Internship Report on Fecto Sugar Mills Ltd

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Internship Report on Fecto Sugar Mills Ltd.


Sugar is one of the essential commodities of life and plays important role in the dietary
of human beings. It is the cheapest food for purchasing energy as an Anna (1/16 of
rupees) would buy 545 calorie when laid out on sugar as against 395 for bread, 182 for
cheese and 190 for milk. In addition to an essential energy. It is the cheapest and most
abundant pure organic chemical available to so many other industries as it is put to a
wide variety of industrial use. e.g. in hair tonics, shoe polishes, photographic material
explosives, tanning leather and silvering mirrors etc. It serves as a starting material for
the synthesis of vitamin B2, also.
There are different sources from which sugar is manufacturing, but sugar cane and
sugar beets are the main sources of the word sugar supplies. Commercial sugar are
also obtained from other plants such as maple, palms, coconuts and apple etc but only
in negligible quantities, sugarcane, however, furnished almost two-third of world sugar
supplies. Sugarcane, besides sugar, yield many other product like fiber molasses,
industrially important acids and valuable maxise.


The origin of English word sugar can be traced back to age old Hindu civilization, when
words like Sharkara. In Sansikrat and Sansikrat and Sakkara in prakrit existed to
convey the same sense.Then it may be traced through all the Aryana languages, as
schaker in Persian, sukkar in Arabic, sincer in Assyrian, zucchero in Italian, sucre in
French, zucher in German, saccharum in Latin and ozucarin Spanish etc stand as
Testimony for its origin from sharkara.
It would thus clear that India is the birth place of the manufacturing of sugar from
sugarcane.The history of modern sugar industries in India may be said to begain from
1932. Five factories, however, were started in 1932-1935 but excepting one, at Rahwali,
all other enterprises failed due to their uneconomic size. Inadequate sugar cane
supplies and inefficient management.
At the time of partition we had the only factory at Rahwali in the Punjab. Hence we had
to start with a scarth. Punjab is the second largest sugar cane growing province in
Indo-Pakistan sub-continent.Now update position of sugar industries in Pakistan is 38
sugar factories in Punjab and 31 in Sindh and 6 in NWFP and Pakistan is now exporting
sugar to other countries.


1. Adam Chishtian Bahawalnagar
2. Ashraf Ashrafabad Bahawalpur
3. Baba Farid Okara Okara
4. Brothers Pattoki Kasur
5. Chanar Tandlianwala Faisalabad
6. Choudary Pensara Road Gojra
7. Chistia Sillianwali Sargodha
8. Crescent Nishatabad Faisalabad
9. Fatima Kot Addu Muzaffarghar
10. Fauji Sheikhupura Sheikhupura
11. Fecto Darya Khan Bhakkar
Gojra Sam Gogra Faisalabad
13. Haseeb Waqas Mirajabad Nankana Sahib
14. Husein Jaranwala Faisalabad
15. Hyesons Jetha Bhutta Rahimyar Khan
16. Ittefaq Sahiwal Sahiwal
17. JDW Mouza Sharin Rahim Yar Khan
18. Kamalia Kamalia Tobatek singh
19. Kohinoor Jauharabad Khushab
20. Layyah Layyah Layyab
21. National Sargodha Sargodha
22. Noon Bhalwal Sargodha
23. Pasrur Pasrur Sialkot
24. Pattoki Pattoki Kasur
25. Phalia Karmanwala Gujrat
26. Punjab Man Channu Khanewal
27. Pahirianwali Lalian Jhang
28. Ramzan Chiniot Sargodha
29. Shahtaj Mandi Bahauddin Gujrat
30. Shakarganj Jhang Jhang
. Sheikhoo Kot Addu Muzafargarh
32. Tandlianwala Kanjwani Faisalabad
33. United Sadiqabad Rahimyar Khan
34. Indus Kot Bahadur Rajan Pur
35. Madina Chattah Khankah Hafizabad
36. Qand Ghar Shahkot Faisalabad
37. Yousaf Shahpur Sargodha
38. Al-Abbas Mirwah Gorchani Mirpurkhas
39. Al-Asif Garho Thatta
40. Al-Noor Moro Naushero Feroz
41. Ansari Tando M.Khan Hyderabad
42. Army Welfare Badin Badin
43. Bawany Talhar Badin
44. Dadu Piarogoth Dadu
45. Dewan Budho Talpur Thatta
46. Faran Sheikh Bhirkio Hyderabad
47. Fauji-Kho Khoski Badin
48. Fauji TMK Tando M. Khan Hyderabad
Habib Nawabshah Nawabshah
50. Kiran Rohri Sukkur
51. Khairpur Khairpur Khairpur
52. Larr Sajawal Thatta
53. Matiari Matiari Hyderabad
54. Mehran Tando M. Khan Hyderabad
55. Mirpurkhas Mirpurkhas Mirpurkhas
56. Mirza Kadhan Badin
57. Pangrio Deh Rajauri-2 Badin
58. Sakrand Sakrand Nawabshah
59. Sanghar Sindhri Sanghar
60. Shahmurad Jhok Sharif Thatta
61. Sindabadgar Deenpur Hyderabad
62. Thatta Deh Bijoro Thatta
63. Consolidated Ranipur Khairpur
64. Larkana Naudero Larkana
65. Bannu Sarai Naurang Bannu
66. Chshma D.I. Khan D.I. Khan
Frontier Takht-I-Bhai Mardan
68. Khazana Peshawar Peshawar
69. Premier Mardan Mardan
70. Saleem Charsadda Charsadda
71. Mian Mohammad Mirpur Azad Kashmir

Introduction to Organization:

The company was incorporated in Pakistan on September 19, 1964 as a public limited
company and is listed at Karachi and Lahore stock exchanges of Pakistan. The
company is principally engaged in the manufacture and sale of sugar. The company has
set up a Particle Board unit. It is situated in Darya Khan.


Authorized capital
15,000, 000 SharesOf Rs. 10 each Rs. 150, 000, 000

Issued, subscribed and paid up capital Rs. 50, 297, 280

Main product:
The main product of the Chashma Sugar Mills is white crystalline sugar.

The by products are following
3…………… PRESS MUD


There are six main departments in Indus Sugar Mills.
i) Cane Department
ii) Mechanical Deptt.
iii) Chemical Deptt.
iv) Electrical Deptt.
v) Accounts Deptt.
vi) Administration Deptt.

Company’s Information:






(Chartered Accountants)

M/S. A. R. DIWAN & CO.
(Chartered Accountants)





Part two

Company Management System

M.D. (Managing Director)
Board of Directors
G.M. G.M. G.M. Manager
(Cane) (Tech.) (Production Administration
Technical Commercial Plant Production Electrical
Manager Manager Manager Manager Manager
Chief Engineer
Shift Engineer Senior Engineer

Administration Department

I worked in this department for 10 days. The head of this department is known as
General Manager (Admin). Presently
Ch.M.Safdar is the head of this department. He keeps all the record of the office. There
is one senior personnel officer, one security officer and two senior clerk and the other
dispatch clerks working in the office.

The senior clerk has the duty of keeping personal files of employees. He also keeps
some other necessary files, which can be produced on demand. The dispatch clerk has
the duty to give dispatch numbers to letters, orders and correspondent of the mill.
Timekeeper is supposed to keep record of employee’s time of entering and leaving the
mill. Security officer is responsible for all the security requirements of the company.




4… Interactions with following govt. department:
Social security
Employee old age benefit
Labor department
Liaison with local administration
Worker welfare programme
programme arrangement for company executives

7…. Mail receiving and distribution

8…Legal matters

9…Supervision of faire price shops



Labor and personal department

Labor and personal department may be considered as the heart of any organization.
The head of this department is called labor officer. This department includes

Senior officer
Junior clerks

These employees are under the control of labor officer and are accountable to him. The
function of supervisors is to supervise all the activities of the other clerk’s. They are
responsible to maintain all the records of this department. If the labor officer is in need
of any old record he produce it to him.
I worked in this department for the period of one week and observed all the information
in detail.

Functions of Labor and Personal Department

This department has a special policy for the appointment of employees the labor
department advertises information of general public. usually the advertisement consists
of posts for which the application are required, pay, other allowances if any,
qualifications for the candidates, and last date for the receipt of application. On the
expiry of the last date for the receipt of application from the candidates at merit list is
prepared and only those candidates are called for interview that are considered suitable
for the post. On the date of interview managing director of the project, manager, the
head of the department in which the vacancy exist conduct the interview. There is also
written test and medical test for the candidates to be selected for the post. The
candidate who is declared medically fit and also considered suitable for the post is then
selected for the post on the terms and conditions decided with the applicant. The labor
personal department issues the orders of the appointment with the approval of the
project manager.


The promotion of employees depends upon the seniority of the employee. When
vacancy of higher post occurs the senior most person is promoted first to fill up the
vacant post.

In this project all permanent employees are provided 50%chance of promotion. For
example two posts are lying vacant in any department, the first post is filled up from
temporary or the manager selects direct new person for the post. Moreover the seniority
of all confirmed employees is considered from the date of regular appointment. In a
case of two or more appointments are made at the same date, then their seniority is
accounted from the dispatch number of the order of the appointment respectively.
In case of vacancy in any department, all the employees of the department are equally
considered to be promoted to that post the employees who is the most senior and who
have got the necessary qualification for the post promoted to that post. If any employee
is the senior most but does not posses the required qualification he is not to be
promoted and the next senior one who have the required qualification is promoted to the

In case of transfer of employee from one department to the other department or from
one section to the other section a seniority of employee for promotion is considered of
appointment and confirmation. It is not to be considered from the date on which the
employee has been transferred.


All the employees are required to obey and abide the rules and regulations of the
project. Violation of rules and regulations by the employees is considered as
misconduct of the employees and consequently leads to the punishment.

The following acts of the employees are considered to be a violation of the law.
1….disobedience to the supervisors
2…. refusal to obey the lawful orders of the supervisors
3…. taking or giving bribes
3…. to damage the property of the factory
5…. absence without leave from the factory
6…. late arrival in the office
7…. found sleeping during the working hours
8…. found absence from the work for one or two hours

Any employee who is found guilty of the above miss conducts, action may be taken
against him, which leads to the following punishments

1…. the management will issue a warning to the employees to be careful for future and
not to repeat this action or otherwise he will be punished.

2…. some time the management makes deduction from the salary.

3…. some time the management will hold the increments or promotions for a certain
period of time. They not give them increment and promotion during that a period of time

4…. some time he his demoted to the lower post

5…. in case of serious miss conduct the management will dismiss him from the

The head of the department to which the guilty employee is concerned sends the case
of employee to the personal department. The personal department will call for his
explanation and the employee will explain his position in the light of charge framed
against him within a specified period of time. The explanation is received from the
employee and then the case of the employee with explanation is forwarded to the
project manager for the final decision. If the employee is found guilty he is punished
otherwise the case is dropped by the project manager.

One of the functions of this department is the transfer of employees. Usually the
employees are not transferred from one department to the other department. But if any
employee of a department wants to transfer to another department consent of the
department is essential. After positive reply from both departments i.e. the department
from which he wants to be transferred and the department to whom he want to be
transferred. The case is transferred to the project manager who posses the transfer

Leave procedure

The following leaves are allowed to the employees of the mill.


There are special rules and regulations for leaves made be the factory. These rules are
applied to each employee of the mill.
The explanation of above leaves are as followed a…. casual leave

The project manager grants the casual leave. The leave is allowed only to the
permanent employees of the project. Every employee has the right to avail ten days
casual leave per annum, Three days at a time is the maximum ceiling for the leave.


