Working Capital Reqiurement

The Krishna Co-operative Sugar Factory Limited, Athani
PROJECT REPORT ON
WORKING CAPITAL REQUIREMENT
SUBMITTED BY
MOHAMMED E
ROLL NO 13786
*2013-2015*
UNDER THE GUIDANCE OF
PROF. SHAMSHUDDIN P.hd.,
SUBMITTED TO
THIRUVALLUVAR UNIVERSITY, SERKADU
NIRMALA MEMORIAL FOUNDATION
COLLEGE OF
COMMERCE AND SCIENCE
90 FEET ROAD, ASHA NAGAR, THAKUR
COMPLEX,
KANDIVALI (E), MUMBAI-400 101.
Babasabpatilfreepptmba.com
Page 0
DECLARATION
I Mr.Mohammed of M.Com (Master of commerce) hereby declare that I have
completed the project on A STUDY ON WORKING CAPITAL REQUIRMENT.
In the academic year 2014-2015.
The information submitted is true and original to best of my knowledge.
________________
________________
Date of Submission.
Signature of Student
(Mohammed)
Page 1
CERTIFICATE
This is to certify that the project titled as A STUDY ON WORKING
CAPITAL REQUIRMENT has been completed by Mr.Mohammed of
C.A.H.C Arts and Science (Semester-IV) examination in academic year
2013-2014.
The information submitted is true and original to the best of knowledge.
______________________
(Dr. T. P. Madhu Nair)
(Prof. Poonam Kakkad)
Principal
Program Coordinator
____________________
(Prof.Neelam Pareek)
_____________________
External Examiner
Project Guide
Page 2
CONTECT
SL. NO
PARTICUALARS
PAGE .NO
EXECUTIVE SUMMARY
1-3
INTRODUCTION TO THE STUDY
INDUSTRY PROFILE
5-8
ORGANIZATION PROFILE
9-31
WORKING CAPITAL MANAGEMENT
32-44
OBJECTIVES OF THE STUDY
45
ANALYSIS OF THE STUDY
46-65
FINDINGS
66
SUGGESTIONS
67
10
CONCLUSION
68
11
BIBLIOGRAPHY
69
Page 3
EXECUTIVE SUMMARY
INDUSTRY PROFILE:
The advent of modern sugar industry began in 1930 with grant of tariff protection to the Indian sugar
industry. The number of sugar mills increased from 30 in the year 1930-31 to 135 in the year 1935
and the production during the same period increased from 1.20 lakh tones to 9.34 lakh tones under
dynamic leadership of the private sector. The era of planning for industrial development began in
1950-51 and government laid down targets of sugar production and consumption licensed and
installed capacity, sugarcane production during each of the five-year plan periods.
Total sugar industries in India are 506 out of which 67 are public sector companies, 157 are
private sector companies and 282 are co-operative societies. Total sugar industries in
Karnataka are 40 out of which two are public sector companies,18 are private sector
companies,19
are co-operative societies and one is joint venture.

COMPANY PROFILE:
The Krishna Co-Operative Sugar Factory Limited, Athani, is a co-operative society registered
under Karnataka co-operative societies Act in 1969. The Plant is located at Sankonattii Village of
Athani in Belgaum district. The registration number of the company is DSK/REG/01/80-81 dated 1003-1981. The industrial license number of the factory is L.I.667 (1988) dated 02/11/1988.
The founder of this organization was Late Sri. A.B.Jakanur Ex Min.of Karnataka. At present it has an
attractive campus with magnificent buildings over it. There are totally 18,103 shareholders of
TKCSFL and it has paid up share capital of Rs.18.39 Crores. During the year 2007-08, it has earned
a net profit of Rs.18.34 lakh. During the same year it has produced 7.00 lakh Quintals of sugar and it
has crushed 5.60 lakh Tonnes of cane.
There are 610 workers in TKCSFL. It is paying salary of Rs. 1500,000 per month to its workers.
Total Turnover of sugar is Rs.60.03 crores.
Page 4

NEED FOR THE STUDY:
Whether a manufacturing unit or non-manufacturing one, working capital is is the life-line of every
concern. Without adequate Working Capital there progress in the industry. Inadequate Working
Capital means shortage of raw materials, labour, etc., resulting in partial utilization of available
machine capacity. Moreover, research and development in the industry will be at low ebb and
essential innovations fail to appear. Inadequate Working Capital frustrates the objectives of the
enterprise through lack of funds and contributes towards the failure of a business. On the other hand,
more Working Capital may lead to less control over workers performance, inefficient store-keeping,
excessive stocks of raw material and finished goods, delay in the flow of work-in-progress and lack
of coordination in the enterprise. So the amount of Working Capital in every concern should be
neither more nor less than what is required.
OBJECTIVES OF STUDY:
To study the sources and application of fund of TKCSFL
To examine how the working capital requirements is estimated
A study on the interpretation of working capital on the basis of calculations and estimations
To study the system of inventory management, receivables management and cash

management.
To identify weakness and short comings if any as a result of the survey and to offer
suggestions
METHODOLOGY:
DATA COLLECTION METHOD:
1.
PRIMARY DATA: The information is collected from the personal interaction

With the Accounts officer & workers of the union
2.
SECONDARY DATA: This is collected through

A) .Annual Reports of the TKCSFL
B) Related Information from Internet.
Page 5

FINDINGS:
The current and quick ratios are satisfactory i.e. 2.09 and 0.267 on an average respectively.
So the firms liquidity position is good. It shows that it is able to meet its current obligations.
The cash reserves maintained by the company are good. But as compared to financial status it
is not at remarkable extent. This is serious liquidity crunch to the company. However the
company is much safer side because of their outstanding due to farmers, who have also hold
shares of company. Another point is farmers are not aggressive to recover their dues.
Proportion of cash to sales maintenance of the cash balance is inadequate. As a rule when
sales increase cash also increase, but at a decreasing rate. It shows that inadequate of cash
balance.
SUGGESTIONS:
The inventory turnover ratio of the company was more than 75%. The firm should search for
new customers, and also the firm should focus on its foreign exports.
When we analyzed the proportion of cash in sales and current assets, the cash is not sufficient
to meet the current expenses. So the firm should maintain sufficient cash balance and bank
balance through effective credit policies. The major drawback for the insufficient of cash is
that, the inventory has not been selling fast. So the firm should force to think about it.
As it is well known fact that sugarcane grown is not only produces sugar. It can produce
many other products also like molasses, cartons, electricity and beverages therefore company
need to focus in these areas also.
CONCLUSION:
When I analyzed the financial performance, the firms commitment to meet short obligations is
good i.e. liquidity position of the company is good. And in respect cash balance, the firm has not
sufficient balance. As a result of that, it may affect the working capital, so totally the firm is
struggling to meet its current expenses. And with regard to resources, the firm is not utilizing the
assets properly. And similarly the firm has a maintained high inventory.
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INTRODUCTION TO STUDY
The aim of the present study is to examine the Small Scale Industry practices in Working Capital
management and to evaluate management performance for the same purpose. Since the efficiency
of the Working Capital management is determined by the efficient administration of its various
components- cash, accounts receivable and inventory, the study attempts to determine the
management of each component.
Working Capital in a business enterprise may be compared to the blood in a human body: Blood
gives life and strength to the human body. Similarly Working Capital injects life and strength- profits
and solvency - to the business organization. Working Capital refers to short term funds required for
the purpose of business operations. The funds used for meeting day to day expenses like, purchase of
raw materials, payment of wages and other expenses, stocking of goods, granting of credit to
customers and maintenance of the minimum balance. It is not necessary that the funds should be in
the form of cash only. It can be in the form of near cash items like, marketable securities, inventories
and account receivable
Page 7
INDUSTRY PROFILE
INTRODUCTION TO SUGAR INDUSTRY:
The Indian sugar industry is a key driver of rural development, supporting India's economic
growth. The industry is inherently inclusive supporting over 50 million farmers and their families,
along with workers and entrepreneurs of almost 500 mills, apart from a host of wholesalers and
distributors spread across the country.
The industry is at a cross roads today, where it can leverage opportunities created by global
shifts in sugar trade as well as the emergence of sugarcane as a source of renewable energy, through
ethanol and cogeneration. While some of these opportunities have been well researched in the past,
there was a need to assess the potential for India and to develop a comprehensive and actionable
roadmap that could enable the Indian industry to take its rightful place as a food and energy producer
for one of the world's leading economies.
India is second largest producer of sugarcane next to Brazil. As per last year data, about 4
million hectares of land is under sugarcane with an average yield of 70 tones per hectare. India is
largest producer of sugar including traditional sugar sweetener, Khandasari and Gur equivalent to 26
million tones raw value followed by Brazil in the second place at 18.5 million tones. Even in respect
of white crystal sugar, India has ranked No position 7 out of last 10 years.
Traditional Khandasari and Gur are consumed mostly by the rural population in the early
1930s nearly 2/3rd of sugarcane production was utilized for production of alternate sweetener, Gur &
Khandasari. With better standard of living and high income, the sweetener demand has shifted to
white sugar. About 1/3rd of sugarcane production is utilized by the Gur & Khandasari sectors. Being
in the small scale sector, these two sectors are completely free from controls and taxes, which are
applicable to the sugar sector.
PROFILE OF THE SUGAR INDUSTRY:

Page 8

Sugar mills with cane crushing capacity and sugar production per unit in various countries
Country
No. of Units
Avg. cane crushing Avg. production per
Thailand
Australia
Brazil
South Africa
Mexico
Colombia
Cuba
Hawaii
Mauritius
India
45
28
213
13
67
10
150
9
16
506
per day
10307
9216
9168
6877
4749
4590
4229
4111
3195
2527
day
140540
183321
64018
137769
71015
214900
45538
44111
42970
35000
The advent of modern sugar industry began in 1930 with grant of tariff protection to the Indian sugar
industry. The number of sugar mills increased from 30 in the year 1930-31 to 135 in the year 1935
and the production during the same period increased from 1.20 lakh tones to 9.34 lakh tones under
dynamic leadership of the private sector.
The era of planning for industrial development began in 1950-51 and government laid down targets
of sugar production and consumption licensed and installed capacity, sugarcane production during
each of the five year plan periods.
Total sugar industries in India are 506 out of which 67 are public sector companies, 157 are private
sector companies and 282 are co-operative societies. Total sugar industries in Karnataka are 40 out of
which two are public sector companies, 18 are private sector companies, 19 are co-operative
societies and one is joint venture.
Government enacted the Sugar Development Fund Act & Rules, which provides for levy of per
quintal of sugar known as Sugar Development Fund (SDF). The SDF is utilized for granting term
loans to sugar mills modernization and grants for research projects in the sugar besides creation of
buffer stocks as and when required to ensuring price stability. Government de-licensed sugar sector
in August 1998. It is now open to entrepreneurs to set up mills without license but at distance of 15
Page 9

kms away from the existing factory. Sugar units free to expand their capacity and also put up higher
capacity new units. This should help to consolidate and expand their capacities wherever cane
potential exists.
SUGAR INDUSTRY IN INDIA
Most of the sugar industries are located in U.P, Bihar, Maharashtra, A.P., Karnataka and T.N.
The sugar industry is one of the largest organized industries with total capital investment of more
than Rs.500 crores. It employees more than 2.5 lakhs of workers besides creating extensive indirect
employment over 25 to 30 million cultivators of sugar cane, dealers in sugar and confectioneries.
When sugar industry was granted tariff protection the history of sugar industry started again
before 1932, which gave driving force to growth of industry.
Again the government in 1951
provided incentives by fixing minimum prices of cane and maximum prices of sugar. This incentive
scheme increased the production of sugar but discouraged the cane production. We will see later on
how contradictory government. Policies have
adversely affected the growth of sugar industry.
Unfortunately, government policy has been that of control and re-control from time to time creating
an environment inimical (hostility, unfriendly) to the growth of sugar industry. Up to 1957-58 both
consumption and production of sugar rose to 20 lakhs tones each. During 1969s production of sugar
rose to 35lakshs tones and during 1970s it was in between 40 to 50 lakh tones. And during 2000-01
it was in-between 80 to 90 lakhs tones.
INDIAN SUGAR INDUSTRY AT GLANCE:
No of sugar factories established
574
Total capital employed
Rs. 50,000 crores
Total annual turnover
Rs. 25,000 crores
Page 10

Total payment to cane growers
Rs. 18,000 crores
Contribution to central & state exchequers
Rs. 1700 crores+800 crores
Direct employment : rural educated
Rs. 5.00 Lakhs
Farmers/families involved in sugar cane (7.5% of Rs. 45 million

rural population)
In global economy, the Indian sugar industry has achieved a number of milestones
Largest Sugar Producer in 7 out of 10 years
Second Largest Area under Cane/Cane production
Amongst the cost effective industries with its field cost (Sugar cane) being the second lowest, despite
small land-holding and low productivity
Fourth efficient processor of sugar despite low capacity of its sugar plants as compared very largesize plants in other parts of the world
GOVERNMENT POLICY:
The present policy of decontrol 10% of production by each unit is supplied for public
distribution system I as levy sugar at Govt. notified prices admittedly bellow 20% of the actual cost
of production. The levy sugar is I to the public irrespective of their economic status. The balance
90% is sold in the free market against monthly/ issued by the Government. This policy has been
continuing since 1967-68 except for brief periods of de-control during the years of surplus
production and accumulated sugar stocks. Government announces the Statutory Minimum price
(SMP) for sugarcane every year based on recommendations of the Commission for Agricultural Cost
& Prices (CACP).
Page 11

ORGANISATIONAL PROFILE
The Krishna Co-Operative Sugar Factory Limited, Athani (Krishna Sahakari Sakkare
Karkhane Niyamit, Athani.) is a co-operative society registered under Karnataka co-operative
societies Act in 1969.
The industrial license number of the factory is L.I.667 (1988) dated
02/11/1988. The Krishna Co-Operative Sugar Factory Limited, Athani is a co-operative unit. It is
situated near Sankonatti village, at a distance of about 6 Km from Athani town. The factory at
present has an attractive campus with magnificent buildings over it.
Agriculture continues to be an extremely important sector in our country. Cooperative system, as one
of its main pillars providing vital support services, is crucial for the transformation of agriculture. It
is how inspired the founder Late Sri. A B Jakanur, an agriculturist and a co-operator, to establish this
factory during 2000-01 with the financial support from cane growers of this area and the State
Government, with an initial crushing capacity 2500 TCD and as a stand-alone sugar industry. This
factory had faced a lot of problems all these years in coming out as a viable unit. Though this factory
had emerged in this area with a meager beginning, it had not only provided a source of income for
forming community but also created a sustainable employment opportunity in this rural area.
After a lot of dispute on location of plant, near Sankonatti village, the construction work started in
year 1990 and comp elected in the year 2000. The factory was inaugurated by Co-Operative minister
of Karnataka State Sri H Vishwanath on 24/03/2002. The regular production was started from
24/03/2002, and the first season lasts from 24/03/2002 to 09/04/2002.
The factory started on 24/03/2002 with initial Crushing capacity of 2500 TCD with total expenditure
of Rs.46.95 Crore. The area of operation covered 22 villages from Athani Taluka,
At present total sugar cane supplied to this sugar industry is from 15,000 acres with average yield per
acre of 25 MT.
The entire plant and Machinery has been supplied by M/s Triveni Engineering and Industries Limited
New Delhi, Rs. 28.17 Crore long-term loan was borrowed from the Co-operative Banks. The factory
had created a financial set backs due to the lack of professionalism both in technical and financial
managements and not adopted the range of different bi-product activities and had suffered due to a
weak governance on efficiency, effectiveness, adaptability and internal and external accountability in
Page 12

the management. However this cooperative and rural based industry must succeed if the poor farmers
and the rural unemployed youths have to be prosperous.
AREA OF OPERATION:
The area of operation of the society shall be confined to the villages of Athani, and Raibag Taluka of
Belgaum District and Jamakhandi Taluka of Bagalkot District of Karnataka State.
OWNERSHIP PATTERN:
A.
The authorized share capital of the Society shall be Rs.18.37 crores divided in to total
17971 shares of RS.2, 000/-each as under.
i)
Rs.3, 00, 29,000/-divided in to 13048 shares of the face value of Rs.2, 000/-each reserved for
the grower members called as A Class.
ii)
Rs.5, 98,000/-divided in to 89 shares each reserved for Co-operative Institutions called as B

Class.
iii)
Rs.14, 08, 50,000/- from one Government share issued to Government of Karnataka
called as C Class.
iv)
Rs.71, 66, 000/- divided in to 4, 309 shares of face value of Rs.2, 000/-each reserved
for non-grower members called as D Class
Page 13
The Krishna Sahakari Sakkare Karkhane

Name of the Company
Niyamit Athani
Date of Incorporation/Registration
No. DSK/REG/01/80-81 Date : 10-03-1981
Nature of Constitution
Co-operative Sector
Factory code no.
40501
Date of commencement of commercial

production of sugar
12/6/2002
Crushing capacity
2500 TCD
Project Cost
48.86 crores
Production of sugar and its by
Activity under taker
Products like Molasses ad Bagasse
Working period
180-210 days
Type unit
Large scale Agro based

manufacturing unit
Main raw material
Sugar cane
Labour employed
61O
Areas of operations
BOARD OF DIRECTORS:
22 villages
1) Shri P.C. Savadi
: Chairman
2) Shri M.B. Patil
: Vice Chairman
Page 14

3 Shri A.P. Akiwate
: Director
4) Shri C.H. Patil
: Director
5) Shri B.M. Patil
: Director
6) Shri B.M. Kavatakoppa
: Director
7) Shri S.A. Mudakannavar
: Director
8) Shri G.K. Butali
: Director
9) Shri M.K. Kubasad
: Director
10) Shri V.G. Telasang
: Nominee Director
11) Smt. P.B.Reddy
: Nominee Director
12) Shri V.M.Shinge
: Nominee Director
13) Shri P.R.Mahajan
: Nominee Director
14) Shri I.M. Maniyar
: Managing Director
STAFF: The employees are responsible for the success or failure of company.
There are totally 530 workers in the company.
No. of Workers
1) Permanent worker
320
2) Seasonal workers
290
610
Company is paying salary of Rs. 21, 00, 000 per month in season and 15,00,000 per month in off
Season to its workers.
WORKERS SHIFT SYSTEM:
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Sugar manufacturing process is continues process it needs employees to take care of the
operations 24 hours. So company employs its workers in 3 different shifts and also provide weekly
off on routine basis. The shift system of the company is as follows.
Shifts
Timings
Break
4:00 am to 12:00 pm
30 min
II
12:00 pm to 8:00 pm
30 min
III
08:00 pm to 4:00 am
30 min
GENERAL AND ADMINISTRATION

8:00 am to 12:00 pm
60 min
1:00 pm to 5:00 pm
CENTRAL OFFICE
10:00 am to 2:00 pm
30 min
02:30 pm to 5:30 pm
JOB SPECIFICATION IN TKCSFL ATHANI

Every organization is made not made up only machineries but also consists of people.
Hence manpower is very essential and improvement in the production industry .So TKCSFL
ATHANI is having manpower sufficiently.
Page 16

Departments
Order Daily Wages
Enhancement No Change Total
121
60
57
09
247
88
37
31
09
165
32
15
08
55
11
20
16
12
59
28
28
00
04
14
29
43
06
03
09
274
151
119
66
610
Engineering
Department
Production
Department
Cane development
Department
Administration
Department
Civil Department
Time Office
Stores
Department
Vehicle
Department
Total
COMPETITORS:
Ugar sugars
Hira sugars
Renuka sugars
Datt sugars (Maharashtra)
Panchaganga sugars (Maharashtra)
Athani farmers sugar factory
Dkssk chikkodi
INFRASTRUCTURE FACILITIES:
Page 17

