CHAPTER 1 INTRODUCTION

INTRODUCTION
WORKING CAPITAL Meaning of Working Capital Capital required for a business can be classified under two main categories via, 1) 2) Fixed Capital Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- to-day operations. Long terms funds are required to create production facilities through purchase of fixed assets such as p&m, land, building, furniture, etc. Investments in these assets represent that part of firms capital which is blocked on permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purposes for the purchase of raw material, payment of wages and other day to- day expenses etc. These funds are known as working capital. In simple words, working capital refers to that part of the firms capital which is required for financing short- term or current assets such as cash, marketable securities, debtors & inventories. Funds, thus, invested in current assts keep revolving fast and are being constantly converted in to cash and this cash flows out again in exchange for other current assets. Hence, it is also known as revolving or circulating capital or short term capital. CONCEPT OF WORKING CAPITAL There are two concepts of working capital: 1. 2. Gross working capital Net working capital

The gross working capital is the capital invested in the total current assets of the enterprises current assets are those Assets which can convert in to cash within a short period normally one accounting year. 2

CONSTITUENTS OF CURRENT ASSETS 1) 2) 3) 4) 5) Cash in hand and cash at bank Bills receivables Sundry debtors Short term loans and advances. Inventories of stock as: a. b. c. d. Raw material Work in process Stores and spares Finished goods

6. Temporary investment of surplus funds. 7. Prepaid expenses 8. Accrued incomes. 9. Marketable securities. In a narrow sense, the term working capital refers to the net working. Net working capital is the excess of current assets over current liability, or, say: NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES. Net working capital can be positive or negative. When the current assets exceeds the current liabilities are more than the current assets. Current liabilities are those liabilities, which are intended to be paid in the ordinary course of business within a short period of normally one accounting year out of the current assts or the income business. CONSTITUENTS OF CURRENT LIABILITIES 1. 2. Accrued or outstanding expenses. Short term loans, advances and deposits. 3

3. 4. 5. 6. 7.

Dividends payable. Bank overdraft. Provision for taxation, if it does not amt. to app. of profit. Bills payable. Sundry creditors.

The gross working capital concept is financial or going concern concept whereas net working capital is an accounting concept of working capital. Both the concepts have their own merits. The gross concept is sometimes preferred to the concept of working capital for the following reasons: 1. It enables the enterprise to provide correct amount of working capital at correct time. 2. Every management is more interested in total current assets with which it has to operate then 3. the source from where it is made available.

It take into consideration of the fact every increase in the funds of the enterprise would increase its working capital.

4.

This concept is also useful in determining the rate of return on investments in working capital. The net working capital concept, however, is also important for following reasons: It is qualitative concept, which indicates the firms ability to meet to its operating expenses and short-term liabilities.

It indicates the margin of protection available to the short term creditors.

It is an indicator of the financial soundness of enterprises.

It suggests the need of financing a part of working capital requirement out of the permanent sources of funds.

CLASSIFICATION OF WORKING CAPITAL Working capital may be classified in to ways: On the basis of concept. On the basis of time.

On the basis of concept working capital can be classified as gross working capital and net working capital. On the basis of time, working capital may be classified as: Permanent or fixed working capital. Temporary or variable working capital

PERMANENT OR FIXED WORKING CAPITAL Permanent or fixed working capital is minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum level of raw material, work- in-process, finished goods and cash balance. This minimum level of current assts is called permanent or fixed working capital as this part of working is permanently blocked in current assets. As the business grow the requirements of working capital also increases due to increase in current assets. TEMPORARY OR VARIABLE WORKING CAPITAL Temporary or variable working capital is the amount of working capital which is required to meet the seasonal demands and some special exigencies. Variable working capital can further be classified as seasonal working capital and special working capital. The capital required to meet the seasonal need of the enterprise is called seasonal working capital. Special working capital is that part of working capital which is required to meet special exigencies such as launching of extensive marketing for conducting research, etc. 5

Temporary working capital differs from permanent working capital in the sense that is required for short periods and cannot be permanently employed gainfully in the business.

IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining the solvency of the business by providing uninterrupted of production. Goodwill: Sufficient amount of working capital enables a firm to make prompt payments and makes and maintain the goodwill. Easy loans: Adequate working capital leads to high solvency and credit standing can arrange loans from banks and other on easy and favorable terms. Cash Discounts: Adequate working capital also enables a concern to avail cash discounts on the purchases and hence reduces cost. Regular Supply of Raw Material: Sufficient working capital ensures regular supply of raw material and continuous production. Regular Payment Of Salaries, Wages And Other Day TO Day Commitments: It leads to the satisfaction of the employees and raises the morale of its employees, increases their efficiency, reduces wastage and costs and enhances production and profits. Exploitation Of Favorable Market Conditions: If a firm is having adequate working capital then it can exploit the favorable market conditions such as purchasing its requirements in bulk when the prices are lower and holdings its inventories for higher prices. Ability To Face Crises: A concern can face the situation during the depression. Quick And Regular Return On Investments: Sufficient working capital 6

enables a concern to pay quick and regular of dividends to its investors and gains confidence of the investors and can raise more funds in future. High Morale: Adequate working capital brings an environment of securities, confidence, high morale which results in overall efficiency in a business.

EXCESS OR INADEQUATE WORKING CAPITAL Every business concern should have adequate amount of working capital to run its business operations. It should have neither redundant or excess working capital nor inadequate nor shortages of working capital. Both excess as well as short working capital positions are bad for any business. However, it is the inadequate working capital which is more dangerous from the point of view of the firm. DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL 1. Excessive working capital means ideal funds which earn no profit for the firm and business cannot earn the required rate of return on its investments. 2. Redundant working capital leads to unnecessary purchasing and accumulation of inventories. 3. Excessive working capital implies excessive debtors and defective credit policy which causes higher incidence of bad debts. 4. 5. It may reduce the overall efficiency of the business. If a firm is having excessive working capital then the relations with banks and other financial institution may not be maintained. 6. 7. Due to lower rate of return n investments, the values of shares may also fall. The redundant working capital gives rise to speculative transactions

DISADVANTAGES OF INADEQUATE WORKING CAPITAL Every business needs some amounts of working capital. The need for working capital arises due to the time gap between production and realization of cash from sales. There is 7

an operating cycle involved in sales and realization of cash. There are time gaps in purchase of raw material and production; production and sales; and realization of cash. Thus working capital is needed for the following purposes: For the purpose of raw material, components and spares. To pay wages and salaries To incur day-to-day expenses and overload costs such as office expenses. To meet the selling costs as packing, advertising, etc. To provide credit facilities to the customer. To maintain the inventories of the raw material, work-in-progress, stores and spares and finished stock. For studying the need of working capital in a business, one has to study the business under varying circumstances such as a new concern requires a lot of funds to meet its initial requirements such as promotion and formation etc. These expenses are called preliminary expenses and are capitalized. The amount needed for working capital depends upon the size of the company and ambitions of its promoters. Greater the size of the business unit, generally larger will be the requirements of the working capital. The requirement of the working capital goes on increasing with the growth and expensing of the business till it gains maturity. At maturity the amount of working capital required is called normal working capital. There are others factors also influence the need of working capital in a business. FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS 1. NATURE OF BUSINESS: The requirements of working is very limited in public utility undertakings such as electricity, water supply and railways because they offer cash sale only and supply services not products, and no funds are tied up in inventories and receivables. On the other hand the trading and financial firms requires less investment 8

in fixed assets but have to invest large amt. of working capital along with fixed investments. 2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the requirement of working capital. 3. PRODUCTION POLICY: If the policy is to keep production steady by accumulating inventories it will require higher working capital. 4. LENTH OF PRDUCTION CYCLE: The longer the manufacturing time the raw material and other supplies have to be carried for a longer in the process with progressive increment of labor and service costs before the final product is obtained. So working capital is directly proportional to the length of the manufacturing process. 5. SEASONALS VARIATIONS: Generally, during the busy season, a firm requires larger working capital than in slack season. 6. WORKING CAPITAL CYCLE: The speed with which the working cycle completes one cycle determines the requirements of working capital. Longer the cycle larger is the requirement of working capital.

Equity & loan

CASH PAYABLES OVERHEAD S Etc. receivable s INVENTORY

SALES

Figure : 1 7. RATE OF STOCK TURNOVER: There is an inverse co-relationship between the question of working capital and the velocity or speed with which the sales are affected. A firm having a high rate of stock turnover wuill needs lower amt. of working capital as compared to a firm having a low rate of turnover. 8. CREDIT POLICY: A concern that purchases its requirements on credit and sales its product / services on cash requires lesser amt. of working capital and vice-versa. 9. BUSINESS CYCLE: In period of boom, when the business is prosperous, there is need for larger amt. of working capital due to rise in sales, rise in prices, optimistic expansion of business, etc. On the contrary in time of 10

depression, the business contracts, sales decline, difficulties are faced in collection from debtor and the firm may have a large amt. of working capital. 10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require large amt. of working capital. 11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more earning capacity than other due to quality of their products, monopoly conditions, etc. Such firms may generate cash profits from operations and contribute to their working capital. The dividend policy also affects the requirement of working capital. A firm maintaining a steady high rate of cash dividend irrespective of its profits needs working capital than the firm that retains larger part of its profits and does not pay so high rate of cash dividend. 12. PRICE LEVEL CHANGES: Changes in the price level also affect the working capital requirements. Generally rise in prices leads to increase in working capital. OTHERS FACTORS: These are: Operating efficiency. Management ability. Irregularities of supply. Import policy. Asset structure. Importance of labor. Banking facilities, etc.

MANAGEMENT OF WORKING CAPITAL Management of working capital is concerned with the problem that arises in attempting to manage the current assets, current liabilities. The basic goal of 11

working capital management is to manage the current assets and current liabilities of a firm in such a way that a satisfactory level of working capital is maintained, i.e. it is neither adequate nor excessive as both the situations are bad for any firm. There should be no shortage of funds and also no working capital should be ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its probability, liquidity and structural health of the organization. So working capital management is three dimensional in nature as 1. It concerned with the formulation of policies with regard to profitability, liquidity and risk. 2. It is concerned with the decision about the composition and level of current assets. 3. It is concerned with the decision about the composition and level of current liabilities.

WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the centre of a business. Adequate amount of working capital is very much essential for the smooth running of the business. And the most important part is the efficient management of working capital in right time. The liquidity position of the firm is totally effected by the management of working capital. So, a study of changes in the uses and sources of working capital is necessary to evaluate the efficiency with which the working capital is employed in a business. This involves the need of working capital analysis. The analysis of working capital can be conducted through a number of devices, such as: 1. 2. Ratio analysis. Fund flow analysis. 12

3.

Budgeting.

1. RATIO ANALYSIS
A ratio is a simple arithmetical expression one number to another. The technique of ratio analysis can be employed for measuring short-term liquidity or working capital position of a firm. The following ratios can be calculated for these purposes: 1. Current ratio. 2. Quick ratio 3. Absolute liquid ratio 4. Inventory turnover. 5. Receivables turnover. 6. Payable turnover ratio. 7. Working capital turnover ratio. 8. Working capital leverage 9. Ratio of current liabilities to tangible net worth.

2. FUND FLOW ANALYSIS

Fund flow analysis is a technical device designated to the study the source from which additional funds were derived and the use to which these sources were put. The fund flow analysis consists of: a. b. Preparing schedule of changes of working capital Statement of sources and application of funds.

