Professional Documents
Culture Documents
Executive Summary
Data Collection
o Primary Data:
Primary data are those data which are collected directly without the use of any secondary
media. Such as Interaction with the company officials
o Secondary Data:
Secondary data are those which are obtained from sources such as follows:
o Annual reports of the company
o Internal Financial records of the company
o Books
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Limitation
o Profitability analysis is a wide study which involves numerous techniques; each and every
aspect of it cannot be dealt in detail.
o As this is an external study, the results are not complete and clear as I m having a little idea
about practical difficulties facing day to day, except the information provided by the SRSL;
o Lastly the study is purely academic. The experience makes this study less precise when
compared with a professional study.
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COMPANY OVERVIEW
Founded in October 1995, SRSL manufactures sugar, energy, ethanol and biofertilizers in an
integrated plant in North Karnataka, India. With an able management and robust vision, Shree
Renuka Sugars today is one of the fastest growing sugar manufacturers in the country. Shree
Renuka Sugars is an integrated manufacturing company with strategic focus on Sugar and its allied
products in Power and Ethanol. The Company's registered office is in Belgaum, Karnataka and
Corporate Office is at Mumbai. Their key manufacturing facility is in Munoli, Athani & Havalgah,
Karnataka and they also operate three leased facilities at Ajara & Arag in Maharashtra and at
Aland in Karnataka. The current capacities of SRSL are as per the table below:
Cogeneration
Distillery
Refinery
(MW)
(KLPD)
(TPD)
7,500
35.5
120
1,000
Athani, Karnataka
6,000
37
160
1,000
Havalgah, Karnataka
4,000
Ajara, Maharashtra
2,500
Arag, Maharashtra
4,000
Aland, Karnataka
1,250
15
2,000
Unit
Cane(TCD)
Munoli, Karnataka
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25,250
87.5
280
4,000
SRSL has the largest sugar refining capacity in India of 4000 tons per day (TPD), two 1000TPD
each refineries integrated with its plants at Munoli and Athani and a 2000 TPD port based refinery
coming up in Haldia SRSL has acquired a majority stake in KBK, an engineering company
primarily engaged in providing turnkey solutions in the field of distilleries, Ethanol plants and biofuels. SRSL has also acquired a standalone distillery of 100 KLPD from Dhanuka Petrochem
located at Khopoli, Maharashtra. The Company has set up a wholly owned subsidiary viz. Shree
Renuka Biofuels Holdings FZE in Sharjah International Free Zone (SAIF Zone) for its overseas
investments.
Company History
Shree Renuka Sugars Limited has been incorporated as a public limited company on 25th October
1995. MURKUMBI family of Belgaum with participation of over 4500+ farmer shareholders has
promoted the company. It is an integrated manufacturing company with strategic focus on Sugar
and its allied products in Power and Ethanol. The Company's registered office is in Belgaum,
Karnataka and Corporate Office is at Mumbai. Its key manufacturing facility is in Munoli, 70 Kms
from Belgaum and also operates a leased facility at Ajara, Maharashtra. The company is working
on other acquisitions, expansions and lease opportunities to strengthen its existing strong
fundamentals and growth prospects.
Shree Renuka Sugars initially acquired a sick sugar mill with a capacity of 1,250 TCD of Nizam
Sugars Limited, a Government of Andhra Pradesh undertaking, situated in Hindapur in Andhra
Pradesh. This unit's asset base was moved to its own location in Munoli and expanded its capacity
to 2500 TCD with 11.2 MW cogeneration plant. The commissioning and trial production took
place in November 1999. A distillery and ethanol plant of 60kl per day capacity was added in
2002. The sugar refinery was set up to process raw sugar to produce refined sugar meeting
European specifications.
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The company offered its shares to Qualified Institutional Placement through Motilal Oswal
Investments in August 2007 at an issue price of Rs.750/- per share aggregating to Rs.1,640 million.
Company Vision
To become the most efficient processor of sugar and the largest marketer of sugar and
ethanol in the country.
