the sugar sold in the form of free sales. The central government releases purchasing orders relating to quantity of sales to be sold on the basis of total production of the sugar in the completed year. Functions of this department: Issuing gate pass to the Lorries for weighment after receiving the delivery orders by the deputy general manager. Reporting of sales transactions to the deputy general manager. Record keeping regarding to the sales transactions done in the company. Maintaining accounts.

CO-GENERATION DEPARTMENT: A co-generation plant was established beside the NCS sugars limited. It was commissioned from 17th march 2007. Two departments are in the co-generation plant one is technical department and the other one is executive office. Here the Deputy General Manager manages the total co-generation plant. The plant total capacity is 20mw/h, and they provide 4.5mw to the sugar plant in the seasonal period and 1mw in the off season. 10% of the total production consumed for the axillaries of the co-generation plant and the remaining should be exported. The byproduct begasse of sugar production is used as the raw material for the power generation. Coal is used as raw material while in the off season. This coal is imports from Indonesia.

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EXECUTIVE OFFICE:

This is the head office of the co-generation plant, total functions which are not related to technical are done here. Organizational chart of NCS sugars limited

55

VARIETIES OF SUGAR CANE: Early varieties: This variety matures earlier than other varieties. The early varieties plat will take 11 months for mature and will take from 10 and half month to 11 months. Some of the early varieties are Mid/Late varieties: Mid/late varieties take more time for maturing in the CAE of Raton these take at least 11 to 11 month and in plant case they take 12 months. Some varieties are Mid: Late:
56

86 V96 Co 690 791V83 Co 671 85 A261 87 A298 81V48 93 V 297

7805 7219 85V110 89032Co

89 V74 85 R186 88 A 184 7219

WELFARE FACILITIES PROVIDED BY THE COMPANY: SAFETY FACILITIES: Staff shoes. Uniforms Other safety equipment

STATUTORY WELFARE FECILITIES: Washing facilities Canteen facilities Restrooms facilities Welfare officer Ambulance room Facilities for setting Storing and drying cloths NON STATUTORY WELFARE FACILITIES: Co-operative stores Co-operative credit society Vehicle facility for school going children Arranging picnics and tours NON STATUTORY BENEFITS: Medical facilities Stitching charges Exgratia Medical reimbursement Accommodation with free power

57

OTHER BENEFITS AND ALLOWANCES: Provident fund Bonus Gratuity Work men compensation Labour welfare fund contribution Washing allowances Medical allowances House rent allowances Health programs

ORGANISATION STRUCTURE OF NCS SUGARS PVT LTD LATCHAYYAPET MANAGING DIRECTOR

Civil Engg.

Engineering Dept.

Mfrg. Dept.

Cane Dept.

General Admin. Dept.

Accounts Dept.

58

CHAPTER-IV
THEORETICAL FRAME WORK

59

FINANCIAL STATEMENT ANALYSIS

Accounting process involved recording, classifying and summarizing various business transactions. The aim of maintaining various records is to determine profitability of the

enterprise from operation of the business and also to find out is financial position. Financial statements are in term reports, presented annually and reflect a division of the life of an enterprise in to more or less arbitrary accounting period more frequently a year. DEFINITIONS: According to John N.Myer The financial statements provide a summary of the accounts of a business enterprise, the balance sheet reflecting the assets, liabilities, and capital as on a certain date and the income statement showing the results of operations during a certain period. The term financial statement generally refers to following basic statements: The income Statement. The Balance Sheet. A Statement of Retained earring. A Statement of Changes in financial position. FINANCIAL STATEMENT

INCOME STATEMENT

BALANCE SHEET

STATEMENT OF RETAINED EARNINGS

STATEMENT OF CHANGES IN FINANCIAL POSITION

60

Income Statement: The income statement (also termed as profit and loss account) is generally considered to be the most useful of all financial statements. It explains what has happened to a balance sheet dates. The nature of the income which is the focus of the income statement can be well understood if a business is taken as an organization that uses inputs to produce output. Balance Sheet: It is a statement of financial position of a business at a specified moment of time. It represents all assets owned by the business at a particular moment of time and the claims of the owners and outsiders against those assets at that time. The important distinction between as

income statement is for a period while balance sheet is on a particular date. Statement of Retained Earnings: The term retained earnings means the accumulated excess earnings over losses and dividends. The balance shown by the income statement is transferred to the balance sheet through this statement after making necessary appropriations. It is fundamentally a display of things that have caused the beginning of the period retained earnings balance to be changed in to the one show in the end-or-the-period balance sheet. Statement of changes in financial position: The balance sheet shows the financial condition of the business at a particular moment of time while the income statement discloses the results of operations of business over a period of time for a better understanding of the affairs of the business, it is essential to identify the movement of working capital or cash in the statement of changes in financial position.

Nature of Financial Statements:

The financial statements are prepared on the basis of recorded facts. The recorded facts are those which can be expressed in monetary terms. The statements are prepared for a

particular period, generally one year. The transactions are recorded in a chronological order as and when the events happen. The financial statements by nature are summaries of the items recorded in the business and there statements are prepared periodically generally for the accounting period.
61

The following points explain the nature of financial statements: Recording facts: The term Recorded facts; refers to the data taken out from the accounting records. The records are maintained on the basis of actual cost data. The figures of various accounts such as cash in hand, cash at bank, bills receivables, Sundry debtors, fixed assets are taken as per the figure recorded in the accounting books. As the recorded facts are not based on replacement costs the financial statements do not show current financial condition of the concern. Accounting Conversions: Certain accounting converters are followed while preparing financial statements. The

conversion of valuating inventory at cost or market price, whichever is lower, is followed. The valuing of assets at cost less depreciation principle for balance sheet purposes statements comparable, simple and realistic. Postulates: The accountants make certain assumption while making accounting records. One of these assumptions is that the enterprise is treated as a going concern. The other alternative to this postulate is that the concern is to be liquidated the concern. So the assets are shows on a going concern basis. An other important assumption is to presume that the value of money will remain in the same in different periods. Personal Judgments: Even though certain standard accounting conversions are followed in preparing financial statement but still personal judgment of the accountant plays on important part.

Characteristics of financial statement:

The financial statements are prepared with a view to depict financial position of a concern. The financial statements should be prepared in such a way that they are able to give a clear and orderly picture of the concern. The ideal financial statement has the following characteristics. Depict true financial position: The information contained in the financial statements should be such that a true and correct idea is taken about the financial position of the concern.

62

 Attractive: The financial statements should be prepared in such a way that important information is underlined so that it attracts the eye of the reader. Comparability: The results of financial analysis should be comparable. The financial statements should be presented in such a way that they can be compared to the previous years statements. Previous years figures in the balance sheet. Brief: If possible, the financial statements must be prepared in brief. The reader will be able to form as idea about the figures.

Importance of financial statements:

Financial statements contain a lot of useful and valuable information regarding profitability financial position and future prospective of business concern. The utility of financial statement to different parties may be summarized as follows: Management: The financial statements are useful for assessing the efficiency of different cost centers. The management is able to decide the course of action to be adopted in future. Creditors: The trade creditors are to be paid in a short period. The CRS will be interested in current solvency of the concerns. The calculations of current ratio and liquid ratio will enable the creditors to assess the current financial position of the concerns in relation to their debts. Investors: The investors include both short-term and long term investors. They are interested in the security of the principal amounts of loan and regular payments by the concern. The

investors will not only analyze the parent financial position but will also study the future prospectus and expansion plans of the concern. Government: The financial statements are used assess tax liability of business enterprises. The Government studies economic situation of the country from these statements. These

63

statements enable the government to find out whether business is following various rules and regulations or not. Trade Associations: These associations provide service and protection to the members. They may analyze the financial statements for the purpose of providing facilities to these members. They may develop standard ratios and design uniform system of accounts. Stock Exchange: The stock exchange deal in purchase and sale of securities of different companies. The financial statements enable the stock broker to judge the financial position of different concerns. LIMITATIONS OF FINANCIAL STATEMENTS: Financial statements are relevant and useful for the concern, still they do not present a final picture of the concern, and otherwise misleading conclusions may be drawn. The financial statements suffer from following limitation: Ignoring of non-monetary aspects: These statements are prepared with the help of accounting information which mainly consider monetary aspects only. The value of business depends both on qualitative and quantitative factors. Historical cost: The statements are prepared on the basis of historical cost. The values of fixed assets are at there original cost less depreciation. The balance sheet value are not shown the value of assets may be sold more over they do not reflect the market value which is as important factor in determining the solvency of an enterprise. Personal Judgment: In preparing financial statements certain items are left to the personal Judgment of the accountant. If any accountant is not following accounting principles correctly his judgment will give wrong picture. Conversion of Conservation: Due to conversion of conservation the income statement may not disclose true income of the business. This is due to ignorance of probable incomes and accounting
64

probable losses.

FINANCIAL ANALYSIS: Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing between the items of the balance sheet and profit and loss account. There are various methods or techniques used in analysis financial statements such as comparative statements, trend analysis, common size statements, schedule of changes in working capital, funds flow and cash flow analysis Cost Volume Profit Analysis and Ratio Analysis. Meaning and concept of financial analysis: The terms financial analysis also known as analysis and interpretation of financial statements refers to the process of determining financial strength and weaknesses of the firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data. Types of financial analysis: Financial analysis can be classified in to different categories depending up on: On the basis of material used. On the basis of modules operandi

Types of Financial Analysis Analysis

On the basis of material Used

On the basis of modules Operandi

Internal Analysis

External Analysis

Horizontal Analysis

Vertical Analysis
65

In the basis of material used:

According to the basis, financial analysis can be of two types: External Analysis: This analysis is done by those who are outsiders for the business. These persons mainly depend up on the published financial statements. Their analysis serves only a limited purpose. Internal Analysis: This analysis is done by persons who have access to the books of account and at other information related to the business.Such as analysis can be done by executives and employees of the organization. The analysis is done depending up on the objective to be achieved through this analysis.

