Executive Summary

Brazil and India are the largest sugar producing countries followed by China, USA, Thailand,
Australia, Mexico, Pakistan, France and Germany. Global sugar production increased from
approximately 125.88 MMT in 1995-1996 to 149.4 MMT in 2002-2003 and then declined to
143.7 MMT in 2003-2004, whereas consumption increased steadily from 118.1 MMT in
1995-1996 to 142.8 MMT in 2003-2004.

The world consumption is projected to grow to 160.7 MMT in 2010, and 176.1 MMT by
2015. According to ISO, the world sugar output is forecasted to reach 145.0 MMT and
consumption to reach 147.0 MMT in 2004-2005, resulting in a deficit of around 2 MMT in
2004-2005. Further, since October 2003, nearly 5 MMT of surplus sugar are expected to
have been removed from the world sugar balance, the stock/ consumption ratio to less than
42%.

INTERNATIONAL SUGAR SITUATION

International sugar prices suffered some losses during the last week – LDP for
white sugar for March 2011 closed for the week at $794.40 Per MT, down by US $ 20.00 .

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 TITLE

A Study on “WORKING CAPITAL ON RENUKA SUGARS LTD.”

OBJECTIVE OF THE STUDY

 To evaluate Working Capital for RENUKA SUGARS LTD

 To calculate Working Capital Ratios for RENUKA SUGARS LTD.
 To know about the practical aspects of Working Capital Management.
 To know the forecasting of Working Capital Requirement.

SIGNIFICANCE OF THE STUDY

The significance of the study is to analyze the financial position of the company, in
Working Capital, which will lead to effective decision-making.

METHODOLOGY
The study is highly dependent upon the working capital where the relationship
between various assets and liabilities are analyzed and plans and policies are executed.
To know the operations concerned with working capital management each section of
RENUKA SUGARS were contacted. For the purpose of working capital, the data available
through ratio analysis was made use.

Data analysis & Interpretation

Working capital analysis was carried out to evaluate the efficiency with which working
capital was employed in the company and was analyzed by also through ratio analysis.

Limitation
• Study was based on only one company.

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• In this study I have considered financial year as 365 days.

1.1 INDUSTRY PROFILE

The Historical Background Of The Indian Sugar Industry

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India is the largest consumer & second largest producer of sugar in the world. The Indian
sugar industry second large agro industry Located in the rural India. The Indian sugar
has a turnover of Rs.500 billion per annum & it contributes almost Rs.22.5 billion to the
central & state exchequer as tax, cess & excise duty every year. It is the second largest
agro-processing industry in the country after cotton textiles.

With 453 operating sugar mills in different part of the country. Indian sugar industry has
been a focal point for a socio-economic development in the rural areas. About 50 million
sugarcane farmers & a large number of agricultural labors are involved in sugarcane
cultivation & ancillary activities, constituting 7.5 % of the rural population.

The sugar industry in the country uses only sugarcane as input; hence Sugar Company’s
have been established in large sugarcane growing states like Uttar Pradesh, Maharashtra,
Karnataka, Gujarat, and Tamil Nadu & Andhra Pradesh. In the year 2005-06 these six states
contributed more than 85 % of total sugar production in the country; Uttar Pradesh,
Maharashtra & Karnataka together contribute more than 65 % of total production.

The sugar industry is proud to be an industry, which spreads the taste of sweetness to
the mankind. The history of origin of this industry is as old as the history of main him self.
Sugar is generally made from sugarcane and beet. In India, sugar is produced mainly from
sugarcane. India had introduced sugarcane all over the worlds and is a leading country in the
making sugar from sugarcane.
‘Saint Vishmitra’ is known as the research person of the sugarcane in religious

literature.

We can find the example of sugarcane in Vedic literature also as well as sugarcane. We

can also find the reference of sugar and the sugarcane in Patanjali’s Mahabashya and the

treaty on the grammar of ‘Panini’. Greek traveler ‘Niyarchus’ and Chinese traveler ‘Tai-

Sung’ have mentioned in their travelogue that the people of India used to know the

methods of making sugar and juice from sugarcane the great Emperor Alexander also

carried sugarcane with him while returning to his country.

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 Thus from different historical references and from some ‘Puranas’ it can be concluded
that method of making sugar from sugarcane was known to the people of Bihar. The
historical evidences of sugar industry prospering in ancient India concrete and this has helped
to develop and prosper the co-operative sugar movement in India. Hence it is necessary to
study the development of the co-operative sugar movement from its start to 2004.

National Scenario Of Sugar Industry

"Indian sugar mills have made an investment of $2500 million during the last two years only,
which is no longer limited to sugar but also includes the cogenerated power and ethanol
sector as well,".
"India contributes about 12 per cent of world sugar production and has annual sugar
production capacity of 23 million tonnes with a total investment of $11000 million,".
Sugar industry has a potential to generate about 6000 mw of power. Already 50 units have an
installed capacity to cogenerate around 900 mw surplus power and a capacity of 1000 mw in
the process of being installed by 50 sugar mills". By 2009-10 the total surplus power
generated by sugar industry and supplied to the grid would cross 2250 mw.
As regards ethanol, sugar industry has a capacity of producing about 1300 million litres and
the Government intends to increase ethanol doping to 10 per cent from June 2007, thereby
increasing annual demand to 1100 million liters.
India has now as many as 453 working sugar factories with an average capacity of 3500 TCD
as against 299 working sugar factories with an average capacity of 1650 TCD in 1980,"
Plants being installed and capacity expansion being undertaken now are for much higher
capacity, ranging between 7500 to 10,000 TCD comparable with the average capacities of
sugar plants in major sugarcane and sugar producing countries.

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International Scenario of Sugar Industry

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 "Brazil and India would shape developments in global sugar trends as largest
producer and producer-consumer respectively,". The first revision of the world sugar
balance by ISO for the current season 2010/11 puts world production at a record 168.955
mln tonnes, raw value, up 5.2% from the last season. However, the revised projection
represents a considerable 1.420 mln tonne downward correction of ISO’s initial assessment
in August 2010. World consumption is expected to grow at a rate still lower than the long-
term 10 year average (2.03% and 2.59%, respectively). The lower growth is attributed to
record high prices in both the world market and, more importantly, domestic markets. Even
so, global use of sugar is expected to reach 167.669 mln tonnes. Therefore, the growth in
global production is sufficient to cover sugar consumption. The same can be said about
export availability projected at 50.687 mln tonnes in 2010/11 that adequately covers import
demand expected not to exceed 50.155 mln tonnes.