Company Mission
Shree Renuka Sugars Ltd aims to become the most efficient and market driven integrated
processor of sugarcane in the world, while enabling the team to grow in learning and motivating
atmosphere, participating in the all round development of the community and delivering
consistently on returns to all the shareholders
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Business Segments
Companys business operation can be segregated into four divisions are as below:
Sugar Milling Division
Ethanol Division
Power Division
Sugar Refining Division
SRSL PRODUCTS
SRSL are one of the few fully integrated sugar companies, which have capabilities to
extract maximum value from sugarcane. Sugar is the primary product of sugarcane. However,
sugarcane crushing yields by-products like molasses that are used in facilities for the generation of
power and production of ethanol and fuel ethanol.
Sugar
Renuka Sugars produces EC II grade refined sugar which confirms to EU norms (Less than 45
ICUMSA). SRS uses phosphorisation process which produces sulphur less sugar. It is considered a
higher end product mostly used for direct consumption in European and African countries as well
by corporates for Industrial usage.
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Ethanol
SRSL produces alcohol from the molasses (Molasses is the brown coloured residue after sugar has
been extracted from the juice. Molasses still contains some quantity of sugar, but this sugar cannot
be extracted by usual technology) left after the extraction of sugarcane juice, which can be used
both for potable purpose as well as an Industrial chemical. Further this alcohol can be again
purified to produce fuel grade ethanol that can be blended with petrol.
Power
In the process of crushing of sugar cane, Bagasse, a fibrous by-product is produced which is used
in the boilers to generate steam. We produce power from bagasse, which is used in the
manufacturing process as well as sold to the state electricity boards. Further this bagasse based
cogeneration plant is eligible for carbon credit compensation under the Kyoto protocol.
Bio-Fertilizers
The residue product from distillery operations blended with chemicals is being sold as biofertilizers
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M.D.
GM Sales
President
Dir.
CFO
ED1
ED2
comm
Mgr Sales
HR
Co. Sec
DGM
Dy mgr
Sales
Asst mgr
comm
Sr.Godown
GM
Mgr A/c
Keeper
G.D K
GM1
GM2
GM 3
C.Eng
C.Eng
C. Eng
C.Chem
C.Chem
C.
Chem
C.E.Eng
C.E.Eng
C. E.
Eng
Dy Mgr
GM cane Dept
Sr Ac off.
Dy cane Mgr
Cane off.
Ac off.
Asst.cane off.
Cane supplier
GM1
GM2
GM3
GM4
C. Eng
C. Eng
C. Eng
C. Eng
C.Chem
C.Chem
C.Chem
C.Chem
C. Eng
C. Eng
C. Eng
C. Eng
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GM cane Dept
Dy cane Mgr
Cane off.
Asst.cane off.
Cane supplier
GM5
Distillery
Mgr. Dist
C. Chem
Lab I/C
Page 11
The Indian sugar industry is the second largest agro-industry located in the rural India. The Indian
sugar industry has a turnover of Rs. 700 billion per annum and it contributes almost Rs. 22.5
billion to the central and state exchequer as tax, cess, and excise duty every year (Sthece: Ministry
of Food, Government of India). It is the second largest agro-processing industry in the country
after cotton textiles. With more than 600 operating sugar mills in different parts of the country,
Indian sugar industry has been a focal point for socio-economic development in the rural areas.
About 50 million sugarcane farmers and a large number of agricultural labtheers are involved in
sugarcane cultivation and ancillary activities, constituting 7.5% of the rural population. Besides,
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Production
In 2006/07, India produced 28.5 mn tons of sugar. UP and Maharashtra together contributed more
than 67% to the total production. Maharashtra overtaking UP became the largest producer of sugar.
Maharashtras production increased from 5.9 mn tons to 9.6 mn tons this year. Higher yields and
greater cane acreage contributed to this increase. Following table shows region wise distribution of
production.