It is an effective management tool to study the changes in financial position (working capital) business enterprise between beginning and ending of the financial dates. 3. WORKING CAPITAL BUDGET

A budget is a financial and / or quantitative expression of business plans and 13

polices to be pursued in the future period time. Working capital budget as a part of the total budge ting process of a business is prepared estimating future long term and short term working capital needs and sources to finance them, and then comparing the budgeted figures with actual performance for calculating the variances, if any, so that corrective actions may be taken in future. He objective working capital budget is to ensure availability of funds as and needed, and to ensure effective utilization of these resources. The successful implementation of working capital budget involves the preparing of separate budget for each element of working capital, such as, cash, inventories and receivables etc. Issues in Working Capital Management Levels of current assets Current assets to fixed assets Liquidity Vs. profitability Cost trade-off

Estimating Working capital Current assets holding period To estimate working capital requirements on the basis of average holding period of current assets and relating them to costs based on the companys experience in the previous years. This method is essentially based on the operating cycle concept. Ratio of sales To estimate working capital requirements as a ratio of sales on the assumption that current assets change with sales. Ratio of fixed investment To estimate working capital requirements as a percentage of fixed investment. 14

Working Capital Finance Policies Long-term Short-term Spontaneous

15

CHAPTER 2 COMPANY PROFILE

16

COMPANY PROFILE

KASHIPUR SUGAR MILLS LTD HISTORY

Kashipur Sugar Mills Limited operates in the Raw cane sugar sector. Kashipur Sugar Mills Limited is an India-based company. During the fiscal year ended September 30, 2009 (fiscal 2009), the Company produced 1, 73,000 quintals of sugar. During fiscal 2009, the Company's mill crushed 19, 34,000 quintals of sugar cane. In our complete report available for purchase the company is compared to: Empee Sugars And Chemicals Limited, Venus Sugar Limited and Ravalgaon Sugar Farm Limited.

Leadership begins with a vision Lala Ram Narain ji [1880 1943], founder of the Kashipur Group, took on the task of supporting his entire family at a very young age and shouldered his responsibilities with fortitude and confidence. During this period he worked with a forest contractor but the craving to press forward and accomplish, burnt deep within his heart. He soon spotted an opportunity in supply of wooden sleepers, for laying new railway tracks and boldly struck out on his own. His determination defied logistics and laid the foundations of the Kashipur Group.

From such modest beginnings, he hand-crafted the destiny of the corporate house that today, directly and indirectly, provides employment and livelihood to a large number of individuals and families of the rural India. In the early 1930s, while the strategists debated over choice of role models on which to shape the Indian economy, Lala Ram Narain ji anticipated the need for industrialization. 17

The outcome of his foresight was investment in two sugar mills one at Kashipur and the other as a 50% partner, at Bareilly, in Uttar Pradesh.

The Kashipur Sugar Mill was commissioned in 1933. Shri Murli Manohar ji [1916 1964], eldest son of Lala Ram Narain ji took up the baton at an early age to carry forward the vision and legacy of his father. Even in face of a youth spent in comparatively difficult circumstances, the indomitable will he inherited from his father manifested itself in 1947 when the Indian Sugar Industry was passing through a challenging phase.

He resisted efforts to divest the Kashipur unit and took over the Managing Agency of the factory agreeing to pay a fixed dividend to his partners. He accomplished this task with great lan and successfully turned around the fortunes of the Kashipur factory.

He passed away at the young age of 48 but the path for the future generations had already been etched.

Kashipur Today

The Kashipur Group is spearheaded by its dynamic Chairman, Mr.V.K.Goel. His visionary innovativeness and emphasis on continuous R&D have made the company a technological leader in sugarcane processing and green energy solutions.

Starting from 300 TCD in 1933 the Kashipur Group has recorded an impressive performance taking its crushing capacity of sugarcane to 39500 metric tonnes per day, with power co-generation capacity of 145 MW and alcochem capacity of 270,000 liters per day. Through its successful pioneering efforts, the Kashipur Group directed the industrys development by introducing new technologies like Fibrizors, Pressure

18

Feeders, Fiber based single tandem, Pressure Evaporation System with Falling Film Type Evaporator Bodies, Vertical Continuous Pans etc. These innovations became the mainstay of sugar technology in India.

Kashipur is one of the most integrated sugarcane processing companies in India. Kashipur's sugarcane co-generation capacity is one of the largest in the country and it has perhaps the highest ethanol manufacturing capacity relative to its cane crushing capacity, in the country. It is also the first and the largest producer of refined sulphurless sugar in the country.

BOARD OF DIRECTORS

Mr. V.K. Goel

Promoter Director and Chairman, aged 69 years is a Chemical Engineer. He is a well known Sugar Technologist and Entrepreneur with vast experience of around 47 years. He is the source of inspiration for every innovation and R&D and has placed the company among the global leaders in sugarcane technology. He has been the President of Indian Sugar Mills Association (ISMA), an apex body of sugar manufacturers of India. An avid sportsperson, he is also the Founder President of Delhi Squash Association.

Mr. A.K. Goel

Promoter Director and Vice Chairman, aged 63 years, is a commerce graduate. He too has vast experience of over 41 years in the Sugar and Paper Industry. He has been the President of U.P. Sugar Manufacturers Association (UPSMA) and President of Indian Sugar Manufacturers Association (ISMA). He is also the Founder President of Indian Agro Paper Mills Association (IAPMA). He is a dedicated bridge player and 19

Founder President of Contract Bridge Association. He has represented India at the Bridge Olympiad and the Bermuda Bowl.

Mr. Gaurav Goel

Promoter Director and Managing Director. Mr. Gaurav Goel, aged 36 years is the son of Mr. Ashok Kumar Goel. He is a Business Management Graduate from United Kingdom and has been associated with the company since 1994. He is responsible for the overall management of financial aspects. He has been the President of Entrepreneurs Organization (EO), Delhi Chapter, for the year 2006-07. He takes avid interest in Tennis, Bridge and Reading.

Mr. Gautam Goel

Promoter Director and Managing Director. Mr. Gautam Goel aged 36 years is the son of Mr. Vijay Kumar Goel. He has been associated with the company since 1994. He is responsible for the technical and working aspect of operations. He is presently the Chairman of the Cogeneration Sub-Committee as well as of the Media and Communications Sub-Committee of the Indian Sugar Mills Association (ISMA). He is a dedicated sportsperson with special interest in Squash and has represented Delhi in national tournaments.

Mr. Ashwani K. Gupta

Independent Director. Mr. Ashwani Kumar Gupta, aged 54 years, is a Chartered Accountant, headquartered at Lucknow. He has experience of over 31 years and is acknowledged as one of the leading Finance, Treasury, Real Estate, Securitisation, Re-construction of Assets Experts in the Industry today and is on the Board of various prestigious companies. Mr.Gupta is Regional Council Member of Central 20

India Regional Council of Institute of Chartered Accountants of India. He has been Government Nominee on the Board of Joint Sector Companies and RBI nominee on the Boards of Bank.

Mr. M.P.Mehrotra

Independent Director. He is a Chartered Accountant with experience of over 41 years and with vast exposure of finance and taxes. He has wide experience as an Auditor and Tax Consultant and is an expert on Companies Act and Income Tax Act. He is the founder Partner of Mehrotra & Mehrotra and member of several prominent organizations such as Central Board of Trustees, Employees Provident Fund Organization (EPFO), Ministry of Labour, Govt. of India, Task Force for MOUs, Ministry of Heavy Industries & Public Enterprises, Govt. of India, Advisory Committee, Handlooms, Ministry of Textiles,Govt. of India, PHDCCI and ASSOCHAM and several others. He has been Director, Canara Bank and Trustee, Cochin Port Trust.

Mr. Harish Saluja

Independent Director. He is a Chartered Accountant with experience of about 36 years and with vast exposure of the financial market in India.

Mr. Rahul Bedi

Independent Director, aged 57 years. Experienced Journalist. He is the India Correspondent for the Daily Telegraph, UK and the Irish Times, Dublin. He specializes in military and security-related issues. An MA in English Literature from Delhi University he was also at Oriel College, Oxford as the Reuters Fellow in the mid 1980's.He has co-authored several books. In the 1970's he was Assistant Master 21

at The Mayo College, Ajmer and The Doon School where he taught English, History and Mathematics.

Mr. J.P. Sharma

Employee Director. A senior employee of the company, acting as Occupier for the Factories of Company.

Mr. Priya Brat

Independent Director. He is a science graduate and started his career as an academician but has been a banker since 1959. During his remarkable career he has been associated with several major financial institutions. He has been on the boards of State Bank of Patiala, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Travencore, State Bank of Saurashtra, M.P.State Development Corporation, M.P.State Electronic Development Corporation and OPTEL.

Mr.B.B.Tandon

Independent Director. Mr. B.B. Tandon was a member of Indian Administrative Services (IAS) 1965-2001, Election Commissioner of India w.e.f. 13.06.2001 to 15.05.2005, member of the Delimitation Commission w.e.f. 12.07.2002 to 15.05.2005 and Chief Election Commissioner of India w.e.f 16.05.2005 to 29.06.2006. He was also invited as International Election Observer to observe the Second Cambodian General Election held in Jul,2003. He also served as a member of the "Commission on Constitutional and Electoral Reforms" set up by the Govt. of Mauritius in November, 2001. He also headed the working group on comprehensive revision of the Companies Act,1956, 22 which recommended several

changes/amendments in the said Act. Having joined the service in 1965, Shri Tandon held various top-level posts in the Government of India including as Addl. Secy.Ministry of Company Affairs and at State level as principal secy. (power) - Govt. of Himachal Pradesh. He has also served on the Board of several Public Sector Undertakings.

Ms. Romi Chakravorty

Nominee Director appointed by IDBI Ltd.

Mr. S.P.Arora

Nominee Director appointed by IFCI Ltd.

Mr. Amit Dhawan

Mr. Amit Dhawan is Nominee Director appointed by ICICI Bank Limited. He is Deputy General Manager with the Corporate Banking Group of ICICI Bank Limited. He joined ICICI Group in 1996 and has worked in various departments. Mr. Dhawan is a B.E. (Mechanical) and Masters in Business Administration from University of Delhi, India. Mr. Dhawan was deputed to help set up the Banks operations in the USA. He launched the loan Origination practice and was instrumental in forging some of the Banks strategic alliances in the USA.

MISSION & VISION

Kashipur stands tall with the collective confidence that our farmers, our workers, our vendors and our stakeholders have pledged with us. Their sense of belonging, their

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hopes and expectations motivate us to perform better each time. Preserving their trust is our corporate mantra.

At Kashipur we have striven to realize a corporate environment of collaborative effort and have worked towards continuous improvement in every sphere of our activity. In our quest for excellence we have given special consideration to our social obligations, whether it is caring for the rural hinterland or the environment we live in. A significant and endearing feat for the Group is that some of its employees have been a part of the Kashipur family for two to three generations.

Projections of the sugarcane based Industry in India are exceptionally promising and Kashipur is totally geared up to think beyond the cube:

To provide energy alternatives to an energy-starved country through cogeneration and ethanol.

To value add on our product portfolio To maximize the potential of the agro industry in India. To continuously bring down the cost of conversion. To encourage creativity and resourcefulness, and focus on continuous R&D. To optimize the value of stakeholder investments with a continuous improvement in financial performance.

To diversify and protect the bottom-line during industry downturn. To attain the highest level of accountability, corporate governance and shareholder value.

In a country where agriculture is the predominant activity, sugarcane processing units wield a tremendous impact on the area of their location. We continue to play our role with absolute commitment and watch with fascination and pride as even the most backward areas where our units are located, slowly transform into a beehive of 24

activity, touching the lives of thousands of people, now a part of the ever increasing Kashipur family.

GLOBAL SUGAR INDUSTRY After two years of consistently rising stocks and relatively low prices, the fundamental outlook for sugar is changing, with a clear indication towards lower production in 2008-09. A combination of factors, including lower production in India and some other countries; rising demand for sugar and ethanol; and general economic slowdown have upset the world sugar balance.

