CHAPTER-1

SUGAR INDUSTRY
AT GLANCE

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INDIAN SUGAR INDUSTRY

1.1) INTRODUCTION:
Sugar originated from the Arabic word "sharkara" and is derived from the
sanskrit world "sharkara". Sugar is an important part of the daily diet and
forming a class of edible substances which includes sucrose, lactose, and
fructose. It provides the human body with requisite carbohydrates and is
basically extracted from sugar cane and sugar beet. Found in fruits, honey,
sorghum, sugar maple and in several other sources, it is the main ingredient of
candy which is loved by children the world over. Yet, it has been blamed for
causing tooth decay and excess consumption of sugar has been associated with a
host of ailments like diabetes, obesity, weight gain, depression, joint pain,
fatigue and insulin resistance and even cancer. Sugar is present in various forms
in fruits, honey, maple syrup and other natural sources. It is extracted by an
intricate process, whereby the pulp is extracted first and then, the remaining is
used for producing the sugar. Sugar has wide variety of uses and is used for
baking, sweets, alcoholic beverages, and even in the soap we use. Further, it is
also used as a food preservative and in confectionery items.

1.2) History:
Sugar is said to have originated in India. During the Gupta dynasty in
India, the extraction of sugar was clearly known to the Indians. Experts identify
the Pacific region and certain parts of India like the North East as real locations
where the sugar cultivation was practised. This was taken to the western
hemisphere by the Arab traders who borrowed the techniques from India and
subsequently, set up mills to commercially produce this highly useful
agricultural product. The production of sugar spread to countries like Spain and
the Portuguese took it to South America.
During the eighteenth century, sugar production became increasingly
mechanized and sugar market went through a phase of great boom. New
technology was developed as sugar became a very popular item and specialized
procedures were developed for the large scale processing of sugar. At first, the
sugar was used mainly for tea and then, went into the making of confectionery
and chocolates. The Dutch took sugar to the Carribean Islands and today, this
area is the largest source of sugar in the world. With the introduction of sugar
plantations in the Carribean islands on a large scale, the price of sugar fell
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substantially and in Britain, all classes of people took to sugar and it has
become a part of their routine. Earlier, it was relegated to the upper echelons of
society, it, then, became a common commodity and became sufficiently
cheaper. Maximum consumption of sugar has been recorded from Belgium and
the least consumption is from Ethopia with an amount of three kilos per year.

1.3) Sources of Sugar

Generally, sugar is produced from plants like sugarcane and sugar beet.
The sugarcane plant is very thick with long grasses. A perennial crop, it is
grown in the various tropical and subtropical areas. The stalks of the sugarcane
is the exact location, from where the sweet sap is extracted. Sugar beet has the
highest sugar content from among the beetroot family and this variety is
specifically cultivated for high quality sugar production. In addition, sugar is
produced from sweet sorghum, maple, honey, corn sugar, etc. Of a 180
countries of the world, around a 100 of them make sugar from the sugar beet
and cane.

1.4) Types of sugar

1)Raw sugars
Raw sugars consist of varying shades of yellow to brown sugars and is
processed by boiling till it solidifies. From sugar beet juice, the raw beet sugars
are extracted and are then used to fabricate white sugar. Raw sugars include
demerera, muscovada and turbinado. These are available in crystalline and loaf
forms, where the moulds are then allowed to dry up and the resulting product is
called jaggery or gur. Raw sugar is not so popular in South America. Mill white
sugar is produced by exposing the sugar to sulfur dioxide but it retains the
coloured impurities.
2)Blanco direct
Blanco direct is a white sugar used much more in India and Asia and is
less purer than the white sugar. It undergoes the process of phosphation and is
more devoid of impurities. White refined sugar, popular in the West, is
processed by dissolving the raw sugar and purifying it with phosphoric acid or
by filtration strategies. White sugar is available in granulated form. Granulated
sugar includes coarse grained sugars such as sanding sugars, caster sugar and
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superfine powdered sugar and they are divided on the basis of fineness of
grades.
3)Brown sugars
Brown sugars are formed when sugars form fine crystals with high
molasses content or from coating white refined sugar with a cane molasses
syrup. Colour and taste becomes stronger with increasing molasses content . On
being exposed to air, they tend to harden and proper handling of this. Natural
sugars are found in their natural form and covers the most unrefined sugars and
includes the fruits, grains and vegetables. The World Health Organization has
approved the natural sugars as carbohydrates for unrestricted consumption
purposes.

1.5) Manufacturing Process:

For sugarcane, the process of refining is carried out in following steps

Pressing of sugarcane to extract the juice.

Boiling the juice until it begins to thicken and sugar begins to crystallize.
Spinning the crystals in a centrifuge to remove the syrup, producing raw
sugar.
Shipping the raw sugar to a refinery where it is washed and filtered to
remove remaining non-sugar ingredients and color.
Crystallizing, drying and packaging the refined sugar.

1.6) World Sugar Scenario:

After two consecutive seasons of surplus between world sugar production
and consumption, World Sugar economy is now facing a significant supplydemand imbalance. There will be fall in global sugar production. The world
consumption of sugar is forecasted to grow by 1.73% to 167.446 mln tones.
World production is expected to increase by 4.817 million tonnes, which is
8.404 million tonnes lower than
world consumption.
World export availability is expected to rise due to projected growth in
output in exporting countries. World export availability for season 2009-10 is
expected to be 51.964 million tonnes, as against 50.903 million tonnes in the
previous season.
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A significant production shortfall in India and China, as well as a

further contraction of production in the EU, on the other hand and a
continuing expansion of sugar output in Brazil, on the other hand are the four
major supply features of Sugar season 20082009.

1.7) Indian Sugar Economy

The sugar industry is the largest agro-based industry and India is the
Second largest producer of sugar in the world next only to Brazil. Sugar
industry in India is headed for a rough patch during the current sugar year
ending September 30, 2009. India plays a crucial role in the world's sugar
output. Indian sugar industry is controlled by the Government. Starting from
cane price to the price of sugar, everything is under the hands of the
Government. The Statutory minimum Price (SMP) of sugarcane is fixed by
the Central Government to support the cane farmers. However, states like
U.P., Haryana and Uttarakhand are free to fix their own price known as State
Advisory Price (SAP), which is usually higher than SMP.

1.8) Indias Production:

The Countrys sugar output touched a three year low. Sugar production
in 2008-09 season is set to fall by 44% from the previous season. In sugar
season 2008-09, production has declined to 147.50 lacs tones compared to
production of 263.28 lac tonnes in the year, 2007-08. One major reason for
this is the shrinkage in the sugarcane growing area in last couple of years due
to delay in cane payment and confusion over the price, less area of ratoon in
this season and poor monsoon in some parts of the country. The sugar industry
is cyclical in nature. It is dependent upon monsoons for both its production
and price realisation. Such a shortfall in sugar production has posed a serious
threat to inventory on hand. Drop in cane output may lead to increase in cost
of production for sugar companies and hit their profit margins in 2009.

1.9) Government Policies:

Rising prices of sugar has caused concern to the Government and it has
intervened substantially to control the prices of the sugar, because it is one of
the essential commodities. The Government brought in measures such as
weekly quota for free sale, weekly reporting mechanism to monitor sugar
dispatches and sale, liberalized raw sugar import under Advance
Authorization Scheme [with change in export obligation norm from grain-tograin to tonne-to tonne basis] and finally the facility to import raw sugar
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without export obligation as well as import of white sugar upto 10 lakh tonnes
by Government agencies, both at zero% customs duty. The Centre is also
planning to bring back Gur under the Sugarcane (control) order, 1996 to
ensure adequate cane supplies to sugar mills.

1.10)

Demand & Supply of sugar in India:

(In

million tonnes)
Season
2009
Opening stock as on 1st 80.00
October
Production
during
the 147.50
season
25.00
Imports
252.50
Total availability
220.00
Domestic consumption*
2.00
Exports
30.50
Closing stock

1
2
3
4
5
6
7

1.11)
Sr.

2008- Season 2007-2008

92.00
263.28
-----355.28
225.72
49.56
80.00

Indian Sugar Industry at a glance:

Particulars

Crushing Season
2008-2009

2007-2008

Number of Sugar Factories in

Operation

501

455

Crushing Capacity (million TCD)

21.391

19.797

Sugarcane Crushed (million tons)

278.872

188.672

Sugar Produced (million tons)

28.328

19.267

Recovery % Cane

10.16

10.21

Yield of sugarcane (tons per

hectare)

69.0

66.9

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1.12)

Sugar Producing States in India:

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SWOT ANALYSIS:
SWOT analysis is a strategic planning method used to evaluate the
Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a
business venture. It involves specifying the objective of the business venture or
project and identifying the internal and external factors that are favorable and
unfavorable to achieving that objective. The technique is credited to Albert
Humphrey, who led a convention at Stanford University in the 1960s and 1970s
using data from Fortune 500 companies.
STRENGTHS
Global prices to move up an incremental positive
The demand is everlasting
Environmental conditions suitable for the growth of sugar cane
About 2.7% culitvable land is used for the cane production
The sugar industry also includes alcohol, gur an khandri which is mainly
for the domestic industry

WEAKNESS
Production to decline by 20-25% in fy09
Shift of the farmer from cane to paddy, wheat, pulses and oil seeds
The greater diversion of cane to un-organised sector
The ignorance in the residual sugar market
Some of the government policy that adhere the growth of the sugar
industry
Shortage in sugar cane supply
Obsolete technology

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OPPRTUNITIES
Prices to rise by 25% in fy09 and more in fy10e
Higher margins , lower cyclicality driving shift towerds integration
The on going increase in demand year after year
The shift of brazil from white sugar to production of ethanol.

THREATS
Less rainfall in the highest sugarcane cultivating regions
Due to water shortage the shift of the farmers to multiple crops
cultivation
Due to government policies the selling of sugarcane by the farmers to
private sectors
Sugar production being more volatile than cane production
Due to rise in domestic consumtion the export

is likely to fall

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CHAPTERCHAPTER-2

DESIGN OF
THE STUDY

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2.1) TITLE OF THE STUDY:

A study on working capital management and Ratio analysis at VSL, BelladBagewadi.
2.2) STATEMENT OF THE PROBLEM:
The success and failure of any organization is very much influenced by
the past and previous year financial analysis and working capital management.
Vishwanath Sugars ltd is mainly engaged in production of sugar. The
leading Vishwanath Sugars ltd is private sector undertakings, which is located
in Bellad-Bagewadi. and have been striving hard on meeting the competition
from their competitors.
Any business enterprise needs funds for its operations, investors are the
major Source of fund apart from owners funds. From the above statement it is
clearly state that they need to be strong in managing resources and increase
there receivables and decrease the liabilities, to be strong in managing working
capital thus it is this problem, which prompted the researcher to take up the
study on financial statement analysis and working capital management.
2.3) OBJECTIVE OF THE STUDY:
The study aims to achieve the following objectives:
To determine the progress of the company and to ascertain the future
prospects of the company.
To find out the level of activity or the operating efficiency of the
company.
To measure the liquidity or the short-term solvency and to indicate
whether the company will be able to meet the short-term obligations out
of its resources.
To ascertain the working capital requirement of the company.
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 To study the extent of influence of different factors on size of working

capital.

2.4) SCOPE OF THE STUDY:

This study has a wider scope to cover components and determinants of
capital, sources and types of working capital, components of capital
management such as cash, receivables and inventory. Financial analysis which
covers using different tools of ratios.

2.5) METHODOLOGY:
No study is completed until a proper method is adopted. The level of any
systematic research depends upon collection of data by keenly observing the
existing conditions, classification and interpretation of data and at the end
formation and generalization and conclusion.
The research design should be such that it maximizes reliability of the
evidence collected. The data required for the preparation of financial statement
analysis and working capital management was collected through Primary and
Secondary data.
Primary Data:
Primary data required for the study is collected from the Vishwanath Sugars ltd
Head office.
Secondary Data:
This includes information relating too
Annual reports.
Company brouchers, magazines, periodical reports.
Balance sheets, profit and loss accounts.
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 Published text books.

Internet.
2.6) TOOLS FOR COLLECTING DATA:
After carrying out analysis of financial statements, balance sheet and
profit and loss A/c, to elicit additional information to supplement the analysis,
discussions were held with the concerned executives of the company. For this
purpose a schedule was prepared for collection of data which is presented in the
appendices.
2.7) PLAN OF ANALYSIS:
Information from financial statements was arranged as per the objectives
of the study. The data collection have been analyses by the use of statistical
tools and techniques such as percentages, average where ever necessary the data
have been presented diagrammatically using graph charts, tables etc.
REFRENCE PERIOD:
For the company under study, financial year is from March 2008-2009,
March 2007-2008, and March 2006-2007.
REVIEW OF LITERATURE:
Annual reports of Vishwanath Sugars ltd from 2006-2009.
Financial management text books:
Prasanna Chandra.
I. M. Pandey.
Interviewing the finance manager of Vishwanath Sugars ltd.

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2.8) OPERATIONAL DEFINATIONS OF CONCEPTS:

Current Assets: Includes Inventories, Sundry debtors, Cash and Bank,
Loans and advances and all those assets that could be converted into cash
within one year.
Current Liabilities: It includes Sundry Creditors, Advances received
from Customers, Provisions and any other liability that fall due for
payment within one year.
Quick Assets: Current assets (less) Inventories.
Liquid Liability: Current liability (less) Bank overdraft etc.
Net working Capital: Current assets (less) Current liabilities.
Liquidity: Liquidity is used in limited sense study to mean short term
debt repaying capacity of the enterprises. In other words, it is taken as the
ability of the firm to meet the claims of suppliers of short-term capital
Profitability: Refers to the ability of the company in making the profits
in relation to capital employed, sales and the share holders funds.
Cash: Cash is the money, which the firm can disburse immediately
without any restrictions.
Inventory: Inventory refers to the stock of goods in the company.
Receivables: Receivable represents the amount due from its customers to
whom the company has extended the credit.
Net sales: It is the gross sales less returns and allowances freight out and
cash discounts allowed.
Credit sales: It means gross credit sales less sales returns.
LIMITATIONS OF THE STUDY:
The figure and facts claimed in the annual reports and other forms are
assumed to be true.

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 The authenticity of conclusions drawn is only based on the observations

made by the researcher only.
It is data based on the data supplied by the company personnel.
The project is just a brief study due to lack of comprehensive and
practical knowledge.
Lack of sufficient time to get required information.
The out come of the study is based on the data given in the financial
statements so that there is always difference in the actual and the
calculated values.

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CHAPTER-3

INTRODUCTION
TO FINANCE

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INTRODUCTION TO FINANCE
Finance has been called The science of money. In studies the principles
and methods of obtaining control of money from those have saved it and the
administration of it by those in to whose control it passes.
Finance may be said to be circulatory system of the economic body,
making possible needed co-operation between the many units of activity. In an
organization composed of myriad separate enterprises, each working for its own
end but simultaneously contributing to the system as whole, some forces is
necessary to bring about direction and co-ordination. Something must be direct
the floe of economic activity and facilitate its smooth operation. Finance is the
agent that produces this result.
Finance is the business activity which is concerned with the acquisition
and conversation of capital funds in meeting financial needs and overall
objective of a business enterprise.

3.1) SCOPE AND IMPORTANCE OF FINANCE

The modern industrial or service firm must conduct its business in a
rapidly changing and highly competitive environment. A premium is placed on
the ability to react quickly and correctly to constantly changing market
conditions. Financial management is most totally independent area. It draws
heavily on related discipline and fields of study namely Economics,
Accounting, Marketing, Production and Quantitative methods. Management
must be concerned with all the aspects of firms operation including production
of goods and delivery of services, sales and marketing activities and supporting
functions such as Personnel training and data processing. To handle these
responsibilities, most firms make extensive use of financial data and reports.
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The scope financial management involves shaping the fortunes of the

enterprise as it involves the most vital decision of allocation of capital. A broad
and farsighted outlook has to be taken into consideration to ensure the funds of
the enterprise are utilized in the most efficient manner. Financial decisions have
far reaching consequences for the firm because they influence the size,
profitability, growth, risk and survival of the firms.
Financial statements are prepared for decision making. They play
dominant role in setting the framework of managerial decisions. But the
information provided in the financial statements not an ending itself as no
meaningful conclusions can be drawn from these statements is of immense use
in making decisions through analysis and interpretation of financial statements.
Financial analysis is the process of identifying relationship between the items of
Balance Sheet and the profit & loss statements, such as Schedule of changes in
Working capital, cost volume profit analysis and ratio analysis. It is the process
of establishing and interpreting various ratios. It is with the help of ratios that
the financial statements can be analyzed more clearly and decision made from
such analysis.
3.2) WORKING CAPITAL MANAGEMENT
Introduction:
The management of working capital is an important and time consuming
aspect of management finance. Sufficient working capital must be provided in
order to take care of the normal process of purchasing raw materials and
supplies, turning out finished products, selling the products, waiting for
payments to be made. If the original estimates of working capital are
insufficient, some emergency measures must be restored to or the business will
come to dead stop. Inadequate levels of working capital can results in serious
financial difficulties, and even bankruptcy; exclusive levels are likely to reduce
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corporate profitability and ultimately cause the firms effectiveness and market
value to decline.
Meaning of Working Capital:
In accounting working capital is the difference between the inflow and
outflow of funds. In other words, it is the net cash inflow. It is defined as the
excess of current assets over current liabilities and provision.
Definition of Working Capital:
Working Capital is the amount of funds necessary to cover the cost of
operating the enterprises.
Concepts of Working Capital:
There are two concepts of working capital:
Balance Sheet concept.
Operating Cycle or Circular flow concept.
(A)

Balance Sheet Concept:

There are two interpretation of working capital under the balance sheet
concept:
1. Gross working capital.
2. Net working capital.

1. Gross working capital:

In the broad sense, the term working capital refers to gross working capital and
represents the amount of funds invested in current assets. Thus, the gross
working capital invested in total current assets of the enterprise. The gross
working capital concept is financial or going concern concept.