On the basis of modules operandi:

According to this financial analysis can also be of two types: Horizontal Analysis: In case of this type of analysis, financial statements for a number of years are reviewed and analysed the current years figures are compared with the standard or base year. The analysis statement usually contains figures for two or more year and the change are shown regarding each item from the base year usually in the form of percentage. Since this type of analysis based on the data from year to year rather than on date, it is also termed as Dynamic Analysis Vertical Analysis: In case of this type of analysis a study is made of the quantitative relationship of various items in the financial statement on a particular date. Since this analysis depends on the data for one period, this is not very conductive to a proper analysis of the companys financial position. It is also called static analysis as it is frequently used for referring to ratio developed on one date or for one accounting period. Techniques of financial analysis:
66

A financial can adopt one or more of the following techniques/ tools of financial analysis: Comparative Financial Statements Common Size Financial Statements Trend Percentages Ratio analysis Cash Flow Analysis Funds Flow Analysis Ratio C.V.P. Analysis

Financial
Analysis Techniques

Comparative Financial Statements

Common Size Financial Statements

Trend Percentages Ratio C.V.P. Analysis

Ratio Analysis Cash Flow Analysis

Funds flow Analysis

67

COMPARATIVE FINANCIAL STAGEMENTS: The statements which have been designed in a way so as to provide time perspective to the consideration of various elements of financial position embodied in such statements figures for two or more period side by side to facilitate comparison. Both the income statement and balance sheet can be prepared Ni the form of comparative financial statements. The comparative financial statements contain the following items. Absolute figures (amount in Rs. /-) as given in the final accounts. Absolute figures expressed in terms of percentages. Increase of decrease in absolute figures in terms of money value. Increase or decrease in terms of percentages. Comparison expressed in ratios. Percentages of totals.

Comparative Income Statements: The income statement (profit & loss A/c) gives the results of the operations during a definite period. It reveals the profit carried or loss incurred by the cancers. The comparative study if income statement for more than 1 year may enable us to know the program of the concern. First two columns gibe figures of various items for two years. The third and fourth column used to show increase or decrease in figures in absolute adopted in preparing comparative balance sheet. In first step, find out the changes in absolute figures i.e., increase or decrease should be calculated. In second step percentage of change should be calculated with the help of following formula.

Change in amount Percentage of change = Base year amount x 100

68

COMPARITIVE INCOME STATEMENT: PARTICULARS PREVIOUS YEAR CURRENT YEAR INCREASE/DECREASE AMOUNT (Rs) Net Sales **** **** *** **** *** PERCENT AGE **** ***

(Less): Cost of goods *** sold Gross Profit Gross Profit (Less): Expenses:Office Administration Expenses Selling & Distribution *** Expenses Total Expenses (Add): Incomes Total Incomes Operating Profit (Add): Non-Operating ***** Operating **** Operating **** Operating ***** & *** Operating ***** *****

***** *****

***** *****

***** *****

***

***

***

***

***

***

*****

*****

*****

****

****

****

****

****

****

*****

*****

*****

69

Incomes:Income on Investment Profit on sale of assets Dividends received *** *** *** *** *** *** ***** *** *** *** ***** *** *** *** *****

Total Non-Operating ***** Incomes (Less): Non-Operating Expenses:Loss on sale of Fixed **** Assets Net Profit & Before ***** Tax

****

****

****

*****

*****

*****

Interest [EBIT] Net

Profit &

Before ***** Tax

*****

*****

*****

Interest [EBIT]

(Less): Interest Paid Net Profit Before Tax (Less): Paid Net Profit After Tax Income

*** ****

*** **** ***

*** **** ***

*** **** ***

Tax ***

*****

*****

*****

*****

70

Guidelines for interpretation: The increase or decrease in sales should be compared with increase or

decrease in cost of goods sold. If increase in sales is more than the cost of goods sold. It means that the profitability of the concerns is increased. The amounts of gross profit should be studied. Operating profits should be studied. The express should be deducted from gross profit to find out operating profit and then operating incomes should be added. The next step is some of the non operating expenses are to be deducted from the operating profits and non operating incomes should be added to get net profit The opinion should be formed the profitability of the business concern and it should be given at the end. Comparative balance sheet: The balance sheet prepared on a particular date reveals the financial position of the concern on the date to study the trends of business over a period of time comparative balance sheet reveals the cause for changes in the financial position on amount of various transactions. The comparative studies throw light on financial policies adopted by management. The comparative balance sheet consists of two columns for the original data. A third column used to show increase or decrease in various items. A south column containing the parentage of increase or decrease may be added.

71

COMPARITIVE BALANCE SHEET: PARTICULARS PREVIOUS YEAR CURRENT YEAR INCREASE/DECREASE AMOUNT (Rs) ASSETS: Current Assets: (C.L) Cash & Bank Balances Sundry Debtors Bills Receivable Stock (Inventories) Prepaid Expenses Marketable Securities Temporary Investments Accured Incomes Total Current Assets Investments: Short-term advances Staff Advances Other Advances Fixed Assets: (F.A) Good Will *** *** *** ***
72

PERCENT AGE

*** *** *** *** *** *** *** *** *****

*** *** *** *** *** *** *** *** *****

*** *** *** *** *** *** *** *** *****

*** *** *** *** *** *** *** *** *****

loans

and ***

***

***

***

*** ***

*** ***

*** ***

*** ***

Land Buildings Plant & Machinery Furniture & Fittings Free Hold Property Lease Hold Property Preliminary Expenses Patent Rights Trade Marks Other Expenses Total Fixed Assets

*** *** *** *** *** *** *** *** *** Deferred ***

*** *** *** *** *** *** *** *** *** ***

*** *** *** *** *** *** *** *** *** ***

*** *** *** *** *** *** *** *** *** ***

*****

*****

*****

*****

TOTAL ASSETS [ C.L + F.A ]

******

******

******

******

Current (C.L)

Liabilities:

Sundry Creditors Bills Payable Out Standing Expenses

*** *** ***

*** *** ***

*** *** ***

*** *** ***

73

Bank Over Draft Unclaimed Dividends Propose Dividends Provision For Tax Accrued Expenses Total Liabilities Long Term Liabilities: (L.T.M) Mortigage Loan Debentures Total Long

*** *** *** *** ***

*** *** *** *** *** *****

*** *** *** *** *** *****

*** *** *** *** *** *****

Current *****

*** *** Term *****

*** *** *****

*** *** *****

*** *** *****

Liabilities Share Reserves: RES.) Equity Share capital *** *** *** *** *** *** ***** *** *** *** *** *** ***** *** *** *** *** *** ***** Capital (CAP. & &

Preference Share Capital *** Share Premium General Reserve Appropriation of Profits Total Reserve Capital *** *** ***

& *****

74

TOTAL LIABILITIES ***** [C.L + L.T.M + CAP. & RES.]

*****

*****

*****

Guide lines for interpretation of balance sheet: The short term financial position can be studied y comparing the working capital of both years. To study the liquidity position changes in liquid assets must be ascertain if there is any increase in liquid assets. We must understand that is an improvement in the liquidity position of the concern and vice versa. A high increase in sundry debtors and bills receivable mean in increase in risk in collecting the amount of dues. A high increase in closing stock may mean that decrease in the demand. Long term financial position of the business concern car be analyzed by studying the changes in fixed assets, long term liabilities and capital. Fixed assets must be compared with long term loans and capital. If the increase in fixed assets is more than the increase in long term financiers from the working capital which is not good. COMMON SIZE STATEMENTS: The common size statements, balance sheet and income statement are shown in analytical percentages. The figures are shown as percentages of total assets, total liabilities and sales. The total assets are taken as 100 and different assets are expressed as percentage of the total. Similarly various liabilities are taken as a part of total liabilities. These statements are also known as component parentage or 100% statements because every individual item is stated as a percentage of the total 100 the short statements because every individual item is stated as a percentage of the total 100 the short-comings in comparative statements and trend percentages where changes in item could not be compared with the total have been covered up. The common size statements may be prepared in the following way. The totals of assets or liabilities are taken as 100.
75

The individual assets are expressed as a percentage of total assets i.e., 100 and different liabilities are calculated in relation to that liability.

Common Size Income Statement: The items in income statement can be shown as percentages of sales to show the relation of each item to sales. A significant relationship can be established between items of income statement and volume of sales. The increase in sales will certainly increases selling expression and volume of sales. The increase in sales will certainly increases selling expresses and not administrative or financial expenses. In case the volume of sale increases to a considerable extent, administrative and financial expenses may go up. In case the sales are declining, the selling expenses should be reduced at once. So, a relationship is established between sales and other in income statement and this relationship is helpful in evaluating operational activities of the enterprises. Common Size Balance Sheet: Statement in which balance sheet items are expressed as the ratio of each asset to total assets and the ratio of each liability is expressed as a ratio of total liabilities is called common size balance sheet. The common size balance sheet is a horizontal analysis. The comparison of figures in different periods is not useful becomes total figure may be affected by a number of factors. It is not possible to establish standard norms for various assets. The trends of year to year may not be studied and even they may not give proper results.