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Sugarcane Availability
Sugarcane occupies about 4.2% of the total kharif area under cultivated area and it is one of the
most important cash crops in the country. The area under sugarcane has gradually increased from
2.7 million hectares in 1980-81 to 4.3 million hectares in 2005-06, mainly because of much larger
diversion of land from other crops to sugarcane by the farmers for economic reasons. From a level
of 154 MMT in 1980-1981, the sugarcane production increased to 241 MMT in 1990-1991 and
further to 297 MMT in 2006-2007 (Sugar India Yearbook).
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Production Mix
Most of the mills in India are not equipped to make refined sugar. Mills which are designed to
produce refined sugar can manufacture sugar not only from sugarcane but also from raw sugar
which can be imported. Therefore, such mills can run their production all the year round, as
opposed to single stage mills which are dependent upon the seasonal supply of sugarcane Due to
good demand and bulk requirement, a lot of millers have shown interest in producing Raw Sugar
this year. It is to be seen if this latent demand can be converted into an opportunity and India can
establish itself as a bulk exporter of Raw Sugar.
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2007/08 Estimates
According to the International Sugar Organization (ISO) said that 2007-2008 sugar production
would reach 165.6 million tons, up 3 million tons on the year. It also said the 2007-2008 surpluses
would be around 10.8 million tons. World consumption is projected at 156.8 million tons, up 2.3%
from 2006- 2007. The ISO also predicted that India would become the worlds largest sugar
producer in 2007-2008, replacing Brazil. They forecast Indias production at a record 33.15
million tons, up 2.55 million tons on the year.
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Recent Developments
Preferential prices in the EU and US remain at a significant premium to the world sugar price. In
terms of the EU Sugar Regime reform, a uniform price is now being paid for ACP (African,
Caribbean and Pacific) and EBA (Everything But Arms) sugar protocol exports.
The EU sugar regime has changed from the year 2006/07 with most of the preferential quota being
abolished by the April 2005 WTO ruling. This created a glut of refined sugar globally in March
May 2007 leading the prices rally to more than 400$ per tonne
A lot of standalone refineries have been announced to fill the gap left by the exit of the European
Sugar which have again depressed the world refined sugar prices to the lows of 270$ per tonne in
August 2007.
Going forward India is going to play a very crucial role in World Sugar Trade. Policy decisions
and Production figures in India would have substantial impact on the world sugar prices.
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Competitive Strengths
The Company believes that we have distinct and different competitive strengths in the businesses.
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7. Locational Advantage
Another strong positive for the Company is the advantage of being located in south India. Sugar
companies in south India are inherently at an advantage over northern India mills as:
a. They have a longer crushing season.
b. The market for co-generated power has matured in these States with proven stability in off take
and payments from the electricity distribution companies.
c. The Company, located in south India, are closer to ports and that opens up a cost-effective
option of extending sugar-producing capacity through the raw sugar-refining route.
d. They operate in a free market compared to north Indian sugar mills.
Moreover, they operate in the high recovery area of southwest India, where sucrose content of
cane is 10%-20% more than elsewhere in the country. South Indian mills have far higher yields as
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14. The Company has a fuel ethanol plants attached to the distillery
They are one of the few distilleries, which are equipped to manufacture fuel ethanol from ethanol.
Fuel ethanol is gaining momentum due to rising oil prices. The GoI is encouraging the use of fuel
ethanol as a motor fuel since it is considered to be less polluting and also a renewable source of
energy (since it is sourced from an agricultural product, which can be re-grown). Subject to
fulfillment of certain conditions, GoI has mandated blending of 5% ethanol in petrol across the
country except North East, Jammu & Kashmir and Island territories. They supply fuel ethanol to
various oil companies such as IOCL, HPCL and BPCL for blending in petrol.