This leave is also allowed to the permanent employees. This leave can be granted on
the basis of medical certificate issued by any authorized medical officer. In the case of
one day no medical certificate is necessary, every employee is allowed ten days
medical leave per annum. If the disease of the employee is such that it requires more
than a day then the approval of the project manager is necessary.


This leave is granted to the employees when leave without pay is exhausted and none
of the type of leave is available at his credit, leave without pay is granted by the
management of the projection special cases this leave can not be more than one month
at a time. But can be extended in special cases.

Any employee who is found guilty of the above miss conducts, action is liable to be
taken against which it leads to the following punishments
1…. the management ill issue a warning to the employees to be careful for future and
not to repeat this action or otherwise he will be punished.
2…. some time the management makes deduction from the salary.
3…. some time the management will hold rhea increments or promotions for a certain
period of time. They not give them increment and promotion during that a period of time
4…. some time he his demoted to the lower post
5…. in case of serious miss conduct the management will dismiss him from the

Workman compensation

In this project compensation is paid to the workers when they receive injuries in the
cause of work during accident. If the worker has violated the safety precaution the
management is not bound to pay compensation.

The management also pays compensation for any kind of diseases, which are caused
as a result of the type of duty. Also in this case he must prove that he has suffered
disease during the employment. If the disease pertain to preposition period,
compensations cannot be claimed.

Fringes benefits

The employee of this mill is given the following fringe benefits in the form of money or
shape of certain facility in addition to their monthly wages. These benefits are
mentioned below

The project maintain a provident fund for the employee under the rule of provident fund
every permanent employee of factory who have completed six month continue service
in the factory is eligible subscribe towards the fund.
Provident fund consists of deductions from the monthly wages of the employees as
equal amount is also contributed toward the provident fund by the mills.
The total amount of provident fund is deposited in the account of provident fund and
separate account is maintained for every employee in the account office of the factory.
The total amount alongside interest is paid to the employee in lump sum upon
completion of office tenure. During the employment an employee can take loan from the
provident fund for the urgent needs. The management sanctioned the required loan
upon 50% of the total loan is recovered in easy installment from the monthly salaries.
Place allowance
Place allowance are given in the following ways
1…. those employees whose pay is unto Rs. 300 p.m. is given 205of the basic pay
2…. those employees whose pay is up to 301 to 500 per month are allowed Rs. 155of
their basic pay.
3… those whose salary is more than R.s. 500 are given 10%of their basic pay.

The employees are also paid hose rent at the basic pay=claw 405 means cost of
leaving allowance up to Rs. 500 = 110 fix
Rs. 501/-uptors 735/-=10%of basic pay+25+25
Rs735/-and above 9736)=105 of their basic pay=25

Every employee and his family are given free medical facilities. Whenever any
employee or any of his family member fall ill, the management is responsible for their
medical allowances, payment made as a result of medical treatment are disbursed later
on. The medical parishioners prepare the bills of medicine, and these bills are offered to
the finance manager for payment.

Washing allowance is given to all the employees at the rate of rs 6 per month.


In the Fecto sugar mills there is special arrangement for the employees children
Educational facilities are intro under worker children ordinance 1967, under the
ordinance each factory should provide free education to the children of the employees.
This ordinance applied to all those organizations 29 or more than 20 workers. The
employee receiving monthly wages less than Rs.10000 are entitled to avail these
facilities. Under the ordinance the education will be free for one child of each employee
of the factory. The children of the employee are free from tuition fee school funds and
the cast of the books.
There is also transportation system for the children of employees.

Scholar Ships To Children Of Employees

In this mill without free education to the children of the workers scholarship at the rate of
rs 15 rs25 rs 30 are awarded to the deserving children of the employees in their 5th 8th
and 10th classes

The mill has provided the canteen facility to its employees. Adequate furniture’s and
other facilities are available in the canteen.

The mill has provided a fair price shop facility to the employees. In the fair price shop a
person can buy the comm. duties of daily use on their prices

In this mill employees are given the bonus also. The number of bonus usually is divided
between the management and workers unions on production basis. /
1… one bonus is given on the production of 1000000 lack bags of sugar
2…. The production of 2000000 lack bags of sugar are given the two bonuses

3…on additional 50 thousand bags of sugar one bonus is given. The amount of one
bonus is equal to one basic pay of the employee, but after up to the present time the
required limit for bonus is not attained as the project is running in losses and the
production has always been less than the actual capacity.

Employees /Personnel in various section


The workers of Fecto sugar mills can be classified as under:

Permanent workers
Those workers who are engaged on performing their services for the whole year are
called permanent workers. They are appointed on those jobs, which are of permanent

Temporary workers
Temporary workers are appointed on those jobs, which are of temporary nature. They
are likely to be financed in a maximum period of nine months.

Seasonal workers
These workers are hired during the cane crushing seasons, when the season is over
they are lay off.
Daily wage workers
These are the workers who worked and get their remuneration on daily bases. They can
be hired in any section where they are needed.

These are the learners. This is a work mean, to which allowances are paid during the
training and after the completion of the course.

Designation and number of employees


Designation/Department STR
General Manager 1

Cane Manager 1
Dy. Cane Manager 2
Tr. Cane Officer 1
Sr. Cane Officer (Admn) 1
C.O. (Admin)/ACO (Admin) 1
Office Supdt./Office Supr./ Typist 1
Office Supdt./Office Supr./ Computer I/C. 1
Cane Admin Office Clerks 5
Qasid/Sr. Qasid 2
Tea Boy 1

Designation/Department STR
Loan Supdt./Loan Supr/ Loan Asstt. 1
Clerks 2
Asstt. Fitter/Fitter (Agri) Workshop 1

Asstt. Cane Officer (Yard)/
Sr. CO (Yard)/C.O. (Yard) 1
Card Supdt. 1
Shift Supr. 2
Weighment Incharge 4
Parchi Clerk 6
Posting Clerk 6
Line Jemedar 6
Gate Pass Clerk 6
Line Jemedar (Gate pass) 3

Feeding Incharge 3
Feeding Clerk 9
Line Jemedar 6

Designation/Department STR
Clerks 3
Line Jemedars 3
Programme Officer/Asstt.
Programme Officer 1
Programme Supdt./Supr. -
Programme Clerks 6
Line Jemedar/Qasid 1
Dak Runners/Line Jemedar 5

Sr. Cane Insp./Cane Insp. 3
Fd. Supr./Sr. Fd.Man/Fd. Man 32
Depot. Incharge (Clerks) 16
Clerks 9
Line Jemedars 16


Designation/Department STR
General Manager (Technical) 1
Dy. General Manager (Tech)
Technical Manager/Chief Engr. 1
Dy. Chief Engr./Sr. Engr. 4
Sr. Shift Engr./Shift Engr. 3
Asstt Engr./Tr. Engr. 1
Drawing Engr/A.D. Engr. 1
Draftsman/A.D. Man/Tracer 1
Typist Clerk 1
Qasid 1
Mill Engr/Asstt M. Engr/Foreman 1
Shift Foreman/A.Shift Foreman/Mechanic 5
Sr. Fitter 5
Fitter 8
Asstt/Fitter 8
Helpers 13
Welders -
Oil man 3
Pump Coolies 5
Tipper Operators 4
Tip. Carrier Operator 2
Cane Carrier Operator 4
Clearing Coolies 18
Designation/Department STR
Maint. Engr/A.Maint.Engr/Foreman 1
Shift Foreman/ (Shift)/shift Supr. 4
Asstt. Shift Supr. 3
Fireman/A.Fireman 14
Waterman/A.Waterman 9
Fire Coolies 8
Feed Pump Attd. 3
Feed Tank Attd. 2
Bagges Carrier Attd/Oilman 2
Welders -
Boiling House Engr/ Asstt.Engr/Foreman 1
Shift Foreman/A.Shift Foreman/Mechanic 3
Sr. Fitter 3
Fitters/Fabricators 8
Asst. Fitters/Helpers 9
Sr. Welder/Welder/A.Welder 6
Oilman 4
Pump Cooly/Pump Attd. 18

Kh. Foreman/Kh.Jem. 1
A.Kh.Jem. 2
Mill House Khalasies 11
Boiling House Khalasies 6

Workshop Incharge 1
Sr. Engr Wksp/Engr Wksp/Foreman -
A.Foreman/Mechanic 1
Sr. Fitters 1
Fitters 2
A.Fitter/Helpers 1
Master Turner 1
Sr. Turner/Turner 3
A.Turner 1
Foreman Welder/Hd. Welder 1
Welders 2
Helper Welder/A.Welders 2
Pettern Maker 1
Black Smith 1
Hammerman 1
Moulder/Asstt Moulder -
Shaperman 1
Plannerman -
Coolies 3

Designation/Department STR
Asstt. Engr./Foreman -
A. Foreman / Mech. 1
Sr. Fitter / Fitter 1
A. Fitter / Helper / Cooly 2
Diesel Fitter 1
Sr. Turbine Engr/Turbine Engr. 1
A.Turbine Engr/Foreman/General Foreman 1
Mechanic/Asstt Foreman 1
Sr. Tur. Operator/Sr. Fitter 1
Tur. Optr/Fitter 9
Asstt. Tur. Optr/Helper 2
Coolies 2

Designation/Department STR
Process Manager (DGM. (P) 1
Chief Chemist/Dy. chief Chem. 1
Senior Chemist/S.Chemist/Trainee Chem. 6
Office Supdt. 1
Qasid -
Sr. Lab. Officer/Lab Officer 1
Lab. Chemist 3
Lab. Analyst 9
Asstt. Analyst 3
Lab. Pointsman 3
Sampler 17
Juice Foreman/Asstt.Chem. 1
Juice Supervisor/Asstt. Juice Foreman 3
General/Record Clerk 3
Juice Heater Mate/A.Supp. 2
Juice Heater Cooly 1
General Cleaning Cooly 6
Designation/Department STR
Def. Attendant 1
Def. Cooly 5
Def. Mate/Asstt. Supp. 3
Mate/Asstt. Supp. 3
Coolies 4
Asstt. Mate. 1
Mate/Asstt.Supervisor 3
Coolies 10
Quadman/Asstt. Supervisor 3
Quad Operator 3
Designation/Department STR
Talo Technician/Operator 3
Coolies 5
Sr. Pan Chemist/Pan Chemist 1
Head Pan Boiler 3
Head Panman 3
Senior Panman 4
Panman 3
Assistant Panman 3
Pan Mate 3
Assistant Panmate 3
Pan Coolies 16
Cryst. Mate. 4
Cryst. Coolies 4
Pan Apprentices -
Mate/Asstt Suppr 3
Asstt Mate. 3
Centrifugal Operator 17
Magma/Remelting Coolies 12
Designation/Department STR
Bagging Clerk 2
Mate/Asstt Supr 2
Asstt Mate 2
Bagging Filling Optr. 1
Bagging Coolies 21
Attendant -
Coolies 2
L.S. Mate 3
Coolies 3
Records Clerk 1
Designation/Department STR
Chief Electrical Engineer 1
Deputy Chief Engineer/
Sr. Inst. & Elect. Engg. 1
Qasid 1
Supervisor -
S.B.S.E. 3
Asstt. Switch Board Optr. -
Inst. Electrical Engg. 1
Asstt. Engr./Foreman/Supp. 3
Senior Electrician 3
Electrician 9
Junior Electrician -
Tubewell Operator 2
Helper/Asstt. Elect. 3
Assistant Wireman -
Coolies 2

