A STUDY ON WORKNG CAPITAL MANAGEMENT OF SUBRAMANIYA SIVA CO-OPRATIVE SUGAR MILL. LIMITED AT GOPALAPURAM. PROJECT REPORT Submitted by NIVETHA.S Register No: 108001655062 In partial fulfillment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION IN GNANAMANI INSTITUTE OF MANAGEMENT STUDIES pachal NAMAKKAL JUNE- 2012
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A STUDY ON WORKNG CAPITAL MANAGEMENT OF
SUBRAMANIYA SIVA CO-OPRATIVE SUGAR
MILL. LIMITED AT GOPALAPURAM.
PROJECT REPORT
Submitted by
NIVETHA.S
Register No: 108001655062
In partial fulfillment for the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
IN
GNANAMANI INSTITUTE OF MANAGEMENT STUDIES
pachal
NAMAKKAL
JUNE- 2012
GNANAMANI INSTITUTE OF MANAGEMENT STUDIES
NAMAKKAL
PROJECT WORK
PHSAE-II
This is to certify that the project entitled
A STUDY ON WORKNG CAPITAL MANAGEMENT OF
SUBRAMANIYA SIVA CO-OPRATIVE SUGAR
MILL . LIMITED AT GOPALAPURAM.
Is the bonafied record of project work done
by
NIVETHA.S
Register No: 108001655062
Of MASTER OF BUSINESS ADMINISTRATION during the year 2010-2012
…………………….. ………………………….. …………………………..
Faculty Guide Head of the Department Professor Head
Submitted for the Project Viva-voce examination held on …………
……………………. ………………………….
Internal Examiner External Examiner
DECLARARION
I affirm that, “A STUDY ON WORKING CAPITAL MANAGEMENT
IN SUBRAMANIA SHIVA CO OPERATIVE SUGAR MILL LTD IN
GOPALAPURAM” being submitted in partial fulfilment for the award of MASTER OF
BUSINESS ADMINSTRATION is the original work carried out by me, it has not formed
the part of any other report submitted for award of any degree or diploma. Either in this or
any other university
..........................
Signature of the student
S.NIVETHA
Register no:
108001655062
I certified that the declaration made above by the candidate is true
……………………….
Signature of the guide
Mr. R. PONMUTHURAMALINGAM, MBA, M.phil,
(ASSISTANT PROFESSOR)
ACKNOWLEDGEMENT
I express my gratitude to Dr. T.ARANGANNAL, Chairman, and Smt.P. MALA
LEENA chairperson of GNANAMANI EDUCATIONAL INSTITUTIONS, PACHAL for
`giving me an opportunity to study MBA course during the year of 2010-2011.
I express my profound gratitude and special thanks to Mr.k.Vivekanandan, CEO,
GNANAMANI EDUCATIONAL INSTITUTIONS, for giving me the opportunity to
undertake this Internship Training.
I would like to express my sincere gratitude to Dr. V.BASKARAN, Principal,
Gnanamani College of Technology for his encouragement in this regard.
I would like to express my sincere gratitude to Dr. P. AMALANATHAN, Professor&
Head, and Department of Management Studies for his valuable suggestions in completing
this training.
I am thankful to H.O.D DR R.MARIMUTHU, DEPARTMENT OF MANAGEMENT
STUDIES, PACHAL for his constant advice throughout the training.
I express my sincere thanks to my guide Mr.R.PONMUTHURAMALINGAM
(ASSISTANT PROFESSOR OF GIMS) for his valuable guidance throughout the Project
report.
I would like to thank the employees of SUBRAMANIA SHIVA CO OPERATIVE
SUGAR MILL LTD IN GOPALAPURAM management and my friends for their advice
and assistance for completing the project work successfully.
S .NIVETHA
ABSTRACT
The researcher as part of curriculum has conducted a study to find the
working capital performance of the company. The data utilized for the study is
secondary sources the secondary data is collected the annual report flash five
year annual report of the company. The data has been collected for a period of
five years (2006- 2007) to (2010 – 2011).
The main motive of the project is to know the company how practically
operating and financial structure of the company Working capital management
is concerned with the decisions which are related with the current assets and the
current liabilities. It means, it concerned with day-to-day management activities.
In an organization, one of the main functions of finance department is to
maintain or manage the working capital efficiency; Current assets should be
managed efficiently of safeguarding the form against the days of liquidity
insolvency, and to increase the profitability.