A sharp recovery in India’s output and an improvement of sugar production in China, on the
one hand, and considerable production shortfalls in Western and Eastern Europe due to
unfavourable weather conditions, on the other hand, have become the major supply features
of 2010/11. Meanwhile, Brazil’s production in 2010/11 (October/September) is also
expected to decrease as against the previous year although in terms of national crop year
(May/April) a further growth is projected for both 2010/11 and 2011/12. ISO’s first revision
of the world trade balance indicates that the global export availability and import demand in
2010/11 (October/September) look neatly balanced in both the white and raw sugar
segments of the market.

A summary of the second assessment of the world sugar balance in 2010/11 is provided in
the table below.

World Sugar Balance

2010/11 2009/10 Change
(mln tonne, raw value) in mln t in %
Production 168.955 160.503 8.452 5.27
Consumption 167.669 164.339 3.330 2.03
Surplus / Deficit 1.286 -3.836
Import demand 50.155 52.892 -2.737 -5.17
Export availability 50.687 52.868 -2.181 -4.13
End Stocks 58.081 57.327 0.754 1.32
Stocks/Consumption ratio in
34.64 34.88
%
Source: ISO Quarterly Market Outlook, November 2010

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 COMPANY PROFILE

Shree Renuka sugars Ltd Belgaum (SRLS) is the largest sugar and ethanol producer in
coastal india with main operations in the states of Maharashtra and Karnataka Shree Renuka
Sugars is an integrated manufacturing company with a strategic focus on sugar bio- fields
and its allied products of renewable energy.
SRSL is the largest sugar and ethanol producer in coastal India with main operations in
the states of Maharasthra and Karnataka. SRSL is currently the leader in the fuel ethanol in
India with a 20% market share and is making a strong strategic move to consolidate its
leadership positions in the bio-fuel space via the organic and inorganic route
Shree Renuka Sugars limited aims to become the most efficient and market driven
integrated processor of sugarcane in the world while enabling the team to grow in a learning
and motivating atmosphere participating in the all round development of the community and
delivering consistently on return to all our shareholders
Founded in October 1995 SRSL manufactures sugar energy ethanol and bio-fertilizers in an
integrated plant in north Karnataka india with an able management and robust vision Shree
Renuka Sugars today is one of the fastest sugar manufacturers in the country

Shree Renuka sugars are an integrated manufacturing company with strategic focus on
sugar and its allied products in power and ethanol. The company registered office in

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Belgaum, Karnataka and co-operate office is at Mumbai our key manufacturing facility is in
Munolli, Athani and Havalga Karnataka and we also operate three least at Ajara and Arag in
Maharastra and at Aland in Karnataka.

The company of SRSL is as per the table below.

Unit Cane (TDC) Cogeneration Distillery Refinery
(MW) (KLPD) (TPD)
Munoli, Karnataka 7,500 35.5 150 1,000
Athani, Karnataka 6,000 38 150 1,000
Havalga, Karnataka 4,000 - 150 -
Ajara, Maharastra 2,500 - - -
Arag, Maharastra 4,000 15 - -
Aland, Karnataka 1,250 - - -
Hadia, West Bengal - 15 - 2,000
Total 25,250 103.5 450 4,000

SRSL has the largest sugar refining capacity in India of 4,000 tons per day (TPD), to 1,000
TPD each refiners integrated with its plants at Munoli and Athani and 2,000 TPD port based
refinery coming up Haldia SRSL has acquired a majority stake in KBK, and engineering
company primarily engaged in providing turnkey solutions in the field of distilleries, ethanol
plants and bio-fuels.
SRSL has also acquired a standalone distillery of 100 KLPD from Dhanuka petrochem
located Khopali, Maharastra.
The has setup a wholly owned subsidiary viz. Shree Renuka Bio-fuels holdings FZE in
Sharjah International Free Zone ( SAIF Zone) for its overseas investments.
The company is working on other acquisition, expansion and lease opportunities of
strengthen its existing strong fundamentals and growth prospects.

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HISTORY
Shree Renuka sugars was incorporated in 1995. Initially it acquired a 1,250 TCD sick unit
from the Andra Pradesh Govt in 1998. This units asset base was moved to its own location in
Munoli and expanded its capacity to 2,500 TDC with 11.2 MW cogeneration plant. The
commissioning and trial production took place in November 1999. A distillery plant of 60 kl
per day capacity was added in 2002. The sugar refinery was setup to process raw sugar to
produce refined sugar meeting European specification.
The company plays a significant role in exports/ imports due to its coastal position. SRSL is
the single largest exporter out of India in 2006-07 in its current export campaign and was the
largest importer of raw sugars during campaign of 2002-03.

Milestone of Shree Renuka Sugars Ltd (SRSL)

1995-SRSL was incorporated.
1998-Initially it acquired a 1250 TCD sick unit from the Nizam Sugars Limited.
1999-The commissioning and trail production took place.
2002-Establishement of 250 TPD sugar refinery at munoli
2003 -Leasing of frist co-operative mill
2004-SRSL IPO launched.
2005-Acqusitation of greenerfield project at athani

2006- Modernisation and expansion of it’s Munoli Plant by 7500 TCD, Power Plant of 35.5
MW and Distillery by 120 KLPD.

2008- Shree Renuka Sugars Ltd has signed a Memorandum of Understanding (MOU) with
Hindustan Petroleum Corporation Ltd., (HPCL) for formation of a Joint Venture
Company (JV) for the purposes of setting up of an Integrated Sugar and Ethanol Plant
in the State of Maharashtra.

2008- The Company has splits its face value from Rs10/- to Rs1/-.

2009- Acquisition of Brazil sugar& ethanol company (VALE DO IVAI)

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2009- Commissioning of a cogeneration plant in panchaganga cooperative sugar mill
2010- Acquisition of 100% stake in value do Ivail S/A and 50.34% stake in equipav acucar e
Alcool S/A (now renamed as Renuka do Brasil S/A)

Location of the Units and Its Subsidiaries

VI. Aland (Karnataka)

VII. Raibag (Karnataka)
VIII. Haldia (West Bengal)
IX. Khopoli (Maharashtra)

The SRSL Subsidiary companies

1. Renuka Commodities DMCC- Dubai

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 2. Shree Renuka Energy limited
3. Shree Renuka Agri Venture Ltd
4. Godavari Biofuels Private Ltd
5. Shree Renuka Southern Africa Holdings (FZC), Sharjah
6. Vale Do Ivai S.A Acucar E Alcohol (VDI),
7. KBK Chem Engineering Private Limited.