World Sugar Balance 2008/09 (E) 2007/08 (P) Change mmtrv mmtrv absolute % Opening stock 42.6 39.3 3.3 8.4 Production 158.8 166.6 (7.9) 4.7 Consumption 162.1 157.1 5.0 3.2 Surplus/deficit 39.3 48.8 (9.5) 19.5 Import demand 47.4 44.8 2.6 5.8 Export availability 48.2 51.0 (2.8) 5.5 End stocks 38.6 42.6 (4.1) 9.6 Stock/consumption ratio in% 23.8 27.1 (3.3) 12.1 Source: USDA , FAS PSD database updated Nov 2008 mmtrv: million metric tones, raw value

During the current season (2007-08), the global availability of sugar has gone up on account of surpluses in Brazil (exported 19.75 mmtrv) and India (exported 4.9 mmt), which has kept the sugar prices under check. Raw-white premium, however, remained high because of lower quantities of white sugar being offered by refineries including those in EU and rising demands. The high freight costs created regional demand and supply clusters and India, therefore, emerged as a major regional

25

supplier of white and raw sugars in this year.

Global sugar consumption during 2007-08 has gone up to 162.1 mmtrv, up by 3.2% over the previous year. The reasons for increase in consumption were rising global demand, improved standard of living in developed/under developed countries and a shift of population from rural to urban areas (around 3.3 bn people living in cities as per the United Nations Population Fund).

The production levels in major sugar producing countries during this period and estimates for the year 2008-09 are as under: (Figures in mmtrv) Country 2006-07 2007-08 (P) Brazil 31.5 32.1 India 30.8 28.6 EU 17.8 17.7 China 12.9 15.9 Thailand 6.7 7.8 Australia 5.2 4.9 US 7.6 7.4 World 164.5 166.6 Source: USDA, FAS PSD database updated Nov 2008 2008-09 (E) 32.4 22.8 16.9 15.8 7.9 4.9 6.9 158.8

After touching the peak in 2007-08, global production is set to fall in 2008-09. Most of the fall is due to changes that are taking place in India. While in response to the low prices relative to rising costs and liquidity issues, going forward, production growth in Brazil is likely to be minimal. Sugar production in China and Thailand are likely to remain nearly constant for the 2008-09 season.

Brazil sugar and ethanol production estimates: Year 2008-09 production estimate for Brazil at 32.45 mmtrv level is almost similar to that of last year in spite of estimates 26

of higher cane production, with a fall in ending stocks by 9.6%. Total sucrose destined for sugar and ethanol production is estimated at 40.5% and 59.5% for 200809 production against 45.5% and 54.5% respectively in 2007-08. With high crude oil prices in 2007-08 onwards, Brazil had diverted a major part of its additional cane production for manufacturing ethanol and consumed nearly 22.5 billion liters of ethanol in 2007-08. In the 2008-09 season, sugar production has been marginally lower than the last season. However, ethanol production is about 10% higher. Total ethanol production in Brazil for 2008-09 is estimated at 26.9 bn liters, up by 20% as compared to the previous season. With the influx of additional flex fuel vehicles at 87% of total new vehicles being added, Brazil ethanol demand is higher by 12% in 2008-09 and estimated to double by 2011-12, which may lead to unprecedented diversion of cane for ethanol manufacturing. With nearly 20% devaluation of Real, Brazilian sugar realization has improved in terms of domestic currency, partly mitigating the impact of fall in sugar prices. However, further capacity expansion is substantially curtailed because of lack of capital inflow. This may reduce sugarcane processing in Brazil in 2008-09 and thereafter; affecting their exports and consequently, supply of sugar and ethanol to the world.

India, a regional hub for white and raw exports: The most unique feature of sugar year 2007-08 has been the development of India's capabilities to export both raw and white sugars simultaneously. India has exported over 4.9 mmt of sugar comprising 2.5 mmtrv of raw sugar which has been exported first time from India. With higher ocean freight costs, the demand around the Indian sub-continent has mostly been met by India. The quality of Indian raw has been appreciated by the buyers. Efficient logistics and 45 ICUMSA sugar proved to be key to exports. In future, India may emerge as a regular exporter of raw and premium white in its neighborhood, 27

particularly in the surplus cane years.

World sugar price trends: The world sugar prices remained highly volatile and subdued on account of surplus sugar available. Except a marginal rise in January 2008 to a level above 14 cents a pound, the prices remained range bound between 1012 cents. The price of white sugar peaked in August 2008 (over 400 USD per MT), and went down thereafter, with the lack of Investing Funds interest in commodities hedging. The white sugar premium during the year remained constantly high because of lower supply from EU and rising consumption. The international prices, both of raw and white have softened considerably, on account of economic and financial pressures and are ruling at 11.28 cents/pound and USD 322 per mt respectively (as on November 21, 2008). The prices of Indian and international sugar have converged in 2007-08, with the evolution of exports of raw and white and growing regional preferences of Indian
London vs. Delhi Prices

sugar.
2050 2000 1950 1900 1850 1800 1750 1700 1650 1600 1550 1500 1450 1400 410.0 390.0 370.0

Rs. / qtl

330.0 310.0 290.0 270.0 250.0 230.0

Months
Delhi Prices London Prices

28

USD / MT

350.0

O 7 -0 ct

8 l-0 Ju 8 0 nJu 8 -0 ay M 8 r-0 Ap 8 -0 ar M 08 bFe 08 nJa 7 -0 ec D 7 -0 ov

8 -0 ct O 08 pSe 08 gAu

Global recession/ slowdown, impact on sugar and ethanol industry: Global sugar industry did not remain unaffected with the financial meltdown and recent slowdown in the world economy. The recessionary trends have impacted the liquidity position, which depressed values and created new correlations between commodities, equities and emerging market currencies. The reduction in risk appetite and withdrawals of funds from commodity markets has reduced its depth and market making abilities. Lower capital is being earmarked for future expansions and the Brazilian industry is already showing sign of falling short of market expectations with regard to production estimates for 2009-10 and beyond. Fall in crude prices to a level below US $50 per barrel may impact the commercial viability of ethanol as a substitute to petroleum products. The environmental impact of ethanol as a renewable fuel, however, will keep its demand alive and nearly constant. The changing currency conversion rates have started affecting domestic cost calculations and import/export values. Falling freight rates, with Baltic freight indices gone down by nearly 90% from 11500 in May 2008 to around 1000 in November 2008, have made movement of sugar feasible to longer distances. The trade clusters created in 2007-08 season are dismantling. While these issues are creating short term disruption, the long term impact is difficult to ascertain at present. However, the world sugar consumption is growing year after year.

Indian sugar, however, is expected to remain un-affected as it is driven by high domestic demand which is least elastic; sugar constitutes small percentage of household budgets; rising indirect consumption; sugar business is mostly in cash and carry; and Indian farmers are not credit dependant. Some impact of slowdown, however, would be seen in the form of fewer transactions in commodity exchanges, lower pipeline stocks and slower growth. Higher interest costs would also affect the 29

industry, which is highly capital intensive. The financial stress may reduce flow of funds to the sugar sector resulting in low capacity expansion, lack of working capital finance, and lower funds investments in commodities.

Outlook for 2008-09 sugar year: 2008-09 should witness a fall in global production by over 7.9 mmtrv; due to a fall in production by over 5 mmt in India and around 3 mmtrv in EU. Unlike Brazil, the sugar industry in these countries is largely dependent on their domestic markets, and lower production will translate into lower exports from these countries affecting the globally tradable sugar. Globally, floating sugar will reduce to 48.2 mmtrv from 51 mmtrv in 2007-08. India is likely to produce 20 mmtrv of sugar in the 2008-09, as per the latest official estimates available.

2008-09 will largely be driven by emerging markets; with India and China being the main drivers. On a regional basis, Asia and Africa will have a more modest consumption growth. With lower production and rising consumption, the stock to use ratio at the end of 2008-09 is expected to be lower by 12.1%, from 27.1 mmtrv to 23.8 mmtrv. A marked contraction in Indian production, followed by a modest decline in Brazilian sugar production in 2009-10, will reduce global production by nearly 6% year-over-year in 2008/09 leaving the global balance in a 1.8 mmtrv deficit- a deficit more than double is expected in 2009/10.

DOMESTIC SUGAR INDUSTRY Changes in India are following the volatility in the world sugar balance. After record crushing numbers in the 2006-07 season, the sugarcane crop has been marginally lower in the 2007-08 season due to lower agricultural yields. With high carryover stocks and current season surpluses, prices remained soft and flat up to March 2008. 30

However, they have shown upward movement thereafter, in anticipation of a lower 2008-09 crop.

India Sugar balancing (figs in mmt) Sugar Year 2006-07 2007-08 P 2008-09 E Opening Stocks 3.6 9.2 8.1** Production 28.3 26.3 19.5 Imports Total 31.9 35.5 27.6 Consumption- domestic 21.0 22.5 23.0 Exports 1.7 4.9* 0.80 Closing Stock 9.2 8.1 3.8 % age of consumption 43.8 35.9 16.5 *Till 12.09.2008, 4.8 mmt has been exported inclusive of 0.09 mmt awaiting loading at the port. **After accommodating for the stock adjustment Source: ISMA/agst.xls/ras/sheet1updated on November10, 2008/ SSL estimates

The Indian sugar industry has emerged as a raw sugar manufacturer and exporter for the first time this year. Out of a total export of 4.9 mmt, raw sugar accounts for 2.5 mmt.. White sugar export included the export of 45 ICUMSA grade sugar, which fetched a premium in the world market. With the emerging price difference between refined and plantation white sugar, domestic manufacturing for refined sugar is enlarging as buyers are becoming more quality conscious. Ethanol adoption remained subdued due to state level restrictions and alternative uses of alcohol. Bio-electricity is emerging as valuable product with a potential to generate up to 5000 Mwh as against actual power generation capacity of 1000 Mwh.

Domestic per capita sugar consumption has increased from 16.6 kg (year 2006) to 18.1 kg (year 2007); an increase of 9%, whereas the share of alternate sweeteners in 31

total sweetener consumption has declined from 5.3 kg to 5.0 kg per capita, which is still much lower than the international standards (35 kg to 50 kg in most of the developed countries). (Source: ISMA, F.O. Licht Year Book and SSL estimates). During the period starting from 1980-81, the indirect consumption of sugar (in the form of soft drinks, ready-to-eat food, etc) has gone up to 61% of the total free sugar consumption. In developed countries this stands at 75% (EU). (Source: AC Neilson survey; April 2007).

Over the last decade, domestic sugar demand has witnessed a compounded annual growth of 3.75%, which is expected to rise at a faster pace, going further. This is due to rapid urbanization (expected at 3.3% p.a. between 2007-08 to 2011-12); increase in population (expected 1.5% p.a.); shift from direct to indirect consumption of sweeteners (where growth rate is much faster); and a shift of consumption from alternate sweeteners to factory made sugar.

The Indian Council for Research on International Economic Relations (ICRIER) in its report on Demand and Supply Trends and Projections of Food in India of March 2008, has projected a sugar consumption at 29.3 mmt in year 2010-11 and per capita consumption of 24.9 kg p.a. In case the GDP growth remains at 8% p.a, the projected sugar consumption is estimated at 26.7 mmt, with per capita consumption of 22.6 kg p.a. This demand is expected to grow up to 65.7 mmt in 2021, with a per capita consumption of 48.8 kg p.a.

