working-capital by chandrababua

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									       INTRODUCTION




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                                  INTRODUCTION
       Financial Management is that managerial activity which is concerned with the
planning and controlling of the firm’s finance. Finance is one of the foundations of all
kinds of economic activities. Finance is the life-blood of a business. The financial
management study deals with the process of procuring necessary financial resource
and their judicious use with a view to maximizing the value of the firm and there by the
value of the owners i.e. equity share holders in a company. Practicing managers are
interest in this subject because among the most crucial decisions of the firm are those
which relate to finance, and an understanding of the theory of financial management
provides them with conceptual and analytical insights to make those decisions skillfully.


FINANCIAL MANAGEMENT
      Financial Management emerged as a distinct field of study at the turn of this
century many eminent persons defined it in the following ways.

DEFINITIONS: -
        According the BONNEVILE AND DEWEY:” Financing consists in the rising,
providing and managing of all the money, capital or funds of any kind to be used in
connection with the business”.
        According to Prof.EZRA SOLOMAN:”Financial Management is concerned with
the efficient use of any important economic resource, namely capital funds”.

FINANCE FUNCTIONS: -
       It may be difficult to separate the finance functions from production, marketing
and other functions, but the functions themselves can be readily identified. The
functions of raising funds investing them in assets and distributing returns earned from
assets to shareholders are respectively known as.
1. Long – term assets-mix (or) Investment Decision
2. Capital – Mix (or) Financing Decision
3. Profit allocation (or) Dividend Decision
4. Short – term asset –Mix (or) Liquidity Decision
GOALS OF FINANCIAL MANAGEMENT
   Maximize the value of the firm to its equity shareholders.
      Maximization of profit
      Maximization of earnings per share.
      Maximization of return on equity (defined as equity earnings/net worth)
      Maintenance of liquid assets in the firm.



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      Ensuring maximum operational efficiency through planning directing and
       controlling of the utilization of the funds.
      Building up of adequate reserves for financing growth and expansion.




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                        INDUSTRY PROFILE
        Sugarcane is one of the important crop for the INDIAN FARMER. Sugar &
jigger are the main products that we get from sugarcane other products baggase
for industrial use molasses for distillery, filter cake, mudas an organic manure &
green leaves with tops for cattle feed are also available as by products, because
of its multi uses sugarcane has played crucial feed role in Indian economy with
Rs. 20,000 Cores TURNOVER & WITH 450 SUGAR MILLS PROVIDING
assistance to 45 million sugarcane farmer and 2 million workmen directly and
indirectly.

       In AP sugar industry is an important agro based industry occupying the
SECOND position next to textile industry. The annual cultivated area is about
1.99 LAKHS hectares with a yield of 149.45 LAKHS of tones during 1996-1997.
At present there are 36 sugar factories in the state and 50% of them are in co-
operative sector. Actually the work sugar derived from a Sanskrit word
“SHAKRA”.


SUGAR INDUSTRY NATURE

SEASONALITY

       The industry is seasonal with the season starting in Nov and continuing till
April/May, sugar cane is available during these 6-7 months and crushing also
takes place during these months.

LICENSING SYSTEM

       To protect sugar – producing units and ensure a sufficient quantity of raw
material (sugar cane), licensing system was introduced. Under this system, each
unit had a command area from where the sugar cane was produced. The
licensing system presently in place is also trying to encourage the setting up of
new units by providing them with sops and other benefits.




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                              COMPANY PROFILE

KARNATAKA BREAWARIES DISTILLERIES SUGARS AND INDUSTRIES
LIMITED PROFILE

       The irrigation in Chittoor district mostly depends on open wells. Recharge
of water in the wells depends in ground water level and rainfall. However, rainfall
depends in monsoon which is uncertain. The soils in district are almost suitable
for sugarcane cultivation. The formers also having good knowledge of growing
Sugarcane. In good olden days, total quantity if sugarcane produce in the district
was converted as jaggery by gangues (Bullock Crushers) and power crushers.
The jaggery making was very difficult to the small farmers due to lack of crusher
and unfavorable prices. The big farmers also faced difficulty to crush the cane for
long period.

       The jaggery made in the district was brought to the Chittoor and Pakala
which are market places with railway transportation. There was list of exploitation
of farmers by the jaggery mundi owners by advancing the money with high
interest rates, commission and also not properly weighment. The price fluctuation
created by the traders was also a reason for poor realization, but there was no
other choice to the farmers.

NAME             :         K.B.D SUGARS AND DISTILLERIES LTD.,
Location and Address       :     MUDIPAPANAPALLI,
                                 (VILLAGE)
                                 SUGALIMITTA POST,
                                 PUNGANUR MANDAL – 517247,
                                 CHITTOOR DIST., A.P

BRIEF HISTORY ABOUT THE COMPANY:

      The company was originally incorporated on 16 th day of October, 1984
under the of SREE TELUGU SUGARS LIMITED. Subsequently the name of the
company was changed to SREE VANI SUGARS AND INDUSTRIES LIMITED
on the 5th day of April, 1990. Again subsequently the name of the company was
changed to K B D SUGARS DISTILLERIES LIMITED on the 1st March, 2005.




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     The company was initially promoted by Sri. T. Suryachandra Rao,
Managing Director and Sri S. Gokul, Executive Director commences its
commercial production from 01st July,1992.

       In the initially years if performance of the company was much below the
break event levels. Due to poor performance, the company accumulated
substantial cash loses and also defaulted in meeting the terms load comities to
AIFIs.

      In these circumstances, the promoters have inducted Sri D. K.
Audhikesavulu as a co-promoter in order to facilitate the company to meet.

      The cost overrun of the project and also provide for the short fall in the
margins for working capital. Sri S. Gokul has since come out the board and left
the company.


MAIN OBJECTS OF THE COMPANY
   1. To carry in the business as manufacturers, produces, processors, sellers,
      distributors, stock lists and traders of sugars and its derivatives, molasses
      biases and all materials and substances arising as products and wastes
      products out of and in the course of manufacture of sugar.
   2. To carry in the business as manufacturers, producers, brewers, blenders,
      dealer’s distillers, stock lists and traders of rectified spirit, ethyl alcohol,
      gasohol, acetic acid, acetones anhydride, vinyl acetate polymers, plastics,
      polyvinyl chloride, liquors and all products made there from.
   3. To carry on the business as manufacturers, producers, packers, dealers,
      stock lists and traders of furfural, bulk drugs, pharmaceutical and medical
      preparations, made out of by-products of sugar or their derivatives.
   4. To carry in the business as manufacturers, dealers, distributors, stock lists
      and traders of biogases pulp, paper pulp and pulp made out agricultural
      residues or other fibrous materials, paper, newsprints, paperboards,
      millboards, starboards, cites paper of kinds, paper bags, febrile boxes,
      cartons, corrugate containers, wrapping and packing materials.
   5. To carry on the business as planters, growers, cultivators, farmers and
      producers of sugarcane, sugar beet.
   6. To generate electrical power by conventional, non-conventional methods,
      including coal, gas lignite, naphtha oil, bio-mass, bio-gases, waste thermal
      solar, hydel, geo-hydel, mino tidal waves any to promote, own acquire
      erect, construct, establish, maintain, improve manage, operate, alter carry
      on, control. Take in hire / lease, power plants, cogeneration plants, energy

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       conversion projects power houses, transmissions and distribution system
       for generation, transmission and supply of electrical energy to the state
       electricity board, state govt., appropriate authorities, agricultural,
       household industrial, commercial, and any other consumer for industrial
       purpose in Indian and else where specified by the state / central govt.
       local authority in state electricity board and any other competent
       authorities by entering into necessary agreements.


                  PRESENT BOARD OF DIRECTORS


                  NAME                             DESTINATION



        SRI D.K. AUDIKESAVULU               CHAIRMAN AND MANAGING

            SRI D.A. SRINIVAS                        DIRECTOR

       SRI L. SURYACHANDRA RAO                       DIRECTOR

        SRI N.V. VARADARAJULU                        DIRECTOR

         SRI RAMACHANDRAIAH                          DIRECTOR

             SRI M.G.G NAIDU                         DIRECTOR

       SRI P.L. SANJEEVA REDDY               DIRECTOR (NOMINEE OF
                                                    IREDA)



                             PRODUCT PROFILE

Sugar Cane

   Sugar cane cultivated by the growers or promising varieties in terms of sugar
content and yield. Cultivation techniques maturity of (decided by the cane
personnel) harvested and supplied to the factory in trucks fresh less tops and
roots. Trucks are weighed with cane on Weigh Bridge and unloaded on the
moving cane carrier. Mechanical un-loaders do unloading. Again empty truck is
weighed to assertion in the weight of cane unloaded.

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Millings
    Provided with a tandem of four mills land each mill is provided with three
rollers. On the cane carried for cane preparation cane knives driven by motor
and followed by a Fibrizer driven steam turbine are provided to chop the cane
into small pieces and fiber to make the milling move efficient and to extract
maximum juice from the cane. To make this process more effective assured
quantity of water is added to Mills. After extraction of juices the waste materials
is called bagasse.

Boilers

    Provided with 2 nos. of boilers of each water evaporation capacity of 25 Mts.
Per hour steam at 300 p sig (21 Kgs). Steam is used for driving the Fibrizer,
mills by turbines and generator power, by steam turbine alternator. For boilers
main fuel is bagasse. Surplus bagasse is sold to paper industries.