NATURE OF BUSINESS CARRIED

Nature of Business carried SRSL is involved in the activity of manufacturing white

crystal sugar products which is the main product. The process of production involve
conversion of

1) Raw sugarcane in to sugar.

2) Raw sugar into refined sugar

Molasses, Bagasses are it’s by products.

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 VISSION
“The company’s vision is to become the most efficient processor of sugar and the
largest marketer of sugar and its allied products in the Country”.

MISSION
“Its mission meeting these objectives are to expand its installed capacity, achieve
end-to-end integration for all the plant to improve margins and reduce cyclicality of business
achieve greater raw material security, increase its focus of corporate and high value
customers to reduce price-risk in sugar by hedging, maintain a strong presence in export
market and expand market for Ethanol”.

OBJECTIVE
Shree Renuka Sugars Ltd aims to become the most efficient and market driven integrated
processor of sugarcane in the world, while enabling the team to grow in learning and
motivating atmosphere, participating in the all round development on the community and
delivering consistently on returns to all our shareholders.

QUALITY POLICY
The Quality policy of the company is producing the sugar in better quality, which
helps to compete with private sector.

GOALS AND OBJECTIVES:

 Ensure an uninterrupted flow of fair required quality materials for the purchase of
production and rendering of series.

 Procurement of required materials at fair and reasonable price keeping in view the
price trends and market condition.

 Maintaining and minimum level of investment in inventory when inventories are low
in reputation to sales less capital is toed up in inventory when inventories are low in

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 reputation to sales less capital is tied up in inventories. This in turn increases the
efficiency with which, the company’s capital is utilized.

 Ensure condition search for alternate source of supply continuity of supply is

particularly important for highly automated process. Where costs are rigid and must
be incurred even when production stops because of unavailability of materials.

 Promoting and developing indigenous sources of supplies whenever possible and also
minimizing reliance on imports In order to manage materials better forecasting of the
future prices, costs to general business activity.

PRODUCT PROFILE:

Sugar

The company’s ten manufacturing units enjoy a cumulative capacity of 37,500 TCD.
Most of these units were situated near ports-the closest was port-based, while the most
distant was only 150 kms away-their flexibility to address domestic and export markets. The
Munoli and Athani raw sugar units (1,000 TPD each) enhanced off-season asset utilization,
while the Company commissioned a 2,000-TPD sugar refinery, strategically located in the
port-town of Haldia to facilitate imports and enhance exports.

Ethanol

Ethanol will enjoy growing demand, following an enhanced demand for ‘green’ energy
and expanding need for increased oil security amid depleting reserves. The Company’s
distilleries (600 KLPD going to 900 KLPD) convert molasses and/or juice into ethanol for
fuel and potable purposes.

Co-generation (Power)

In power intensive business like sugar manufacture, the saving grace is the
Company’s ability to generate power from sugar by-product bagasse. The Company enjoys a

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129 MW co-generation capacity, leaving an adequate exportable surplus of 70 MW. The
biogases-based co-generation units qualify as a clean development mechanism project,
helping the Company earn carbon credits.

BIO-FERTILIZERS

This reduce product from distillery operations blended with chemicals is being sold as
bio-fertilizers.

Area of operation:In a business with diverse manufacturing, there is a premium on

production, process and capacity selection leading to competitiveness.

Shree Renuka sugars consciously selected to integrate sugar manufacture with

downstream possibilities in its factories across Maharastra and Karnataka. It invested in
integration within a year of inception, emphasising its understanding of multi-product
profitability. The Company processes co-products to generate ethanol, power and bio-
fertilizers. Of its five factories, three possess integrated facilities, while the rest are in the
process of integration.

OWNERSHIP PATTERN:

Shareholders

Class A Class B

Non producer member

Producer member BOD

Managing Chairman Vice-President

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BOARD OF DIRECTORS

Sl. No Name of the Director Nature of Directorship

1 Mrs. Vidya M. Murkumbi Executive Chairperson

2 Mr. Narendra .M. Murkumbi Vice chairman & MD
3 Mr. J.J Bagath IndependentDirector
4 Mr. Sanjay. K. Asher IndependentDirector
5 Mr. Nandan .V. yalgi IndependentDirector
6 Mr. Robert Taylor IndependentDirector
7 Mr. Jonathan Kingsman IndependentDirector
8 Mr. Hrishikesh Parandekar IndependentDirector
9 Mr. S.K. Tujeta IndependentDirector
10 Mr. Nitin Puranik Executive Director
11 Mr. S. M. Kaluti Non-Executive Director
12 Mr. Nandan V. Yalgi Executive Director
Commercial and HR

Competitors information:
The Competitors for this industry is other companies located nearby sugar industry
namely:
1. Siddeshwar Sugars Co-operative (Sholapur)
2. Lokamangal Sugars Co-operative (Bhandarkote)
3. Hira Sugars Co-operative (Hirebennur)
4. Shree Santh Damagi Sugar Co-operative
5. Ugar Sugars ltd.

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 INFRASTRUCTURAL FACILITIES:
1. Self contained residential quarters are constructed for officer & worker.
2. The workers & their dependents are provided with free medical facilities.
3. Formed a cooperative consumer society.
4. Established at the factory site the employee cooperative credit bank.
5. Primary School, Balawadi & Anganawadi are run by the factory.
6. Arranged a mini-bus for transporting the school going children from colony to their
schools.

7. Issued identity cards in corporating name of the blood group of each employees,
computerized punching cards to ensure discipline in & out, beside providing uniform
to all the employees.
8. Provided a well equipped ambulance to employees.
9. The factory has provided a playground at the colony.
10. For the entertainment of the colony residents, the factory has provided with TV
antenna.

CORPORATE GOVERNANANCE
As an important step towards corporate governance and part of compliance under clause 49
of the SEBI guidelines for the listed Companies, SRSL has constituted its Board of Directors
by inducting professionals, independent persons of stature in sugar industry and nominees of
strategic lenders. In order to have efficient and effective control over the operations of the
company in line with the Corporate Governance the following committees have been formed.

Audit Committee
Comprising of three independent Directors Viz, Mr. Sanjay Asher, Chairman Mr. Robert
Taylor, and Mr. Hrishikesh Parendekar. The statutory auditors, internal auditors and Head of
Finance will be attendees. The broad terms of references of the audit committee are as
follows.