The possibility of growth in cane availability in the future is limited because of nearly constant cultivable area and increasing competition with other food and cash crops; stagnant farm yields; small landholding size further getting fragmented; lack of basic 32

research in improved agricultural practices and ever increasing costs of agriculture. With limited crop growth and increasing demand, Indian sugar balances may turn from surplus to shortages as it may not be able to balance demand from domestic production year after year. Induced cyclicality: Domestic sugar sector is always impacted by the induced cyclicality of high sugar prices leading to payment of higher cane prices which in turn leads to increase in production at the cost of other crops. This translates into higher sugarcane production and higher sugar production resulting in lower sugar prices affecting the ability of the mills to pay to farmers and creation of arrears. High arrears cause a fall in cane cultivation in subsequent period, and the cycle restarts all over again. Trends in Indian sweetener/sugar production and consumption
40 35 30 25 20 15 10 5
1980- 1982- 1984- 1986- 1988- 1990- 1992- 1994- 1996- 1998- 2000- 2002- 2004- 2006- 2008- 201081 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 Sugar Consumption Sugar production Sweetener Consumption Total Sweetener production

In addition to the economic cycle, outline above, natural cycles, such as climate variation, water availability and pest attacks, also affect sugar cane production. In the current sugar cycle, production of sugarcane was affected on account of higher realizations from other food crops such as wheat, paddy and oil. With two years of excessive sugarcane/sugar production, the cycle is turning into lower production in 33

the sugar year 2008-09. With rising consumption and linkages with world sugar markets, these cycles are becoming shorter and more volatile. Sugar price and stock to use ratio: Like any commodity, the price of sugar too is determined by demand-supply dynamics. The demand for sugar has been more or less inelastic, with such factors as population growth and per capita income influencing it. However, supply is affected by cyclicality and seasonality of production. There has been an inverse correlation between price of sugar and stock to use ratio at the end of each sugar year. Domestically, season end stock to use ratio of less than three months consumption is considered low and free sugar price could be showing improvement with falling stock levels.

Stock use Ratio (%) (at end of season) 2001-02 16.78 67.4 2002-03 18.38 63.2 2003-04 17.29 49.1 2004-05 18.50 25.8 2005-06 18.50 19.6 2006-07 21.00 43.8 2007-08 22.50 35.9 Source: ISMA handbook/ monthly data compilation

Sugar Year

Consumption (mmt)

Delhi free sale sugar price per qtl (Rs) 1478 1299 1500 1787 1953 1567 1655

In the recent past, to meet sugar demand in the years when stock to use ratio had been lower, the country resorted to import of white or raw sugars. Government Policy measures: A number of policy measures have been initiated by the union/state governments which impacted this years operations in the sugar industry. Sugarcane pricing issues in Uttar Pradesh remained the major cause of disagreement between the state and millers. The state advised price (SAP) of Rs. 125 per qtl for the 2007-08 (for general varieties), has been challenged initially with Honble Allahabad High Court and thereafter with the Honble Supreme Court on the rationality of non consultation process and arbitrariness for fixation of cane price by 34

the state government. The court fixed an interim price of Rs. 110 per qtl instead. The matter is still sub judice. Other policy issues initiated/implemented are:

Fixation of SMP at Rs. 81.18 per qtl linked to basic recovery of 9% with a premium of Rs. 0.90 per every 0.1 point increase. Increase in the rate of cess on sugar under SDF Act from Rs. 14 to Rs. 15 per qtl w.e.f. January 1, 2008, and to Rs. 24 per qtl w.e.f March1, 2008. Buffer stock of 5 mmt created in 2006-07. This has since been dismantled. The E5 (5% blend of Ethanol with petrol) programme continued across the country with few exceptions. The plan to increase it to E10 (10% blend) from October 2008 has been deferred. There has not been any change in ex factory purchase price of ethanol of Rs. 21.50 per litre. Transport subsidy of Rs. 1350/1450 per MT for sugar export has been introduced up to September 2008.

The UP Government did not reformulate the sugar incentives policy, after its premature withdrawal in May 2007 (Sugar industry promotion policy 2004-08) and benefits promised in the policy remained unrealized. The matter has been referred to the Honble Allahabad High Court for resolution and is presently sub judice. In respect of sugar year 2008-09, the state has fixed SAP of Rs. 140/- per qtl (for general variety), which has been challenged in the Honble Allahabad High Court.

Future outlook: Based on updated industry estimates, sugar production in the 2008-09 season is expected to be lower at 20 mmt on account of a smaller sugarcane crop, fall in farm yields and initial estimates of sugar recoveries. These estimates have been revised downward from 22 mmt (initial estimates endorsed by GOI). For the 2008-09 35

season, a large number of cane farmers have diverted to the cultivation of other food/cash crops with changing farm economics. The reported carryover stocks from the 2007-08 season at 10.5 mmt still show a healthy position. However, it is felt that the country may need stock adjustment in the opening inventory of 2008, with actual stocks being lower than the stocks reported. Taking this into account, the carry over stock position by the end of ensuing sugar season may lead to a situation where the season end stock to use ratio falls below the comfort level of three months. After three years of record surpluses, the sugar cycle is now moving into deficit, having a positive impact on sugar prices.

Utilization of molasses for the production of ethanol not only provides value-addition to the by product, it can also ensure better price stability and price realization of molasses for the sugar mills. This will improve the viability of the sugar mills, which will in turn benefit cane growers. Further, cogenerated power is emerging as the strongest revenue and profit generator for the mills. Availability of sugarcane and its optimum utilization in the form of ethanol/power/plant utilization factor would be the major revenue drivers for sugar industry going forward. Such flexibility has become very relevant in the current scenario of economic liberalization and more particularly, as a means to correct the aberrations in sugar production.

Alcohol/ ethanol usage and balancing: Energy security and environmental concerns are motivating adoption of ethanol bio-fuel globally. Ethanol fuel demand is likely to grow exponentially in the future. Most of the leading countries have mandated ethanol doping at different per cent levels, in all commercial automobile fuels over the long term. An increase in the demand of ethanol will result in lower sugar supplies. As more cane would be diverted to ethanol, sugar prices would rise. 36

During 2007-08, out of the total alcohol produced in India, around 33% was used for drinking purposes, and almost a similar amount was consumed by the chemical industry as feed stock, leaving around one third for the fuel ethanol. If the trend continues, and E5 is implemented fully, going forward there may be a gap in demand and supply. With gasoline demand of 11.6 mmt in 2006-07, the requirement of ethanol at 5 per cent blending is expected to be over 650 million litres. The sugar industry has reiterated its commitments that it will not be lacking in meeting the ethanol demand by the petroleum companies. Current demand for alcohol for manufacturing potable alcohol is estimated at 1.2 bn bulk litres with an annual growth rate of 9 to 10% p.a. With the increase in the population in the drinking age and improvement in disposable income, this growth in consumption will increase in future. Further, the use of alcohol for chemical industry with a base consumption of 700 mn bulk litres (estimate for 2006-07) is growing by 5 to 6% p.a. Thus, with the overall demand of 2.50 bn bulk liters of alcohol for all the three major consumption streams, going forward, India may find it difficult to meet its alcohol demand from domestic supply. In India, almost all the alcohol is derived for sugarcane molasses.

After two years of consistently rising stocks and relatively low prices, the fundamental outlook for sugar is changing, with a clear indication towards lower production in 2008-09. A combination of factors, including lower production in India and some other countries; rising demand for sugar and ethanol; and general economic slowdown have upset the world sugar balance.

37

World Sugar Balance 2008/09 (E) 2007/08 (P) Change mmtrv mmtrv absolute % Opening stock 42.6 39.3 3.3 8.4 Production 158.8 166.6 (7.9) 4.7 Consumption 162.1 157.1 5.0 3.2 Surplus/deficit 39.3 48.8 (9.5) 19.5 Import demand 47.4 44.8 2.6 5.8 Export availability 48.2 51.0 (2.8) 5.5 End stocks 38.6 42.6 (4.1) 9.6 Stock/consumption ratio in% 23.8 27.1 (3.3) 12.1 Source: USDA , FAS PSD database updated Nov 2008 mmtrv: million metric tones, raw value During the current season (2007-08), the global availability of sugar has gone up on account of surpluses in Brazil (exported 19.75 mmtrv) and India (exported 4.9 mmt), which has kept the sugar prices under check. Raw-white premium, however, remained high because of lower quantities of white sugar being offered by refineries including those in EU and rising demands. The high freight costs created regional demand and supply clusters and India, therefore, emerged as a major regional supplier of white and raw sugars in this year.

Global sugar consumption during 2007-08 has gone up to 162.1 mmtrv, up by 3.2% over the previous year. The reasons for increase in consumption were rising global demand, improved standard of living in developed/under developed countries and a shift of population from rural to urban areas (around 3.3 bn people living in cities as per the United Nations Population Fund). The production levels in major sugar producing countries during this period and estimates for the year 2008-09 are as under:

38

(Figures in mmtrv) Country 2006-07 2007-08 (P) Brazil 31.5 32.1 India 30.8 28.6 EU 17.8 17.7 China 12.9 15.9 Thailand 6.7 7.8 Australia 5.2 4.9 US 7.6 7.4 World 164.5 166.6 Source: USDA, FAS PSD database updated Nov 2008 2008-09 (E) 32.4 22.8 16.9 15.8 7.9 4.9 6.9 158.8

After touching the peak in 2007-08, global production is set to fall in 2008-09. Most of the fall is due to changes that are taking place in India. While in response to the low prices relative to rising costs and liquidity issues, going forward, production growth in Brazil is likely to be minimal. Sugar production in China and Thailand are likely to remain nearly constant for the 2008-09 season. Brazil sugar and ethanol production estimates: Year 2008-09 production estimate for Brazil at 32.45 mmtrv level is almost similar to that of last year in spite of estimates of higher cane production, with a fall in ending stocks by 9.6%. Total sucrose destined for sugar and ethanol production is estimated at 40.5% and 59.5% for 200809 production against 45.5% and 54.5% respectively in 2007-08. With high crude oil prices in 2007-08 onwards, Brazil had diverted a major part of its additional cane production for manufacturing ethanol and consumed nearly 22.5 billion liters of ethanol in 2007-08. In the 2008-09 season, sugar production has been marginally lower than the last season. However, ethanol production is about 10% higher. Total ethanol production in Brazil for 2008-09 is estimated at 26.9 bn liters, up by 20% as compared to the previous season. With the influx of additional flex fuel vehicles at 87% of total new vehicles being added, Brazil ethanol demand is higher by 12% in 2008-09 and estimated to double by 2011-12, which may lead to unprecedented 39

diversion of cane for ethanol manufacturing. With nearly 20% devaluation of Real, Brazilian sugar realization has improved in terms of domestic currency, partly mitigating the impact of fall in sugar prices. However, further capacity expansion is substantially curtailed because of lack of capital inflow. This may reduce sugarcane processing in Brazil in 2008-09 and thereafter; affecting their exports and consequently, supply of sugar and ethanol to the world.

India, a regional hub for white and raw exports: The most unique feature of sugar year 2007-08 has been the development of India's capabilities to export both raw and white sugars simultaneously. India has exported over 4.9 mmt of sugar comprising 2.5 mmtrv of raw sugar which has been exported first time from India. With higher ocean freight costs, the demand around the Indian sub-continent has mostly been met by India. The quality of Indian raw has been appreciated by the buyers. Efficient logistics and 45 ICUMSA sugar proved to be key to exports. In future, India may emerge as a regular exporter of raw and premium white in its neighborhood, particularly in the surplus cane years.