Through this study I suggest to the company to maintain the fixed assets
value and also increased the level of current assets. The firm can maintain the
increase in current assets value comparing with current Liabilities .Working
capital has to be maintained, and increase their value.
CONTENTS
SL.NO CONTENTS PAGE NO
I
INTRODUCTION
1.1 Introduction of the study
1.2 Review of literature
1. 3 Statement of problem
1.4 Objectives of the study
1.5 Scope of the study
1. 6 Research Methodology
1. 7 Period of the study
1. 8 Limitations of the study
1. 9 Chapter Scheme
1
17
19
20
20
21
21
22
23
II
HISTORY OF THE INDUSTRY
2.1 Industry Profile
2.2 Company profile
24
28
III
DATA ANALYSIS AND INTERPRETATION
3.1 Analysis using ratio analysis
3.2 Analysis using trend analysis
3.3 Analysis using statement of changes in
working capital method
35
52
55
IV
4.1FINDINGS,
4.2SUGGESTION
4.3CONCLUSION
65
66
67
BIBLIOGRAPHY,APPENDIX
68
LIST OF TABLES
Table NO. TABLE NAME Page No
3.1.1 Table showing current ratio
37
3.1.2 Table showing fixed asset ratio 40
3.1.3.1 Table showing net profit ratio 44
3.1.4 Table showing working capital turnover ratio 47
3.1.5 Table showing quick ratio 50
3.2.2 Table showing expected sales 53
3.3.1 Table statement showing changes in working capital (2006 – 2007)
55
3.3.2 Table statement showing changes in working capital (2007 – 2008)
57
3.3.3 Table statement showing changes in working capital (2008 – 2009)
59
3.3.4 Table statement showing changes in working capital (2009– 2010)
61
3.3.5 Table statement showing changes in working capital (2010 – 2011)
63
LIST OF CHART
Chart no
CHART NAME
Page No
3.1.1 Chart showing current ratio
38
3.1.2 Chart showing fixed asset ratio
42
3.1.3.1 Chart showing net profit ratio
45
3.1.4 Chart showing working capital turnover ratio
49
3.1.5 Chart showing quick ratio
51
3.2 Trend analysis of sales
54
CHAPTER – I
INTRODUCTION OF THE STUDY
1.1 INTRODUCTION
If a company's current assets do not exceed its current liabilities, then it
may run into trouble paying back creditors in the short term. The worst-case
scenario is bankruptcy. A declining working capital ratio over a longer time
period could also be a red flag that warrants further analysis. For example, it
could be that the company's sales volumes are decreasing and, as a result, its
accounts receivables number continues to get smaller and smaller.
Working capital also gives an idea of the company's underlying
operational efficiency. Money that is tied up in inventory or money that
customers still owe to the company cannot be used to pay off any of the
company's obligations. So, if a company is not operating in the most efficient
manner (slow collection), it will show up as an increase in the working capital.
This can be seen by comparing the working capital from one period to
another; slow collection may signal an underlying problem in the company's
operations.
Working capital management is concerned with the decisions which are
related with the current assets and the current liabilities. It means, it concerned
with day-to-day management activities.
The key factor, which is used to differentiate long term financial
management and short-term financial management, is the timing of cash.
But a short time financial decision mainly involves the cash flow within a
year, or within the operating cycle of the firm.
MEANING OF WORKING CAPITAL
Capital required for a business can be classified under two main
categories viz.
Fixed Capital and
Working capital
Every business needs funds for two purposes for its establishment and to
carry out its day-to-day operations long-term funds are required to create
production facilities through purchase of fixed assets such as plant and
machinery, land, building furniture, etc. investments in these assets represent
that part of firms capital which is blocked on a permanent or fixed basis and is
called fixed capital funds are also needed for short-term purposes from for the
purchase of raw materials.
Payment of wages and other day-to-day expenses. These funds are known
as working capital. In simple words, working capital refers to that part of the
firm’s capital which is required for financing short term or current assets such
as such, marketable securities, debtors and inventories. Funds, thus invested in
current asserts keep revolving fast and are being constantly converted into cash
and this cash flow again in exchanging for other current assets. Hence, it is also
known as revolving or circulating capital or short-term capital.
DEFINITION OF WORKING CAPITAL
In the words of shubin, “working capital is the amount of funds necessary
to cover the costs of operating the enterprise.