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  Review of the Company’s financial reporting process and its financial statements.
 Review of accounting and financial policies and practices.
 Review of the internal control and internal audit systems.
 Review of Risk management policies and practices.

ACHIEVEMENT / AWARD:
Acquisition of Gokak Sugars Ltd in Karnataka.
The company has acquired 87% shareholding in Gokak Sugars ltd , for a consideration of Rs
693 million which includes assumption of pre-existing debt of Rs 650 million.
The Government of Karnataka has awarded Shree Renuka Sugars Ltd 30 years lease of
Raibag Sahakari Sakhar Karkhana Niyamit.

Workflow model (end to end): SUGAR PROCESS

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FUTURE GROWTH AND PROSPECTUS:

McKINSEY’S 7s MODEL

The 7s model is better known as McKensy’s 7s, because the two persons who
who developed this model Tom Peter and Robert Waterman, have been consultant at
McKensy’s and Co. They published their 7s model in their article “Structure is not
Organization” (1980) and their books “The art of Japanese management” (1981) and “In
Search of Excellence” (1982). The model consists of seven elements. Those seven elements
are distinguished in so called hard S’s and soft S’s. The three hard S’s elements are feasible
and easy to identify. They are Strategy, Structure and System of the organization.the four S’ s
are hardly feasible .Those are highly determined by the people at work in the organization
i.e., Style, Staff, Skills and shared values.

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I. STRUCTURE
This defines the basic organization of the company, its departments,
reporting lines, areas of expertise and responsibility. The structure represents the hierarchy of
the organization and the reporting system. The organization structure is the pattern of
relationship among various components or parts of the organization. Structure is thus the
basic frame work within which an organization carries outs its orders, decision and general
functioning. It defines the unbroken line or chain of command and the span of control. The
organization structure of SRSL as follows.

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 ORGANSATIONAL STRUCTURE

Chairperson

Managing
Director

Executive Chief Chief Director Vice

Director Operating Financial Commercial president

Cane Sales &

Developme Engineering Treasuy Derivatives Logistic
nt s

Cane Risk
Process and Accouts manageme Distillery
procureme Quality
nt nt

Power Taxatin EXIM

Plant Department

Planning HR
and Department
Budgeting

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Departments

The various departments in Renuka Sugars are

Purchase Department
Cane Department
Process Department
Stores Department
Sales Department
Engineering Department
Administrative Department
General Accounts Department
HR Department

1) Purchase Department
1) Purchase of material.
2) It enquires required material in the store.
3) Maintaining the purchase account.

2) Cane Department
The cane department manages cane procurement through dedicated cane
procurement teams. Cane managers issue cutting orders or harvesting permits, based on data
–wise cum pre harvesting maturity surveys. The Cane Department acts as a mediator between
the Company and the farmers where the Company purchases sugarcane directly from farmers
through Cane Department.

3) Process Department:
The process department is responsible for looking after all the production
activities. The process department consists of major technicians who are responsible for

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carrying out the various activities required to manage the process of conversion of raw
material available as sugarcane to the conversion of sugar.

4) Store Department

1) To make the material requisitions for the purpose of knowing the quantity material.
2) To make purchase order or in simple terms the tender.
3) To make approval memo for verification of materials.
4) The store department issued material with reference with store requisition.
5) To make classification & codification of materials.
6) Receipt of material.
7) Inspect it with ordered quantity, quality & if any other specifications.
8) Some of the material like chemical is to be sent to laboratory for incepatation & testing.
9) Getting indents from departmental head & issuing it.
10) To make purchase return if the material are rejected.
11) To maintain minimum level of materials.
12) Informining purchase department when material required.

5) Sales Department
In the sugar industry sugar is sold according to central govt. guidance & release.
Marketing & advertising is not necessary in sugar industry. Any how customer
relationship is necessary to convert the stock into cash
1) Getting order from parties.
2) Arranging for delivery to parties.
3) Maintaining record of sales.
4) Sending report to managing direct

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6) Engineering Department

1) Planning for new project.

2) Water supply to the factory & quarters.
3) Looking over cleanliness of the factory.
4) Making arrangement for the functions.
5) Maintenance of factory building.
6) Maintenance of roads, which are constructed by factory.
7) Maintaining distillery plant.

7) Administrative Department
Overseeing & carrying out office operations, preparing, systematizing& preserving
written communication, Distributing information, collecting accounts. Admin helps in HR
functions like employee’s pay, leaves, attendance, formalities in joining organization etc.

8) General Account Department

Finance is the lifeblood of business one cannot imagin a business without finance
department because it is the central point of all business activities. Finance dept. of Hira
sugar factory plays a very important role, as it is here that decision with to procurement &
utilization of funds are taken. Such decision includes the preparation of various budgets,
allocation of funds for various activities or division of the firm as well as distribution of
profits etc.
An account section is also including in the finance dept. it helps in achieving the
objectives of the company. Proper management of the fund is necessary for effective
management.

9) HR Department
Human resource department helps out in recruitment, selection, training and
development, performance appraisal, reward

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II. Skills
Skills refer to the fact that employees have the skills needed to carry out the
company’s strategy. Training & development ensuring people know how to do their job &
stay up to date with the latest techniques. The team “skill” includes those characteristics,
which most people use to describe a company. Hindustan lever or Procter & gamble are
known for their marketing skills. Tata engineering & locomotive companies (TELCO) are
known for their engineering skills. IBM is known for its customer service. These are
developed over a period of time. Shree Renuka sugars is also one among them SRSL is
known for its production skills, mechanical skills, research & technical skills, SRSL have
owned facilities at Havalga. At Havalga the factory is well equipped & manufactures raw
sugar with 4,000 TCD to 37,500 TCD capacity.

III. Style
The style of working is also not different from other co-operative companies the
company is required to hold annual general meeting at the end of each year inviting all the
shareholders of the company by sending notice of the AGM (Annual General Meeting) at
least 15 days prior to the meeting. The notice all the relevant information of the company
&the agenda of the meeting. The notice also contains the audited balance sheet & the profit
& loss account of the company.

IV. Strategy
The integrated vision & direction of the company, as well as the manner in which it
derives, articulates, communicates & implements that vision & directors.
Its strategy is to expand its installation capacity, achieve end-to-end integration for all
its plants to improve margins & reduce cycling of business, achieving greater raw material
security, increasing its focus of corporation & high value costumer, to expand market for
ethanol. The broad level strategy of the company is to focus towards corporate & industrial
buyers. Unlike the traditional mode, dealing with cooperate & industrial buyers has benefits
of committed & timely off-takes, reduced price risk, reduced working capital.

