“A COMPERATIVE FINANCIAL STATEMENT ANALYSIS OF NAYAGARH

SUGAR COMPLEX LTD. WITH RENUKA SUGAR”(Submitted to Utkal University in partial fulfilment for degree of Master of Finance & Control under Kushagra Institute of Information & Management Science (KIIMS), Cuttack.)

SUBMITTED BY:

NAME: MISS. MONALISA PATRA

ROLL NO: 13771U111020

BATCH: 2011-2013

UNDER THE GUIDANCE OF:

External guide Internal guide

Mr. Sabyasachi Mishra Prof. RASHMI RANJAN MISHRA

CMD, NSCL Faculty in Management

NSCL

KUSHGRA INSTITUTE OF INFORMATION AND MANAGEMENT SCIENCE PIRABAZAR, CUTTACK .

CERTIFICATE

This is to be certified that the summer project report entitled, “A COMPERATIVE FINANCIAL STATEMENT ANALYSIS OF NAYAGARH SUGAR COMPLEX LTD. WITH RENUKA SUGAR” Submitted to Utkal University in partial fulfilment of the requirement for the award of MASTER OF FINANCE & CONTROL, is a record of original research work done by MONALISA PATRA during the period of his study (2011-2013) in the department of MFC,KUSHAGRA INSTITUTE OF INFORMATION AND MANAGEMENT SCIENCE, affiliated to Utkal University under the supervision & guidance of Prof. RASHMIRANJAN MISHRA & that Summer project has not formed the basis for award of any degree/ diploma/associate ship/fellowship/any other similar title.

Date: Dean , Academic

Place: KIIMS

CERTIFICATE

This is to be certified that the summer project report entitled, “A COMPERATIVE FINANCIAL STATEMENT ANALYSIS OF NAYAGARH SUGAR COMPLEX LTD. WITH RENUKA SUGAR” Submitted to Utkal University in partial fulfillment of the requirement for the award of MASTER OF FINANCE & CONTROL, is a record of original research work done by MONALISA PATRA during the period of his/her study (2011-2013) in the department of MFC, KUSHAGRA INSTITUTE OF INFORMATION AND SCIENCE, affiliated Utkal University under the supervision & guidance of prof. RASHMI RANJAN MISHRA & that summer project has not formed the basis for award of any degree/ diploma/associate ship/fellowship/any other similar title .

Date : HOD

Place: DEPT. OF MFC, KIIMS

CERTIFICATE

This is to be certified that the summer project report entitled, “A COMPERATIVE FINANCIAL STATEMENT ANALYSIS OF NAYAGARH SUGAR COMPLEX LTD. WITH RENUKA SUGAR” Submitted to Utkal University in partial fulfilment of the requirement for the award of MASTER OF FINANCE & CONTROL, is a record of original research work done by MONALISA PATRA during the period of his/her study (201-2013) at the department of MFC, KUSHAGRA INSTITUTE OF INFORMATION AND SCIENCE, Utkal University under the supervision & guidance of Mr. Sabyasachhi Mishra (CMD),NSCL. That summer project has not formed the basis for award of any degree/ diploma/associate ship/fellowship/any other similar title.

Date : External guide Sabya Sachi Mishra

Place: NSCL

DECLARATION

I do hereby declare that the summer project report entitled, “A COMPERATIVE FINANCIAL STATEMENT ANALYSIS OF NAYAGARH SUGAR COMPLEX LTD. WITH RENUKA SUGAR “Submitted to Utkal University in partial fulfilment of the requirement for the award of MASTER OF FINANCE & CONTROL, is a record of original research work done by MONALISA PATRA during the period of my study (2011-2013) at the department of MFC, KUSHAGRA INSTITUTE OF INFORMATION AND SCIENCE, Utkal University under the supervision & guidance of PARTHASARATHI SENAPATI & that summer project has not formed the basis for award of any degree/ diploma/associate ship/fellowship/any other similar title .

Date: - Signature of student

Place:

ACKNOWLEDGEMENT

It is with profound gratitude that I express my sincere thanks to Mr. J.B. Padhi, the Secretary, KIIMS and all other faculty members of our college for their constant encouragement during the course of my study.

I would like to express my profound gratitude to my external guide Mr. SABYASACHI MISHRA (CMD) and Internal guide Prof.Rashmi ranjan mishra,

KIIMS who utilized their valuable time able to guide my project work in “A COMPERATIVE FINANCIAL STATEMENT ANALYSIS OF NAYAGARH SUGAR COMPLEX LTD. WITHRENUKA SUGAR”

Their simplicity, self affecting humility and genuine affection for student community have been an inspiration.

I sincerely express my deep sense of gratitude to, R. Rosalin, Head of the department,MFC,KIIMS and for guiding me in completing the project. I am indebted to all our friends for their encouragement and support rendered for their successful completion of the project. Lastly no words can express my debt gratitude to my parents and thanks to all my relatives for their cooperation.

Signature of student

CONTENTS

SL NO

TOPIC

1 INTRODUCTION

2 COMPANY PROFILE

3 CURRENT SCENARIO OF SUGAR

4 RATIO ANALYSIS

5 TYPES OF RATIO

6 OBJECTIVE OF RATIO ANALYSIS

7 IMPORTANCE OF RATIO ANALSIS

6 ADVANTAGE & LIMITATION OF RATIO ANALYSIS

7 FINANCIAL STATEMENT OF NAYAGARRAH SUGAR COMPLEX

8 RATIO ANALYSIS OF NAYAGARRAH SUGAR COMPLEX

9 FINANCIAL STATEMENT OF RENUKA SUGAR COMPANY

10 RATIO ANALYSIS OF RENUKA SUGAR COMPANY

11 CONCLUSION

12 BIBLIOGRAPHY

CHAPTER -I

OBJECTIVE OF THE STUDY

To know the financial position of the NSCL ltd.

Find out strength and weakness of the NSCL ltd.

Growth of NSCL ltd.

INTRODUCTION

After preparation of the financial statements, one may be interested in knowing the position of an enterprise from different points of view. This can be done by analyzing the financial statement with the help of different tools of analysis such as ratio analysis, funds flow analysis, cash flow analysis, comparative statement analysis, etc. Here I have done financial analysis by ratios. In this process, a meaningful relationship is established between two or more accounting figures for comparison.

Financial ratios are widely used for modeling purposes both by practitioners and researchers. The firm involves many interested parties, like the owners, management, personnel, customers, suppliers, competitors, regulatory agencies, and academics, each having their views in applying financial statement analysis in their evaluations. Practitioners use financial ratios, for instance, to forecast the future success of companies, while the researchers' main interest has been to develop models exploiting these ratios. Many distinct areas of research involving financial ratios can be discerned. Historically one can observe several major themes in the financial analysis literature. There is overlapping in the observable

themes, and they do not necessarily coincide with what theoretically might be the best founded areas.

Financial statements are those statements which provide information about profitability and financial position of a business. It includes two statements, i.e., profit & loss a/c or income statement and balance sheet or position statement.

The income statement presents the summary of the income earned and the expenses incurred during a financial year. Position statement presents the financial position of the business at the end of the year.

Before understanding the meaning of analysis of financial statements, it is necessary to understand the meaning of analysis‘and financial statements‘. Analysis means establishing a meaningful relationship between various items of the two financial statements with each other in such a way that a conclusion is drawn. By financial statements, we mean two statements- (1) profit & loss a/c (2) balance sheet. These are prepared at the end of a given period of time. They are indicators of profitability and financial soundness of the business concern.

Thus, analysis of financial statements means establishing meaningful relationship between various items of the two financial statements, i.e., income statement and position statement

Parties interested in analysis of financial statements

Analysis of financial statement has become very significant due to widespread interest of various parties in the financial result of a business unit. The various persons interested in the analysis of financial statements are:- Short- term creditors

They are interested in knowing whether the amounts owing to them will be paid as and when fall due for payment or not. Long –term creditors

They are interested in knowing whether the principal amount and interest thereon will be paid on time or not. Shareholders

They are interested in profitability, return and capital appreciation.

Management The management is interested in the financial position and

performance of the enterprise as a whole and of its various divisions. Trade unions They are interested in financial statements for negotiating the wages

or salaries or bonus agreement with management

HISTORY OF SUGAR

The history of sugar is not a simple one. From ancient China to the colonies to Candy Land, sugar has been making its mark throughout time in myriad ways. The "white gold," as British colonists called it, has now reached mundane staple status for much of

the western world, sitting in a five-pound bag in the pantry patiently waiting to be spooned into a cup of coffee or employed in a batch of cookie dough. But that doesn't mean the coruscating carbohydrate can't be put to other uses. In a bind, regular table sugar can pinch-hit for a number of other concoctions, often times taking the place of more costly or possibly toxic solutions. Whether for health or beauty, in the kitchen or in the garden, here are a number of ways you can put this versatile ingredient to work.

Uses of Sugar

1. Soothe your babeAccording to a study in Pediatrics, babies who were given a one-to-four sugar-water solution (directly into the mouth or administered on a pacifier) before immunizations handled the pain of the shots better than children who received only water. 2. Treat a woundYou can treat wounds with a sprinkle of sugar: Wives' tale or wise truth? This study showed that pouring granulated sugar on bedsores, leg ulcers or amputations before dressing killed the bacteria that prevents healing and causes chronic pain.