Nearer to raw materials
Good transportation facilities.
Nearer to river place (Krishna River)
Good networking.
Proper accommodation for its employees
ACHIEVEMENTS/AWARDS:
STAI, SISSTA & DSTA in their recent 10 th annual convention at Chennai held on 11-08-2007 have
honored this sugar factory with the most prestigious award as the THE BEST EFFICIENCY &
PERFORMANCE SUGAR FACTORY in the country for the year 2006-07. Honble Union
Minister gave the award for agricultural, food & Civil Supplies, in presence of Honble Chief
Minister of Tamilnadu. The TKCSFL Athani has also bagged First place for Best Cane Development
Award, SISSTA-2007.
The companies have the Honor of achieving the Highest Sugar Recovery @ 11.68% in
Southern part of India for the year 2008-09.
2.7 VISION & MISSION OF THE ORGANIZATION:
To continue to remain the best performer among sugar manufacturing companies in India & to
provide more value to the shareholders by means of efficient capacity utilization of its sugar, power
and distillery based facilities.
VISION:
The vision statement of The Krishna Co-operative Sugar Factory Limited is We are
dedicated to deliver overall value to our customers by delivering high quality products, exceptional
financial performance to our share holders & complete satisfaction to cane growers, employees &
stakeholders.
MISSION:
Page 18

At TKCSFL, Athani, they believe in growth through quality, innovation and Research and
Development in Agriculture. Their mission is to reduce the overheads and increase the profitability
by maximum utility of raw material by way of producing various products.
To encourage agro-based co-operative industry
To develop co-operative movement in rural sector
To encourage the farmers to grow sugarcane for production of sugar and its by-products
OBJECTIVES OF TKCSFL, ATHANI

To give the good market rate to the farmers who supply the sugar cane to their factory.
To keep the good relations with the customers and. farmers and to maximize their
satisfaction.
Maximum utilization of man power and production capacity and proper utilization of raw
material for good recovery.
To promote the economic and social betterment among the members through self-help and
mutual aid in accordance with the co-operative principles specified in the first schedule of the
Act.
To encourage self-help, thrift and co-operation amongst member
To acquire lands either by way of purchase or otherwise for cultivation of sugar cane and
other crops and for erection of buildings, godowns, staff quarters, administrative blocks etc.,
and for installation of machinery.
To manufacture sugar jaggery and their by-products out of sugar-cane grown and supplied by
members of the society and other and to sell the same to the best advantage.
To undertake such other activities as are identical and conducive to the development of the
society.
To acquire and install machinery for the utilization of the by-products and buy raw material
and sell finished product in the course of utilizing and marketing the by-products.
Page 19

PRODUCT PROFILE:
The main and direct product of the sugarcane is sugar. The factory has byproducts like distillery,
arrack, co-generation, press mud and ethanol etc.
SUGAR:
The factory initially started crushing at the rate of 2500 Tonnes crushing per day (TCD). It is
needless to emphasis here that this factory has its own credibility and enjoys its own sanctity in the
sugar industry.
The TKCSFL Athani produces the sugar which can be classified as shown in the table below. The
sugar is divided in to three types based on the crystal size; they are large, medium, and small. The
production of these is dependent on the crushing capacity of the factory. To produce large sized
crystals it takes more time, which in turn affects the crushing. As the size increases the impurity
increases and colour of the crystals decreases.
TYPE OF SUGAR PRODUCED IN TKCSFL ATHANI:
TYPE OF SUGAR
SIZE (IN MICRONS)
%AGE PRODUCTION IN
2007
LARGE (L30)
1400
NILL
MEDIUM (M30)
1120
10-15%
600
85-90%
SMALL (S30)
DISTILLATION:
The unit uses molasses, which is waste in the production of sugar, as raw material for distillation.
This molasses has about 40% to 45% of sugar in it. The yeast strain used in fermentation process is
Sacchromyces Uvarum.
BAGASSES:
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The fibrous material of sugar cane which after extraction of juice comes out from mill house is called
Bagasse and is used as fuel for Boilers. In TKCSFLthey use the Bagasse for high pressure boilers to
generate steam. Thus generated steam is used to produce electric power by using Extraction Turbo
Generation set. Thus produced power is used to run the factory and excess power is exported through
KEB Grid.
CO-GENERATION:
The factory started producing Power by using Bagasse in the year 2002 with the initial capacity of 6
MW... It installed turbo generator set of capacity 6 MW in the year 2002. As on 2006 the Factory has
the total capacity of 6 MW, out of which 4 MW is used for in-house consumption and the remaining
power is transported.
PRESS MUD:
The press mud is obtained in the process of juice purification process. It is used as manure. In
K S K N, the press mud is sold to the farmers.
PROCUREMENT:
The factory obtains the sugarcane, which is required from more than 1000 farmers and by the
company farms and others raw materials which are required for the operation is taken from the
vendor, here vendors will be evaluated on the basis of price and quality and then the required raw
materials will be taken for the efficient vendors.
The transport of sugar cane from farmers to the factory will be engaged through Lorries, who will be
taken through bidding at the time of harvesting, and also farmers themselves supply by their own
bullock carts or by tractors.
CANE WEIGHMENT:
There are 12 outlaying weigh bridges situated round about Athani for delivering the sugarcane from
the farmers. Double check has been provided over the weighment of cane transported from out
stations.
OPERATIONS:
Page 21

The sugarcane, which is carried by Lorries or other, will be directly fed to the machine where the
initial process starts. At the starting point there are knives, which cut sugar cane bunches into
individual sugar cane.
After this in the next step there are sharp cutter, which cuts the sugarcane bunches into very small
pieces. Then it will go to trade marbs (a series of rollers used for crushing purpose) for crushing.
Then the juice produced will go for further processing and the Bagasse will be left out there itself.
Then they add flocculent [used for mud setting] milk sanitation etc and then after it will go through
pans and Masscuite for this Masscuite they will add sodium Hydro Sulphite (to bleach the
Masscuite) and it will be separated out and the molasses will be sent to distillery and then white
sugar will be bagged.
ORGANISATION STRUCTURE:
Page 22
BOARD OF DIRECTORS
CHAIRMAN& VICE
CHAIRMAN
MANAGING DIRECTOR
GEN
MGR
(S)
GEN
MGR
(P)
GEN
MGR
(DS)
CIVIL
ENG.
STORE
KEEPER
MEDICA
L
OFFICER
HEAD
TIME
KEEPER
CHIEF
C.D.O
CHIEF
ACCOUNTS
OFFICER
OFFICE
SPDT
LWO
WATCH
WARD
TOOL ROOM & DIESEL PUMP
CHIEF ENG.
CHIEF CHEMIST
DIST. CHEMIST
CO-GEN
CANE YARD
AGRL DEV
GODOWN SECTION
GEN ACCOUNT
CANE ACCOUNT
SALES
CASH
COMPUTER
GAD
SECTION
EST
SECTION
MEETING
SECTION
INWARD &
OUTWARD
SECTION
SHARE
SECTION
TYPING
SECTION
GUEST
HOUSE
LEGAL
SECTION
PURCHASE
SECTION
FUNCTIONAL DEPARTMENTS
Functional heads
Page 23

1) Managing Director (M.D)
2) Chief Engineer
3) Chief Chemist
4) Chief Accountant
5) Cane Development Officer (C.D.O)
6) Office Superintendent
7) Accountant (Cane)
8) Labour Welfare Officer (L.W.O)
9) Civil Engineer
10) Accountant (General)
11) Store Keeper
12) Sales Officer
13) Purchase Officer
14) Time Keeper
15) Gudown Keeper
16) Cashier
17) Security Head
BRIEF ABOUT FINANCE AND ACCOUNTS DEPARTMENT:
Finance plays a vital role in the functioning of all industrial units. Finance is the lifeblood of the
organization. In sugar Industry Finance and accounts Department has very vital roles. The financial
plan basically deals with raising and proper utilization of funds. The funds can be raised by issue of
shares as well as by raising loans through various sources. The finance manager supported with
accounts manager and an accounts assistant manages finance department.
FUNCTIONS: They look after the overall financial requirements of the company.
They see that a proper inflow and outflow of income and expenditure is maintained.
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Accounting of sales and sales realization
Receipt of cash, cheque and bank drafts etc and issue of official receipts for the same
Maintenance of journal, expense ledger and general ledger
Costing and accounting is framed and maintained.
Yearly budget is framed so that each department can meet their cash requirements.
Budget prepared is based on sales forecasting, expenses forecasting, cost forecasting, purchase
forecasting etc.
Registration and scrutiny of sale orders pertaining to equipment and spare parts
FINANCE DEPARTMENT CONSISTS OF FOLLOWING SECTIONS:
General Accounts Section.
Cane Accounts Section.
Sales Section.
Cash Section.
An Accounts Officer is the head of this department. Accountant, sales manager, and head cashier
assist him.
AS FUNCTIONING OF EACH SECTION IS SUMMARIZED FOLLOWS:
GENERAL ACCOUNTS SECTION:
General Accounts are looking after the passing of bills and
payments. Management is also done
by General account section and preparation of financial statements i.e., Balance sheet, profit and loss
account is attended by general accounts section.
CANE ACCOUNTS SECTION: Babasabpatilfreepptmba.com
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The Bills and payment concerned to procurement of sugar cane, is attended by cane accounts section.
Payments like cane bills, transport and harvesting bills etc., are prepared and passed in cane accounts
section.
SALES SECTION:
It is looking after sales of sugar and by products molasses, Rectified spirit and other scrap materials.
It is keeping records concerned to all sales section.
CASH SECTION:
It is looking after the payments of all general bills and salary bills apart from cane payment and it is
also looking after receipt of cash and cheque payment. All accounts are maintained in usual manner.
Various records and books kept are: General ledger
Sub ledger
Subsidiary
Cash book
Bank book
Vouchers
Each branch prepares trading and profits and loss account and Balance Sheet as on 31 st March every
year. And the government Auditor audits the accounts.
BANKS (TO PAY BILLS OF THE SUGARCANE SUPPLIERS)
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SLNO
NAME OF THE BANK
1
THE BDCC Bank Ltd, Athani
2
THE BDCC Bank Ltd, Satti
3
THE BDCC Bank Ltd, Halyal
4
THE BDCC Bank Ltd, Konnur
PURCHASE
5
THE BDCC Bank Ltd, Kulgod
6
THE BDCC Bank Ltd, Gokak
7
THE BDCC Bank Ltd, Ankali
8
THE BDCC Bank Ltd, Kalloli
Purchase
9
THE BDCC Bank Ltd, Kabbur
10
THE BDCC Bank Ltd, Gudas
responsible
11
THE BDCC Bank Ltd, Harugeri
spare
parts 12
THE BDCC Bank Ltd, Mudalagi
THE BDCC Bank Ltd, Ghataprabha
industry. The 13
14
THE BDCC Bank Ltd, Shiraguppi
responsible
15
THE BDCC Bank Ltd, Yaragatti
maintaining and issuing required materials to the concerned section.
DEPARTMENT
Purchase officer heads
Department.
for
He
purchasing
required
for
storekeeper
for
Calling quotations
Preparing C.S.Q (comparative statement quotation)
Placing before meeting for decision
Placing orders for supply of materials.
Passing bills to Accounts section for payment.
MANAGER
GODOWN
SUPERVISORS
STORE KEEPERS
ASSISTANTS
the
stacking;
Purchase department hierarchy