Clarification

    Juice extracted form sugar cane in mills is weighted in automatic weighing
scale. It is preheated in juice heater to 50-750. Then it is limited and sulphieted
simultaneously. Juices will be coagulated form and will not settle. To induce
settings cheaply and abundantly available positive is to be added i.e. namely
time in slurry form, also called milk of lime, by using addition of such alkaline
medium is again brought down to natural pH medium by bubo ling of sulphur
dioxide gas. This gas is produced in sulphur burners and bubbled in preheated
juices. By the aid of compressed air passing through sulphur burners. As such
a juice is kept at slightly alkaline medium say 701 to 7.2. Then this treated juice
is heated again in other row of juices heaters to 102 C and to send to graver.
Graver is a big tank where settling is taking place. Continuously, such juices is
sent and drawn from it with the detention time of juices of about 330 hours, in ‘u’
tube principles.

Evaporation
    In graver juices will be well settled and will have a golden yellow color of
7.0pH (Neutral). This clear juice will contain more than 85% of water and the
remaining soiled (Sugar Maximum + a little sugar). In evaporators about 75% of
water is removed and made syrup. This consists of one vapor cell and is
followed by four bodies. Boiling is done under vacuum using exhaust stream
from turbines tubes emerging out through tube plates and above this calandria


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vapor space or shell. Steam circulated through calandreia and heating the outer
point of huices is brought well below its origin boiling point. In the vapor cell
alone exhaust steam is admitted into the calandria produced vapor to its
subsequent body and soon. Vacuum is helping is drawing vapor from the
preceding body and this boiling is called multi effect boiling and maximum fuel
economy. Thus when juices is emerges out from last body it will be a syrup,
losing about 75% of water.

Vacuum filter

   Mud settled in graver is taken in rotary filters to extract juices from it and
waste is called filter cake sent out and used as manure. Extracted juices is again
mixed juices from mills after weighment tank and takes the path of process along
with mills juices in acyclic form.
Sulphitation and syrup

    The syrup from evaporator last body is again sulphited to beach to get white
sugar and sent to pan supply tanks.
Pans
    Pan bodies are similar to evaporators in construction with different design.
Materials are invidiously boiled in four numbers under vacuum. When the syrup
is further boil in pans. When the super saturation point reaches crystals come
out its is again boiled up by addition kept in pan and the rest 2 portions sent to
receivers. Then again pan is boiled. This process will help growth or crystal as
desired by us.
    Three boiling are bone A, B, C. These are called massecuites. All these
mass cuties (sugar + molasses) are purged in centrifugals respectively sugar and
molasses are separated. Pans are boiler on vapor produced form vapor cell.

Centrifugals

    Such made massecuties are dropped in crystallizers (a storage tank with
stirring mechanism). From crystallizes taken into centrifugal machines and sugar
and molasses separator. Centrifugal machines contain a basket fitted with mesh
and screen of small opening and will not allow sugar crystals to pass through but
only molasses. When one machine changed with massecuities and spun at 150
RPM molasses gets out and collects in a tank. Sugar remains in basket washed
and dried by steam. Then dropped on hopper (to and or) shaking medium sugar
will get dry when flowing and galls on sugar grader (fitted with meshes) screened
and bagged. Bags weighed on P.O scales of 100kgs. And sent to go down.


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   Molasses got from a massecuites; sugar and molasses form B massescuties
and sugar form c massecuites (final) are again boiled in pans in cyclic manner.
Molasses got fro c massecuites called final molasses is a waste and sent to
storage tanks (Raw material for alcohol industries). Sugar is graded in
accordance and large i.e., S-29, S-30. As the demand in the market is for S-30 it
is made in the fact.




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        RESEARCH
       METHODOLOGY




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                RESEARCH METHODOLOGY
NEED FOR THE STUDY

In carrying the study both primary and secondary data collected in aphased
manner as follows:

   A. Initially preliminary discussions with G.M. sales manager and accounts
      officer carried on.
   B. The information about profit and loss reports
   C. The ratios are calculated by studying balance sheet and the necessary
      information required for the study was being obtained from fruitful
      interaction of the researched with the employees of the organization.
   D. And some information gathered from secondary data and some of the
      financial books.

OBJECTIVE OF THE STUDY
               This study is mainly focused to examine the short-time financial
viability of KBD sugars as stated below:
 To study how best the working capital is utilized in the company.
 To study the effectiveness of credit management of the company.
 To study the short-term liquidity positions of company.
 To understand working capital management of a company.
 To study the changes in working capital position of the company.
 To suggest necessary methods by which future improvement may be made in
   its management of working capital.



SOURCES OF DATA ANALYSIS
The study required both primary and secondary data.
PRIMARY DATA:-
      Primary data has been collected by interviewing certain executives who
were chosen on the basis of their in depth knowledge and experience in the
company. The interviews in nature are under to gain as much information as
possible.
SECONDARY DATA:-
      Secondary data was obtained from the past records file and reports of the
organization also from other financial statements.




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TOOLS FOR ANALYSIS OF WORKING CAPITAL:-
        The quantum of working capital as well as its financing pattern is subject
to constant monitoring and reviews by the financial manager. There are different
analytical tools which can help a financial manager in monitoring in viewing and
controlling the working capital. The popularly used tools are:
        1. Schedule of changes in working capital.
        2. Working capital ratios.
LIMITATION OF THE STUDY:-
 It is based on the data supplied by the factory personnel.
 It is based on consultation, decisions of all concerned officials.
 Since only 5 years data is used for the analysis the out come may
    Not be generalized.
 Due to limitations of time, it was unable to go far a depth study into
   The subject.




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       REVIEW OF
       LITERATURE




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            INTRODUCTION TO WORKING CAPITAL

       “Working capital “is often referred to as “lifeblood” of an organization of its
“the money required for carrying on day today activities of an organization. The
management of current assets is similar to that of fixed assets in the sense that
in both cases a firm analysis their effects on its return and risk.

        The management of fixed and current assets, however, differs in three
important ways: first, in managing fixed assets, time is very important factor;
consequently, discounting and compounding techniques play a significant role in
capital budgeting and a minor one in the management of current assets. Second,
the large holding of current assets, especially cash, strengthens the firms liquidity
position (and reduce risk ness), but also reduces the overall profitability. Thus, a
risk-return trade off is involved in holding current assets. Third, levels of fixed as
well as current assets depend upon expected sales fluctuations in the short run.
Thus the firm has a greater degree of flexibility in managing current assets.

          Working capital is probable the often used financial management
concepts verbally and misused practically. Independent of the nature of an
organization, its constitution and activity requires working capital. Many
organizations have failed or become sick mainly due to the mismanagement of
this “working capital”.

                          MEANING AND DEFINITION

       Working capital management or administration of all aspects of working
capital, which manage the firm’s current assets and current liabilities in such a
way that a satisfactory level of working capital is maintained.
       According to smith “working capital management is concerned with the
problem that arise in attempting to manage the current assets, current liabilities,
and the inter-relationship that exists between them”

TYPES OF WORKING CAPITAL:-
        There are two types of working capital. They are:
I) on the basis of concept
        1) Gross working capital.
        2) Net working capital.
1. Gross working capital:-



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               Refers to the firm’s investment in current assets are the assets,
which can be concerned into and with in an accounting year (or operating cycle)
and include cash, short-term securities, debtors (accounts receivables or book
debts) bills receivable and stock (inventory)
       Gross working capitals points to the arranging of funds to finance current
assets.


2. Networking capital:-
                 Refers to the difference between current assets and current
liabilities. Currents liabilities are those claims of outsiders, which are expected to
nature for payment within accounting years and include creditors (accounts
payable). Bills Payable and outstanding expenses. Networking capital can be
positive or negative. A positive networking capital will arise when current assets,
exceed current liabilities and a negative working capital will arise when current
liabilities are in excess of current assets.
II) On the basis of time
          1) Permanent/fixed/fluctuating working capital
          2) Temporary working capital




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1) Permanent working capital:-
                      The need for current assets arises because of the operating
cycle. The operating cycle is a continuous process and therefore, the need for
the current assets is felt constantly. But the magnitude of current assets needed
is not always a minimum level of current assets, which is continuously required
by the firm to carry on its business operations. This minimum level of current
assets is referred to as permanent or fixed working capital.
EXAMPLE: - Every firm has to maintain a minimum level of raw materials, work-
in-progress, finished goods and cash balance. This minimum level of current
assets is called permanent or fixed working capital as this part of capital is
permanently blocked in current assets. As the business grows, the requirements
of permanent working capital also increase due to the increase in current assets.




                                                                       Temporary
                                                                           Or
                                                                       Fluctuating
                                                                       Permanent




                                         Time


2. Temporary working capital:-

       Depending upon the changes in production and sales, the need for
working capital over and above permanent working capital, will have in be
maintained to support the peak proceeds of sale and investment in receive may
also increase during such periods. On the other hand, investment in raw
material, working in progress and finished goods will fall if the market is slack.
       The extra working capital needed to support the changing production and
sales activities is called fluctuating, or variable or temporary working capital. The
firm to meet liquidity measurement that will last only temporarily creates
temporary working capital.



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                                                              Temporary
                                                                   Or
                                                                  Fluctuating
                                                                   Permanent




THE NEED OR OBJECTIVES OF WORKING CAPITAL


              The need for working capital to run day -to -day business activities
cannot be over emphasized, we will hardly find business firm, which doesn’t
require any amount if working capital indeed, and firms differ in their
requirements of the working capital. We know that a firm should aim at
maximizing the wealth of its share holders. In its endeavor to do so. A firm
should earn sufficient return from its operations. Earning a study amount of profit
required successfully sale activity. The firm has to invest enough funds in current
assets for cash instantaneously. There is always an operation cycle involved in
the conversion of sales in to cash.
VARIOUS NEEDS OF WORKING CAPITAL IS AS FOLLOWS:-
       1. To pay wages and salary.
       2. It helps to the purchase of raw materials, components and spares.
       3. It helps to incur day-to-day- expenses and overhead costs such as
          fuel, power, and office expenses etc.
       4. It also to meet the selling cost as packing, advertising etc.
       5. It provides credit facilities to the customer.
       6. It helps to maintain the inventories of raw material, working progress,
          stores and spares and finished stock.