World sugar price trends: The world sugar prices remained highly volatile and subdued on account of surplus sugar available. Except a marginal rise in January 2008 to a level above 14 cents a pound, the prices remained range bound between 1012 cents. The price of white sugar peaked in August 2008 (over 400 USD per MT), and went down thereafter, with the lack of Investing Funds interest in commodities hedging. The white sugar premium during the year remained constantly high because of lower supply from EU and rising consumption. The international prices, both of raw and white have softened considerably, on account of economic and financial pressures and are ruling at 11.28 cents/pound and USD 322 per mt respectively (as on 40

November 21, 2008). The prices of Indian and international sugar have converged in 2007-08, with the evolution of exports of raw and white and growing regional preferences of Indian sugar.
London vs. Delhi Prices
2050 2000 1950 1900 1850 1800 1750 1700 1650 1600 1550 1500 1450 1400

410.0 390.0 370.0

Rs. / qtl

330.0 310.0 290.0 270.0 250.0 230.0

Months
Delhi Prices London Prices

Global recession/ slowdown, impact on sugar and ethanol industry: Global sugar industry did not remain unaffected with the financial meltdown and recent slowdown in the world economy. The recessionary trends have impacted the liquidity position, which depressed values and created new correlations between commodities, equities and emerging market currencies. The reduction in risk appetite and withdrawals of funds from commodity markets has reduced its depth and market making abilities. Lower capital is being earmarked for future expansions and the Brazilian industry is already showing sign of falling short of market expectations with regard to production estimates for 2009-10 and beyond. Fall in crude prices to a level below US $50 per barrel may impact the commercial viability of ethanol as a substitute to petroleum products. The environmental impact of ethanol as a renewable fuel, 41

USD / MT

350.0

O 7 -0 ct

8 l-0 Ju 8 0 nJu 8 -0 ay M 8 r-0 Ap 8 -0 ar M 08 bFe 08 nJa 7 -0 ec D 7 -0 ov

8 -0 ct O 08 pSe 08 gAu

however, will keep its demand alive and nearly constant. The changing currency conversion rates have started affecting domestic cost calculations and import/export values. Falling freight rates, with Baltic freight indices gone down by nearly 90% from 11500 in May 2008 to around 1000 in November 2008, have made movement of sugar feasible to longer distances. The trade clusters created in 2007-08 season are dismantling. While these issues are creating short term disruption, the long term impact is difficult to ascertain at present. However, the world sugar consumption is growing year after year.

Indian sugar, however, is expected to remain un-affected as it is driven by high domestic demand which is least elastic; sugar constitutes small percentage of household budgets; rising indirect consumption; sugar business is mostly in cash and carry; and Indian farmers are not credit dependant. Some impact of slowdown, however, would be seen in the form of fewer transactions in commodity exchanges, lower pipeline stocks and slower growth. Higher interest costs would also affect the industry, which is highly capital intensive. The financial stress may reduce flow of funds to the sugar sector resulting in low capacity expansion, lack of working capital finance, and lower funds investments in commodities.

Outlook for 2008-09 sugar year: 2008-09 should witness a fall in global production by over 7.9 mmtrv; due to a fall in production by over 5 mmt in India and around 3 mmtrv in EU. Unlike Brazil, the sugar industry in these countries is largely dependent on their domestic markets, and lower production will translate into lower exports from these countries affecting the globally tradable sugar. Globally, floating sugar will reduce to 48.2 mmtrv from 51 mmtrv in 2007-08. India is likely to produce 20 mmtrv of sugar in the 2008-09, as per the latest official estimates available. 42

2008-09 will largely be driven by emerging markets; with India and China being the main drivers. On a regional basis, Asia and Africa will have a more modest consumption growth. With lower production and rising consumption, the stock to use ratio at the end of 2008-09 is expected to be lower by 12.1%, from 27.1 mmtrv to 23.8 mmtrv. A marked contraction in Indian production, followed by a modest decline in Brazilian sugar production in 2009-10, will reduce global production by nearly 6% year-over-year in 2008/09 leaving the global balance in a 1.8 mmtrv deficit- a deficit more than double is expected in 2009/10.

DOMESTIC SUGAR INDUSTRY Changes in India are following the volatility in the world sugar balance. After record crushing numbers in the 2006-07 season, the sugarcane crop has been marginally lower in the 2007-08 season due to lower agricultural yields. With high carryover stocks and current season surpluses, prices remained soft and flat up to March 2008. However, they have shown upward movement thereafter, in anticipation of a lower 2008-09 crop.

India Sugar balancing (figs in mmt) Sugar Year 2006-07 2007-08 P 2008-09 E Opening Stocks 3.6 9.2 8.1** Production 28.3 26.3 19.5 Imports Total 31.9 35.5 27.6 Consumption- domestic 21.0 22.5 23.0 Exports 1.7 4.9* 0.80 Closing Stock 9.2 8.1 3.8 % age of consumption 43.8 35.9 16.5 *Till 12.09.2008, 4.8 mmt has been exported inclusive of 0.09 mmt awaiting loading at the port. 43

**After accommodating for the stock adjustment Source: ISMA/agst.xls/ras/sheet1updated on November10, 2008/ SSL estimates

The Indian sugar industry has emerged as a raw sugar manufacturer and exporter for the first time this year. Out of a total export of 4.9 mmt, raw sugar accounts for 2.5 mmt.. White sugar export included the export of 45 ICUMSA grade sugar, which fetched a premium in the world market. With the emerging price difference between refined and plantation white sugar, domestic manufacturing for refined sugar is enlarging as buyers are becoming more quality conscious. Ethanol adoption remained subdued due to state level restrictions and alternative uses of alcohol. Bio-electricity is emerging as valuable product with a potential to generate up to 5000 Mwh as against actual power generation capacity of 1000 Mwh.

Domestic per capita sugar consumption has increased from 16.6 kg (year 2006) to 18.1 kg (year 2007); an increase of 9%, whereas the share of alternate sweeteners in total sweetener consumption has declined from 5.3 kg to 5.0 kg per capita, which is still much lower than the international standards (35 kg to 50 kg in most of the developed countries). (Source: ISMA, F.O. Licht Year Book and SSL estimates). During the period starting from 1980-81, the indirect consumption of sugar (in the form of soft drinks, ready-to-eat food, etc) has gone up to 61% of the total free sugar consumption. In developed countries this stands at 75% (EU). (Source: AC Neilson survey; April 2007).

Over the last decade, domestic sugar demand has witnessed a compounded annual growth of 3.75%, which is expected to rise at a faster pace, going further. This is due to rapid urbanization (expected at 3.3% p.a. between 2007-08 to 2011-12); increase in 44

population (expected 1.5% p.a.); shift from direct to indirect consumption of sweeteners (where growth rate is much faster); and a shift of consumption from alternate sweeteners to factory made sugar.

The Indian Council for Research on International Economic Relations (ICRIER) in its report on Demand and Supply Trends and Projections of Food in India of March 2008, has projected a sugar consumption at 29.3 mmt in year 2010-11 and per capita consumption of 24.9 kg p.a. In case the GDP growth remains at 8% p.a, the projected sugar consumption is estimated at 26.7 mmt, with per capita consumption of 22.6 kg p.a. This demand is expected to grow up to 65.7 mmt in 2021, with a per capita consumption of 48.8 kg p.a.

The possibility of growth in cane availability in the future is limited because of nearly constant cultivable area and increasing competition with other food and cash crops; stagnant farm yields; small landholding size further getting fragmented; lack of basic research in improved agricultural practices and ever increasing costs of agriculture. With limited crop growth and increasing demand, Indian sugar balances may turn from surplus to shortages as it may not be able to balance demand from domestic production year after year. Induced cyclicality: Domestic sugar sector is always impacted by the induced cyclicality of high sugar prices leading to payment of higher cane prices which in turn leads to increase in production at the cost of other crops. This translates into higher sugarcane production and higher sugar production resulting in lower sugar prices affecting the ability of the mills to pay to farmers and creation of arrears. High arrears cause a fall in cane cultivation in subsequent period, and the cycle restarts all over again. 45

Trends in Indian sweetener/sugar production and consumption

40 35 30 25 20 15 10 5
1980- 1982- 1984- 1986- 1988- 1990- 1992- 1994- 1996- 1998- 2000- 2002- 2004- 2006- 2008- 201081 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 Sugar Consumption Sugar production Sweetener Consumption Total Sweetener production

In addition to the economic cycle, outline above, natural cycles, such as climate variation, water availability and pest attacks, also affect sugar cane production. In the current sugar cycle, production of sugarcane was affected on account of higher realizations from other food crops such as wheat, paddy and oil. With two years of excessive sugarcane/sugar production, the cycle is turning into lower production in the sugar year 2008-09. With rising consumption and linkages with world sugar markets, these cycles are becoming shorter and more volatile. Sugar price and stock to use ratio: Like any commodity, the price of sugar too is determined by demand-supply dynamics. The demand for sugar has been more or less inelastic, with such factors as population growth and per capita income influencing it. However, supply is affected by cyclicality and seasonality of production. There has been an inverse correlation between price of sugar and stock to use ratio at the end of each sugar year. Domestically, season end stock to use ratio of less than three months consumption is considered low and free sugar price could be showing improvement with falling stock levels.

46

Stock use Ratio (%) (at end of season) 2001-02 16.78 67.4 2002-03 18.38 63.2 2003-04 17.29 49.1 2004-05 18.50 25.8 2005-06 18.50 19.6 2006-07 21.00 43.8 2007-08 22.50 35.9 Source: ISMA handbook/ monthly data compilation

Sugar Year

Consumption (mmt)

Delhi free sale sugar price per qtl (Rs) 1478 1299 1500 1787 1953 1567 1655

In the recent past, to meet sugar demand in the years when stock to use ratio had been lower, the country resorted to import of white or raw sugars. Government Policy measures: A number of policy measures have been initiated by the union/state governments which impacted this years operations in the sugar industry. Sugarcane pricing issues in Uttar Pradesh remained the major cause of disagreement between the state and millers. The state advised price (SAP) of Rs. 125 per qtl for the 2007-08 (for general varieties), has been challenged initially with Honble Allahabad High Court and thereafter with the Honble Supreme Court on the rationality of non consultation process and arbitrariness for fixation of cane price by the state government. The court fixed an interim price of Rs. 110 per qtl instead. The matter is still sub judice. Other policy issues initiated/implemented are:

Fixation of SMP at Rs. 81.18 per qtl linked to basic recovery of 9% with a premium of Rs. 0.90 per every 0.1 point increase. Increase in the rate of cess on sugar under SDF Act from Rs. 14 to Rs. 15 per qtl w.e.f. January 1, 2008, and to Rs. 24 per qtl w.e.f March1, 2008. Buffer stock of 5 mmt created in 2006-07. This has since been dismantled. The E5 (5% blend of Ethanol with petrol) programme continued across the country with few exceptions. The plan to increase it to E10 (10% blend) from October 2008 has been deferred. There has not been any change in ex factory purchase price of 47

ethanol of Rs. 21.50 per litre. Transport subsidy of Rs. 1350/1450 per MT for sugar export has been introduced up to September 2008.

The UP Government did not reformulate the sugar incentives policy, after its premature withdrawal in May 2007 (Sugar industry promotion policy 2004-08) and benefits promised in the policy remained unrealized. The matter has been referred to the Honble Allahabad High Court for resolution and is presently sub judice. In respect of sugar year 2008-09, the state has fixed SAP of Rs. 140/- per qtl (for general variety), which has been challenged in the Honble Allahabad High Court.

Future outlook: Based on updated industry estimates, sugar production in the 2008-09 season is expected to be lower at 20 mmt on account of a smaller sugarcane crop, fall in farm yields and initial estimates of sugar recoveries. These estimates have been revised downward from 22 mmt (initial estimates endorsed by GOI). For the 2008-09 season, a large number of cane farmers have diverted to the cultivation of other food/cash crops with changing farm economics. The reported carryover stocks from the 2007-08 season at 10.5 mmt still show a healthy position. However, it is felt that the country may need stock adjustment in the opening inventory of 2008, with actual stocks being lower than the stocks reported. Taking this into account, the carry over stock position by the end of ensuing sugar season may lead to a situation where the season end stock to use ratio falls below the comfort level of three months. After three years of record surpluses, the sugar cycle is now moving into deficit, having a positive impact on sugar prices.