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2. Net working capital:

The term net working capital is the excess of current assets over current
liabilities. Net working capital is an accounting concept of working capital.
Net working capital= Current assets Current liabilities
Current assets include:
Cash in hand.
Cash in bank.
Sundry debtors (less provision for bad debts).
Short-term loans and advances.
Inventories of stocks as:
Raw materials.
Work-in-progress.
Stores and spares.
Finished goods.
Temporary investments of surplus funds.
Prepaid expenses.
Accrued incomes.
Current liabilities include:
Bills payable.
Sundry creditors or accounts payable.
Accrued or outstanding expenses.
Short-term loans, advances and deposits.
Dividends payable.
Bank overdraft.
Provision for taxation, if it does not amount to appropriation of profits.

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(B)

Operating cycle or circular flow concept:

The circular flow of concept of working capital is based upon this operation or
working capital cycle of a firm. The cycle starts with the purchase of raw
material and other resources and ends with the realization of cash from sale of
finished goods. The speed/time duration required to complete one cycle
determination the requirements of working capital-longer the period of cycle
determines the requirements of working capital.

Debtors

Cash

Raw
materials

Sales

Finished
goods

Work in
progress

Importance or advantage of adequate working capital:

Working capital is the life blood and nerve center of a business. Working
capital is very essential to maintain the smooth running of a business. No
business can run successfully without an adequate amount of working capital.
Some of the importance or advantage of adequate working capital are as
follows:

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 Solvency of the business: Adequate working capital helps in maintaining

solvency of the business by providing uninterrupted flow of production.
Good will: Sufficient working capital enables a business concern to make
prompt payment and hence helps in creating and maintaining good will.
Easy loans: A concern having adequate working capital, high solvency
and good credit standing can arrange loans from bank and other easy and
favorable terms.
Cash discounts: Adequate working capital also enables a concern to
avail cash discounts on the purchases and hence it reduces costs.
Regular supply of raw materials: Sufficient working capital ensures
regular supply of raw materials and continuous production.
Regular payment of salaries: A company which has ample working
capital can make regular payment of salaries, wages and other day to day
commitments which rises the morale of its employees, increase there
efficiency, reduces wastages and costs and enhances production and
profits.
Exploitation of favorable market conditions: Only concerns with
adequate working capital can exploit favorable market conditions such as
purchasing its requirements in bulk when the

prices are lower and by

holding its inventories for higher prices.

Ability to face crises: Adequate working capital enables a concern to
face business crises in emergencies such as depression because during
such periods, generally there is much pressures on working capital.
Quick and regular return on investment: Every investor wants a quick
and regular return on his investments. Sufficiency of working capital
enables a concern to pay quick and regular dividends to its investors as
there may not be much pressure to plough back profits. This gains the
confidence of its investors and creates a favorable market to rise
additional funds in the future.
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 High morale: Adequacy working capital creates an environment of

security, confidence; high morale creates efficiency in a business.
Importance of Excess or Inadequate working capital:
Every business concern should have adequate working capital to run its
business operations. Both excess as well as short working capital positions are
bad for any business.
Disadvantages of redundant or excessive working capital:
Excessive working capital mans idle funds which earn no profits for the
business and hence the business cannot earn a proper rate of return on its
investments.
When there is redundant working capital, it may lead to unnecessary
purchasing and accumulation of inventories causing more chances of
theft, wastes and losses.
Excessive working capital implies excessive debtors and defective credit
policy which may cause higher incidence of bad debts.
It may result into overall inefficiency in the organization.
When there is excessive working capital, relations with the banks and
other financial institutions may not be maintained.
Due to low rate of return on investments the value of shares may also fall.
The redundant working capital gives rise to speculative transactions.
Disadvantages or dangers of inadequate working capital:
A concern which has inadequate working capital cannot pay its short
term liabilities in time. Thus it will lose its reputation and shall not be
able to get good credit facilities.
It cannot buy its requirement in bulk and cannot avail discounts, etc.

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It becomes difficult for the firm to exploit favorable market conditions

and undertake profitable projects due to lack of working capital.

The firm cannot pay day-to-day expenses of its operations and it creates
inefficiencies, increases costs and reduces the profits of business.
It becomes impossible to utilize efficiently the fixed assets due to non
availability of liquid funds.
The rate of return on investments also falls with the shortage of working
capital.
Need or Objectives of working capital:
The need for working capital to meet the operation needs of a firm need
not be over emphasized. Every business needs some amount of working capital.
The need of working capital arises due to the time gap between production and
realization of cash from sales.
Working capital is needed for following purpose, they are:
For the purchase of raw materials, components and spares.
To pay wages and salaries.
To incur day-to-day expenses and over heads costs such as fuel, power
and office expenses, etc.
To meet the selling costs as packing, advertising, etc.
To provide credit facilities to the customers.
To maintain the inventories of raw materials, work-in-progress, stores
and spares and finished stock.
The amount of working capital needed goes on increasing with the growth
and expansion of business till it attains maturity. At maturity the amount of
working capital needed is called normal working capital.

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Principles of working capital management:

Principles
of risk
variation

Principles
of
maturity
payment

Principles
of working
capital

Principles
of cost of
capital

Principles
of equity
postion

Principles of Risk Variation: Risk here refers to inability of a firm to

meet its obligation as and when they become due for payment. There is a
definite inverse relationship between the degree of risk and profitability,
A conservative management prefers to minimize risk by maintaining a
higher level of current assets or working capital while a liberal
management assumes greater risk by reducing working capital.
Principle of Cost of Capital: The various sources of raising working
capital finance have different cost of capital and the degree of risk
involved. Generally, higher the risks lower is the cost and lower the risk
higher is cost. A sound working capital management should always try to
achieve a proper balance between these two.
Principle of Equity Position: This principle is concerned with planning
the total investment in current assets. According to this principle, the
amount of working capital invested in each component should be
adequately justified by firms equity position.
Principle of Maturity of Payment: This principle is concerned with
planning the sources of finance for working capital. According to this a
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firm should make every effort to relate maturities of payment to its flow
of internally generated funds. Maturity pattern of various current
obligations is an important factor in risk assumptions and risk
assessments. Generally, shorter the maturity schedule of current liabilities
in relation to expected cash inflows, the greater the inability to meet its
obligation in time.
COMPONENTS OF WORKING CAPITAL:
There are three important components in working capital, they are:
Cash management.
Receivable management.
Inventory management.
Cash Management:
Cash management has assumed importance because it is the most significant of
all the current assets. It is required to meet business obligations and it is
unproductive when not used.
Cash management deals with the following:

Cash inflows and outflows.

Cash flows within the firm.
Cash balance held by the firm at a point of time by financing deficit or
investing surplus cash.
Receivable management:
Receivable management is the process of making decisions relating to
investment in trade debtors. We have already stated that certain investment
decisions are necessary to increase the sales and the profits of a firm. But at the
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same time investment in this asset involves cost considerations also. Further,
there is always a risk of bad debts too. Thus, the objective of receivables
management is to take a sound decision as regards investment in debtors.
Dimension of receivable management are:

Forming of credit policy.

Executing the credit policy.
Formulating and executing collection policy.
Inventory management:
The investment in inventory is very high in most of the undertakings
engaged in Manu fracturing, whole-sale and retail trade. The amount of
investment is sometimes more in inventory than in other assets. It is necessary
for every management to give proper attention to inventory than in other assets.
It is necessary for every management to give proper attention to inventory
management. A proper planning of purchasing, handling, storing and
accounting should form a part of inventory management. An efficient system of
inventory management will determine what to purchase, how much to purchase,
from where to purchase, where to store etc.

3.3) RATIO ANALYSIS

A ratio is a simple arithmetical expression of the relationship of one
number to another. It may be defined as the indicated quotient to two
mathematical expressions. According to Accountants hand book by Knell and
Bedford, a ratio Is an expression of the quantitative relationship between
two numbers
Ratio analysis is a process of comparison of one figure against another,
which make a ratio, and the appraisal of the ratios to make proper analysis about
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the strengths and weakness of the firm operations. The calculations of ratios are
a relatively easy and simple task but the proper analysis and interpretation of the
ratios can be made only by the skilled analyst. While interpreting the financial
information, the analyst has to be careful in limitations imposed by the
accounting concepts and information, the analyst has to be careful in limitations
imposed by the accounting concepts and methods of valuation. Information of
non-financial nature will also be taken into consideration before a meaningful
analysis is made.
Significance of Ratio Analysis:
The ratio analysis is one of the most powerful tools of financial analysis. It is
used as a device to analysis and interprets the financial health of the enterprise.
The use of ratios is not confined to financial managers only. There are different
parties interested in the ratio analysis for knowing the financial position of a
firm for different purposes of a firm for different purposes. The suppliers of
goods on credit, banks, financial institutions, investors, shareholders and
management all make use of ratio analysis as a tool in evaluating the financial
positions and performance of a firm for granting credit, providing loans or
making investment in the firm. With use of ratio analysis, one can measure the
financial condition of a firm and one can point whether the condition is strong,
good, questionable or poor.
Helps in financial forecasting and planning: Ratio analysis is of much
help in financial forecasting and planning. Planning is looking ahead and
the ratio calculated for a number of year work as guide for the future.
Meaningful conclusions can be drawn for future from these ratios.
Helps in control: Ratio analysis even helps in making effective control
of business standard ratio can be based upon Performa financial statement
variances or deviation, if any can be found by comparing the actual with

Page | 28

the standards to take a corrective action at the right time. The weakness or
otherwise , if any come to the knowledge of the management which helps
in the control of business.
Utility to shareholder/investors: Investors in the company will like to
assess the financial position of the concern where he is going to invest.
His first interest will be the security of his investment and then a return in
the form of dividend or interest. For purpose he will try to assess the
value of fixed assets and the loans raised against them. The investor will
feel satisfied only if the concern has sufficient amount of assets long-term
solvency ratios will help him in assessing the financial position of the
concern. Profitability ratios, on the other hand will be useful to determine
the profitability position.
Utility to creditors: The creditors or suppliers extend short-term credit to
the concern. They are interested to know whether financial positions of
the concern enable their payments at a specified time or not. The concern
pays short term creditors out of its current assets. If the current assets are
sufficient to meet the current liabilities then the creditors will not hesitate
in extending credit facilities.
ADVANTAGES/USES OF RATIO ANALYSIS:
Ratio analysis simplifies the understanding of financial statements.
Ratio

analysis

is

an

instrument

for

diagnosing

the financial

health/condition of a business that is through the computation comparison

and interpretation of accounting ratios.
Ratio analysis is an invaluable aid to the management in the efficient
discharge of its basic functions of forecasting, planning, communications
etc. By an analytical study of the past performance of the business, trends
in cost, sales, profits and other related facts can be understood and based
on such trends.
Page | 29

 Future events can be forecasted.

Ratios are helpful in establishing standard costing system and budgetary
control.
Ratio analysis is not only useful to management but also to outsiders like
creditors and investors.
LIMITATIONS OF RATIO ANALYSIS:
Ratio analysis is very useful in many aspects. However, its importance should
not be exaggerated because it has number of limitations which are as follows:
Ratios computed from historical dated are used for predicting and
projecting the likely events in the future. Such ratios may provide a
glimpse of the firms past performance but the forecast for the future may
not be correct.
Ratios are tools of quantitative analysis only. As such only quantitative
aspects are taken into account in ratios analysis, thereby ignoring
qualitative factors which generally where the conclusions are drawn.

A ratio is a hypersensitive; a new entry of a transaction can change its

magnitude drastically.

3.4) Categories of Ratios

The ratio analysis is made under six broad categories as follows:
Long-term Solvency Ratios.
Shot-term Solvency Ratios.
Profitability Ratios.
Activity Ratios.
Operating Ratios.

Page | 30

Long-Term Solvency Ratios:

The long term liability financial stability of the firm may be considered as
dependent upon its ability to meet all its liabilities, including those not currently
payable. The ratios which are important in measuring the long-term solvency
are as follows:
Debt-Equity Ratio.
Shareholders equity ratio.
Debt to net worth ratio.
Capital gearing ratio.
Fixed assets to long-term funds ratio.
Proprietary ratio.
Debt service coverage ratio.
Dividend cover.
Interest cover.
1. Debt-Equity ratio: Capital is derived from two sources: share and
loans. It is quite likely for only shares to be issued when the
company is formed, but loans are invariably raised at some later
date. There are numerous reasons for issuing loan capital. For
instance, the owners might want to increase their investment but
avoid the risk which attaches to share capital, and they can do this
by making secured loan.
Debt Equity Ratio =

Long Term Debt

Share Holders Fund

This ratio indicates the relationship between loan funds and net
worth of the company, which is known as gearing. If the proportion
of debt to equity is low, a company is said to be low-geared and
vice versa. A debt equity ratio of 2:1 is the norm accepted by

Page | 31

financial institutions for financing of projects. The higher the

gearing, the more volatile the return to the shareholders.
2. Shareholders equity ratio:

Share holders Equity

Total assets (Tangible)

It is assumed that the larger the proportion of the shareholders

equity, the

stronger is the financial position of the firm. This

ratio will supplement the debt equity ratio. In this ratio the
relationship is established between the shareholders funds and the
total assets. This ratio indicates the degree to which unsecured
creditors are protected against the loss in the event of liquidation.
3. Debt to net worth ratio: The ratio compares long- term debt to the
net worth of the firm i.e., the capital and free reserves less
intangible assets. This ratio is finer than the debt-equity ratio and
includes capital which is invested in fictitious assets like deferred
expenditure and carried forward losses. This ratio would be more
interest to the contributors of long term finance of the firm.
Debt to Net worth Ratio

= Long term debt

Net worth

4. Capital gearing ratio: It is the proportion of fixed interest bearing

funds to equity shareholders funds. The fixed interest bearing funds
include debenture, long term loans and preference share capital.
The equity shareholder funds include equity share capital, reserves
and surplus. Capital gearing ratio indicates the degree of
vulnerability of earnings available for equity shareholders.
Capital Gearing Ratio = Fixed Interest bearing funds
Equity share holders fund

Page | 32

5. Fixed assets to long term funds ratio: This ratio indicates the
proportion of long term funds deployed in fixed assets. Fixed
assets represent the gross fixed assets less depreciation
provided on this till date of calculation. Long term funds
include share capital, reserves and surplus and long term
loans. The higher the ratio indicates the safer the funds
available in case of liquidation. It also indicates the
proportion of long term funds that is invested in working
capital.
Fixed Assets to Long Term Funds Ratio = Fixed Assets
Long-Term funds
6. Proprietary Ratio: It expresses the relationship between net worth
and total assets.
Net worth = equity share capital+ preference share capital+
reserves- fictitious assets.
Total assets= fixed assets+ current assets
Reserves embarked specifically for a particular purpose should not
be included in calculation of net worth. A high proprietary ratio is
indicative of strong financial position of the business. The higher
the ratio the better it is
Proprietary Ratio = Net Worth
Total Assets
7. Interest cover: The interest coverage ratio shows how many times
interest charges are covered by funds that are available for payment
of interest. An interest cover of 2:1 is considered reasonable by
financial institutions. A very high ratio indicates that the firm is
conservative in using debt and a very low ratio indicates excessive
use of debt.

Page | 33

Interest Cover = Profit before Interest, Depreciation and Tax

Interest

8. Dividend cover: This ratio indicates the number of times the

dividends are covered by net profits. This highlights the amount
retained by a company for financing of future options.
Dividend Cover = Net Profit after Tax
Dividend
Short- Term solvency Ratios:
The short-term solvency ratios, which measure the liquidity of the firm and its
ability to meet its maturing short-term obligations. Liquidity is defined as the
ability to realize values in money the most of liquid assets. It refers to the ability
to pay in cash, the obligations that are due.
The corporate liquidity has two dimensions viz, quantitative and qualitative
concepts. The quantitative concept includes the quantum, structure and
utilization of liquid assets and in the qualitative concept it is the ability to meet
all present and potential demands on cash from any source in a manner that
minimizes cost and maximizes the value of the firm. Thus, corporate liquidity is
a vital factor in business-excess liquidity, though a guarantor of solvency would
reflect lower profitability, deterioration in managerial efficiency, increased
speculation and unjustified expansion, extension of too liberal credit and
dividend policies.
The important ratios in measuring short term solvency are:
Current ratio.
Quick ratio or liquid ratio.

Page | 34

1. Current ratio: This ratio measures the solvency of the company in the
short-term. Current assets are those assets which can be converted into
cash within a year. Current liabilities and provisions are those liabilities
that are payable within a year. A current ratio of 2:1 indicates a highly
solvent position. A current ratio of 1.33:1 is considered by banks as the
minimum acceptable level for providing working capital finance. A high
current ratio may be due to the pilling up of inventory, inefficiency in
collection of debtors, high balances in cash and bank accounts with out
the proper investment.
Current ratio = Current Assets, Loans & Advances
Current liability & provision

2. Quick ratio or liquid ratio: This ratio is used as measure of the

companys ability to meet its current obligations. Since bank overdraft is
secured by the inventories, the other current assets must be sufficient to
meet other current liabilities. A quick ratio of 1:1 indicates highly solvent
position. This ratio is called acid test ratio. This ratio serves as a
supplement to the current ratio in analyzing liquidity.
Quick Ratio or Liquidity Ratio = Current Assets, Loans & Advances Inventories
Current Liability & provision Bank overdraft

Profitability Ratios:
The purpose of study and analysis of profitability ratios are to help assessing the
adequacy of profits earned by the company and also to discover whether
profitability of the firm is the net result of a large number of policies and
decisions. The profitability ratios show the combined effects of liquidity, asset
management and debt management on operating results. Profitability ratios are
measured with reference to sales, capital employed, total assets employed,
shareholders funds etc. The major profitability ratios are as follows:
Page | 35

 Return on capital employed or return on investment (ROCE or ROI).