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DETERMINATES OF WORKING CAPITAL OR FACTORS AFECTING
       The working capital requirement of a firm affected by a number of factors.
The various factors, which affect the working capital requirement of a concern,
are as follows:


 Internal factors                                           External factors
             Nature of business
                                                               Business
                                                               fluctuations
             Product cycle                                    Technological
                                                                 Developments
            Business cycle
                                                              Transport and
           Credit policy                                      Communication
                                                                Development
            Scale of production                               Import Policy

           Growth and Expansion of business                    Taxation policy
           Operating efficiency


                             INTERNAL FACTORS

1. NATURE OF BUSINESS:-
              The working capital requirements of enterprises are basically
related to the conduct of business. Public utilities have certain features which
have a bearing on their working capital needs. They do not maintain big
inventories arid have, therefore, probably the least requirement of working
capital. On the other hand trading and manufacturing concern required large
amount of working capital to maintain a sufficient amount of cash inventories and
book debts.

2. PRODUCTION CYCLE: -

             The term production or manufacturing cycle refers to the span
between the procurement of raw materials and completion of the manufacturing
process leading to the production of finished goods. In other words, there is a
some time gap before raw materials become finished goods. Therefore the


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longer the time span, the larger will be the working capital needed and vice
versa.
3.BUSINESS CYCLE:-
        The business fluctuations influence the size of working capital mainly
during updated phase when boom conditions prevail, the need for working capital
is likely to cover the lag between increases sales and receipt of cash as well as
invest in plant and machinery to meet the increased demand. The down swing an
opposite effect on the level of working capital requirement.
4.CREDIT POLICY:-
        The credit policy relating to sales and purchases also affects the working
capital. The credit policy in influences the requirements of working capital in two
ways:
        Though credit terms granted by the firm to its customers/buyers of goods
credit terms available to the firm from its creditors. A firm, which more credit
sales and cash purchase required high working capital than a firm having more
credit purchase and cash sales.
5.SCALE OF PRODUCTION:-
        A concern carrying on activities on a small scale of needs less working
capital. On the other hand a concern undertaking activities on large scale
Needs large amount of working capital.

6. GROWTH AND EXPANSION OF BUSINESS:-
       The growth and expansion of business also affect the working capital
requirement. When there is growth and expansion in the business of a firm the
working capital needs of the firm will also increase.

7.OPERTAING EFFICIENCY:-
        The operating efficiency of the management is also important determinant
of the level of working capital. A firm enjoying operating efficiency can eliminate
wastage and use its resources efficiently and thereby reduce its working capital
needs considerably.
                          EXTERNAL FACTORS
1. BUSINESS FLUCTUATIONS:-
                    Business enterprises usually experiences fluctuations in
demand for their products and services because of changes in economic
conditions. In view of this, working capital requirements of these enterprises are
affected. Thus, in the event of economic prosperity, general demand of the
goods and services tends to shoot up. To cope with increased demand and
consequently increased production, the firm will require additional working
capital.

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2. TECHNOLOGICAL DEVELOPMENTS:-
                    Technological developments in the area of production can
have sharp effects on the need for working capital. If a firm switches over to new
manufacturing process and installs new equipments with which it is able to cut
period involved in converting raw materials into finished goods, permanent
working capital requirements of the firm will decrease.

3. TRANSPORT AND COMMUNICATION DEVELOPMENTS:-
                     Where the means of transport and communication in a
country are not well developed, industries may need additional funds to maintain
big inventory of raw materials and other accessories which would otherwise not
be needed where the transport and communications systems are highly
developed.
4. IMPORT POLICY:-
                     Import policy of the government may also have its bearing
on the levels of working capital of the enterprises since they have to arrange
funds for importing goods at specified times.

5. TAXATION POLICY:-
                    Working capital needs of business enterprises are affected
sharply by taxation policy of the government. In the event of regressive taxation
policy of the government, as it exists today in India, imposing heavy tax burdens
on business enterprises leaves very little profits for distribution and retention
purposes.

SOURCES OF WORKING CAPITAL:-

       Among the various sources available for financing working capital needs
finance manager has to select the best suitable source depending on working
capital need of company.




                       SOURCES OF WORKING CAPITAL


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Long term sources                                          Short term sources




                        Internal sources                      External sources
                                                                       Bank
                               With drawing the
                             Depreciation fund                         Trade credit

                                Using the renouncement                  Bills of
                                For taxation                            exchange

                                Postponement of payment                 Govt.
                                Accrued expenses                     assistance
                                Public deposits

                                The need of working capital is increased by
raising prices of end products and relative inputs. On the other hand the
government and monetary authorities play their own role to curd the malice in
periods of inflation. The control measures often take the firm of dear money
policy and restriction credit. Financing of additional working capital in such an
amusement becomes a real problem to finance manager of a concerned unit.
Commercial banks play the most significant role in providing working capital
finance, particularly in Indians context. In view of mounting inflation, the R.B.I
has taken up certain social measures to check the money supply in the economy.
The balancing need has to be managed either by long-term borrowings or by
issuing equity or by earning sufficient profits and retaining the same of coping
with the additional working capital requirements. The first choice before a
finance manager, where banks do not provide a part of additional working capital,
is to take the long-term sources of fiancé.
LONG TERM FINANCING:-

       Loans from financial institution the option is normally rules out, because
financial institutions do not provide finance for working capital requirements.
Further this facility is not available to all companies this option is not practical

FLOATING OF DEBENTURES:-


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                The profitability of a successful floating of debentures seems to be
rather merging. In Indian capital market, floating of debentures has still to gain
popularly debentures issues of companies in private sector not associated with
certain reputed groups generally failed to attract investors to invest their funds in
companies. In this context the mode of raising funds by issuing convertible
debenture/bonds is also gaining.
ACCEPTING PUBLIC DEPOSITS:-
         The issue of tapping deposits is directly to the image of the company
seeking to invite public deposits.
ISSUE OF SHARES:-
         With a view of financing additional capital needs, issue of additional equity
share could be considered. Many Indian company have still to go ahead to
command respect of investors in the context low profit margin as well as lack o
knowledge about company make the success of a capital Issue very dim.
RAISING FUNDS BY INTERNAL FINANCING:-
         Raising funds from operational profit poses problems for many companies,
because price of their end products are controlled and do not permit companies
to earn profit sufficient requirements to finance additional working assets, still a
largely feasible solution lies in increase profitability through cost control and cost
reduction measures managing the cash operating cycle, rationalizing inventory
stock and so on.
PROBLEMS ASSOCIATED WITH EXCESS & IN ADEQUATE WORKING
CAPITAL:-
DANGERS OF EXCESS WORKING CAPITAL:-
1) It results in unnecessary accumulation of inventories. Thus the
changes of inventory mishandling, the losses increase.
2) It is an indication of defective credit policy and stock collection period.
3) Excessive working capital makes management Compliment, which
degenerates into managerial efficiency.
4) Tendencies of accumulating to make speculative profits grow. This may tend
to make dividend policy liberal and difficult to cope with in future when the firm is
unable to make speculation profits.
DANGERS INADEQUATE WORKING CAPITAL:-
1) It Strategies growth. It becomes difficult to undertake profitable project due to
non-availability of the working capital funds.
2) It becomes difficult to implement t operating plans and achieve the firms profit
target.
3) Operating inefficiencies creep in when it becomes difficult even to meet day-
to-day commitments.



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4) Fixed assets are not efficiently utilized for the working capital funds. Thus, the
rate of return on, investment slumps.
5) Paucity of working capital funds renders the firm unable to avail of attractive
credit opportunities etc.The firm losses it reputation when it is not in a position to
turnover short-term obligation.
      METHODS FOR ESTIMATING WORKING CAPITAL REQUIRMENTS

        Three    widely used methods for determining working capital requirements
of a firm are:
                Percentage of sales method
                Regression analysis method
                Operating cycle method

1. PERCENTAGE OF SALES METHOD:-

       In this method, level of working capital requirements is decided on the
basis of past experience. The past relationship between sales and working
capital is taken as a base for determining the size of working capital
requirements for future. It is, however, presumed that the relationship between
sales and working capital that has existed in the past has been stable. This may
be explained with the help of the following illustration.

        Percentage of sales method is a simple and easily understood method
and practically used for ascertaining short-term changes in working capital in
future. However this method lacks reliability inasmuch as its basic assumption of
linear relationship between sales and working capital does not hold true in all the
cases. As such, this method cannot be recommended for universal application.


2. REGRESSION ANALYSIS METHOD:-

       This is a statistical method of determining working capital requirements by
establishing the average relationship between sales and working capital and its
various components in the past years. In this regard the method of least squares
is employed and the relationship between sales and working capital is expressed
by the equation:
              Y=a+bx
The values of ‘a’ and ‘b’ is obtained by the solution of simultaneous linear
equations given as under:
Where a=fixed component


                                                                                   24
SVIM
       b=variable component
       x=sales
       y=inventory
       n=number of observation




3. OPERATING CYCLE APPROACH:-
       Operating cycle refers to the length of time necessary to complete the
following cycle of events.
Conversion of cash into inventory.
Conversion of inventory into receivable
Conversion of receivable into cash
       If the operating cycle is length than the working capital requirement will be
more on the other hands, if the operating cycle is shorter than the working capital
requirement will be less.