According to Genestenberg “Circulating capital means current assets of a
company that are changed in the ordinary course of business from one to
another as for example, from cash to inventories, inventories to receivables,
receivables into cash”.
CONSTITUENTS OF CURRENT ASSETS
1. Cash in hand and bank balance
2. Bills receivables
3. Sundry debtors (less Provision for bad debts)
4. Inventories of stock as:
i. Raw materials
ii. Work-in-process
iii. Store and spares
iv. Finished goods
5. Temporary investments of surplus funds
6. Prepaid expense
7. Accrued incomes
CONSTITUENTS OF CURRENT LIABILITIES
1. Bills payable
2. Sundry creditors accounts payable
3. Accrued or outstanding expenses
4. Short-term loans advances and deposits
5. Dividends payable
6. Bank over draft
7. Provision for taxation if it does not amount to appropriation of profits
In a narrow sense, the term working capital refers to the net working
capital. Net working capital is the excess of current assets over current liabilities
or say;
Net working capital = current assets - current liabilities
KINDS OF WORKING CAPITAL
On basis of concept
1. Gross working capital
2. Net working capital
On the basis of time
1. Permanent or fixed working capital
2. Temporary or variable working capital
Permanent of fixed working capital
1. Regular working capital
2. Reserve working capital
Temporary or variable working capital
1. Seasonal working capital
2. Special working capital
CONCEPTS OF WORKING CAPITAL
The two concepts of working capital are,
1. Gross Working Capital
It refers to the investment made by the company in current assets. Current
assets are the assets which can be converted into cash with an accounting year
or operating cycle. It also includes cash, short-term securities, debtors, bills
receivable and stock.
2. Net Working Capital
To analyze the various components of working capital in the company.
The difference between current assets and current is called the next working
capital. Current liabilities are the own which is claimed from the outsiders and
are expected to be returned within an accounting year. It includes creditors, bills
payable, and out siding expense.
TWO DANGEROUS POINTS OF CURRENT ASSETS
Danger of Inadequate Working Capital
1. Inadequate working capital will lead to a condition, in which one cannot
pay its short-term liabilities in time. So there arises a situation where
there is a loss of reputation and tight credit terms.
2. The organization’s requirements cannot be fulfilled in bulk: hence it
cannot take the advantage of cash discounts.
3. Difficulties will arise in meeting the day-to-day expenses. This will lead
to inefficiency and increase in costs with the minimum profits.
Dangers of Excessive Working Capital
1. The low rate of return investment will lead to the fall in the value of
shares.
2. Excessive working capital will lead to unnecessary purchasing and
excessive amount of inventories, as a result, there are chances of theft and
loses.
3. Excessive debtors and defective credit policy are the indication of
excessive working capital. There may be delay in collection and
increased incidence of bad debts.
4. Excessive working capital will make the management complacent. This
will lead to overall inefficiency in the organization.
Need For Working Capital Management
Beyond the limit, both the current assets i.e., inadequate working capital
and excessive working capital are dangerous. Beyond the limitations of both the
level, the common goal of the organization cannot be achieved.
Working capital management provides effective and efficient decision to
allocate the current assets.
DETERMINATION OF WORKING CAPITAL MANAGEMENT
There is no set of rules or formulate to determine the working capital
requirements of firms. Many factors influence working capital needs of firms.
They each have different importance. The importance of factors for a firm
changes over all period of time. The various factors which generally influence
the working capital requirement of firm are:
1. Nature of Business
The main factors which influence the working capital requirement of a
firm are the nature of business. Trading and non-manufacturing firms invest
large amount of money in working capital, while fixed assets have a very small
investment.
2. Credit Policy
Another factor which influences the level of working capital is credit
police of the firm. The firm has to judge correctly in granting credit terms to its
customers. Depending upon an individual customers, credits can be given
indifferent terms. A lenient credit policy to an unworthy customer will create a
problem of collecting funds later on. The firm should prompt making collection.
A high collection period means tie-up of large funds in book debtors Slack
collection procedures can increase the chance of bad debts. Credit policy with a
short period to good customers affects the level of sales. Both these credit
policies affect the company’s profitability.
3. Availability of Credit
Credits terms, granted by its creditors, affect the working capital
requirements of a firm. Availability of liberal credit will enhance a firm with
less working capital. This is similar to the credit from the banks, which also
influence the working capital needs of the firm.