Earnings per share (EPS).
Cash earnings per share (Cash EPS).
Gross profit margin.
Net profit margin.
Cash profit margin.
Return on assets.
Return on Net worth (Return on shareholders funds).
1. Return on capital employed: The strategic aim of business enterprises is

to earn a return on capital. If in any particular case, the return on the longrun is not satisfactory then the deficiency should be corrected or the
activity be abandoned for a more favorable one. Measuring the historical
performance of an investment centre calls for a comparison of the profits
that has been earned with capital employed.
Return on Capital Employed =

Net Profit

100

Capital Employed
2.

Earnings

per share (EPS):

The objective of financial

management is wealth or value maximization of a corporate entity.

The value is maximized when the market price of equity shares is
maximized. The use of the objective of wealth maximization or net
present value maximization has been advocated as an appropriate
and operationally feasible criterion to choose among the
alternatives financial actions. A higher EPS means better capital
productivity.
Earning per Share = Net Profit after tax and Preference Dividend
No of Equity Shares

Page | 36

3. Gross profit margin: The ratio measures the gross profit margin on the
total net sales made by the company. The gross profit represents the
excess of sales proceeds during the period under observation over their
costs, before taking into account administration, selling and distribution
and financing charges. The ratio measures the efficiency of the company
operations and this can be compared with the previous years results to
ascertain the efficiency partners with respect to the previous years. The
gross profit margin may be compared with that of competitors in the
industry to assess the operational performance relative to the other
players in the industry.
Gross Profit Margins = Sales Cost of Goods Sold

100

Sales

4. Net profit margin: The ratio is designed to focus attention on the net
profit margin arising from business operations before interest and tax is
deducted. The convention is to express profit after tax and interest as a
percentage of sales. A draw back is that the percentage which a result
varies depending on the sources of employed to finance business activity,
interest is charged above the line while dividends are deducted below the
line. It is for this reason that the net profit earnings before interest and tax
(EBIT) are used. It is to be observed that majority of the costs debited to
the profit and loss account are fixed in nature and any increase in sales
will cause the cost per unit to decline because of the spread of same fixed
cost over the increased number of units sold.
Net Profit Margin = Net Profit before interest and Tax 100
Sales
5. Cash profit ratio: where cash profit= net profit + depreciation
Cash profit ratio measures the cash generation in the business as a result
of the operations expressed in terms of sales. The cash profit ratio is more
Page | 37

reliable indicator of performance where there are sharp fluctuations in the

profit before tax and net profit from year to year owing in depreciation
charged. It also facilitates inter-firm comparison of performance since
different methods of depreciation may be adopted by different companies.

Cash Profit Ratio = Cash Profit 100

Sales

6. Return on assets: The profitability of the firm is measured by

establishing relation of net profits with the total assets of the organization.
This ratio indicates the efficiency of utilization of assets in generating the
revenue.
Return on Assets = Net Profit after Tax 100
Total Assets
Activity ratios or Turnover ratios:
Activity ratios measure how effectively the firm employs its resources. These
ratios are also called turnover ratios which involve comparison between the
level of sales and investments in various accounts inventories, debtors, fixed
assets, etc, activity ratios are used to measure the speed with which various
accounts are converted into sales or cash. The following activity ratios are
calculated for analysis:
Inventory ratio: A considerable amount of a companys capital may be tied up
in the financing of raw materials, work-in-progress and finished goods. It is
important to ensure that the level of stocks is kept as low as possible, consistent
with the need to fulfill customers order in time.
Inventory turnover ratio:

Cost of goods sold

Average inventory
Page | 38

Average inventory: opening stock+ closing stock

2
Inventory ratio: The level of inventory in a company may be assessed by the
use of the inventory ratio, which measures how much has been tied up in
inventory. The inventory turnover ratio has decreased from past, it means that
either inventory is growing or sales are dropping. In addition to that, if a firm
has a turnover that is slower than for its industry, then there may be obsolete
goods on hand, or inventory stocks may be high. Low turnover has impact on
the liquidity of the business.
Inventory ratio:

Inventory

100

Current assets

Debtors:
There are three main debtors ratios are as follows :
1. Debtor turnover ratio: Debtor turnover, which measures whether the
amount of resources tied up in debtors, is reasonable and whether the
company has been efficient in converting debtors into cash.
Debtors turnover ratio: Credit sales
Average debtors.
2. Debtors collection period: Average collection period, which measures
how long it take to collect amounts from debtors. The actual collection
period can be compared with the stated credit terms of the company. If it
is longer than those terms, then this indicates some insufficiency in the
procedures of collecting debts.
Debtors collection period: Average debtors

X 365

Credit sales

Page | 39

3. Bad debts to sales ratio: This ratio indicates the efficiency of the credit
control procedures of the company. Its level will depend on the type of
the business. Mail order companies have to accept a fairly high level of
bad debts, while retailing organizations should maintain very low levels
or, if they do not allow credit accounts, none at all. The actual ratio is
compared with the target or norm to decide whether or not acceptable
Bad debts to sales ratio: Bad debts
Sales
4. Creditors payment period: In general the longer the credit period
achieved the better, because delays in payment mean that the operation of
the company are being financed interest free by suppliers of funds. But
there will be a point beyond which delays in payment will damage
relationships with the suppliers which, if they are operating in a sellers
market, may harm the company. If too long period is taken to pay
creditors, the credit rating of the company may suffer, there by making it
more difficult to obtain suppliers in the future.
Creditor payment period: Average creditors

X 365

Purchases
Operating ratios:
The ratio of all operating expenses (i.e. materials, labour, factory overheads,
administration, and selling expenses) to sales is the operating ratio. A
comparison of the operating ratio would indicate whether the cost content is
high or low in the figure of sales. If the annual comparison shows that the sales
has increased the management would be naturally interested and concerned to
know as to which element of the cost has gone up.
1) Material cost ratio.

2) Administrative expenses ratio.

3) Labour cost ratio.

4) Selling and distribution expenses ratio.

5) Factory overhead ratio.

Page | 40

CHAPTER-4

COMPANY PROFILE

VISHWANATH SUGARS LIMITED

BELLAD-BAGEWADI
Page | 41

4.1) PROFILE OF THE COMPANY

Vishwanath Sugars Ltd., was a pioneer in the exporting of power to other
industry. Situated in state of Karnataka, it combines for technology and the
latest. Mechanization and compliments with a two years experience result, High
quality sugar.
Alongside, the factory waste namely molasses is used for organo
Chemicals industrial alcogol/rectified spirit is manufacture with the sugar waste.
This VSL company is also looking towards venturing into plant a new plant for
production.

4.2) History:
Vishwanath sugars ltd entered the sugar industry in the late nineties.
Based in the Indian State of Karnataka, it began operations by setting up one
sugar factory, of which used a scientific method of cultivation. Despite
increasing emphasis on traditional cultivation methods, Vishwanath sugars ltd
was among the few to introduce modernity to this industry.
Sugar factories in Maharashtra were being victimized through state
policies Private farms were being nationalized and the co-operative movement
quickened the pace of ultimate closure of these farms. This was unfortunate
because the yields from these belts of sugarcane were among the best in the
world. The yield of cane was 64 ton per acre, recovery of sugar was 11.5% per
acre and yield of sugar was 7.36 tons per acre. Realizing that it could no longer
work towards its full potential, the opened Vishwanath Sugars Ltd at Bellad
Bagewadi in Karnataka State.
In 2002, the foundation stone at the factory of Vishwanath sugars ltd was
laid by then Governor of Karnataka. Due to the prevalent India Pakistan war at
that time.

Page | 42

The factory was erection on a war footing and commissioned in a record

time of less than ten months. Production started in 2005.Today advanced
technology and a high level of Mechanization has made Vishwanath sugars ltd
one of Indias largest sugar producers. This Vishwanath sugars ltd company has
one of the highest average recovery rates in industry.

4.3) ABOUT THE FOUNDER

A Light has gone out of our lives but has left behind many sweet
memories. Born with humble feelings, Shri Umesh V. Katti learnt that Honesty
and hard work lead to success. Very early in his life, through the example and
teachings of great men like swami Vivekanand, Mahatma Gandhi and swami
Dayanand Saraswati, he assimilated in his life the maxim that There is no
religion greater than man.
Shri Umesh V. Katti started his carrier as agriculturist. He use to grow
sugar cane as a main crop in his filed. In later days Shri Umesh V. Katti has
acquired great name and reputation from his achievements in agriculture, for his
insight and analytical skills and for his deep understanding of people problems.
A popular person Shri Umesh V. Katti made his mark for his outspoken and
fortnight views and stood for the elections of MLA and was also elected as a
MLA and after that he was selected another three times as a MLA and for the
forth time he became a Sugar minister and was Public Work Department and
cabinet minister. He was also Director of Belgaum District Co-operative Bank.
And at present he is the Horticulture and Prison Minister in cabinet.
Then he started his carrier as a Business man as a industrialist, when we
studied about his we would he was a visionary person and a hard worker and he
is a self made man and a good decision maker.
When we asked his employs their opinion was that He is a kind hearted
Person and also a well knowledge person in the field of sugar industry and
Page | 43

distillery industry technical field. When we asked for some more details they
told being a politician he is also a great industrialist. They also told that my
establishing this industry in rural place he is feeding thousand of familys live
hoods. Being a agriculturist he understands the problems of farmers and poor
people and helped to solved the problems. When we asked the people of the
villages.
Shri Umesh V. Katti vision and foresight have led to this huge growth of
industry in Karnataka. Due to his belief in Humanity and faith in Almighty he
could transform his dream into reality.

4.4) Location:
Vishwanath sugars ltd is located at Bellad Bagewadi small village in the
Belgaum district of Karnataka Bellad Bagewadi lies in presented between two
rivers, Ghatprabha & Krishna. It falls under the command area of Hidkal dam,
on the Ghatprabha Left Bank canal, at the confluence of four townships
(talukas) , Mudhol, Jamakhandi, Raibag and Gokak.

4.5) COMPANY VISION AND MISSIONS :

VSL will continue to expand its operations by expanding production into
new markets and applications. Growth will also come from value added
diversification derived from the groups strengths in products and process.
The quality of the products and services delivered by VSL will always
strive to exceed customer expectations.
VSL always has and will continue to use renewable resources in its
products. We believe that this is an important need for sustainable development.
VSL has been and always is aware of its social commitment to the
community that it serves. We believe that we have a responsibility and
obligation to return to society what we earn from it.

Page | 44

VSL has a vision to adopt the most modern technologies and equipments
to improve the production of the company and to create more no of
employment.
VSL has an vision to help farmers present in the surrounding area and
help them in improving their yield totally they want to see rural development.

4.6) ORGANIZATION STRUCTURE:

Chairman

Managing
Director
General
Manager
Production
Engineer

Cane Dept
Officer

Finance
Manager

Personnel
Manager

Manufacturing
Chemist

Asst. C.D.O

F.D.A

Security
Officer

Supervisors

Field Officer

S.D.C

Time Officer

Assistants

Assistants

Environmental
Engr
Mechanical
Maintenance
Electrical
Maintenance

Page | 45

4.7) MANAGEMENT TEAM:

Mr. Umesh V. Katti
Mr. Umesh V. Katti is Chairman and Promoter of the company having
business and manufacturing interest in Sugar Industrial Alcohol, Organic
Chemicals, Agriculture etc. since over five years. He is also associated with
various Educational, social and Cultural Organization and is also cabinet
minister of the state government.

Mr.Ramesh V. Katti
Mr.Ramesh V. Katti is the vice chairman of the company. He is also
Bachelor of Arts from Hukkeri. He is also a Chairman of a Sugar cane factory at
Hukkeri.

Shri Mallikarjun Pujar

Managing Director of the company having more than 12 years of
experience in the filed of Sugar, Chemical and Power. He is Bachelor of Arts
having such a good experience he is good at managerial skills which helps
maintaining of people of the company.

Shri Mukesh Kumar Sharma

He is COO of the company with more than 13 years of experience in the
filed of Sugar Industry. He is well known person in Sugar Industry. He is person
who had his Bachelor of Engineering from Bihar with specialization in the field
of Chemistry.

Mr. Shivanand M Katti

Whole time Chief Electrical Engineer of the company. He is B.E. in
electrical from belgaum. He is the person with great knowledge who is most
helpful person in the company who looks after power section of the company.

Page | 46

4.8) BANKERS AND INSTITUTIONS:

Bank of India
Industrial Development Bank of India
State Bank of India
HUDCO

4.9) COMPANY QUALITY POLICY :

We are committed to produce and supply products to meet our costumers

needs.

We shall continually strive to improve the effectiveness of our quality

management system.

We shall train and motivate our employees for continual improvement.

We are conscious of our responsibility towards safety, Health and

Environment.

Quality is what we think, and Believe.

4.10) PRODUCT AT GLANCE

The specification of Bellad Bagewadi sugar is
Polarization
:
99.80 to 99.88
Moisture

0.35 to 0.06

Icmsa

up to 150 units

Ash

0.08 to 0.10

Granulation

S-30 of Indian Sugar

Standard Colour

Sparking white

Packing

Present Packing. 100 kg

However they can be packaged in 50 kg HDPE bags, if required.

Vishwanath sugars ltd is the manufacture of White Crystal Sugar, along with
sugar some other main products manufactured in Vishwanath Sugars works ltd
arePower ,Distillery Products,Bio-gas etc..

Page | 47

4.11) Sugar Industry By-Products

SUGAR CANE

SUGAR

MOLASES

RECTIFIED
SPIRIT

FUEL
ETHANOL

BIOGAS

BAGASSE

EXPORTABLE
POWDER

INDUSTRIAL
ALCHOHOL

PRESS MUD

POWER

BIO
FERTILIZER

PORTABLE
ALCHOHOL

4.12) FUNCTIONAL DEPARTMENTS

1

Administration Department

Purchase Department

Cane Development Department

Production Department

Finance Department

Sales and Distribution Department

Page | 48

Administration Department
Administration department is the main department in the organization.
They are total number of 38 employees working in this department. Is divided
into 6 sections and they are as below :
1. Share section.
2. Purchase section.
3. Stores section.
4. Sales Section.
5. Time office section.
6. Computer section.
7. Security section.
8. Telephone operating section.

1) SHARE SECTION:
The Share section is one of the important sections because more than half
of the total authorized capital is collected from shareholders. In this factory the
share are class
1. Grower shares

A class

2. Non Grower Shares

D class

3. Society share

B Class

4. Out of Area Share

E class

5. Govt share

C Class

The person who wants to become a member has to follow the procedure /
rules. He has to fulfill appropriate application given by the share section
authority. If the boards of directors approve the application in body meeting,
Page | 49

then only he is treated as shareholder of the factory. After the approval he has to
pay the amount equivalent to face value of the share.
There is no transferability of share. If at all he wants to transfer his shares,
he has to transfer to such a person who is the member of the factory. If he
transfer to another person it is not valid and such shares get cancelled. For the
identification of its members, the factory issues share certificate and identity
cards to such share holders.
2) PURCHASE SECTION :
Purchase officer

Clerks

Attenders
FUNCTIONS OF PURCHASE DEPARTMENT: receiving purchasing requisition
determining the volume of materials to be ordered
placing orders
inviting tenders and quotations from different suppliers
Checking and passing bills for payment.
Receiving and inspecting materials.
Steps involved in purchasing the materials:
A. Raising requisition :
It is the first step and necessity for particular can be used only by the user
of the material.
B. Scrutinizing requisition :
The manager scrutinizes the demand of materials. He examines
whether the item mentioned in the requisition note is necessary or not.
Page | 50

C. Vendor selection :
After scrutinizing, if a material is necessary then tender advertisement
is given or if they have permanent vendors. The manager chooses the power
vendor. The BOD does selection of vendors.
D. Enquiry :
After selecting a proper vendor enquiry is sent to the vendor.
E. Receiving Quotation :
The purchase manager receives the quotations from vendors to whom
the enquiries are sent. Through there quotations a right vendor is chosen.
F. Sending purchase order :
Lastly the purchase order is placed to the selected venders. In this way
purchase of material takes place.

3) STORES SECTION
Stores keeper

Clerks

Attainders

Daily wage labors

Tool room Clerk

Tool room attainders

Diesel room Clerk

Clerks

Attainders
Page | 51

PROCEDURE OF WORKING AT PRESENT:

Handling of materials: First, they receive the stores purchase indents
from concerned section heads for requisition to purchase item needed for the
crushing or off season work. Then they mention the present stock of item in the
purchase indents, after verifying the stores. Then only they forward the purchase
indents.
After receiving the materials from suppliers they seek the quality approval
of the same materials. After getting the approval materials are placed to the
respective to the racks they issue the materials by adapting FIFO method.
They issue the materials to the workers of the factory on loan and
retainable basis on daily loan or personal loan.
STORES ACCOUNT:
After receiving the materials from suppliers quantity will be verified.
The details of the materials will be entered in to transport registered and
approved memo will be sent to the concerned departments for getting quality
approval. They keep bin cards for each different items receipt from the suppliers
with details.
TOOL ROOM:
Tool room is personnel issue the materials to the workers on temporary
loan and retainable basis entering in the register.
List of the registers:
1. Transport register.
2. Approval memo book.
3. Bin card files.
4. Purchase order.
5. Stores purchase indent etc.
Page | 52

4) TIME OFFICE :
Time keeper

Clerks
Time office is one of the important sections of administration department.
There are 5 employees working in this department.
Functions:
1. Showing the absent report to the HODs
2. To receive the attendance cards from the workers
3. To put attendance of the workers in the master role
4. It arranges the duty to the workers, maintains working bell
5. It maintains salary register book.
Types of Leaves:
1. Sick leaves :
Sick leave provided to employees 15 days per year
2. Casual leaves :
Casual leave provided to employees 12 days per year
3. Earn leaves :
If employee attends 30 days in a month then he is eligible for 3 days
Earn leave
Shift working :
In a shift of 8 hours the factory is providing 4 types of shifts.
Shift

Time

4 am to 12 pm

II

12 pm to 8 pm

III

8 pm to 4 am

General Shift

8-30 am to 5-30 pm

Page | 53

5) SALES SECTION:
Sales officer

Godown clerk

Consultant Clarks
In this section sales of the following products produced takes place are
sugar, molasses, bagasses and power. This factory is producing three types
of sugars they are M-30, S1-30 and S2-30 grades. And also it producing by
products like molasses, bagasses, press mud. These are used by factory it self
only like molasses and press mud are used in distillery / Ethanol production
and bagasses is used in production of power. And power is exported to
KPTCL.
This section will take care of all the sales transactions. The sale of sugar
is done according to the notification by the central government and has such
factories follows certain government rules in sales of sugar. Accordingly,
Karnataka state federation of co-operative sugar factories limited will give
figures of bags to sell within a month.
PROCEDURE FOR SALE:
The organization undertakes selling activities in three methods;
1. Free sale: Free sale is done within the country. Hear company will invite
tenders from different buyers at a 10 days notice. The sugar is sold to that
buyer who quotes or bids highest price. Tenders are called periodically. If
the rate is not satisfactory the tender will be cancelled. In free sale sugar

Page | 54

is being done to bulk purchases on the bases of tenders, these bulk

purchases then sell the purchased sugar to retailers.
2. Levy sale: It is also done within the state of Karnataka and being sold to
the government of Karnataka on levy bases. The government then
distributes outlets at predetermined, reasonable price.
3. Export: Sugar is sold outside the country on the contract bases.
According to the rules and regulation of the contract it will be done.