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Companys Strategy
The corporate vision is to be the most efficient processor of sugarcane and the largest marketer of
sugar and ethanol in the country. The strategies for meeting these objectives are as follows:
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Pursuant to the provisions of Chapter XIII of the SEBI Guidelines, they have issued and allotted
1,000,000 convertible warrants of Rs.10 each to Shree Renuka Sugar Development Foundation,
Shree Renuka Sugar Employees Welfare Trust and Murkumbi Industries Private Limited on
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The "Compensation Committee" of the Board of Directors has approved, by circulation on 28th
June, 2007, grant of 2,38,000 Stock Options to the employees/Directors under the ESOS -2006.
The price per share to be allotted on exercise of Options is Rs.591 Vesting of option is as under :(1) 50% of the options granted to the employees shall vest on 28th June, 2010.
(2) 50% of the options granted to the employees shall vest on 28th March, 2012. The options shall
be exercised within three years from the date of vesting or Five years from the date of granting,
whichever is later.
The Company has acquired a 54% stake in KBK, an engineering company primarily engaged in
providing turnkey solutions in the field of distilleries, Ethanol plants and bio-fuels. The above
acquisition was made for a consideration of Rs.400 Mn
The Company has set up a wholly owned subsidiary viz. Shree Renuka Biofuels Holdings FZE
in Sharjah International Free Zone (SAIF Zone) for its overseas investments".
Expansion Phase 1:
1. In the current year SRS have expanded the cane crushing capacity at their plant in Munoli,
Karnataka to 7500 TCD and the cogeneration capacity to 35.5 MW.
2. They have commissioned a 4000 TCD plant at Havalgah, Karnataka.
3. They have enhanced the crushing capacity at the leased facility at Arag, Maharashtra from 2500
TCD to 4000 TCD.
4. The company has completed a green-field plant and commenced crushing operations at Athani,
Karnataka. The plant has a capacity of 6000 TCD and a cogeneration capacity of 38 MW.
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Expansion Phase 2:
In the second phase the co-generation capacity would be increased to 129 MW and the distillery
capacity to 900 KLPD by 2009.
Some of the key developments for fiscal year 2006 were:
CDM Project: they became the first bagasse based cogeneration mill in the world to be
registered as a clean development mechanism (CDM) project.
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RISK FACTORS
Risks relating to the Company
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1) Sugarcane is the principal raw material used for the production of raw sugar.
SRSL business depends on the availability of sugarcane and any shortage of sugarcane may
adversely affect companys results of operations. A variety of factors beyond the control may
contribute to a shortage of sugarcane in any given crushing season.
2) Companys profitability depends significantly on the cost of and the selling price
that we are able to obtain for sugar.
Sugar industries are not able to set the cost of sugarcane or the selling price for sugar product.
Some of the main reasons that contribute to fluctuations in the margin between raw material cost
and the selling price of sugar are set forth below.
Under the Sugarcane (Control) Order 1966, the Government of India fixes the Statutory Minimum
Price (SMP) for sugarcane each year based on the recommendations of the Commission on
Agricultural Costs and Prices, which takes into account factors such as the cost of cultivation,
return to factories and average recovery for previous year. SRSL may be adversely affected if the
Government of India raises the SMP, which in turn would affect the actual price paid. Such a
situation may worsen in the event of a decrease in the selling price of sugar. A portion of the sugar
manufactured by us is bought by the Government of India as levy sugar at a price that is fixed by
the Government of India. The remaining sugar is known as free sale sugar and is sold at a price
that is determined by market factors such as availability. The free sale sugar prices are also
controlled to some extent by the monthly release mechanism (MRM), which is dependent on
demand and supply of sugar. On the last day of every month the Company receives a release order
indicating the quantity of sugar sold for the next month. We may be adversely affected if free sale
sugar prices decline.
3) SRSL operate in an industry where the market price for their products is cyclical
and affected by general economic conditions.
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4) The prices they are able to obtain for the sugar that we produce depend largely on
prevailing market prices.