3. Clean cruddy handsFor extra mucky hands (think paint, grease, grime) add sugar to your soap lather to act as an abrasive. You can also use equal parts sugar and olive oil, which acts to soothe and moisturize over-worked hands.

4. Feed your flowersAdd three teaspoons of sugar and two tablespoons of white vinegar per quart of warm water for fresh-cut flowers. The sugar feeds the stems and the vinegar restricts the growth of bacteria. 

5. Keep cakes freshIf you store cake in an airtight container with a few sugar cubes, it will stay fresh longer.

6. Prevent cheese from moulding: Storing cheese with sugar cubes will prevent cheese from moulding.

CURRENT SCENARIO OF SUGAR

GLOBAL SCENARIO OF SUGAR INDUSTRY

International sugar prices have dipped to a 7-month low after falling about 25-30% from highs in the last 2 months, in the backdrop of deferment of the purchases by importing nations and surplus production by India and EU. The price of white sugar has fallen to $540.9 per tonne and raw sugar price has dipped to 19.67 cents per pound as on 12th March, 2010. Analysts are expecting a rebound in sugar production next year and a higher-than-anticipated output in the current agricultural year ending September. Drop in the sugar imports from India, the biggest consumer of sugar has also taken its toll on the sugar prices globally. Lack of any strong trigger to reverse the falling trend in sugar prices, continuing government interference to check rising sugar prices and increased production estimates are all turning out to be negatives for the sector.

Till some time back, there was a shortage (of sugar) globally. However, it is now felt that while the shortage will remain, it will not be to the extent anticipated earlier. Also, with the commencement of crushing season in Brazil by May, the global supplies are expected to further increase.

For October 2009 to September 2010, estimates put world production at 159.887 million tonnes, up by 6.911 million tonnes or 4.5% from the last season. A forecasted limited growth in sugar output in Brazil, a modest production recovery in India after last season’s unprecedented shortfall, and a higher sugar crop in the EU have become the three major supply features of 2009/10. World consumption is expected to grow at a rate significantly lower than the long-term 10 year average (1.71% and 2.66%, respectively).

SOME GRAPHICAL STATEMENT OF WORLD SUGAR

Some major sugar producer

.

. world sugar consumption

.World sugar balance and stock

.World raw sugar price

INDIAN SUGAR SCENARIO

India is the largest consumer and second largest producer of sugar in the world (Source: USDA Foreign Agricultural Service). In SY 2007-08 India, produced 26.3 million tons and consumed 22.5 million tons of sugar. With an opening stock of 9.55 million tons in 2008-09, India will end the year with stocks of around 4 million tons.

India is the world's largest sugar consumer,

accounting for 15% of global consumption. It is also a huge 'swing producer' - severe year-to-year production fluctuations affects its trade status (and often the world's net balance by extension), as it alternates as a massive importer to small sugar exporter. The following table shows the supply demand imbalance since 2004-05. India had swung itself from a net importer to a potentially big exporter in two years. It has once again become a net importer and is importing in 2009. This demonstrates the domestic sugar industry's extreme cyclicality.

The main contribution to the world sugar

deficit this year is the large production shortfall in India. Latest estimates from India's Sugar Mills Associations suggest sugar output will fall to about 15 MT, down 43% from the 26.3 MT achieved in 2007-08. Following unprecedented output growth, India is now entering the down phase of its production cycle. Higher alternative crop prices began influencing cane growers back in 2006-07, causing a large switch to other crops like paddy and wheat. India's cane area fell 16% to 4.41million hectares in 2008-09 from the record area in 2007-08 of 5.29 million hectares.

SOME GRAPHICAL STASTEMENT OF INDIAN SUGAR SCENRIO

.Supply and demand for India

.SHARE OF SUGAR PRODUCTION

 

CHAPTER -II

COMPANY PROFILE OF NSCL

 NAYAGARH SUGAR COMPLEX LTD. is one of the fastest growing Sugar Industries in the Eastern Part of India. The Plant is located at Nayagarh which is 90minutes drive from the State Capital of Orissa i.e. Bhubaneswar. Currently the Company is crushing 1500 tonnes of sugar cane per day. NAYAGARH SUGAR is a very Big FAMILY of more than 10,500 family members comprising10000 farmers, 500 employees and many more.

Nayagarh Sugar plans to be an integrated manufacturing company with strategic focus on Sugar and its allied products in Power and Ethanol. The Company's registered office is in Bhubaneswar, Orissa and Corporate Office is at Mumbai. Nayagarh Sugar Complex Ltd was incorporated on 20th June 2004  after it acquired  a 4  years closed  1250 TCD  unit from the Government  of Orissa. Subsequently the plant capacity was increased to 1500 TCD with a parallel development in the Agricultural side looking to achieve both horizontal and vertical growth.

LOCATION OF NSCL:

 1) 90 minutes drive from the nearest airport. (Bhubaneswar)  2) 60 minutes drive from the nearest railway station. (Khurda

Junction)

 3) 10 minutes from the nearest Bus Stand. (Nayagarh)

 4) a. 120 km. from the nearest port. (Gopalpur)

 b. 220 km. from Paradip Port.

C. 400 km. from Vishakhapattanam Port.

HISTORY OF THE ORGANIZATION

A sugar industry under co-operative banner in the name and style of Nayagarh co-operative sugar industry limited was commissioned in 1988 at Nayagarh district. The commercial production of the sugar mill wait for two years and subsequently due to mounting losses the mill was closed in 1991.After that the sugar mill was Handel over theM/S DHARANI SUGAR & CHAMICAL.  Limited. TAMILINADUa reputed based company, who operated under the management contract from 1991 to 1998. Due to various reasons company abandoned the project in1998.Due to public demand and potential strength of sugar growing area, the government during the period from 2000 to 2004 hon’ble chief minister of Odisha wanted to revive the sugar mill under private entrepreneurship. At last under disinvestment scheme of government of Odisha M/S ECP group of industry a large business house of Odisha having provision track record in industry and business take over the sugar mill by signing the sales and purchase agreement on 20.06.2004 and modified by 24.11.2004 the sugar mill now is functioning in the name and style of Nayagarh sugar complex limited(NSCL) and commenced its crossing operation immediately after the take over27.nov.2004.

REGISTRATION NO. OF THE ORGANIZATION

The Regd. No. of this organization is NG 28/2004.Mission, Vision and Objective of the organization Nayagarh Sugar Complex Ltd plans to manufacture good quality Sugar, also diversify to Power, Ethanol & Bio-Fertilizer plant. With an able management and robust vision, Nayagarh Sugar will be the leader in the field of sugar, create an organization that all our associates will be proud of , set benchmarks that will become the standard for others to emulate and through ethical business practices

create wealth for our stakeholders. The company is working on organic and inorganic opportunities to strengthen its growth prospects. Our mission to transform Nayagarh Sugar Complex Ltd. into a dynamic and vibrant business entity where growth is an ethos and the long-term value creation for our stakeholders is the paramount objective.  

Products of the organization 

The main product of NSCL is sugar. Expect sugar some other products are produce by NSCL. Here briefly discuss about other products Plantation White sugar This sugar is sparkling white, pure, manufactured without any toxic chemicals from the fresh canes. At Nayagarh Sugar we producing M-30 and S-30 sugar as per standard fixed by government of India.

By Products

Molasses: Molasses is the only by-product obtained in the preparation

of sugar through repeated crystallization. Molasses is mainly used for the manufacture of alcohol, yeast and cattle feed. Alcohol in turn is used to produce ethanol, rectified spirit, potable liquor and downstream value added chemicals such as acetone, acetic acid, butane, a cetican hydride, MEG etc. Bagasse: Bagasse are a fibrous residue of cane stalk that is obtained after crushing and extraction of juice. It consists of water, fibre and relatively small quantities of soluble solids. The composition of bagasse varies based on the variety of sugarcane, maturity of cane, method of harvesting and the efficiency of the sugar mill. Bagasse are usually used as a combustible in furnaces to produce steam, which in turn is used for power generation. It is also used as a raw material for production of paper and as feedstock for cattle. By making use of

biogases sugar mills have been successful in reducing depends on State Electric Boards, for their power supply as it can procure up to 90-95% of its total power requirement through captive generation from steam turbines.

 Fly Ash:  Fly Ash is the residual output from the boiler furnace after biogases has completely burnt out. This fly can be used as a raw material for brick manufacturing.

Press Mud:  Press mud, also known as olive cake or press cake, is the residual output after the filtration of the juice. It is mixed with spent wash from the distillery and cultivated to produce high quality bio-manure.

1. Sugar cane is broadly classified into three varieties early, mid and late. Cane is sowed during October to March every year. The first seed growth is known as the plant and subsequent growth after harvesting from the stem is known as Raton. The early variety has more sugar content than the general variety.  2. Every farmer within the command area of the Mill is provided with a calendar, which tells him when he can expect a Mill Supply Ticket (cutting order), against which he will deliver the sugarcane. 3. He then harvests the cane and transports it either in a bullock cart, tractor, trolley or truck to the mill.