Designation/Department STR
Foreman/Supervisor 1
Asstt. Foreman(H.Winder) -
Senior Winder/Winder 1
Asstt. Winder/Winder Helper 1
Electrician 1
Wireman/Electrician 1
Assistant Wireman -
Lineman/Khalasi 1
Welder -
Asstt. Lineman/Asstt. Khalasi/
Asstt. Electrician -
Electrical Fitter 1
Cooly -

Workshop I/c./Instrument Engr/Assttt. Engr 1
Foreman/Asstt. Foreman 1
Asstt. Supervisor -
Senior Technician/Tech. 1
Helper/Cooly 1

Technician/Asstt. Tech. 3
Helper/Asstt. Tech. -


Designation/Department STR
Finance Manager (Malik Ishfaq Hussain) 1
Chief Accountant (Rana Saeed Akhtar) 1
Store Account Officer (Hafiz Sajid Akhtar) 1
Sr. Accountant (Mr. Sohail Siddiqui) 1
Sr. Accountant (Mr. Mobishir Ahmad) 1
Store Accountant (Mr. Shahid Akhtar) 1
Record clerk 1
(Mr. Qasim)
Typist 1
Qasid 1
Dak Runner 1
Tea Boy 1
Designation/Department STR
Deputy Manager/Off. I/C. 1
Supervisor 1
Asstt. Store Keeper 4
Godown Boy. 5
Qasid 1
Accounts Officer/Asstt. Accounts Officer 1
Accounts Supervisor/Asstt. Accountant 1
Junior Programmer 1
Computer Operator 1
Data Feeding Clerk/Ledger Posting Clerk -
Clerk (Cash payment) 3
Billing Clerk 1
Checking Clerk 4
Clerk (Bank Payment) 2
TPT Clerk -
Qasid -
Incharge Fair Price Shop 1
Cooly 1
Technical Director 1
Executive Secretary 1
Qasid 1

Designation/Department STR
Purchase Manager (Mr. Daud Shah) 1
Purchase Officer (Mr. Irshad Ahmad) 1
Manager Store/Store Officer 1
Sr. Officer Store/Asstt. Store Officer 1
Store Keeper 1
Asstt. Store Keeper 3
Storeman/Clerk 4
Asstt. Storeman/Store Boy
Sr. Store/Boy/Helper 6
Typist/Sr. Typist 1
Qasid 1

Designation/Department STR
Manager Administration (P.I.R.O) 1
(Malik Ishfaq Hussain)
Supervisor 1
(Malik Iqbal Hussain)
Officer I/c/Off.Supdt. 1
Steno Typist/Typist 1
Record Clerk/General Clerk 1
Office Attendant 1
Mr. Allah Ditta
Supervisor/Asstt. Supp. 1
Mr. Tariq
Clerk 3
Qasid 1
Pharmacist 1
Estate Officer -
Plumber 1
Sweepers 6
Mali 1
Carpenter 1
Gardner 2
Cooly -
Sr. Civil Engr./Civil Engr. 1
Sr. Civil Supp./Civil Supp. 1
Clerk/Supervisor 1
Mason (R.F.) 1

Cooly 4
Security Officer/Asstt. Sty. Officer 1
Asstt. Security Supervisor 1
Security Jemadar 3
Security Leading 1
Security Man 3
Security Watchman 35
M.T. Incharge/M.T. Supdt. 1
Mechanic/Sr. Fitter 1
Sr. Driver/Fitter -
Driver 6
Tractor Driver -
Cooly/Helper 1
Cleaner -
Designation/Department STR
Incharge Guest House 1
Cook 2
Bearer 1
Guest House Keeper 1
Supervisor/Asstt. Supp. 2
Sr. Telephone Optr. 2
Telephone Optr/Asstt. Optr. 1
Lineman -

Career ladder??????????????????/

Major Managerial Policies

In each and every organization discipline is the key to the stability, efficiency and orderly
pursuit of business.

For employee’s guidance and to help them guard against those acts or omissions which
are inimical to the interests of the company and those of themselves, certain managerial
policies are outlined below. It is the duty of each and every employee to follow these
policies and abide by all the rules and regulations otherwise the violations of these
norms of conduct may subject one to disciplinary action commensurate to the gravity or
seriousness of the violation in every instance and the incorrigible attitude shown.

The disciplinary action may range from a verbal admonition, written reprimand,
suspension, and ultimately, separation or termination from employment for just cause.
As a general rule, however, offences involving dishonesty or breach of trust will be
penalized with dismissal.

Conflict Of Interest:
The following are examples of conflicts which must be avoided unless specifically
authorized by the Chairman and Managing Director or his duly authorized
a) Employees may not have ownership interest in suppliers, customers or competitors,
except for holding of less than 1% of the outstanding stock of companies with publicity
traded stock.
b) Employees may not seek to profit from confidential information or business
opportunities that are available to them as a result of their position with the Company.
c) Employees who purchase or have any influence on the purchase of commodities may
not engage in personal investment or speculation in commodity futures.
d) Employees may not act as director, officer, partner, employee, agent or consultant for
a supplier, contractor, customer or competitor.
e) Employees may not receive gifts, loans, or favors from suppliers or others with whom
the company does business, except (1) casual entertainment or gifts of small value
consistent with accepted business practice and (2) loans from financial institutions on
prevailing terms and conditions.
f) Employees may not use Company funds, facilities, personnel, or other resources for
private purposed.
The interests, activities, and associations prohibited by this policy are those of a direct,
as well as indirect nature. Thus, those who are acting for an employee or of his spouse
or member of his family, may be included where the facts are known to the employee.

It should also be stressed that non-adherence to employees responsibilities mentioned
in Section. A may also result in violations of the company’s policy against conflict of

Attendance And Punctuality:

All employees are expected to be at work during their official working time, except when
on approved leaves of absence or prevented from reporting to work by disabling
sickness or other emergency situations beyond their control.
When you cannot report for work, you should report your absence to your immediate
superior within the day of absence through any means available, such as telephone,
telegram, or messenger. Failure to give the required notification will result in your
absence being treated as UNEXCUSED.
Likewise, employees are required to report for work punctually on their designated
starting time. It is not permitted for an employee to compensate for tardiness by working
If you are late for 10 minutes or more, it is discretionary on the part of your superior
whether or not to accept you for work. if you are sent home, you will not be paid for the
Examples of conduct in violation of the above norms are:-
a) Absence without leave (AWOL) or notification. Being absent without notification and
approval of leave from the competent authority for 10 consecutive days or more will be
considered as hob abandonment.
b) Excessive unexcused absences.
c) Excessive unexcused tardiness/under times.

Absence and tardiness/under times will be considered excessive where they are
incurred for no valid reasons and in such frequency as to cause serious disruption of
your work and that of the department where you are assigned.
As a general rule, 3 unexcused absences, and 3 unexcused tardiness/under times in a
month will be regarded as excessive.

Dishonesty And Breach Of Trust:

The relationship between the company and its employees regardless for rank, is of
necessity founded on mutual trust and confidence. When an employee commits an act
of dishonesty or breach of trust, he give cause for the company to lose trust an
confidence in him and justifies his termination from employment.
Examples of acts or omission which violate the high standards of honesty expected of
employees are:-
a) Theft of company property or of others within or outside company premises.
b) Misappropriation, misuse, or unauthorized use of company funds, money or property.
c) Submission of false, padded, tampered or fictitious documents in support of claims
for reimbursement or other monetary payments form the company.
d) Falsifying, altering and tampering of company records such as spoiled merchandise
receipts, employment records, overtime slips, quality control reports, etc.
e) Punching or filling in of another employee’s time card and having one’s time card
punches or filled in by another.
f) Accountable company employees who incur unexplained shortages are presumed to
have misappropriated the shortages.
g) Similar or analogous acts of dishonesty, fraud and breach of trust.

Misbehavior and Misconduct:

Examples of acts which constitute misconduct are:-
a) Insubordination and disrespect to superiors and other company officials, guests,
visitors and other persons dealing with this company.
b) Fighting or quarrelling inside company premises.
c) Loitering or unauthorized leaving of one’s post while on duty.
d) Gambling inside company premised, including the making, taking and payment of
e) Unauthorized or unreported possession of firearms or other deadly weapons.
f) Inflicting physical injuries or manhandling another person inside company premises.
g) Possession and use of prohibited drugs.
h) Sleeping on duty.
i) Drunkenness or reporting for work under the influence of liquor. Drinking of alcoholic
beverages is prohibited inside company premises.
j) Immorality and indecent behavior.
k) Threatening another person with harm or physical injury.
l) Engaging in activities which are disruptive of company operations, such as gossiping,
intriguing against honor and selling personal goods inside company premises.
m) Abuse of company benefits and privileges such as malingering or feigning illness to
justify absence.

n) In General, violation of other working rules and regulations which may be issued from
time to time such as:
I. Leaving the job unattended without permission of the supervisor or entertaining the
guests or friends at the place of duty.
II. Leaving the premises during duty hours without proper authorization or gate pass
duly signed by the Manager of the Department.
III. Taking any bags, brief case or any other material in the company premises without
proper permission of authorities concerned. It is advisable to leave such things in the
custody of security at the Gate Office.
IV. Using the telephone for personal calls without permission.
V. Entering the factory premises or offices without wearing the Identity Cards or the
name badges.
VI. Taking away the company property without any proper gate pass or authorization
slip issued by the Manager of the Department.

Breach Of Security And Safety:

Examples of acts which fall under this category are:-
a) Causing destruction or damage to company materials or property, deliberately or
through negligence.
b) Causing wastage of company materials and property, deliberately or through
carelessness or negligence.
c) Sabotage or deliberate downgrading of company property, materials and products.
d) Unauthorized disclosure of confidential company information obtained by reason of
one’s employment in the company.
e) Tampering with fire protection and other safety equipment.
f) Substituting or attempting to substitute company equipment or property.
g) Refusal to comply with or evasion of security requirements, such as searches by
security guards.
h) Failure to report any misconduct or dishonest act of a co-employee.
i) Smoking fire or exposing.
j) Horse playing
k) Unauthorized use of company vehicles, machinery and other equipment.
l) Refusal to use prescribed personal protective safety or working under unsafe
conditions by avoiding goggles, or any safety equipment provide for jobs.

Breach of Cleanliness and Sanitation:

Examples of unclean unsanitary acts are:
a) Urinating or spitting on floors, walls and other places other than the proper
b) Littering, throwing cigarette butts and other acts which contribute to poor house
c) Refusal to wear prescribed uniform or footwear inside company premises.
d) Abuse or misuse of uniforms other company provided personal equipment.
e) Poor personal hygiene such as long hair, dirty fingernails or uniforms etc.
f) Improper or abusive use of toilets and other company facilities.
g) Failure to comply with other sanitary rules, such as washing hands after coming from

Just causes for Termination of Employment:
The following acts and omissions shall be treated as misconduct:-
a) Willful insubordination or disobedience to any lawful and reasonable order of a
b) Theft, fraud, or dishonesty in connection with the employer’s business or property
c) Willful damage to or loss of employer’s goods or property
d) Taking or giving bribes or any illegal gratification
e) Habitual late attendance
f) Habitual absence without leave or absence without leave for more then ten days
g) Habitual breach of any law applicable to the establishment.
h) Riotous or disorderly behavior during working hours at the establishment.
i) Habitual negligence or neglect of work
j) Frequent repetition of any act or omission referred to in clause
k) Striking work or inciting others to strike in contravention of the provisions of any law,
or rule having the force of law
l) Go-slow.

Part Three


Success or failure of any organization largely depends on the management. Mangers
have following four major roles to perform.


For effective performance of the above mentioned functions the managers need
different skills. Like, effective managers require communication skills, in written, oral
and non verbal form. They should be creative and innovative, Should be able to
manage time and stress. Motivate and influence the others. They should be able to
manage the conflicts etc.