6) COMPUTER SECTION:
The total number of employees working in this department is 9. This section
is to maintain all types of records that are very important for the organization
and the following departments are computerized in the factory,
a) Weigh bridge department
b) Cane accounts department
c) Time office department
d) Laboratory department
e) Stores department
f) Sales department
g) Purchase department
h) General accounts department
i) Sales accounts section

7) SECURITY SECTION:
Security officer

Assistant security officer

Security guard
Page | 55

The security section is operating under the administrative department. It

is also working in three shifts as mentioned under time office section. Hear in
this department the employees are recruited on the yearly contract basis. There
are total 42 guards working in this section.

FACILITY TO WORKERS:1 Availability of rest house with TV facility.

2 Availability of quarters.
3 Providing 2 wheelers for employees who are visiting the field to
supervise and check the availability cane.
4 Executive levels are provided with 4 wheelers.
5 Weekly one holiday of any in a week

FINANCE DEPARTMENT:
Accounts of finance department are the main and the hart of every
department of the company or industry. Hear in this factory, the accounts
section maintains all the transactions related to the factory dealings. The sale
accounts, purchase accounts, etc are maintained and this department prepares
P&L account, Balance sheet, etc.
In RSSK is divided finance department or accounts department in two sections.
1. General account section
2. Cane account section
In the above chart 50% of the labors are working in the general
account section and 50% are in the cane accounts section.
1. GENERAL ACCOUNTS SECTION:
In general accounts section book keeping is followed. General
account transactions like receipts and payments registers are maintained.
Receipts include sales process of sugar, molasses, share amount, etc. Payments
include salary, tax, etc. maintaining audit and audit rectification is done, annual
account and monthly account are prepared and maintained.
Page | 56

Some other types of registers are maintained by this section are:

a. Advance register
b. Contractors register
c. Contra register
d. Fixed assets register
e. Bank register
f. Expense register
Functions
1) Its main functions to finalize each & every record of the factory.
2) It prepares profit & loss a/c & balance sheet.
3) It executes financial activities in factory.
4) Ratio analysis.
5) Report to the management.
6) Conduction of meetings.

2. CANE ACCOUNTS SECTION:

This section maintains the cane accounts and cane bills. This section
purchases the cane on daily basis and prepares accounts of forthrightly basis. In
addition, will take care of all cane suppliers accounts and department manager
separates accounts for cane suppliers.
The section will provide cane bill once in a month desired by the higher
authority. While giving cane bill, department will debut all the expenses and
advances which is given to the cane suppliers in terms of seeds, fertilizers and
transportation facilities and also harvesting of the cane that all the expenses are
given by the factory.
The registers maintained in this section are:
a) Self harvesting payment register
b) Harvesting bills
c) Cultivator payment register
Page | 57

CANE DEVELOPMENT DEPARTMENT

Cane Manager

Office manager Cane

Cane Procurement Manager Cane Dev Manager

Cane Officers

Field Assistants

Cane Officers

Field Assistants

Objectives of the CDD:

To get best quality of cane at a right time
To improve the variety of the cane
To provide all facilities like seeds, fertilizers, unloading and
loading charges
Main objectives are to receiving exactly 2500 TCD
To undertake seeds development program

Varieties of Sugar cane:

1. COC671

{Early Maturity}

2. CO8011

{Middle Maturity}

3. CO86032

{Early Maturity}

4. CO8021

{Early Maturity}

5. CO94012

{Early Maturity}

Page | 58

PRODUCTION DEPARTMENT
STRUCTURE

Laboratory In
charge

Deputy Chief Chemist

Laboratory
Chemist

Manufacturing Chemist

Laboratory

Staff and Workers

Boys

The production department is center of the center organization. The main

function of the production department is Functions: To maintain close and co-ordinates relationship with all others.
To upgrade the technical efficiency of the production.
To flow up the daily production schedule of as per plan.
To produce the future needs of the company and to promote the
organization.

Page | 59

CHAPTER-5

ANALYSIS

Page | 60

SCHEDULE OF CHANGES IN WORKING CAPITAL

SL.NO

PARTICULARS

LOANS :Secured Loans

Unsecured Loans
TOTAL

FIXED ASSETS
Gross Block

31/03/2009

1,330,097,993.26
23,242,972.00
1353340965.26

31/03/2008

638,064,463.23
---------------638,064,463.23

Increase or
Decrease in
Absolute
692033530.03
23,242,972.00
715276502.03

1,800,795,673.04

965,574,561.26

835221111.78

169,905,278.44

124,662,222.38

45243056.06

Net Block - A

1,630,890,394.60

840,912,338.88

789978055.72

TOTAL CURRENT
ASSET

1,119,608,329.53

(Less) Current
Liability in provision

584,263,485.22

279,261,185.52

Net Current Assets

B

535,344,844.31

404,317,656.74

(Less) - Depreciation

Total (A+B)

2166235238.91

683,578,842.26

1245229995.62

436029487.27

305002299.7

131027187.57

921005243.29

Page | 61

Working capital required:

WCP= COGS * Operating Cycle

+ Desired Cash Balance

No of Working Days
Operating Cycle = Raw material + WIP + Finished Goods +Debtors Creditors
1) Raw Materials

a) Average Stock of Raw materials = Total of Raw materials and Components

2
b) Raw material consumption per day = Total material consumed
No of working days
(Amount in Rupees)
PARTICULARS
Average stock of Raw materials

2009

2008

2007

500023234.43

275874282.31

254892920.00

3846332.57

1339195.54

897510.28

130

206

284

Raw Material consumption per day

Raw materials (in days)

Raw materials (in days)

300
250
200
150
100
50
0
2007
2008
2009

Raw materials (in days)

Page | 62

Working capital maintained by the company:

WC= Current assets (less) Current liabilities.
Particulars

2009

2008

2007

Total current assets

1,119,608,329.53

683,578,842.26

422067183.97

Totalcurrent liabilities

584,263,485.22

279,261,185.52

151708691.07

404,317,656.74

270358492.90

535,344,844.31

W.C

FLOW OF WORKING CAPITAL

60
50
40
WORKING
CAPITAL 30
(IN. CRORES)
20

Series 1

10
0
2007

2008

2009

YEAR

Page | 63

RATIO
ANALYSIS

Page | 64

1)Debt Equity Ratio:

Debt Equity Ratio =

Long Term Debt

Share Holders Fund

Debt= Secured loan + unsecured loan (long term)

Particulars

2009

2008

2007

Debt

135,33,40,965.26

63,80,64,000

76,80,20,840

34,03,59,000.00

34,03,59,000

33,19,71,481

1.87

2.31

Equity
Ratio

3.97

Chart showing changes in Debt Equity Ratio

4
3.5

RATIO

3
2.5
2

Series 2

1.5
1
0.5
0
2007

2008

2009

YEAR

Page | 65

2) Shareholders equity ratio:

Shareholders equity ratio:

Share holders Equity

Total assets (Tangible)

Particulars

2009

2008

2007

83,45,92,364.65

60,93,74,000

34,38,69,627

Total assets

2,18,79,33,329.91

152,67,00,000

110,46,90,466

Ratio

0.38

0.39

0.31

Shareholders funds

Share holders equity: Equity shares+ Preference+ Reserves and surplus- losses (if any)

Chart showing changes in Shareholders equity

ratio

RATIO

0.4
0.3
0.2
Series 1

0.1
0
2007

2008

2009

Year

Page | 66

3)Debt to net worth ratio:

Debt to Net worth Ratio

= Long term debt

Net worth

Net worth: equity + preference+ reserves and surplus- losses

Particulars

Long term debt

Net worth
Ratio

2009

2008

2007

135,33,40,965.26

63,80,64,000

76,80,20,840

83,45,92,364.65

60,93,74,000

34,38,69,627

1.62

1.04

2.23

Debt to Net worth Ratio

2007
2008
2009

If we look at this ratio we can say the company is having more long term debts
than its net worth. So the company has to taken care of it. Here higher the ratio
higher the obligation and vice-versa.

Page | 67

4) Fixed assets to long term funds:

Fixed assets to long term funds:

Fixed assets
Long term funds.

Long term funds = equity + debt

Particulars
Fixed Assets
Long term funds.
Ratio

2009

2008

2007

1,63,08,90,394.60

84,09,12,000

83,19,52,687

169,36,99,965.26

97,84,23,000

109,99,92,321

0.96

0.85

0.75

Fixed assets to long term funds

2007
2008
2009

If we look at this ratio the company is getting more and more long term funds
from year to year. This analysis states us that the company securing itself by
raising its long term funds. This raise the companys capability of investment.
Page | 68

5) Current ratio:
Current ratio: Current assets
Current liabilities
Particulars

2009

Current assets
Current Liability

2008

2007

111,96,08,329.53

68,35,78,842.26

42,20,67,183.97

58,42,63,485.22

27,92,61,185.52

15,17,08,691.07

1.91

2.44

2.78

Ratio

Current ratio
3

2.5

2
Current ratio

1.5

0.5

0
2007

2008

2009

As the current ratio is moving downwards from year to year, it states us that the
company is becoming lesser capable to meet its short term obligations. If the
Page | 69

companys current ratio goes lesser than 1 it would be very harmful to the
company. So the company has taken care of it.

6) Quick Ratio:
Quick Ratio: Current assets- stock
Current liabilities- bank o/d

Particulars

2009

2008

2007

Current Assets- Stock

66,90,90,723.72

37,81,31,521.16 19,65,75,176.36

Current Liability Bank

overdraft

58,42,63,485.22

27,92,61,185.52 15,17,08,691.07

Ratio

1.14

1.35

1.29

Quick Ratio
1.35
1.3
1.25
1.2

Quick Ratio

1.15
1.1
1.05
1
2007

2008

2009

If we look at the quick ratio we can say that the company is not so consistent to
meet its short term debt obligations. By above analysis the company from 2007
Page | 70

to 2008 it had more capability of repaying its debt obligations and if compare
2008 to 2009 it has lost its capability of repayment of its debt obligations.

7)Return on capital employed:

Return on Capital Employed =

Net Profit

100

Capital Employed

Particulars
Net Profit
Capital Employed

2009

2008

2007

22,52,18,081.25
83,45,92,364.65

21,64,97,137.69
60,93,74,000

7,09,29,391.60
34,38,69,627

0.26

0.35

0.20

Ratio

Return on Capital Employed

0.35
0.3
0.25
0.2

Return on Capital Employed

0.15
0.1
0.05
0
2007

2008

2009

This position of the company states us that the company is fair enough in its
return on capital employed. The above analysis states us that the company as
Page | 71

compared to 2009 into 2008 it is not having fair margin and if we 2008 into
2007 it has gained good margin in it.

8) Net profit margin:

Net Profit Margin = Net Profit before interest and Tax 100
Sales

Particulars
Net Profit before
interest and Tax
Sales

Ratio

2009

2008

2007

251,079,243.25

247,131,501.69

70929391.60

1,160,705,003.75

942,877,990.40

518359946.19

0.21

0.26

0.13

Net Profit Margin

2007
2008
2009

Page | 72

By above analysis we can say that as compared to 2007 into 2008 it

has gained good control over its costs and if we compare 2009 into
2008 the company is not having much control over its costs.

SUGGESTION AND RECOMMENDATION

On the basis of analysis, the recommendation to further improves the
working capital management, which would level the company to greater
heights.
1) As we seen in the current ratio, we can say that the company is
utilizing its equity fully. This states us that there is no unutilized
fund in the company.
2) By observing current ratio, we can say that the company is having
more current assets than its current liabilities.

Page | 73

EXECUTIVE SUMMARY

Page | 74

India is the largest consumer and second largest producer of sugar in the world. The Indian sugar
industry is the second largest agro-industry located in the rural India. Indian sugar industry has been
a focal point for socio-economic development in the rural areas. The industry not only generates
power for its own requirements but surplus power for export to the grid based on by-productBagasses. It also produces ethyl alcohol, which is used for industrial and potable uses, and can be
used to the manufacture of ethanol, an ecology friendly and renewable fuel for blending with petrol.
The unit was originally established in the year 1997-98 as a modern Khandasari
Sugar unit with a crushing capacity of 500 tones of cane per day and later converted into white
crystal sugar unit. This is one amongst the earliest Khandasari unit in the country, which started with
a new technology like:(a) High pressure boiler (32.0 ATA) (b) Multiple effect pressure evaporator
system

with

falling

film

evaporator

and

also

with

captive

power

generation.

M/s.Nirani Sugar Litd. Now proposes to expand the sugar factory from the present capacity of 7500
TCD to 15000 TCD by adding a new plant of 7500 TCD, retaining the existing plant also. Also 62 MW

Page | 75

Cogen Power Plant is part of the expansion. The project appraisal was done by Mitcon Consultancy
Services Limited, Pune.
The study has been conducted on Measuring effectiveness of distribution channel of
Nirani sugars limited, It is a Descriptive Research.
PROJECT TITLE:

Measuring effectiveness of distribution channel of NIRANI SUGARS LIMITED

OBJECTIVES:
To study the distribution channel of Nirani sugars limited,Mudhol.
To find out the feasibility of establishing new depots by the company.
To understand factors influencing buying decision.
To find out the packaging method adopted by sugar factories.

METHODOLOGY:

SELECTION OF DATA COLLECTION METHODS:

Primary and Secondary Data will be collected to carry out the research work

Research Design
It is a Descriptive Research. The study was based on both Primary and Secondary Data.

Primary data (Survey data):

Questionnaire, face-to-face interview with the wholesaler and retailers of Bagalkot District.

Page | 76

Secondary data
In this study, Secondary Data is used for exploratory research and secondary data
includes data collection from interaction with the company guide and with the officials and with the,
organizations Data, Brochures/newsletters, Reviews and Internet information websites.

MEASUREMENT TECHNIQUE:

Questionnaire:
Questionnaire is a formalized instrument for asking information directly from the
wholesaler.During this research questionnaire will be used as measurement technique for getting
information from the wholesalers and retailers of Bagalkot district.
Sampling Plan
Sampling unit

: WHOLESALER & RETAILER.

Sampling Method

: Convenience Sampling

Sampling Size

: 70 Retailers Respondents,20 Wholesaler.

Sample Area

: Bagalkot,Kerur, Jamakhandi, Mudhol, Mahalingpur, Kaladgi and Banahatti

Analysis: Using MS-Excel, and SPSS software

FINDINGS

Price is the main factor considered by the most wholesalers and the retailers, while placing
orders.
S1 is the most selling sugar grade in the local market by the wholesaler and retailers
irrespective of price and quality .
97% retailers are aware about the different grades of sugar.

Page | 77

 86% of retailers are ready to buy the sugar , if Nirani sugars limited setup new depot in their
respective area.
85% of retailers are not facing any stock problem, indicating the present distribution channel
is working fine.
Recommendation
The company itself develop a cost effective eco packaging materials and distributing
them to retailers and wholesalers, this mechanism not only helps Nirani sugars to
build its brand and creates awareness about its brand.
The Nirani sugar should go ahead with its proposed area to service up to new depots
nearing delivery location as the majority of retailers have shown acceptability towards
to buy sugar from Nirani sugar industry.
The Nirani sugar should focus expanding its market, even on export market as it is
facing stiff competition in local market.

Conclusion:
Present distribution channel of Nirani sugars limited is working well.

Page | 78

Page | 79

INDUSTRY BACKGROUND

Page | 80

THE HISTORICAL BACKGROUND OF THE INDIAN SUGAR INDUSTRY:-

India is the largest consumer and largest producer of sugar in the

world.
The sugar industry is proud to be an industry, which spreads the taste of sweetness to the mankind.
Sugar is generally made from sugarcane and beet. In India, sugar is produced mainly from sugarcane.
India had introduced sugarcane all over the world and is a leading country in making sugar from
sugarcane.

Saint Vishwamitra is known as the research person of the sugarcane in religious literature.We can
find the example of sugarcane in Vedic literature also as well as sugarcane.We can also find the
reference of sugar and the sugarcane in Patanjalis Mahabashya and the treaty on the grammer of
Panini.Greek traveler Niyarchus and Chinese traveler Tai-Sung have mentioned in their
travelogue that the people of India used to know the methods of making sugar and juice from
sugarcane the great Emperor Alexander also carried sugarcane with him while returning to his
country.

Thus from different historical reference and from some Puranas it can be concluded that method of
making sugar from sugarcane was known to the people of Bihar.The historical evidence of sugar
industry prospering in ancient India concrete and this has helped to develop and prosper the cooperative sugar movement in India.