4. Cane is weighed and unloaded into cane carriers. It is then prepared for milling .Sugarcane juice is then extracted by pressing the prepared cane through mills. Extracted juice mixed with water is weighed and sent to the boiling house forfurther processing. Residual biogases are sent to boilers for use as fuel for steamgeneration.

5. Sugarcane is broadly classified into three varieties early, mid and late. Cane is sowed during October to March every year. The first seed growth is known as the plant and subsequent growth after harvesting from the stem is known as Raton. The early variety has more sugar content than the general variety. 6. Every farmer within the command area of the Mill is provided with a calendar, which tells him when he can expect a Mill Supply Ticket (cutting order), against which he will deliver the sugarcane. He then harvests the cane and transports it either in a bullock cart , tractor ,trolley or truck to the mill.

7. Cane is weighed and unloaded into cane carriers. It is then prepared for milling. Sugarcane juice is then extracted by pressing the prepared cane through mills.

8. Extracted juice mixed with water is weighed and sent to the boiling house for further processing. Residual biogases is sent to boilers for use as fuel for steam generation  9. This juice is heated and then treated with milk of lime and sculpture dioxide. The treated juice is then further heated and sent to clarifiers for continuous settling. The settled mud is filtered by vacuum filters and filtered juice is returned to be further processed while the Oliver cake is sent out. 10. The clear juice is evaporated to a syrup stage, bleached by sculpture dioxide and then sent to vacuum pans for further concentration and sugar grain formation. Crystals are developed to a desired size and the crystallized mass is then dropped in the crystallizers to exhaust the mother liquor of its sugar as much as possible. This is then centrifuged for separating the crystals from molasses. The molasses is re-boiled for further crystallization

11. Thus, the original syrup is disguised progressively (normally three times) till finally, a viscous liquid is obtained from which sugar can

no longer be recovered economically. This liquid, which is called final molasses, is sent to the distillery for making alcohol. 12. The sugar thus is separated from molasses in the centrifuge is dried, bagged (50 Kg and 100 Kg), weighed and sent to storage houses. Sugar is made in different sizes and accordingly classified into various grades i.e. large, medium and small. 

Technology :-

The plant and machinery at Nayagarh Co-operative Sugar Industries was supplied by M/s. An and Tanks & Vessels. The specifications of the equipment confirm to standard specification laid down by Govt. of India in 1972 - 73. Major equipment like Mills, Boilers and Centrifugal machines are supplied by M/S. WALCHAND NAGAR INDUSTRIES, PUNE and Turbines by M/S. TRIVENI ENGINEERING WORKS, pumps by M/s.Kirolskar Industries. At no Time during the period of operations between 1988 to 1999 the equipment was subjected to any performance trial, whether the plant and machinery can crush 1250 tons of cane per day. While most of the blame is shifted to non-availability of cane, even the meagre amounts crushed, was not to the rated capacity. During the entire years of operation, only on one day the plant is recorded to have crushed 1160 tons. A 1250 ton plant can become viable if it can crush 1.85 lakhs tons of Sugarcane in a season, achieving a sugar recovery % of 9.5% and above. In fact in the present day context, the plant and machinery should crush 2.25 lakhs tons of cane in 180 days to become viable.

ORGANIZATION STRUCTURE:

Organization is a set of people working together to achieve a common goal. The organization process in the forming of structure interpersonal relationship. The

organization process is the forming of structural interpersonal relationship the organization is a mechanism, with which a management directs so, co-ordinates and controls the activities of employees. The organization of  NSCL contains a Board of Directors of eminent well experienced persons as directors and headed by a visionary Chairman, Mr. Trailokya Mishra,  and Sri Sabyasachi Mishra the yours Director is in charge of Deputy Managing Director who isa dynamic youth and whose guidance the plant is marched ahead to teach the new horizon so far as sugar production productivity is concerned.Each department of NSCL is leaded by able HOD’S who are working and the direct supervision of director Sri Manoranjan Mishra whose dedication to words the plant. Mr.S.K.Acharya V.P. (o) is a known name in sugar industry A poor organization may lead to duplicity of work, lack of co-ordination, loose administration and in effective delegation. But a good will definitely avoid all these defects and positively contribute to the efficiency of administration. We may say that an organization is a combination of human beings with defined duties and responsibilities who are brought together to accomplish some desired objects. NAYAGARH SUGAR COMPLEX LIMITED has a well developed and systematic organizational structure. We can show the organizational structure and chart below. The management committee come under the control of chairman and is answerable to the chairman of sugar industry. Vigilance officer function directly under s the A&P is answerable to the Chairman and acts as chairman in his absence.

COMPANY PROFILE OF RENUKA SUGAR COMPANY

The Company was originally incorporated as Shree Renuka Sugars Limited vide certificate of incorporation no. 08-19046 dated October 25, 1995 with Registrar of Companies, Karnataka at Bangalore and received the certificate for commencement of business on January 5, 1996.

MANAGEMENT SYSTEM OF SHREE RENUKA

Name Designation

Vidya Murkumbi Executive Chair Person

Vijender Singh Executive Director

Hrishikesh Parandekar Independent Director

Robert Taylor Independent Director

J J Bhagat Independent Director

Nandan V Yalgi Executive Director

S M Kalauti Non executive Director

Jonathan Kingsman Independent Director

Sanjay K Asher Independent Director

TOP SHARE HOLDERS

No.

Name of the Shareholder Total Shares held

1ICICI Prudential Life Insurance Company Ltd

30,103,158 4.48

2 Shree Renuka Sugars Development Foundation

20,572,884 3.06

3 Life Insurance Corporation of India 18,720,122 2.79

4 Platinum Investment Management Ltd A/c Platinumasia

13,222,745 1.97

5 DNB Fund ASIAN Small Cap 11,000,000 1.64

6 GMO Emerging Markets Fund 15,155,014 2.26

7 Thier Avenue Management LLC A/c Third Avenue Global Value (Master) fund LP

8,783,946 1.31

8 Sbi Magnum Sector Funds Umbrella Contra Fund

15,000,000 2.23

9 Morgan Stanley Asia Singapore Ptd 9,523,040 1.42

Total 142,080,909 21.16

SHAREHOLDING BELONGING TO THE CATEGORY : “PROMOTER AND PROMOTER GROUP’’

No. Name of the Shareholder

Total Shares held Shares pledged or

Otherwise encumbered

Number As a % of As a % of

Grand total % of total Grand total

( A )+(B)+(C) No. Shares held (A)+(B)+(C)

1 Murkumbi Investment Pvt Ltd

121,414,000 18.0922 893,990 18.86 3.41

2 Khandepar Investment Pvt Ltd

75,400,000 11.2343 793,990 58.08 6.52

3 Agriventure Trading & Investment Pvt Ltd

37,522,295 5.59 __ __ __

4 Narendra Madhusudan Murkumbi

9,202,705 1.37 __ __ __

5 Supria Shailesh Rojekar

4,710,000 0.7 __ __ __

6 Shanta V Deshpande 1,600,200 0.24 __ __ __

7 Inika Narendra Murkumbi

1,400,000 0.21 __ __ __

8 Malavika Murkumbi

1,400,000 0.21 __ __ __

9 Vidya Murkumbi 1,228,800 0.18 __ __ _-

10 Anuradha Ravindra Kulkarni

1,237,732 0.18 __ __ __

11 Dilip Vasant Rao Deshpande

315,860 0.05 __ _ __

12 Apoorva Narendra Murkumbi

50,000 0.01 __ __ __

Total 255,481,592 38.0666 687,980 26.1 9.93

HISTORY AND OTHER CORPORATE MATTERS

OVERVIEW

The Company was originally incorporated as Shree Renuka Sugars Limited vide certificate of incorporation no. 08-16046 dated October 25, 1995 with Registrar of Companies, Karnataka at Bangalore and received the certificate for commencement of business on January 5,1996.

The key events in the business of our Company are as follows:

.Year Milestone achieved

1998 Acquisition of assets of Nizam Sugars Limited Our Company bought over the sick unit (sugar mill), from Nizam Sugars Limited with an existing capacity of 1,250 TCD and land admeasuring 135.552 acres situated at Sudhanagar Sugar Unit, Parigi Mandal, near Hindupur, Ananthapur District, Andhra Pradesh. At) the land, buildings, plant and machinery along with the employees were taken over by our Company.

1999 Shifting of plant from Hindupur to Munoli, and enhancement of capacity

Our Company subsequent to purchase of the mill from Nizam Sugars Limited, transferred all the plant and machinery along with the employees to the Munoli Unit at Belgaum and enhanced the capacity to 2,500 TCD. 1999 Commencement of commercial production

We started our commercial production of sugar at the Munoli unit. We entered into a power purchase agreement with the Karnataka Electricity Board for sale of surplus electricity, being 7.55 MW for an initial period of 10 years from the date of commercial production and a renewal period of 20 years at the rate of Rs. 2.25 per kilowatt hour with escalation at the rate of 5% per annum.

2000 Commencement of 11.2 MW cogeneratlon plant

We commissioned a 11.2 MW cogeneration plant for producing electricity from the Bagasse

2002 Commencement of 60 KL distillery at Munoli in Karnataka

We installed a distillery with a capacity of 60 KL at our

Munoli unit for manufacture and production of Ethanol.