76

COMMON SIZE BALANCE SHEET PERFORMANCE:

Rs. Crs Previous Particulars ASSETS: Current Assets: (C.L) Cash & Bank Balances Sundry Debtors Bills Receivable Stock (Inventories) Prepaid Expenses Marketable Securities Temporary Investments Accrued Incomes Total Current Assets Investments: Short-term advances Staff Advances Other Advances Fixed Assets: (F.A) Good Will Land Buildings Plant & Machinery Furniture & Fittings Free Hold Property Lease Hold Property Preliminary Expenses Patent Rights *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** ***
77

Percentage

Current Year

Percentage

Year

*** *** *** *** *** *** *** *** *****

*** *** *** *** *** *** *** *** *****

*** *** *** *** *** *** *** *** *****

*** *** *** *** *** *** *** *** *****

loans

and ***

***

***

***

*** ***

*** ***

*** ***

*** ***

Trade Marks Other Deferred Expenses

*** ***

*** ***

*** ***

*** ***

Total Fixed Assets

*****

*****

*****

*****

TOTAL ASSETS [ C.L + F.A ]

******

******

******

******

Current Liabilities: (C.L) Sundry Creditors Bills Payable Out Standing Expenses Bank Over Draft Unclaimed Dividends Propose Dividends Provision For Tax Accrued Expenses Total Current Liabilities Long Term Liabilities: *** *** *** *** *** *** *** *** ***** *** *** *** *** *** *** *** *** ***** *** *** *** *** *** *** *** *** ***** *** *** *** *** *** *** *** *** *****

(L.T.M) Mortgage Loan Debentures Total Liabilities Share Capital & Long *** *** Term ***** *** *** ***** *** *** ***** *** *** *****

Reserves: (CAP. & RES.) Equity Share capital *** *** *** ***
78

Preference Share Capital Share Premium General Reserve Appropriation of Profits Total Capital & Reserve

*** *** *** *** *****

*** *** *** *** *****

*** *** *** *** *****

*** *** *** *** *****

TOTAL LIABILITIES [C.L + L.T.M + CAP. & RES.]

*****

*****

*****

*****

TREND ANALYSIS: Trend analysis is an important and useful technique of financial analysis. It involves computation of index numbers of the moments of the various financial items in the financial statements for a number of periods. It enables to know the changes in the financial position and the operational efficiency between the period chosen. Through trend analysis the analysis can give his opinion as to whether favorable or unfavorable tendencies are reflected by the accounting date. The comparative and common size balance sheets suffer from a major limitation i.e., absence of basic standard to indicate whether the proportion of an item is normal or analysis values are calculated for each item in isolation but conclusions are to be drawn by studying the related items also. Trend analysis can be analysis in the following ways: i. ii. By calculating trend ratio (or) percentage. By plotting on graph paper (or) charge.

Trend Ratio (or) Percentage: It involves the ascertainment of arithmetical relationship which each item of several year to the same item of base year. Any year maybe as the base year, it is usually the earliest year.

79

Procedure for Calculating Trend Ratio: The following procedure maybe adopted for calculating trend ratio. i. Select any year as base year the selected year should be normal year for the base year the trend value is taken as 100. ii. Trend percentage of each item should be calculated with the help of following formula.

Current year value Trend Percentage = Base year value COST-VOLUME-PROFIT ANALYSIS: Cost Volume Profit analysis is an important tool of profit planning. It studies the relationship between cost, volume of production, sales and profit. It is not strictly a technique used for analysis of financial statements. However, it is an important tool for the management for decision making. Since the data is provided both cost and financial records. It tells the volume of account of variation in output, selling price and cost, and finally, the quantity to be produced and sold to reach the target profit level. RATIO ANALYSIS: Financial analysis depends to very large extents of the use of ratios through there are other equality important tools of such analysis. Thus, a direct examination of the magnitude of two released items is somewhat enlightening but the comparison is greatly facilitated by expressing the relationship as a ratio. Ratio analysis of business enterprises enters on efforts to derive quantitative measures or guides concerning the expected capacity of the firm to meet its future financial obligation or expectations present and past data are used for the purpose and whatever extrapolations appear necessary. They are made to provide no indication of feature performance. Alexander Walt, who criticized the bankers for its lap sided development owing to their decisions regarding the X 100

80

grant of credit on current ratios a lone, made the presentation of an elaborate system of ratio analysis in1919. Ratio: Ratio is an expression of the quantitative relationship that exists between the two numbers. The ratio is defined as the indicated quotient of two mathematical expressions the ratio should be determined between related accounting variables to be meaningful and effective. CASH FLOW ANALYSIS: Cash flow analysis enables the management to plan and co-ordinate the financial

operations of the enterprise, and furnish the basis for evaluating financing policies. It provides a barometer for ensuring the profitability of the business and makes financing problems of the business much more managble. This statement is prepared to know clearly the various items of inflow and outflow of cash. It is an essential tool for short-term financial analysis and is very helpful in the evaluation of current liquidity of a business concern. It helps the business executives of a business in the efficient cash management and internal financial management. A statement of changes in the Financial Position of firm on cash basis is called a cash flow statement. The cash flow statement is to be presented as per the AS-III of the institute of Charted Accountants of India (ICAI). The ICAI issued AS-III in June 1981 for the first time; later in March 1997 it is revised and standard. All the listed companies / Estates whose financial year ends on March 1996 and thereafter will be required to give cash flow statement comes into effect immediately i.e., on 15/02/1996.

81

FUNDS FLOW ANALYSIS: The Funds Flow Statements is the statement which shows the movement of funds and is a report of the financial operations of the business under takings. It indicates various stages by which funds obtained during a particular period of time and the wages which these funds were employed. In simple words it is a statement of sources and application of funds. The term fund has been defined a number of ways. In narrow sense fund means cash only. In broader sense the term fund refers to any current assets and liabilities. In popular sense the term fund means Working Capital. Every firm should forecast the requirement of working capital to estimate the working capital is the help of Funds Flow Statements. This statement is prepared in order to reveal clearly the various sources where from the funds are produced to finance the activities of a business concern during the accounting period and also brings to highlight the uses to which these funds are put during the said period. The following process is adopted for the preparation of Funds Flow Statement. i. ii. Preparation of schedule of changes in Working capital (Working Capital Statement). Calculation of funds from operations with the help of Non-current assets and Non-current liabilities ledger A/Cs. iii. Preparation of Funds Flow Statement.

82

CHAPTER-V
DATA ANALYSIS AND INTERPRETATION

83

FINANCIAL STATEMENT ANALYSIS IN NCS Sugars Ltd. Comparative Balance Sheet of 2011-12 and 2010-11 Table 4.1 PARTICULARS Sources of funds 1.Share fund holders 628,187,482 150,000,000 478,187,482 493,383,953 150,000,000 343,383,953 134,803,529 0 134,803,529 27.32 0 2011-12 2010-11 CHANGE AMOUNT PERCENTAGE

Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Deferred tax liability Total funds(1+2+3) Application of funds 1.Fixed assets(gross block)

39.26 1,521,938,143 1,729,271,957 (207,333,814) 11.99 1,521,938,143 1,729,271,957 (207,333,814) 11.99 0 0 0 261,364,453 256,628,807 4,735,646 1.85 2,411,490,078 2,479,284,717 (67,794,639) 2.73 0 1,735,518,316 1,603,428,201 132,090,115 8.24 64.95 3.22 1165.59 70.84

(-)Depreciation 215,174,458 130,446,908 84,727,550 Net block 1,520,343,858 1,472,981,293 47,362,565 2. capital works in 57,552,904 4,547,516 53,005,388 progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision Net current assets 6.Misc.expenditures Total assets (net block +2+3+4+net current assests+6) 144,011,480 43,984,000 2,070,103,050 1,502,483,559 0 0 1,211,713,298 210748590 144011480 43984000 858,389,752 1,291,734,969

612.93 567,619,491 1,000,964,708 (433,345,217) 43.29 77,978,345 791,202 77,187,143 9755.68 2,411,490,078 2,479,284,719 (67,794,641) 2.73

84

INTERPRETATION: Above table 4.1 depicts the comparative balance sheets of NCS Sugars Ltd. for the years, 2010-2011 and 2011-2012. There is an increase of 39.26% in reserves and surplus in 2011-2012 because of increase in the profit after tax. There is an increase of 27.32% in share holders fund in 2011-2012. It is a good sign for the company. In loan funds there is a decrease of 11.99% due to repayment of loans. Regarding the application of funds, there is an increase of 8.24% in companys gross block as the company made investment in fixed assets. There is an increase of 70.84% in companys current assets in 2011-2012. There is an increase of 612.93% in current liabilities in 2011-2012. There is a decrease of 43.29% in companys net current assets in 2011-2012 due to huge increase in current liabilities. It is required that the company should increase its current assets and decrease current liabilities in order to maintain good liquidity position. However the increase in the share holders fund and decrease in loans is a good sign for the company.