Page | 81

NATIONAL SCENARIO OF SUGAR INDUSTRY

The first sugar mill in the country was set up in 1903 in the United Provinces. There are 566
installed sugar mills, of which 453 were in operation in the year 2002-03 and utilized 194.4 million
tones of sugarcane (69% of total cane production ) to produced 20.14 million tons of sugar. About 5
lakhs workmen are directly employed in the sugar industry besides many in industries, which utilize
by-products of sugar industry as raw material.

India is the largest consumer and second largest producer of sugar in the world. The
Indian sugar industry is the second largest agro-industry located in the rural India .Indian sugar
industry has been a focal point for social-economic development in the rural areas. About 50 million
sugarcane farmers and a large number of agriculture labors are involved in the sugarcane cultivation
and ancillary activities , constituting 7.5% of the rural population. Besides, the industry provides
employment to about 2 million skilled/semi skilled workers and others mostly from the rural areas.
The industry not only generates power for its own requirement but surplus power for export to grid
based on by-products Bagasses.It also produces ethyl alcohol, which is used for industrial and
Page | 82

potable uses, and can be used to manufacture Ethanol, an ecology friendly and renewable fuel for
blending with petrol.
The sugar industry in the country uses only sugarcane as input: hence sugar
companies have been established in the large sugarcane growing states like Uttar Pradesh,
Maharashtra ,Karnataka, Gujarat,Tamilnadu,and Andhra Pradesh.In sugar year 2003-04, these six
states contributed more than 85% of total sugar production in the country: Uttar Pradesh,
Maharashtra and Karnataka together contribute more than 65% of total production. The Govt of
India licensed new units with an initial capacity of 1250 TCD up to the 1980s and with the revision in
minimum economic size to 2500 TCD, the Govt de-licensed sugar sector in the year 11.September.
1988. The entrepreneur have been allowed to set up sugar factories of expand the existing sugar
factories as per the techno-economics feasibility of the project. However, they are required to
maintain a radial distance of 15 kms from the existing sugar factory . After de-licensing, a number of
new sugar plants of varying capacities have been set up and the existing plants have substantially
increased their capacity.
There are 566 installed sugar mills in the country as on March 31st 2005, with a production
capacity of 180 lack MTs of sugar, of which only 453 are working. These mills are located in 18 states
of the country.

Page | 83

COMPANY BACKGROUND

Page | 84

HISTORY OF NIRANI SUGARS LTD.

M/s. Nirani Sugars Limited (NSL), a company incorporated on the 6th Dec, 1995 under the
Companies Act, 1956 has applied for Term Loan of Rs. 15.90 crores to Sugar Development Fund(SDF)
for meeting part of the capital cost of its project envisaging modernization & up-gradation of
existing sugar factory with an installed capacity of 1250 TCD to 3750 TCD with substantial
investment at Kulali cross Mudhol Tq. Dist: Bagalkot, Karnataka State, NSL has included in the scope
of the project, the co-generation of surplus power also at a total project cost of about Rs. 97.00
crores. (Sugar unit Rs. 53.00 crores and cogeneration unit Rs. 44.00 crores). Total Cost of the Project,
for the Sugar plant expansion Rs. 5300 Lakhs, (Rs. 42.00 Crores for sugar and 11.00 crores loading
from co-generation plant cost) consisting of an Equity Contribution of Rs. 5.30 Crores Promoters, Rs.
15.90 crores equity from Sugar development fund of Govt. of India & the balance of Rs. 31.80 crores
funded through Term Loans from the Financial Institutions/Banks.
The funding for the cogeneration plant costing Rs. 4400.00 Lakhs is
envisaged by obtaining Rs. 3080 Lakhs from IREDA, Rs 440.00 Lakhs from promoters contribution
and Rs. 880 Lakhs from sugar development fund.
M/s. Nirani Sugars Limited (NSL) is a company registered under the
Indian Companies Act, 1956, initially as Private Limited Company, vide registration certificate

Page | 85

number 08/19340 of 1995 dated 06.12.1995 by the registrar of companies in Karnataka, Bangalore,
Subsequently, the company has been converted into Public Limited Company vide Certificate of
Incorporation dated 15.02.2002 by ROC, Karnataka, Bangalore.

The unit was originally established in the year 1997-98 as a modern Khandasari Sugar unit with a
crushing capacity of 500 tonnes of cane per day and later converted into white crystal sugar unit.
This is one amongst the earliest Khandasari unit in the country, which started with a new technology
like:
(a) High pressure boiler (32.0 ATA)
(b) Multiple effect pressure evaporator system with falling film evaporator and also with
captive power generation.
Subsequently making use of the Government of Indias liberalized policy, vide Govt. of
India notification DCS/S/14/DTD 02-06-1998, which permitted Khandasari sugar units to use vacuum
system, they modernized the unit quickly by adding vacuum pans and vacuum evaporators. The
capacity of the plant was increased in stages to its present capacity of 1250 TCD during 2005-06.
Now the plant has increased to 7500 TCD.(2008-2010). The plant runs fairly efficiently and is self
sufficient in fuel and power. It has recorded an average sugar recovery of over 11 percent during
2008-2009 crushing season.
M/s. Nirani Sugar Litd. Now proposes to expand the sugar factory from
the present capacity of 7500 TCD to 15000 TCD by adding a new plant of 7500 TCD, retaining the
existing plant also. Also 62 MW Cogen Power Plant is part of the expansion. The project appraisal
was done by Mitcon Consultancy Services Limted, Pune.

Page | 86

Objectives of Nirani Sugars Ltd.:1. Maximum, effective and efficient utilization of available resources.
2. To manufacture good quality sugar and bi-products.
3. Welfare of agriculturists
4. To provide comparative market rate to the farmers.
5. Proper co-ordination and co-operation among its members.
6. To maintain proper means of transportation to the farmers during season.
7.

Provide modern techniques and methods and of cultivation and to supply seeds, fertilizers
to the farmers.

8. To undertake such other activities as are incidental and conductive to the development of
society.
VISION
1. To expand production capacity to 15,000 T.C.D.
2. To produce 62 Megawatt electricity.
3. To produce 120,000 liters of distillery unit..
4. To produce 10,000 ton Bio fertilizers.
5. To establish agricultural development and resource center at Mudhol.
MISSION

1.We will provide products of superior quality at competitive price and ensure sustained profitability
and growth.
2.We will protect the interest of all concerned promoters, shareholders, customers, distributors,
employees and community.
3.We believe in fair trade practice, standards and strive for total customers satisfaction, keeping the
environment eco friendly.
4.We believe that our people are most valuable assets for personal and organizational growth.
5.We will treat our people with dignity and look after the safety and welfare of individuals and there
families.
6.We provide electricity which is major necessity for the country.
7.Sugar industries are providing ethanol which can be added in diesel and diesel is major
requirement of the nation.

Page | 87

COMPANY PROFILE

Name of the company

Address

: NIRANI SUGARS LIMITED. MUDHOL

: NIRANI SUGARS LIMITED.

No. 166, Kulali Cross,
Jamkhandi Road,
MUDHOL - 587313
DIST: BAGALKOT

Regd. Office

BBMP No.003,
House No. 4/02, left wing,
First floor, Nehru Nagar,
Sheshadripuram,
Bangalore 560 001

Status of Company

: Private limited company.

Page | 88

Constitution of the firm

Financial Institutions

: Registered under companies act 1956

: K.S.I.D.C
K.S.F.C

Bankers of the Company

: I.C.I.C.I Bank Jamakhandi

S.B.I Mudhol Br.
Bank of India, Mudhol.
Punjab National Bank

Products

: Sugar (L30, M30, S30)

Molasses, Press Mud, Bagasse.

Page | 89

BOARD OF MANAGEMENT

1. Shri. Hanamanth R. Nirani

Chairman & Managing Director

2. Shri. Sangamesh R. Nirani

Executive Director.

3. Smt. Kamala M. Nirani

Director.

4. Shri R V Vatnal

Director (Tech)

5. Shri. S.V. Kariyannavar

Chief Executive Officer.

6. Shri Sadanand E G

7. Shri. G G Annigeri

General Manager (Cane)

8. Shri. Bandivadekar

G.M (Distillery)

Chief General Manager (Tech)

9. Shri. M.S. Heggalagi

Sr. Manager

10.Shri. M.M . Hiremath

General Manager (Fin&Accts)

Page | 90

ORGANIZATION CHART

Chairman and MD

Executive Director

Director (Tech)

Chief Executive Officer

Production Department

Account
Engineering
Manufacturing
Department

Electrical
Department

Department

Administrative Department

Sales Department

Purchase Department

Account
Security

Account
Time office

Department

Account
Cane

Account
Department

Mechanical

Laboratory

Cane

Department

Department

Account

Department

General
Account

I.T
Department

Page | 91

Page | 92

FUNCTIONAL DEPARTMENTS IN N.S.L.

Production Department
Purchase Department
Sales Department
Mechanical Department
Chemical Department
Store Department
Time Office Department
Human resources development Department

PRODUCTION DEPARTMENT

Production department is most important part of the factory and it is divided into two
departments namely:

1. Engineering department
2. Manufacturing department

1. Engineering department:
The engineering department maintains all the work connected with plant and
machinery. Engineering department aims at enhancement of feeding capacity of factory. The
department is assisted by workshop.

Page | 93

Workshop:
Spares are fabricated using the lathe machine in the workshop and shaping like
square, cutting, fabricating etc. are done in the workshop. 75% of works of machinery are done in
workshop. This department has the following machines:

1. Lathe machines for around job.

2. Shaping machine of 32Inch for right angle planning
3. Hacksaw machine for cutting
4. Redial drilling machine for drilling hole
5. Grinding machine for tool grinding

2. Manufacturing department:
Manufacturing department is divided into 3 sections namely:
a) Laboratory department
b) Manufacturing department
c) Go-down

a)

laboratory department:
Laboratory department plays a significant role in sugar production. The key

activity of laboratory is checking the content of sugar in the sugarcane and fixing the correct shape
and size of sugar. The laboratory prepares hourly reports which advice in the addition of other
chemicals in the production.
Page | 94

Other activities of the laboratory:

1. Determining and maintenance of temperature of boiling juice.
2. Determining the percentage of water content in the dilution of juice.
3. Determining the percentage and content of chemicals to be added during
production.
4. Finding the PH of water through universal indicator.
5. Choice of color and size for sugar.
6. To manage the time and quality.

PURCHASE DEPARTMENT
Purchase success and failure of any company depends on the cost of
materials, the proper buying of materials and procurement of materials at the right time from the
right source is having greater importance in any business. There is a need for separate department
for buying the materials know as Purchasing department.
The purchase section also connected to administrative department. In this section 3 workers are
working including purchase officers. This section is purchase all types of materials for the factory,
plant and machinery.
Page | 95

This department also maintains the quality of raw materials, by taking the sample of cane to
laboratory test then if the raw material will below standard then will be rejected, otherwise the raw
material will be purchased at the particular price.

FUCTIONS OF PURCHASE DEPARTMET

1.Receving purchasing requisition
2.Determing the volume of materials to be ordered
3.Placing orders
4.Inviting tenders and quotation from different suppliers
5.Checking and passing bills for payment.
6.Receving and inspecting materials.

Page | 96

SALES DEPARTMENT
Meaning
It is the department which handles sales process of the company.

Structure :

AGM

Central Excise officer

Salesman

Salesman

Godown Keeper

Godown Keeper

Loading supervisor

Loading supervisor

Sugar House Clerks

Sugar House Clerks

Sugar loading labours

Sugar loading labours

Page | 97

Page | 98

Sugar:
This unit is producing two different grades of sugar. They are S-30, M-30
grades. Production department sends weekly the report of sugar balance to Karnataka Sugar
Federation by telegram or letter by examining the sugar balance. Karnataka Sugar Federation sends
released order to the factory. The release order quantity differs every month. After receiving the
releasing order, the sales department sells the sugar through tender. The release order is the base of
the tender.

Molasses:
Molasses is the mother liquor in the massecuite which is separated from
crystals by mechanical means. The mother liquor is separated before the washing of crystals is
termed by light molasses. These are again classified as A, B, C etc. According to the grade of
massecuite from which they are obtained.
The heavy molasses obtained from the last grade of massecuite is termed as final
molasses or waste molasses.
Recovery is assumed to be 4% on cane crushed and the sale price is assumed to be 600/- per
M.T.

Bagasses:

Bagasses is the residue of cane after crushing in one mill or a train of mills bagasse are named
successively as first mill bagasse, second mill bagasses and so on to last mill bagasses or final
bagasses or simply bagasse.
Bagasses produced are used in the generation of electricity and in the boiler house.
Surplus is however sold. The surplus bagasse is estimated at 3% cane crushed. The price assumed at
Rs 400/- per M.T.

Page | 99

Page | 100

CANE DEVELOPMENT DEPARTMEANT:Objectives :1.To get high yield of sugarcane to factory in right time.
2.To improve variety of cane.
3.To develop the backward area.
4.To provide all facilities like seeds,fertilizers,unloading and loading charges.
5.To maintain registration of cane,gang and plantation.
The soil of the area is varying alluvial fertile soil is there on the bank of Krishna and
Ghataprabha river.Futher upwards, there is medium deep black soil,vary fertile well drained light to
medium clay soil, which has recived heavy application if from yard Manu science last 10-12 years
also is presently in some parts.
The main function of cane development department is to arrange for raw material, which is
required to factory. For this the order is recived by priority basis (that is growers who grows cane
first in his lead). They also provide a loading gang with 8 to 10 members per village and also a
bonded tractor for transportation.

Varieties of sugarcane:
At present COC-671, CO-8011 are very popular and the quality of sugarcane on the area where
it is grown. The oyher different qualities of Sugarcanes are: CO-94012, COC-86032, CO-8014 etc.
Here more than 85% of sugarcane of variety COC-671 that is mainly grown in this area. And this
variety is considered as the best and which provides good recovery.

Page | 101

MECHANICAL DEPARTMENT
Meaning
It is a season in which the maintenance of machineries, repairs and over all
operation are rendered by the workers. It is to Manufacture sugar by using machines.

Structure:

Work Manager
Chief Engineer

Asst. Engineer

Asst. Engineer

Asst. Engineer

Trainee. Engineer

Trainee. Engineer

Trainee. Engineer
Page | 102

Fitters

Fitters

Fitters

Page | 103

CHEMICAL SECTION
Meaning
It means to take chemical tests before producing sugar and manufacturing of sugar
from sugar cane.

Structure

Chemical Department

Lab Incharge

Manufacturing
Chemist

Manufacturing
Chemist

Manufacturing
Chemist

Responsibilities:
The responsibility of this department is to test the product of the sugarcane and quality of sugar.

Chemicals used:
1.
2.
3.
4.
5.

Sulphor
Lime
H2O2 (Hydrogen peroxide)
Orthophosporic acid
Alcohol.
Page | 104

6.

Turckey red oil.

Cleaning Chemicals :
1.
2.
3.

Caustic soda.
Washing soda.
Common salt.

STORE SECTION:It means storing of the equipment required to the factory for the smooth flow of process.

Structure

Purchase officer

Store officer

Store Accountant
Page | 105
Store Keeper

Page | 106

SECURITY DEPARTMENT

Security department works under M.D secretariat and office supervision. It is also considered in
administrative department. It works around 3 shifts as under:
1st shift - 8am to 8pm
2nd shift 8pm to 8am

Organization chart of security department are done on the requirement of the factory as given
below:

Security officer

Supervisor

Head guards Ex- servicemen

Security guards (civilians)

The main works of the department:

Page | 107

1. They are maintaining peace and discipline within the factory premises.
2. To maintain works attention.
3. They check the incoming raw materials as per voucher.
4. The incoming materials are checked and if they are right, they will record inwards then they
seal the bill and leave inside.
5. The out going materials with proper gate pass will be recorded in outwards and they are sent
outwards.
6. If they are returnable they are recorded in books of returns and are returned
7. Check the loaded and unloaded vehicles and collect notes.
8. Submit daily activity report to the managing director.

Page | 108

HUMAN RESOURCE DEPARTMENT

This department plays a very important role in the company as there

are many numbers of workers working in this organization.
It mainly deals with the following:
1 Maintaining attendance records
2 Preparation of salary slips
3. Maintaining personal records
4. Maintaining leave records
Functions:
1. Maintenance of attendance records
2. Preparation of salary slips
3. Maintaining personnel records

There are about 530 employees working in this organization. There is a separate department called
TIME OFFICE DEPARTMENT for the maintenance of time in this organization.
Functions of time office department
1) Maintaining working bell.
2) Arranging duty to workers.
3) Distribution of salary according to workers attendance.
4) Sanctioning of leaves to workers.

The factory runs around 3 shifts in the season

Page | 109

First shift

4am to 12pm

Second shift

12pm to 8pm

Third shift

8pm to 4am

One general shift 8am to 5pm for both seasonal and non-seasonal and for office workers 10.30
to 5.30pm

Objectives
Methodology
Page | 110

 Analysis
Suggestions.
Recommendation
Questionnaire
Bibliography

PROJECT TITLE:

Page | 111

Measuring effectiveness of distribution channel of NIRANI SUGARS LIMITED

OBJECTIVES:
To study the distribution channel of Nirani sugars limited,Mudhol.
To find out the feasibility of establishing new depots by the company.
To understand factors influencing buying decision.
To find out the packaging method adopted by sugar factories.

METHODOLOGY:

SELECTION OF DATA COLLECTION METHODS:

Primary and Secondary Data will be collected to carry out the research work

Research Design

It is a Descriptive Research. The study was based on both Primary and Secondary Data. The
Primary Data was collected through asking the questions consisting of following categories .

Open-ended questions.

Close ended questions.