4. Seasonality of Operation
Firms whose operations change seasonally have a highly fluctuating
working capital requirement. The working capital need of such a firm is likely
to increase rapidly during a season and will have a significant decrease during
another season.
5. Marker Conditions
Market conditions also play an important part in the working capital need.
If the competitions in the market are high, a large inventory of finish goods is
required to serve the customer’s need. If not, the customers will shift to other
manufactures, which are ready to meet their needs with further generous credit
terms. Thus for greater investment in finished goods, working capital needs
should be high inventory and accounts receivable.
6. Conditions of Supply
The inventory of raw materials, spears and stores depends on the
condition of supply. If the supply is in correct amount, the firm contain only
small inventory. Even though the supply is unpredictable, a continuous
production stock and inventor are made available at any time.
Supply cannot be always predictable. During that stage, the condition of
the production is affected. To overcome this, inventory is maintained. A similar
policy also has to be maintained, when the raw materials are available, only one
season and the production operation are carried out throughout the year.
IMPORTANCE OF WORKING CAPITAL MANAGEMENT
1. Continuous Production
Excessive working capital helps to run the production continuously. It
helps prevent the unpredictable supply of raw materials.
2. Solvency and Good will
If a firm has adequate working capital, it will enable him to pay the
payment to the creditors. This will create and maintain goodwill to the firm.
3. Easy loan Facility
A firm with sufficient working capital enjoys high privileges of liquidity
and good credit standing. This enables them to secure loans from banks and
other financial institutions very easily.
4. Cash Discounts
Adequate working capital leads to cash discounts on purchases which in
turn helps the organization in the reduction of cost.
5. Regular Payment of Expenses
Working capital helps to give a regularly milk payment cooperative
society of salaries. Wages and other day-to-day commitments. This helps to
raise the morale of employees and increase their efficiency.
6. Exploitation of Market Condition
A firm with excessive working capital can create favorable market
condition. When the market price is lower, this will enable them to buy huge
amount of raw materials. During unfavorable conditions, they are able to hold
stocks of finished goods, until there is an increase in the retail price.
7. High Return on Investments
Excessive working capital gives the facility of continuous production and
effective utilization of fixed assets. This makes the concern to get more profits
and ensure the form a higher return on investment. Now we can have a detailed
look, at the big parts of working capital. The lists to be studied are;
1. Receivable Management
2. Inventory Management
3. Cash Management
RECEIVABLE MANAGEMENT
Introduction
Trade credit occurs only when a firm sells its products or services on
credit and not receiving the cash immediately.
It acts as a bridge for the movement of goods through the stages of
production and distribution to customers. Thus are acts as an essential
marketing tool.
A firm will grant trade credit to protect its sales from the competitors.
This is done to attract the potential customers to buy its product at favorable
terms.
Sometimes the firm will not see the credit worthiness of the customers.
This leads to bad debts.
The main objective of the receivable management is to maximize the
sales and minimize the bad debts.
CAUSES FOR CREDIT SALES
1. Competition
When the degree of competition is high, the credit granted by the firm
will also be high.
2. Relationship with Dealers
The companies provide extra facilities like extension of credit to dealers.
This is done to build a long-term relationship with them. The companies also
reward the customers for their loyalty.
3. Marketing tool
Normally, the marketing promotional tools are 1) Advertising 2) Personal
selling 3) Publicity. The indirect marketing promotional tools are credit sales.
FACTORS AFECTING THE INVESTMENT IN ACCOUNTS
RECEIVABLE
1. Volume of Credit Sales
The policy of giving certain amount of products in credit during a period
of time.
2. Collection
It means the times given to the debtors to pay the money for the credit
purchase.
CREDIT EVOLUTION OF CUSTOMERS
Before giving the credit sales to the customers, the firm should analyze
and evaluate the credit worthiness of the customers. The firm should also
analyze the ability of the customers to repay the credit on time.
To analyze the credit worthiness of the customers, the firm collects
information from various sources. They are
1. Financial Statement
It is one of the easiest methods to know the credit worthiness of the
customers. This method is made use of in public limited companies only, but
not for partnership firms and individual companies.
2. Bank References
Bank, the place where the customers maintain their account, is the
another place of collecting credit information. In developed countries, like USA,
banks with credit department provide information about the customer’s credit
worthiness. If the creditor needs to know about the customer’s information, the
bank will provide them. But in India bank does not act as a sourer of
information because of their indifference in providing information. Even though
the banks in India provide information they won’t be accurate.