       According to this approach, size of working capital requirements of a firm
is determined by multiplying the duration of the operating cycle by cost of
operations. The duration of the operating cycle may be found with the help of the
following formula:
       O=R + W + F + A – P
       Where, O=Duration of operating cycle
               R=Duration of raw materials
              W=Duration of work-in-process
               F=Duration of finished goods
               A=Duration of accounts receivable
               P=Duration of accounts payable

Duration of raw materials:-
             It reflects the number of days for which raw materials remain in
inventory before they are issued for production. The following formula can be
used to determine duration of raw materials.
                            Average stock of raw materials
                    R = ----------------------------------------------------
                         Per day consumption of raw materials

Duration of the work-in-process:-


                                                                                 25
SVIM
             It denotes the number of days required in the work-in-process
stage. It may be ascertained with the help of the following formula:
                             Average work-in-process inventory
                     W = --------------------------------------------------
                                 Average production per day
Duration of finished goods:-
             It refers to the number of days for which finished goods remain in
inventory before they are sold. This can be computed by the following formula:
                             Average finished goods inventory
                     F = ----------------------------------------------
                                 Per day sale of goods




Duration of the accounts receivable:-
              It represents the number of days required to collect the accounts
receivable. This may be calculated as under:
                          Average book debts
              A = ---------------------------------------------
                     Average credit sales per day
Duration of accounts payable:-
              It refers to the number of days for which the suppliers of raw
materials offer credit. This may be measured with the help of the following
formula:
                                   Average trade creditors
                     P = -----------------------------------------------
                            Average credit purchases per day




                                                                            26
SVIM
                  TANDON COMMITTEE REPORT
        Reserve Bank of India set up a committee under the chairmanship of shri
P.L. Tandon in July 1974. The terms of reference of the committee were:
         To suggest guidelines for commercial banks to follow up and supervise
credit from the point of view of ensuring proper end use of funds and keeping a
watch on the safety of advances.
         To suggest the type of operational data and other information that may
be obtained by banks periodically from the borrowers and by the reserve bank of
India from the leading banks.
         To make suggestions for prescribing inventory norms for the different
industries, both in the private and public sectors and indicate the broad criteria
for deviating from these norms.
         To make recommendations regarding resources for financing the
minimum working capital requirements.
         To suggest criteria regarding satisfactory capital structure and sound
financial basis in relation to borrowings.
         To make recommendations as to whether the existing pattern of
financing working capital requirements by cash credit/overdraft system etc.,
requires to be modified, if so, to suggest suitable modifications.

CRETERIA FOR JUDGING THE EFFICIENCY OF WORKING CAPITAL
MANAGEMENT:-

       The efficiency of working capital management can be judged through
accounting ratios. The important accounting ratio’s that could be used for
judging the efficiency of working capital management are:

           Current ratio

           Quick ratio

           Inventory turnover ratio

           Current assets turnover ratio

           Cash position ratio

           Working capital turnover ratio.


                                                                               27
SVIM
      SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2004-05
    Table-1                                                                      (in lakhs)


                                                                Effect of working capital
     PARTICULARS                2004            2005          Increase          Decrease
CURRENT ASSETS:
 Inventories                    265.23         885.30          620.07
  Sundry debtors                260.55         100.25                            160.29
  Cash balance                  165.11         134.12                             30.98
Loans and advances              787.78         732.22                             55.55
Total current assets –A        1478.67        1851.91
LIABILITIES:
  Sundry creditors                             202.21
  Creditors for expences                       444.81
  Tax deducted payble                           2.50

Advance from customers                          19.70
Sundry creditors                                11.36
Total current liabilities -B   1016.72         680.61          336.10
Working Capital (A-B)           461.95        1171.30
Net decrease in working         709.34                                           709.34
         Capital

                               1171.30        1171.30          956.18            956.18
    Source: annual published report of KBD sugars Ltd.


    INTERPRETATION:
           The net working capital requirement of the company during the year 2005 has
    been increased in 2004, and the net working capital of the company was recorded RS.
    46.95 and it was been increased to Rs. 1171.30 in the year 2005.
    SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2005-06
    Table-2                                                                      (in lakhs)


                                                                 Effect of working capital
     PARTICULARS                2005            2006           Increase          Decrease
CURRENT ASSETS:
  Inventories                   885.30        1754.47          869.16
  Sundry debtors                100.25          80.68                             19.56
  Cash balance                  134.12          22.14                            111.98
Loans and advances              732.22         745.38           13.15
Total current assets -A        1851.91        2602.69
LIABILITIES:                                                                     209.30
  Sundry creditors             202.21          411.52

                                                                                        28
    SVIM
 Creditors for expences        444.81          691.52                            246.71

 Tax deducted payble            2.50            0.71            1.79

Advance from customers          19.70          20.28                              0.58
Sundry creditors                11.36          11.78                              0.42

Total current liabilities -B   680.61         1135.84

Working Capital (A-B)          1171.30        1466.84
Net increase in working         295.54                                           295.54
        Capital

                               1466.84        1466.84          884.11            884.11

    Source: annual published report of KBD sugars Ltd.
    INTERPRETATION:
          The net working capital requirement of the company during the year 2005 has
    been increased in 2006, and the net working capital of the company was recorded RS.
    1171.30 and it was been increased to Rs. 1466.84 in the year 2006.

    SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2006-07
     Table-3                                                                    (in lakhs)


                                                                Effect of working capital
      PARTICULARS               2006            2007          Increase          Decrease

CURRENT ASSETS:
  Inventories                  1754.47        3032.38          1277.90

  Sundry debtors                 80.68          82.56           1.87
  Cash balance                   22.14          29.07           6.93
Loans and advances              745.38         895.84          150.46
Total current assets -A        2602.69        4039.86
LIABILITIES:                                                                    498.55
  Sundry creditors             411.52          910.08
  Creditors for expences       691.52         2655.73                           1964.20
  Tax deducted payble           0.71            0.68            0.032
Advance from customers          20.28           44.07                            23.78
Sundry creditors                11.78           11.78
Total current liabilities -B   1135.74        3622.36
Working Capital (A-B)          1466.84         417.50
Net decrease in working                       1049.34          1049.34
         Capital

                               1466.84        1466.84          2486.54          2486.54
    Source: annual published report of KBD sugars Ltd.



                                                                                      29
    SVIM
    INTERPRETATION:
           The net working capital requirement of the company during the year 2007 has
    been increased in 2006, and the net working capital of the company was recorded RS.
    4175.50 and it was been increased to Rs. 1466.84 in the year 2006

    SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2007-08
    Table-4                                                                      (in lakhs)


                                                                Effect of working capital
     PARTICULARS                2007            2008          Increase          Decrease
CURRENT ASSETS:
  Inventories                  3032.38        3756.76          724.38
  Sundry debtors                 82.56         84.16             1.60
  Cash balance                   29.07         50.67            21.59
Loans and advances              895.84        1509.64          613.79
Total current assets -A        4039.86        5401.25
LIABILITIES:                                                                    276.65
  Sundry creditors              910.08        1186.73
  Creditors for expences       2655.73        3445.82                           790.09
  Tax deducted payble            0.68           0.85                             0.17

Advance from customers           44.07          26.23           17.84
Sundry creditors                 11.78          11.78
Total current liabilities -B   3622.36        4671.43
Working Capital (A-B)           417.50         729.81
 Net increase in working        312.30                                          312.30
         Capital

                               729.81          729.81          1379.23          1379.23
    Source: annual published report of KBD sugars Ltd.

    INTERPRETATION:
           The net working capital requirement of the company during the year 2008 has
    been increased in 2007, and the net working capital of the company was recorded RS.
    417.50 and it was been increased to Rs. 729.81 in the year 2008

    SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2008-09
    Table-5                                                                      (in lakhs)


                                                                Effect of working capital
     PARTICULARS                2008            2009          Increase          Decrease
CURRENT ASSETS:
  Inventories                  3756.76        1563.06                           2193.70

  Sundry debtors                84.16          73.48                             10.67
  Cash and bank                 50.67          87.55            36.88
  balance


                                                                                       30
    SVIM
Loans and advances             1509.64        1457.66                           51.97
Total current assets -A        5401.25        3181.77
LIABILITIES:                                                   744.58
  Sundry creditors             1186.73         442.15

 Creditors for expences        3445.82        1959.98          1485.84
 Tax deducted payble             0.85           0.75           0.09185

Advance from customers           26.23         165.05                           138.81
Sundry creditors                 11.78          11.78
Total current liabilities -B   4671.43        2579.73
Working Capital (A-B)           729.81         602.04
Net decrease in working                        127.77          127.77
         Capital
                               729.81          729.81          2395.18         2395.18
    Source: annual published report of KBD sugars Ltd.
    INTERPRETATION:
           The net working capital requirement of the company during the year 2008 has
    been increased in 2009, and the net working capital of the company was recorded RS.
    602.04 and it was been increased to Rs. 729.81 in the year 2008.
                                     RATIO ANALYSIS
            Over several years scientific tools have been evolved for determine
    optimum level of working capital online assessment of each of the components of
    current assets for selective application of management control. Undisputedly the
    ratio analysis occupies place of prime importance. Ratio’ are complied and
    studied for profitability’ assessment of financial position sufficiency of working
    capital strategies perused by the organization short term and long term solvency
    liquidity etc. I would deal with some of the predominant rations more relevantly
    applicable net working capital management studies.