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Comparative Balance Sheet of 2010-11 and 2009-10 Table 4.2

PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Deferred tax liability Total funds(1+2+3) 493,383,953 150,000,000 343,383,953 1,729,271,957 1,729,271,957 0 256,628,807 2,479,284,717 417,943,034 100,000,000 317,943,034 1,125,170,316 1,125,170,316 0 154,482,764 75,440,919 50,000,000 25,440,919 604,101,641 604,101,641 0 102,146,043 18.05 50 8 53.69 53.69 0 66.12 46.05 0 0 35.28 107.2 31.24 98.22 100 176.79 25.72 270.54 41.9 46.05 2010-11 2009-10 CHANGE AMOUNT PERCENTAGE

1,697,596,114 781,688,603

Application of funds 1.Fixed assets(gross 1,603,428,201 block) (-)Depreciation 130,446,908 Net block 1,472,981,293 2. capital works in 4,547,516 progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision 0 0 1,211,713,298 210,748,590

1,185,292,175 418,136,026 62,956,330 67,490,578 1,122,335,845 350,645,448 254,913,739 (250,366,223) 48,844,602 0 437,770,567 167630387 (48844602) 0 773,942,731 43,118,203

Net current assets 1,000,964,708 6.Misc.expenditures 791,202 Total assets 2,479,284,719 (net block +2+3+4+net current assests+6)

270,140,180 730,824,528 1,361,748 (570,546) 1,697,596,114 781,688,605

86

INTERPRETATION: Above table 4.2 depicts the comparative balance sheets of NCS Sugars Ltd. for the years, 2009-2010 and 2010-2011. There is an increase of 50% in the share capital of the company due to further issue of shares. There is an increase of 8% in reserves and surplus in 2010-2011 because of increase in the profit after tax. There is an increase of 18.05% in share holders fund in 2010-2011. In loan funds there is an increase of 53.69% due to increase in secured loans. Regarding the application of funds, there is an increase of 35.28% in companys gross block as the company made investment in fixed assets. There is an increase of 176.79% in companys current assets in 2010-2011 due to an increase in inventories and loans and advances. There is an increase of 25.72% in current liabilities in 2010-2011. There is an increase of 270.54% in companys net current assets in 2010-2011 due to decrease in current assets. It is not good for the company to increase its secured loans. However, the increase in the share capital is a good sign for the company.

87

Comparative Balance Sheet of 2009-10 and 2008-09 Table 4.3

PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Deferred tax liability Total funds(1+2+3) 417,943,034 100,000,000 317,943,034 1,125,170,316 1,125,170,316 0 154,482,764 1,697,596,114 282,127,701 100,000,000 182,127,701 393,229,986 393,229,986 0 48,356,942 723,714,629 135,815,333 0 135,815,333 731,940,330 731,940,330 0 106,125,822 973,881,485 74.57 186.14 186.14 219.46 134.57 0 0 359,433,508 43,288,971 316,144,537 36,606,167 56,680,634 0 942,006,396 629815436 312,190,960 2,092,332 723,714,630 825,858,667 19,667,359 806,191,308 218,307,572 (7836032) 0 (504,235,829) (462,185,049) (42,050,780) (730,584) 973,881,484 229.77 45.43 255.01 596.37 13.82 53.53 73.38 13.47 34.92 134.57 48.14 0 2009-10 2008-09 CHANGE AMOUNT PERCENTAGE

Application of funds 1.Fixed assets(gross 1,185,292,175 block) (-)Depreciation 62,956,330 Net block 1,122,335,845 2. capital works in 254,913,739 progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision 48,844,602 0 437,770,567 167630387

Net current assets 270,140,180 6.Misc.expenditures 1,361,748 Total assets 1,697,596,114 (net block +2+3+4+net current assests+6)

88

INTERPRETATION: Above table 4.3 depicts the comparative balance sheets of NCS Sugars Ltd. for the years, 2008-2009 and 2009-2010. There is a 74.57% increase in reserves and surplus in 2009-2010 because of increase in the profit after tax. There is a 48.14% increase in share holders fund in 2009-2010. In loan funds there is an increase of 186.14% due to increase in secured loans. Regarding the application of funds, there is an increase of 229.77% in companys gross block as the company made investment in fixed assets. There is a decrease of 13.82% in capital advances in 2009-2010. There is a decrease of 53.53% in companys current assets in 2009-2010. There is a decrease of 73.38% in current liabilities in 2009-2010. There is a decrease of 13.47% in companys net current assets in 2008-2009 due to decrease in current assets. The company should increase is current assets so as to maintain good liquidity. It is not good for the company to increase its secured loans. However, the increase in the share capital is a good sign for the company.

89

Comparative Balance Sheet of 2008-09 and 2007-08 Table 4.4

PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Deferred tax liability Total funds(1+2+3) 282,127,701 100,000,000 182,127,701 393,229,986 393,229,986 0 48,356,942 723,714,629 195,544,679 100,000,000 95,544,679 220,296,329 220,296,329 0 35,594,505 451,435,513 86,583,022 0 86,583,022 172,933,657 172,933,657 0 12,762,437 272,279,116 44.28 0 90.62 78.5 78.5 35.86 60.31 0 0 20.31 62.29 16.2 1490.2 1.91 16.02 79.04 22.24 60.31 2008-09 2007-08 CHANGE AMOUNT PERCENTAGE

Application of funds 1.Fixed assets(gross 359,433,508 block) (-)Depreciation 43,288,971 Net block 316,144,537 2. capital works in 36,606,167 progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision 56,680,634 0 942,006,396 629815436

298,745,591 26,673,449 272,072,142 2,301,991 0 0 924,339,088 749968451 174,370,637 2,690,744 451,435,514

60,687,917 16,615,522 44,072,395 34,304,176 56680634 0 17,667,308 (120,153,015) 137,820,323 (598,412) 272,279,116

Net current assets 312,190,960 6.Misc.expenditures 2,092,332 Total assets 723,714,630 (net block +2+3+4+net current assests+6)

90

INTERPRETATION: Above table 4.4 depicts the comparative balance sheets of NCS Sugars Ltd. for the years, 2007-2008 and 2008-2009. There is a 90.62% increase in reserves and surplus in 2007-2008 because of increase in the profit after tax. There is a 44.28% increase in share holders fund in 2007-2008. In loan funds there is an increase of 78.5% due to increase in secured loans. Regarding the application of funds, there is an increase of 20.31% in companys gross block as the company made investment in fixed assets. There is an increase of 1.91% in companys current assets in 2008-2009. There is a decrease of 16.02% in current liabilities in 2008-2009. There is an increase of 79.04% in companys net current assets in 2008-2009 due to decrease in current liabilities. The increase in the share capital is a good sign for the company.

91

Comparative Balance Sheet of 2007-08 and 2006-07 Table 4.5

PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Deferred tax liability Total funds(1+2+3) 195,544,679 100,000,000 95,544,679 220,296,329 220,296,329 0 35,594,505 451,435,513 130,067,184 91,500,000 38,567,184 266,849,819 266,849,819 0 19,956,344 416,873,347 65,477,495 8,500,000 56,977,495 (46,553,490) (46,553,490) 0 15,638,161 34,562,166 147.74 17.45 17.45 78.36 8.29 0 0 23.98 99.1 19.56 92.51 355.22 1487.19 11.92 2.95 8.29 50.34 9.29 2007-08 2006-07 CHANGE AMOUNT PERCENTAGE

Application of funds 1.Fixed assets(gross 298,745,591 block) (-)Depreciation 26,673,449 Net block 272,072,142 2. capital works in 2,301,991 progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision 0 0 924,339,088 749968451

240,962,378 13,396,882 227,565,496 30,731,353 0 0 203,055,297 47251393 155,803,904 2,772,598 416,873,351

57,783,213 13,276,567 44,506,646 (28,429,362) 0 0 721,283,791 702,717,058 18,566,733 (81,854) 34,562,163

Net current assets 174,370,637 6.Misc.expenditures 2,690,744 Total assets 451,435,514 (net block +2+3+4+net current assests+6)

92

INTERPRETATION: Above table 4.5 depicts the comparative balance sheets of NCS Sugars Ltd. for the years, 2006-2007 and 2007-2008. From the above table it is clear that there is an increase of 9.29% in share capital as a result of further issue of shares. There is a 147.74% increase in reserves and surplus in 2007-2008 because of huge increase in the profit after tax. In loan funds there is a decrease of 17.45% due to repayment of secured loans. Regarding the application of funds, there is an increase of 23.98% in companys gross block as the company made investment in fixed assets. However in the case of companys current assets in 2007-2008 there is an increase of 355.22% due to increase in inventories, fixed deposits with banks, loans and advances , cash and bank balances and sundry debtors. There is an increase of 1487.19% in current liabilities in 2007-2008.Due to the huge increase in current liabilities even though the current assets increased the increase in the net current assets is 11.92% in 2007-2008. The increase in the share capital and decrease in loan funds is a good sign for the company. The overall performance of the company is satisfactory.