The wholesale price of sugar has a significant impact on companys profits. Sugar is subject to
price fluctuations resulting from weather, natural disasters, domestic and foreign trade policies,
shifts in supply and demand and other factors beyond their control. In addition, approximately 30
per cent. of total worldwide sugar production is
traded on futures exchanges and is thus subject to speculation, which could affect the price of
sugar worldwide and the results of operations. As a result, any prolonged decrease in sugar prices
could have a material adverse effect on companys results of operations.
5) Rising inventory levels are likely to keep sugar prices depressed and thereby
affect the results of SRSL operation
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The closing stock of sugar for FY2004, FY2005, FY2006, and FY2007 was 8.5 million tons, 4.7
million tons, 4.4 million tons and 10.9 million tons respectively. Even assuming that the sugar
companies would move towards direct ethanol production, the closing stock of sugar for FY2008
and FY2009 is expected to be 13.4 million tons and 8.6 million tons respectively. Source:ISMA
and Citi .As such, rising inventory levels are likely to keep sugar prices depressed thereby
affecting the results of their operations.
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Other Risks
1) Inability to manage companys growth could disrupt their business and reduce the
profitability.
As part of companys business strategy, they are rapidly expanding their operations by enhancing
the existing sugar refining capacity, cogeneration and bio-fuel production capacity and distillery
capacity. SRSL is also proposing to acquire and lease more sugar plants. SRSL has experienced
high growth in recent years, averaging a consolidated compound annual growth rate (CAGR) of
121 percent over the past three years and expect their business to grow significantly as a result of
their capacity expansion plans and increased focus on bio-fuel production. SRSL expect this
growth to place significant demands on company and require them to continuously evolve and
improve in the operational, financial and internal controls. Any inability to manage this growth
may have an adverse effect on the business and financial results.
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Data Collection
o Primary Data:
Primary data are those data which are collected directly without the use of any secondary
media. such as Interaction with the company officials
o Secondary Data:
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Limitation
o Profitability analysis is a wide study which involves numerous techniques; each and every
aspect of it cannot be dealt in detail.
o As this is an external study, the results are not complete and clear as I m having a little idea
about practical difficulties facing day today, except the information provided by the SRSL;
o Lastly the study is purely academic. The experience makes this study less precise when
compared with a professional study.
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In any investment proposal the following are the main points to be considered:
o Costs
o Benefits
o Risks
o Opportunity
Before an investment proposal is decided a detailed study of these factors is done so as to make the
best use of the scarce resources, to earn the best return, ensure the safety from any risk and utilize
the opportunity in the best manner.
For estimating the profitability of a proposal various items and indices are used.
Capital Employed
This represents the total money invested in construction of the project as well as initial working
capital. Thus, capital employed is equal to:
o Fixed capital cost.
o Amount of working capital.
Fixed capital cost is the total cost of the project. However, this will not include the cost of spares,
training cost and margin money for working capital. The provision for these items is made only for
financing purpose as these are not capitalized.
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Benefits
The next item to be estimated is the benefits. Benefits may be in the form of following
o Net profit in case of new project
o Additional production resulting in additional revenue on incremental basis
o Reduction in the cost of production at the same level of production
o Lower rejections/wastages
o Better working condition
o Lower pollution and total pollution control
o Energy conservation
o Better information system
o Import substitution thus saving foreign exchange.
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Gross Margin
The term Gross Margin denotes the difference between the net sales/net benefits or savings and
cost of production and services before depreciation and interest.
Depreciation
Depreciation is worked out on straight line method which forms the basis for the purpose of
profitability evaluation.
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Income Tax
In arriving at the net profit, Income Tax shall be worked out on the taxable profit at the prevailing
rate of Income Tax.
Profitability Indices
After the details of net sales, net savings, cost of production, etc. have been worked out, various
profitability indices shall be calculated. These indices are as follows:
o Pay Back Period
o Return on Investment (ROI)
o Internal Rate of Return by DCF (IRR)
o Net Present Value Method (NPV)
Return on Investment
Return on investment is worked out by dividing the net benefits/net savings after depreciation but
before interest by the capital employed. This method is simple like the pay back period method.