3. Business References
A firm can ask the debtor or customers to know about the debtor’s credit
worthiness and trade references. This is the useful source of getting information
without any cost.
INVENTORY MANAGEMENT
Introduction
Inventory is one of the significant parts of working capital. An inventory
has more than half of the percent of current assets in most sofas the public
limited companies in India. Inventories are the main source to satisfy the
customer’s demand. If we fail to provide the right quality of goods in right time
it decreases our firm’s good will. So effective and efficient inventory
management is necessary to run production and sale activities smoothly.
TYPES OF INVENTORIES
There are three types of inventories, they are,
1. Raw materials
2. Work in progress
3. Finished goods
1. Raw Materials
This is a basic input which can be converted in to finished goods through
manufacturing process. The stored units for the continuous production are
known as raw material inventories.
2. Work-in-Progress
Work-in-progress inventories are the party finished products. In order to
produce finished goods as per the demand, the work in process is store. This is
known as work in progress inventories.
3. Finished Goods
The products which are ready for sale is known as finished operations.
Finished goods inventories are more important.
All the three inventories are not made use of in all the organization. They
depend only on the nature of business.
THE MAIN OBJECTIVES OF INVENTORY MANAGEMENT ARE:
1. To inventories for smooth manufacturing operations.
2. To maintain investment in inventories to maximize company’s
profitability.
3. To maintain the sufficient finished goods for smooth marketing
operations
4. To minimize the ordering and carrying cost
5. Keeping investment in inventories at optimum level.
CASH MANAGEMENT
Cash is the other important current asset in business operations. Cash is
one of the most liquid assets. It forms the important part in day-to-day business
operations; generally, cash is referred to as life blood of business enterprises.
Cash refers to coins, currency, the firm’s cheques and balances in its bank
accounts.
OBJECTIVE OF CASH MANAGEMENT
We have already seen the important of current assets. Excessive cash in
business operations, may lead to the destruction of the profitability. If more cash
balance is held in banks and other financial institutions, it affects the
profitability. So the main objectives of cash management are,
1. To minimize the amount locked up as cash balance
2. To meet the cash payment requirements regularly
1.2 REVIEW OF LETARTURE
1. Ramamoorthy, V.E., working capital management, IFMR, Chennai,
1976, p.11.
The firm should maintain a sound working capital position. It should have
adequate working capital to run its business operations. Both excessive as well
as inadequate working capital position are dangerous from the firm’s point of
view.
2.Ramamurthy, V.E., working capital management, Chennai: institute for
financial management and research, 1976, p. 183.
Ramamurthy, V.E., “Trade credit creates account receivable or trade debtors
that the firm is expected to collect in the near future. The customer from
receivable or book debt have to be collected in the future are called trade
debtors or simply as debtors and represent the firm’s claim or assets. A credit
sale has three characteristics” 2 first, it involves an element of risk that should be
carefully analyzed. Cash sales are totally riskless, but not the credit sales as the
cash payment are yet to be received. Second, it is based on economic value. To
the buyer, the economic value in goods or services passes immediately at the
time of sales, which the seller expects an equivalent value to be received later
on. Third, it implies futurity. The buyer will make the cash payment for goods
or services received by him in a future period.
3.Weston, j.fred and Eugene f.brighan, managerial finance, Illinois:
Dryden press, 1975, pp. 123-24.
Working capital management refers to the administration of all components of
working capital-cash, marketable securities, debtors (receivable) stock
(inventories) and creditors (payable). The financial manager must determine
levels and composition of current assets. He must see that right source are
tapped to finance current assets, and current liabilities are paid in time.
There are many aspects of working capital management which make it an
important function of the financial manager. Weston, j.fred and Eugene
f.brighan:
Time
Investment
Growth
4. Daloof, M, “doea working capital management affects profitability of
belgian firms”, journal of business finance and accounting, vol 30, no. 3 &
4, 2003, p.573-587
Deloof, M., (2003) discussed that most firms had a large amount of cash
invested in working capital. It can therefore be expected that the way in which
working capital managed will have a significant impact on profitability of those
firms. Using correlation and regression tests he found a significant negative
relationship between gross operating income and the number of days accounts
receivable, inventories, accounts payable of Belgian firms.
5. M.E. thukaram rao. “Management accounting”, new age international
publishers, New Delhi.
According AICPA, “financial statements are prepared for the purpose of
presenting a periodical review or report the progress by the management”.