93

Comparative Statement of Profit& Loss a/c for the year

2011-12 and 2010-11 Table 4.6 CHANGE AMOUNT

PARTICULARS Income: 1.Operations 2.Other income 3.Increase/(Decrease) in Stock Total Income Expenditure: Material cost Rawsugar Cost Traded goods cost Power cost Loss on derivatives Mfg,Administrative and Selling Cost Finance Cost Depreciation Total Expenditure: Profit before tax Less: Prior Period Expenses Less: Taxes and Generation

2011-12

2010-11

PERCENTAGE

2,234,373,425 2,463,132,741 (228,759,316) 9.29 50,797,939 6,920,234 2,923,469 115,695,508 47,874,470 1637.59

(108,775,274) 94.02

2,292,091,598 2,581,751,718 (289,660,120) 11.22 0 211253326 257173504 635043964 551348831 38772710 177090140 153253335 84727550 2108663360 183,428,238 217941 602590729 0 1333254874 78693142 0 195257817 103488710 67490578 2380775850 200,975,868 0 (391337403) 257173504 (698210910) 472655689 38772710 (18167677) 49764625 17236972 (272112490) (17,547,630) 217941 64.94 52.37 600.63 9.3 48.09 25.54 11.43 8.73 -

Provisions Profit after tax

30704565 152,505,732

125534949 75,440,919

(94830384) 77,064,813

75.54 102.15

94

INTERPRETATION: Above table 4.6 depicts the comparative profit and loss account of NCS Sugars Ltd. for the years, 2010-2011 and 2011-2012. Regarding the income of the company, there is a decrease of 9.29% in income from operations in the year 2011-2012 when compared to the year 2010-2011.It indicates that the company has not performed well. However there is an increase of 1637.59% in other income in 2011-2012 which is a good sign. There is a decrease of 11.22% in total income of the company in 2011-2012 which is not good for the company. Regarding the expenditure, there is a decrease of 64.94% in material cost. The cost of the traded goods decreased 52.37% in the year 2011-2012 when compared to the year 2010-2011.The power generation cost increased 600.63% in the year 2011-2012. The total expenditure of the company decreased 11.43% in the year 2011-2012 which is a good sign. There is a decrease of 8.73% in profit before tax. The profit after tax increased 102.15% in the year 2011-2012 which is a good sign to the company. The overall performance of the company is satisfactory as there is increase in the profit after tax.

95

Comparative Statement of Profit& Loss a/c for the year

2010-11 and 2009-10 Table 4.7 CHANGE AMOUNT

PARTICULARS Income: 1.Operations 2.Other income 3.Increase/(Decrease) in Stock Total Income Expenditure: Material cost Raw sugar Cost Traded goods cost Power cost Mfg,Administrative and Selling Cost Finance Cost Depreciation Total Expenditure: Profit before tax Less: Prior Period Expenses Less: Taxes and Generation

2010-11

2009-10

PERCENTAGE

2,463,132,741 3,102,327,612 (639,194,871) 20.6 2,923,469 115,695,508 18,094,159 (29,530,886) (15,170,690) 145,226,394 83.84 491.78

2,581,751,718 3,090,890,885 (509,139,167) 16.47 0 602590729 0 1333254874 78693142 478,897,756 564,626,904 123692973 (564626904) 25.83 100 13.81 2053

1,546,942,601 (213687727) 3,655,049 75038093

195257817 103488710 67490578 2380775850 200,975,868 0

167,906,077 33,247,623 19,667,359

27351740 70241087 47823219

16.29 2.11 2.43 0.15 0.27 -

2,814,943,369 (434167519) 275,947,516 0 (74,971,648) 0

Provisions Profit after tax

125534949 75,440,919

125886312 150,061,204

(351363) (74,620,285)

0 0.5

96

INTERPRETATION: Above table 4.7 depicts the comparative profit and loss account of NCS Sugars Ltd. for the years, 2009-2010 and 2010-2011. Regarding the income of the company, there is a decrease of 20.6% in income from operations in the year 2010-2011 when compared to the year 2009-2010.It indicates decrease in the operations level of the company which is a bad sign. However there is a decrease of 83.84% in other income in 2010-2011 which is a bad sign. There is a decrease of 16.47% in total income of the company in 2010-2011 due to decrease in income from operations. Regarding the expenditure, there is an increase of 25.83% in material cost. The raw sugar cost decreased 100% in the year 2010-2011 when compared to the year 2009-2010.The power generation cost increased 2053% in the year 2010-2011 The total expenditure of the company decreased 0.15% in the year 2010-2011 which is a good sign. There is a decrease of 0.27% in profit before tax. The profit after tax decreased 0.5% in the year 2010-2011 which is not a good sign. The overall performance of the company is not satisfactory as there is decrease in the profit after tax. The company has to increase its income from operations in order to perform well and at the same time curtail expenditure on power generation.

97

Comparative Statement of Profit& Loss a/c for the year

2009-10 and 2008-09 Table 4.8 PARTICULARS Income: 1.Operations 2.Other income 2009-10 2008-09 CHANGE AMOUNT PERCENTAGE

3,102,327,612 3,461,029,958 (358,702,346) 18,094,159 68,739,890 (50,645,731) (37,396,210) 7,865,324

10.36 73.68 21.03 11.5 0 11.38 13320.13 34.66 -

3.Increase/(Decrease) (29,530,886) in Stock Total Income Expenditure: Material cost Cost of Sugar Export Cost of Sugar Trading Cost of Molasses Export

3,090,890,885 3,492,373,638 (401,482,753) 478,897,756 429,965,937 1,143,104,930 8,517,837 99,218,927 304,618,744 151,849,062 0 48931819 1,134,587,093 (52,630,135) 304,618,744

Cost of Raw sugar 0 Trading Raw sugar Cost Power cost Generation 564,626,904 3,655,049 167,906,077 33,247,623 19,667,359 2,814,943,369 275,947,516

1,734,893,803 (1,734,893,803) 100 858,877,960 0 115,199,428 26,294,866 16,615,522 3,342,214,415 150,159,223 0 52173700 97,985,523 (294251056) 3655049 52706649 6952757 3051837 (527271046) 125,788,293 0 73712612 52,075,681 34.26 45.75 26.44 18.37 15.78 83.77 141.28 53.15

Mfg,Administrative and Selling Cost Finance Cost Depreciation Total Expenditure: Profit before tax

Less: Prior Period 0 Expenses Less: Taxes Provisions Profit after tax and 125886312 150,061,204

98

INTERPRETATION: Above table 4.8 depicts the comparative profit and loss account of NCS Sugars Ltd. for the years, 2008-2009 and 2009-2010. Regarding the income of the company, there is a decrease of 10.36% in income from operations in the year 2009-2010 when compared to the year 2008-2009.It indicates decrease in the operations level of the company which is a bad sign. However there is a decrease of 73.68% in other income in 2009-2010 which is a bad sign. There is a decrease of 11.5% in total income of the company in 2009-2010 due to decrease in income from operations and other income. Regarding the expenditure, there is an increase of 1.38% in material cost. The raw sugar cost decreased 34.26% in the year 2009-2010 when compared to the year 2008-2009.The cost of sugar trading decreased 34.66% in the year 2009-2010 when compared to the year 2008-2009. The manufacturing and administrative costs increased 45.75% in the year 2009-2010 when compared to the year 2008-2009. The total expenditure of the company decreased 15.78% in the year 2009-2010 which is a good sign. There is an increase of 83.77% in profit before tax. The profit after tax increased 53.15% in the year 2009-2010 which is a good sign. The overall performance of the company is satisfactory as there is increase in the profit after tax.

99

Comparative Statement of Profit& Loss a/c for the year

2008-09 and 2007-08 Table 4.9 CHANGE AMOUNT

PARTICULARS Income: 1.Operations 2.Other income 3.Increase/(Decrease) in Stock Total Income Expenditure: Material cost Cost of Sugar Export Cost Trading Cost of Raw sugar Trading Raw sugar Cost Mfg,Administrative and Selling Cost Finance Cost Depreciation Total Expenditure: Profit before tax Less: Prior Period Expenses Less: Taxes and of Sugar

2008-09

2007-08

PERCENTAGE

3,461,029,958 1,389,251,081 2,071,778,877 149.13 68,739,890 (37,396,210) 30,927,533 108,648,524 37,812,357 122.26

(146,044,734) 134.42

3,492,373,638 1,528,827,138 1,963,546,500 128.43 0 429,965,937 8,517,837 151,849,062 429,869,350 0 0 96587 8,517,837 151,849,062 0.02 -

1,734,893,803 462,888,257 858,877,960 115,199,428 26,294,866 16,615,522 358,656,700 135,410,155 26,596,513 13,276,566

1,272,005,546 274.8 500221260 (20210727) (301647) 3338956 139.47 14.93 1.13 25.15 134.26 0.47 -

3,342,214,415 1,426,697,541 1915516874 150,159,223 0 102,129,597 0 48,029,626 0

Provisions Profit after tax

52173700 97,985,523

36671941 65,457,656

15501759 32,527,867

0.42 0.5
100

INTERPRETATION: Above table 4.9 depicts the comparative profit and loss account of NCS Sugars Ltd. for the years, 2007-2008 and 2008-2009. Regarding the income of the company, there is an increase of 149.13% in income from operations in the year 2008-2009 when compared to the year 2007-2008. It is a good sign for the company. However there is an increase of 122.26% in other income in 2008-2009 which is also good sign. There is an increase of 128.43% in total income of the company in 2008-2009 due to increase in income from operations and other income. Regarding the expenditure, there is an increase of 0.02% in material cost. The raw sugar cost increased 139.47% in the year 2008-2009 when compared to the year 2007-2008. The manufacturing and administrative costs decreased 14.93% in the year 2008-2009 when compared to the year 2007-2008. The total expenditure of the company increased 134.26% in the year 2008-2009. The profit after tax increased 0.5% in the year 2009-2010 which is a good sign. The overall performance of the company is satisfactory as there is increase in the profit after tax.

101

Comparative Statement of Profit& Loss a/c for the year

2007-08 and 2006-07 Table 4.10 CHANGE AMOUNT

PARTICULARS Income: 1.Operations 2.Other income 3.Increase/(Decrease) in Stock Total Income Expenditure: Material cost Cost of Raw sugar Trading Rawsugar Cost Mfg,Administrative and Selling Cost Finance Cost Preliminary Written Off Depreciation Total Expenditure: Profit before tax Less: Prior Period Expenses Less: Taxes and Exp.