However, this method also lacks in considering the time value of money to be received in future
years of the project. But it is a very widely used method in the estimation of profitability because
of its simplicity.
In working out ROI following components of costs and benefits are considered:
o Capital employed. This consists of fixed capital costs and working capital.
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2005
2006
2007
Unit - I Munoli
2,500
2,500
7,500
Unit - II Ajara
2,500
2,500
2,500
Capacity utilization
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2006
2007
Unit - I Munoli
114.50%
123.25%
52.31%
Unit - II Ajara
94.75%
119.79%
116.36%
2005
2006
2007
Sugar Recovery
Unit - I Munoli
10.20%
11.20%
10.87%
Unit - II Ajara
11.41%
11.73%
12.01%
Particulars
Fixed Capital
2005
2006
2007
Building
Depreciation
NET
178,423,808.46
4,524,827.78
173,898,980.68
218,321,547.00
5,536,634.43
212,784,912.57
311,610,569.00
7,902,444.03
303,708,124.97
Land
Depreciation
NET
65,355,887.97
65,355,887.97
66,127,877.00
66,127,877.00
53,350,976.00
53,350,976.00
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532,659,865.59
15,979,795.97
516,680,069.62
581,996,186.00
17,459,885.58
564,536,300.42
1,144,139,101.00
34,324,173.03
1,109,814,927.97
755.93
843.45
1,466.87
Term Loan
Owned Funds
165.86
55.29
165.55
55.18
175.05
58.35
221.14
220.74
233.40
977.08
1,064.19
1,700.27
Working Capital
Particulars
2005
2006
2007
Working Capital
Bank Borrowing
Owned Funds
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67.35
22.45
140.11
46.70
134.55
44.85
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89.79
186.81
179.40
Rent
56.00
58.80
61.74
123.35
198.91
196.29
Crushing
Sugar Production (MT)
Op stock
Total
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2006
2007
641,200
677,875
839,576
65,402
75,922
91,262
3,063
6,847
8,277
68,465
82,769
99,539
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61,619
74,492
89,585
6,847
8,277
9,954
61,619
74,492
89,585
30,809
37,246
44,792
24,647
29,797
35,834
6,162
7,449
8,958
32,060
33,894
41,979
211,596
223,699
277,060
25,648
27,115
33,583
(Rs. in millions)
1,139.95
1,154.62
1,209.40
48.09
67.79
92.35
137.54
100.66
96.97
1.28
1.36
1.68
1,326.86
1,324.43
1,400.40
88.42
11.73
(6.34)
1,415.27
1,336.16
1,394.06
937.43
1,024.27
975.59
49.67
44.73
29.80
1.85
1.96
2.42
105.49
58.93
54.57
15.05
21.03
1.99
29.29
57.07
79.00
27.69
19.70
25.59
1,166.47
1,227.68
1,168.96
17,835.33
16,170.30
12,808.81
248.80
108.48
225.10
20.50
23.00
42.23
228.30
85.48
182.87
Crushing
Sugar Production (MT)
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2006
(Rs. in millions)
2007
251,088
521,087
523,620
28,649
61,123
62,887
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2,865
6,399
28,649
63,988
69,286
25,784
57,590
62,357
2,865
6,399
6,929
25,784.18
57,589.52
62,357.04
12,892.09
28,794.76
31,178.52
10,313.67
23,035.81
24,942.82
2,578.42
5,758.95
6,235.70
12,554.38
26,054.33
26,181.00
82,858.88
171,958.55
172,794.60
10,043.50
20,843.46
20,944.80
477.01
892.64
841.82
18.83
52.11
57.60
42.42
175.05
175.90
0.50