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V. System
The decision-making system within the organization can range from management
institution to structured computer systems to complex expert system & artificial intelligence.
System refers to all the rules, regulation & procedure both formal & informal that
complements the company structures. It includes production planning & control systems,
cost accounting procedures, planning, budgeting system, capital budgeting systems etc.

VI. Staff
Staff means that the company has hired able people, trained them well & assigned
them to the right job. Selection, training reward, recognition, retention, motivation &
assignment to appropriate work are all the key issues.
Staffing is a process of acquiring human resource for the company & ensuring that
they have the potential to contribute to the achievements of company’s goal. It is selecting
people for specific company positions & developing in these & subsequent abilities & skills
that they would need to be effective in these & subsequent assignment.
The staffing function applies to the whole company. Good performing companies paid
attention to the development of managers. On the Indian since there are some example of
firms, which are relatively more, concerned about the processes of management
development.

VII. Shared values

Shared values means that the employees share the same guiding values. Values are
things that you would strive for even if they were demonstrably not profitable.

1) Customer satisfaction
The company is dedicated to building a relationship with our customers where the
company becomes partners in fulfilling their mission.
The company strives to understand their customer’s needs & to deliver products & services
that fulfill & exceed all their requirements.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 26

2) Responsibilities
They accept that our actions must accord with the interest of the society. About
all else, they place our products & services in the interest of the safety of people, the
economic use of resources, & environmental suitability.

3) Commitment to total quality

The company is committed to continuous improvement of all our activities. The
company supplies product & services that conform to highest standards of design,
manufacture, reailiblity, fitness etc.

SWOT Analysis
STRENGTH
1. Extensive integration:-SRSL is extensively integrated, extracting maximum value out
of sugarcane through the processing of cane, molasses and bagasse to produce sugar,
power and ethanol.
2. Strong global presence: The Company is the second largest exporter of Sugar from
India with a presence in the Middle east, South East Asia and East Africa. This export
revenue provides the company with an enhanced trade flow larger than its production.
3. Preferred supplier status. The company is a sugar “supplier of choice” across brand
enhancing multinational companies that produce carbonated soft drinks, fruit juice
and others. Its clients are Coco-Cola, Pepsi, ITC and others.
4. Increasing capacity. The Company has relentlessly enhanced its capacity. Since its
IPO in October 2005, Its sugar capacity grew seven fold, etanol capacity grew 15 fold
and power capacity grew by 8 fold
5. Moderating the impact of sugar cyclicality.
6. Successful acquisition. The company acquired co-operative mills and stand alone
ethanol plant of 100 KL and leased production assets. The company also acquired a
strategic 54% in KBK Chem- Engineering Pvt ltd.
7. Excellent farmer relationship.
8. Seamless sugarcane collection network.
9. Technical expertise.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 27

 WEAKNESS
1) Over stock of sugar leads to lag in conversion of stock into cash.
2) Excess of labour causes increase in cost.
3) Delay in payments of staff members & workers

OPPORTUNITIES
1) Government of Karnataka has planned to provide irrigation facilities to the farmers
in Gulbarga and Bijapuru8 district, this helps to enhance the sugar cane production in
coming year.
2) Company has prepared detailed project report to produce ethanol production as by-
product of sugar; this can help to increase the company profit.
3) The company has acquired 54% stake in KBK Chem- Engineering pvt ltd this
acquisition provides the company with robust platform for leading innovation in
flexi- production, new feedstocks and cellulosic process.

THREATS
1) Competition from both private & public sector.

2) Lack of availability of skilled labour.

3) Problem of “son soil”.

4) Government restrictions on sale of sugar.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 28

 THEORITICAL FRAMEWORK

WORKING CAPITAL
Working capital is a means and not an end, every company want to invest smaller amounts
as working capital but it must be adequate as well to run the business smoothly. Thus it is a
means to achieve the common objectives. It involves the determination of amount spent on
current assets less credit benefits granted by the creditors. Following factors are to be taken
into considerations while estimating the working capital requirements:
• Expenses on raw materials, labor and overhead.
• Length of time, the raw materials to be held in stock.
• Length of time, the raw materials remain in manufacturing process in semi
finished form.
• Length of time, finished goods are held in godown awaiting sales.
• Credit period granted to the sundry debtors.
• Credit period granted by the sundry debtors.
• Time gap in the payment of wages, salaries and other operating expenses.

IMPORTANCE OF WORKING CAPITAL

The working capital level in any firm is a very important factor to be maintained. The
fate of large to be maintained. The fate of large-scale investments in fixed capital is often
determined by a relatively small amount of current assets. Working capital is just like a heart
of industry; if it is weak the business cannot prosper and survive although there is a large
body of fixed assets. Adequacy of working capital is a lifeline and controlling the center of a
business. It is said inadequate working capital is disastrous, where as redundant working
capital is a criminal waste. The level of working capital makes an impact of profitability and
liquidity of the firm and also risk involved in that particular project.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 29

ADVANTAGES OF WORKING CAPITAL

1. It is must for maintaining solvency and continuing production by making the

payments in time in this era of cutthroat competition.
2. It increases goodwill and debt capacity of the business.
3. It creates a feeling of security and confidence in management or officials of the
company.
4. Exploitation of goods opportunities.
5. Easy loan from banks can be obtained without any security.
6. High morale of executives because of an environment of certainty, security and
confidence which is a great psychological facto.
7. It increases the production efficiency by making expenditure on research and
technical development and by maintaining continuous flow or raw materials.
8. Cash discount can be claimed by making cash purchases
9. Distribution of dividend in not possible inspite of good profits, in the absence of
adequate working capital.
10. Meeting unseen contingencies such as depression, financial crises.
The following are the two deciding factors for deciding the level of working capital.
1. Operating cycle.
2. Cash inflows and cash outflows.

1. Operating cycle
Operating cycle is the time duration required to convert sales, after the conversion of
resources in to inventories and inventories into cash.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 30

 OPERATING CYCLE

MBA, PG-DEPARTMENT, VTU, BLGAUM. 31

 Cash Raw
Material

Work -in-
progress
B/R

Goods

The operating cycle of a manufacturing company involves three phases.