2003 Increase in co-generation capacity to 20.5 MW and setting up 250 TPD sugar refinery at Munoli

We increased our co-generation capacity of power from 11.2 MW to 20.5 MW by adding an additional turbine and

boiler. We also installed a sugar refinery at our Munoli unit with a capacity of 250 TPD.

2004 Expansion of refinery capacity to 1000 TPD

Subsequent to the installation of the 250 TPD sugar refinery and successful operation, we expanded the capacity to 1000 TPD

2004 Lease for operation of Unit II at Ajara in Maharashtra

Our Company vide a lease agreement with Ajara Shetkari Sahakari (a co-operative sugar factory) Sakhar Karkhana Limited dated October 29, 2004, leased the sugar factory at Ajara in Maharashtra with a capacity of 2,500 TCD for a period of two years until September 26, 2006.

2004 Setting up subsidiary in Dubai

We incorporated and registered Renuka Commodities DMCC as a Company in the Free Trade Zone in Dubai, United Arab Emirates to carry on the business of wholesale trading of sugar in the International market.

2005 Lease for operation of Unit III at Mohannagar in Maharashtra

Our Company vide a lease agreement with Mohanrao Shinde Sahakari (a co-operative sugar factory) Sakhar Karkhana Limited dated July 2005, leased the sugar factory at Mohannagar village of Taluka Miraj, District Sangli in Maharashtra with a capacity of 2500 TCD for a period of six years for the entire crushing season of 2005-2006 to end of crushing season 2010-2011.

2005 We have entered into a memorandum of understanding (MoU) with Haripriya Sugar Works Limited to acquire all assets (excluding receivables) of Haripriya Sugar Works Limited (Haripriya Sugar) including land admeasuring 162 acres and 29 guntas situated at village Burlatti (old Kokantur), Taluka Athani, District Belgaum, Karnataka for a sum of Rs. 40 million. For details, see "Objects of the Issue" on page 29 of this Red Herring Prospectus.

Changes in Registered Office of the Company The table below shows the changes in the Registered Office of the Company since incorporation:

Previous Address New Address

1438/2 Kalmath Road, BC 105, Havelock Road, Belgaum - 590 002. Cantonment, Belgaum - 590 001.

Reasons for Change in Office Date of Change

Shifting of operational office February 23, due to expansion of facilities. 1996.Form 18 dated February 23, 1996 for the change in address of the Registered Office has been filed with the Registrar of Companies, Karnataka at Bangalore.

2006 -Shree Renuka Sugars Ltd has informed that there has been a

change in Company's Board of Directors, consequent to the withdrawal of nomination of Institutional Nominee Director, Mr B S Parashivamurthy, by IDBI w.e.f. October 23, 2006.-Shree Renuka Sugars enters into MoU with Copersucar, Brazil-Shree Renuka joins hand for Munoli project

2007

-Shree Renuka Sugars Limited has appointment Mr Nitin Puranik as Whole Time Director of the Company w.e.f. 20th April, 2007.

2008

-Shree Renuka Sugars Ltd has signed a Memorandum of Understanding (MOU) with Hindustan Petroleum Corporation Ltd., (HPCL) for formation of a Joint Venture Company (JV) for the purposes of setting up of an Integrated Sugar and Ethanol Plant in the State of Maharashtra.

- The Company has splits its face value from Rs10/- to Rs1/-.

-Shree Renuka Sugars acquired 87pc stake in Gokak Sugars

2009

-Shree Renuka Sugars Ltd has informed BSE that the Company has acquired 5% equity stake in National Commodity & Derivatives Exchange Ltd (NCDEX) from Intercontinental Exchange Holdings and Goldman Sachs Investments (Mauritius) I Ltd. for a total consideration of Rs. 36.50 crores.

-Shri Renuka Sugars acquires Brazilian VDI

Global Market Position

• One of the largest sugar producers in the world with eleven cane mills globally and total crushing capacity of 20.7 million tons of cane per annum • One of the largest sugar refiners globally with capacity of 1.7 MTPA

• Leading manufacturer of sugar in India, the world’s largest consumer market • Highly integrated with ethanol capacity of 6,120 KL per day and Co- Generation capacity of 242 MW, in India and 295MW in Brazil.

ADDRESS Registered AddressBC,105Havelock Road,CampBelagaum Karnataka590001Tel:0831-2404000Fax:0831-2404961Email:iyer.dv@renukasugars.comWebsite:http://www.renukasugars.comGroup:Not Applicable

Corporate Office 7th Floor,Devchand House,Shiv Sagar Estate,Dr.Annie Besant Road,WorliMumbai-400018Maharashtra-IndiaPhone:24977744,40011400Fax:24977747Email:investor@renukasugars.comInternet:N.A.

CHANGES IN REGISTERED OFFICE OF THE COMPANYThe table below shows the changes in the Registered Office of the Company since incorporation: Previous Address New Address

1438/2 Kalmath Road, BC 105,Havelock Road,

Belgaum-590 002. Cantonment,Belgaum-590 001.

Reasons for change n Office Date Of Change

Shifting of operational office February 23,

due to expansion of facilities. 1996.

Form 18 dated February 23,1996 for the change in address of the Registered Office has been filed with the Registered of Companies,Karnataka at Bangalore.

CHAPTER -III

RATIO ANALYSIS

RATIO ANALYSIS

Ratio analysis is the most used tool of analysis. A ratio is quotient of twonumbers and is expression of relationship between the figures or two amounts. It indicates a quantitative relationship, which is used for qualified judgment anddivision making. The relationship between two accounting figures is known asratio. These ratios may be compared with the previous year or base year ratios of the same firm. A comparison may also be made with the selective firms in the sameindustry i.e. inter-firm comparison. Ratio analysis is useful to share holders,creditors and executives of the company.British institute of management has classified the ratios into twocategories- Primary Ratio and Secondary Ratios.Relationship between profits and capital employed are primary ratios.Secondary ratios give the information about the financial position andcapital structure of the company. Liquidity ratios and leverage ratios are the secondary ratios. Ratio analysis is a powerful tool of financial analysis it is one of thestatistical yardsticks that provide relationships between two accounting figures. Ratio analysis of financial statements refers to the process determining andpresenting the relationship of items and group of items in the statement.Ratios may be expressed in 3 forms:a) As a quotient 1:1 or 2:1 etc.b) As a rate i.e. inventory turnover as number of times in a year.c) As a percentage.With the help of ratio analysis, conclusions can be drawn regarding theliquidity position of a firm. The liquidity position of a firm will be satisfactory if it isable to meet its current obligations when they become due. A firm can be said tohave the ability to meet the short term liabilities if it has sufficient liquid funds topay the interest on its short term liabilities if it has sufficient liquid funds to paythe interest on its short-making debt usually with in a year as well the principal.The ability is reflected in the liquid ratios of a firm. The liquid ratios areparticularly useful in credit analysis by banks and other suppliers of short termloans.Ratio analysis not only throws light on the financial position of a firm butalso serves as a stepping-stone to remedial measures. This is made possiblefrom inter-firm comparison with industry averages. An inter-firm comparisonwould demonstrate the relative position vis-à-vis its competitors. If the results areat

variance either with the industry overage or with those of the competitors, thefirm can seek to identify the probable reasons and, in that light, take remedial measures.

Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this compare your ratios with the average of businesses similar to yours and compare your own ratios for several successive years, watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-important early warning indications that allow you to solve your business problems before your business is destroyed by them. The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful financial management. Apply Ratio Analysis to Financial Statements to analyze the success, failure, and progress of your business.

Importance of financial statement analysis in an organization. In our money-oriented economy, Finance may be defined as provision of money at the time it is needed. To everyone responsible for provision of funds, it is problem of securing importance to so adjust his resources as to provide for a regular outflow of expenditure in face of an irregular inflow of income. 1. The profit and loss account (Income Statement). 2. The balance sheet In companies, these are the two statements that have been prescribed and their contents have been also been laid down by law in most countries including India. There has been increasing emphasis on (a) Giving information to the shareholder in such a manner as to

enable them to grasp it easily.(b) Giving much more information e.g. funds flow statement, again

with a view to facilitating easy understanding and to place a year results in perspective through comparison with post year results.

(c) The Directors report being quite comprehensive to cover the factors that have been operating and are likely to operate in the near

future as regards to the various functions of production, marketing, finance, labour, government policies, environment in general. Financial statements are being made use of increasingly by parties like Bank, Governments, Institutions, and Financial Analysis etc. The statement should be sufficiently informative so as to serve as wide a curia as possible.

The financial statement is prepared by accounts based on the activities that take place in production and non-production wings in a factory. The accounts convert activities in monetary terms to the help know the position. Uses of Financial Statement Analysis.

The main uses of accounting statements for; - Executives : - To formulate policies. Bankers : - To establish basis for Granting Loans. Institutions \ Auditors : - To extend Credit facility to business. Investors : - To assess the prospects of the business and to know whether they can get a good return on their investment. Accountants : - To study the statement for comparative purposes. Government Agencies: - To study from an angle of tax collection duty levee etc

TYPES OF RATIOS

1. Liquidity ratios

2. Turnover Ratios

3. Leverage Ratios

4. Profitability Ratios

1. Liquidity ratios:-

Liquidity refers of the ability of a firm to meet its obligation in the short run, usually one year or when they become duration for payment.