There are two major sections of the organization.
1 Plant.
2 Head office

Plant related administration is only up to plant. plant administration administer only the
plant. and head office administer only the head office. HRM deals with both plant and
head office. here in head office peoples are very well discipline’s there is no chain of
strike or dispute in head office. Same is the case with the plant.

Here both in head office and in plant administrator are very strick by the rules and
regulation. Otherwise the here is very friendly. people fell free to talk with each other.
Here the administrative style is democratic not the autocratic.

Administration styles has its impact on the people here but senior executive here have a
combine type of attitude at the time of closing they are really strict but at beginning little
But when you talk about the styles on the morale of the people. Then you can take the
example of this that

After its merger with the lever brother. people are very much frustrated about their
future.they are very much cautious that what will be happened in the future with respect
to their jobs.and all these things are really effecting the efficiency of the people
performance.the is the one vview of the picture but on the other there are a bundle of
incentives like hajj ticket,allowances,really incouraged the employee to show there
best.and they are showing their best here.because all these activities incouraged the the working envirnment is very friendly mess and tea was the two thing
which I am really missing.there is no question that when you provide all these facilities
then the morale of employees will automatically rise.
READ the above page of mgt styles WITH CARE/????????????????/

Part four

Production facilities


The head of this department is called the Production Manager. The Production Manager
is also is called the Deputy Manager of the project. There are four Shift Chemists and
one Assistant Chemist under the control of Production Manager.

The main function of this department is to produce maximum sugar from the cane
available to the factory with minimum possible sugar losses during manufacturing by
controlling various units, processes and operations.

Functions Of Production Department

Function of production department may be classified as follows

Supervising the process of production in three shifts viz; crushing of about 1500 tons of
sugar cane, delousing of juice, its carbonation,sulphitation ,filtration and concentration
by operating juice heaters liming gassing etc

The process involves washing of filter cloth and press mud, operation of sulphur
furnace, vacuum evaporators, steam boilers, pan boiling molasses tanks juice,
molasses pumps crystallizers and centrifugal machine etc

Conducting special and routine analysis far quality control in each of three shifts .The
laboratory chemist who is independently in charge of a shift prepares about 30 routine
analyses per hour and two-lab analyses assisted by lab boys and laboratory samples
conduct 10 to 15 analyses per hour.Preparation of daily weekly forth nightly and
monthly reports and laboratory charts.

Packing the good quality sugar, maintaining the stock of new empty bags, pointing the
serial no. in the correct manner ,handing over the shift production to the sugar go down,
repair of damaged filter cloth and preparation of new filter cloth is done by the bogging

Stocking and dispatch of sugar bags to various government agencies, dealing with the
food directorate of N.W.F.P., excise departments, preparing periodical reports of
disposal of stock, sticking of damaged bags during off season etc. is done by this
In this department the following materials are used during manufacturing.

1 Lime Stone
2 Hard Coke
3 Filter Clothe
4 Sugar
5 Cotton Bags
6 Furnace Oil


After weightment, cane comes on cane dipper and through the cane carrier it passes
through the cane leveler and then reaches at the cane cutter which cut it into small
pieces. After it cane passes through cane shredder which cut it into very small pieces.
Now the cane is in position to give maximum juice. Then the cane reaches at mill house
where the juice is separated from baggage. Baggage go to the boiler house where it is
burnt and the heat energy so gained is used for steam and to produce electricity. The
juice gathers in a big tank named "mix juice tank". The juice then goes to the process
house where it is heated from 25-70°C. Then line water (Ca(OH)2) is mixed in it to get
rid of impurities. Then it is sent to the clarifier where it is heated from 60-105°C and by
the Co-agulent, the mud is separated from juice. Then it goes to the evaporators where
water evaporators. Here the brix of juice goes from 15-65. This thick juice is named as
"syrup". Now the syrup is sent to A-Pan where it is heated so much that it reaches at its
supersaturated point. A massecuite is produced by adding small amount of grain in it.
Crystals of sugar and molasses is present in A - Massecuite. To separate sugar from
molasses, it is sent to A - centrifugal. In this way, A - sugar is gained. The molasses
separated from A - sugar is sent to B-Pans, where it is heated again and B-Massecuite
is produced and the sugar gained from it is known as B-Sugar. C-sugar is also gained
by the molasses of B-sugar. The molasses separated from C-sugar has a very little size
of sugar in it, so it is sent to the separated thanks and it is called "Final molasses". C-
sugar is used for graining purpose while A and B sugars are sent to Talo-house for
colouring purpose. Chemicals litre Phosporic Acid, talo-flak, talo float and lime scerate
are mixed in it to remove the impurities. This sugar is known as "Liqour" and to get pure
sugar from it, it is sent to "refine-pans". Refine massecuite is produced and after
passing it from refine centrifugal, sugar is separated from molasses. It is passed
through drier to dry it. Then it is passed through grader where "product sugar" is
separated from small or big sugar. This small or big sugar is again dissolved in water to
get product sugar. Product sugar is sent to godown after packing.


This is perhaps the most important department of the establishment outside the factory.
Cane department produces the basic raw material which is usually in short supply and
for which there are competing forces namely “Alternate crops, Gur making crushers and
other sugar mills”. Therefore, only the effective working of the department can ensure
full capacity operation of the mill throughout the crushing season and thus reduce the
fixed costs.
This department is considered as the backbone of the mill. The function of this
department is as under which are two folded.

1…. cane department
2…. cane procurement

The head of the Cane Department is known as Cane Manager. There is a Cane
Inspector who is under the direct supervision of Cane Manager. The Cane Inspector
examines the work and steps that are undertaken for the cane development. Also a
large number of Field Men are working under the direct supervision of Cane Manager.
The Field Men make crops survey and determine the cane area of the growers.

The whole area covered by the production process has been divided into 25 zones. The
Field Man supervises each zone. The main reason of dividing the area into zones is to
encourage more quantity of cane. Various stages of cane development and
procurement are as follows.
Stages Of Cane Development And Procurement

The first stage in any development and procurement programme is the correct survey of
the sugar cane crops. Each Field Man is responsible to make the first survey in his
respective area.
If a long-term incentive development programmed is in preview the survey should
include the entire area of the zone and cultivated land available in the zone, so that the
target for bringing the area under cultivation may be ensures. For the purpose of the
cane procurement a survey of the area under sugar cane only is sufficient. For the
procurement purpose complete list of the Mohall’s under various field staff is to be
prepared showing distance of each mahal or village from the mill. Convenient place in
consultation with the local people are also to be fixed as loading centers and their
accurate distances from the mill be certain and declared which will form the bases of
payment of transportation charges. The list of all the loading centers shows their
distance from the mills is accurately and carefully prepared.

The cane superintendent will provide this to the Cane Accountant for calculation of
transport charges where such a calculation is required. While preparing list of villages,
each village should be continuous to the other. This list and serial orders will also be
followed in the programme register and during the issuance of indents.


The field men will commence the survey. Normally the survey should start when the
crop is about three feet high as that plot of sugar cane can easily be seen from the
distance and no plot is missed during the survey. The field man will prepare a weekly
advance programmes of the visit of the villages in his area and also makes an
announcement among the sugar cane growers of his visit, so that they may also be able
to contact the field man during the visit.

Local information has to be collected about the area actually surveyed. Physically, by
walking around the plot and counting the number of steps he should do the survey. The
surveyor step should be measured which will give the length of the plot.

All survey records should be prepared in the name of the owner of the land and not
subtenants unless there are any special circumstances in any particular case.

During the survey the Field Man contacts the growers and then takes a note of their
demand for seeds sand fertilizers. The field man then prepare the demand schedule for
the respective zone and provide it to the department for necessary action.

The field man will do the actual field survey. The duty of the Cane Inspector of the area
will be to see that the survey is being done is accurate. To achieve this the Cane
Inspector will visit these areas along with the Field Man who has surveyed it so that the
cane inspector will take up any plot and first see the area noted by the field man and
then he himself survey the plot. If any difference is noted it will be immediately checked
out. Thus checked out is filled in survey checking (D.D. form) and sent to the cane
superintendent every week along with a weekly progress report and explanation of the
field man for any discrepancy in his founding during the checking.

If facilities are available survey record should also be checked with survey record of the
revenue authorities.

Second survey

In the month of February and March the field man makes the second survey of his
zones. The field man examines whether the grower has shown all the seeds as
provided by the mills. They also point out he problem of the grower and try to solve
them as son as possible.

Third survey

The-Field Man makes the third survey in the month of May and June. During the survey,
he makes agreement with the grower. In his agreement the Field Man gives surety of
purchases to the growers. The grower also gives surety of supplying his cane to the mill
during the incoming season.

Final survey

After making the above surveys the Field Man makes an average estimate of cane
production of their respective zones. After making all the necessary corrections of the
completed survey it should be filled up in the survey form and sent to the cane
superintendent. The cane superintendent will then issue instructions for filling up
agreement forms with the zamindars

Each cane grower whose record is existed will be issued a passbook, which will serve
the purpose of a presentation. It will be presented by the grower at the time weightment
of the cane in the mills and at the time of payment.
When all the passbooks are thus ready they will be handed over to the field staff for the
distribution to the zamindar in their areas. Here the programme in charge while handing
over the passbook to the field staff for distribution will note down the serial of the
passbook having handed over to the Field Man and obtain his signature.

The field man while distributing the identity cards will maintain the register. The work of
writing and distribution of identity cards should be completed by the end of September.

Upon the receipt of the identity cards the grower became responsible to deliver his cane
to the Mill within six days. When the identity cards are issued to the grower then cane
department makes transportation arrangement for the supply of the cane to the mill

The transportation facilities are provided to the growers according to their productive


When the vehicle arrives at the gross weight bridge the weighment clerk will observe
the following procedures


The vehicle has a valid indent for that day and there is no over writing or cutting on it. If
there is any such thing it should bear the counter signature of an officer. The indent
must be accompanied with the identity cards. If any of the documents are not present
the cane will not be weighted.


The vehicle got a passbook and has brought the cane according to the movement
order. There is no other load on the vehicle except the sugar cane. It must be properly
placed on the weight bridge


The whole area from the weightment to the cane carrier (cane yard) includes

1.Gross Weight Bridge

2-. Tare Weight Bridge

3-. Cane carrier
After gross weightment, vehicle is processed toward the cane carrier for un-loading.
Then without cane vehicle it is again weighted on the tare weight bridge. Again the tare
weight is deducted from the gross weight. Finally the binding material is deducted and
net weight of sugarcane is remained.

When cane is weighted parchi is prepared in the quadruplicate. This parchi shows the
name of the grower name of their zones and the quantity of the cane supplied to the mill
The first parchi is given to the grower. The Second copy is sent to the cane account
section and the third one is given to the carriage contractor for receiving payments.

All the payments will be made on the bases of the purchasing sheets received by the
Cane Accountant from the Cane Superintendent. Any purchi not appearing in the
purchasing sheets will not be paid. The procedure for payment is distributed according
to the above principle.