Primary data (Survey data):

Information will be collected directly from the wholesalers and retailers of the
Bagalkot district for the project work. The survey data collected during the study includes the data
collected through questionnaire, face-to-face interview with the wholesaler and retailers of Bagalkot
District.
Page | 112

Secondary data
In this study, Secondary Data is used for exploratory research and secondary data
includes data collection from interaction with the company guide and with the officials and with the,
organizations Data, Brochures/newsletters, Reviews and Internet information websites.

MEASUREMENT TECHNIQUE:

Questionnaire:

Questionnaire is a formalized instrument for asking information directly from the wholesaler
and retailer of Bagalkot District namely Kerur,Jamakhandi,Mudhol,Mahalingpur,Kaladgi and
Banahatti During this research questionnaire will be used as measurement technique for
getting information from the wholesalers and retailers of Bagalkot district.

Select the sample:

Sampling unit: Wholesalers and Retailers of the Bagalkot District
Extended To: Kerur, Jamakhandi, Mudhol, Mahalingpur, Kaladgi and Banahatti.
Time: 8 weeks (starting from 4th June to 4th August 2010)

Page | 113

Specify sampling unit:

The sampling units will be the Retailer and Wholesaler of Bagalkot District namely Kerur,
Jamakhandi, Mudhol, Mahalingpur, Kaladgi and Banahatti.

Sampling Design
The research was mainly opted on wholesaler and retailers survey and company.
The sample selected for Retailer survey was of cluster sample. Sample size of 70
respondents, and the sample selected for wholesaler was 20 respondents.

Sample Character
Respondents who sell sugar in there wholesale and Retail outlet were sources of
data collection.

. Sampling Plan
Sampling unit

: WHOLESALER & RETAILER.

Sampling Method

: Convenience Sampling

Sampling Size

: 70 Retailers Respondents,20 Wholesaler.

Sample Area

: Bagalkot,Kerur, Jamakhandi, Mudhol, Mahalingpur, Kaladgi and Banahatti

Page | 114

RETAILERS

Awareness about the grading of sugar.

Page | 115

AWARENESS ABOUT THE GRADING OFSUGAR

3%

YES
NO
97%

Awareness about grading

Percentage(%)

Yes

97%

No

3%

ANALYSIS
The data reveals that 97% of the retailers are aware about the different grades of sugar
practiced by sugar mills and only 3% of retailers are not aware about the different grades of
sugar.

Page | 116

 Sales of different grades of sugar from Retailers.

Sales of different grades of suagr

1% 2%
M-30

20%

0%

S1
S2

18%

58%

M-30 and S1
M-30 and S2
S1 and S2

1%

No of Retailers
1

All three

Sugar grade

Percentage(%)

M-30

2%

41

S1

58%

S2

1%

13

M-30 and S1

18%

M-30 and S2

0%

Page | 117

14

S1 and S2

20%

All three

1%

Analysis.
From the above graph and table we get that 58% of the retailers will sell S1 grade sugar
only and 18% retailers will sell M-30 and S1 graded sugar,20%of the retailers will sell S1 & S2 graded
sugar, and 2% of retailers will sell M-30 grade sugar and 1% ,1% of retailers will sell only S2 and all
three graded sugar.

InterpretationFrom the above analysis we get that most of the retailers will prefer to sell S1
graded sugar more than the other two grade sugars.(M-30 and S2).

Factors influencing during purchase of sugar.

Factors
Quality

No.of retailers
21

% of total
30%
Page | 118

Price

28

40%

Availability

11%

Service

13

19%

Total

70

100%

Factors influencing during purchase of sugar

19%

30%
quality

11%
40%

price
availability
service

Analysis From the table we get that out of 70 retailers 28 i,e 40% retailers consider price as main
factor,21 i,e 30% retailers consider quality as main factor,13 i,e 19% retailer consider
service as main factor and 8 i,e 11% retailer consider availability as main factor.
Interpretation From graph we can get that most of the retailers who are in business irrespective of number
of years in business will consider price as the main factor ,then they will look for the quality,
then they will look in to the availability and service provided by the wholesaler.

By this we can get that their is sufficient supply of sugar in the market, just retailers look for
good price and good quality of the sugar.

Page | 119

Stock problem

Responses of Retailers about the stock problem.

Stock problem

No of Retailers

% of Total

Yes

10

14%

No

60

86%

Total

70

100%

YES
14%

NO
86%

Analysis and InterpretationPage | 120

From the table we get that out of 70 retailers 60 retailers are not facing any stock
problem, and only 10 people are facing stock problem.

 Different package styles practiced by the retailers.

Package style(kg)

No of retailers

% of Total

21

30%

19

27.1%

18

25.7%

More than 5

12

17.1%

Total

70

100%

25

20

15
no of retailers

10

0
1kg packs

2kg packs

5kg packs

Morethan 5 kg
packs

Page | 121

Analysis and Interpretation:

From table and graph we will get that 30% of the retailers sell their sugar by making 1kg
packs,27% retailers sell their sugar by making 2kg packs most, 26% retailers sell their sugar
by making 5 kg packs most, 17% retailers sell their sugar by making more than 5 kg packs.
1kg,2kg,5kg packaging style is adopted by the most of the retailers.

Acceptability of New depots (New distribution channel)

Acceptability of New depots.

yes

no

14%

86%

Page | 122

Acceptance

No of retailers

% of Total

Yes

60

86%

No

10

14%

Total

70

100%

Analysis and interpretation-

The data reveals that 86% of the retailers are ready to buy the sugar from the
Nirani sugars company if it set up new depots in there area

14% retailers not accepted to buy the sugar from the Nirani sugars limited if it
set up new depots in there area. So its good to set up new depots in there
area.

Wholesaler;
Page | 123

Factors influencing the wholesaler during

purchase of the sugar from the

company.

Factor

No of wholesaler

% of Total

Quality

Price

12

60%

15%

Availability
Total

20

25%

100

Analysis and Interpretation:

Page | 124

 The data reveals that 60% of the wholesalers will consider price as the prime factor while
purchasing of sugar from the sugar factories.

25% of the wholesalers look for the quality factor as the major factor, and 15% of the
wholesalers will consider availability as the main factor.

Profit margin of wholesaler/quintal

Profit margin(Rs)

No of wholesalers

% of Total

Rs 50

35%

Rs 100

13

65%

Total

20

100%

Page | 125

14
12
10
No of wholesaler

Column1
6

Column2

4
2
0
Rs.50

Rs100

Analysis and Interpretation:

The data reveals that the 65% wholesaler get profit up to Rs 100 /quintal.

35% of the wholesalers will get profit up to Rs 50/quintal.

Page | 126

 Sale of sugar to final consumer from wholesalers.

yes
20%

no
80%

Sale to final consumer

No of wholesaler

% of total

Yes

20%

No

16

80%

Total

20

100%

Analysis and Interpretation:

The data reveals that 80% of the wholesalers sell sugar to the final consumers

Page | 127

20% of the wholesalers dont sell sugar to the final consumer.

FINDINGS

Price is the main factor considered by the most wholesalers and the retailers, while placing
orders.
S1 is the most selling sugar grade in the local market by the wholesaler and retailers
irrespective of price and quality .
97% retailers are aware about the different grades of sugar.
86% of retailers are ready to buy the sugar , if Nirani sugars limited setup new depot in their
respective area.
85% of retailers are not facing any stock problem, indicating the present distribution channel
is working fine.
Packaging method used by the most of the wholesaler as 100kg,50kg and 25kg.(most as 100
kg)
Packaging method used by the most of the retailers as 1kg, 2kg and 5kg.
Page | 128

 Package material used by the most of the wholesaler is Gunny bag.

package material used by the most of the retailer is plastic bags.

Recommendation
The company itself develop a cost effective eco packaging materials and distributing
them to retailers and wholesalers, this mechanism not only helps Nirani sugars to
build its brand and creates awareness about its brand.
The Nirani sugar should go ahead with its proposed area to service up to new depots
nearing delivery location as the majority of retailers have shown acceptability towards
to buy sugar from Nirani sugar industry.
The Nirani sugar should focus expanding its market, even on export market as it is
facing stiff competition in local market.

Page | 129

QUESTIONNAIRE(wholesaler)

NAME: _____________________________________
NAME OF THE SHOP: _________________________
Page | 130

1) Do you sell sugar in your business unit?

Yes

no

2) From how many years are you into the business of selling sugar?
a. 0-2 years
b. 2-5 years
c. 5-10 years
d. 10+years

3) From where you will purchase sugar for resale purpose?

_____________________________________________________________________
4) What factors you consider while buying sugar?
a. Quality

b. price.

c. availability

d. service

e. others

5) Are you aware of grading of sugar?

Yes

No

6) Name of grade of sugar sold by you. ( among these 1) M-30, 2) S1, 3) S2? )
a. only 1

b. only 2

c. only 3

e. 1 and 3

f. 2 and 3

g. all three

d. 1 and 2

7) What is the average sale per day?

_________________________________________________________________________

Page | 131

8) Name the areas from which retailers come in your shop to buy sugar.
_______________________________________________________________________
_______________________________________________________________________
9) What factors retailers look while purchasing sugar from you?
a. Quality

b. price.

c. availability

d. service

e. others

10) At what rate you are selling sugar per quintal?

______________________________________________________________________
11) What is your profit margin per quintal?
______________________________________________________________________
12) How do you pack your sugar?
______________________________________________________________________
13) Name the package material used by you?
______________________________________________________________________
14) How many retailers buy from you?
a. <5

b. 5 to 10

c. 10 to 20

d. 20 to 30

e. >30

15) DO you sell to final consumer?

Yes

No

If yes, how?
_____________________________________________________________________________

Page | 132

16) Have you faced any stock problem?

Yes

No

a) If yes, give reason.

_____________________________________________________________________
_____________________________________________________________________

QUESTIONNAIRE(Retailer)

NAME: _____________________________________
NAME OF THE SHOP: _________________________

1)Do you sell sugar in your unit?

Yes

no

2)From how many years are you into the business of selling sugar?
e. 0-2 years
f.

2-5 years

g. 5-10 years
h. 10+years

3)From where you will purchase sugar for resale purpose?

_____________________________________________________________________
4) If the NIRANI Sugars company setup its own depot in your area do you buy from them?
Yes

No

Page | 133

5) What factors you consider while buying sugar?

a. Quality

b. price.

c. availability

d. service

e. others

6) Are you aware of grading of sugar?

Yes

No

7) Name of grade of sugar sold by you.(among these 1) M-30, 2) S1, 3) S2?)

a. only 1

b. only 2

c. only 3

e. 1 and 3

f. 2 and 3

g. all three

d. 1 and 2

8) What is the average sales per day?

_________________________________________________________________________

9) What factors customers look while purchasing sugar from you?

a. Quality

b. price.

c. availability

d. service

e. others

10) At what rate you are selling sugar per kg?

______________________________________________________________________
11) What is your profit margin per kg?
______________________________________________________________________
12) How do you pack your sugar?
______________________________________________________________________
Page | 134

13) Name the package material used by you?

______________________________________________________________________

14) Is the sales more in bulk quantity or in small quantity?

Bulk

small.

15) What Kg of sugar is purchased by the customers mostly?

1) 1 Kg

2) 2 kg

3) 5Kg

4) 10 kg

5) more than 5 kg

16) Have you faced any stock problem?

Yes

No

b) If yes, give reason .

_____________________________________________________________________
_____________________________________________________________________

Page | 135

BIBLIOGRAPHY:

Reference Books:
o Marketing
: Philip Kotler
o Marketing Research
: David A.Aaker,V.kumar
The responses of the respondents are assumed to be true.
Some of the journals of the company

Websites:
http://www.goole.com

A
Page | 136

FINAL PROJECT STUDY REPORT

ON
Training Undertaken at

SHRIRAM RAYONS, KOTA

Titled
Recruitment And Selection Process
Submitted in partial fulfillment for the
Award of degree of

Master of Business Administration

Submitted by: -

Project Guide:-

Jahangir Ansari

Mr. Mani Menon

MBA HR

Officer A

Final year

Personnel Department

2009-11

Page | 137

CERTIFICATE
This is to certify that the project work done on Recruitment & Selection Process is a
bonafide work carried out by Mr. Jahangir Ansari under my supervision and guidance. The
project report is submitted towards the partial fulfillment of Master of Business
Administration.
This work has not been submitted anywhere else for any other Degree/Diploma. The original
work was carried during 20/6/2011 to 19/7/2011 in DCM Shriram rayons.

Project Guide
Mr. Mani Menon
Officer A
Personnel Department

Page | 138

DECLARATION

I Jahangir Ansari student of MBA final Year hereby declare that the summer training report
on Recruitment & Selection Process submitted to Punjab Technical University,
Jalandhar in partial fulfillment of Degree of Masters of Business Administration is the
original work conducted by me.

The information and data given in the report is authentic to the best of my knowledge.This
summer training report is not being submitted to any other university for award of any other
Degree, Diploma, and Fellowship.

Jahangir Ansari
MBA-HR
Final year

Page | 139

ACKNOWLEDEMENT

Words are inadequate to express my gratitude to the DCM Shriram rayons for giving me an
opportunity to undergo the summer training in their company and extend me full cooperation,
enabling me to successfully complete this project report.
I am thankful to my family and friends who have helped and supported me to take this project
a success.
I am particularly grateful to Mr. Mani Menon, Officer A- Personnel department (Shriram
rayons) for his cooperation extended to me by providing necessary information and timely
help.
I am also thankful to Mr. KKR Raju (Asst. manager B),Mr. BL Bhandari (Asst. manager
B),Mr. Anuj sisodia (IR manager B) & Mr. KK Rai (Sr. officer) for the valuable
suggestions and encouragement in completing this project successfully.

Jahangir Ansari
MBA-HR
Final year

Page | 140

PREFACE

The MBA curriculum is so designed that student get enough practical knowledge of business
world which helps them to explore their skills in the corporate world in future.

The MBA training helps the students to understand and gain knowledge about the industry
and market environment. It develops skills of analyzing and interpreting problems through
application of concepts and techniques of management.

This project helped us analyze the difference between the organizational realities and the
theories that have been taught in our academic sessions and also gave us a real experience of
the corporate world.

This project also helped us in understanding the working and functioning of the organization
in a better way. It also taught us how to take every experience in the right way and learn from
each one. Finally the analysis of the report and the recommendation made by us should be
practically feasible put to test in real life situation.

Page | 141

EXECUTIVE SUMMARY

Today, in every organization personnel planning as an activity is necessary. It is important

part of an organization. Human Resource Planning is a vital ingredient for the success of the
organization in the long run. The objectives of Human Resource Department are Human
Resource Planning, Recruitment & Selection, Risk Management, and Performance Appraisal.
Each objective needs special attention and proper planning and implementation.

For every organization it is important to have a right person on a right job. Recruitment and
selection plays a vital role in this situation. Shortage of skills and the use of new technology
are putting considerable pressure on how employers go about Recruiting and Selecting staff.
It is recommended to carry out a strategic analysis of Recruitment and Selection.

With reference to this context, this project is been prepared to put a light on Human Resource
Procurement process at DCM Shriram Rayons. This report is fully highlighting how an
employee is Recruited, Selected, and Inducted at DCM Shriram Rayons

Page | 142

CONTENTS

INTRODUCTION
Founder of Shriram Group
Overview of Industry
Locations, Units and their Products
Milestones
Introduction of Recruitment & Selection
COMPANY PROFILE
About Shriram Rayons
Mission
Achievements
Customers & Dealers
Products
Organizational Structure
Bankers & Auditors
Addresses of Company
HUMAN RESOURCE MANAGEMENT
STUDY OF RECRUITMENT & SELECTION PROCESS
RESEARCH METHODOLOGY
CONCLUSIONS
LIMITATIONS
SUGGESTIONS
REFERENCES

Page | 143

INTRODUCTION
FOUNDER OF SHRIRAM GROUP:-

Lala Shri Ram (1884-1963)

Page | 144

OVERVIEW OF THE INDUSTRY: DCM shriram industries ltd represents a rich & versatile entrepreneurial legacy for over 100
years old house of shriram. The founder, sir shriram was a man of great integrity who laid
down the stamp of his personality upon a whole tenure of Indian history. Starting with a
textile unit, DCM ltd diversified into various areas & development into a leading industrial
empire of India under the stewardship of Dr. Bharat ram, Dr. Charat ram & Dr. Bansi dhar on
1st April 1990, the DCM conglomerate into four new companies & thus came into being the
DCM shriram industries ltd. headed by Late. Dr. Bansi dhar.
HRD, team work & employees participation are key thrust areas of management. Customer
satisfaction is the prime focus of entire enterprise. Industry won many safety awards from
ministry of labor, govt of India. An award of excellence in pollution control compliance has
been given by Rajasthan state pollution control board. To keep pace with the current stringent
air pollution control standards, the company has installed two electrostatic factors have
contributed to the organization growth.
In industrial relations, the company philosophy is based on the concept that employees are
the most important asset in its economic activity & this has, with the passage of time seen the
implementation of numerous welfare schemes & built up the feeling that the employees, now
numbering 1120 approx. are considered as part of one family the DCM. Build up a team of
professional managers 7 competent employees who have been largely responsible for its
growth.

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LOCATIONS, UNITS & THEIR PRODUCTS:Units

Shriram Rayons

Locations

Kota (Rajasthan)

Products

Industrial Rayon, Nylon,

Chemicals

Daurala Sugar Works

Daurala (U.P)

Sugar, Alcohol, Aromatic

Chemicals

Daurala Organics Ltd.

Daurala (U.P)

Drug Intermediates, Fine

Chemicals

Daurala F&B (P) Ltd.

Daurala (U.P)

Scotch & Blended,

Whiskies, Liquors

DCM Hyundai Ltd.