1.04
1.05
538.76
1,120.84
1,076.37
52.60
41.00
(1.34)
591.37
1,161.84
1,075.03
368.53
704.51
641.80
19.20
34.39
25.66
0.98
2.03
2.04
13.45
32.34
25.14
32.33
42.48
50.89
28.94
9.99
11.52
56.00
58.80
61.74
6.61
9.56
18.59
526.04
894.09
837.37
18,361.46
14,627.60
13,315.57
65.33
267.75
237.66
65.33
267.75
237.66
RETURN ON INVESTMENT
Babasabpatilfreepptmba.com
Page 53
ROI = Profit after depreciation but before interest and tax X 100
Total capital Employed
228.3
X 100
977.08
=23.37%
Ajara
ROI=
65.33
X 100
123.53
=52.96%
Calculation of return on investment for the year 2006 (Amounts in Millions)
Munoli
ROI=
85.48 X 100
1064.19
=8.03%
Ajara
ROI=
267.75
X 100
198.91
=134.61%
Babasabpatilfreepptmba.com
Page 54
182.87 X 100
1700.27
=10.76%
Ajara
ROI=
237.66
X 100
196.21
=121.08%
Babasabpatilfreepptmba.com
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Crushing
Sugar Production (MT)
Op stock
Total
Sales
Cl stock
Sales revenue
Sales: MT
Free Sale
Exports
Levy Sale
Molasses
Bagasse
Pressmud
Revenue:
Sale sugar - Mfg
Sale of Molasses
Sale of bagasse
Sale of Press mud
Total Net Sales
Increase / (decrease in stock)
Total
Raw materials (Sugarcane)
Cane Development Expenses
Power
Consumables &Others
Stores and Spares
Salaries & wages
Other Manufacturing Exp
Total cost of production
Cost of production / MT
EBIDTA
Babasabpatilfreepptmba.com
(Rs. in millions)
2009
917,926
1,017,114
107,122
119,206
9,954
11,708
117,076
130,913
105,368
117,822
11,708
13,091
105,368
117,822
52,684
58,911
42,147
47,129
10,537
11,782
45,896
50,856
302,916
335,648
36,717
40,685
1,443.55
1,649.51
110.15
132.22
90.87
100.69
1.84
2.03
1,646.41
1,884.46
15.18
17.52
1,661.59
1,901.98
1,101.51
1,220.54
21.44
32.84
2.37
2.77
50.00
48.70
3.00
3.00
104.83
129.69
22.30
21.18
1,305.45
1,458.71
12,186.55
12,236.93
356.14
443.27
Page 56
Babasabpatilfreepptmba.com
60.00
60.00
296.14
383.27
Page 57
Ajara
2008
Crushing
Sugar Production (MT)
Op stock
Total
Sales
Cl stock
Sales revenue
Sales: MT
Free Sale
Exports
Levy Sale
Molasses
Bagasse
Pressmud
Revenue:
Sales
Sale sugar - Mfg
Sale of Molasses
Sale of bagasse
Sale of Press mud
Total Net Sales
Increase / (decrease in stock)
Total
Raw materials (Sugarcane)
Cane Development Expenses
Power
Consumables &Others
Salaries & wages
Other Manufacturing Exp
Rent
Stores and Spares
Total cost of production
Cost of production / MT
EBIDTA
Depreciation - allocated amt
Amortization, if any
Profit After Depreciation but
Babasabpatilfreepptmba.com
2009
664,464
770,731
78,274
91,023
6,929
8,520
85,202
99,544
76,682
89,589
8,520
9,954
76,682.18
89,589.22
38,341.09
44,794.61
30,672.87
35,835.69
7,668.22
8,958.92
33,223.20
38,536.55
219,273.12
254,341.23
26,578.56
30,829.24
(Rs. in millions)
1,111.89
1,254.25
79.74
100.20
65.78
76.30
1.33
1.54
1,258.74
1,432.29
20.70
17.36
1,279.44
1,449.64
797.36
924.88
32.84
36.07
2.91
3.66
35.33
41.19
60.46
69.74
24.00
26.00
64.83
68.07
20.00
22.00
1,037.72
1,191.61
13,257.61
13,091.24
241.71
258.04
Page 58
241.71
258.04
283.50 X 100
1246.06
=22.75%
Ajara
ROI=
300.93 X 100
274.62
=109.58%
383.27 X 100
1327.44
=28.87%
Ajara
ROI=