The cane superintendent after making the necessary checking will forward the posting
sheet purchi and duplicate copy of gross and tare register to the cane account. While
receiving these the cane accountant will check that all documents have been completed
according to the requirement. If any paper is incomplete the cane account will
immediately return the paper to the cane superintendent for necessary completion.
When received incomplete from the cane accountant ant will check every purchi and
entry in the posting sheet particularly the calculations of net weight, cane price and
deductions. If any mistake are found the cane accountant will refer this to the cane
superintendent for necessary action. The cane accountant may correct the calculation
mistake without referring to the cane superintendent

Corrections should be made immediately in parches and posting sheets. After having
their correct net weight of cane, cane price and deduction in this posting sheet are
totaled. These totals should be exactly the same as the total taken of these items from
the parches remarks and cutting should be properly initiated erosion and overwriting in
the parches and register should not be accepted by the Cane Account and should be
referred back to the Cane Superintendent for inquiry and certificate of its correctness.
Now the posting sheet will be the basis on which all the payments will be made as well
as the daily cane figures. The cane account will also intimate the corrected totaled net
weight of the cane to the cane superintendent also so that if necessary he may adjust
his daily cane figures also

The posting sheet after checking by the cane account will be countersigned by the cane
superintendent and then it will be ready for payment.

It will also be sent to the cane accountant that will prepare the necessary votures with
the manager’s signature for drawl and payment of the amount of cane price against this
posting sheet. Payment will be made of one day of the posting sheet or the posting
sheet for Monday may be paid on the next day.
If someone fails to turn up and received his payment on Monday or on Sunday then he
can again have his payment on the next Monday or Sunday and not between the
While making payment the cashier will take back from the zamidar his copy of the
parchee and the acknowledgement or receipt of payment on the reserve side of the
account copy of the parchee, which had been checked and corrected, and according to
which the payment has been made.
The cashier will receive back the parchee from the zamindar one by one from the same
serial as entered in purchasing sheet and make the payment immediately after receiving
the parchee .Only when one zamindar has been paid the cashier will receive the next
person .The cashier should never collect more than one zamindars parchee at a time
for payment .Now payment will be made unless the claimant produces the identity card
also. Soon as the payment had been made the cashier will put his initial and date on the
identity cards in the column provided and stamp “paid” with his initial and signature on
the posting sheet .The cashier when giving account to the accounting in charge of
money advanced to him for payment should also give to the account in support of
payment made by him. The zamindars copy of the parchee to against which the
payment had been made. These will claimant chances of wrong fictions payment.

The accountant in charge may however adopt any other procedure in addition to the
above for the accuracy of payment and accounting.

Payment through bank

In case of payment through bank the procedure of checking the posting sheet will be
same except that after checking the posting sheet, it will be handed to the Bank for
payment .The bank while claiming reimbursement of amount paid by them should
produce the zamindar’s copy of the parchee of the same value. Under agreement, the
bank should not make any payment without production of the identity cards and after
payment the band cashier should sign and put his initial on the identity cards in the
column provided for.

Facilities provided to the Cane grower

The following types of loan are provided to the growers

Each year the project sanctions a fixed amount of loan from A.D.B.P. The amount of
loan then is divided into two parts; one part is specified for the seeds and the other for
fertilizers and pesticides. Management of the project then inform the grower through
their respect field man to contact their programme officer for loan purposes

The procedures of providing the loan to the grower is as under:

The grower who wants to acquire seeds and fertilizers from the mill should submit his
request through an application. The grower also provides a photo state copy of his
national identity card .He also maintained hid land khasra number, which he has
specified for seeds in his application

After the fulfillment of the above requirement the field man signs on agreement with the
grower. After the agreement the application is approved by the cane inspector and then
the cane manager give sanction of loan to the grower. When the cane manager
sanctions a loan the officer superintendent of the cane department prepare the supply
order .In this way seeds and fertilizers loans are provided to the growers.

Management of the project also provides loan for pesticides to the grower .The
procedure of providing pesticides loans is the same as discussed above.

Utilization capacity????????????

Part five is pending

Part Six

Company accounting/finance system


The head of this department is known as Finance Manager. The Department has two

1…Main Account Section
2…Cane Account Section

There are two Assistant Account Officers under the control of Finance Manager. They
supervise the activities of main account section and cane account section respectively.
The Finance Manager control all the financial activities of the project along with general
administration and make arrangement of funds to meet the requirement of the project

Main account section

This section has to supervise all the work of the department. The details of the above
section is given as under

1-Finance Section
In this era of information technology, Fecto sugar mill is also fully equipped with
computer technology in almost all of its sections. The finance section of this department
prepares the monthly and annual budget and financial statement bills. The cheques are
also prepared in this section. Moreover the following books of account are maintained in
this section.

A…Main cashbook
This is a separate book for all kinds of cash receipts and payments known as main cash
book .All the cash payments and receipts vouchers are posted to this book. This book is
summarized at the end of each month. The transaction in this book is reconciled with
the book statement at the end of each month. The final posting from this book are made
in the general ledger.

B …General register
All the daily transactions are recorded in the general register .At the end of day the
transactions are posted to the general ledger in their respective accounts.

C…Ledger register
The ledger register is called the kings of all the registers of different types of accounts.
The reason for this is because all the entries from the books for original entry must be
posted for various accounts in the ledger. At the end of the day all the transactions are
transferred from the general register to the ledger register .The debits and credits
columns of the ledger register and these balances are used to prepare the trial balance
and financial statements

D…Petty cash book
The cashier makes all the petty cash payments of miscellaneous bills and post them to
the petty cash book and these are summarized at the end of each month and then
posted them to the general ledger.

This section prepares the salaries of officers and workers on receipt of their attendance
from the time office. Moreover payments to employee’s old age benefit and income tax
assessments of the mill officers and workers are also dealt within this section.
In this office, daily attendance of factory workers is noted. Punch card system is used
for the attendance of employee’s .Two punch cards machines are fixed on the wall of
the time office. All the tokens of workers are fixed on the board section wise and
employees come and take his token from the board and punch it into the machine and
placed it on the box.

The in charge of this section is called as Chief Time Keeper. At the end of each month
the attendance sheet is prepared and send it to the payroll section .The payroll section
prepares the monthly salaries of the workers according to their total attendance as
shown by their attendance sheets.


This section maintains the record of machinery and different parts used in the project
.The purchases and consumption of different parts is adjusted monthly and annually.

5 - Suppliers bills
The main account section pays all the suppliers’ bills. When some items are purchased
and received in the store, the store in charge prepare the receiving report showing the
amount and quantity of items received .the receiving report is sent to the main account
section. This section then makes arrangement for payment to the supplier.

Cane account section:
The cane or the assistant account section performs the following functions
It supervises and checks the cane price bills, sugar bills. Recovery bills of seeds and
fertilizers loan from the cane grower and make arrangements for funds to the concern
banks for payment.

Procedure of payment to the growers:

The cane reaching the mill is weighted and voucher is prepared in quadruplicate. The
voucher shows the gross weight of cane. The first copy of voucher is given to the
grower and second copy is sent to the cane department .The third copy is sent to the
cane account section and the last copy is sent to the carriage contactor.

After receiving copy of the voucher, cane department makes entry in the gross tire
register. Then cash voucher and control ledger posting sheet is prepared and the
posting sheet along with the tire register is sent to the main account section.

When the posting sheet and gross tire register reaches in the tire account section the
gross tire clerks checks the posting sheet and then send it to the loan section .In this
section loan is deducted from the actual payment and send it to the voucher checker.
The voucher checker then determine the cost of the cane payable amount to the
grower .The posting sheet is then sent the gross checker who make super checking of
the posting sheet .the gross checker then sent the posting sheet along with the bills in
the duplicate.

One copy of each of the above bill is sent to the concerned bank for payment .The bank
makes the payment after fifteen days of receiving the bill from the cane account section.

The project has specified some branches of the scheduled banks in different zones. At
the beginning of the season the lump sum amount is deposited with each branch for
payment to the grower. Each branch maintains it daily records of payment to the grower
and provide it at the end of each month to the cane account section The cane record of
payment is checked with the posting sheet of different zones .The cane account section
then makes the vouchers of payment to the cane growers and submit it to the main
account section.

Cane account section therefore plays an important role in the project. This section
determines the cost of the cane and makes arrangement for payment to the cane
grower and cane carriage contractor.

Analysis of various Accounting Procedures in the company:

Going concern:

These accounts have been prepared on going concern basis despite the fact that during
the year the company have incurred a net after tax profit of Rs. 0.314 Million and its
accumulated loss stood at Rs.41.186 Million, causing erosion in share holder’s equity.
The current ratio is adverse and showing deterioration over preceding year. However
the going concern basis is valid as:

The company is able to arrange finance for its smooth operations.
Repayment of liabilities is being made and arrangements for matured finance have
been made and there are not defaults.
Projected cash flows shows better results in future.
Accounting convention:

These accounts have been prepared under the historical cost convention.

Staff retirement benefits:

The company operates a defined Contribution Recognized Provident Fund Scheme for
its eligible permanent employees who opted for the benefits. Equal monthly contribution
are made, both by the company and the employee to the fund at the rate of 10% of
basic pay.


Provision for current taxation is based on taxable income at the current rates of taxation
after taking into account admissible tax credits and rebates, if any.

The company accounts for deferred taxation on all significant timing difference using
liability method.

Fixed assets:

Company’s owned:
Operating fixed assets are stated at cost less accumulated depreciation except freehold
land and capital work-in-progress which are stated at cost.

Depreciation is computed by applying reducing balance method whereby the cost of an
asset is written off over its estimated useful life. Full year depreciation is charged on the
assets acquired during the year while no depreciation is charged in the year of the

Maintenance and normal repairs are charged to income as incurred. Major renewals
and improvements are capitalized and assets so replaced if any, are retired. Profit or
loss on disposal of fixed assets is included in the current year’s income.

Leased assets:
The company accounts for plant and machinery under financial lease by recording the
asset and related liability. The amount are determined on the basis of discounted value
of total minimum lease payments and residual value of the asset at the end of lease
period to be paid by the company.

Finance charges are allocated to accounting period in a manner so as to provide a
constant periodic rate of charge on the out-standing liability. Depreciation is charged at
the rates specified in the related note to write off the asset over its estimated use-full life
keeping in view of the certainly of the ownership of the asset at the end of lease term.

Lease rentals payable on assets held under operating lease are charged to profit and
loss account for the year.

Long Term Investment:

These are stated at cost, less provision for permanent diminution if any in the value of
long term investment. Working of permanent diminution determined on the basis of
difference market price prevailing during the year and carrying value of the investment.


These are valued as follows: Basis:
Store and spares
-In stock -At cost on FIFO basis.
-In transit -At actual cost.
Loose tools -At valuation.
Work-in-process -At average cost of raw materials.
Finished stock -At lower of average cost and net
Realizable value.
Molasses -At net realizable value

Trade debts:

Debts considered irrecoverable are written off and provision is made for the amounts
considered doubtful, if any.