Procedure of purchasing
PURCHASE
the
is
The important functions of this department are:

Purchasing materials
is
Page 27
1. Determination of purchase budget

In the beginning of the year the purchase manager, with the help of production planning
department, prepares a purchase budget. This budget guides him in knowing what and when he has
to buy and also quantity.
2.
Determination of quantity
The stock availability in each location is determined and compared with the actual
requirements. After receiving the sales order, raw materials needed are scheduled according to these
order level.
3.
Purchase order:
After satisfy with the quality of materials and reputation of the supplier, purchase order is
sent to the supplier. Purchase order includes the date of order, description of materials to be
supplied. The copies of this order are sent to the Administrative office, Accounts departments and to
the Storekeeper.
4.
Receiving and issuing raw materials: The department heads and the storekeeper check the quality and quantity of raw materials
received respectively. The storekeeper enters the details of purchased materials in the store receipt
book. Then the general manager passes the amount for payment.
PRODUCTION DEPARTMENT
Production management refers to the application of management principles to the
production function in a factory. In other words production management involves application of
planning, organizing, directing and controlling the production process.
A well-organized production function can offer competitive advantage to a firm in the
following areas.
Higher quality
More inventory turns
Shorter new product lead time
Greater flexibility
Shorter manufacturing lead time
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Better customer satisfaction
Reduced wastage
Laboratory
The factory is having well equipped lab, and the main activity of the lab is to check the
content of sugar cane & fixing the correct shape & size of sugar. The lab prepares hourly reports
which advice on the addition of the other chemicals in production
CHEMICAL SECTION
Structure:
CHIEF CHEMIST
MANUFACTURING CHEMIST
DEPUTY CHEMIST
LAB IN CHARGE
LAB BOY
PRODUCTION PROCESS:
The main Raw material in the production of sugar is
SUGAR CANE
The raw materials has to go through following stages before it become finished product. The process
in each stage is as under:
STAGE:1
SUGAR CANE SUPPLY:
The harvested and transported sugar can received is weighed on the weigh Bridge. It is unloaded and
kept on the feeder tables. It is fed to the cane carrier as per the requirement.
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Note: 4500 tons received, 1000 tons stocked and 3500 tons crushing per day.
STAGE:-2 MILLING OF CANE/ EXTRACTION OF JUICE:
This cane is passed through leveler and fibrizor by making the fine making the fine chips. It is
crushed through series of mills. Imbibitions hot water is added prior to the last mill to extract more
possible sugar. The Bagasse from the last will is carried through Bagasse conveyor and required
quantity of Bagasse is fed to the boilers and excess quality is sent for storage.
STAGE:-3
CLARIFICATION AND EVAPORATIONS:
The juice from all the mills is pumped to juice weighting scale. It is heated to about 70-77o c in the
juice heaters. It is taken to continuous juice sulphitor in which milk of lime and sulphur di-oxide gas
are adjusted to maintain ph 7.0. It is again heated in juice heaters to about 100 to 105oc and sent to
continuous clarifier. Clear juice is taken to multiple effect evaporators to concentrate up to 60oc
Brix.
The settled mud from the bottom of the clarifier is taken to mud mixer to mix with beguile and taken
to continuous vacuum filer. The filtrate is transferred to raw juice receiving tank for treatment. The
adhered mud on the screens is scraped and sent out as filter cake, which will be used for composting
the manure.
STAGE:-4
SUGAR MANUFACTURE AND CRYSTALLIZATION PURING:
The concentrated syrup from evaporator is taken to syrup sulpthitor to adjust Ph 4.8 to 5.2. This is
stored in the supply tanks and fed to A masscult boiling by taking B-seed as a footing. It is
concentrated to 92o Brix and dropped to the crystallizer. This masscult is purged in the centrifugal
machines. The adhered crystals are scraped to hopper and treated with hot air and cold air blower. It
is sent to grader the size for gradation. This graded sugar is stored in SILOS. Weighed and bagged
sugar bags are transferred to respective godowns for stacking.
STAGE 5:- FURTHER PROCESS:
While purging A- massecuite the A-light molasses received is sent to supply tanks and fed to Bmasscult boiling with b-grain as footing. This is purged in the centrifugals. This sugar is used as B-
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seed and excess is melted and fed to A- masscults. White purging low purity B- Heavy molasses
obtained is used for boiling C- massecuite with C- grain as footing.
This C- massecuite is taken for purging in Centrifugal machines. The final molasses is separated,
weighed and sent to storage tanks. C.F.Magma is sent to melt supply tanks and fed to A massecuite
boiling. C-light molasses obtained is tired in supply tanks and used for C- massecuite boiling and Cgraining also 0.
STORES DEPARTMENT
This department is headed by storekeeper. To keep the stores and required materials for the
factory section wise in a proper way and to maintain their registers and big cards of indents (order
goods)
Functions:
1) To make the materials requisition for the purpose of knowing the quantity materials.
2) To make purchase order or in simple terms the tenders.
3) To make approval memo for verification of materials.
4) The main function of store department is to prepare a Bin Card.
5) The store Department issues material with reference with store requisitions.
6) To make classification & codification of materials.
7) Receipts of materials.
8) Inspect it with ordered quantity, quality and if any other specifications.
9) Some of the materials like chemicals are to be sent to laboratory for inspection and testing.
10) Getting indents from departmental head and issuing it.
11) To make purchase returns if the materials are rejected.
12) To maintain minimum level of materials.
13) Informing purchase department when materials require.
In stores there are two sections
1) Transport Entry table.

2) Store Receipt Table
1) Transport Entry Table
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They maintain records the receipt of materials at what data, at what time, vehicle
number,
and quantity in kg. Acknowledgement from vehicles etc
2) Store receipt Table

The store keeper maintain the records of receipt of materials, serial no made of transport,
purchase order reference, bill no, the name of the supplier etc. the store keeper has given
proper conditions to the materials to identify the materials.
MARKETING AND SALES DEPARTMENT
The American Marketing Association offers the following formal definition: Marketing is an
organizational function and a set of processes for creating, communicating, and delivering value to
customers and for managing customer relationships in the ways that benefit the organization and its
stake holders.
It can be viewed Marketing Management as, an art and science of choosing target markets
and getting, keeping, and growing customers through creating, delivering, and communicating
superior customer value.
Channel of distribution
Most producers do not sell their goods directly to the final users. Between them stands set of
intermediaries performing a variety of function Those intermediaries constitute a marketing channel.
Marketing channels are sets of interdependent organizations involved in the process of
making a product or service available for use or consumption.
Marketing channel decisions are among the most critical decisions facing management. The
channel chosen intimately affects all the other marketing decision. The companys pricing depends
on whether it uses mass merchandisers or high quality boutiques. The firms sales force and
advertising decisions depends upon how much training and motivation dealers need. In addition, the
company's channel decisions involve relatively long term commitments to other firms.
Role of marketing manager
1) To collect information for sale forecasting.
2) Pricing the products as per the demand.
3) To appoint new dealers and distributors
4) .To have full and perfect knowledge of marketing conditions and policies
5) Marketing department also looks after dispatching goods to the vendors
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Functions of sales department

1.
Sales officer is responsible for selling the products.
2.
To look after dispatch of the ordered products.
3.
Suggestion, ideas, complaints, feedback from the market to the company.
4.
Stocking planning, godown maintenance.
Release mechanism of sugar

The sale of sugar is controlled by the Chief Director of sugar, New Delhi through release
mechanism.
Sugar industry is basically a seasonal industry. Hence the sugar will be produced during the
season and the sugar thus produced will have to be marketed throughout the year by the sugar
mills.
The Directorate of sugar will release monthly sugar sale quota for the sugar factories in India
and the sugar thus released for the specific month will have to be sold and dispatched before the end
of the month.
In case any factory not able to sell the entire quantity of the sugar released for the particular
month, the remaining quantity will be treated as lapsed. So every factory tries to sell their sugar
quote of the month within the validity period.
Sales procedure
Procedure adopted for sale of sugar and power
1.
Sugar
Domestic Sale of Sugar