A proper balance between liquidly and profitability is required for efficient Financial Management.

Liquidity ratios are based on the relationship between current assets the sources for meeting short-term obligation and current liabilities.

The ratios, which indicate the liquidity of a firm, are: -

A. Current Ratio.

B. Acid test Ratio.

C. Net working capital.

A. Current Ratio.The current Ratio is the ratio of current liabilities it is calculated as: -

Current assets Current ratio = - - - - - - - - - - - - - - - - - - Current Liabilities

The current assets include cash and Bank Balance, Marketable securities, Bills, Receivable, Inventories, Loans and advances, Advances Payment and prepaid expenses. The current liabilities include creditors, bills payable bank overdraft short-term loans, outstanding expense & income tax payable, unclaimed divided and proposed dividend. The current ratio measures the ability of the firm to meet its current liabilities. The current assets get converted into

cash into the operational cycle of the firm and provide the fund needed to pay current liabilities. The higher the ratio, to ward off.

B.QUICK RATIO

The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best measures of liquidity. It is figured as shown below: current assets – inventoriesQUICK RATIO = ------------------------------------------------ Current liabilities – bank over draft

The Quick Ratio is a much more exacting measure than the Current Ratio. By excluding inventories, it concentrates on the really liquid assets, with value that is fairly certain. It helps answer the question: "If all sales revenues should disappear, could my business meet its current obligations with the readily convertible `quick' funds on hand?" An acid-test of 1:1 is considered satisfactory unless the majority of your "quick assets" are in accounts receivable, and the pattern of accounts receivable collection lags behind the schedule for paying current liabilities.

C. Working capital turnover ratio

Working capital refers to the investment by the company in short terms assets such as cash, marketable securities. Net current assets or net working capital refers to the current assets less current liabilities. Symbolically, it means,

Net Current Assets = Current Assets Current Liabilities.

Definitions of Working Capital:The following are the most important definitions of Working capital: 1) Working capital is the difference between the inflow and outflow of funds. In other words it is the net cash inflow.

2) Working capital represents the total of all current assets. In other words it is the Gross working capital, it is also known as Circulating capital or Current capital for current assets is rotating in their nature.

3) Working capital is defined as the excess of current assets over current liabilities and provisions . In other words it is the Net Current Assets or Net Working Capital It is calculated as, Woking capital turnover ratio = Sales / Working capital

2. TURN OVER RATIOS

Turnover Ratios are also referred to as Activity ratio or Assets Management ratios. This ratio establishes relationship between the level of activity represented by sales or cost of goods sold and levels of various assets.

A. INVENTORY TURN OVER RATIO

This Ratio is computed by dividing net sales by inventory Thus, Net sales Inventory Turnover ratio = ____________________ Average Inventory The numerator of this ratio is the net sales for the year and the denominator is the Inventory balance at the end of the year. This ratio is deemed to reflect the efficient the management of inventories and vice versa. This statement need not be always true. A low level of inventory may cause a higher inventory turnover ratio. It might be argued that the inventory turnover ratio may be Cost of goods sold Inventory Turnover ratio = --------------------------------------------

Average Inventory

B. DEBTORS TURNOVER RATIO

The debtor s turnover ratio is determined by dividing the net credit sales by average debtors outstanding during the year. Therefore Debtors turnover ratio = Net credit sales ------------------------------ Average debtors

NOTE;- Here there is no specification about net credit purchase and average debtors So, assume that (net credit sales = net sales) (Average debtors = debtors)

The main function of this ratio is to measure how rapidly debts are collected. A high ratio is indicative of shorter time lag between credit sales and cash collection/ A low ratio indicates that debts are not being collected rapidly.

C.CREDITORS TURN OVER RATIO Creditor‘s turnover ratio is a rate between net purchase and average amount of creditor Outstanding during the year. Net credit purchasesCreditors turnover ratio = --------------------------- Average of creditors

Average creditors = Average of creditors outstanding at the Beginning and at the end of the year. A low turnover ratio reflects liberal terms granted by suppliers, while a high turnover ratio shown that accounts are settled rapidly.

The creditor‘s turnover ratio is an important tool as a firm can reduce its requirement of current assets by relying on suppliers creditors. The intent to which trade creditors are willing to wait for payment can be approximated by the creditors turnover ratio.

NOTE;- Here, there is no specification about net credit purchase and average of creditors, So, let assume that, (net credit purchase = Net Purchase) (Average of creditors = creditors)

3. LEVERAGE or CAPITAL STRUCTURE RATIO

These ratios refer to the use of debt finance long term solvency of the firm can be examined by using leverage or capital ratios. The leverage ratio or capital structure ratio can be defined as the financial ratios which throw light on the long term solvency of a firm reflected in its ability to assure the long term creditors with regards to. 1. Periodic payment of interest during the period of loan.

2. Repayment of Principe on maturity or in predetermined instalments at due dates.

A. DEBT-EQUITY RATIOThis ratio reflects the relative claims of creditors and share holders against the assets of the firm, debt equity ratios establishment relationship between borrowed funds and owner capital to measure the long term financial solvency of the firm. The ratio indicates the relative proportions of debt and equity in financing the assets of the firm. It is calculated as follows

Debt equity ratio = Debt / Equity The debts side consist of all liabilities (that include short term and long term liabilities) of the firm. The equity side consists of new worth (plus) preference capital. The lower the debt equity ratio the

higher in the degree of protection enjoyed by the creditors. The debt equity ratio defined by the controller of capital issue, debt is defined as long term debt plus preference capital which is redeemable before 12 years and equity is defined as paid up equity capital plus preference capital which is redeemable after 12 years. The general norm for this ratio is 2:1. on case of capital intensive industries as norms of 4:1 is used for fertilizer and cement industry and a norms of 6:1 is used for shipping units.

B. DEBT – ASSET RATIO The debit asset ratio establishes a relationship between borrowed funds and the assets of firm. It is calculated as: Debt Debt Asset Ratio = ------------------------------- Asset Debt includes all liabilities. Short term as well as long term and the assets include the total of all the assets (the balance sheet total)

C. INTEREST COVERAGE RATIO

This ratio is also known as Time interested Earned ratio This ratio measures the debt servicing of capacity of a firm in so far as fixed interest on long term loan is concerned. Interest coverage ratio determined by dividing the operating profits or earnings before interest and taxes by fixed interest charges on loans. It is calculated as

Earning Before Interest &Taxes (EBIT) Interestest coverage Ratio = ---------------------------- Debt Interest

The EBIT is used in the numerator of this ratio because the ability of a firm to pay interest is not affected by tax payment as interest on debt fund in a tax deductible expenses. The ratio apparently measure the

margin of safety the firm enjoys with the respect to its interest burden. A high interest coverage ratio implies that the firm can easily meet its interest burden even if EBIT decline. A low interest coverage ratio results in financial embarrassment when EBIT declines. This ratio is not appropriate measures of interest coverage because the source of interest payment is cash flow before interest and taxes, not EBIT.

4. PROFITABILITY RATIO A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. Some examples of profitability ratios are profit margin, return on assets and return on equity. It is important to note that a little bit of background knowledge is necessary in order to make relevant comparisons when analyzing these ratios. For instances, some industries experience seasonality in their operations. The retail industry, for example, typically experiences higher revenues and earnings for the Christmas season. Therefore, it would not be too useful to compare a retailer's fourth-quarter profit margin with its first-quarter profit margin. On the other hand, comparing a retailer's fourth-quarter profit margin with the profit margin from the same period a year before would be far more informative.

A. OPERATING MARGIN A ratio used to measure a company's pricing strategy and operating efficiency. Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt. It Is Also known as "operating profit margin." Calculated as: 56

Operating margin gives analysts an idea of how much a company makes (before interest and taxes) on each dollar of sales. When looking at operating margin to determine the quality of a company, it is best to look at the change in operating margin over time and to compare the company's yearly or quarterly figures to those of its competitors. If a company's margin is increasing, it is earning more per dollar of sales. The higher the margin, the better. For example, if a company has an operating margin of 12%, this means that it makes $0.12 (before interest and taxes) for every dollar of sales. Often, nonrecurring cash flows, such as cash paid out in a lawsuit settlement, are excluded from the operating margin calculation because they don't represent a company's true operating performance

B. GROSS PROFIT MARGIN

Gross profit can be defined as the difference between net sales and cost of goods sold. Gross margin profit ratio is also known as gross margin gross profit margin ratio is calculated by dividing gross profit by sales. Gross profit margin ratio = gross profit/Net sales .Net sales-cost of goods sold. The gross profit margin ration shows the margin left after meeting manufacturing cost. The ratio also measures. The efficiency of production as well as pricing. The Gross profit to sales is a sign of good management s as it implies that the cost of production of the firm is relatively low. A high ratio may also imply of a higher sales rise without a corresponding increase in the cost of goods sold.C. NET PROFIT MARGIN The Net Profit Margin Ration determines the between Net profit and sales of business firm. This relationship is also known as net margin. This ratio shows the earning left for shareholder (both equity and preference) as percentage of Net sales. Net Margin Ratio measures the overall efficiency of production, Administration selling, Financing, pricing and Tase anagement. Thus, Net profit Margin Ratio: Net Profit/Net Sales

A high Net profit Margin indicates adequate return to the owners as well as enable a firm to withstand adverse economic conditions when selling price is decanting, cost of production is rising and demand for product is falling. A low Net Profit Margin has opposite implications. A firm with low net profit margin can earn a high rate of return on investment it has a higher inventory turnover. Jointly considering gross and net profit margin provides a valuable understanding of the cost and profit structure of the firm and enables the analyst to identity the source of business efficiency of inefficiency.