1.3 STATEMENT OF THE PROBLEM
• There is no proper financial manager to maintain the working capital
management.
• Low financial performance of the company.
• There is no proper norms to maintain the current asset and current
liabilities of the company Working capital is determine the current asset
and current liabilities of the company and also it is show the current
position of the company so this the reason for I am choose this topic.
1.4 OBJECTIVES OF THE STUDY
• To know the working capital management of the company over the
period five years (From 2007 – 08 to 20010 – 11).
• To analysis the cash and liquidity position of Subramanian Siva co-
operative sugar mill.
• To analysis over all current assets and current liability.
1.5. SCOPE OF THE STUDY
The study is extremely useful in highlighting the financial performance of
the company.
To give suggestion about the requirement of working capital to the company
for the future years.
By use of financial ratio the company can able to compare the liquidity and
the profitability position for the given period.
1.6 RESEARCH METHODOLOGY
Research Methodology means it provides valuable guidelines to do the
project systematically. In other words it indicates way to collecting, analyzing
and interpreting the data.
SECONDARY DATA
• The data require for the study have been collected from the secondary
sources like five years of company annual report, financial statement,
magazines, websites and the internal auditing books etc.
• Secondary data means the data which are already collected for the same
or other uses.
ANALYTICAL TOOLS
• The tools require to analysis ratio analysis.
• Schedule of changes in working capital.
• Trend analysis.
1.7. PERIOD OF STUDY:
A study on financial performance analysis in Subramanian Siva co-
operative sugar mills ltd at Gopalapuram the period of December 2011 to May
2012
1.8. LIMITATIONS OF THE STUDY
The study is restricted for a period of two months
Due to inadequate time it is not possible to analyze all aspects
relevant to the study.
One cannot make an accurate analysis, using the data of five years
and judge the performance of the whole company.
Only secondary data are used for the analysis, they were extracted
from the published the statements of the corporation.
This research is mainly based on ratio analysis and other tools to
certain extent it deals with working capital management only.
1.9 .CHAPTER SCHEME
The first chapter consists of brief introduction of the study,
The second chapter consists of company profile.
The third chapter consists of data analysis and interpretation.
The fourth chapter consists of findings, suggestion and
conclusions.
CHAPTER – II
CHAPTER – II
2.1 INDUSTRY PROFILE
Sugar factory plays a significant role in the social and economic uplift of
people day and night and plays a significant role in essential item like sugar,
molasses , bagasse , alcohols , and bio-fertile. Sugar cane is cultivated in more
than 110 countries and India stands first in sugar production within around 20
established sugar factories and over 35 million farmers and agricultural labors
involved in sugarcane cultivation and harvesting .
Tamilnadu has a rich tradition of successful sugarcane cultivation .if occupies
2.56lakhs hectors representing 65% of cane, a major portion being crushed by
36 sugar factories in Tamilnadu and Pondicherry. Benefit of these items is
Industry related to regular activities of the common people in rural areas .in
addition other by-products form sugar factories play a principal role in the
foreign exchange in an indirect way.
SUGAR INDUSTRY
Sugar industry is an Argo -based industry next only to textile. It plays a major
role in the economic development of rural areas in the state. The sugar industry
generates large scale direct employment to the rural population in various ways.
There are 36 sugar mills in this state, of which 16 are in co-operative sector, 3
are in public sector and 17 are in private sector.
PERFORMANCE OF SUGAR MILLS IN TAMILNADU
During 1994-1996 seasons, the sugarcane was produced in abundance in
the state and the sugar mills faced a glut situation and had to crush 160% and
124% of their capacity respectively affecting the recovery badly. during1996-97
sessions , the sugar mills had just sufficient cane to achieve total cane crush of
117.40 lakh tones and in 1997-19e98,the mills crushed 145.92 lakh tones which
amount to 7% and 87% of capacity utilization respectively. The financial
performance of cooperative and public sector sugar mills during 1998-1999 is
given in annexure-II. The financial performance of the department of sugar in
respect of plan schemes allocation is furnished in annexure-III.
SUGAR DEVELOPMENT FUND (SDF) FROM GOVERNMENT OF
INDIA:
The government of India had enacted the sugar cess act 1984, under
which a sugar cess amount of Rs.14/-per quintal of sugar is levied on each sugar
mills in country. The above amount is collected as fund with the title ‘sugar
development fund’ (SDF) by the government of India and is being utilized by
the sugar mills as loan for the following purposes:
Modernization /rehabilitation of sugar mills.