The sugar is sold in the domestic market through tender system. Sugar tenders will be called
periodically from the various sugar traders. The traders are intimated well in advance about the
grade and quality being offered in tender over telephone. The sugar tender is some times conducted
at Karnataka Sugar Institute, Belgaum and also at factory site. The officer of KSI will be present at
the time of tenders. The rates will be collected over telephone from the various parties along with
grade and quantity of sugar required by them. The parties who have offered higher price will be
allotted the sugar and they will be instructed to take the sugar delivery within the stipulated period.
The sugar will be sold against 100% payment. The rate of domestic price of sugar in the state and
the rate of neighboring sugar factories will be compared while selling the sugar in tenders.
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Export of Sugar
When the international price of sugar is remunerative compared to domestic price of sugar,
the company exports some of the stock of sugar. The sugar export is mainly undertaken through the
mercantile exports or through EXIM Corporation New Delhi.
The price for export sugar is
negotiated taking into account, the prevailing international sugar price and the price being offered by
various sugar factories for export of sugar. Once the rates are finalized, the company will enter into
agreement with the party. Then the party will obtain a release orders from chief Director of sugar,
New Delhi and necessary excise bond from the concerned authority. After completing all the
necessary formalities, sugar will be delivered to the party for export against full payment of the
consignment. After the export shipment is completed necessary documents in proof of export of
consignment will be collected from the parties. The same will be submitted to the excise department.
2.
Export of Power to the KPTCL Grid

In addition to the above company is also receiving its revenue from its power plant. Company
is having a power plant of 6.0 MW capacities.
It is using about 4.0MW for its own/captive
consumption; the excess power of about 2.0MW is being exported to the KPTCL.
WORKING CAPITAL MANAGEMENT:
The aim of the present study is to examine the Small Scale Industry practices in Working Capital
management and to evaluate management performance for the same purpose. Since the efficiency
of the Working Capital management is determined by the efficient administration of its various
components- cash, accounts receivable and inventory, the study attempts to determine the
management of each component.
Working Capital in a business enterprise may be compared to the blood in a human body: Blood
gives life and strength to the human body. Similarly Working Capital injects life and strength- profits
and solvency - to the business organization. Working Capital refers to short term funds required for
the purpose of business operations. The funds used for meeting day to day expenses like, purchase of
raw materials, payment of wages and other expenses, stocking of goods, granting of credit to
customers and maintenance of the minimum balance. It is not necessary that the funds should be in
the form of cash only. It can be in the form of near cash items like, marketable securities, inventories
and account receivable
CONCEPT OF WORKING CAPITAL:
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Like most other financial concepts, the concept of Working Capital is used in different connotations
by different writers. Obviously, it is understood either as the total current assets or as the excess of
current assets over current liabilities. The former is referred to the gross working Capital and the
latter the net Working Capital.
So there are two concepts in Working Capital:
Gross Working Capital.
Net Working Capital
Gross Working Capital is the total of all current assets, viz. cash, marketable securities account
receivable and inventory Net Working Capita refers to excess of current assets over current
liabilities. Both of these concepts have their own importance. The gross concept is a going concern
concept in which management is particularly interested because for the productive utilization of
fixed assets all the currents are necessary.
The net concept is useful to gauge the financial soundness of a form and is of special interest to
sundry creditors and suppliers of short-term loans and advances. It creates confidence among the
creditors about the security of their amounts.
No special distinction is made between the terms total current assets and Working Capital by
some authors Working Capital is nothing but total of current assets. It is a substitute for Working
Capital, though not a perfect one
Working Capital is the capital circulating into cash over an operating cycle. Working Capital is
equated with all the current assets.
Working Capital and current assets are interchangeable.
The precise meaning of current assets and current liabilities
CURRENT ASSETS:
Current assets are those assets which are used in the current operation of a business such as
inventories, receivables, cash and bank balances and easily convertible securities. These assets
generally change their form within an accounting period. Current assets have a short life span. Cash
Page 35

balance may be held idle for a week or two, accounts receivable may have a life span or 30 to 60
days, and inventories may be held for 30 days 100 days.
CURRENT LIABILITIES:
Current liabilities are those claims of outsiders which are expected to mature for payment within an
accounting year and include creditors, bill payable, bank-overdraft, outstanding expenses,
outstanding tax and income received in advance. Current liabilities are those liabilities where
liquidation is reasonably expected to require the use of existing resources properly classifiable as
current assets, or the creation of other current assets, or the creation of other current assets, or the
creation of other current liabilities.
FACTORS AFFECTING WORKING CAPITAL NEEDS:

The Working Capital requirements of a form depend on many factors. It is a common proposition
that the size of Working Capital is a function of sales. Sales alone do not determine the size of
Working Capital. But it is constantly affected by the crisis- crossing economic currents flowing in a
business. The nature of the firms activities, the industrial health of the country, the availability of
materials, the ease or tightness of the money market are all parts of these shifting forces.
Realizing the complication involved in Working Capital estimates, Gerstenberg observes, Although
no definite rule can be established for determining Working Capital requirements, we can arrive at
some general principles. Certain influences, some inherent in the nature of the business and the
others arising out of business management policies, affect each of the items of current capital.
The following factors affect not only the requirements of Working Capital but also influence to a
great extent the composition or structure of Working Capital. It is believed that any attempt at
Working Capital management could be improved upon with greater understanding of the underlying
factors.
THE FOLLOWING FACTORS ARE IMPORTANT:
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Nature of business
Period of manufacture and cost of production,
Volume and terms of purchase,
Size of business unit,
Capacity utilization,
Degree of specialization,
Seasonal variations,
h) Coordination between production and distribution,
i)
Business cycles,
j) Management policy,
k) Miscellaneous factors such as government policies, transport and communication system and
economic and political environment.
FINANCING OF WORKING CAPITAL:
In that GFEL, it was financing the working capital from the following five common sources.
They are:
1. SHARES:
The TKCSFL has issued the equity shares for raising the funds. The Equity Shares
do not have any fixed commitment charges and the dividend on these shares is to be paid subject to
the availability of sufficient funds. These funds have been injected from the companys own
personal resources, from the members and from the third party investors.
2. TRADE CREDITORS: The trade creditors refer to the credit extended by the suppliers of milk in
the normal course of business. The firm has a good relationship with the trade creditors. So that
suppliers send the milk to the firm for the payment to be received in future as per the agreement or
sales invoice. In this way, the firm generates the short-term finances from the trade creditors. It is an
Page 37

easy and convenient method to finance and it is informal and spontaneous source of finance for the
firm.
3. FACTORING OR ACCOUNTS RECIEVABLE CREDIT: Another method of raising shortterm finance in The Krishna Co-Operative Sugar Factory Limited, Athani, is through accounts
receivables credit offered by the commercial banks. A commercial bank has provided finance by
discounting the bills or invoices of its customers. Thus, a firm gets immediate payment for sales
made on credit. The factor is also a financial institution, which offers services relating to
management and financing of debts arising out of credit sales. Factors render services varying from
bill discounting facilities provide commercial banks to the total take over of administration of credit
sales including maintenance of sales ledger, collection of accounts receivables, credit control, and
protection from bad debts, provision of finance and rendering of advisory services to the firms
clients.
4. LINE-OF-CREDIT: The business is well capitalized by equity and is has a very good collateral,
the business (the firm) might quality fore one. A line-of-credit allows firm to borrow funds for shortterm needs when they arise. The funds are rapid once the collections of accounts receivables that
result from the short-term sales peak. Lines-of-credit typically are made for one year at a time and
expected to be paid it for 30 to 60 consecutive days some times during the year to ensure funds are
used for short-term needs only.
5. SHORT-TERM LOAN: The firm has borrowed the funds from the commercial banks to finance
for the working capital needs. The short-term loans duration is less than one year. They provide a
wide verity of loans to meet the specific requirements of a concern. The different forms in which the
banks normally provide loan and advances are
Loans
Cash credits
Overdraft
COMPONENTS OF WORKING CAPITAL:
The components of working capital are:
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Cash management
Receivables management
Inventory management
CASH MANAGEMENT:
Cash is the liquid form of an asset. It is the ready money available in the firm or with the
business, essential for its operations. A firm needs the cash for the following three purposes:
Transaction motive: The firm must and should keep the funds for transactions like purchase, sales
etc. These activities, which are not known in advance, are not considered while preparing a cash
budget.
Precautionary motive: The firm also keeps funds for the safeguard against uncertainties, which are
an integral part of business operations.
Speculative Motive: To tap profits from opportunities arising from fluctuations in commodity
prices, security prices, interest rates etc. The company with surplus cash is in a better position to
exploit such situations.
Cash Flows: The flow of cash into and out of the business over a period refers to cash flow. Cash
inflow can be in the form of cash received from customers, lenders and investors. Cash outflow can
arise because of payments made to employees (salaries), suppliers and creditors.
Positives Cash flow: When cash inflow exceeds outflow it results in positive cash flows. Positive
cash flow is beneficial to the business, the only thing to be cautious about is the opportunity cost,
incurred as a result of idle money.
Negative Cash flows: Negative cash flows arise when cash outflow exceeds inflows. This can be
due to various reasons.
A good cash management has a major impact on the overall working capital management. It is
required to meet the business obligations in the firm. The benefits of good cash Management are:
Control of financial risk
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Opportunity for profit
Increased customer, supplier, and shareholder confidence
The cash management is commonly deals with the following aspects.
Cash planning or identifying sources of cash flows
Managing the cash flows
Optimum cash level
Identifying various avenues to invest surplus cash
TYPES OF WORKING CAPITAL:
While planning for the Working Capital one has to keep in mind different classification of Working
Capital. They are:
Permanent of fixed Working Capital: Permanent Working Capital is the minimum amount of
current assets, which is needed to conduct a business even during the dullest season of the year. This
amount varies from year to year, depending upon the growth of a company and the stage of the
business cycle in which it operates. It is the amount of funds required to produce the goods and
services, which are necessary to satisfy demand at a particular point. It represents the current assets,
which are required on a continuing basis over the entire year. It is maintained as the medium to carry
on operations at any time.
Temporary or variable Working Capital: Temporary or variable or fluctuating Working Capital is
the amount of Working Capital which is required to meet seasonal in nature, it means the blocking of
Working Capital in stock and it will take time to convert it into cash. In order to meet special
exigencies like, launching of extensive marketing campaign, for conducting research etc., special
Working Capital is required.
OPERATING CYCLE:
The operating cycle can be said to be at the heart of the need for Working Capital. The continuing
flow from cash as advances to suppliers, to inventory, to accounts receivable and back into cash is
Page 40

what is called the operating cycle. In other words, the terms cash cycle refers to the length of time
necessary to complete the following cycle of events. Fuel, power and office expenses to meet selling
costs, such as packing, advertising etc
The aim of such an approach is not only directed towards management of Working Capital fund
inflows and outflows, but also directed to refine the balancing judgment between liquidity and
profitability.
ADEQUACY OF WORKING CAPITAL:

A business enterprise should have enough Working Capital. Without adequate Working Capital it
cannot be run effectively a manufacturing concern is sure to collapse if it is run for longer period
without or with meager amount of Working Capital. Therefore, the enterprise has to maintain
adequate Working Capital can avail following advantages:
It enables the enterprise to enjoy uninterrupted flow of production by obtaining the raw material well
in time.
It enables an enterprise to avail cash discounts on the purchase and hence, it reduces costs,
It enables to make regular payments of salaries, wages and other day to day commitments which
raise the morale of its employees, increases their efficiency, reduce-wastage and costs,
It enables to extend favorable credit terms to customers,
It will help to maintain the good will and credit worthiness which is essential for raising the loans
from banks and others on easy and favorable terms,
It helps to exploit favorable market conditions such as, purchasing its requirements in bulk when the
prices are lower and by holding its inventories for higher prices,
Page 41

This gains the confidence of its investors and creates a favorable market to raise additional funds in
the future and
It creates an environment of security, confidence, high morale and overall efficiency in a business,
etc.
INADEQUACY OF WORKING CAPITAL:
At the same time inadequacy of Working Capital will affect business prospects adversely. Goodwill
of the firm will be at stake if the Working Capital gap is not bridged. Shortage of Working Capital or
inadequacy of Working Capital will affect profitability. Liquidity and soundness of a business
enterprise, it can cause following damages:
It stagnates growth. It becomes difficult for the enterprise to undertake profitable projects for nonavailability of the Working Capital funds,
It becomes difficult to implement operating plans and achieve an enterprises profit target,
An enterprise may not be able to take advantage of cash discount facilities,
An enterprise will not be able to pay its dividends because of the non availability of funds,
An enterprise may have to borrow funds at exorbitant rates of interest,
Operating inefficiencies creep in when it becomes difficult even to meet day-to-day commitments,
An enterprise loses its reputation when it is not in a position to honor its short term obligations. As a
result, an enterprise faces tight credit terms.
SHORT-TERM BANK CREDIT - A SOURCE OF FINANCE:
There are four categories of sources of Working Capital namely;
Trade credit
Bank credit
Current provisions and non-bank short term borrowing, and
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Long term source comprising equity capital and long-term borrowings
Trade credit and short-term credit are the primary sources for financing Working Capital, in our
country. According to an estimate, both these sources together finance about three
fourth of the
Working Capital requirements of an industry.

FORMS OF CREDIT:
After getting the overall credit limit sanctioned by the banker, the borrower draws funds periodically.
The following forms of credit are available to him.
Loan arrangement: Under this arrangement, the amount of the loan is credited by the bank to the
borrowers account and the interest is payable on the balances outstanding.
Overdraft arrangement: The borrower is allowed to overdraw in his current account with the bank
up to a stipulated limit and the interest is payable on the actual loan utilized.
Cash credit arrangement: The borrower can draw to a stipulated limit based on the security margin.
Usually, such credit is allowed against Pledge or hypothecation of goods but the borrower can
provide alternative securities also in conformity with the terms of advance.
Bills purchased and bills discounted: This arrangement is of relatively recent origin in India. With
the introduction of the New Bill Market Scheme in 1970 by the Reserve Bank of India, a bank credit
is made available through discounting of bills by banks. This scheme intends to link credit with the
sale and purchase of goods. To popularize this scheme, the discount rates are fixed lower than those
of cash credit.
Term loans: Bank advance loans for 3 to 7 years payable in yearly or half yearly installments.
PRINCIPLES OF WORKING CAPITAL MANAGEMENT
E. L. Walkers Capital Propositions and James C. Van
Homes elucidation of the same.
These
propositions are also known as the principles dealing with risk factors and serve as the basis of
Working Capital theory.
Principle-1
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The first principle is concerned with the relationship between the levels of Working Capital and
sales. Briefly, it may be stated as follows: if Working Capital is varied relative to sales, the amount of
risk that a form assumes is also varied and the chances of gain or loss are increased This principle
implies that a definite relation wrists between the degree of risk and the rate of return. That is the
more the risk that a firm assumes, the greater is the possibility of gain or loss. The opportunity for
gain is enhanced by choosing an appropriate asset and liability structure.
The firms return on investment will be comparatively large when there are a low proportion of
current assets to total assets and a high proportion of current liabilities to total liabilities. This
strategy, no doubt, will result in a low level of Working Capital and relatively great profitability but
the firm assumes a risk of technical insolvency, i.e., the inability to meet its cash obligations.
Therefore, the risk involved with various levels of current assets and current liabilities must be
evaluated in relation to the profitability associated with those levels.
Principle -2
As already stated above, the main purpose of management is determining the ideal level of Working
Capital. This principle serves as a basis for determination and is applicable to investments made not
only in various components of Working Capital but also in fixed assets. Stated precisely, it is as
follows: capital should be invested in each component of Working Capital as long as the equity
position of the firm improves.
Principle - 3
The third principle is concerned with the risk resulting from the type of capital used to finance
Working Capital directly affects the amount of risk that a firm assumes as well as the possibility of
gain or loss, and cost of capital
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Principle - 4
As stated above, the extent of the of debt depends upon the level of risk a management wishes to
undertake. It should be noted that the risk is not only associated with the amount of debt used relative
to equity but also related to the nature of the contacts negotiated by the borrower. The dates of
maturity and restrictive clauses of the contracts are the most important characteristics of debt
contracts that directly affect the firms operations.
The greater the disparity between the maturities of a firms short -term debt instruments and its flow
of internally generated funds, the greater the risk and vice versa.
Incidentally, management is not compensated for assuming the risk referred to in this concept;
therefore, under no circumstances should the risk be assumed.
On the whole, a management has to determine the liquidity of the firm on the basis of information
about risk and opportunity. Costs of holding liquidity. The degree of liquidity, desirable is a function
of profitability of insolvency of various levels of liquidity, the opportunity cost of maintaining those
levels and the cost of bankruptcy. Therefore, the behavior of the management should be influenced
not only by the risk and the opportunity costs associated with the various levels of liquidity, but also
by the cost of bankruptcy. Thus the management must behave in a manner consistent with the
maximization of shareholders wealth.
FACTORS INFLUENCING WORKING CAPITAL REQUIREMENTS
Nature of business This is one of the primary factors influencing the working capital requirements
of a firm. The Krishna Co-Operative Sugar Factory Limited, Athani, is a manufacturing firm, has a
longer operating cycle for manufacturing the products, and investing more funds in its current assets.
Therefore, it requires much more working capital.
Market conditions The level of competition existing in the market also influences working capital
requirement. When competition is high, the company should have enough inventories of finished
Page 45

goods to meet a certain level of demand. Otherwise, customers are highly likely to switch over to
competitors products. It thus has greater working capital needs. When competition is low, but
demand for the product is high, the firm can afford to have a smaller inventory and would
consequently require lesser working capital. But this factor has not applied in these technological
and competitive days.
ESTIMATION OF WORKING CAPITAL REQIUREMENTS
Managing the working capital is a matter of balance. The firms must have sufficient funds on hand
to meet its immediate needs. The Krishna Co-Operative Sugar Factory Limited, Athani, is
manufacturing oriented organization; the following aspects have to be taken into consideration while
estimating the working capital requirements. They are:
Total costs incurred on material, wages and overheads.
The length of time for which raw material are to remain in stores before
They are issued for production.
The length of the production cycle or work-in-process, i.e., the time taken for conversion of raw
material into finished goods.
The length of sales cycle during which finished goods to be kept waiting for sales.
The average period of credit allowed to customers.
The amount of cash required paying day-today expenses of the business.
The average amount of cash required to make advance payments
The average credit period expected to be allowed by suppliers.
Time lag in the payment of wages and other expenses.
Page 46
OBJECTIVES OF STUDY
To study the sources and application of fund of TKCSFL
To examine how the working capital requirements is estimated
A study on the interpretation of working capital on the basis of calculations and estimations
To study the system of inventory management, receivables management and cash Manageme
nt.
To identify weakness and short comings if any as a result of the survey and to offer
suggestions
Page 47
ANALYSIS AND INTERPRETATION OF DATA:

TABLE 1: CALCULATION OF WORKING CAPITAL
Particulars
2005-06
2006-07
2007 08
Inventories
193771415
624968314
717284971.5
Sundry debtors
11081938.99
25182025.76
5727392
Cash
72521
325153.45
28456.45
Bank
27143285.9
26566127.5
14554932.44
Other assets
939201052
12356005.85
16419308.96
Loans & advances
37226454.5
4315300.17
4315300.17
Receivables from govt.
1859709
1859709
1859709
1210356376.39
693712926.73
76019007
1893901.5
18503328
11822912
51010105.66
61987719
68212128
Current Assets
Current Liabilities
Sundry creditors
Term loans
DCC bank
Others
Page 48

Statutory payable
2640680
5336185
8322361
Excise duty
551827
551827
551827
Net Working Capital
1154259862.23
607333867.73
48500689
The Net Working Capital has been increased in 2006 2007, when compared to other years. This is
due to huge rise in inventories .
TABLE 2: STATEMENT SHOWING INCREASE & DECREASE IN WORKING

CAPITAL:
Particulars
Increase in Current Assets
Inventories
431196899
Sundry debtors
14100086.77
Cash
252632.45
Bank
Other assets
Loans & advances