D. EARNING PER SHARE

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. Calculated as: EPS = Net Profit Available To Equity-Holders Number Of Ordinary Shares Outstanding When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period. Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number. Earnings per share are generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio. For example, assume that a company has a net income of $25 million. If the company pays out $1 million in preferred dividends and has 10 million shares for half of the year and 15 million shares for the other half, the EPS would be $1.92 (24/12.5). First, the $1 million is deducted from the net income to get $24 million, and then a weighted average is taken to find the number of shares outstanding (0.5 x 10M+ 0.5 x 15M = 12.5M). An important aspect of EPS that's often ignored

is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.

E. PRICE EARNINGS RATIO PE ratio is closely related to the earnings yield/earnings price ratio. It is actually the reciprocal of the latter. This ratio is computed dividing the market price of the shares by the EPS. Thus, PE ratio = Market Price of hare EPS.The PE ratio reflects the price currently being paid by the market for each rupee of currently reported EPS. In other words, the P/E ratio measures investors‘ expectations and the market appraisal of the performance of a firm. In estimating the earnings, therefore, only normally sustainable earnings associated with the assets are taken into account. That is, the earnings are adjusted for income from, say, discontinued operations and extraordinary items as well as many other items not expected to occur. This ratio is popularly used by security analysts to assess a firm‘s performance as expected by the investors.

OBJECTIVES OF RATIO ANALYSIS

Analysis of financial statements is an attempt to assess the efficiency and performance of an enterprise. For that there are some objectives which are described as under. 1. EARNING CAPACITY OR PROFITABILITY The overall objective of a business is to earn a satisfactory return on the funds invested in it. Financial analysis helps in ascertaining whether adequate profits are being earned on the capital invested in the business or not. It also helps in knowing the capacity to pay the interest and dividend. 2. COMPARATIVE POSITION IN RELATION TO OTHER FIRMS The purpose of financial statements analysis is to help the management to make a comparative study of the profitability of various firms engaged in similar business. Such comparison also helps the management to study the position of their firm in respect of sales expenses, profitability and using capital.etc. 3. EFFICIENCY OF MANAGEMENT The purpose of financial statement analysis is to know that the financial policies adopted by the management are efficient or not. Analysis also helps the management in preparing budgets by forecasting next year‘s profit on the basis of past earnings. It also helps the management to find out shortcomings of the business so that remedial measures can be taken to remove these shortcomings. 4. FINANCIAL STRENGTH The purpose of financial analysis is to assess the financial potential of business. Analysis also helps in taking decisions; (a) Whether funds required for the purchase of new machinery and equipments are provided from internal resources of business or not. (b) How much funds have been raised from external sources. 5.SOLVECNY OF THE FIRM The different tools of analysis tells us whether the firm has suffucient funds to meet its short-term and long-term liabilities or not.

IMPORTANCERatio analysis is very useful tool of management accounting. With this, we can analyze business's financial position. We also check company's short term and long term solvency with ratio analysis. Following are the main importance of ratio analysis.

1. Helpful in Decision Making

All our financial statements are made for providing information. But this information is not helpful for decision making because financial statements provide only raw information. When we calculate different ratios in ratio analysis, at that time, we get useful information. I can explain it with simple example. Suppose, we calculate our interest coverage ratio which is 10times but our competitor company's interest coverage ratio is 15 times. It means capacity of the profit of our competitor company is more than us. By seeing this, we can take decisions for increasing our profitability.

2. Helpful in Financial Forecasting and Planning

Every year we calculate lots of accounting ratios. When we make trend of all these ratios, we can get useful information for our future forecasting and planning. For example, we can tell five year collection period with following way

2007 = 90 days2008 = 70 days2009 = 60 days2010 = 50 days2011 = 30 days

From this trend, we know that we are decreasing the days for collection money from our debtors. With this information, we can make two plans. One is effective use of money which we are getting from our debtors more fastly and second we can also check the behavior of our debtors by comparing this with sales trend. Like this, there are lots of ratios which are also useful for better planning.

3. Helpful in Communication

Ratio analysis are more important from communication point of view. Suppose, we have to appoint new sales agents for our company. At that time, we can communicate them by using our company's sales and profit related ratios. There is no need of hi-tech for understanding the meaning of any specific ratio. For example, our gross profit in 2010 is 26.6% and in 2011, it is 28.55%. By just telling this ratio, we can understand whether our company is growing or falling.

4. Helpful in Co-ordination

No company has all the strength points. Company's financial results shows some strength points and some weak points. Ratio analysis can create co-ordination between strength points and weak points.

5. Helps in Control

Ratio analysis can also use for controlling our business. We can easily create the standard of each financial item of our balance

sheet and profit and loss account. On this basis, we can also calculate standard ratios. By comparing standard ratios with actual accounting ratios, we can find variance. These variance may be favorable and unfavorable. On this basis, we can control our business from financial point of view.

6. Helpful for Shareholder's decisions

For example, I am a shareholder. I want to invest in any company's shares. Before buying any company's shares, I will be interested to know company's long term solvency. So, I have to calculate long term solvency ratios. In which, I have to calculate fixed assets to net worth ratio, fixed assets to long term debt ratio. On this basis, I can know the level of fixed assets and its main resource. After checking my money's security, I will be interested to know my return on this investment. ROI, EPS and DPS are most useful ratios which I can calculate for knowing this.

7. Helpful for Creditors' decisions

Creditors are those persons who provide goods on credit to company or provides short period loan to company. All the creditors are interested to know whether company will repay their debt or not. For this, they calculate current ratio and quick liquid ratio and average payment period. On this basis, they take decisions.

8. Helpful for employees' decisions

Every employee wants to increase his salary. He also wants to get more and more incentives from company. For this, he takes help

from company's profitability ratios. Profitability ratios will be helpful for employees to pressure on the company for increasing their salary.

9. Helpful for Govt. decisions

Different companies analyze their accounting ratios and publish on the net and print newspapers. Govt. collects all these information. On this basis, Govt. makes policies. If ratios will wrong, Govt. policies will become wrong. For example, Govt. collects income data of all companies in different industries for calculation the national income.

ADVANTAGES OF RATIO ANALYSIS

Ratio analysis is an important and age-old technique of financial analysis. The following are some of the advantages of ratio analysis: 1. Simplifies financial statements: It simplifies the comprehension of financial statements. Ratios tell the whole story of changes in the financial condition of the business.

2. Facilitates inter-firm comparison: It provides data for inter-firm comparison. Ratios highlight the factors associated with successful and unsuccessful firm. They also reveal strong firms and weak firms, overvalued and undervalued firms.

3. Helps in planning: It helps in planning and forecasting. Ratios can assist management, in its basic functions of forecasting. Planning, co-ordination, control and communications.

4. Makes inter-firm comparison possible: Ratios analysis also makes possible comparison of the performance of different divisions of the firm. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future.

5. Help in investment decisions: It helps in investment decisions in the case of investors and lending decisions in the case of bankers etc.

LIMITATIONS OF RATIO ANALYSIS

The ratios analysis is one of the most powerful tools of financial management. Though ratios are simple to calculate and easy to understand, they suffer from serious limitations. 1. Limitations of financial statements: Ratios are based only on the information which has been recorded in the financial statements. Financial statements themselves are subject to several limitations. Thus ratios derived, there from, are also subject to those limitations. For example, non-financial changes though important for the business are not relevant by the financial statements. Financial statements are affected to a very great extent by accounting conventions and concepts. Personal judgment plays a great part in determining the figures for financial statements.

2. Comparative study required: Ratios are useful in judging the efficiency of the business only when they are compared with past results of the business. However, such a comparison only provide glimpse of the past performance and forecasts for future may not prove correct since several other factors like market conditions, management policies, etc. may affect the future operations.

3. Problems of price level changes: A change in price level can affect the validity of ratios calculated for different time periods. In such a case the ratio analysis may not clearly indicate the trend in solvency and profitability of the company. The financial statements, therefore, be adjusted keeping in view the price level changes if a meaningful comparison is to be made through accounting ratios.

4. Limited use of single ratios: A single ratio, usually, does not convey much of a sense. To make a better interpretation, a number of ratios have to be calculated which is likely to confuse the analyst than help him in making any good decision.

5. Personal bias: Ratios are only means of financial analysis and not an end in itself. Ratios have to interpret and different people may interpret the same ratio in different way.

6. Incomparable: Not only industries differ in their nature, but also the firms of the similar business widely differ in their size and accounting procedures etc. It makes comparison of ratios difficult and misleading.