Development of sugar cane in the sugar mills area. Sanction of
research grant for the research and development project connected
with sugar industry is also made from this fund.
From the introduction of the SDF in 1984, 30 sugar mills out of 36 sugar mills
in tamilnadu have availed loan from government of India for cane development.
Sugar industry is the agro-based industry located in the rural India. About
45million sugar cane farmers, their dependents and a large mass of agricultural
labor are involved in sugar cane cultivation harvesting and ancillary and
consulting 7.5% of the rural population. Besides, about 0.5million skilled and
semi-skilled workers, mostly from the rural areas are engaged in the sugar
industry. The industry in India has been a focal point for socio, economic
development in the rural areas by mobilizing rural resources, generating
employment and higher income, transport and communication facilities.
Further, many sugar factories have established school, colleges, medical centers
and hospital for also diversified in to by-produced based industries and have
invested and put up distilleries, organic plants, paper and board factories and co-
generation plants.
BACKGROUND OF THE INDUSTRY
Human, throughout its history, has enjoyed sweet food and link
sugar brings out flavors, intensities colors and also acts as servitude
and fermenting agent. In olden days we know that it is one of the
cheapest sources of energy i.e. calories sweetness sources’ occurs
aurally in plants.
There is lack of statically data to determine when acne sugar
became the principal sweetener in any given part of the world. But
it can be stated that cane sugar was first made in India and
achieved dominant status 2000 or more years ago. The earliest
precise and secure date for manufacture of sugar from sugarcane is
in the kautillya’s Arthshatra, a Sanskrit manual on statesmanship
written in 324-300 B.C. kautillya was government official.
Cultivation of sugarcane as a commercial crop was widely spread
in Ganges valley. North India was the first center of innovations
and from here knowledge of how to make crystalline sugar spread
along the tread to the east and through Ire an, to the west. The
Indian religious offerings contain fire (punch elixir Amrita) like
milk, curd, ghee, honey and sugar which indicates how important
sugar was, not only as an item consumption but as on items which
influenced the Indian was of life.
2.2 COMPANY PROFILE
Subramanian Siva co-operative sugar mills ltd., gopalapuram on agro-
based industrial undertaking was established in pappireddipatty talus in
dharmapuri district to fulfill the long felt need of the public in general and the
sugar cane grower in particular. This area was traditionally a cane potential
area.
Normally the bulk of cane grower in this area was sent to dharmapuri district
coop. sugar mills to cater to the need of the sugar cane grower of this area sugar
factory was established with a crushing capacity of 2,500 TCD at a total project
cost of Rs.3,300.00 lakhs. This sugar factory is situated gopalapuram village,
pappireddipatty talus in dharmapuri district about 40Kms from dharmapuri
town and 50Kms from Salem city. The location of the mills is 5Kms from
Salem to Vellore main road. The area of the mills is 96.14 acres.
The mill was registered under the tamilnadu co-operative society’s act
1961 and 25th November 1987. The foundation stone was laid by the hon’ble
chief minister of tamilnadu Dr.kalaingnar on 13.05.1990. The factory
commenced its first crushing season on 1st October 1992.
The unique feature of the mills is installing of 2.5 MW co-generation
plant using the bagasse as raw material at a cost of 01.23 cores.
The mill has obtained ISO 9001-2000 certificate during 2003 for a period
of three years and subsequently renewed up to June 2009.
To improve the mill efficiency, boiler efficiency and quality of sugar-
modernization of mills and boiler with DCS system and installation of rotary
screen for filtering the bagacillo in cane juice installation of auto PH control
system, the tender finalized. The government of tamilnadu has sanctioned
Rs.57.50lakhs under part II scheme.
GENERAL INFORMATION:
Company name : Subramanian Siva co-operative sugar mills
ltd
Administrators : Mr. Kalaichelvam
Address : gopalapuram
Date of registration : 25.11.87
Date of office started functioning : 16.02.88
Date of commencement of crushing : 01.10.92
Letter of intent : 584/1987 DT: 09.10.87
Industrial license : CIL: 44/of 1996
Total area of mills : 96.14acres
CAPACITY:
Crushing per day : 2500TCD
For season : 430000tons
CANE PARTICULARS:
Cane divisional office: area of operation of the mills consisting of 8