                                                                                    31
    SVIM
CURRENT RATIO

  Current ratio indicates ability of the company to meet the current obligation i.e.,
the current assets must be sufficient to pay as and when the latter matrices. The
standard ratio is 2:1, the current ratio is calculated by using the formula:

                              Current assets
              Current ratio = ----------------------
                              Current liabilities
                                     CURRENT RATIO
                                         Table-6
           YEAR         CURRENT ASSETS                CURRENT               RATIO
                                (in lakhs)           LIABILITIES
                                                       (in lakhs)


   2004-2005              1851.91                   680.61                  2.720
   2005-2006              2602.69                  1135.84                  2.291
   2006-2007              4039.86                  3622.36                  1.115
   2007-2008              5401.25                  4671.43                  1.156
   2008-2009              3181.77                  2579.73                  1.233
Source: annual published report of KBD sugars Ltd.

                              CURRENT RATIO chart-1

             3

           2.5
                                                                                2008-09
             2
  RATIOS




                                                                                2007-08
           1.5                                                                  2006-07
                    2.72
                              2.291                                             2005-06
             1
                                                                                2004-05
           0.5                           1.115      1.156           1.233

             0
                    2005      2006       2007       2008            2009


                                       YEARS
                                                                                    32
SVIM
INTERPRETATION
        The current ratio is below satisfactory level of 1:115 during the year 2006-
2007 and the year 2004-2005 above the satisfactory level. However there is a
decrease during the years 2006-2007 to 2008-2009 the decrease in the current
ratio indicates bad trend of company.

QUICK RATIO

       Quick ratio are acid test ratio ignores less liquidity assets like
inventory. This takes account readily available cash and other assets which
are quickly converted into cash. The standard is ratio is1:1. The general
principle of quick ratio is as follows:
                                          Liquid Assets
                     Quick ratio = --------------------------------
                                      Current liabilities
                                     QUICK RATIO
                               Table-7 and chatr-2

       YEAR          QUICK ASSETS             CURRENT                   RATIO
                         (in lakhs)       LIABILITIES(in lakhs)

   2004-2005              966.60                  680.61                 1.42
   2005-2006              848.21                 1135.84                 0.75
   2006-2007             1007.48                 3622.36                 0.28
   2007-2008             1644.48                 4671.43                 0.35
   2008-2009             1618.71                 2579.23                 0.63

Source: annual published report of KBD sugars Ltd.




                                                                                 33
SVIM
           1.6
           1.4
           1.2
                                                                          2008-09
            1
  RATIOS



                                                                          2007-08
           0.8
                 1.42                                                     2006-07
           0.6                                                            2005-06
           0.4            0.75                                            2004-05
                                                         0.63
           0.2                                 0.35
                                    0.28
            0
                 2005    2006       2007      2008       2009



INTERPRETATION                            YEARS
       The Quick ratio is below satisfactory level of 0:072 during the year 2002-
2003 and the year 2003-2004 above the satisfactory level. However there is a
increase during the years 2004-2005 this year position is 2005-2006to 2006-
2007 the increase in the Quick ratio indicates satisfy trend of company




INVENTORY TURNOVER RATIO

                                                                              34
SVIM
       Turnover ratio is also known as stock velocity. This ratio is calculated to
consider the adequacy of the quantum of capital and its institution for investing in
inventory.
       A firm must have reasonable stock in caparison to sales. It is the ratio of
cost of sales and average inventory of. This ratio helps the financial managers to
calculate inventory policy. This ratio reveals the number of times finished stock is
turned over during a given accounting period. The ratio is used for measuring the
profitability. These are the various ways in which stock turnover ratio may be
calculated.

                                        Net sales
Inventory turnover ratio =   --------------------------------
                                 Average Inventory

                   INVENTORY TURNOVER RATIO Table-8


       YEAR                  NETSALES                     AVERAGE         RATIO
                              (in lakhs)                 INVENTORY
                                                            (in lakhs)
     2004-2005                3153.26                           1623.24   1.943
     2005-2006                2262.33                           1183.63   1.911
     2006-2007                3210.56                           2340.07   1.372
     2007-2008                4463.92                           3250.79   1.373
     2008-2009                4069.39                           2533.44   1.606



Source: annual published report of KBD sugars Ltd.




                    INVENTORY TURNOVER RATIO chart-3




                                                                                  35
SVIM
             2
           1.8
           1.6
           1.4                                                     2008-09
  RATIOS



           1.2                                                     2007-08
             1   1.943 1.911                                       2006-07
           0.8                                   1.606
                                1.372 1.373                        2005-06
           0.6
                                                                   2004-05
           0.4
           0.2
             0
                 2005   2006   2007     2008     2009


INTERPRETATION
                                           YEARS
        The inventories are decreased in 2006-2007,2007-2008 and 2004-2005,
the ratio is increases 2005-2006 and if decreases in2008-2009.




CURRENT ASSETS TURNOVER RATIO

                                                                        36
SVIM
       Current assets turnover ratio indicates the extent to which the investments
in current assets contribute towards sales. It comported with a previous period. It
indicates whether the investment is fixed assets has been judicious or not.
                                     Net Sales
   Current assets turnover ratio= ----------------------
                                    Current Assets
                CURRENT ASSETS TURNOVER RATIO Table-9

           YEAR          NET SALES           CURRENT                  RATIO
                          (in lakhs)       ASSETS(in lakhs)
    2004-2005             3153.26             1851.91                  1.703
    2005-2006             2262.33             2602.69                  0.869
    2006-2007             3210.56             4039.86                  0.795
    2007-2008             4463.92             5401.25                  0.826
    2008-2009             4069.39             3181.77                  1.279

Source: annual published report of KBD sugars Ltd.

                  CURRENT ASSETS TURNOVER RATIO chart-4




           1.8
           1.6
           1.4
           1.2                                                                 2008-09
  RATIOS




             1                                                                 2007-08
                  1.703                                                        2006-07
           0.8
                                                           1.279               2005-06
           0.6
                           0.869       0.795     0.826                         2004-05
           0.4
           0.2
             0
                  2005     2006        2007     2008       2009

INTERPRETATION                         YEARS
                                                                                37
SVIM
        The ratio is decreasing continuously from 2005-2006 to 2007-2008 and
after year 2008-2009 it increased. It indicates that the current assets were used.

CASH POSITION RATIO


       Cash in the most liquid asset, a financial analyst may examine the ration
of cash and its equivalent to current liabilities. Trade investment or marketable
securities are equivalent of cash, therefore, they may be included in the
computation of cash position ratio.

                                   Cash+ marketable securities
     Cash Position Ratio=      ---------------------------------------------
                                          Current liabilities




                       CASH POSITION RATIO Table-10



    YEAR          CASH+MARKETA-BLE                        CURRENT              RATIO
                     SECURITIES                          LIABILITIES
                            (in lakhs)                      (In lakhs)
  2004-2005                 134.12                           680.61            0.19
  2005-2006                  22.14                          1135.84            0.02
  2006-2007                  29.07                          3622.36            0.01
  2007-2008                  50.67                          4671.43            0.01
  2008-2009                  87.55                          2579.23            0.03

 Source: annual published report of KBD sugars Ltd.




                        CASH POSITION RATIO chart-4


                                                                                       38
SVIM
            0.2
           0.18
           0.16
           0.14                                                                 2008-09
  RATIOS




           0.12                                                                 2007-08
            0.1    0.19                                                         2006-07
           0.08                                                                 2005-06
           0.06
                                                                                2004-05
           0.04
           0.02              0.02                             0.03
                                        0.01       0.01
              0
                  2005     2006       2007       2008        2009
                                    YEARS
INTERPRETATION
        The cash position ratio is inadequate as there are ups and downs during
the year. The above ratio indicates that the company is unable to quickly realize
its current liabilities it is not good enough.




WORKING CAPITAL TURNOVER RATIO


                                                                              39
SVIM
       Working capital of a concern is directly related to sales. The current assets
like debtors, bills receivable, cash, and stock etc., change with the increase or
decrease in sales. The working capital is taken as:
          Working capital =current assets-current liabilities

        This ratio indicates the velocity of the utilization of net working capital. This
ratio indicates the number of times the working capital is turned over in the
course of a year. The ratio measures the efficiency with which the working capital
is being used by a firm. A higher ratio indicates the efficient utilization of working
capital and the low ratio indicates inefficient utilization of working capital.
                                                              SALES
WORKING CAPITAL TURNOVER RATIO = -------------------------------
                                                          NET WORKING
                                                              CAPITAL

               WORKING CAPITAL TURNOVER RATIO Table-11



        Year             NETSALES              NET WORKING                RATIO
                            (in lakhs)         CAPITAL(in lakhs)
     2004-2005             3153.26                1171.30                 2.692
     2005-2006             2262.33                1466.84                 1.542
     2006-2007             3210.56                4175.08                 0.769
     2007-2008             4463.92                 729.81                 6.116
     2008-2009             4069.39                 602.04                 6.759

Source: annual published report of KBD sugars Ltd.




                WORKING CAPITAL TURNOVER RATIO chart-5

                                                                                      40
SVIM
        7

        6

        5
                                                                   2008-09
        4                                                          2007-08
                                                  6.759
                                         6.116                     2006-07
        3
                                                                   2005-06
        2                                                          2004-06
              2.692      0
        1              1.542
                                0.769
        0
             2005     2006     2007     2008      2009


                                   YEARS
INTERPRETATION

       This ratio indicates the number of times the net sales met with the working
capital for the year. The turnover of the working capital has highly increasing
from 2007-2008 to2008-2009.