Calculation Ratio’s Of NSCL:

LIQUIDITY RATIO

1:- Current Ratio = Current Assets = 255,592,185.99

Current liabilities 1.25,542,904.87

= 2.4

2:- TOL = Total outsiders liability = 152,153,896.87 = 0.541

TNW Total net worth 280,769,012.87

3:- Acid test ratio = Liquid/Quick asset = -3,732,902.44 = 0.029

-Current liabilities 125,542,904.87

EFFICENCY RATIO

1:- Net sales = 248,033,673.00 =0.59(time)

Total tangible Asset 416,570,886.60

2:- PBT = before tax Profit = 9,360,715.13 =0.023 =2.3

TTA Total tangible Asset 416,570,886.60

3:- Bank finance = 160,695,707.44 = 0.628 =62.8%

Current Asset 255,592,185.99

4:- Inventory+Receivable = 138,601,957.23 =0.558

Net sales 248,033,673.00

LEVERAGE RATIO

1:- Debt equity ratio = outsiders fund = 152,153,896.87 = 1.95

shareholders fund 78,173,820.00

2:- Fixed asset coverage ratio = Net fixed asset = 277,968,929.37

Secured loan 202,595,192.87

= 1.372

3:- interest coverage ratio = EBIT

Interest Expenses

= 17750715.13 = 0.67

26643530.64

TURNOVER RATIO

1:- Inventory turnover= Cost of goods sold

Average inventory

= 226,251,809.71

123,097,101.18

= 0.213

2:- Asset turnover = Net Sales

Average total assets

= 248,033,673.00 = 0.478

518,215,395.145

Total tangiable assets= Net block + Inventories

= 277,968,929.37 + 138,601,957.23

= 416,570,886.60

(1) Total Bank finance =

Cash credit from UCO Bank = 102,593,532.44

Term loan from UCO Bank = 21,112,456.00

Indian Bank term loan = 36,989,719.00

160,695,707.44

(2) Total Net worth = Owner’s fund + Long term liabilities

=

= 280,769,012.87

(3) Total outsiders liabilities = Debenture + Reserve

= 0 + 152,153,896.87

= 152,153,896.87

(4) Liquid asset/ quick asset = Sundry debtors + Cash / Bank balance

= (- 6,670,930.33) + 2,938,027.84

= (- 3,732,902.44)

(5) Total liabilities = Total liabilities + Current liabilities

= 432,922,909.60 + 125,542,904.87

= 558,465,804.47

(6) Total assets = Total assets – Current liabilities

= 432,922,909.60 – 125,542,904.87

= 307,380,004.73

CHAPTER -IV

FINANCIAL STATEMENT OF NSCL

BALANCE SHEETP/L AC

CASH FLOW STATEMENT

Ratio analysis of nscl

LIQUIDITY RATIO

1. CURRENT RATIO= CURRENT ASSETS

CURRENT LIABILITIES

= 255,592,185.99 =2.036

125,542,904.87

2. TOL = TOTAL OUTSIDER’S LIABILITY

TNW TOTAL NET WORTH

= 152,153,896.87 = 0.541

280,769,012.87

3. ACID TEST RATIO = LIQUID/QUICK ASSET

CURRENT LIABILITIES

= -3,732,902.44 = -0.029

125,542,904.87

LEVERAGE RATIO

DEBT EQUITY RATIO = OUTSIDER’S FUND

SHAREHOLDER’S FUND

= 152,153,896.87

78,173,820.00

= 1.95

FIXED ASSET COVERAGE RATIO = NET FIED ASSET

SECURED LOAN

= 277,968,929.37

202,595,192.87

= 1.372

INTEREST COVERAGE RATIO = EBIT

INTEREST EXPENSES

= 17,750,715.13

26,643,530.64

= 0.666

EFFICIENCY RATIO

1. NET SALES = 248,033,673.00TOTAL TANGIBLE ASSET 416,570,886.60

= 0.59(TIME)

2. PBT = PROFIT BEFORE TAX

TTA TOTAL TANGIBLE ASSET

= 9,360,715.13

416,570,886.60

= 0.023

= 2.3%

3. BANK FINANCE = 160,695,707.44

CURRENT ASSET 255,592,185.99

= 0.628

= 62.8%

4. INVENTORY RECEVABLE = 138,601,957.23

NET SALES 248,033,673.00

= 0.558

TURNOVER RATIO

INVENTORY TURNOVER RATIO = COST OF GOODS SOLD

AVERAGE INVENTORY

= 226,251,809.71123,097,101.18

= 0.213

ASSET TURNOVER RATIO = NET SALESAVERAGE TOTAL

ASSET

= 248,033,673.00518,215,395.145

= 0.478

FINANCIAL STATEMENT OF RENUKA SUGAR LTD.ShreeRenukaSugarsBalance Sheet ------------------- in Rs. Cr. -------------------

Mar '12 Sep '10 Sep '09 Sep '08 Sep '07

18 mths 12 mths 12 mths 12 mths12

mths

Sources Of FundsTotal Share Capital 67.13 67.04 31.69 27.60 24.81Equity Share Capital 67.13 67.04 31.69 27.60 24.81Share Application Money

0.00 0.00 20.59 23.09 6.26

Preference Share Capital

0.00 0.00 0.00 0.00 0.00

Reserves 1,721.161,712.451,211.92 589.26 304.68

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00Networth 1,788.291,779.491,264.20 639.95 335.75Secured Loans 3,895.241,692.221,257.99 827.58 621.09Unsecured Loans 432.83 23.64 41.53 159.76 25.91Total Debt 4,328.071,715.861,299.52 987.34 647.00Total Liabilities 6,116.363,495.352,563.721,627.29 982.75

Mar '12 Sep '10 Sep '09 Sep '08 Sep '07

18 mths 12 mths 12 mths 12 mths12

mths

Application Of FundsGross Block 3,059.051,802.501,406.62 778.87 631.37Less: Accum. Depreciation

376.00 231.45 149.76 87.72 69.06

Net Block 2,683.051,571.051,256.86 691.15 562.31Capital Work in Progress

147.64 410.46 242.31 513.95 207.73

Investments 2,013.491,639.28 105.99 150.57 16.76Inventories 1,719.161,135.951,002.32 186.91 100.17Sundry Debtors 176.51 315.94 104.27 48.64 38.69Cash and Bank Balance 10.39 4.42 7.06 7.47 20.71Total Current Assets 1,906.061,456.311,113.65 243.02 159.57Loans and Advances 737.79 755.23 753.86 323.12 186.23Fixed Deposits 0.00 19.05 203.22 5.92 9.96Total CA, Loans & Advances

2,643.852,230.592,070.73 572.06 355.76

Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 1,375.052,136.361,013.44 248.95 122.94Provisions 2.82 229.66 100.41 53.09 38.98Total CL & Provisions 1,377.872,366.021,113.85 302.04 161.92Net Current Assets 1,265.98 -135.43 956.88 270.02 193.84Miscellaneous Expenses

6.20 9.98 1.67 1.61 2.11

Total Assets 6,116.363,495.342,563.711,627.30 982.75

Contingent Liabilities 1,463.081,224.68 389.00 44.50 148.50Book Value (Rs) 26.64 26.54 39.24 22.35 132.81

Profit and loss ac

Shree Renuka Sugars

Previous Years »

Profit & Loss account ------------------- in Rs. Cr. -------------------Mar '12 Sep '10 Sep '09 Sep '08 Sep '07

18 mths 12 mths 12 mths 12 mths 12 mths

IncomeSales Turnover 6,468.18 5,634.06 2,320.64 1,805.34 827.58Excise Duty 106.08 122.87 86.43 47.60 29.53Net Sales 6,362.10 5,511.19 2,234.21 1,757.74 798.05Other Income -88.26 81.92 5.59 0.14 11.43Stock Adjustments 284.68 216.16 581.51 61.08 -49.58Total Income 6,558.52 5,809.27 2,821.31 1,818.96 759.90ExpenditureRaw Materials 5,284.13 4,803.94 2,241.15 1,365.05 465.48Power & Fuel Cost 350.13 234.32 176.42 17.30 37.18Employee Cost 128.87 72.94 51.44 37.35 25.37Other Manufacturing Expenses

101.13 63.18 47.84 54.74 60.89

Selling and Admin Expenses

0.00 84.93 55.18 91.28 32.84

Miscellaneous Expenses

43.86 -180.55 -132.25 19.00 10.60

Preoperative Exp Capitalised

0.00 0.00 0.00 0.00 0.00

Total Expenses 5,908.12 5,078.76 2,439.78 1,584.72 632.36Mar '12 Sep '10 Sep '09 Sep '08 Sep '07

18 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 738.66 648.59 375.94 234.10 116.11PBDIT 650.40 730.51 381.53 234.24 127.54

Interest 369.87 92.23 101.44 84.06 24.64PBDT 280.53 638.28 280.09 150.18 102.90Depreciation 145.47 81.55 62.46 36.48 24.92Other Written Off 0.00 0.00 0.00 0.00 0.00Profit Before Tax 135.06 556.73 217.63 113.70 77.98Extra-ordinary items -0.01 -0.15 0.00 18.24 0.00PBT (Post Extra-ord Items)