Utilization of molasses for the production of ethanol not only provides value-addition 48

to the by product, it can also ensure better price stability and price realization of molasses for the sugar mills. This will improve the viability of the sugar mills, which will in turn benefit cane growers. Further, cogenerated power is emerging as the strongest revenue and profit generator for the mills. Availability of sugarcane and its optimum utilization in the form of ethanol/power/plant utilization factor would be the major revenue drivers for sugar industry going forward. Such flexibility has become very relevant in the current scenario of economic liberalization and more particularly, as a means to correct the aberrations in sugar production.

Alcohol/ ethanol usage and balancing: Energy security and environmental concerns are motivating adoption of ethanol bio-fuel globally. Ethanol fuel demand is likely to grow exponentially in the future. Most of the leading countries have mandated ethanol doping at different per cent levels, in all commercial automobile fuels over the long term. An increase in the demand of ethanol will result in lower sugar supplies. As more cane would be diverted to ethanol, sugar prices would rise. During 2007-08, out of the total alcohol produced in India, around 33% was used for drinking purposes, and almost a similar amount was consumed by the chemical industry as feed stock, leaving around one third for the fuel ethanol. If the trend continues, and E5 is implemented fully, going forward there may be a gap in demand and supply. With gasoline demand of 11.6 mmt in 2006-07, the requirement of ethanol at 5 per cent blending is expected to be over 650 million litres. The sugar industry has reiterated its commitments that it will not be lacking in meeting the ethanol demand by the petroleum companies. Current demand for alcohol for manufacturing potable alcohol is estimated at 1.2 bn bulk litres with an annual growth rate of 9 to 10% p.a. With the increase in the population in the drinking age and improvement in disposable income, this growth in 49

consumption will increase in future. Further, the use of alcohol for chemical industry with a base consumption of 700 mn bulk litres (estimate for 2006-07) is growing by 5 to 6% p.a. Thus, with the overall demand of 2.50 bn bulk liters of alcohol for all the three major consumption streams, going forward, India may find it difficult to meet its alcohol demand from domestic supply. In India, almost all the alcohol is derived for sugarcane molasses.

Uttar Pradesh Sugar Industry is one of the largest sugar industries in the Indian economy. The lavish measures in form of new promotional policies for the Uttar Pradesh sugar industry by the state government of Uttar Pradesh was introduced at a time when it was much needed to further boost the growth of the Uttar Pradesh sugar industry. The improvements in the plant capacity and the introduction of new techniques which enables the optimization of the existing plant capacities has the further made the growth definite.

With the new promotional policies of the Uttar Pradesh sugar industry, the investors have already starting eying the future prospects. There are 20 more sugar processing units are coming up as a part of Uttar Pradesh sugar industry. The existing companies under the Uttar Pradesh sugar industry are planning an investment pertaining to expansion of about Rs 4,000 crore. At present the major companies in the Uttar Pradesh sugar industry are Balrampur Chini, Simbhaoli Sugars Ltd., Bajaj Hindusthan Ltd., etc. A batch of Brownfield and Greenfield expansion projects has already started their activities of crushing cane. The increase in the capacity would help the Uttar Pradesh sugar industry to churn out an extra 140,000 tons of crushed cane everyday to the existing 2.5 million tons of sugar produced within a few years time. The total sugar production under the Uttar Pradesh sugar industry would lead to 50

7.5 million tons, making Uttar Pradesh the biggest manufacturer of sugar in India.

The Uttar Pradesh sugar industry has a bright future as one of the prospective players in the global sugar market. The demand for sugar across the world has been growing exponentially. The Uttar Pradesh sugar industry with its capacity can cater to this international demand. The advantages of the Uttar Pradesh sugar industry are that the cost of production is quite low and the climatic conditions and the conditions of the soil are favorable to the sugarcane production. The region of India where the state of Uttar Pradesh lies is one of the most fertile lands in India called the 'doab'. This is an extremely fertile belt of lands between the rivers Ganges and Jamuna. To boost the production of the Uttar Pradesh sugar industry, the government of Uttar Pradesh is likely to set up a research and development unit which would develop better quality sugarcane plants to have better yield and diseases-resistant crops to ensure that the industry has a sustainable growth. The geographical position of the state of Uttar Pradesh is one of the key advantages as it is very easy to access. With all these developments the Uttar Pradesh sugar industry can meet the increasing domestic demands in India, which due to the improvements in the economic conditions and the rise in the general income level. The present consumption of sugar is nearly 19 mt annually and it may go up to 24 MT on a yearly basis. At present, the situation of the Indian sugar production can improve with all these measures. In the financial year of 2004-2005, India had to import 8.89 lakh tons of sugar from different countries due to the huge decline in the national sugar production. These measures would have a long term effect on the sugar production of the state and therefore of the entire country.

Sugar Industry in India is well developed with a consumer base of more than billions 51

of people. It is also the second largest producer of sugar in the world. There is around 45 millions of sugar cane growers in India and a larger portion of rural labourers in the country largely rely upon this industry. Sugar Industry is one of the agricultural based industries. In India it is the second largest agricultural industry after textile industry. Statistics on Sugar Production As to the statistics there were a total number of 571 sugar factories in India as on March 31, 2005 compared to 138 during1950-51. These 571 sugar mills produce a total quantity of 19.2 million tones (MT). Sugar production in India increased from 15.5 MT in 1998-99 to 20.1 MT in 2002-03. Department of Agriculture and Co-operation, sugarcane production in 2004-05 is estimated at 232.3 MT from 237.3 MT in 2003-04. Sugarcane production is expected to reach 257.7 MT in 2005-06. Sugar Production In states The following table shows level of sugar production (In Lakh Tonnes) in Indian States: State Uttar Pradesh Maharashtra Karnataka Tamil Nadu Andhra Pradesh Gujarat Haryana Uttaranchal Punjab Bihar Madhya Pradesh Other 2002-03 58.74 61.64 17.98 17.04 11.88 12.38 5.99 4.59 5.11 4.21 0.85 0.91 2003-04 46.08 31.99 11.57 11.9 8.81 10.77 5.86 3.93 3.88 2.77 0.94 1.09 2004-05 Estimated 50.32 22.29 13 9.84 9.75 8.32 4.03 3.82 3.37 2.77 0.85 1.58

52

The sugar production in the states largely depends upon monsoon. From 1998-03 good monsoon resulted a larger production of sugar in the country. Sugar Pricing: Government of India fixes Statutory Minimum Price (SMP) for sugarcane according to Clause 3 of the Sugarcane Order. This statutory Minimum Price is designed through the consent of Commission for Agricultural Coast and Prices (CACP) and respective state Governments. For the year 2004-05, the rate was fixed at Rs. 74.50 per quintal with a basic recovery of 8.5%.

INDIAN GOVERNMENT ON SUGAR INDUSTRY The following policy initiatives are taken to boost the Sugar industry:

for new factories, which shows that there will be no sugar factory in a radius of 15 km.

improving efficiency in the industry.

for modernization of the industry.

53

PRODUCT PROFILE SUGAR:

BRAND : KASHIPURE

With the belief that the Indian consumer today is as quality and health conscious as any other consumer today the world over, Kashipur Sugar Mills made an initiative to produce a sugar comparable to the high standards of the western countries, in India. Kashipur embarked on the project in 1996, under the aegis of the Sugar Technology Mission to make sugar that would be sparkling white, pure and healthier. Kashipur perfected the technique and the result was India's first double refined sulphurless sugar sold under its brand Kashipure.

Kashipure is a better sugar simply because its processing continues long after that of ordinary sugar has stopped.

The secret behind Kashipure's purity is the unique Defeco Remelt Process, in

which the sugar after it has crystallized is melted all over again and all the impurities are removed without the use of sulphur.

Since no sulphur is used in the manufacturing of Kashipure sugar, it meets even

the strict standards of the European Union on sulphur content.

The double refined Kashipure sugar has no impurities, so its crystals have natural

translucent white colour and don't require bleaching with sulphur-dioxide.

Kashipure is packed under a controlled environment, untouched by hand, assuring

impeccable hygiene. 54

POWER COGENERATION CAPACITY : 145 MW

(80 MW GRID INTERACTIVE)

BAGASSE, the residual fiber of sugarcane after crushing and extraction, is a valuable by-product generated during the sugar manufacturing process. It has high calorific value and is therefore used to generate steam and thereby electricity, which is a conventional thermal alternative and eliminates emission of green house gases.

In 1994, Kashipur was the first sugar company in India to start eco-friendly cogeneration at one of its units, with a low project outlay as compared to conventional power plants. Conventionally, this was restricted to providing captive power in order to meet the energy requirements of the sugar factory. However, Kashipur was one of the first to realize the tremendous potential it had towards reducing the power deficit, by supplying to the grid, thereby contributing to the bio-energy effort undertaken by the country.

An additional benefit of using bagasse is that it is a renewable source of fuel and does not contribute to Greenhouse gasses as the sugarcane plantation consumes more carbon dioxide than that generated in burning bagasse. Today, the Groups combined cogeneration capacity stands at 145 MW with 80 MW of grid interactive power. Kashipur is the first in the world to install 105 kg.cm2 boiler and turbine in its sugar division, which has increased efficiencies in bagasse usage and made it perhaps the most 55

efficient cogeneration unit in the world. Kashipur additionally installed energy saving devices which would further increase bagasse savings. This saving would enable the company to run its power plants without external bagasse purchases. Power generation in non-sugar season as well, will result in consistent cash inflows.

Kashipur was the first sugar company in Uttar Pradesh, which was allowed export of power under Open Access (during off-season), from 1st October, 2009, resulting in higher realizations.

ETHANOL

CAPACITY : 270 KL Per Day

Ethanol is a generic name for Ethyl Alcohol which is a product of sugarcane molasses and juice, prepared by fermentation and distillation processes. It is a volatile, flammable and colourless liquid, widely used as a solvent of substances intended for human contact or consumption, including fragrances, flavoring, colouring and medicines. When blended, as an additive with fuel for motor vehicles, it is known as Motor Fuel Grade Alcohol or Power Alcohol. It can be blended with petrol in varying quantities up to any extent depending upon the technology of the engine. Up to 15% blend no modifications are required in the engines.

Usage of ethanol-blended gasoline began in the late 1970s. Environmentally, the use of ethanol blends has assisted in reducing carbon monoxide emissions. In the United States, one out of every eight gallons of gasoline sold contains ethanol. Most of this ethanol is purchased as blends of 10% ethanol and 90% gasoline, known as E10, and is used as an octane enhancer to improve air quality.

56

In India we are presently using E5 that is, 5% ethanol blend with gasoline but a government order for 10% blend is expected in the near future.

A SUGAR INDUSTRY PERSPECTIVE & ETHANOL PRODUCTION

Most sugar companies in India are evolving into integrated players as diversification into distillery, ethanol and power has become possible. This has improved the demand for molasses and ensures better economics.

The Government of India has made blending of 5% Ethanol in motor vehicle fuels, compulsory all over India. This directive has provided sugar mills the opportunity to implement forward integration.

A 5% ethanol blend on an all-India basis would require around 500 million liters. The current installed capacity would be adequate to meet this requirement as also for E10 blend, even after fully meeting the requirement of the chemical industry and potable sectors, as India is the second largest producer of sugar in the world.

Ethanol blended fuels are advantageous due to the following characteristics:

Renewable source of energy Renewable source of energy Use Molasses which is readily available and is a by-product of the sugar manufacturing process

Diversifies the Sugar Industry Utilizes industrial installed capacity, improving the economy of the industry. Energy security, trade balance and risk reduction. Reduce use of gasoline and ensures less dependence on imports of oil Market opportunity for agricultural crops

57

Rural economic development and boost to the agricultural sector Environmental benefits (reduced carbon dioxide and carbon monoxide emission. It does not contribute to the harmful greenhouse gasses)

Displaces dangerous and environmentally damaging components in gasoline, such as benzene.