1. Purchasing of resources such as raw materials, labour.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 32

 2. Manufacturing of products, which includes conversion or raw material into work in-
process then subsequently to finished goods.
3. Sale of product either for cash or on credit. Credit sales create book debts for
collection.

2) Cash inflow and cash outflow

In many organizations the cash flow in to and out of the organization decides the
working capital requirements. Cash inflow are usually un-certain and cannot be protected.
But cash out flow up to some extent is predictable. But both of them are non-synchronous in
nature. So, when the cash inflows are more or predictable in a firm then the working capital
requirements is less. And when the cash inflows are less or uncertain then the requirement of
working capital is more.

Operating Cycle is defined as the time duration which the firm requires to Manufacture
and sell the product and collect cash. Thus operating cycle refers to the acquisition of
resources, conversion of raw materials into work-in-process into finished goods, conversion
of finished goods into sales and collection of sales. Larger is the operating cycle, larger will
be the investment in current assets. In practice, firms are acquire resources on credit. To that
extent, firm’s need to raise working finance is reduced.

Net Operating Cycle is used for the difference between operating cycle (or gross operating
cycle) and the payment deferral period (or the period for which creditors remain
outstanding).

The Manufacturing Cycle is conversion of raw material into work-in-process into finished
goods, is a component of operating cycle, and therefore, it is a major determinant of working
capital requirement. Manufacturing cycle depends on the firm’s choice of technology and
production policy.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 33

Credit Policy of the firm is another factor which influences the working capital requirement.
It depends on the nature and norms of business, competition and the firm’s desire to use it as
a marketing tool.

Investment in Current Assets involves a trade-off between risk and return. When the firm
invests more in current assets it reduces the risk of illiquidity, but loses in terms of
profitability since the opportunity of earning from the excess investment in current assets is
lost. The firm therefore is required to strike a right balance.

Financing of Current Assets also involves a trade-off between risk and Return. A firm can
choose from short- or long-term sources of finance. If the firm uses more of short-term funds
for financing both current and fixed assets, its financing policy is considered aggressive and
risky. Its financing policy will be considered conservative if it makes relatively more use
long term funds in financing its assets. A balanced approach is to finance permanent current
assets by long-term sources and ‘temporary’ current assets by short-term sources of finance.
Theoretically, short-term debt is considered to be risky and costly to finance permanent
current assets.

MANAGEMENT OF WORKING CAPITAL

Basic objective of the working capital management i.e., it refers to all aspects of
administration of both current assets and current liabilities are concerned with the problems
that arise in attempting to manage the current assets, current liabilities and the
interrelationships that exists between them. The finance manager had to perform two
functions.

1. Estimating the amount of working capital required.

2. Sources from which these funds are to be raised.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 34

TYPES OR CLASSIFICATION OF WORKING CAPITAL
1. Permanent or fixed working capital (P.W.C)

2. Temporary or variable working capital (T.M.C.)

1.Permanent or fixed working capital

It represents that part of capital, which is permanently locked up in the business in the
current assets and carrying out business smoothly. It is permanent in nature and will increase
as the size of business expands. In other words current assets required on a continuing basis
over the entire year are permanent working capital. Ex. Investment required to maintain the
minimum stock of raw material, work-in-progress, finished products. Loose tools and
equipments. It also requires minimum cash to be kept in reserve for payment of wages,
salaries and all other expenditure thought the year.

tt.Wyiisww.wC
Y T.W.C
Amount of
Working capital
P.W.C

O TIME X

MBA, PG-DEPARTMENT, VTU, BLGAUM. 35

Permanent working capital can be further divided into:
1. Regular working capital.
2. Reserve working capital.

1. Regular working capital

It is the minimum amount of liquid capital needed to keep up the circulation of the
capital from cash to inventories to receivables and again to cash. This would include
sufficient minimum bank balance to discount all bills, maintain adequate supply of raw
materials… etc.

2. Reserve working capital

It is the excess over the needs or regular working capital that should be kept in
reserve for contingencies that may arise at any time these contingencies include rising prices,
business depression, strikes special operations such as experiments, with new products.

2. TEMPORARY OR VARIABLE WORKING CAPITAL

Variable working capital changes with the increase or decrease in the volume of
business. It may be sub-divided into.
1. Seasonal working capital.
2. Special working capital.
The working capital required to meet the seasonal needs of the industry is known as
seasonal working capital. On the other hand special working capital is that part of the
variable working capital which is required to finance the special operations, such as extensive
marketing campaigns, experiments with the products or methods of production, carrying of
special jobs. Etc.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 36

 T.M.C

T.M.C
P.M.C
Amount of
Working
capitalY

O X
TIME

COMPOSITION OF WORKING CAPITAL

For a proper appreciation and under standing of it, closer look at the composition of
working capital is necessary. The following are the constituent parks of working capital.
a. Current assets
1. Cash and Bank balance.
2. Quoted investments in government and other trustee security.
3. Fixed deposits with banks.
4. Stocks (Raw Material, Stock-In-Progress, Finished Goods, Spares etc.)
5. Receivables (other than deferred receivables) and other installments of deferred
receivables due within one year.
6. Advance payment for tax.
7. Advance paid to suppliers of raw materials.
8. Income accrued and due.
9. Other loans and advances recoverable at a short notice and money receivable during
next 12 months.
10. Prepaid expenses and tax.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 37

b. Current liabilities
1. Trade dues and other liabilities.
2. Outstanding expenses or payments.
3. Sundry creditors or trade creditors.
4. Bills payables.
5. Bank loans (short term) or bank o/d
6. Incomes received in advance.

FACTORS AFFECTING WORKING CAPITAL REQUIREMENTS

Large number of factor influences the working capital requirements. The following
factors must be considered in planning the need for working capital of a concern.
1. Nature and volume of business.
2. Size of the business.
3. Seasonal variations.
4. Terms of purchase and sale.
5. Turnover of circulating capital.
6. Labour intensive v/s capital intensive.
7. Growth and expansion of business.
8. Business cycle fluctuations.
9. Means of transportation and communication.
10. Hazards and contingencies inherent in a particular business.

Dangers of excess working capital

Maintaining a redundant or excess working capital is said to be a criminal waste
because of the following reasons.
1. There is no proper return on investment because excess working capital earns nothing
for the business.
2. Unnecessary accumulation or purchasing of inventories, thus changes of inventory
mishandling, waste, theft and losses will increase.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 38

 3. No expansion activities because major portion of fixed capital is being invested in
current assets.
4. Poor grade management.
5. It destroys turnover ratios.
6. It is an indication of defective credit policy and slack collection period.
7. it is an indication of higher incidence or bad debts resulting in decrease in the
profitability.