TOTAL ASSET TURNOVER RATIO


                                                                                41
SVIM
        This ratio indicates the sales generated per rupee of investment in total
assets. Althought fixed assets are directly concerned with the generation of
sales. But other assets also contribute to the production and sales activities of
the firm. The firm must manage its total assets efficiency and should generate
maximum sales through their proper utilization.
        The total assets turnover is used know how many times the total assets
are being converted into sales. If sales are not available cost of goods is to be
considered. It shows in how many times the total sales are being concerted into
total assets. The ratio is calculated by dividing the cost of goods sold as sales by
total assets. The general principle for the calculation of this as follows
                                   Sales
Total assets turnover ratio = ------------------
                                   Total assets

                TOTAL ASSET TURNOVER RATIO                        Table-12

      YEAR               NETSALES               TOTALASSETS                  RATIO
                          (in lakhs)                 (in lakhs)
  2004-2005               3153.26                    5168.57                 0.61

  2005-2006               2262.33                 5690.89                    0.39
  2006-2007               3210.56                 7008.99                    0.46
  2007-2008               4463.92                 8219.34                    0.54
  2008-2009               4069.39             YEARS
                                                  6099.33                    0.67

Source: annual published report of KBD sugars Ltd.

                  TOTAL ASSET TURNOVER RATIO chart-6




                   0.7

                   0.6
    RATIOS




                   0.5
                                                                                     2008-09
                   0.4                                                               2007-08
                                                             0.67
                   0.3     0.61                                                      2006-07
                                                     0.54
                                              0.46                                   2005-06
                   0.2                 0.39
                                                                                     2004-05
                   0.1                                                                  42
SVIM
                     0
                          2005 2006 2007 2008 2009
INTERPRETATION

       The total asset turnover ratio increase in 2004-2005 after it decreased in
2005-2006 and after the increase turnover ratio 2008-2009.




                         RECEIVABLES MANAGEMENT

Management of receivables
Introduction
        Account receivable or trade credit is the most prominent force of the
modern business. It is considered as essential marketable tolls. Acting as a
bridge for the movement of goods through production and distribution stages to
customer finally. A firm grants credit to protect of sales from the competitor and
to attract potential customer. Trade credit, thus credit receivable or book debit,
which the firm is expected to collect in future. It also involves an elements of risk
as the cash payment has get to be received, hence they has to be carefully
analyzed.

        Receivable constitute a substantial portion of current assets of several
firms. They form about 1/3 part of current assets in India. As substantial amounts
are tied up in trade debtors, it needs careful analysis and proper management,
for proper management of receivable a concern must adopt an optimum credit
policy.



1.1 Optimum Policy
       The optimum investment in receivable will be at a level is a trade-off
between cost and profitability. When firm resorts to liberal credit policy the
profitability of the firm increase on account of higher sales. However, such policy
results in increased investment in receivables, increased changes of bad debts
and more collection cost. The total invest in receivable increases and thus the
problem of liquidly is credited. On the hand a stringent credit policy reduces
profitability but increases the liquidity of firm. Optimum credit policy there fire

                                                                                  43
SVIM
intones a trade off between the profit and sales that bring in receivable. On the
one hand the cost of carrying bills receivables plus bad debts losses on the
others. The optimum credit policy occurs at a point where there is “trade-off”
between liquidity and profitability as shown in the chart below:-
Optimum credit policy
Variable of credit policy
       A firm should establish receivable policies after carefully considering both
benefit and cost different policies. These policies relate to:-

            A. Credit standard

            B. Credit term

            C. Collection procedures

A. Credit standard
        The term credit standard represents the basic criteria for extension of
credit to customers. The level of sales and receivable are likely to be high. If the
credit standard is relatively loose, as compared to a situation when there are
relatively height
        The firms credit standards are generally determined by the five c’s,
character, capacity, capital, collateral and condition.

        Character denoted his ability to manage the business
        Capital denotes his financial soundness
        Collateral refers to assets which the customer can offer by way of security.
        Condition refers to the impact of general economic trends on the firm, or to
         special development in certain areas of economy that many affect in
         customer’s ability to meet his obligation.

B.   Credit terms
      It refers to the terms under which a firm sells goods on credit to its
customers. The two components of credit terms are

            1. Credit Period
            2. Cash Discount


1. Credit Period
      Extending the credit period stimulates sales but increases the cost on
account of more typing up of fund in receivable. Similarly, shortening the credit

                                                                                  44
SVIM
period reduces the profit on account of reduce sales, but also reduces the cost of
typing up of funds in receivable. Determining the optimum credit period therefore
involves locating the period where the marginal profit on increase sales are
exactly offset by the cost carrying the higher amount of account receivable.
2. Cash discount
       The effect of allowing cash discount can also be analyzed in the same
pattern as that of the credit period. Attractions cash discount term reduce the
average collection period resulting in reduced investment in account receivable.
Thus there is a saving in capital cost. On other hand cash discount it is a loss the
optimum cash discount ions allowed at the point where the cost and benefit are
exactly offering.

C.   Collection procedure
        A stringent collection procedure is expansive for the firm because of high
out of pocket costs and loss of goodwill of the firm among its customers.
However it minimized the on account of reduction in the size of different
collection procedures or policies.
Cost of maintaining receivables
        The costs in respect to maintenance of receivables can be identified as
followed:

Capital cost
       Maintenance of account receivable result in blocking of the firms financial
resources in them. This because there is a time lag between the sales of goods
to customer and the payment by them. The firm has therefore to arrange for
additional funds may either be raised from outside or out of profit retained in the
business. In both the cases, the firm incurs a cost. In the former cases, the firm
has to pay interest to the outsider while in the latter case, there is opportunity
cast to the firm that is the money which the firm could have earned otherwise by
investing the funds elsewhere.
Administrative costs
       The firm has to incur additional administrative cost for maintaining account
receivable in the form of salaries to the staff kept for maintaining accounting
records relating to customer to determine there credit worthiness etc.

Collection cost
      The firm has to incur costs for collecting the payment from its credit
customer. Sometimes additional step may have to be taken to recover money
from defaulting customers.



                                                                                 45
SVIM
Defaulting costs
       Sometimes after making all serious efforts to collect money from
defaulting customer, the firm may not be able to recover the over dues because
of the inability of the customer. Such debt is treated as bad debt and has to be
written off since they cannot be realized.

Study of the credit policy
        Credit policy adopted by a firm should by a firm be optimum neither too
liberal nor too stringent. In order to determine the nature of credit policy follows
by a firm the following the techniques may be adopted.

Accounts receivable management in KBD sugar Ltd.
       Various reports which serve as a control device for accounts receivable
are prepared by all the units of KBD sugars Ltd. are submitted to central; office
they included:
    Monthly
    Sundry debtors reports
    Report on age of account and
    Weekly debtors report

         Different units in KBD sugar Ltd prepares monthly reports including the
credit sales to customer and provides the operating balance at the beginning of
the year, total dispatches done during the, month realization figure and balances
of bills not submitted out standing.

       Following up steps like finding reasons for not submitting the bills and
there reasons are analyzed.

       Once more report is also prepared to analyze the age of each account
receivable. The accounts due for more then one year and less than one year are
analyzed. Customer wise, to know way the amount are outstanding.

      There is one more weekly debtor’s report, which is prepared by finance
department of each unit for the purpose of internal control.

       All these reports are mentioned above are prepared by KBD sugar Ltd.
unit is send to company’s corporate office of pungent. On the basis of there
report the finance department is corporate office advises the different unit in
taking action to reduce investment in receivables. If any problem arises it is
solved by the corporate office.


                                                                                 46
SVIM
       The K.B.D. sugar Ltd. marks provision for bad and doubtful debts on the
basis of the period of which debts have been outstanding.


                        Inventory management

Introduction
       The presiding two chapter’s basic strategies and consideration in
managing current assets namely, cash receivables are stocks of product a
company is manufacturing for sales and components that makes up a products.
Inventory like receivable are also a significant portion of the most firm assets and
accordingly required substantial investment. To keep this investment from
becoming unnecessarily large, inventories must be managed efficiently. The
various forms in which inventories exist manufacturing company.

   1) Raw materials: raw material is those basic inputs that are converted in to
      finished products through the manufacturing process. Raw materials
      inventories are those units, which have been purchased and stored for
      future production.
   2) Work in progress: the work in progress is that stage stock, which is
       between raw materials and finished goods they are seem-finished
       products that need more work before they become finished products for
       sale. The quantum of WIP depends on the time taken in the manufacturing
       process the grater the time taken in manufacturing the more will be the
       amount of in work-in-progress.
   3) Finished goods: finished goods inventories are those completely
       manufactured products, which are ready for sales. Stocks raw materials
       and work-in progress facilitated production while stock of finished goods is
       required for smooth marketing operations.
       The level of three kinds of inventories for affirms depends on the nature its
business. A manufacturing firm will have substantially high level of three kinds of
inventories.




       A fourth kind of inventory firm also maintains suppliers. Include office and
plant cleaning material oil, fuel, light, bulbs etc. These materials do not directly
enter into production but are necessary for production process, usually these
supplies are small part of inventory and do not involve significant investment.

                                                                                 47
SVIM
Need for holding inventory

       There are generally three major motives for holding inventories

              The transaction motive which emphasis the need to maintain
               inventories to facilitate smooth production and sale operations.

              The precautionary motive, which necessitates holding of
               inventories to guard against the risk of unpredictable changes in
               demand and supply forces and other factors.