India presently has an installed capacity of over 3,000 million liters per annum but is producing less than 50% of installed capacity.

58

CHAPTER 3 OBJECTIVE OF THE STUDY

59

OBJECTIVE OF THE STUDY

Objective of the study: To understand the cash inflow and outflow of the organization To compare the cash inflow and outflow of the organization with the help of two years. To compare the actual and budgeted cash inflow and outflow of the organization.

Scope of the study: It will helpful to understand the cash inflow and outflow of the organization It will helpful to compare the cash inflow and outflow of the organization with the help of two years. It will also helpful to compare the actual and budgeted cash inflow and outflow of the organization. I will be able to learn a lot of theory is available of banking sector from various acts, banking sector besides many expert have also contributed among them main contributors are :- this report will be application in any organization. Cash management is ultimately about cash flow -- and very few small businesses are awash in cash. Even successful, growing companies are vulnerable to cash flow problems because they tend to add employees and inventory rapidly. This may quickly deplete the company coffers and lead to cash shortages. Because having cash at the right time is so important, entrepreneurs must pay close attention to cash management. Here are some tips for saving money and managing cash flow: Make financial projections. Forecast both expenses and anticipated revenues for at least the coming year. This will help you predict when you're likely to have cash and when you're likely to need it. You should also maintain a cash reserve if possible. 60

Create contingency plans. Have several budget projections, including best case and worst case scenarios, and think about how you might respond. In the event sales don't take off as expected or there's some unforeseen problem, you'll be better prepared. Keep a lid on spending. One of the most common problems with new businesses is the owners' tendency to spend freely. There's no need to have lavish offices or expensive furniture. Remember, you're in this for the long haul: You should try to get as much value as possible out of every transaction, whether you're leasing office space or stocking the company kitchen. Keep inventory low. Don't stock inventory based on your fantasy of what you think you'll be selling in six months. Instead, stock only what you know you can sell in the short term. Lease, don't buy. Another good way to conserve cash is to lease equipment instead of buying it. Although leasing can be more expensive in the long run, it helps you avoid laying out a lot of capital all at once for things like office furniture, computers and copiers. Delay hiring employees. Try to improve the productivity of current employees (without burning them out), use independent contractors and consider outsourcing certain nonessential functions. Employees are expensive, so you should put off adding permanent hires as long as you can -- or at least until you're earning the revenue to support them. Go without a salary. Some experts recommend stockpiling a year's worth of living expenses before going into business. Admittedly, this may be difficult, but you should at least avoid paying yourself an excessive salary. Too many entrepreneurs waste cash by paying themselves big salaries without the revenues to justify them.

61

Speed up customer payments. Try to get customers to pay on time or early, if possible. Offer incentives like discounts or late fees, and adopt more effective collection techniques for deadbeat customers. Don't be wasteful. Recycle and reuse what you can -- for example, boxes, computer discs and file folders. The savings may not be large on any given item, but they can add up over time.

62

CHAPTER 4 RESEARCH METHODOLOGY

63

RESEARCH METHODOLOGY

Research Objective: This research is basically done for the comparison b/w product after by different broking houses. Research design: For the study, exploratory design was undertaken to classify the investors on their risk and return profile. Sampling method- for this research work I have chosen non- probability convenience sampling method. I have chosen this method because time for the completion of the work is limited and also managers and employees are not available all the time. Area of study- KASHIPUR SUGAR MILLS Duration 2 months. Data collection method- I have used both primary and secondary sources of data collection . For primary I have used questionnaire & for secondary I have used internet, magazines and newspaper etc. Research Design Research design is simply the framework or plan for a study, used as a guide in collecting and analyzing data. There are three types of Research Design:1.Exploratory Research Design:- The major emphasis in exploratory Research design is on discovery of ideas and insights. 2.Descriptive Research Design:- The Descriptive Research Design Study is typically concerned with determining the frequency with which something occurs or the relationship between two variables. 3.Casual Research Design:- A Casual Research Design is concerned With determining cause and effect relationship. Sampling Design 64

(a) Population: Element: Businessmen and Servicemen in Kashipur. Extent: Time: (b)Sampling Unit: -Employees of Kashipur Sugar Mill (e) Sampling Method:There are two methods of sampling:1. Probability Sampling: It is based on the concept of random selection of a controlled procedure that assures that each Population element is gives a non-zero chance of selection. Probability Sampling is of following types: Simple Random Systematic Cluster Stratified Double 2. Non-Probability Sampling: Non probability sampling is non-random and subjective. That is each member does not have a known non zero chance of being included. Types of Non-Probability Sampling 1. Convenience 2. Judgement 3. Quota Researcher selects the sample as per their convenience. Data Collection Method Data for the present study is collected from two sources: Primary sources: KASHIPUR SUGAR MILL

65

The data are collected directly from the universe by conducting interviews, etc. these are the original sources from which the researcher directly gathers data which are not previously referred. Secondary sources: The data are collected from the secondary sources such as magazines, journals, etc. These sources consist of already variable data in the form of statements, and reports, which may include sensory reports, financial statements of the company, reports of governments departments, etc. 2- Data Approach- There are several Approach of data collection. The primary sources of data collection are done through Observation Interviewing Stimulation Mail survey Projective techniques Observation: Observation is a mode of primary data collection through which we directly get the data from a universe and based on that data one can carry on the research. Interviewing: Interviewing is another mode of direct data collection, which provides complete information about the universe. Stimulation: Stimulation is a technique of performing experiments on the model of a particular system. The experiment is done on the model and not on the real system because the latter will be inconvenience and expansive.

66

Research Diagram:

Review of literature
Review concepts & theories

Introduction to the problem

Review Empirical Evidences

Formulate Hypothesis

Design Research (including sample design)

Suggestion

Interpretation

Finding & Analysis

Collect Data

Figure 2: Research Process Diagram

67

CHAPTER 5 FINDINGS AND ANALYSIS

68

FINDINGS AND ANALYSIS

CASH FLOW STATEMENT YEAR : 03-04 FORM NO : 25 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2002-03 BUDGET 2003-04 FLASH 2003-04 ACTUAL 2003-04

13435 19482 77356 110273 3310 5062 8372 118645

17650 905 94889 113544 2817 2125 4942 118486

29792 4420 68390 102602 2891 2808 5699 108301

32166 3109 68062 103337 2696 3490 6186 109523

6528 10440 26657 1802 849 46276 23999 2915 8599 2099 4853 44 -306 485 42688 88964 29681 0 0

4250 9836 25343 1702 1150 42281 25187 3970 10866 2524 5983 50 1000 0 49580 91861 26625 0 0

6765 12498 20163 1622 1045 42093 23744 3313 9456 2438 6839 65 -411 0 45444 87537 20764 0 0

9610 11961 19764 1602 1096 44033 24423 3186 9310 2332 6793 56 -530 0 45570 89603 19920 0 0

2863 7606 0 1345 11814 100778 17867

4562 7390 0 1473 13425 105286 13200

6975 4975 2170 1153 15273 102810 5491

6975 4740 91 1110 -12916 102519 7004

69

CASH FLOW STATEMENT YEAR : 04-05 FORM NO : 25 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NON- OPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2003-04 BUDGET 2004-05 FLASH 2004-05 ACTUAL 2004-05

32166 3109 68062 103337 2696 3490 6186 109523

15950 50592 72831 139373 2033 2090 4123 143496

21994 49804 79223 151021 1204 3117 4321 155342

25524 49735 84619 159878 904 3155 4059 163937

9610 11961 19764 1602 1096 44033 24423 3186 9310 2332 6793 56 -530 0 45570 89603 19920 0 0 6975 4740 91 1110 -12916 102519 7004

7260 14163 41430 2420 2400 67673 25550 4313 1640 2552 6582 95 322 0 41054 108727 34769 0 0 8940 4666 166 1620 -15392 124119 19377

12558 17269 48051 1556 1490 80924 25057 3271 8125 3162 6822 70 -400 0 46107 127031 28311 0 0 6588 2016 118 986 9780 136739 18603

12614 18303 49988 1360 1512 83777 24788 3261 7985 3345 6880 51 -680 14 45644 129421 34516 0 0 8074 2012 117 928 -11131 140552 4587

70

CASH FLOW STATEMENT YEAR : 05-06 FORM NO : 25 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2004-05 BUDGET 2005-06 FLASH 2005-06 ACTUAL 2005-06

25524 49735 84619 159878 904 3155 4059 163937

18650 19745 142871 181266 4478 2580 7058 188324

21342 20326 1149091 156569 1749 3786 5535 162104

20730 20396 118862 159988 2108 4015 6123 166111

12614 18303 49988 1360 1512 83777 24788 3261 7985 3345 6880 51 -680 14 45644 129421 34516 0 0

10250 24874 48605 2480 2800 89009 26974 6801 18444 3581 8065 120 -200 0 63785 152794 35530 0 0

17150 33408 37038 2675 2560 92831 27857 4378 10228 3265 7620 70 -500 0 52918 145749 16355 0 0

18305 34574 36579 2616 2528 94602 27490 4178 10304 2511 7196 56 -1007 0 50728 145330 20781 0 0

8074 2012 117 928 -11131 140552 23385

11678 8730 242 1750 -22400 175194 13130

127078 2392 195 996 -16290 162039 65

12710 2141 300 1043 -16194 161524 4587

71

CASH FLOW STATEMENT YEAR : 06-07 FORM NO : 25 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2005-06 BUDGET 2006-07 FLASH 2006-07 ACTUAL 2006-07

20730 20396 118862 159988 2108 4015 6123 166111

17980 3799 178266 200045 692 3240 3932 203977

43090 2742 171832 217664 464 4045 4509 222173

50856 2946 161272 215074 464 4134 4598 219672

18305 34574 36579 2616 2528 94602 27490 4178 10304 2511 7196 56 -1007 0 50728 145330 20781 0 0

18020 30925 43570 2570 3000 98085 29081 8236 13697 3706 8589 110 -500 0 62919 161004 42973 0 0

19650 35583 41040 3691 2596 102560 28261 6849 11491 3441 9244 118 -2000 0 57404 159964 62209 0 0

21176 35007 40907 3677 2638 103405 28216 6750 11633 3198 9343 108 -2000 0 57248 160653 59019 0 0

12710 2141 300 1043 -16194 161524 4587

17441 10750 490 1150 -29831 190835 13142

15613 6084 316 2015 24028 183992 38181

15612 6363 320 1895 -24190 184843 34829

72

CASH FLOW STATEMENT YEAR : 07-08 FORM NO : 5.1 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2006-07 BUDGET 2007-08 ACTUAL 2007-08 APPOVED BE 2008-09

50856 2946 161272 215074 464 4143 4598 219672

40050 3419 216954 260423 750 4050 4800 265223

59338 2837 182316 244487 279 4085 4364 248851

57800 1394 284978 344172 750 4225 4975 349147

21176 35007 40907 3677 2638 103405 28216 6750 11633 3198 9343 108 -2000 0 57248 160653 59019 0 0

20150 31280 51070 5250 3300 111050 33173 9100 20237 4177 12600 170 -2100 0 77357 188407 76816 0 0

24179 41556 37371 6603 3431 113140 32151 5234 13883 3410 12514 130 -3670 -63 63589 176729 72122 0 0

22541 40075 96058 14510 3800 176984 38590 7300 23270 4348 16021 219 -3801 0 85947 262931 86216 0 0

15612 6363 320 1895 -24190 184843 34829

20116 20448 415 1190 -42169 230576 34647

23228 7720 326 1718 -32992 209721 39130

23035 22426 524 1540 -47525 310456 38691

73

Cash inflow (operation)Actual

cash inflow (operation) 300000

250000
200000 150000 100000 50000 0
actual

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

year

Interpretation: Cash inflow are rising every year with a slow pace .there hasnt been any steep rise after year 2003-2004.