2007-08

2006-07

PERCENTAGE

1,389,251,081 523,354,863 865,896,218 30,927,533 108,648,524 5,289,960 (7,259,437) 25,637,573 115,907,961

165.45 484.65 1596.65

1,528,827,138 521,385,386 1,007,441,752 193.22 0 429,869,350 462,888,257 358,656,700 135,281,488 26,596,513 128,667 13,276,566 304,020,014 125849336 0 0 462,888,257 358656700 41.4 12.71 29.05 10.33 17.93 201.69 110.68 -

120,025,305 15256183 37,488,805 116,620 11,257,843 (10892292) 12047 2018723

1,426,697,541 472,908,587 953788954 102,129,597 0 48,476,799 0 53,652,798 0

Provisions Profit after tax

36671941 65,457,656

17203594 31,273,205

19468347 34,184,451

113.16 109.31

102

INTERPRETATION: Above table 4.10 depicts the comparative profit and loss account of NCS Sugars Ltd. for the years, 2006-2007 and 2007-2008. Regarding the income of the company, there is an increase of 165.45% in income from operations in the year 2007-2008 when compared to the year 2006-2007.It is a good sign for the company. However there is a huge increase of 484.65% in other income in 2007-2008 which is also good sign. There is an increase of 193.22% in total income of the company in 2007-2008 due to increase in income from operations and other income. Regarding the expenditure, there is an increase of 41.4% in material cost. The manufacturing and administrative costs increased 12.71% in the year 2007-2008 when compared to the year 2006-2007. The total expenditure of the company increased 201.69% in the year 2007-2008. The profit after tax increased 109.31% in the year 2007-2008 which is a good sign. The overall performance of the company is satisfactory as there is huge increase in the profit after tax.

103

Common size balance sheet for the year

2011-12 and 2010-11 Table 4.11 PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Differed tax liability Total funds(1+2+3) Application of funds 1.Fixed assets(gross block) (-)Depreciation Net block 2. capital works in progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision Net current assets 6.Misc.expenditures Total assets (net block +2+3+4+net current assests+6) 2011-12 628,187,482 150,000,000 478,187,482 1,521,938,143 1,521,938,143 0 261,364,453 % in total 26.05 6.22 19.83 63.11 63.11 0 10.84 2010-11 493,383,953 150,000,000 343,383,953 1,729,271,957 1,729,271,957 0 256,628,807 2,479,284,717 % in total 19.9 6.05 13.85 69.75 69.75 0 10.35 100 0

2,411,490,078 100 0

1,735,518,316 71.97 215,174,458 8.92 1,520,343,858 63.05 57,552,904 2.39 144,011,480 43,984,000 2,070,103,050 1,502,483,559 5.97 1.82 85.84 62.31

1,603,428,201 130,446,908 1,472,981,293 4,547,516 0 0 1,211,713,298 210748590

64.67 5.26 59.41 0.18 0 0 48.87 8.5

567,619,491 23.54 77,978,345 3.23 2,411,490,078 100

1,000,964,708 791,202 2,479,284,719

40.37 0.03 100

104

INTERPRETATION: Above table 4.11 reveals the common size balance sheet of NCS Sugars Ltd for the years 2011-2012 and 2010-2011. From the above table it is evident that the share holders funds in the year 2010-2011 is 19.9% and in the year 2011-2012 it was increased to 26.05% due to an increase in reserves and surplus. The loans and advances decreased from 69.75% in the year 2010-2011 to 63.11% in the year 2011-2012. In the case of application of funds the gross block of the fixed assets is 64.67% in the year 2010-2011, it increased to 71.97% in the year 2011-2012. The net block of the fixed assets is 59.41% in the year 2010-2011, it increased to 63.05% in the year 2011-2012 due to purchase of fixed assets. The capital work in progress for the year 2010-2011 was 0.18% and it increased to 2.39% in the year 2011-2012. There is a decrease in case of net current assets from 40.37%in the year 2010-2011 to 2.54% in the year 2011-2012. This decrease is the result of an increase in current liabilities and provisions. By over all comparison the companys position is satisfactory.

105

Common size balance sheet for the year 2010-11 and 2009-10 Table 4.12
PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Differed tax liability Total funds(1+2+3) Application of funds 1.Fixed assets(gross block) (-)Depreciation Net block 2. capital works in progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision Net current assets 6.Misc.expenditures Total assets (net block +2+3+4+net current assests+6)

2010-11

% total 19.9

in

2009-10

% in total

24.62 417,943,034 100,000,000 317,943,034 1,125,170,316 1,125,170,316 0 154,482,764 1,697,596,114 5.89 18.73 66.28 66.28 0 9.1 100

493,383,953 150,000,000 343,383,953 1,729,271,957 1,729,271,957 0 256,628,807 2,479,284,717

6.05 13.85 69.75 69.75 0 10.35 100

1,603,428,201 130,446,908 1,472,981,293 4,547,516 0 0 1,211,713,298 210,748,590

64.67 5.26 59.41 0.18 0 0 48.87 8.5

1,185,292,175 62,956,330 1,122,335,845 254,913,739 48,844,602 0 437,770,567 167630387

69.82 3.71 66.11 15.02 2.88 0 25.79 9.87

1,000,964,708 791,202 2,479,284,719

40.37 0.03 100

270,140,180 1,361,748 1,697,596,114

15.91 0.08 100

106

INTERPRETATION: Above table 4.12 reveals the common size balance sheet of NCS Sugars Ltd for the years 2010-2011 and 2009-2010. From the above table it is evident that the share holders funds in the year 2009-2010 is 24.62% and in the year 2010-2011 it was decreased to 19.9 % due to decrease in reserves and surplus. The loans funds increased from 66.28% in the year 2009-2010 to 69.75% in the year 2010-2011 due to an increase in secured loans from 2009-2010 to 2010-2011. In the case of application of funds the gross block of the fixed assets is 69.82% in the year 2009-2010, it decreased to 64.67% in the year 2010-2011. The net block of the fixed assets is 66.11% in the year 2009-2010; it decreased to 59.41% in the year 2010-2011 due to purchase of fixed assets. The capital work in progress for the year 2009-2010 was 15.02% and it decreased to 0.18% in the year 2010-2011 There is an increase in case of net current assets from 15.91% in the year 2009-2010 to 40.37% in the year 2010-2011. This increase is due to an increase in current assets. By over all comparison the companys position is satisfactory.

107

Common size balance sheet for the year 2009-10 and 2008-09 Table 4.13
PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Differed tax liability Total funds(1+2+3) Application of funds 1.Fixed assets(gross block) (-)Depreciation Net block 2. capital works in progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision 2009-10 % in total 2008-09 % total 38.98 13.82 25.17 54.33 54.33 0 6.68 100 0 49.67 5.98 43.68 5.06 7.83 0 130.16 87.03 43.14 0.29 100 in

417,943,034 100,000,000 317,943,034 1,125,170,316 1,125,170,316 0 154,482,764 1,697,596,114

24.62 5.89 18.73 66.28 66.28 0 9.1 100 0 69.82 3.71 66.11 15.02 2.88 0 25.79 9.87 15.91 0.08 100

282,127,701 100,000,000 182,127,701 393,229,986 393,229,986 0 48,356,942 723,714,629

1,185,292,175 62,956,330 1,122,335,845 254,913,739 48,844,602 0 437,770,567 167630387

359,433,508 43,288,971 316,144,537 36,606,167 56,680,634 0 942,006,396 629815436 312,190,960 2,092,332 723,714,630

Net current assets 270,140,180 6.Misc.expenditures 1,361,748 Total assets 1,697,596,114 (net block +2+3+4+net current assests+6)

108

INTERPRETATION: Above table 4.13 reveals the common size balance sheet of NCS Sugars Ltd for the years 2009-2010 and 2008-2009. From the above table it is evident that the share holders funds in the year 2008-2009 is 38.98 % and in the year 2009-2010 it decreased to 24.62% due to decrease in reserves and surplus. The loans funds increased from 54.33% in the year 2008-2009 to 66.28% in the year 2009-2010 due to an increase in secured loans from 2008-2009 to 2009-2010. In the case of application of funds the gross block of the fixed assets is 49.67 % in the year 2008-2009, it increased to 69.82 % in the year 2009-2010. The net block of the fixed assets is 43.68% in the year 2008-2009; it increased to 66.11% in the year 2009-2010 due to purchase of fixed assets. The capital work in progress for the year 2008-2009 was 5.06% and it increased to 15.02% in the year 2009-2010. There is a decrease in case of net current assets from 43.14% in the year 2008-2009 to 15.91% in the year 2009-2010. This decrease is due to a decrease in current assets. By over all comparison the companys position is not satisfactory compared to the previous year.