Revenue recognition:

Sales are recorded on dispatch of goods to customers. Income for SNTD’s/Profit on
bank deposits/COI’s and rent is recognized on accrual basis. While income from
dividend is recognized when right to received the same is established.
Financial analysis

1. Horizontal + vertical analysis

2. Ratio analysis


2000 1999 1998 1997 1996
Sales 710380214 916602792 831611332 540572289 528738466
Cost of sale 612248348 824957306 764171721 513867334 451316012
Gross profit 98131866 91645486 67439611 26704955 77422454

Selling expenses 1978790 14330457 1965947 1193813 1495007
Administration expenses 38903083 34034120 28294359 26154434 31024115
40881873 48364577 3260306 27348247 32519122
Operating prfit/(loss) 57249993 43280909 37179305 -643292 44903332
Other income 8916964 3029040 1391158 5595783 2613995
66166857 46309949 38570463 4952491 47517327

Financial charges 60835837 38872986 44085736 42327479 48742830
Other charges 1096662 1042880 211997 893387 358137
61932499 39915866 44297733 43220866 49100967
profit/ (loss) before taxation 4234358 6394083 -5727270 -38268375 -1583640

Taxation 3920008 151069 4687841 508695 1711500
Profit /(loss) after taxation 314350 6243014 -10415111 -38777070 127860
Transfer from
general reserve 6000000
Interim dividened (5,029,728)
314350 7213286
unappropriated lossb/f (41,500,778) (48,714,064) -38298953 478117 350257
accumulated profit/ (loss) c/f -48714064 -38298953 478117

Balance sheet

2000 1999 1998 1997 1996
tangible fixed assets:
operating assets 721714036 532408169 511617023 552599553 587665901
capital work in progress 11524252 90157171 108655188 7262843 18755571
733238288 622565340 620272211 622862396 606421472
long term investments 20662667 22537900 10037900 10037900 10037900
long term loans 362280
long term deposits 27978541 22334830 12125130 19375130 21884730

stores spares 63750696 68272304 59379896 63582180 72749612
stock in trade 2254867 407776 89271555 40154151 1094957
trade debts 5654650
short term investments 4113322
loans and advances 13562375 63101972 13615670 13566216 14807087
deposits & prepayments 8634398 4211716 9437510 3025493 6098208
cash and bank balances 69099313 6925345 3722261 6645238 1101494
157301649 142919113 175426896 126973278 105619330
total assets 939181145 810357183 817862137 779248704 744325712
Balance sheet liability side

2000 1999 1998 1997 1996
authorized, Rs 10 each 150000000 150000000 150000000 150000000 150000000
issued, subscribed and paid up 50297280 50297280 50297280 50297280 50297280
revenue reserves 6000000 6000000 6000000
accumulated (loss) or profit -41186428 -41500778 -48714064 -38298953 478117
9110852 8796502 7583216 17998327 56775397
subordinated loans 451000000 466000000 466000000 452000000 417000000
long term loans 45750000 30000000
redeemable capital 4000000 19147770
liabilities against assets subject to f. lease 141437404 78669283 37104799 67784794
Marabaha finance 15264040
deferred liabilities 17488093 27416885 7110410
deferred taxation 6000000 6000000 8300000

current portion of L/T liabilities 127483883 59508341
short term running finance 115035070 72399065 134731755 115625926 55511877
current proportion of redeemable capital 4000000 15147770 20573601
C/T against assets subject to F. lease 30679995 31269316 43848926
current portion of the deferred liabilities 7214970
creditors, accruals and other liabilities 29768462 71177897 92225117 58567469
provision for taxation 4331434 6318002 4905400 3744692 2853844
276618849 209403305 273757237 224355173 177400228
contingencies and commitments
TOTAL 939181145 810357183 817862137 779248704 744325712

The process of the financial analysis basically involves viewing the financial position of
the organization from different angles. The basic purpose of the making the financial
analysis is to see whether the organization‘s performance is in accordance with the
plans of the management and whether the objectives of the organization are being met
or not. In short it is the assessment of the firm’s past, present and the anticipated future
financial condition. Because of the financial analysis, firm’s strengths and weaknesses
are highlighted. The financial analysis can be,
· Internal
· External


When the analysis is done by the internal employee of the firm then it is called as the
internal analysis.


When the analysis is carried out by the external analyst, then it is known as the external

The particular objectives sought to the served by financial analysis determine the type
of ratios as well as the extent and depth of ratio analysis to be carried out to draw
conclusions. Financial analysis is carried out by;

Business Concern:
· For assessment of profitability of the business.
· For assessment of stability and financial strength of the business entity.

· Assessment of efficiency of resources utilization.
· Assessment of potentials of profitability.
· Evaluation of different management controls.


· Assessment of earnings and divided prospects.
· Growth in economic value of investments vis-à-vis risks undertaken.

Bankers/Creditors Concern:

· Assessment of the ability of the business to service its debt obligations.
· Debt coverage.
· Proper utilization of assets financed.
Government Concern:

· Evaluation of the economic contributions of the business entity.
· Determination of the entity’s financial strength to carry social and development


The tools used by the both internal and the external analysts are the same but the
purpose for carrying out the analysis different. The tools commonly used are as follows,
1. Trend analysis
2. Common size analysis
3. Ratio analysis


The word trend normally represents the direction. So in the trend analysis, we see that
in which direction i.e. favorable or unfavorable, a particular firm is going.
In this analysis, a year is taken as the base and the other years’ quantities are
expressed in term of percentages of the base year. Generally, the first year is taken as
the base year; trend analysis involves the computation of the percentage relationship
that each figure bears to the same item in the base year. This analysis helps in forming
an opinion as to whether the favorable or the unfavorable tendencies are reflected from
the data.


The comparability of the trend analysis is affected by ,
The accounting principles and the policies followed during the years which are under
consideration. Therefore, the accounting policies must remain same during the periods
of comparison
The prices when these change materially. Therefore for the trend analysis to be
effective, the prices must remain unchanged during the period under consideration.
Trend analysis for the “FECTO SUGAR MILLS LTD.”



From the sales figure we can see that the sales are not going in the favorable direction
recently. The trend in the sales, taking year 1996 as base, is as follows,
· 102.24% in 1997
· 157.2822 % in 1998
· 173.3566% in 1999 &
· 134.3538% in 2000
From the above data we can conclude that the year 1999 was the time of boom for the
company. Up to 1999, the sales grew in an increasing pattern but these fell down
drastically in the year 2000. It is because of the shortage of the sugar cane in the area.
The trend is as follows,
· 135.6585% in 2000
· 182.7893% in 1999
· 169.3208% in 1998
· 113.8598% in 1997
The same trend was there in the CGS as we found in the sales. The reason being the
same for the both. It is not a bad trend because the cost of goods are moving in the
same direction as that of the sales.
The gross profit has showed the following trend,
· 126.7486% in 2000
· 118.3707% in 1999
· 87.10601% in 1998
· 34.49252% in 1997
Being closely related to the sales and the cost of sales, the gross profit is also moving in
their respective direction.

The trend in the selling expenses shows that the year 1999 was really the year of the
selling efforts by the sales department. In this particular year, the selling expenses
touched the top as compared to all the other years. The enormous rise in the sales in
1999 was also because of the selling efforts of the department. a few selling contracts
were of such nature because of which the sales as well as the sales related expenses


The management of the mills was able to control the management and other
administrative expenses up to a great deal. In 1999, these expenses were only
109.7021% of the base year despite the fact that all the other expenses rose in this
year. In 1999, there was the implementation of the long planned downsizing policy of
the management of the mill. All the redundant posts were vacated by the management.
It cut down the salary costs of those who have been employed for nothing. The rise in
the sales was also because of the threat to the employees about the management’s
severe downsizing policy implementation.


The trend shown by the operating profit is quit a successful one. The rise is really a slow
one, but it is a favorable one. The trend reflects the management’s real efforts towards
the improvement of the profits of the company. The trend of 82%, 96% and 127% in the
last consecutive years might have really boosted the spirit of the management.


This particular area of the company is amazingly improving for the last few years. The
reasons for this particular improvement are,
· The availability of market for the wastes of the mill.
· Timely disposals of the obsolete machinery
· The investment of the idle funds in the profitable areas.


It seems the trouble creating area for the company. Almost all the profits of the mill are
turned into the losses because of the heavy financial charges. The company must
consider its borrowing policy to save all the profits eaten up by the debt servicing


In addition to the financial charges, the other charges are also something the company
needs to consider seriously. The figures of 291% and 306% in the years 1999 and 2000
respectively, are conveying an alarming condition for the management of the company.


Despite the sever fluctuations in the different expenditures of the company, the net
income available to the shareholders is satisfactory from its trend point of view. In this
area also, the year 1999 took a lead ahead of all the preceding areas. 4882.695%
Increase as compared to the base year means a lot of improvement. But as we can see
from the other years under consideration, this increase was not because of some
permanent nature.
2000 1999 1998 1997
Sales 134.3538 173.3566 157.2822 102.2381
Cost of sale 135.6585 182.7893 169.3208 113.8598
Gross profit 126.7486 118.3707 87.10601 34.49252
Selling expenses 132.3599 958.5545 131.5009 79.85334
Administration expenses 125.3963 109.7021 91.20118 84.30356
125.7164 148.7266 10.02581 84.09897
Operating profit/(loss) 127.4961 96.38685 82.79854 -1.43262
Other income 341.124 115.8778 53.21961 214.0701
139.2479 97.45908 81.17137 10.42249
Financial charges 124.8098 79.75119 90.44558 86.83837
Other charges 306.213 291.1958 59.19439 249.454
126.133 81.29344 90.21764 88.02447
profit/ (loss) before taxation -267.381 -403.759 361.6523 2416.482
Taxation 229.0393 8.826702 273.9025 29.72217
Profit /(loss) after taxation 245.8548 4882.695 -8145.71 -30327.8


2000 1999 1998 1997
tangible fixed assets:
operating assets 122.8103 90.59708 87.05916 94.03294
capital work in progress 61.44442 480.6954 579.3222 38.72366
120.9123 102.6622 102.284 102.7111
long term investments 205.8465 224.528 100 100
long term loans
long term deposits 127.845 102.0567 55.40452 88.53264

stores spares 87.63029 93.84559 81.62229 87.39865
stock in trade 205.932 37.24128 8152.974 3667.19
trade debts 0 0 0 0
short term investments 0 0 0 0
loans and advances 91.59381 426.1606 91.95374 91.61975
deposits & prepayments 141.5891 69.06481 154.7587 49.61282
cash and bank balances 6273.236 628.7229 337.9284 603.2932
148.9326 135.3153 166.0936 120.2178
total assets 126.1788 108.8713 109.8796 104.6919


2000 1999 1998 1997
authorized, Rs 10 each
issued, subscribed and paid up 100 100 100 100
revenue reserves 0 0 100 100
accumulated (loss) or profit -8614.3 -8680.05 -10188.7 -8010.37
16.04718 15.49351 13.35652 31.70093
subordinated loans 108.1535 111.7506 111.7506 108.3933
long term loans
redeemable capital 0 0 0 20.89016
liabilities against assets subject to f. lease 215.27 119.7359 56.47411 103.1696
Marabaha finance
deferred liabilities
deferred taxation 0 0 72.28916 72.28916

current portion of L/T liabilities
short term running finance 207.2261 130.4209 242.708 208.2904
current proportion of redeemable capital 0 0 19.44239 73.62722
C/T against assets subject to F. lease 0 0 69.96749 71.31148
current portion of the deferred liabilities
creditors, accruals and other liabilities 54.50903 130.3339 168.8734 107.2429
provision for taxation 151.7754 221.3857 171.8875 131.2157
155.9293 118.04 154.3162 126.4684
Contingencies and commitments
TOTAL 126.1788 108.8713 109.8796 104.6919

The trend in the financial position of the company is a very healthy one because the
assets have an increasing trend in them which shows the capitalization of the business.
In the first two years immediately following the base year, there has been a decrease in
the assets i.e.6% in the 1997 and almost 13% in the 1998. but this does not mean any
unhealthy sign for the company rather if we look at the capital work in progress, it is
continuously at an increase i.e.39% in 1997 and 590% in 1998. it was because of the
sale of the obsolete machinery in those years because of which the assets show a
decreasing trend. The receipts from the sale were actually capitalized in the acquisition
of new assets for the company which is reflected by the increase in the capital work in
progress. This capitalization was done very swiftly because we can see the decreasing
trend in the capital work in progress figure in the last two years under consideration.


In 1999 and 2000, the company was also able to invest substantial amount in the long
term investments. The management of the company seems to have decided for the long
term capitalization process. The increasing trend in the other income is because of the
incomes coming from these long term investments.