333.91
X 100
306.91
=108.80%
Babasabpatilfreepptmba.com
Page 59
PROFIT MARGIN
Profit margin = Profit after depreciation but before interest and tax X 100
Net sales
Years
2005
2006
2007
2008
2009
Ajara
12.13%
23.89%
22.08%
23.91%
23.31%
Munoli
17.21%
7.37%
5.79%
17.22%
20.34%
Babasabpatilfreepptmba.com
Page 60
ROI (Munoli)
35.00
28.87
30.00
Returns
25.00
23.37
22.75
20.00
15.00
9.17
10.00
4.77
5.00
2005
Babasabpatilfreepptmba.com
2006
2007
Years
2008
2009
Page 61
ROI (Ajara)
160.00
134.61
140.00
121.08
Returns
120.00
109.58
108.80
2008
2009
100.00
80.00
60.00
52.96
40.00
20.00
2005
2006
2007
Years
Profit Margin(Munoli)
25.00%
20.34%
Profit(%)
20.00%
17.22%
17.21%
15.00%
10.00%
7.37%
5.79%
5.00%
0.00%
2005
2006
2007
2008
2009
Years
Babasabpatilfreepptmba.com
Page 62
Profit Margin(Ajara)
30.00%
23.89%
Profit(%)
25.00%
22.08%
23.91%
23.31%
2008
2009
20.00%
15.00%
12.13%
10.00%
5.00%
0.00%
2005
2006
2007
Years
Interpretation
o Return on Investment
2005
2006
2007
2008
2009
Munoli
23.37%
9.17 %
4.77%
22.75%
28.87%
Ajara
52.96%
134.61%
121.08%
109.58%
108.80%
2008
2009
o Profit Margin
2005
2006
Babasabpatilfreepptmba.com
2007
Page 63
17.21%
7.37%
5.79%
17.22%
20.34%
Ajara
12.13%
23.89%
22.08%
23.91%
23.31%
Babasabpatilfreepptmba.com
Page 64
Page 65
Babasabpatilfreepptmba.com
Page 66
Babasabpatilfreepptmba.com
Page 67
Suggestions
o Ajara plant is highly profitable plant; SRSL should consider it as a good option for
acquisition so that they can go for expansion and increase its profitability.
o .The profitability and returns of Ajara plant shows growth, which is a good sign for
SRSL and they can further think of increasing the capacity of Ajara plant.
o The Sugar industry is growing at the rate of 3.5% and SRSL can make huge profits
from Munoli plant in the coming years if the machineries used in the plant are properly
rectified and maintained.
o As the sugar industry undergoes a cycle of growth and depression once in 2 years SRSL
has to increase its productivity by increasing the recovery rate of sugar and its capacity
utilization to maintain its level of returns and profitability.
Babasabpatilfreepptmba.com
Page 68
Babasabpatilfreepptmba.com
Page 69
Ajara plant shows returns at a higher side as compared to Munoli plant as the capital
invested in the Ajara plant is very low as compared to the investment made in the
Munoli plant.
o Ajara plant is more profitable than Munoli plant as the rate of recovery and the capacity
utilization of Ajara plant is higher than that of Munoli plant.
o In the coming years both the plants have the required strength to sustain the
competition for maintain good returns and profit margin.
Babasabpatilfreepptmba.com
Page 70
Babasabpatilfreepptmba.com
Page 71
Books:
o Project Management and Control by Narendra Singh, 2nd edition.
o Financial Management by M.Y. Khan & P.K. Jain 4th edition.
Web Sites:
o www.shreerenukasugars.com
o www. Babasabpatilfreepptmba.com
Babasabpatilfreepptmba.com
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Babasabpatilfreepptmba.com
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