92316657.5
4063303.11
Decrease in Current Liabilities

Sundry creditors
66804156
Term loans
Page 49

DCC bank
Others
Statutory payable
Excise duty
Decrease in working capital
546925994.5
Total
992475612.72
163184116.61
Particulars
Decrease in Current Assets
Inventories
Sundry debtors
19424634
Cash
296697
Bank
577158.4
12011195.06
Other assets
926845046.15
Loans & advances
32911154.33
Sundry creditors
16609426.5
Term loans
10977613.34
6224409
DCC bank
2695505
2986176
Increase in Current Liabilities
Others
Page 50

Statutory payable
Excise duty
Increase in working capital
62534882.96
Total
990615903.72
103477994
TABLE 3: COMPUTATION OF WORKING CAPITAL:
Year
Current Assets
Current Liabilities
Working Capital
2005-06
25,88,44,064
12,83,39,937
13,05,04,127
2006-07
72,30,11,048
32,37,78,891
39,92,32,157
2007-08
81,24,64,742
39,73,58,597
41,51,06,145
Page 51
Interpretation: It was in positive in the following 3years i.e., from 2005-06 to 2006-07 and in 200708 it has been in comparatively high positive terms i.e., amount of Rs. 41,51,06,145. It indicates that,
in the 2007-08, the working capital has met its current obligations...
CURRENT RATIO: Current ratio is also known as working capital ratio which compares the total
current assets of the business unit to its current liabilities. This ratio measures its short-term solvency,
which only reflects its ability to meet short-term obligation. The higher the ratio the greater the
business units ability to meet current obligation and more the safety of funds of the short-term
creditors Thus, a current ratio of 2:1 is considered satisfactory.
Current Assets
Current ratio =
Page 52

Current liabilities
TABLE 4 : COMPUTATION OF CURRENT RATIO
Year
Current Assets
Current Liabilities
Ratio
2005-06
25,88,44,064
12,83,39,937
2.01
2006-07
72,30,11,048
32,37,78,891
2.23
2007-08
81,24,64,742
39,73,58,597
2.04
Interpretation: The Current Ratio for the year 2005-06 is below standard ratio. It is increased to
2.01 to 2.23 for 2006-07, which is above standard ratio. For the year 2007-08 it is decreased to 2.23
to 2.04, which below standard ratio. It indicates that, the firm is able to meet its current obligations.
QUICK RATIO:
It establishes a relationship between quick, or liquid assets and current liabilities. An asset is liquid if
it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the
most liquid asset. Inventories are considered to be less liquid.
Quick assets (current assets - Inventory)
Quick ratio =
Page 53

Current liabilities
TABLE 5 : COMPUTATION OF QUICK RATIO:
Year
Current Assets
Current Liabilities
Ratio
2005-06
4,95,54,229
12,83,39,937
0.380
2006-07
7,64,04,609
32,37,78,891
0.235
2007-08
7,04,60,447
39,73,58,597
0.177
Interpretation: The ideal ratio is 1:1. The Quick ratio of current assets & liabilities are below the
standard ratio. It indicates that the firms liquidity position is good.
CURRENT ASSET TURNOVER RATIO:

Assets are used to generate sales. Therefore, a firm should manage its assets efficiently to maximize
sales. The relationship between sales & assets is called assets turnover.
Sales
Page 54

Current asset turnover ratio=
______________
Current assets
TABLE 6 : COMPUTATION OF CURRENT ASSET TURNOVER RATIO:
Year
Sales
Current Assets
Ratio
2005-06
94,06,20,046
25,88,44,064
3.63
2006-07
79,13,32,804
72,30,11,048
1.09
2007-08
40,96,02,092
81,24,64,742
0.50
Interpretation: The above table exhibits how the current assets were efficiently utilized in
generating sales. In the above table the ratio shows that, the firm has utilized the currents assets
properly.
WORKING CAPITAL TURNOVER RATIO:

Net sales
Page 55

Working capital turnover ratio =
Net working capital
TABLE 7: COMPUTATION OF WORKING CAPITAL TURNOVER RATIO:
Year
Net Sales
Net working Capital
Ratio
2005-06
94,06,20,046
1,15,42,59,862
0.81
2006-07
79,13,32,804
60,73,33,868
1.30
2007-08
40,96,02,092
73,12,59,661
0.56
Interpretation: The ratio is fluctuating. That was high in 2006-07, 1.30.and it was negative in 200506 i.e. 0.81 and 2007-08 i.e.0.56 it indicates that the working capital has been utilized effectively in
2006-07.
INVENTORY MANAGEMENTS:
Page 56

Inventory management is one of the components of working capital. This management is concerned
with the effective management of stock or inventory. Inventory consisting of raw material, work-inprogress and finished goods, represent a significant proportion of total current assets.
In the case of TKCSFL, the inventory consisting only finished goods these finished goods consist of
sugar, molasses& bagasse these inventories are not sold then and there but disposed of as per the
company act guidelines for sugar and its by products. The effectiveness of working capital is
depends on this inventory managements effective.
So, effective management of particular in working capital in general can also be evaluated by the
computing inventory related ratios. Inventory turnover ratio reflects the relationship between costs of
goods old during or given period and the average inventory. This ratio helps the average inventory.
This ratio helps in determining the liquidity of a business concern in as a much as it indicates the rate
at which the inventories are converted into sales and then into cash ultimately
This ratio is calculated by the following ratio.
Cost of goods sold
Inventory turnover ratio =
Average inventory
Where,
Cost of goods sold
Sales - Gross profit

Opening stock + Closing stock
And average inventory
-----------------------------2
365
Inventory holding period
Inventory turnover ratio

TABLE 8: COMPUTATION OF INVENTORY TURNOVER RATIO:
Page 57

Year
Sales
Average Inventory
Ratio
2005-06
26,40,87,564
10,11,41,647
2.61
2006-07
69,74,45,272
67,11,26,643
1.03
2007-08
84,53,40,822
73,42,01,254
1.15
Interpretation: A higher rate of inventory turnover ratio reduces investment in inventory and thus
reduces the requirement of working capital. Hence efforts should be made to magnify the ratio to get
the benefits, reduction in investment on stock and reduction in requirement of working capital.
The above table reveals that, the turnover of inventory in 20005-06 was 2.61 were as in 2006-07
there was a increase of 1.03 come up to, in 2007-08 there was a decrease of 1.15, this shows of
finished goods inventory is more in 2006-07which reflects more sales in 2006-07.
Page 58

TABLE 9: COMPUTATION OF PROPORTION OF INVENTORY TO CURRENT
ASSETS:
Year
Inventory
Current Assets
Percentage
2005-06
19,37,21,415
25,88,44,064
0.74
2006-07
62,49,68,314
72,30,11,048
0.86
2007-08
71,72,84,972
81,24,64,742
0.88
Interpretation: The above table exhibits how the current assets were efficiently utilized in
generating sales. In the above table the ratio was found near to1. It shows that, the firm has utilized
the currents assets properly.
Page 59

TABLE 10: COMPUTATION OF PROPORTION OF CURRENT ASSETS AND
FIXED ASSETS:
Year
Fixed assets
Current Assets
Ratio
2005-06
50,68,16,681
25,88,44,064
1.95
2006-07
47,00,50,942
72,30,11,048
0.65
2007-08
45,46,52,642
81,24,64,742
0.56
Interpretation: The table shows the proportion of current assets and fixed assets undertaken by the
unit. The above table clears that proportion of investment in fixed assets is more than proportion of
investment in current assets. The ratio ranges between 0.56:1 to 0.65
Page 60

TABLE 11: COMPUTATION OF SIZE OF INVENTORY:
Year
Inventory
Indices(04-05=100)
2004-05
23,78,03,265
100
2005-06
19,47,71,415
81.90
2006-07
62,49,68,314
262.7
71,72,84,972
301.5
2007-08
Interpretation: The above table throws light on investment in total inventory and the progressive
base year percentage growth in total inventory. The growth rate in inventory was on a downward
trend in 2005-06 as compared to 2004-05 by 81.90% respectively. In 2006-07 the trend was on a
upward by 262.7% as compared to 2005-06. In 2007-08 the trend was on a upward by 301.5% as
compared to 2006-07. However, the size of inventory had that leads to the increase in output and
sales has a positive impact on its growth in unit.
Page 61

RECEIVABLE MANAGEMENT:
Trade credit is the most prominent force of modern business. It is considered or an essential
marketing tool, acting as a bridge for the movement of goods through production and distribution
stages to ultimate consumers. The management of amount receivables is an important part of
working capital management part of working capital management is an undertaking, which sell their
goods on credit. Accounts receivables include book debts, and bills receivables. The level of
accounts receivable of an undertaking is determined with reference to the volume of credit sales and
the average period between sales and realization from the customer like inventories.
In the context of dairy union the finished products sugar and their by products on the basis of cash
and credit system. So the question of credit sales which leads to accounts receivables does not arise
but the factory providing credit facilities to the farmers by way of supplying fertilizers. This credit
given by factory can be recovered by the sugar which is provided by farmers. Therefore the scope of
amounts receivables management in dairy unit is very limited.
RECEIVABLE TURNOVER RATIO:
This ratio is also known as Debtors turnover ratio which related credit sales of business unit to
trade debtors. This ratio indicates the rate at which cash is generated by turnover of receivables or
debtors. It measures the liquidity of the business unit.
By and large the amount of trade debtors and bills receivables depends upon the extent of sales,
credit facilities extended and the effectiveness of collection policy in force. The DTR is ascertain
how many days of average sales are locked up in the amounts owning by debtors as depicted in the
balance sheet.
Credit sales
RTR =
Average debtors
Total sales
or
closing debtors
Ex:
Page 62

In the year 2006 - 07
Total sales
RTR =
Closing debtors
79, 25, 85,774.00

=
26001540.16
= 30.48
365
Average collection period =
----------------------RTR
365
=
---------30.48
11.81 days
TABLE 12: COMPUTATION OF RECEIVABLE TURNOVER RATIO:
Page 63