Polivakkam (Tamil)

Dry Cargo, Sheet Metal

Page | 146

MILESTONES:1889- Delhi Cloth Mills founded at Delhi

1932-Sugar factory setup at Daurala
1934-Textile mills setup at Lyallpur (Now Faisalabad in Pakistan)
1940-Sugar factory setup at Mawana
1941-Heavy inorganic chemicals plant setup at Delhi
1943-Distillery setup at Daurala
1948-New textile mills setup at Delhi
1958- Spinning mills at Hissar & Silk mills setup at Delhi
1960-PVC, Chlor-alkali & calcium carbide plant setup at Kota
1965-Rayon tyrecord plant setup at Kota
1967-Liquor operations started at Daurala
1969-Urea plant setup at Kota
1970-Aromatic chemicals plant setup at Daurala
1972-Textile mills setup at Dasna, Computers unit setup at Delhi
1977-Precision castings (for automobiles) foundry setup at Ropar
1990-DCM restructured into four different groups (Birth of DCM shriram industries group)
1994-Drug intermediates co. established with works at Daurala (Daurala organics Ltd.), Yarn
Dyeing & processing unit established at Alwar
1995-Shipping Containers Company established at Chennai (DCM Hyundai Ltd.)
1997-Joint venture liquor company with works at Daurala (DCM Remy Ltd.)
2004-Commercial production of anhydrous alcohol ( for admixing field)
2005-Daurala organics Ltd., amalgamated with DCM shriram industries Ltd.

Page | 147

INTRODUCTION OF RECRUITMENT AND SELECTION:RECRUITMENT:

According to Flippo Recruitment is the process of searching for prospective employees and
stimulating them to apply for jobs in the organization.
According to Dale Yoder Recruitment is a process to discover the sources of manpower to
meet the requirements of the staffing schedule and to employ effective measures for
attracting that manpower in adequate numbers to facilitate effective selection of an efficient
working force.
Recruitment is a linking function joining together those with jobs to fill and those seeking
jobs. Recruiting makes it possible to acquire the number and types of people necessary to
ensure the continued operation of the organization. Recruiting is the discovering of potential
applicants for actual or anticipated organizational vacancies. In simple terms, recruitment
applies to the process of attracting potential employees to the organization or company. It is a
systematic means of finding and inducing available candidates to apply to the company or
enterprise for employment. Recruitment is said to be positive it its approach as it seeks to
attract as many candidates as possible.

Page | 148

SELECTION:

According to Dale Yoder Selection is the process in which candidates for employment are
divided into two classes those who are to be offered employment and those who are not.
Selection means a process by which qualified personnel may be chosen from the applicants
offering their services to the organization for employment.

Selection is the process of picking individuals with requisite qualifications and competence to
fill job in the organization. A formal definition of selection is that it is the process of
differentiating between applicants in order to identify those with a greater likelihood of
success in a job.
Selection is the process of examining the applicants with regard to their suitability for the
given job or jobs, and choosing the best from the suitable candidates and rejecting the others.
Thus, selection is negative in its application in as much as it seeks to eliminate as many
unqualified applicants possible in order to identify the right candidate.

False negative error

True positive (High hit)

True negative (Low hit)

False positive error

Success

Failure

Failure predicted

Success predicted

Outcomes of the selection decision

Page | 149

COMPANY PROFILE

ABOUT SHRIRAM RAYONS:-

Shriram rayons is a unit of DCM shriram industries limited established in 1965 with
technical know-how from beau nit fiber inc.USA for manufacturing high tenacity rayon tyre
yarn, cord, fabrics for industrial applications. Chemicals like carbon disulphide and sodium
sulphate were also setup.

It also developed wide markets for its rayon tyre yarn/cord/grey & dipped fabric in Europe,
North east & Middle east countries. Accredited by ISO 9002 from reputed RWTUV,
Germany. Shriram rayon is the only producer in india having its own dipping treatment
facility & fabric weaving plant with latest shuttle less weaving machines.

The quality of shriram rayons product has been widely accepted in the international market
& the company is committed to excellence & growth with active participation of all
employees. The companys philosophy is to maintain excellent industrial harmony inside &
outside the factory. Shriram rayons is committed for continuous growth in export by quality
improvement through their technically qualified & experience manpower. Regular training
programmes are conducted for employees development at all levels. Shriram rayons has
installed another state-of-the-art dipping machine, which is capable of dipping nylon,
polyester tyre fabrics. Shriram rayons is also pioneer in producing dipped nylon chafer in
India. Units annual turnover is approximate Rs150 crores having its 90% share of experts.

Page | 150

MISSION:Our mission is to be a leader in our business by providing world class production & services
to meet our customers needs & to ensure a healthy return to the state holders.

Page | 151

ACHIEVEMENTS:-

We are known for adapting to change. We have transformed the unit from domestic
one to a virtual 100% export oriented unit.
Recipients of 8 Export Awards for highest exports of Rayon Tyre Cord Product from
the Silk & Rayon Textile Export Promotion Council.
Recipients pf 15 Safety Awards for safe and healthy operations from government of
India, Ministry of Labour.
We have been accredited with ISO 9002/9001/2000 from RWTUV of Germany
continuously since 1994.

CUSTOMERS:-

YARN: Goodyear (Luxemburg), Firestone (Spain), L.Italia (Italy), Stomin (Poland), Nile
cordsa (Egypt)
Fabric: Firestone (France), Bridgestone (Japan, Italy, Poland), Fabric cordsa (Egypt), Cleber
(Germany)

DEALERS:-

Ruchi udyog (Chem), Delhi

Hukum chand durga Prasad, Delhi
Drug chemicals, Sonipat
N.H Dyes & chemicals, Ludhiana
Mukrey chemicals, Chandigarh
Shankarlal, Bhilwara

Page | 152

PRODUCTS:Shriram Rayons has the following product range

(Rayon Products)

(Nylon Products)

(Chemicals)

RAYON PRODUCTS:
1220/1 D. Tex Rayon Tyre Yarn
1840/1 D. Tex Rayon Tyre Yarn
1220/2 D. Tex Rayon Tyre Cord
1840/2 D. Tex Rayon Tyre Cord
Rayon Tyre Cord Fabric (Grey)
1840/1 D. Tex (1650/1 Denier) Dipped Rayon Chafer Fabric
NYLON PRODUCTS:
940/1 D. Tex (840/1 Denier) Dipped Nylon Chafer Fabric
1400/1 D. Tex (1260/1 Denier) Dipped Nylon Chafer Fabric
2/1880 D. Tex Nylon Tyre Cord Fabric (Gery)
2/940 D. Tex Nylon Tyre Cord Fabric (Grey)
2/1400 D. Tex Nylon Tyre Cord Fabric (Grey)
CHEMICALS:
Anhydrous Sodium Sulphate (Cross Grain Quality)
Anhydrous Sodium Sulphate (Normal Quality)
Carbon Di Sulphide

Page | 153

ORGANIZATIONAL STRUCTURE:-

BOARD OF DIRECTORS:
Sh. Tilak Dhar

Chairman and Managing Director

Sh. Alok B. Shriram

Dy. Managing Director

Sh. Madhav B. Shriram

Whole-Time Director

Sh. Anil Gujral

Director & CEO (Chemicals & Alcohols)

Sh. P.R Khanna

Dr. V.L Dutt
Sh. S.B Mathur
Sh. S.B Mathur
Sh. Ravinder Narain
Sh. S.C Kumar

IFCI Nominee

COMPANY SECRETARY:
Sh. B.P Khandelwal

Sr. Executive Director

PRINCIPAL EXECUTIVES:
Sh.D.C Mittal

President

Sh. G. Kumar

Advisor to CMD

Sh. K.N Rao

Chief Operating Officer (Rayons)

Sh. P.V Bakre

Sr. Vice President

Sh.N.K Jain

Chief Financial Officer

Page | 154

ORGANIZATIONAL CHART (SHRIRAM RAYONS):

KN Rao
(COO)
(Rayon
Operations)

VK Jaitly (Sr
GM)

PTE

Production

CAA

Technical

Engineering

Comm&Ad
min

A/c& ERP

IRD

Spinning

Viscose

Spinbath

Textile

Qlty
Assurance

Engg &
Project

VK Jaitly

A/c,Finance

IR

Govind
Kumar

CP
Chaudhary

RK
Maheshwari

SK
Agarwal

Kireet Joshi

S Bali

Law

Ashok
Dalmia

Anuj
Sisodia

Purchase &
Sales

Arish
Anklesaria

Page | 155

HIERARCHY OF PERSONNEL (SHRIRAM RAYONS):

Mr. Ashok
Dalmia (Sr.
Manager)
Recruitment &
Training
Mr.KKR Raju
(Asst. Manager
'B')

Income Tax &

Salary
Mr. BL Bhandari
(Asst. Manager
'B')

Time Office

Mr. Mani
Menon (Officer
'A')

Page | 156

HIERARCHY OF IR (SHRIRAM RAYONS):

Mr. Anuj
Sisodia
(Manager 'B')

PF & ESI

Mr. KK Rai

Recruitment &
Welfare

Mr. Rajpal

Payroll Process

Mr. CP Nama

Canteen
Incharge

Mr. Bhanwar
Singh

Time office

Mr. RK
Sharma

Dispensary
Area

Mr. SN Sharma

Page | 157

EMPLOYEES CATEGORIES:

OFFICERS:

COO
Sr. Vice President
Vice President
Sr. G.M
General Manager
Dy. G.M
Asst. G.M
Sr. Manager
Manager A
Manager B
Dy. Manager
Asst. Manager A
Asst. Manager B
Sr. Officer
Officer A
Officer B

Page | 158

SUBORDINATE STAFF:

Sr. Supervisor/ Sr. Foreman/ Sr. Office Assistant/ Chemist A/ Sr. Security Inspector/
Supervisor/ Foreman/ Office Assistant/ Stenographer/ Chemist/ Security Inspector/ Sr.
Draftsman

Sr. Clerk/ Draftsman/ Stenographer/ Assistant Security Inspector/ Clerk/ Typist/ Draftsman/
Telephone Operator

WORKERS:

Skilled
Semi- Skilled
Unskilled

Page | 159

BANKERS AND AUDITORS:-

BANKERS:

State Bank of India

Punjab National Bank
Oriental Bank of Commerce
State Bank of Bikaner & Jaipur
Punjab & Sind Bank
IDBI Bank Limited
Karnataka Bank Limited
Syndicate Bank
State Bank of Hyderabad
Ghaziabad Zila Sahkari Bank Ltd.
Bijnor Zila Sahkari Bank Ltd.

AUDITORS:
A.F Ferguson & Co.
New Delhi

ADDRESSES:Registered Office
Kanchenjunga Building, 6th
Floor, 18 Barakhamba Road,
New Delhi- 110001
Phone: 011-23759300
Fax: 011-23350765
Email: dsil@dcmsr.com
Web: http://www.dcmsr.com

Divisional Office
(Shriram Rayons)
Akashdeep Building, 5th
Floor 26A Barakhamba Road
New Delhi- 110001
Phone: 011-2331-2267
Fax: 011-2331-3494,22351916
Email: srdelhi@dcmsr.com

Working Unit
(Shriram Rayons)
Shriram Rayons
Shriram Nagar
Kota
Rajasthan- 324004
Phone: 0744-2480001,02,04
Fax; 0744-2480003,2481519
Email:
sriramrayons@dcmsr.com

Page | 160

HUMAN RESOURCE MANAGEMENT

MEANING OF HUMAN RESOURCE MANAGEMENT:

According to Flippo
Human Resource Management is the planning, organizing, directing, and controlling of the
procurement, development, compensation, integration, maintenance, and separation of human
resources to the end that individual, organizational and social objectives are accomplished.
Human Resource Management is a process of bringing people and organizations together so
that the goals of each are met. It is that part of the management process which is concerned
with the management of human resources is an organization.

According to Arthur Lewis

There are great differences in development between countries which seem to have roughly
equal resources, so it is necessary to enquire into the difference in human behaviors
Human resource management is the management of employees skill, knowledge abilities,
talent, aptitude, creativity, ability etc. different terms are used for denoting Human Resource
Management.

They are labor management, labor administration, labor management relationship, employee
employer relationship, industrial relationship, human capital management, human assent
management etc. Though these terms can be used differently widely, the basic nature of
distinction lies in the scope or coverage and evolutionary stage. In simple sence, human
resource management means employing people, developing their resources, utilizing,
maintaining and compensating their services in tune with the job and organizational
requirements.

Page | 161

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT:

MANAGERIAL FUNCTIONS:

Planning
Organizing
Directing
Coordinating
Controlling

OPERATIVE FUNCTIONS:
Employment
Job Analysis
Human Resource Planning
Recruitment
Selection
Placement
Induction & Orientation
Human Resource Development
Performance Appraisal
Training
Management Development
Career Planning & Development
Internal mobility
Transfer
Promotion
Demotion
Organization Development
Compensation
Job Evaluation
Wage & Salary Administration
Incentives
Bonus
Fringe Benefits
Social Security Measures
Human Relations

Page | 162

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT:

1. Attract highly qualified and competent people.

2. Ensure thats the selected candidates stays longer with company.
3. Make sure that there is match between cost and benefit.
4. Helps the organization to create more culturally diverse workforce.

Whereas, the poor quality of selection means extra cost on training and supervision.
Furthermore, when recruitment fails to meet organizational needs for talent, a typically
response is to raise entry level pay scales. This can distort traditional wages and salary
relationship in organization, resulting in unavoidable consequences. Thus the
effectiveness of the recruitment process can play a major role in determining the
resources that must be expended on other HR activates and their ultimate success.

SCOPE OF HRM AT ORGANIZATIONAL LEVEL:

Scope of HRM is indeed vast. All major activities in the working life of a worker from the
time of his/her entry in an organization until he/she leaves come under the purview of HRM.

Specifically the activities included are:

Procurement
Training and Development
Job Analysis and Job Description
Remuneration
Personnel Records
Welfare and Industrial Relations

Page | 163

PERSONNEL DEPARTMENT AT SHRIRAM RAYONS:

Personnel
Department
Recruitment
& Selection

Resource
Allocation

Training &
Development

This Department looks after the needs and requirement the present employees. This
department includes number of functions which are as follows:

Training & Development

Process & Policies
Appraisal & Increment
Induction involves the information to the new employees about the company, job,
departments etc
Motivational activities & Entertainment
Roles & Responsibilities
Key Result Area
Employee separation includes resignation & dismissal
Joining formalities
Computerization
Helpdesk
Employee verification
Surveys
Project Trainees
Counseling & Grievance handling

Page | 164

STUDY OF RECRUITMENT & SELECTION PROCESS

RECRUITMENT:-

MEANING AND DEFINITIONS OF RECRUITMENT:

Recruitment is hiring of employees from outside. Recruitment has been regarded as the
most important function of the HR department , because unless the right type of people are
hired, even the best plans, organization chart and control system would not do much good.
Recruitment is the discovering of potential applicant for actual or anticipated organizational
vacancies. Accordingly the purpose of recruitment is to locate sources of manpower to meet
the job requirements and job specification.
It is defined as a process to discover the sources of manpower to meet the requirements of
staffing schedule and to apply effective measures for attracting the manpower to adequate
number to facilitate effective selection of an effective workforce
Yoder points out that recruitment is a process to discover the sources of manpower to meet
the requirement of the staffing schedule and to employee effective measures to attracting that
manpower in adequate number to facilitate effective selection of an effective workforce.

Edwin B Flippo defines recruitment as the process of searching for prospective employees
and stimulating them to apply for the jobs in the organization.

It is the process of finding and attracting capable applicants for employment. The process
begins when new recruits are sought and ends when their application are submitted. The
result is a pool of applicants from which new employees are selected.

Page | 165

METHODS OF RECRUITMENT:
Dunn and Stephens summaries the possible recruiting methods into three categories, namely
Direct method
Indirect method
Third party method

DIRECT METHOD:
The direct method includes sending of the recruiters to different educational and professional
institutions, employees contact with public and mannered exhibits. One of the widely used
methods is sending the recruiters to different colleges and technical schools. This is mainly done
with the cooperation of the placement office of the college. Sometimes, firms directly solicit
information from the concerned professors about student with outstanding records.
Other direct methods include sending recruiters to conventions and seminars, setting up exhibits
at fairs, and using mobile offices to go the desired centers.

INDIRECT METHOD:
Indirect method involves mainly advertising in newspapers, on the radios, in trade and
professional journals, technical magazines and brochures. Advertisements in newspapers and
or trade journals and magazines are the most frequently used methods. Senior post is largely
filled with such methods. Advertising is a very useful for recruiting blue color and hourly
worker, as well as scientific, professional, and technical employees.
Local newspaper can be good sources of blue collar workers, clerical employees, and lower
level administrative employees.
The main point is that the higher the position in the organization the more dispersed
advertisement is likely to be. The search for the top executive might include advertisement in
a national periodical, whereas the advertisement of the blue color jobs usually confine to the
daily newspaper.
According to the Advertisement tactic and strategy in personnel Recruitment, three main
points need to be borne in the mind before an advertisement in inserted.
First, to visualize the type of applicants one is trying to recruit.
Second, to write out a list of advantages the company offers, or why should the reader join
the company.
Third, to decide where to run the advertisement , not only in which area, but also in which
newspaper having a local, state or a nation- wide circulation.

Page | 166

THIRD PARTY METHOD:

These include the use of commercial or private employment agencies, state agencies, and
placement offices of schools colleges and professional associations recruiting firms,
management consulting firms, indoctrination seminars for college professors, and friends and
relatives.
Private employment agencies are the most widely used sources. They charge a small fee from
the applicant. They specialize in specific occupation; general office help, salesmen, technical
workers, accountant, computer staff, engineers and executives.
State or public employment agencies are also known as the employment or labor exchanges,
are the main agencies for the public employment. Employers inform them of their personnel
requirement, while job seekers get information for them about the type of job are referred by
the employer.
Schools and colleges offer opportunities for recruiting their student. They operate placement
services where complete biodata and other particular of the student are available.
Professional organization or recruiting firms maintain complete information records about
employed executive. These firms maintain complete information records about employed
executives. These firms are looked upon as the head hunters, raiders, and pirates by
organization which loses their personnel through their efforts.