              The speculative motive, which include the decision to increase
               or reduce inventory levels of to take advantage of price
               fluctuations.

             A company should maintain adequate stock material, as it is not
                possible for a company to procure raw material when ever it is
                needed and also for a continuous and smooth and uninterrupted
                production process.
Objectives of inventory management

    The main objectives of inventory management are operational and
     financial
    Operate objectives mean that the material spares should be available in
     sufficient quantity to achieve interrupted production and sale operation.
    Financial objectives means that investment in inventories should not
     remain idle and minimum working capital should be locked in it.

      Both inadequate and excessive inventories are not desirable. They are to
danger points with in which the form should operate. The objectives of inventory
management should to determined and maintain the optimum level of inventory
management the optimum level will be lie between to danger points of excessive
and inadequate inventories.

       The firm should not over invest in inventories as excess a level of
inventories consume funds of firm which cannot be used for any other purpose,
and there it involves an opportunity cost, carry such as costs of storage,
handling, insurance and inspection. This cost will impair the firms profitability
further maintaining inadequate investors are,


                                                                              48
SVIM
   A. Production holds-ups and
   B. Failure to meet delivery commitments.

       Inadequate raw materials and work in progress investors will infrequent
production interruption.
Thus the efficient inventory management should
    Ensure a continuous supply of materials of facilitates uninterrupted
       production.
    Maintain sufficient stock of raw material in periods of short supply and
       anticipate price changes.
    Maintain sufficient finished goods inventory for smooth sales operations
       and efficient customer services.
    Minimize the carrying cost and time.
    Control investment in investors and keep it an optimum level.
Cost associated with inventory
       The cost associated with managing inventory is
   A. Ordering costs: these are costs, which are associated with the
       purchasing are ordering of materials. Thus costs included:
       Cost of staff of ordering of goods a purchase order is processed and then
placed with supplies. The lab out spent on the process is included in ordering
costs.
        Expenses incurred on transportation of goods purchased.
        Inspection costs of incoming materials.
        Cost of stationary typing, postage, telephone charges etc.
       These costs are also known has buying costs and will arise only when
some purchase are made. When materials are manufactured in a concern then
these machinery for manufacturing materials, time taken up in setting cost of
tools etc.
   B. Carrying costs: these are costs for holding inventors these cost will not
       the incurred if investors are not carried. These costs include,
        The cost of capital invested in investors. An interest will be paid on the
           amount of capital locked upon investors.
        Cost of storage, which could have been used for other purposes.
        The loss of materials due to determination and obsolescence. The
           materials may deteriorate with passage of time this loss of
           obsolescence arises when the stocks are not usable because of time
           in process or product.
        Insurance cost.
        Cost of spoilage in handling of materials.



                                                                                49
SVIM
                  Inventory of working capital ratio Table-13

                                                       Net working        Inventory to
         Particulars         Inventory                                    net working
                                  (in lakhs)
                                                         capital
                                                             (in lakhs)   capital ratio
         2004-2005               885.30                     1171.30           0.76
         2005-2006               1754.47                    1466.84          11.96
         2006-2007               3032.38                    417.50            7.26
         2007-2008               3756.76                    729.81            5.15
         2008-2009               1563.06                    602.04            2.59

Source: annual published reports of KBD sugars Ltd.

Analysis
        The standard ratio is 1:1 i.e. inventory should not exceed working capital
in all the above period the ratios are very much satisfactory, will below the
standard level. Through the ratio is satisfactory there seems to be the constant
fluctuation in the ratios. Ratios decreed 2004-05, and 2006-07 period and after
decreased in the year 2008-09.

Interpretation
       Though the period 2005-06 to as seen an increase in ratio, it as an
indicator that they might be a raise in volume of sales for which increase of
inventory size is required. As all the ratios are well below the standard level this
increase in the ratios gradually is an indicator that the firm is doing well with
raises sales and probability.




                    Inventory current assets ratio Table-14

                  Inventory            Total assets                Current         Inventory
  Particulars
                    (In lakhs)                 (In lakhs)          assets         represents



                                                                                               50
SVIM
                                                   (In lakhs)              As a %
                                                                As a %
                                                                             of
                                                                of total
                                                                           current
                                                                assets
                                                                           assets
   2004-2005        885.30         5168.57        1851.91       17.13      47.80
   2004-2006       1754.47         5690.89        2602.69       30.83      67.41
   2006-2007       3032.38         7008.99        4039.86       43.26      75.06
   2007-2008       3756.76         8219.34        5401.25       45.71      69.55
   2008-2009       1563.06         6099.33        3181.77       25.63      49.13

Source: annual published report of KBD sugars Ltd.

Interpretation:
       This ratio measures the relationship between net profit and sales of the
company the net margin of KBD sugars & industries Ltd. is almost same for
these 5 years. Accompany can decries its net loss by controlling its operating
expenses.




Source: annual published reports of KBD sugars

       The main purpose of working capital ratio analysis is:

            To indicate working capital management performance and
            To assist management in identifying areas which requires closer
             management.

       Three key points was taken into account when analyzing financial ratios:


                                                                                  51
SVIM
        The results are based on the highly summarized information.
         Consequently situation which required control might not be
         apparent, situation which do not warrant time significant efforts
         might be unnecessarily highlighted.
        Different department face very different situation. Comparisons
         between them are with global ideal ratio values can be misleading.
        Ratio analysis is some what one side favorable results, means little
         unfavorable, where as result are usually significant.




                                                                          52
SVIM
        FINDINGS
           &
       SUGGESTIONS




           FINDINGS



                      53
SVIM
     In the over all evaluation of the Working Capital Management at each and
every aspect, the following are the findings.

   1. Working Capital ratio of the KBD sugars and distilleries Ltd is decreasing
      in some years which indicate poor liquidity position of the company.
   2. Inventory turn over ratio of the KBD sugars and distilleries Ltd is good in
      all the 5 years of study, which indicates the efficient management of
      inventory.
   3. Total Assets to Net worth Ratio of the KBD sugars and distilleries Ltd is
      less than 1% which indicates the Owner’s funds are sufficient to Finance
      Fixed Assets.
   4. Working capital Turn over Ratio of the KBD sugars and distilleries Ltd is
      highest 6.79 in the year 2008-09, which the management is efficient in
      utilizing the working capital.
   5. Current ratio of KBD sugars and distilleries Ltd is highest 2.70 in the year
      2004-05, which is the management of effective and efficient utilization
   6. The company sales have been increased in all the years but decrease in
      the year 2009 .
   7. The reserves and surplus is always accumulating every year. The
      company can capitalize the reserves and Surplus.



                             SUGGESTIONS
        The company should utilize the reserves and surplus by either
         capitalizing or invest the money some where as investment to get
         benefits.
        The company should maintain adequate working capital
        The company should maintain the high liquidity position
        The company is under loss zone, so it needs some subsidy by
         government to develop its position.
        By merging the company with other profitable company, the firm may
         Improve its performance.
        By selling molasses to other plant the company can earn additional
         profit.
        By using the sugar can scrap the firm can generate it’s electrically
         supply.
        By selling the scrap to bio-plants it can generate funds.
                                                                                54
SVIM
       CONCLUSION



                    55
SVIM
                               CONCLUSION
         From the analysis on the working capital management at KBD Sugar and
distilleries Ltd, conclude in spite of all suggestions, the company has to reduce its
production cost to increase profit.

         The inventory turn over is good in all the five years. The company should
try to increase their sales. It should maintain the high liquidity position. Hence,
the suggestions given are realistic which will lead to increase in the profitability of
the company. The company should try to tap the market and set in brand value
and do the best.




                                                                                     56
SVIM
       ANNEXURE


       KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

  TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR 2005
PARTICULARS      AMOUNT       PARTICULARS      AMOUNT


                                                            57
SVIM
                                       Rs.                                                 Rs.
1.OPENING STOCK:                        247700686          1. CLOSING STOCK:                   76948042

2. consumption of raw
material                                  61527193         2. sales                           313325838
                                                           LESS:excise duty                           0
3.. Cost of production
     Transferred from                     19968870
     Manufacturing a/c

4. salaries,wages and                     19932171
other benifit
5.gross profit                            41144960


                                 ----------------------                                ----------------------
                                        390273880                                             390273880
                                 ----------------------                                ----------------------

                                                           3.gross profit                      41144960

6.Intrest and financial                   42276656         4.Other incom                        2001044
charges                                                    5.net loss.                         37092582

7.Administrative
expenses                                    8568795

8.Depriciation                            23584508
9.Dduties& taxes                           5476000
10.preliminary and
share issue ex written                        332628
off
                                           80238587
                          ------------------------------                                        80238587
                                                                               ------------------------------




          KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

                          BALANCE SHEET AS ON 31-03-2005
      LIABILITIES               Rs.            ASSETS                                             Rs.