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Common size balance sheet for the year 2008-09 and 2007-08 Table 4.14
PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Differed tax liability Total funds(1+2+3) Application of funds 1.Fixed assets(gross block) (-)Depreciation Net block 2. capital works in progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision 2008-09 282,127,701 100,000,000 182,127,701 393,229,986 393,229,986 0 48,356,942 723,714,629 % in total 2007-08 38.98 13.82 25.17 54.33 54.33 0 6.68 100 0 195,544,679 100,000,000 95,544,679 220,296,329 220,296,329 0 35,594,505 451,435,513 % in total 43.32 22.15 21.16 48.8 48.8 0 7.88 100 0

359,433,508 43,288,971 316,144,537 36,606,167 56,680,634 0 942,006,396 629815436

49.67 5.98 43.68 5.06 7.83 0 130.16 87.03 43.14 0.29 100

298,745,591 26,673,449 272,072,142 2,301,991 0 0 924,339,088 749968451 174,370,637 2,690,744 451,435,514

66.18 5.91 60.27 0.51 0 0 204.76 166.13 38.63 0.6 100

Net current assets 312,190,960 6.Misc.expenditures 2,092,332 Total assets 723,714,630 (net block +2+3+4+net current assests+6)

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INTERPRETATION: Above table 4.14 reveals the common size balance sheet of NCS Sugars Ltd for the years 2008-2009 and 2007-2008. From the above table it is evident that the share holders funds in the year 2008-2009 is 38.98 % and in the year 2007-2008 it is 43.32%.Thus there is an decrease in the share holders fund. The loans funds increased from 48.8% in the year 2007-2008 to 54.33% in the year 2008-2009 due to an increase in secured loans. The secured loans contribute 54.33% of the total funds in the year 2008-2009. In the case of application of funds the gross block of the fixed assets is 66.18% in the year 2007-2008, it decreased to 49.67 % in the year 2008-2009. The net block of the fixed assets is 60.27% in the year 2007-2008; it decreased to 43.68% in the year 2008-2009. The capital work in progress for the year 2007-2008 was 0.51% and it increased to 5.06% in the year 2008-2009. The capital advances contribute to 7.83% of the total assets in the year 2008-2009 where as there are no capital advances in the year 2007-2008. There is an increase in case of net current assets from 38.63% in the year 2008-2009 to 43.14% in the year 2007-2008. By over all comparison the companys position is not satisfactory compared to the previous year. The decrease in share holders fund and increase in loan funds is not a good sign for the company.

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Common size balance sheet for the year

2007-08 and 2006-07 Table 4.15 PARTICULARS Sources of funds 1.Share holders fund Share capital Reserves &surplus 2.Loan funds Secured Unsecured 3.Differed tax liability Total funds(1+2+3) Application of funds 1.Fixed assets(gross block) (-)Depreciation Net block 2. capital works in progress 3. Capital Advances 4.Investment 5.Current assets (-)Current liabilities& provision 2007-08 195,544,679 100,000,000 95,544,679 220,296,329 220,296,329 0 35,594,505 451,435,513 % in total 43.32 22.15 21.16 48.8 48.8 0 7.88 100 0 66.18 5.91 60.27 0.51 0 0 204.76 166.13 38.63 0.6 100 2006-07 130,067,184 91,500,000 38,567,184 266,849,819 266,849,819 0 19,956,344 416,873,347 % in total 31.2 21.95 9.25 64.01 64.01 0 4.79 100 0

298,745,591 26,673,449 272,072,142 2,301,991 0 0 924,339,088 749968451

240,962,378 57.8 13,396,882 3.21 227,565,496 54.59 30,731,353 7.37 0 0 0 0 203,055,297 48.71 47251393 11.33 155,803,904 37.37 2,772,598 0.67 416,873,351 100

Net current assets 174,370,637 6.Misc.expenditures 2,690,744 Total assets 451,435,514 (net block +2+3+4+net current assests+6)

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INTERPRETATION: Above table 4.15 reveals the common size balance sheet of NCS Sugars Ltd for the years 2007-2008 and 2006-2007. From the above table it is evident that the share holders funds in the year 2007-2008 is 43.32 % and in the year 2006-2007 it is 31.2%.Thus there is an increase in the share holders fund. The loans funds decreased from 64.01% in the year 2006-2007 to 48.8% in the year 2007-2008 due to repayment of loans. In the case of application of funds the gross block of the fixed assets is 57.8% in the year 2006-2007, it increased to 66.18 % in the year 2007-2008 due to further purchase of fixed assets. The net block of the fixed assets is 54.59% in the year 2006-2007; it increased to 60.27% in the year 2007-2008. The capital work in progress for the year 2006-2007 was 7.37% and it decreased to 0.51% in the year 2007-2008. There is an increase in case of net current assets from 37.37% in the year 2006-2007 to 38.63% in the year 2007-2008. By over all comparison the companys position is satisfactory .The increase in share holders fund and decrease in loan funds is a good sign for the company.

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Common size Profit& Loss a/c for the year

2011-12 and 2010-11 Table 4.16 % total in % in total

PARTICULARS Income: 1.Operations 2.Other income 3.Increase/(Decrease) in Stock Total Income Expenditure: Material cost Rawsugar Cost Traded goods cost Power cost Loss on derivatives Mfg,Administrative and Selling Cost Finance Cost Depreciation Total Expenditure: Profit before tax Less: Prior Period Expenses Less: Taxes and Generation

2012-11

2010-11

2,234,373,425 50,797,939 6,920,234 2,292,091,598

97.48 2.22

2,463,132,741 2,923,469 115,695,508 2,581,751,718

95.41 0.11

0.3 100

4.48 100

211253326 257173504 635043964 551348831 38772710 177090140 153253335 84727550 2108663360 183,428,238 217941

9.22 11.22 27.71

602590729 0 1333254874 78693142 0 195257817 103488710 67490578 2380775850 200,975,868 0

23.34 0 51.64

24.05 1.69

3.05 0

7.73 6.69 3.7 92 8

7.56 4.01 2.61 92.22 7.78

0.01

Provisions Profit after tax

30704565 152,505,732

1.34 6.65

125534949 75,440,919

4.86 2.92

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INTERPRETATION: The above table 4.16 depicts the common size profit and loss account of NCS Sugars Ltd. for 2010-2011 and 2011-2012. The income from operations in the year 2010-2011 is 95.41% where as it increased to 97.48% in the year 2011-2012. The other income was 0.11% in the year 2010-2011 where as it increased to 2.22% in the year 2011-2012. Increase in the income of the company indicates that the company is performing well. Regarding the expenditure, the cost of traded goods constitutes 51.64% of the total expenditure in the year 2010-2011. It constitutes major portion of the expenditure for the year 2010-2011.The traded goods cost decreased to 27.71% in the year 2011-2012. The power generation cost is 3.05%in the year 2010-2011 and it increased to 24.05% in the year 2011-2012. The profit after tax in the year 2010-2011 was 2.92% where as in the year 2011-2012 it increased to 6.65% which is a good sign. By over all comparison we can say that the position of the company is satisfactory.

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Common size Profit& Loss a/c for the year

2010-11 and 2009-10 Table 4.17 PARTICULARS Income: 1.Operations 2.Other income 3.Increase/(Decrease) in Stock Total Income Expenditure: Material cost Rawsugar Cost Traded goods cost Power cost Mfg,Administrative and Selling Cost Finance Cost Depreciation Total Expenditure: Profit before tax Less: Prior Period Generation 602590729 0 1333254874 78693142 23.34 0 51.64 478,897,756 564,626,904 1,546,942,601 3,655,049 15.49 18.27 50.05 2,463,132,741 2,923,469 115,695,508 2,581,751,718 95.41 0.11 3,102,327,612 18,094,159 (29,530,886) 3,090,890,885 100.37 0.59 2010-11 % in total 2009-10 % in total

4.48 100

0.96 100

3.05

0.12

195257817 103488710 67490578 2380775850 200,975,868 0

7.56 4.01 2.61 92.22 7.78

167,906,077 33,247,623 19,667,359 2,814,943,369 275,947,516 0

5.43 1.08 0.64 91.07 8.93

Expenses Less: Taxes and

Provisions Profit after tax

125534949 75,440,919

4.86 2.92

125886312 150,061,204

4.07 4.85

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INTERPRETATION: The above table 4.17 depicts the common size profit and loss account of NCS Sugars Ltd. for 2009-2010 and 2010-2011. The income from operations in the year 2009-2010 is 100.37% where as it decreased to 95.41% in the year 2010-2011.The other income was 0.59% in the year 2009-2010 where as it decreased to 0.11% in the year 2010-2011. Regarding the expenditure, the cost of traded goods constitutes 51.64% of the total expenditure in the year 2010-2011. The traded goods cost increased from 50.05% in the year 2009-2010 to 51.64% in the year 2010-2011. The raw sugar cost constitutes 18.27% in the year 2009-2010 where as in the year 201002011 it is nil. The power generation cost increased from 0.12% in the year 2009-2010 to 3.05% in the year 2010-2011. The total expenditure constitutes 92.22% of the total income in the year 2010-2011 where as in the year 2009-2010 the total expenditure constitutes 91.07% of the total income. The profit after tax in the year 2009-2010 was 4.85% where as in the year 2010-2011 it decreased to 2.92%. By over all comparison we can say that the position of the company is not satisfactory when compared to previous year as there is a decrease in profit after tax.