EVALUATION OF RECRUITMENT METHOD:

The following are the evaluation of the recruitment method

Number of initial enquires received which resulted in completed application forms

Number of candidates recruited.
Number of candidates retained in the organization after six months.
Number of candidates at various stages of the recruitment and selection process,
especially those short listed.

Page | 167

OBJECTIVE OF RECRUITMENT:

To attract with multi dimensional skills and experience that suite the present and
future organization strategies.
To induct outsider with new perspective to lead the company.
To infuse fresh blood at all levels of organization.
To develop an organizational culture that attracts competent people to the company.
To search or headhunt people whose skill fit the companys values?
To seek out non-conventional development grounds of talent
To devise methodology for assessing psychological traits.
To search for talent globally not just within the company.
To design entry pay that competes on quality but not on quantum.
To anticipate and find people for position that doesnt exists yet.

Recruitment represents the first contact that a company makes with potential employees. It is
through recruitment that many individuals come to know about the company and eventually
decide whether they wish to work for it.

The recruitment process should inform qualified individuals about the job so that applicant
can make comparison with their qualification and interest.

Page | 168

FACTORS AFFECTING RECRUITMENT:

There are two types of factors that affect the Recruitment of candidates for the company.
Internal factors: These includes

Companys pay package

Quality of work life

Organizational culture

Companys size

Companys product

Growth rate of the company

Role of trade unions

Cost of recruitment

External factors: These include

Supply and demand factors

Employment rate

Labor market condition

Political, legal and government factors

Information system

Page | 169

FACTORS TO BE UNDERTAKEN WHILE FORMULATING RECRUITMENT

POLICIES:
The following factors should be undertaken while formulating the policies.
Government polices
Recruitment sources
Recruitment needs
Recruitment cost
Organizational and personal policies

THEORIES REGARDING RECRUITMENT:

Recruitment is two way street: it takes a recruiter has a choice whom to recruit, same way the
prospective employee also has taken the decision whether or not to apply for the given job
vacancy.
The individual take the decision usually on three different basic:
The objective theory
The critical contact theory
The subjective factor theory

The objectives theory:

Views that the process of organizational choice as being one of weighing and evaluating set
of measurable characteristic of employment offers, such pay, benefits , location, opportunity
for advancement, the nature of job to performed, and education opportunities.
The critical contact theory:
Suggests that the typical candidates is unable to make a meaningful differentiation of
organizations offers in terms of objective or subjective factors, because of his limited or very
short contact with the organization. Choice can be made only when applicant can readily perceive
the factors such as the behavior of the recruiters, the nature of the physical facilities, and such as
the efficiency in processing paper work association with the application.

The subjective theory:

Emphasizes the congruence. Here the choices are made on highly personal and emotional
basis.

Page | 170

RECRUITMENT PROCESS:
The actual steps involved in recruitment follow a well defined path:

Application shortlist:
In this step, we shortlist the resume received from various sources based on the suitability for
the requirement.

Preliminary Assessment:
The short listed candidates go through a preliminary round of interviews. This interview lays
more emphasis on functional competencies. To have more data on the functional skills, the
candidates may be given a business case for analysis and presentation (This is done for
certain positions only).

Final interview:
Here the candidates who successfully clear the first round of interview go through another
round of interview with one or more of the functional heads.

Medical Evaluation:
Candidates who are selected are asked to undergo a medical test.

Page | 171

PROCESS CHART:

Stage First
Job Description
Define Requirements
Job Specifications

Stage Second
Attract Potential
Employees

Job Advertising

Stage Third
Select Right Peoples

Job Interview

Ability Tests

Page | 172

EVALUATION OF RECRUITMENT PROCESS:

The following are the evaluation of the recruitment process:

Return rate of application sent out.
Number of suitable candidates for selection.
Retention and performance of the candidate selection.
Cost of recruitment
Time lapsed data.
Comments on image projected.

PHILOSOPHIES OF RECRUITMENT:
Basically there are two Philosophies of recruitment. These are as follows:

Realistic Job Preview (RJP):

Realistic Job Previews provides complete job related information to the applicants so that they
can make the right decision before taking up the jobs. It includes positive and the negative aspects
of the job.

Job Compatibility Questionnaire (JCQ):

Job compatibility Questionnaire was developed to determine whether an applicants
preference for the work match the characteristic of the job. The JCQ is designed to collect
information on all aspects of the job which have a bearing in on employee performance
.absenteeism, turnover and job satisfaction. The underlying assumption of JCQ is that, greater
the compatibility between an applicants preference for the job and characteristic of the job as
perceived by the job seeker, the greater the probability of employee effectiveness and longer
the tenure.

Page | 173

SELECTION:-

MEANING AND DEFINITONS OF SELECTION:

Selection is a negative process and involves the elimination of candidates who do not have
the required skills and qualification for the job proposed. Also it is a process of differentiating
between applicants in order to identify and hire those with greater likelihood of success in
job.
The objective of selection decision is to choose the individual who can most successfully
perform the job from the pool of qualified candidates. It is the system of function and devise
adopted in a given company to ascertain whether the candidates specifications are matched
with the job specifications and recruitment or not.
Selection process or activities typically follow a standard patter, beginning with an initial
screening interview and concluding with final employment decision. The traditional selection
process includes: preliminary screening interview, completion of application form,
employment test, comprehensive interview, background investigation, physical examination
and final employment decision to hire.
According to Dale Yoder Selection is the process in which candidates for employment are
divided into two classes those who are to be offered employment and those who are not.
Selection means a process by which qualified personnel may be chosen from the applicants
offering their services to the organization for employment.

PURPOSE OF SELECTION:
The purpose of selection is to pick up the most suitable candidate who would meet the
requirements of the job and the organization best, to find out which job applicant will be
successful, if hired. To meet this goal, the company obtains and assesses information about
the applicants in terms of age, qualifications, skills, experience, etc. The needs of the jobs are
matched with the profile of candidates. The most suitable person is then picked up after
eliminating the unsuitable applicants through successive stages of selection process.

Page | 174

ORGANIZATION FOR SELECTION:

Until recently the basic hiring process was performed in a rather unplanned manner in many
organizations. In some companies, each department screened and hired its own employees.
Many mangers insisted on screening their own employees as they thought no one else could
do that as efficiently as they themselves.
But now selection is centralized and handled by the Human Resource Department. This type
of arrangement is also preferred due to some of these advantages:
It is easier for the application because they can send their applications to a single
centralized department.
It facilitates contact with applicants because issues pertaining to employment can be
cleared through one central location.
It helps operating managers to concentrate on their operating responsibilities. This is
especially helpful during the chief hiring period.
It can provide for better selection because hiring is done by specialist trained in
staffing techniques.
The applicant is better assured of consideration for a greater variety of jobs.
Hiring cost is cut because duplication of efforts is reduced.
With increased governmental regulation on selection process, it is important that
people who know about these rules handle a major part of the selection process.

Ideally, a selection process involves mutually decision making. The organization decides
whether or not to make a job offer and how attractive the job offer should be.

Page | 175

BARRIERS TO EFFECTIVE SELECTION:

The main objective of selection process is to hire people having competence and commitment
towards the given job profile. But due to some reason the main purpose of effectively
selecting candidates is defeated. These reasons are:
Perception or the Halo effect:
Many a times the interviewer selects a candidate according to the perception he has or he
made up while talking or looking at the individual. This way he does not see through the
caliber or the efficiency of the individual and many times it leads to the selection of the
wrong candidates.

Fairness:
During the selection process the interviewer does not select the individual on the basis of
his knowledge and hence the right type of the candidates is not selected.

Pressure:
The people from the HR department and also have a lot of pressure from the top
management and from other top class people for selecting the candidates they want.
This ways the purpose of effective selection process of effective selection process is
defeated as they have to select that individual whether or not he is capable of the job.
That is being offered.

ESSENTIAL OF SELECTION PROCEDURE:

Someone should have the authority to select.
There must be sufficient number of applicants from whom the required number of
employees to be selected.
There must be some standards of personnel with which a prospective employee may be
compared.

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FACTORS AFFECTING SELECTION DECISION:

Includes:
Profile matching
Organization and social environment
Multi correlations
Successive hurdles
METHODS OF SELECTION:
Unscientific method of selection:
Physiognomy: Physical features such as shape of face, color, etc.
Graphology: Selection is made on the basis of handwriting.
Scientific method of selection:

Photograph
Letter of Application
Application Blanks

References & Recommendations:

Documentary evidences in favor of satisfactory performance in the past are provided
by references and recommendations from the previous employer.
Interview:
Interview techniques are extensively used for the selection of employees in any and
every job.
According to Scott & Others An interview is a purposeful exchange of ideas, the
answering of questions and communication between two or more persons. In other
words, an interview is an attempt to secure maximum amount of information from the
candidate concerning his suitability for the job under consideration.

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Types of Interviews:
Preliminary Interview:
Informal Interview
Unstructured Interview
Core Interview:
Background Information Interview
Stress Interview
Formal and Structured Interview
Panel Interview
Group Discussion Interview
Job and Probing Interview
Depth Interview
Decision Making Interview:
After the candidates are examined by the experts including the line managers of the
organization in the core of the job, the head of the department concerned interviews
the candidates once again, mostly through informal discussion. The interviewer
examines the interest of the candidate in the job, organization, reaction to the working
conditions, career planning, promotional opportunities, work adjustments and
allotment etc. The personnel manager also interviews the candidates with a view to
find out his/her reaction regarding salary, allowances, benefits, promotions,
opportunities etc.
SELECTION TESTS:
According to Monappa & saiyadain Psychological tests are an objective and standardized
measure of a sample of behavior.
Features of selection tests:
Objective: Refers to validity & reliability of measuring instrument.
Validity: Refers to content of measurement.
Reliability: Refers to the consistency with which the test yields the same results
throughout the series of measurement.
Standardization: It refers to the uniformity of procedure in administering & scoring
the test.

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Types of selection tests:

Aptitude Tests:

Intelligence Test
Mechanical Aptitude Test
Psychomotor Test
Clerical Aptitude Test

Achievement Tests:

Job Knowledge Test

Work Sampling Test

Situational Tests:

Group Discussions
In Basket:
The candidate in this test is supplied with actual letters, telephone and
telegraphic message, reports and requirements by various officers of the
organization, adequate information about the job and organization. The
candidate is asked to take decisions on various items based on the basket
information regarding requirements in the memoranda.

Personality Tests:

Objective Test
Projective Test

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SELECTION PROCESS:

Screening of
Applicants

Selection

Interview

Checking by
References

Physical Examination

Hiring Decisions

Placement

PERFORMA OF PERSONNEL REQUISITION FORM:

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This form is used by each & every department of the company requesting for manpower in
that department.

SHRIRAM RAYONS
(PERSONNEL DEPARTMENT)
PERSONNEL REQUISITION FORM

1.
2.
3.
4.
5.
6.

POSITION:
NO. OF VACANCIES:
CATEGORY:
DEPARTMENT:
PRESENT STRENGHT OF DEPARTMENT:
QUALIFICATION ESSENTIALS:
QUALIFICATION DESIRABLE:
7. PREFERRED AGE GROUP:
8. EXPERIENCE
NO. OF YEARS

AREAS

9. JOB DESCRIPTION/DETAILS
JUSTIFICATION:

DATE:

DEPARTMENT HEAD

DIVISIONAL HEAD

PERSONNEL DEPTT.

RECOMMENDATIONS/COMMENTS

SANCTION

SR. GM

DATE

COO

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APPLICATION BLANK FORM USED FOR SCREENING OF CANDIDATES BY

SHRIRAM RAYONS:

SHRIRAM RAYONS
(A unit of DCM Shriram industries Ltd.)
PERSONAL DATA FORM
(To be filled in by candidate in own handwriting)

1) Post Applied For:

PHOTO

2) Personal Particulars:
Name:
Mailing Address

Permanent Address

Tel No (Residence)

Tel No (Office)

3) Date of Birth

Age

4) Place of Birth

Place of Origin

5) Marital Status

Religion

6) Father/ Husbands Name

Occupation

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7) Childrens
Children

Numbers

Age

Occupation

Speak

Read

Write

Sons
Daughters

8) Extra-Curricular Activities
9) Hobbies
10) Languages Known
Language

11) Dependents (Excluding Wife and Childrens)

Relationship

Age

Reason of Dependent

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12) Earning Members in the Family

Relationship

Age

Address where
Employed

Approx Monthly
Income

13) Source/Amount of any other Income

14) Give Particulars of Material Indebtedness

15) Member of any Religious, Social, Political Organization

Profession

Society

Honors

Thesis

16) Have you been involved in any Court proceedings?

If yes give Details
17) Physical Disability or Serious illness if any

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18) Educational Details (High school onward)

Name & Address
of
School/College

Board/University

Year of
Entering/Leaving

Degree/Subject
Exam

Percentage %

19) Employment Details (Beginning with present)

Employer name
& address

Position Held

Employed

From To

Salary Year

Reason for
Leaving

Year Joining Leaving

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Scope & Responsibilities under each Employer

Reporting to (Name/Designation)

Please add additional sheet if necessary

20) Present Salary Details
Name of Organization

Present Designation

Particulars
Basic

Amount
Rs (PM)

Remarks

Remuneration Salary
DA
Personal pay
Special Allow.
Residence
Co. Houses
HRA
Water/Electric
charges
House
maintenance
expenses
Telephone
Furniture
Desert cooler
Geyser
Refrigerator
TV/VCR
AC
Soft
Furnishing
Conveyance
Co. Car fully
maintained
Conveyance
Allow
Driver
Others
Children Edu
Club Expenses
Home
Entertainment
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Newspaper
expenses
Leave Travel
expenses
Medical
subsidy
Bonus
Any other
Retirement
Benefits

Contributory
PF
Pension
Gratuity
Total (PM)
Total (PA)

21) References
Name

Designation

Particulars
Unit

Relationship

Deptt

22) Give Two references of people not related to you

Name

Occupation

Address & Name

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23) Other Particulars

How many days notice would you require to join?
Have you been interviewed by us before?
Date

Post

Expected Salary (Rs/PM)

DECLARATION

I shall, if when required, take up casual/Temporary/Permanent duty in the discharge of company

assignments anywhere in India or abroad.
I certify that the foregoing information is correct & complete to the best of my knowledge & belief
& nothing has been concealed. I am not aware of any circumstances which might impair my
fitness for employment. If at any time, I am found to have concealed any material informations or
given any false details, my appointment shall be liable to summary termination without notice or
compensation.
Date

Place

Sign of Candidate

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FOR OFFICE USE ONLY

Preliminary Interview Notes

Date

Interview Board

Sign

Final Interview Notes

Date

Interview Board

Sign

DECISION

Date
ACTION TAKEN

Date

Personnel Department

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REASERCH METHODOLOGY

In everyday life human being has to face many problems viz. social, economical, financial
problems. These problems in life call for acceptable and effective solutions and for this
purpose, research is required and a methodology applied for the solutions can be found out.
Research was carried out at DCM Shriram Rayons to find out the Recruitment and
selection process.

DATA COLLECTION:-

PRIMARY DATA:
Primary data was collected through survey method by distributing questionnaires to branch
manager and other sales manager. The questionnaires were carefully designed by taking into
account the parameters of my study.
SECONDARY DATA:
Data was collected from books, magazines, web sites, going through the records of the
organization, etc. It is the data which has been collected by individual or someone else for the
purpose of other than those of our particular research study. Or in other words we can say that
secondary data is the data used previously for the analysis and the results are undertaken for
the next process.

SAMPLING DESIGN:Random Sampling

Non-Random Sampling

Simple Random Sampling

Judegment Non-Random Sampling

Stratified Random Sampling

Quota Non-Random Sampling

Systematic Random Sampling

Convenience Non-Random Sampling

Multi-Stage Sampling

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CONCLUSIONS

This presents the summary of the study and survey done in relation to the Recruitment and
Selection in DCM Shriram rayons. The conclusion is drawn from the study and survey of
the company regarding the Recruitment and Selection process carried out there.
The recruitment process at DCM Shriram rayons to some extent is not done objectively and
therefore lot of bias hampers the future of the employees. That is why the search or headhunt
of people should be of those whose skill fits into the companys values.

Most of the employees were satisfied but changes are required according to the changing
scenario as recruitment process has a great impact on the working of the company as a fresh
blood, new idea enters in the company.

Selection process is good but it should also be modified according to the requirements and
should job profile so that main objective of selecting the candidate could be achieved.

Once again I express my sincere thanks to Mr. Mani Menon for their valuable guidance. I
also extend my thanks to Mr.KKR Raju, Mr. BL Bhandari, Mr. Anuj Sisodia and Mr. KK Rai
who helped me during my project as they gave me their precious time to solve my problems
regarding project study and gave their valuable suggestions for the fulfillment of my report.

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LIMITATIONS

Though I had a very cordial relation with people at DCM Shriram Rayons, but there were
certain constraints that came my way during the training period.
The major hurdles that I came across were:

The organization was very big, so I could not cover every part of it.
A major constraint was the time duration as it was just 30 days; therefore I was not
able to do a depth study of the Topic.

Page | 192

SUGGESTIONS

Manpower requirement for each department in the company is identified well in

advance.
If the manpower requirement is high and the recruitment team of the HR department
alone cannot satisfy it, then help from the placement agencies is needed.
Time management is very essential and it should not be ignored at any level of the
process.
The recruitment and selection through placement agencies as the last resort and is
utilized only when need.
The recruitment and selection procedure should not to lengthy and time consuming.
The candidates called for interview should be allotted timings and it should not
overlap with each other.

Page | 193

REFERENCES

Books References

Human Resource Management, Dr PG Aquinas (Professor & Dean, St.

Aloysius college, Mangalore)
CB Gupta (2005)

Personnel References from DCM Shriram rayons, Kota

Mr. Mani Menon (Officer A)

Mr. KRK Raju ( Asst manager B)
Mr. BL Bhandari (Asst manager B)
Mr. Anuj Sisodia (IR Manager B)
Mr. KK Rai (Sr. Officer)

Web References

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

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