Cash outflow (operation)Actual

200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 2003- 2004- 2005- 2006- 2007- 200804 05 06 07 08 09
year

total outflow(operation)

actual

Interpretation: Cash outflow are rising every year with a sloe pace.there hasnt been any steep rise after year 2003-2004

74

Overall surplus/deficit (Actual)

45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2003- 2004- 2005- 2006- 2007- 200804 05 06 07 08 09 year

overall sur/deficit

actual

Interpretation: It is showing an irregular trend i.e steep rise &steep fall.In financial year 06 -07 rose sharkey however during current year in rise is slow. In 05-07 it declined heavily but soon it ecovered dasticcally in 06 -07.

Cash inflow (budget)

300000 cash inflow(budget) 250000 200000 150000 100000
budget

50000
0 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 year

Interpretation: Cash inflow (budget) are rising with a slow pace . there hasnt been any steep rise & dont budget show in 2003-2004.

75

Total outflow (budget)

200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 2003- 2004- 2005- 2006- 2007- 200804 05 06 07 08 09

total outflow (budget)

budget

year Interpretation: Total outflow are rising every year with a slow pace.there hasnt been any steep rise &dont budget show in 2003-2004.

Overall surplus /deficit (budget)

overall sur/deficit (budget)

40000 35000 30000 25000 20000 15000 10000 5000 0

budget

year
Interpretation: company has the policy of spending more money every year as compare to previous year. 76

CHAPTER 6 LIMITATION

77

LIMITATIONS

The study is based on secondary data. There is no special arrangements for trainees. Lack of time Difficulties in the identification of the source Employees does not create interest to give the data to the trainees

78

CHAPTER 7 SUGGESTIONS

79

SUGGESTION

No doubt SSD and its cash department are very good. They are performing their functions in a very impressive way but if the company thinks about these following points then the working will be better.

Staff of the cash department should be sufficient because the load always very much there on them. So it will be good if organization increases its working force for their cash department.

Cash section should not be very far away from other departments like finance department which controls the cash section. So that employees would not have to face difficulties, because every time they have to go there again and again.

Cash section should not be very small in size. Specially book keeping section. It should not be very congested. So organization must provide enough space.

80

CHAPTER 8 CONCLUSION

81

CONCLUSION
It is very difficult to elaborate all the work of cash section. But I have tried my level best to cover all the work done by it. This project was undertaken in order to know the effectiveness of cash section of finance department of the company. I would like to conclude my project with these points: Cash department is the backbone of the finance department and organization itself. All money transactions are done through this department. Cash department should be totally connected with corporate office. It works on the instruction of corporate office. That is why the system is called centralized cash management system. All tools should be used by cash department & in a efficient and reliable way. Salary disbursement, system should be marvelous and other tools like bank book, cash book, voucher, cash draft etc. should be helpful to maintain account up to date and in a systematic form. Staff of cash section should be a mixture of youth & experience, knowledgeable and hard working. They should perform their work efficiently with a team spirit. Environment of cash department should be very cooperative. So at last I can say it was a good experience. I learnt a lot through out my project and I am sure that this knowledge will help me forever.

82

CHAPTER 9 BIBLIOGRAPHY

83

BIBLIOGRAPHY
BOOKS: I M Pandey Financial Management Vikas Publishers Agrawal J. D, Education Finance: Facts & Fancies, Finance India Vol II No.3, Sept 1998, pp 321-338 Brigham F. Eugene, Fundamentals of Financial Management, Dryden Press Brigham F. Eugene, Ehrhadt c. Michael, Financial Theory and Practice; Thomson South Western Bryant James W, Financial Modeling in Corporate Management, WileyInterscience Clark, John J., el, al, Financial Management: A Capital Market Approach, Allyn Publications Khan and Jain, Financial Management, Tata Mc Graw Hill Publications Kuchhal S.C, Financial Management: An Analytical & Conceptual Approach, Chaitanya Allahabad, 1980 Kulkarni, PV, Financial Management, Himalaya, Bombay, 1983. I.M. Pandey.Financial Management.

WEBLIOGRAPHY :

wikimapia.org/1233903/Kashipur-Sugar-Mills-Ltd msn.bankbazaar.com/kashipur-sugar-mills-ltd/stock?scid=2687

84

CHAPTER 10 APPENDIX

85

APPENDICES
CASH FLOW STATEMENT YEAR : 03-04 FORM NO : 25 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2002-03 BUDGET 2003-04 FLASH 2003-04 ACTUAL 2003-04

13435 19482 77356 110273 3310 5062 8372 118645

17650 905 94889 113544 2817 2125 4942 118486

29792 4420 68390 102602 2891 2808 5699 108301

32166 3109 68062 103337 2696 3490 6186 109523

6528 10440 26657 1802 849 46276 23999 2915 8599 2099 4853 44 -306 485 42688 88964 29681 0 0

4250 9836 25343 1702 1150 42281 25187 3970 10866 2524 5983 50 1000 0 49580 91861 26625 0 0

6765 12498 20163 1622 1045 42093 23744 3313 9456 2438 6839 65 -411 0 45444 87537 20764 0 0

9610 11961 19764 1602 1096 44033 24423 3186 9310 2332 6793 56 -530 0 45570 89603 19920 0 0

2863 7606 0 1345 11814 100778 17867

4562 7390 0 1473 13425 105286 13200

6975 4975 2170 1153 15273 102810 5491

6975 4740 91 1110 -12916 102519 7004

86

CASH FLOW STATEMENT YEAR : 04-05 FORM NO : 25 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NON- OPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2003-04 BUDGET 2004-05 FLASH 2004-05 ACTUAL 2004-05

32166 3109 68062 103337 2696 3490 6186 109523

15950 50592 72831 139373 2033 2090 4123 143496

21994 49804 79223 151021 1204 3117 4321 155342

25524 49735 84619 159878 904 3155 4059 163937

9610 11961 19764 1602 1096 44033 24423 3186 9310 2332 6793 56 -530 0 45570 89603 19920 0 0 6975 4740 91 1110 -12916 102519 7004

7260 14163 41430 2420 2400 67673 25550 4313 1640 2552 6582 95 322 0 41054 108727 34769 0 0 8940 4666 166 1620 -15392 124119 19377

12558 17269 48051 1556 1490 80924 25057 3271 8125 3162 6822 70 -400 0 46107 127031 28311 0 0 6588 2016 118 986 9780 136739 18603

12614 18303 49988 1360 1512 83777 24788 3261 7985 3345 6880 51 -680 14 45644 129421 34516 0 0 8074 2012 117 928 -11131 140552 4587

87

CASH FLOW STATEMENT YEAR : 05-06 FORM NO : 25 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2004-05 BUDGET 2005-06 FLASH 2005-06 ACTUAL 2005-06

25524 49735 84619 159878 904 3155 4059 163937

18650 19745 142871 181266 4478 2580 7058 188324

21342 20326 1149091 156569 1749 3786 5535 162104

20730 20396 118862 159988 2108 4015 6123 166111

12614 18303 49988 1360 1512 83777 24788 3261 7985 3345 6880 51 -680 14 45644 129421 34516 0 0

10250 24874 48605 2480 2800 89009 26974 6801 18444 3581 8065 120 -200 0 63785 152794 35530 0 0

17150 33408 37038 2675 2560 92831 27857 4378 10228 3265 7620 70 -500 0 52918 145749 16355 0 0

18305 34574 36579 2616 2528 94602 27490 4178 10304 2511 7196 56 -1007 0 50728 145330 20781 0 0

8074 2012 117 928 -11131 140552 23385

11678 8730 242 1750 -22400 175194 13130

127078 2392 195 996 -16290 162039 65

12710 2141 300 1043 -16194 161524 4587

88

CASH FLOW STATEMENT YEAR : 06-07 FORM NO : 25 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2005-06 BUDGET 2006-07 FLASH 2006-07 ACTUAL 2006-07

20730 20396 118862 159988 2108 4015 6123 166111

17980 3799 178266 200045 692 3240 3932 203977

43090 2742 171832 217664 464 4045 4509 222173

50856 2946 161272 215074 464 4134 4598 219672

18305 34574 36579 2616 2528 94602 27490 4178 10304 2511 7196 56 -1007 0 50728 145330 20781 0 0

18020 30925 43570 2570 3000 98085 29081 8236 13697 3706 8589 110 -500 0 62919 161004 42973 0 0

19650 35583 41040 3691 2596 102560 28261 6849 11491 3441 9244 118 -2000 0 57404 159964 62209 0 0

21176 35007 40907 3677 2638 103405 28216 6750 11633 3198 9343 108 -2000 0 57248 160653 59019 0 0

12710 2141 300 1043 -16194 161524 4587

17441 10750 490 1150 -29831 190835 13142

15613 6084 316 2015 24028 183992 38181

15612 6363 320 1895 -24190 184843 34829

89

CASH FLOW STATEMENT YEAR : 07-08 FORM NO : 5.1 DIVISION : KASHIPUR SUGAR MILLS LTD.
DESCRIPTION INFLOW (OPERATIONS) DIRECT AGAINST ADVANCES NON SSD RECEPT AGAINST CURRENT DESP. 1) SSD. Incl. Libya. 2) NON SSD SUB TOTAL EXPERT INSENTIVE OTHER RECIPT SUB TOTAL CASH INFLOW (OPERATION) OUTFLOW (OPERATIONS) 1. METERIAL (INDIGENOUS) 1) SSD 2) NON SSD 2. MATERIAL (IMPORTED) 3. CUTOM DUTY 4. PMT. TO SUB-CONT (FAB) SUB- TOTAL PERSONNEL PAYMENTS SALES TAX EXCISE DUTY OTHER EXPENSES 1) SSD 2) NON SSD INTEREST: DIRECT (OTHERS) ALLOCATION FROM CORP. OFF EXCHANGE VARIATION SUB-TOTAL TOTAL OUTFLOW (OPERATIONS) OPERATING SUR./DEFICIT INFLOW NON- OPERATIONS SUB TOTAL (INFLOW NONOPERATIONS) OUT FLOW (NON-OPERATION) SHARE OF TAX & DIV. & OTHERS CAPITAL EXPENDITURE REPMT. OF LOAN (DIRECT) PAYMENT ON BEHALF OF OTHERS OUT FLOW (NON OPERATION) TOTAL OUT FLOW (OPERATION) OVERALL SUR./DEFICIT ACTUAL 2006-07 BUDGET 2007-08 ACTUAL 2007-08 APPOVED BE 2008-09

50856 2946 161272 215074 464 4143 4598 219672

40050 3419 216954 260423 750 4050 4800 265223

59338 2837 182316 244487 279 4085 4364 248851

57800 1394 284978 344172 750 4225 4975 349147

21176 35007 40907 3677 2638 103405 28216 6750 11633 3198 9343 108 -2000 0 57248 160653 59019 0 0

20150 31280 51070 5250 3300 111050 33173 9100 20237 4177 12600 170 -2100 0 77357 188407 76816 0 0

24179 41556 37371 6603 3431 113140 32151 5234 13883 3410 12514 130 -3670 -63 63589 176729 72122 0 0

22541 40075 96058 14510 3800 176984 38590 7300 23270 4348 16021 219 -3801 0 85947 262931 86216 0 0

15612 6363 320 1895 -24190 184843 34829

20116 20448 415 1190 -42169 230576 34647

23228 7720 326 1718 -32992 209721 39130

23035 22426 524 1540 -47525 310456 38691

90