                                                                                                         58
SVIM
SOURCES OF FOUNDS                        APPLICATION OF FOUNDS
1. Share capital            274407700    1.FIXED ASSETS:
 LSS:                                      Land and site development     8327231
  Net loss:                 -118920125     Buildings                    93237221
2.Reserves and surplus         1500000     Plant and mechinary         202155579
3.loan funds                              Electrical instalation        17273155
  Secured loans             244421413     Office equipment                849069
  Unsecured loans            88199664     Furniture and fixture           535795
4.Current liabilities                     Vehicles                        305247
  Sundry creditors           20221528    ADD:
  Creditors for expences     44481861     Capital work in progress       8983008
  Tax deducted at source
  payble                       250998    2.CURRENT
 Advance from customars       1970266    ASSETS,LOANS AND
 Sundry creditors-capital                ADVANCES
 goods                        1136585      Inventories                 88530984
                                          Sundry debtors               10025086
                                          Cash and bank balance        13412486
                                           Loans and advances          73222916


                                          Deferred tax asset           40812113

                                         3.MISCELLANE EXP
                                           Merger/demerger exp                 0

                            557669889                                  557669889




        KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

    TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR 2006


                                                                          59
SVIM
 PARTICULARS                     AMOUNT                     PARTICULARS               AMOUNT
                                   Rs.                                                  Rs.
1.OPENING STOCK:                          71752879         1. CLOSING STOCK:                  164974561

2. consumption of raw
material                                254504145          2. sales                           225910943

3.. Cost of production
     Transferred from                     19303448
     Manufacturing a/c

4. salaries,wages and                     22324127
other benifit
5.gross profit                            23000905


                                 ----------------------                                ----------------------
                                        390885504                                             390885504
                                 ----------------------                                ----------------------

                                                           5.Other incom                         322344
6.Intrest and financial                     5268418        6.gross profit                      23000905
charges

7.Administrative
expenses                                    8218789
                                                           6.Net loss                          15620826
8.Depriciation                            23697999




                                           37185206                                             37185206
                          ------------------------------                       ------------------------------




          KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

                          BALANCE SHEET AS ON 31-03-2006
      LIABILITIES               Rs.            ASSETS                                             Rs.

                                                                                                         60
SVIM
SOURCES OF FOUNDS                       APPLICATION OF FOUNDS
1. Share capital            13084210    1.FIXED ASSETS:
 LSS:                                     Land and site development     8327231
  Net loss:                 217800007     Buildings                    90123658
2.Reserves and surplus      262823490     Plant and mechinary         183292630
3.loan funds                             Electrical instalation        16118211
  Secured loans             177589768    Office equipment                742926
  Unsecured loans           134789487    Furniture and fixture           468654
4.Current liabilities                    Vehicles                        160840
  Sundry creditors          41152450    ADD:
  Creditors for expences    69152961     Capital work in progress       9096115
  Tax deducted at source
  payble                        71292   2.CURRENT
 Advance from customars       2028979   ASSETS,LOANS AND
 Sundry creditors-capital               ADVANCES
 goods                        1178673     Inventories                 175447569
                                         Sundry debtors                 8068939
                                         Cash and bank balance          2214356
                                          Loans and advances           74538394


                                         Deferred tax asset                   0

                                        3.MISCELLANE EXP
                                          Merger/demerger exp            489705

                            569089228                                 569089228




        KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

   TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR 2007
 PARTICULARS      AMOUNT       PARTICULARS      AMOUNT


                                                                         61
SVIM
                                       Rs.                                                 Rs.
1.OPENING STOCK:                        180156589          1. CLOSING STOCK:                  287857605

2. consumption of raw
material                                303164832          2. sales                           320594420

3.. Cost of production
     Transferred from                     40364585
     Manufacturing a/c

4. salaries,wages and                     23375833
other benifit
 5.gross profit                           61390186

                                 ----------------------                                ----------------------
                                        532910923                                             608452025
                                 ----------------------                                ----------------------

                                                           5.Other incom                       26118647
6.Intrest and financial                   19326073         4.gross profit                      61390186
charges

7.Administrative
expenses                                    9936508

8.Depriciation                            23805268
9.Duties& taxes                           29444670
6.Net loss                                 4996314



                                           87508833                                             87508833
                          ------------------------------                       ------------------------------




          KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

                          BALANCE SHEET AS ON 31-03-2007
      LIABILITIES               Rs.            ASSETS                                             Rs.

                                                                                                         62
SVIM
SOURCES OF FOUNDS                       APPLICATION OF FOUNDS
1. Share capital                    0   1.FIXED ASSETS:
 LSS:                                     Land and site development     8327231
  Net loss:                         0     Buildings                    87121772
2.Reserves and surplus      -20659974     Plant and mechinary         170969303
3.loan funds                             Electrical instalation        14963269
  Secured loans             253408846    Office equipment               1673626
  Unsecured loans           105914487    Furniture and fixture           419136
4.Current liabilities                    Vehicles                        549944
  Sundry creditors           91008350   ADD:
  Creditors for expences    265573013    Capital work in progress     12520913
  Tax deducted at source
  payble                        68042   2.CURRENT
 Advance from customars       4407965   ASSETS,LOANS AND
 Sundry creditors-capital               ADVANCES
 goods                        1178673     Inventories                 303238111
                                         Sundry debtors                 8256619
                                         Cash and bank balance          2907579
                                          Loans and advances           89584621


                                         Deferred tax asset                   0

                                        3.MISCELLANE EXP
                                          Merger/demerger exp            367279

                            700899402                                 700899402




        KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

   TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR 2008
 PARTICULARS      AMOUNT       PARTICULARS      AMOUNT


                                                                         63
SVIM
                                       Rs.                                                 Rs.
1.OPENING STOCK:                        287857607          1. CLOSING STOCK:                  446392044

2. consumption of raw
material                                391436510          2. sales                           401675116

3.. Cost of production
     Transferred from                     57824840
     Manufacturing a/c

4. salaries,wages and                     31625273
other benifit
5.gross profit                            79322930

                                                                                       ----------------------
                                 ----------------------                                       848067160
                                        532910923                                      ----------------------
                                 ----------------------

                                                           5.Other incom                       44716928
6.Intrest and financial                   36973820         5.gross profit                      79322930
charges

7.Administrative
expenses                                    8759405

8.Depriciation                            24457497
 9.duties&taxes                           48400517
 10.net profit                             5448619



                                         124039858                                            124039858
                          ------------------------------                       ------------------------------




          KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

                          BALANCE SHEET AS ON 31-03-2008
      LIABILITIES               Rs.            ASSETS                                             Rs.

                                                                                                         64
SVIM
SOURCES OF FOUNDS                       APPLICATION OF FOUNDS
1. Share capital                    0   1.FIXED ASSETS:
 ADD:                                     Land and site development     8327231
  Net Profit:                       0     Buildings                    84198435
2.Reserves and surplus      -78641650     Plant and mechinary         168804473
3.loan funds                             Electrical instalation        13806997
  Secured loans             365142945    Office equipment               1591074
  Unsecured loans            68289487    Furniture and fixture           355599
4.Current liabilities                    Vehicles                        171114
  Sundry creditors          118673653   ADD:
  Creditors for expences    344582844    Capital work in progress       8983008
  Tax deducted at source
  payble                        85082   2.CURRENT
 Advance from customars       2623395   ASSETS,LOANS AND
 Sundry creditors-capital               ADVANCES
 goods                        1178673     Inventories                 375676892
                                         Sundry debtors                 8416762
                                         Cash and bank balance          5067311
                                          Loans and advances          150964503


                                         Deferred tax asset                   0

                                        3.MISCELLANE EXP
                                          Merger/demerger exp            244852

                            821934428                                 821934428




        KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

   TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR 2009
 PARTICULARS      AMOUNT       PARTICULARS      AMOUNT


                                                                         65
SVIM
                                       Rs.                                                 Rs.
1.OPENING STOCK:                        362301766          1. CLOSING STOCK:                  144387553

2. consumption of raw
material                                103459245          2. sales                           407989582
                                                           LESS:excise duty                    27168636
3.. Cost of production
     Transferred from                     36451713
     Manufacturing a/c                                     4. Gross loss                         7702423

4. salaries,wages and                     30698199
other benifit




                                 ----------------------                                ----------------------
                                        532910923                                             532910923
                                 ----------------------                                ----------------------

5.gross loss                                7702423        5.Other incom                       26118647

6.Intrest and financial                  349702423
charges

7.Administrative
expenses                                    8882627        6.Net loss                          51120343

8.Depriciation                            25683267




                                                                                                77238990
                                           77238990                            ------------------------------
                          ------------------------------




          KBD SUGARS AND DISTILLERIES LIMITED-SUGAR DIVISION

                          BALANCE SHEET AS ON 31-03-2009
      LIABILITIES               Rs.            ASSETS                                             Rs.

                                                                                                         66
SVIM
SOURCES OF FOUNDS                        APPLICATION OF FOUNDS
1. Share capital                     0   1.FIXED ASSETS:
less:                                      Land and site development     9359723
  Net loss:                  -51120343     Buildings                    86240815
2.Reserves and surplus               0     Plant and mechinary         176158031
3.loan funds                              Electrical instalation        12652053
  Secured loans              292832366    Office equipment               1407657
  Unsecured loans            110248323    Furniture and fixture           330673
4.Current liabilities                     Vehicles                        457327
  Sundry creditors            44215344   ADD:
  Creditors for expences     195998366    Capital work in progress       5027508
  Tax deducted at source
  payble                        75897    2.CURRENT
  Advance from customars     16505043    ASSETS,LOANS AND
  Sundry creditors-capital               ADVANCES
  goods                        1178673     Inventories                 156306246
                                          Sundry debtors                 7348982
                                          Cash and bank balance          8755709
                                           Loans and advances          145766518


                                          Deferred tax asset                   0

                                         3.MISCELLANE EXP
                                           Merger/demerger exp            122426

                             609933669                                 609933669




                                                                          67
SVIM
       BIBLOGRAPHY


                     68
SVIM
The following books have reffered during the prepararion of this project:-
 I.M.pandey - Financial management- Vikas publishing house PVT LTD, New
     Delhi-110014, 2003.
 Prasanna Chandra- Financial management-Tata MCGrawhill-hill publications
     company ltd, New Delhi, 2002.




                                                                        69
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