Year
Sales
Closing debtors
RTR
Average
collection
Period
2005-06
40,96,02,092
1,10,81,938
36.96
9.87
2006-07
94,06,20,046
2,51,82,026
37.35
9.77
2007-08
79,13,32,805
57,27,392
138.16
2.64
Interpretation: In the above chart, the Debtor turnover ratio is low in all years i.e. it was 36.96 in
2005-06. As a result of that, the payment period will increase. But a very low is dangerous. Lower
the DTR it affects increases in working capital.
Page 64

TABLE 13: COMPUTATION OF PROPORTION OF RECEIVABLES TOCURRENT
ASSETS:
Year
Total Receivables
Current Assets
Percentage
2005-06
3,73,02,784
25,88,44,064
14.4
2006-07
6,95,56,533
72,30,11,048
9.61
2007-08
5,73,74,008
81,24,64,742
7.06
Interpretation:
Total receivables
Percentage of total =
x100
Receivables to total current assets

Total current assets
Total receivable includes the sundry debtors, loan and advances.
Page 65

The above table indicates that 14.4% of the total current assets were kept in receivables in 2005-06.
This share decreased up to 9.61% during the period of 2006-07. Further the trend was towards
declined to 7.06% during the period of 2007-08.
TABLE 14: COMPUTATION OF SIZE OF TOTAL RECEIVABLES:
Year
Total Receivables
Indices(04-05=100)
2004-05
2,77,12,355
100
2005-06
3,73,02,784
134.6
2006-07
6,95,56,533
251
2007-08
5,73,74,008
207
Interpretation: The table throws light on the position of total receivables. It is evident from the table
that, there was an increased in the size of receivables up to 134.6% during 2005-06. In the year
2006-07 the trend was again increased i.e. 251%. Further decreased to 207 for the year 2007-08
Page 66
CASH MANAGEMENT: Cash is another significant element of working capital it includes cash in
hand and bank balances. Without cash no business unit can survive at any time during its life cycle.
Cash occupies an important place in the structure of working capital in order to maintain good trade
and credit, cash is needed for repayments that must be made on scheduled time. Hence quantum of
cash should be neither more nor less than the requirements. This optimum level depends on various
factors such as manufacturing cycle, the sale and collection cycle, age of the enterprise, the liquidity
of other current assets, debt redemption etc.
Percentage of cash to current assets =
Cash
Total current assets
x 100
TABLE 15: Computation of Proportion of Cash to Total Current Assets:
Year
Cash
Current Assets
Percentage
2005-06
2,72,15,806
25,88,44,064
10.51
2006-07
3,64,67,361
72,30,11,048
5.04
2007-08
1,51,03,607
81,24,64,742
1.85
Interpretation: From the table it can be derived the fact that the average cash to current assets ratio
is the lowest at 10.51 in 2005-06. However, the ratio has decreased of 5.04% in 2005 06. But there
was increased by 1.85 % in the year 2007-08. The proportion of total assets to cash there was high in
the year of 2005-06. In the total, the average cash balance to total current assets is very low. It shows
inadequate cash balance or situation is undesirable from the point of profitability and liquidity of the
unit.
CASH RATIO:
It is the method for measuring the liquidity of the factory by calculating the ratio between cash & all
current liabilities. It is also known as Cash Asset Ratio.
Cash
Page 67

Cash Ratio = _________________
Current liabilities
TABLE 16: COMPUTATION OF CASH RATIO:
Year
Cash
Current
Ratio
Liabilities
2005-06
2,72,15,806
12,83,39,937
0.212
2006-07
3,64,67,361
32,37,78,891
0.112
2007-08
1,51,03,607
39,73,58,597
0.038
Interpretation:
From the table
it can be derived
the fact that the
average cash to
current liabilities ratio is the lowest at 0.212 in 2005-06. However, the ratio has decreased of 0.112%
in 2006 07. But there was decreased by 0.038 % in the year 2007-08.
FINDINGS:
The current and quick ratios are satisfactory i.e. 2.09 and 0.267 on an average respectively.
So the firms liquidity position is good. It shows that it is able to meet its current obligations.
The cash reserves maintained by the company are good. But as compared to financial status it
is not at remarkable extent. This is serious liquidity crunch to the company. However the
company is much safer side because of their outstanding due to farmers, who have also hold
shares of company. Another point is farmers are not aggressive to recover their dues.
Page 68
Proportion of cash to sales maintenance of the cash balance is inadequate. As a rule when
sales increase cash also increase, but at a decreasing rate. It shows that inadequate of cash
balance.
When analyzed the financial performance, the firms commitment to meet short term
obligations is good i.e. liquidity position of the company is good. And in respect cash
balance, the firm has not sufficient balance. As a result of that, it may affect the working
capital, so totally the firm is struggling to meet its current expenses. And with regard to
resources, the firm is not utilizing the assets properly. And similarly the firm has a maintained
high inventory.
The current assets turnover ratio of the firm was greater than 1.It was 1.74on an average. It
shows that, the firm has been utilized the current assets properly.
The size of the inventory is more than 75% of the working capital as compared to the last
three year. It shows that the inventory has not been disposed off in those years i.e. goods
might be stably in the warehouse due to may be either decreased in sales or higher purchase
of raw materials.
SUGGESTIONS:
The inventory turnover ratio of the company was more than 75%. The firm should search for
new customers, and also the firm should focus on its foreign exports.
When we analyzed the proportion of cash in sales and current assets, the cash is not sufficient
to meet the current expenses. So the firm should maintain sufficient cash balance and bank
Page 69

balance through effective credit policies. The major drawback for the insufficient of cash is
that, the inventory has not been selling fast. So the firm should force to think about it.
With regard to resources (assets) the firm has not been utilized the assets properly in making
sales. So it is forced to think for proper utilization of that to have sufficient cash balance.
The firm has invested more on fixed assets. By investing in fixed assets is useless because
they cannot be converted into cash. Major problem of the firm is that it does not have
sufficient cash balance, so I personally feel that the firm better to invest in current assets
instead of having high inventory.
As it is well known fact that sugarcane grown is not only produces sugar. It can produce
many other products also like molasses, cartons, electricity and beverages therefore company
need to focus in these areas also.
CONCLUSION:
When I analyzed the financial performance, the firms commitment to meet short obligations is
good i.e. liquidity position of the company is good. And in respect cash balance, the firm has not
sufficient balance. As a result of that, it may affect the working capital, so totally the firm is
Page 70

struggling to meet its current expenses. And with regard to resources, the firm is not utilizing the
assets properly. And similarly the firm has a maintained high inventory.
BIBLIOGRAPHY:
Prasanna Chandra
Financial Management theory and practice,

Tata, McGraw Hill Publishing Co. Ltd.,
New Delhi, 1998
Page 71

M. Y. Khan and P. K. Jain
Financial management, Tata McGraw Hill

Publishing Co. ltd. Financial Management,
The Institute of Chartered Accountants of
India, New Delhi.
N. Vinayakam and I.B. Sinha
: Management Accounting, Himalaya

Publishing House
N. K. Agarwal
Management of Working Capital,

Sterling Publishers, Pvt. Ltd.
Website
www.google.com
www.msn.com
www.answers.com
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The Krishna Co-operative Sugar Factory Limited, Athani

The Krishna Co-operative Sugar Factory Limited, Athani

The information submitted is true and original to best of my knowledge.

The Krishna Co-operative Sugar Factory Limited, Athani

(Prof. Poonam Kakkad)

The Krishna Co-operative Sugar Factory Limited, Athani

INTRODUCTION TO THE STUDY

WORKING CAPITAL MANAGEMENT

OBJECTIVES OF THE STUDY

ANALYSIS OF THE STUDY

The Krishna Co-operative Sugar Factory Limited, Athani

are co-operative societies and one is joint venture.

The Krishna Co-operative Sugar Factory Limited, Athani

To study the sources and application of fund of TKCSFL

To examine how the working capital requirements is estimated

To study the system of inventory management, receivables management and cash

PRIMARY DATA: The information is collected from the personal interaction

SECONDARY DATA: This is collected through

The Krishna Co-operative Sugar Factory Limited, Athani

The Krishna Co-operative Sugar Factory Limited, Athani

The Krishna Co-operative Sugar Factory Limited, Athani

PROFILE OF THE SUGAR INDUSTRY:

The Krishna Co-operative Sugar Factory Limited, Athani

Avg. cane crushing Avg. production per

The Krishna Co-operative Sugar Factory Limited, Athani

Again the government in 1951

adversely affected the growth of sugar industry.

INDIAN SUGAR INDUSTRY AT GLANCE:

No of sugar factories established

Total capital employed

Rs. 50,000 crores

Total annual turnover

Rs. 25,000 crores

The Krishna Co-operative Sugar Factory Limited, Athani

Rs. 18,000 crores

Contribution to central & state exchequers

Rs. 1700 crores+800 crores

Direct employment : rural educated

Rs. 5.00 Lakhs

Farmers/families involved in sugar cane (7.5% of Rs. 45 million

The Krishna Co-operative Sugar Factory Limited, Athani

The industrial license number of the factory is L.I.667 (1988) dated

The Krishna Co-operative Sugar Factory Limited, Athani

Rs.5, 98,000/-divided in to 89 shares each reserved for Co-operative Institutions called as B

The Krishna Co-operative Sugar Factory Limited, Athani

The Krishna Sahakari Sakkare Karkhane

No. DSK/REG/01/80-81 Date : 10-03-1981

Factory code no.

Date of commencement of commercial

Activity under taker

Products like Molasses ad Bagasse

Large scale Agro based

Main raw material

1) Shri P.C. Savadi

2) Shri M.B. Patil

The Krishna Co-operative Sugar Factory Limited, Athani

4) Shri C.H. Patil

5) Shri B.M. Patil

6) Shri B.M. Kavatakoppa

7) Shri S.A. Mudakannavar

8) Shri G.K. Butali

9) Shri M.K. Kubasad

10) Shri V.G. Telasang

11) Smt. P.B.Reddy