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Common size Profit& Loss a/c for the year

2009-10 and 2008-09 Table 4.18 PARTICULARS Income: 1.Operations 2.Other income 2009-10 3,102,327,612 18,094,159 % in total 100.37 0.59 0.96 100 15.49 36.98 3.21 9.86 0 18.27 0.12 5.43 1.08 0.64 91.07 8.93 0 4.07 4.85 2008-09 3,461,029,958 68,739,890 (37,396,210) 3,492,373,638 429,965,937 8,517,837 151,849,062 0 1,734,893,803 858,877,960 0 115,199,428 26,294,866 16,615,522 3,342,214,415 150,159,223 0 52173700 97,985,523 1.07 100 12.31 0.24 4.35 0 49.68 24.59 0 3.3 0.75 0.48 95.7 4.3 0 1.49 2.81 % in total 99.1 1.97

3.Increase/(Decrease) (29,530,886) in Stock Total Income Expenditure: Material cost Cost of Sugar Export Cost of Sugar Trading Cost of Molasses Export 3,090,890,885 478,897,756 1,143,104,930 99,218,927 304,618,744

Cost of Raw sugar 0 Trading Rawsugar Cost 564,626,904 Power Generation 3,655,049 cost Mfg,Administrative 167,906,077 and Selling Cost Finance Cost Depreciation Total Expenditure: Profit before tax 33,247,623 19,667,359 2,814,943,369 275,947,516

Less: Prior Period 0 Expenses Less: Taxes Provisions Profit after tax and 125886312 150,061,204

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INTERPRETATION: The above table 4.18 depicts the common size profit and loss account of NCS Sugars Ltd. for 2008-2009 and 2009-2010. The income from operations in the year 2008-2009 is 99.1% where as it increased to 100.37% in the year 2009-2010. The other income was 1.97% in the year 2008-2009 where as it decreased to 0.59% in the year 2009-2010. Regarding the expenditure, the cost of sugar export increased from 0.24% in the year 2008-2009 to 36.98% in the year 2009-2010. The cost of molasses export constitutes 9.86% in the year 2009-2010 where as in the year 2008-2009 it is nil. The power generation cost is 0.12% in the year 2009-2010 where as in the year 2008-2009 it is nil. The cost of raw sugar trading constitutes 49.68% of the total expenditure in the year 2008-2009. The total expenditure constitutes 91.07% of the total income in the year 2009-2010 where as in the year 2008-2009 the total expenditure constitutes 95.7% of the total income. The profit after tax in the year 2008-2009 is 2.81% where as it increased to 4.85% in the year 2009-2010. By over all comparison we can say that the position of the company is satisfactory when compared to previous year as there is an increase in profit after tax as a result of increased income and decreased expenditure.

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Common size Profit& Loss a/c for the year

2008-09 and 2007-08 Table 4.19 PARTICULARS Income: 1.Operations 2.Other income 3.Increase/(Decrease) in Stock Total Income Expenditure: Material cost Cost of Sugar Export Cost Trading Cost of Raw sugar Trading Rawsugar Cost Mfg,Administrative and Selling Cost Finance Cost Depreciation Total Expenditure: Profit before tax Less: Prior Period Expenses Less: Taxes and of Sugar 429,965,937 8,517,837 151,849,062 12.31 0.24 429,869,350 0 0 28.12 0 3,461,029,958 68,739,890 (37,396,210) 3,492,373,638 99.1 1.97 1,389,251,081 30,927,533 108,648,524 1,528,827,138 90.87 2.02 2008-09 % in total 2007-08 % in total

1.07 100

7.11 100

4.35

1,734,893,803 858,877,960 115,199,428 26,294,866 16,615,522 3,342,214,415 150,159,223 0

49.68 24.59

462,888,257 358,656,700 135,410,155 26,596,513 13,276,566 1,426,697,541 102,129,597 0

30.28 23.46

3.3 0.75 0.48 95.7 4.3

8.86 1.74 0.87 93.32 6.68

Provisions Profit after tax

52173700 97,985,523

1.49 2.81

36671941 65,457,656

2.4 4.28

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INTERPRETATION: The above table 4.19 depicts the common size profit and loss account of NCS Sugars Ltd. for 2007-2008 and 2008-2009. The income from operations in the year 2007-2008 is 90.87% where as it increased to 99.1% in the year 2008-2009. The other income was 2.02% in the year 2007-2008 where as it decreased to 1.97% in the year 2005-2009. Regarding the expenditure; the cost of raw sugar trading increased from 30.28% in the year 2007-2008 to 49.68% in the year 2008-2009. The Mfg,Administrative and Selling Cost decreased from 8.86% in the year 2007-2008 to 3.3% in the year 2008-2009. The total expenditure constitutes 95.7% of the total income in the year 2008-2009 where as in the year 2007-2008 the total expenditure constitutes 93.32% of the total income. The profit after tax in the year 2007-2008 is 4.28% where as it decreased to 2.81% in the year 2008-2009. By over all comparison we can say that the performance of the company is not satisfactory when compared to previous year as there is a decrease in profit after tax.

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Common size Profit& Loss a/c for the year

2007-08 and 2006-2007 Table 4.20 PARTICULARS Income: 1.Operations 2.Other income 3.Increase/(Decrease) in Stock Total Income Expenditure: Material cost Cost of Raw sugar consumed Cost of Raw sugar trading Mfg,Administrative and Selling Cost Finance Cost Preliminary Written Off Depreciation Total Expenditure: Profit before tax Less: Prior Period Exp. 429,869,350 358,656,700 28.12 23.46 304,020,014 0 58.31 0 1,389,251,081 30,927,533 108,648,524 1,528,827,138 90.87 2.02 523,354,863 5,289,960 (7,259,437) 521,385,386 100.38 1.01 2007-08 % in total 2006-07 % in total

7.11 100

1.40 100

462,888,257

30.28

135,281,488 26,596,513 128,667 13,276,566 1,426,697,541 102,129,597 0

8.85

120,025,305 37,488,805 116,620 11,257,843 472,908,587 48,476,799 0

23.02

1.74 0.01

7.19 0.02

0.87 93.32 6.68 0

2.16 90.70 9.30 0

Expenses Less: Taxes and

Provisions Profit after tax

36,671,941 65,457,656

2.4

17203594 31,273,205

3.30

4.28

5.998

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INTERPRETATION: The above table 4.20 depicts the common size profit and loss account of NCS Sugars Ltd. for 2006-2007 and 2007-2008. The income from operations in the year 2006-2007 is 100.38% where as it decreased to 90.87% in the year 2007-2008. The other income was 1.01% in the year 2006-2007 where as it increased to 2.02% in the year 2007-2008. Regarding the expenditure; the material cost has decreased from 58.31% in the year 20062007 to 28.12% in the year 2007-2008. The Mfg, Administrative and Selling Cost has decreased from 23.02% in the year 20062007 to8.85% in the year 2007-2008. The total expenditure constitutes 93.32% of the total income in the year 2007-2008 where as in the year 2006-2007 the total expenditure constitutes 90.70% of the total income. The profit after tax in the year 2006-2007 is 5.99% where as it decreased to 4.28% in the year 2007-2008. By over all comparison we can say that the performance of the company is not satisfactory when compared to previous year as there is a decrease in profit after tax.

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CHAPTER VI
Summary Findings

suggestions

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Summary

Financial Analysis is the academic process of identifying the financial strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm or by parties outside the firm, viz. owners, creditors investors and others to form judgment about the operating performance and financial position of the firm. Users of the financial statements can get better insight about the financial strength and weakness of the firm if they properly analyze the information reported in the statements. Management should be interested in knowing the financial strength of the firm to make their best use and to be spot out the financial weakness of firm to take suitable corrective actions. The future plans of the firm should be laid down in the view of the firms financial strengths and weaknesses. Thus financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for anticipating the future. The nature of the analysis was differing depending on the purpose of the analysis. Financial analysis can be undertaken by the management of the firm or by the outside parties creditors, invester and public. The first task of financial analysis is to select the information relevant to the design under consideration from the total information contained financial statement. the second step involved in the financial analysis is to arrange the information in away to highlight significant relationship the final system is interpretation and drawing of infernos and conclusions. The focus of the study is a a study of financial performance of NCS by using ratio analysis which is more widely used tecnic of financial analysis besides,studying,financial position one co study the certain organization as financial analysis it covers aspects of management this evokes the interest a need for the study. Keeping in view of above mentioned facts the following of the objectives of the study. To analyses the financial performance of the firm.i.e through various ratios To examine the financial strengths and weakness To evaluate the capital structure of the firm through leverage ratio. To Examine the shorter solvency of the firm To find out the reasons of the problem and to evolution possible way of the resolving the problem.
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FINDINGS

1) In six years period the firms properties has substantially increased. The long-term financial position of the organization is depends on the firms fixed assets capacity. The firms properties are increased drastically during the years 2006 to 2012 .The increased properties will give good future production possibilities.

2) The firms investment capability of funds has substantially increased likely fixed and call deposits, current and savings a/c., and deposits etc., it is shows the firms chooses it is one of the profit earning source.

3) There is a constant increase in reserves & surpluses of the organization. It shows the firms profitability position is good. It shows the firm is having more capital funds. The firm is to be continued in future.

4) The incomes from operations are increased substantially except of 2008 and 2010. The expenses are also increased same proportion.

5) The net profit of the organization is also constantly increased except 2010. The annual turnover of 2009-10(Rs 9 Cr.) has been reduced comparing to the previous year of 200809(Rs 15 Cr.).

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SUGGESTIONS:
The firm has to think about expenditure. The firm should reduce expenditure to get good profits. Through taking the contract employees and care about the operational activities. The firm has to take care about huge profits for that the firm should show operations and maintenance more effectively.

The company should try to minimize or reduce the losses by way of economies of operations at all stages of production. The company should try to reduce their interest burden.

The company should take up necessary measures to cope up with the price volatility of both raw material and a finished goods coupled with competition is a major risk. The company should maintain adequate working capital for meeting its full capacity utilization.

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BIBLIOGRAPHY REFERENCE:
TECHNIQUES OF FINANCIAL ANALYS : FINANCIAL MANAGEMENT PRINCIPLES OF CORPORATE FINANCE : : ERICH A. HELFERT I M PANDEY RICHARD A.BREALEY & STEWART C.MYRES FINANCIAL ACCOUNTING& ANALYSIS : COST AND MANAGEMENT ACCOUNTING: S.P.JAIN & K.L.NARANG S.P.JAIN,K.L.NARANG, SIMMIAGGRAWAL&MONIKA SEHGAL

Websites: www.google.com

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