Dangers of inadequate working capital

1. It stagnates growth.
2. It becomes difficult to implement operating plants and achieve the firm’s operating
profit target.
3. Operating inefficiencies will increase.
4. Inefficient use of fixed assets leads to decrease in profitability.
5. Credit opportunities cannot be used.
6. The firm loses its reputation.

Dimensions of working capital

It refers to the various phases involved in the working capital, the current assets
should be utilized to the maximum extent. Therefore the firm should have the adequate
working capital.
The following are the different policies, which are adopted by the firm for
maintenance of current assets.

1. Conservative policy.
2. Aggressive policy.
3. Average policy.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 39

 CONSERVATIVE POLICY

Level of
current AVERAGE POLICY
assets to
fixed assets
AGGRESSIVE POLICY

FIXED ASSETS

Out put

1. Conservative policy.
The current assets maintained are naturally more than required. It is called
conservative because the risk attached in this policy is very less. Therefore as a precautionary
measure more, current assets are maintained to reduce the risk and increase the liquidity. The
main drawback is it reduces profitability.

2. Aggressive policy.
It is another extreme of conservative policy. It is called aggressive because the risk
attached is more leading to more profitability and decrease in liquidity. The current assets
maintained are just minimum, which leads to inadequate working capital and chances of the
firm becoming technically insolvent, is more

3. Average policy.
It matches between both conservative and aggressive policies. It is a trade off
between these two policies as the risk is also minimized and the profitability is increases. The
current assets are just adequate which leads to a situation called optimum working capital.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 40

ESTIMATION OF WORKING CAPITAL REQUIRMENTS
Working capital is a means and not an end, every company wants to invest smaller
amounts as working capital but it must be adequate as well to run the business smoothly.
Thus it is a means to achieve the common objectives. To the business, it is necessary to
decide adequate amount of working capital and it is not an end itself.

In general working capital requirements is estimated as follows.

1. Percentage of working capital to sales.

2. Percentage of inventory and receivable to sales.
3. Percentage of working capital to fixed assets.
All the above three methods are considered to be crude methods, which suffers so
many weaknesses .

MBA, PG-DEPARTMENT, VTU, BLGAUM. 41

 PRESENTATION OF DATA

Statement of changes in working capital for the year ended 2007 -2008

Particulars 2007 2008 Increase Decrease

Current Assets
Inventory 1001.69 2252.11 1250.42

Debtors 386.85 1603.29 1216.44

Cash and bank 306.71 226.94 79.77

Other Current Assets 323.32 853.46 530.14

Loans and advances 1333.83 2727.13 1393.3

Current Assets 3352.4 7662.93 4310.53

Current Liabilities
Current liabilities 822.32 2213.28 1390.96

Provisions 389.77 572.42 182.65

Net Current liabilities 1212.09 2785.7 1573.61

Net Working capital 2140.31 4877.23 2736.92

Statement of changes in working capital for the year ended 2007 -2008

Particulars 2008 2009 Increase Decrease

MBA, PG-DEPARTMENT, VTU, BLGAUM. 42

 Current Assets
Inventory 2252.11 10721.10 8468.99

Debtors 1603.29 1762.27 158.98

Cash and bank 226.94 4911.58 4684.64

Other Current Assets 853.46 717.51 135.95

Loans and advances 2727.13 4518.16 1791.03

Current Assets 7662.93 22630.6 14967.7

Current Liabilities
Current liabilities 2213.28 9157.08 6943.8

Provisions 572.42 1014.46 442.04

Net Current liabilities 2785.7 10171.54 7385.84

Net Working capital 4877.23 12459.08 7581.85

INTERPRETATION
The difference between the current assets and current liabilities is called net
working capital. From the above table we found that net working capital has been increasing
in the three years.
This is due to rise in current assets such as cash and bank balances, debtors, and
inventories. But in the year 2007-2008 and 2008 -2009 there was increase in working capital
and increase in current liabilities idle cash affects the profitability of the company. The
company has to check regarding the excess amount of cash and inventories held with it.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 43

The Inventory for the year 2008-2009 is
INVENTORY September 2008 September 2009
Stores and Spares 455.87 480.29
Raw materials and components 682.28 3,047.11
Intermediate products 105.05 159.42
Work-in-progress 98.41
Finished products
Manufactured 837.47 4,966.96
Others 33.75 1,968.91
2,252.11 10721.10

The Sundry Debtors for the year 2008-2009 are

Sundry Debtors September 2008 September 2009
Unsecured
Debt over six months
Considered good 199.31 187.54
Considered doubtful
Others
Considered good 1403.98 1574.73
1603.29 1762.27

The Cash and Bank balance for the year 2008- 2009 is
Cash and Bank balance September 2008 September2009
Cash on hand 9.42 6.49
Balances with scheduled banks
On current accounts 114.45 2,839.55
On deposit accounts 90.33 2,062.61
Balance with other banks
On current accounts 12.74 12.74
226.94 4,911.48

The other current assets for the year 2008- 2009 were
Other Current Assets September 2008 September 2009
Export incentives accrued 637.56 312.98
Interest accrued 4.95 16.08
Others 210.95 388.45
Total 853.46 717.51

MBA, PG-DEPARTMENT, VTU, BLGAUM. 44

The Loans and Advances for the 2008-2009 were
Loans and Advances September 2008 September 2009
Unsecured and considered good
Advances recoverable in cash or 1027.18 2195.93
kind or for value to be received
Balances with excise, customs, 944.99 1072.71
etc
Deposits 311.92 686.92
Advance Income tax 443.04 562.60
Total 2727.13 4518.16

Current Liabilities

The current liabilities include the following

Current Liabilities September 2008 September 2009
Sundry creditors
Small scale industries 2.80 1.64
Others 924.88 8302.80
Advance from customers 565.17 136.49
Sundry deposits 281.14 -
Interest accrued but not due 116.53 156.99
on loans
Other liabilities 322.76 559.16

The Provisions for the year 2008-2009 are as follows

Provisions September 2008 September 2009

Provision for taxation 488.42 624.13
Provision for gratuity 6.11 1.04
Provision for leave 4.79 10.77
encashment
Provision for fringe benefit 8.70 7.76
tax
Provision for dividend on 55.19
equity shares