The long term deposits have increased up to 27% as compared to the base year. From
these also, we can conclude the solvency position of the company. Here one thing I
would like to add, we have seen in the income statement trends that the company is
having substantial earnings from activities other than its major operations because of
which, despite having little operating profits, the company was able to gather enough
amounts for its shareholders. It is not a bad or ill thing, but what the management
should be doing is that they must give greater importance to their main operations
instead of having greater income from other sources. No doubt the management has
been quite successful in earning funds for the shareholders, but actually they cannot be
said to be efficient as they have not been able to show it in the activities for which they
have been in the company.


Current assets are basically the key indicators of the efficiency of the management in
handling the business. Stores and spares are those current assets which are
continuously used by the organization for the daily needs of their plant and machinery.
The decrease in the stores and spares mean their utilization in the following period.
There has been an almost fixed decrease in the stores in the following years as
compared to the base year and this decrease has proved to be the constant one. It
shows decreased need for the items of store, probably because of having replaced the
worn out machinery. The other thing which can be concluded from this is that the
operational workers are well aware of the need for the store items’ needs which is
evident from the constant figure of the store items.

Immediately after the base year, there have been piles of stock at the end of the period
and it piled further in the next year. The two figures of the stock in trade i.e.3667% and
8152% in years 1997 and 1998, respectively, show the period of great tension for the
management being unable to sell the stock within time. But in the year 1999, the
reduction of the stock in trade from 8152% to only 27% is a great achievement of the
management who must have worked at their toes to get the market share in the sales of
the sugar. The other reason for this can be the anticipation of a big order in future which
made them pile the stock for the period of almost two years. The enormous sales of the
year 1999 might also be because of the sale of heavily piled stock.


The position of the cash and bank balance of the company indicate that the
management does not believe in keeping the funds in the form of idle cash either in the
bank or at hand. There has been an almost fixed increase in the cash balance of the
company in the following years as compared to the base year.
In the four years of operations the management has been able to increase the total
assets of the company up to 27% of the base year which is a very positive sign for the


Not being able to earn profits and having been indulged in the payment of the financial
and other charges, the company has not been able to generate any profits during the
last four years of its operations. It has been accumulating all of its loss due to which the
equity of the company has been following a decreasing trend. It is the only sign of great
worry for the management and the shareholders. This trend is also putting a very bad
impact on the company image in the open market. As discussed earlier, the
management should be looking forward to the efficient working of the company instead
of making investments in other activities.
Looking at the figures for the liabilities, it is really amazing that at one side the
management has made huge long-term investments, and has advanced the loans but
on the other hand, the trend in the liability position is also an increasing one. The
management must try to utilize its own resources in the business so that it may be
saved from the heavy interest charges on the borrowed money. It is also advisable
because the money earned on investments is much less than the money spent on
borrowing the funds.


In trend analysis, we see that in which direction the firm is moving by comparing the
data of different years. This analysis may be of some value when the comparison of
items is made with the same items in the base year. But this method is not beneficial
when the comparison is of one company or several companies with the industry. It is
because there exists no common base for the different companies. For such
comparisons, the common size statements are used. In common size statements, the
items of the financial statements are taken as one grand total .e,g.
In case of the income statement, all the items are taken as the percentage of the sales.
In the balance sheet, both the assets and the liabilities are taken as the percentages of
their grand total of the balance sheet.
Because of the above reason, the common size statement is also called as the
“component percentage” or the “100%’ statement. These are most valuable to the
analyst for studying the current financial position and operating results of the company
especially in making comparisons with the company in the same industry and the
industry standards.


The vertical analysis of the company id very attractive so far as the cost of goods sold is
concerned. The company has been able to control the cost of goods sold not only up to
a constant level but also it has been able to bring it down up to some extent. The picture
presented by the vertical analysis is as follows,
· 86.18601% in 2000
· 90.00161% in 1999
· 91.89049% in 1998
· 95.05987%in 1997
We can easily observe the downward flow of the cost of sales. It might be because of
the close supervision of the operations by the management. Ideally, the CGS should
have been much less than the percentages which are prevailing in the financial reports
of the company.

2000 1999 1998 1997
Sales 100 100 100 100
Cost of sale 86.18601 90.00161 91.89049 95.05987
Gross profit 13.81399 9.998386 8.109511 4.940127
Selling expenses 0.278554 1.563432 0.236402 0.220842
Administration expenses 5.476375 3.713072 3.402354 4.838286
5.754928 5.276503 0.392047 5.059129
Operating profit/(loss) 8.059064 4.721883 4.470755 -0.119
Other income 1.255238 0.330464 0.167285 1.035159
9.314288 5.052346 4.63804 0.916157
Financial charges 8.563842 4.240985 5.301243 7.830124
Other charges 0.154377 0.113777 0.025492 0.165267
8.718218 4.354762 5.326735 7.995391
profit/ (loss) before taxation 0.596069 0.697585 -0.6887 -7.07923
Taxation 0.551818 0.016481 0.563706 0.094103
Profit /(loss) after taxation 0.044251 0.681104 -1.2524 -7.17334

So much level of CGS never allows the management to aggressively participate in the
other promotional activities to develop the business to some higher level. Anyway, the
decreasing pattern of the CGS may be because of the management’s awareness of this
fact and as a result of the efforts taken by the management in this area.


Gross profit is basically the coushin that any company has for the expenses other than
the manufacturing expenses. The companies able to avail a higher level of the GP are
in better position to expend the resources in the activities other than the manufacturing
activities. From the year 1997 to 2000, there is a very positive sign of increase in the GP
which has been increased from a very poor level of only 4% to an acceptable level of
9% in 2000. It is still not up to the mark but the reason of the satisfaction is the trend
that we can observe in the GP with the passage of time. As said earlier. The GP
provides the cushin to the management for the incurring of the other costs, in the year
1997, where the GP percentage is only 4%, the company has gone into severe loss
where it has not even been able to cover its manufacturing costs. It also means that all
the other costs have been paid by the company out of its own pocket. In the next years
the management has been quite successful in improving in this area and we can see
that in the year,
· 1998, the company has covered all of its manufacturing costs but because of having
very little left behind, it fell short of the admin and other expenses.
· 1999, in contrast to the previous two years, here the company has not only covered its
operating costs, but it has also been able to save some amount for its shareholders
after paying for all the expenses.
· 2000, the amount saved for the shareholders has increased which again shows a
satisfactory sign for the shareholders.


The management seems to have a firm control over these expenses because at an
average these have not shown any significant fluctuations. Only in the year 1999, there
have been some tremendous selling activities and as a result, the expenses have gone
to a higher level. The admin expenses have increased over these years.


The operating profit has been managed to increase over the years. This is because of
the tight control of the management over the production processes and activities. The
cost of goods sold, as explained earlier has been controlled and reduced as compared
to the past. It led to an increased gross profit and the increased resultant operating


It is really the danger area for the management of the company. We can see that as the
operating profit increased, the financial charges have also shown the same trend in
them. These charges have been almost equal to the operating income which means
that these would not allow the income’s flow to reach the shareholders’ accounts waiting
in the bottom of the income statement. Only an amount less than one percent has been
able to flow to the shareholders in the years where there has been some operating
profits i.e. 1998, 1999 and 2000.the management of the company must consider their
borrowing policies so as to minimize the adverse impact of these financial charges on
the financial and the operating performance of the company.


2000 1999 1998 1997
tangible fixed assets:
operating assets 76.84503 65.70043 62.55541 70.9144
capital work in progress 1.227053 11.12561 13.28527 0.932031
78.07208 76.82604 75.84068 79.93114
long term investments 2.200073 2.78123 1.227334 1.288151
long term loans
long term deposits 2.979036 2.756171 1.48254 2.486386

stores spares 6.787902 8.424964 7.26038 8.159421
stock in trade 0.240089 0.050321 10.91523 5.152931
trade debts
short term investments
loans and advances 1.444064 7.786933 1.664788 1.740935
deposits & prepayments 0.919354 0.519736 1.153924 0.388258
cash and bank balances 7.3574 0.854604 0.455121 0.852775
16.74881 17.63656 21.44945 16.29432
total assets 100 100 100 100


Like a typical manufacturing concern, the company is having most of its investment in
the fixed assets. More than 75% of the total assets are in the form of the fixed assets of
the company. The company has been involved in the making of the new fixed assets
and there has been a continuous exchange between the fixed assets and the capital
work in progress but on the whole, the total amount invested in the fixed assets has
remained constant over the years.


The current assets investment of the company has remained constant to almost 19% of
the total assets. It shows that the company is well aware of the fact that greater the
liquid assets, smaller will be the profitability of the company. Looking at the figures, we
can see that in the years 1997 and 1998, the major proportion of the current assets
were the stock in trade.

2000 1999 1998 1997
authorized, Rs 10 each
issued, subscribed and paid up 5.35544 6.206804 6.149848 6.454586
revenue reserves 0.73362 0.769972
accumulated (loss) or profit -4.38536 -5.12129 -5.95627 -4.91486
0.970085 1.085509 0.9272 2.309703
subordinated loans 48.02056 57.50551 56.97782 58.00459
long term loans 4.871265 3.702071
redeemable capital 0.513315
liabilities against assets subject to f. lease 15.05965 9.707976 4.536804 8.698737
Marabaha finance 1.62525
deferred liabilities 2.158072 3.352262 0.91247
deferred taxation 0.73362 0.769972

current portion of L/T liabilities 13.57394 7.343471
short term running finance 12.24844 8.934216 16.47365 14.83813
current proportion of redeemable capital 0.48908 1.943894
C/T against assets subject to F. lease 3.751243 4.012752
current portion of the deferred liabilities 0.882174
creditors, accruals and other liabilities 3.169619 8.783521 11.27636 7.515889
provision for taxation 0.461193 0.779656 0.599783 0.480552
29.45319 25.84086 33.4723 28.79122
contingencies and commitments
TOTAL 100 100 100 100

In the following two years i.e. 1999 and 2000, the proportion has been shifted to the
long term investments than the stocks. The reason being the sale of the stocks in those
years and the investment of the receipts in the long term investments.


The current liabilities are in the form of the short term running finance availed by the
company. The current liabilities made up almost 30% of the total liabilities of the
company. Out of the total current liabilities, 15% are in the form of the short term
running finance and the 12% are in the form of the current portion of the long term
liabilities. The remaining is contributed by the creditors and the taxation provisions and
the others. The nominal portion of the creditors in the current liabilities shows that the
company pays the cash to its suppliers of sugar cane through the presence of a running
finance facility obtained from a bank. Like all the other industries using the agricultural
products as their raw materials, the Fecto sugar mills is also dealing with its suppliers
through making payment to them in cash.


This area is very poor one for the company as the portion of the equity in the total
liabilities is only round about 1% which shows that the company is not at all in a position
to give anything to its shareholders if it gets insolvent. 1% means really nothing as
equity. The other thing which is very interesting here is the presence of the
subordinated loans. The loans provided by the management of the company. From here
we can easily conclude that the management of the company is more interested in the
company than the shareholders of the company. The portion of the subordinated loans
in the total liabilities is 48%. I can even say that the shareholders of this company must
have considered their investment as gone wasted and the fact that the company is still
in operation is that the management has all the interest in the company for which it is
making the organization move in any direction with an anticipation of recovering some
thing out of it one or the other day.