135.05 556.58 217.63 131.94 77.98

Tax 50.99 150.44 74.14 39.15 23.56Reported Net Profit 84.05 410.05 143.51 92.79 54.43Total Value Addition 623.99 274.81 198.62 219.67 166.88Preference Dividend 0.00 0.00 0.00 0.00 3.55Equity Dividend 67.13 67.04 31.69 5.96 4.96Corporate Dividend Tax

10.89 11.13 5.39 1.01 1.45

Per share data (annualised)Shares in issue (lakhs) 6,713.20 6,703.82 3,169.00 2,759.63 248.10Earning Per Share (Rs)

1.25 6.12 4.53 3.36 20.51

Equity Dividend (%) 100.00 100.00 100.00 20.00 20.00Book Value (Rs) 26.64 26.54 39.24 22.35 132.81

Cash flow statement

Shree Renuka Sugars

Previous Years »

Cash Flow ------------------- in Rs. Cr. -------------------Mar '12 Sep '10 Sep '09 Sep '08 Sep '07

18 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 135.05 560.65 217.65 113.70 77.99Net Cash From Operating Activities

-685.88 1367.78 -212.56 83.26 53.83

Net Cash (used in)/fromInvesting Activities

-1247.78 -2061.83 -311.11 -584.94 -354.92

Net Cash (used in)/from Financing Activities

1920.58 506.15 720.56 484.39 314.60

Net (decrease)/increase In Cash and Cash Equivalents

-13.08 -187.90 196.90 -17.29 13.51

Opening Cash & Cash Equivalents

23.47 211.38 13.39 30.67 17.17

Closing Cash & Cash Equivalents

10.39 23.47 210.28 13.39 30.67

Ratio analysis of renuka sugar

Shree Renuka Sugars

Previous Years »

------------------- in Rs. Cr. -------------------

Mar '12

Sep '10 Sep '09 Sep '08 Sep '07

Investment Valuation RatiosFace Value 1.00 1.00 1.00 1.00 10.00Dividend Per Share -- -- -- -- --Operating Profit Per Share (Rs)

25.74 17.71 7.25 4.20 57.82

Net Operating Profit Per Share (Rs)

184.25 114.40 81.01 68.67 383.17

Free Reserves Per Share (Rs)

-0.10 32.85 44.93 26.60 164.40

Bonus in Equity Capital

49.88 49.95 -- -- --

Profitability RatiosOperating Profit Margin(%)

13.97 15.47 8.95 6.11 15.08

Profit Before Interest And Tax Margin(%)

5.61 12.21 6.30 4.12 12.30

Gross Profit Margin(%)

5.70 12.27 6.32 4.16 12.46

Cash Profit Margin(%) 7.43 10.45 1.65 0.13 11.20Adjusted Cash Margin(%)

7.43 10.45 1.65 0.13 11.20

Net Profit Margin(%) -0.24 9.12 8.68 7.00 8.61Adjusted Net Profit Margin(%)

-0.24 9.12 8.68 7.00 8.61

Return On Capital Employed(%)

7.46 11.04 5.83 5.55 12.04

Return On Net Worth(%)

-1.42 30.09 14.83 16.55 18.24

Adjusted Return on Net Worth(%)

-3.98 23.95 -1.65 -4.23 18.26

Return on Assets Excluding Revaluations

32.33 34.86 47.55 29.31 175.50

Return on Assets Including Revaluations

32.33 34.86 47.55 29.31 175.50

Return on Long Term Funds(%)

7.46 13.55 6.71 6.02 14.45

Liquidity And Solvency RatiosCurrent Ratio 1.45 0.68 1.37 1.40 0.90Quick Ratio 0.86 0.77 1.17 1.49 2.11Debt Equity Ratio 4.63 2.77 0.89 1.06 1.48Long Term Debt Equity Ratio

4.63 2.07 0.66 0.93 1.08

Debt Coverage RatiosInterest Cover 0.88 4.42 1.66 1.45 8.08Total Debt to Owners Fund

4.63 2.77 0.89 1.06 1.48

Financial Charges Coverage Ratio

1.87 4.94 1.95 1.53 6.31

Financial Charges 1.95 4.83 3.41 2.99 5.35

Coverage Ratio Post TaxManagement Efficiency RatiosInventory Turnover Ratio

6.46 4.55 2.60 13.21 14.07

Debtors Turnover Ratio

29.12 21.95 15.26 15.38 12.88

Investments Turnover Ratio

6.46 4.55 2.60 13.21 14.07

Fixed Assets Turnover Ratio

0.97 0.94 1.67 2.33 1.51

Total Assets Turnover Ratio

1.01 0.93 0.85 1.10 0.87

Asset Turnover Ratio 0.97 0.94 1.67 2.33 1.51Average Raw Material Holding

-- 38.00 53.67 25.81 9.87

Average Finished Goods Held

-- 66.55 100.28 17.19 23.30

Number of Days In Working Capital

65.42 46.51 187.14 83.78 114.21

Profit & Loss Account RatiosMaterial Cost Composition

76.18 80.42 104.83 84.51 71.70

Imported Composition of Raw Materials Consumed

-- -- -- -- --

Selling Distribution Cost Composition

-- 1.86 1.38 4.09 2.33

Expenses as Composition of Total Sales

-- -- -- -- --

Cash Flow Indicator RatiosDividend Payout Ratio Net Profit

-- 11.11 16.58 5.20 8.06

Dividend Payout Ratio Cash Profit

7.87 8.23 12.73 4.07 6.14

Earning Retention Ratio

-- 86.04 248.51 120.32 91.95

Cash Earning Retention Ratio

91.67 90.30 12.90 -163.83 93.87

AdjustedCash Flow Times

10.77 8.08 31.55 325.43 5.99

COMPARISION OF FINANCIAL RATIOS

NAME OF THE RATIO NAYAGARH SUGAR

RENUKA SUGAR

CURRENT RATIO 2.036 1.45DEBT EQUITY RATIO 9.16 4.63FIXED ASSET COVERAGE RATIO

1.372 1.372

INTEREST COVERAGE RATIO

0.666 0.82

INVENTORY TURNOVER RATIO

0.213 6.46

ANALYSIS OF FINANCIAL ASPECTS OF NAYAGARH SUAGR

This analysis of financial aspects of Nayagarh Sugar Complex Ltd. Is providing the specified comparison of various financial aspects of the year 2011 with the data of 2010.

Gross sale has been increased by 2.7 times. Net profit increased by 1.34 times in comparison to

previous year. The expenditures in raw materials consumed is increased

by 2.8 times.

The proportion of raw material consumed & sale has been decreased in comparison to previous year 2009-2010.

There is a very big change in the current liability. It increased by 10.05 times.

But the current asset is decreased by 0.98 times. Capital work in progress is remaining same during the

period. Fixed asset of the firm is increased by 1.08 times.

Long term liabilities also decreased by 0.93times

CONCLUSION

The profitability of Nayagarh Sugar complex Ltd. Is in a good position n comparison to the profitability of the renuka Sugars Ltd. Nayagarh sugar complex Ltd. Is also planning for many projects. Some of the projects are

Nayagarh sugar is also making plan to start a plant in Navarangpur with the capacity 2500 TCD& with power generation capacity of 18mw. The projected net worth of the project is 280 corers. Land acquisition for the project is also completed.

Planning is also made to establish a project in Bhadrak with the capacity of 2500tcd & 18 mw power generation. The project cost will be 310 crores.

A dislery project is also going to be started in Nayagarh Sugar plant in Nayagarh. After completion of this project the plant will

able to generate 1 mw power from the grain. The project cost is Rs60 crores.

It shows that the company is performing well &also earning a good profitability. To capture the rural market the company is also planning to introduce retail sugar packet of 1kg & 5 kg.

The analysis of financial statements is a process of evaluating the relationship between component parts of financial statements to obtain a better understanding of the firm‘s position and performance. The first task of financial analyst is to select the information relevant to the decision under consideration from the total information contained in the financial statements. The second step is to arrange the information in a way to highlight significant relationships. The final step is interpretation and drawing of inferences and conclusions. In brief, financial analysis is the process of selection, relation and evaluation. Ratio analysis in view of its several limitations should be considered only as a tool for analysis rather than as an end in itself. The reliability and significance attached to ratios will largely hinge upon the quality of data on which they are based. They are as good or as bad as the data itself. Nevertheless, they are an important tool of financial analysis.

BIBILOGRAPHY

BOOKS1. MANAGEMENT ACCOUNTING AUTHOR: Sashi K Gupta PUBLISHER: Kalyani Publishers

2. FINANCIAL MANAGEMNT AUTHOR: Prasanna Chandra

3. FINANCIAL ACCOUNTING AUTHOR: T S Grewell PUBLISHER: Sultan Chand & Sons.

WEBSITES

www.nayasugar.comwww.renukasugar.comwww.indiansugar.com

ANNUAL REPORTS

1. ANNUAL REPORT OF NSCL

2. ANNUAL REPORT OF RENUKA SUGAR

ARTICLES

1. Research article published by Mr. J Panda, lecturer P.N. college Khorda