MBA, PG-DEPARTMENT, VTU, BLGAUM. 45

Provision for interim 316.90
dividend on equity shares
Provision for corporate 9.38 53.86
dividend tax
Total 572.42 1014.46

MBA, PG-DEPARTMENT, VTU, BLGAUM. 46

Balance Sheet as at September 30, 2008 and 2009:
(Rs. In Millions)

MBA, PG-DEPARTMENT, VTU, BLGAUM. 47

 Schedule No 30 Sept 2008 30 Sept 2009
SOURCES OF FUNDS
Shareholder’s funds
Share capital 1 506.86 522.77
Reserves and Surplus 2 7829.38 14,779.13

Loan Funds
Secured Loans 3 8330.91 13006.10
Unsecured Loans 4 263.64 421.36

Deffered Tax Liabilities 5 466.99 820.97

Total
APPLICATION OF FUNDS
Fixed assets 6
Gross block 8400.79 15,704.22
Less: Depreciation 884.31 1,555.14
Net block 7,516.48 14,149.08
Capital work-in-progress 5,211.63
including capital advances 2584.90

Investments 309.61 476.84

Current Assets, Loans and
Advances
Inventory 8 2252.11 10721.10
Sundry debtors 9 1603.29 1762.27
Cash and bank Balances 10 226.94 4911.58
Other current assets 11 853.46 717.51
Loans and advances 12 2727.13 4518.16
Less: Current Liabilities and
Provisions
Current liabilities 13 2213.28 9157.08
Provisions 14 572.42 1014.46
Net Current Assets 4,877.23 12,459.08
Deferred revenue expenses 15 16.15 27.60
Total
MBA, PG-DEPARTMENT, VTU, BLGAUM. 17,931.10 48
29,697.50
MBA, PG-DEPARTMENT, VTU, BLGAUM. 49
Profit and Loss Account

Particulars Sched 30 Sept 30 Sept 30 Sept 30 Sept

2006 2007 2008 2009
ule
No.
INCOME
Revenue (net) 16 11,046.74 9,506.42 21,052.68 28,159.89
Other Income 17 64.09 175.72 138.95 64.40
Total 11,110.83 9,682.14 21,191.63 28,224.29
EXPENDITURE
Raw material 18 3,964.05 3,378.51 6,526.91 20,439.37
consumed
Cost of traded goods 19 4,548.46 3,370.65 9,219.18 3,928.08
(Increase)/Decrease 20 (128.28) 115.32 20.95 (4,163.28)
in Inventory
Personnel Expenses 21 122.24 238.98 418.85 517.35
Operating and 22 509.15 861.73 1566.54 2,372.48
Administrative
Expenses
Selling and 23 431.78 221.59 776.51 356.18
Distribution Expenses
Depreciation and 6 40.32 196.95 369.18 675.27
Amortization
Financial Expenses 24 187.87 180.46 685.43 1076.84
Profit Before tax 1,435.24 1,117.95 1608.08 2,967.93
Provision for tax
Current tax 164.00 88.40 158.57 363.98
Deferred tax 2.44 2.10 262.96 353.98
Fringe benefit tax 16.39 145.08 5.22 2.17
Profit After Tax and 1,252.41 882.37 1,181.33 2,247.80
before prior items
Prior period items 7.30 - - -
Add: Excess - - 182.39 0.22
provision of
depreciation written
back
Net profit 1,327.83 882.37 1,339.14 2,235.55
Balance brought 334.35 1,307.88 1,408.26 2,177.72
forward from

MBA, PG-DEPARTMENT, VTU, BLGAUM. 50

previous year
Profit available for 1,662.18 2,190.25 2,747.40 4,413.27
appropriation
Dividend on - 35.51 - -
Preference shares
Dividend on Equity 47.62 53.99 59.56 -
shares
Corporate dividend 6.68 15.21 10.12 53.86
tax
Transfer to general 300.00 500.00 500 500
reserve
Surplus carried to 1,307.88 1,585.54 2,177.72 3,422.51
balance sheet
Basic and diluted 25 53.37 35.19 4.13 7.80
earnings per share (In
rupees / share)

FINDINGS AND SUGGESTIONS

Summary of the Findings

• During the year 2008- 2009, the current ratio has declined from 2.75 to2.22, it means
that it needs improvement in current assets and also decrease liabilities if possible.
• The ratio of Sales to the Current assets is decreased from 4.31% to 2.26%.
• It is able to get good credit terms from its suppliers. The debt payment period has
increased as there is decline in creditors turnover rate, the less is the need for other
sources of financing working capital.
• Gross profit margin has increased from 10.62% to 12.98%
• Net profit margin has also increased from 4.40% to 5.09%.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 51

 • Inventory in case of Renuka sugars are not written below cost if the finished products
in which they will be incorporated will be sold at or above cost.
• There is an increase in labour cost, factory overhead, administrative expenses, finance
cost and marketing expense, which means that the expenses have been increased
• Consumption of materials has increased.
• Net working capital has improved, which shows the efficiency of the company in the
working capital.
• Even the turnover of net working capital has also increased.

SUGGESTIONS

• The management of inventory can be improved further if the company undertakes or

makes use of techniques like EOQ analysis and ABC analysis.

• It needs improvement in case of current assets. This shows there can be further
improvement in the utilization of current assets.

• The company also needs to improve its quick ratio, which shows inefficiency in the
use of liquid assets. They should improve the utilization of liquid assets.

• The current assets to total assets is increased which means the company is paying
more attention to its current assets. They should improve the utilization of current assets as it
will be required for day to day business.

• The management of cash and bank can also be improved. It has to follow the four
motives of cash transaction. Cash is required to improve as it is a common denominator.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 52

 CONCLUSION

• On the contrary, Renuka Sugars is efficiently managing its working capital. Its net
working capital has been increasing in 2008-09as compared to previous year.

• There is increase in net operating ratio in 2008-2009, because of increase in net

operating profit, which is a positive sign for the company.

• Renuka Sugars has reduced its liquidity during the year and it is more efficient in
utilizing the inventory.

• Sundry debtors to current assets showed improvement in 2008-09 in comparison with

previous year.

• The return on capital employed has been increased; this shows that the capital has
been properly utilized.

Thus, we can conclude that the company is doing well in the working capital.

MBA, PG-DEPARTMENT, VTU, BLGAUM. 53

MBA, PG-DEPARTMENT, VTU, BLGAUM. 54