“An index that relates two accounting numbers and is obtained by dividing one number
by other”

Ratio Analysis is an important and age-old technique of financial analysis. It simplifies
the comprehension of financial statements. Ratios tell the whole story of changes in the
financial condition of business. It provides data fro inter firm comparison. Ratios
highlight the factors associated with successful and unsuccessful firm. They also reveal
strong firms and weak firms, over- valued and under valued firms.
It helps in Planning and forecasting. Ratios can assist management, in its basic
functions of forecasting, planning, co-ordination, control and communication. Ratio
analysis also makes possible comparison of the performance of different divisions of the
firm. The ratios are helpful in decision about their efficiency of otherwise in the past and
likely performance in future. Ratios also helps in Investment decisions in the of investors
and lending decisions in the case of bankers etc.

Types of Ratios

Following the main types of ratios that we are going to calculate in this assignment,

1. Liquidity Ratios
2. Leverage Ratios
3. Coverage Ratio
4. Activity Ratios
5. Profitability Ratios


Liquidity ratios are used to measure a firm’s ability & solvency of the firm to meet short-
term obligations. They compare short-term obligations to short-term resources available
to meet these obligations. It consists of two ratios current & acid test ratio. Let us
calculate these for Service Industries.
We have two types of liquidity ratios,
· Current ratio
· Acid test/quick ratio

Current Ratio
Current ratio is the relationship between current assets and current liabilities. This Ratio
is also known as working Capital ratio. It is calculated as

Current ratio = Current Assets/ Current Liabilities
The current ratio for the Fecto sugar mills is as follows,


The current ratios of the company are not very impressive. The acceptable current ratio
is 2:1 but the company has never been able to maintain the acceptable level of the
current ratio. Having a 1:1 current ratio means that the company has one rupee for the
discharge of each one rupee of the current liabilities. The company is not in a good
position to meet its current obligations as they will fall due in the recent period of time.
The company has a current ratio of less than one in each of the years which shows that
the companies’ short term obligations will not be fulfilled by its current assets rather
some of the long term assets will also be needed for the discharge of the current
liabilities. The other thing which this ratio signifies is that some of the fixed assets of the
company have also been financed through the short term liabilities.


Quick or Acid Test Ratio is the ratio of liquid assets to current Liabilities. True liquidity
refers to the ability of a firm to pay its short-term obligations as when they become due.
Quick Ratio is equal to

Quick or Acid test ratio = Quick Assets/ Current liabilities


This ratio basically shows the ability of the company to pay off its short term obligations
as they become due without going for anything else. For this ratio, the current assets
are reduced by the amount of the slow moving items like the stocks and the
prepayments. The acceptable or the ideal ratio is 1:1 which means that the firm must
have one rupee in quick assets to pay off its current liabilities as they become due. Like
the current ratio, the company has never been able to achieve the desirable figure in
this area also. As shown in the above table, the average ratio maintained by the
company in the last five years is less than 1 which means that the company will be
forced to do some thing else to pay off its current obligations.

We all know that the firms are financed through two main sources,
· Internal sources
· External sources
Internal sources include the shareholders’ contribution in the total financing of the
company and the external sources include the debts which have been obtained by the
management to finance the company. Leverage ratios can be defined as,
“The ratios which show the extent to which the firm has been financed by the debts”.
These include,
· Debt to equity ratio
· Debt to total assets ratio
· Long term debt to total capitalization


Debt to equity ratio indicates the relationship between the external equities or outsider
finds and the internal equities or shareholder fund. It is calculated to assess the extent
to which the firm is using borrowed money. In other words, we can say that the debt to
equity ratio answers the following question,
How the firm has financed its assets? It gives us the sources of finance and their
percentages in the total financing of the company.
Debt to equity is simply calculated as

Debt to equity ratio = Total Debts / Shareholders equity
Where as:
Total debts = current liabilities + long-term debts


We can see that the company has been consistently relying on the external debts to
finance its operations. The ratio has an increasing trend in it since 1996 up to year
2000; the debt amount has gone beyond the equity. It means that for financing the
activities of the firm, each rupee invested by the shareholders has been accompanied
· 0.12 rupee in year 1996
· 0.47 rupee in 1997
· 1.42 rupees in 1998
· 0.97 rupee in 1999 &
· 1.13 rupees in 2000
of the external lender. It is not a good sign at all as the firm would not be able to get
more funds from other lenders because the coushin in its equity for the lenders has
already been exhausted.

The Debts to total assets Ratio tells us how much portion of assets is a debt. This ratio
serves a similar purpose to debts to equity ratio. It highlights relative importance of debt
financing to the firm by showing the percentage of the firm’s that is supported by debts
financing. This ratio is calculated as

Debts to Total Assets ratio = Total Debts / Total Assets


This ratio gives us the view about the amount invested in the total assets of the
company. The above figures of the company are not very good. We can see that for the
last five years, the company’s assets have been predominantly financed by the external
debts. The ratios of 1.05, 1.11, 1.33, 1.067, and 1.11 for the years 1996, 1997, 1998,
1999 and 2000 respectively show that for all of these years, the each rupee of the
shareholders had been accompanied by more than one rupee of the external lenders.


This ratio tells us about the amount of the long term debt in the total capitalization of the
firm. It is calculated by the following relation,
Long term debt to total capitalization = LT debt/ (LT debt + share holders’ equity)


We can see that the long term debt has always been equal to the total financing of the
company. As already discussed the equity is very nominal in the total financing of the
company. Out of the total long term debt, we have seen that the portion of the debt
provided by the management of the company is very much.


“The Ratio that relates the financial charges of a firm to its ability to serve or cover
This ratio tells us about how much earning is available for the servicing of the interest
payable on the debts. In other words, we can say that this ratio shows that whether the
income of the company is sufficient to bear the interests and other charges or not.


Interest Coverage ratio is designed to relate the financial charges of a firm to its ability
of pay/cover them from its earning. Interest Coverage ratio is calculated as

Interest Coverage Ratio = Earning before Interest & Tax / Financial charges


This ratio again is not a very good one because we can see that for each rupee to be
paid as the interest, the company only has an amount a little over one rupee for the
payment of interest. Here, I am not saying that the company will not be able to pay its
interest charges; the point of tension is that it would be left with only the nominal amount
to be distributed among its shareholders or even it would not have anything to pay to its
shareholders after the payment of the taxation expenses for the year. This was the
picture in the years 1999 and 2000, the condition was even worse in the years 1998,
1997 and 1996 where the company was not even able to pay its financial charges fully.

Activity ratios are also known as efficiency or turnover ratios, measure how effectively
the firm is using its assets. Some of the aspects of activity analysis are closely related to
liquidity analysis. In this session we will primarily focus on how effectively the firm is
managing tow specific groups receivables and inventories and its total assets in
general. The two main activity ratios are,
· Receivable turnover ratio
· Payables turnover ratio
· Inventory turnover ratio


Debtor turnover ratio indicates the velocity of debts collection of a firm. In simple words,
it indicates the number of times average debts are turned over during a year. Higher the
value of debts turnover, more efficient is the management of debts or more liquid the
debtors are and vice versa. Receivable turnover ratio is calculated as

Receivable/debtors turnover ratio = Annual credit sale / Trade debtors

There have been no trade debts in the company after the year 1996, probably because
of the low performance of the company or because of the strict debt policy of the


This ratio is against to Debtors turnover ratio. It compares the creditors with the total
credit purchase. It signifies the credit period enjoyed by the firm in paying off debts. In
payable turnover ratio less the results better for the company. It is calculated as

Payable Turnover ratio = Annual Credit Purchase / Creditors


Inventory Turnover ratio, also known as Stock Turnover, is the relationship between
Cost of Goods Sold during the period and average inventories. It measures the velocity
of conversion of stock into sales. Usually higher inventory turnover, stock velocity,
indicates efficient management because more frequently stocks are sold lesser the
amount of money required to finance the inventory. It is calculated as

Inventory Turnover = Cost of Goods Sold / Average Inventory


Profitability ratios are of two types
· Those showing profitability in relation to sale and
· Those showing profitability in relation to investment.
To gather these ratios indicate the overall effectiveness of operation


It consists of the following ratios,
· Gross profit ratio
· Net profit ratio


Gross profit is the amount which a company has after the deduction of the operating
expenses from the total revenue of the firm. It basically provides the coushin for the
expenses other than the operating expenses. Gross profit ratio, which is also called
Profitability in relation to sales, is the ratio of gross profit to new sales expressed as a
percentage. This ratio tells us the profit of the firm relative to sales after we deduct the
producing the goods. It is a measure of the efficiency of the firm operation. Higher the
gross profit ratio better it is. It is calculated as

Gross Profit Margin = Gross Profit / Net Sales


As discussed earlier, the GP ratio provides the management with the funds to expend
on the other business activities than the manufacturing expenses. The above
calculations of the GP ratio indicate that the management of the Fecto sugar mills have
to be very much reluctant in making the expenses because the margin for the expenses
is very little i.e.
· 13.81% in 2000
· 9.998% in 1999
· 8.109% in 1998
· 4.94% in 1997
· 14.64% in 1996
The margin earned by the company is so much less that the shareholders might have
no chance of receiving anything from the company because there are other admin and
selling expenses which need to be paid off before anything comes to the shareholders
lying at the bottom of the income statement.


The net profit margin is a measure of the firm’s profitability of sales after taking account
of all expenses and income tax. This ratio also indicates performance during the
financial year. Simply high the ratio better the firm performance and efficiency. It is
calculated as,

Net Profit Margin = Profit after tax / Sales


The net profit ratios gives the picture of what the company is actually paying to its share
holders after paying all the expenses incurred in the activities of the business. The
above calculations are really very much depressive for the Fecto sugar mills. The firm
has never been able to pay the shareholders some amount which can justify their
investment in the company. The nominal profits earned in the years 1999 and 2000
went in setting off the accumulated profits carried forward by the company. This fact is
also evident from the income statement of the company.


In this head, we have two ratios,
· Return on equity
· Return on total assets


Return on equity is another measure of overall firm’s performance. It compares net
profit after tax to the equity that share holders have invested in firm. This ratio tells the
earning power on shareholder’s book value. Higher the return on equity ratio often
reflects the firm’s acceptance of strong investment opportunities and effective expense
management. It is calculated as

Return on Equity = Net profit After Tax / Shareholders Equity x100


This ratio is also a very bad one for the company because the return on the equity is
negative in the years 1997 and 1998. in the other years when the return is positive, it is
so meager that the shareholders might have repented on investing in the company. The
amount invested in the company might have earned much greater amount if it had been
invested some where else. In the years where it is in positive figures, only the year 1999
is a good one when the company gave 70% return on the equity while in the year 2000,
the return was only 3%.


Total Asset turn over shown the sale revenue per dollar of assets invested. This total
asset turnover ratio tells us the relative efficiency with which firm utilizes its total assets
to generate sale. It is calculated as

Total Asset Turnover = Net Sales / Total Assets x 100


The assets have been earning at an average of 80% in the form of the profits. This ratio
is also not a very great one as compared to the industry average.

Part seven

Training programme

Part eight

Coclusions and recommendations


Specific Recommendations For The Organization:

Ø There should be a safety department in the company to assure the safety of the
Ø A regular training programme should be a permanent policy of the management so as
to provide not only the required skill to employees but also to help them keeping their
skills up to date.
Ø Balance should be at a distance of 5 kilo-meters from the cutters
Ø There should be card system for every employee from helper to manager for
Ø Wages of workers should not be less than Rs3000 per month.
Ø There should be family quarters for all married workers.
Ø There should be a high school and a college as well for boys and girls in the factory
Ø There should be transport facility for workers within the district.
Ø All the employees especially those associated with production should be encouraged,
and should be involved in decision making and empowered to make innovative
decisions. In this way employees can add to the organization, a lot. e.g. a new cost
effective production technique can result in comparatively huge profits.

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