CHAPTER I1. INTRODUCTION

The term training refers to the acquisition of knowledge, skills, and competencies as a

result of the teaching of vocational or practical skills and knowledge that relate to specific useful

competencies. This industrial training was undertaken in order to observe and familiarize with

the organizational activities and practical application of the concepts. Basically, the training

covered the areas like functions of department, organization performance, production process

etc.

The sugar industry in India is the best agro-based industry occupying a pre-eminent

position in the economy of the country about 3 Lakhs. Skilled and unskilled workers and 70,000

technicians, besides providing employment to about 27 million cultivators.

HISTORY OF SUGARCANE

Sugarcane is the world’s main source of sugar. In south pacific Islanders grew sugarcane more

than 8000 years ago. The plant was also widely grown in ancient India, the cultivation and

refining of sugarcane to America and the West Indies. Today the leading sugarcane growing

nations include INDIA, BRAZIL, CUBA, MEXICO, THE UNITED STATES AND

PHILPPINES.

Sugarcane provides useful raw material over to 27 industries to produce SUGAR,

JAGGERY AND KHANDSARI and arrange of agro industrial co-products such as ALCOHOL,

PAPER AND NEWS PRINT, VARITEY OF CHEMICALS, and CATTLE AND

ELECTRICITY.

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2. INDUSTRY PROFILE

2.1. Sugar Production:

After two years of large statistical deficit, global sugar economy was calculated to

register a surplus during 2010/11. International sugar organization places them surplus below

one million ton Thailand has shown a remarkable progress in canton. Harvest for 2010-11.

Improved rains and larger use of inputs have helped Thai1. Sugar increase cane yield by 17%.

Stock to consumption ratio 2010-11 is at its lowest in more than two decade.

2.2. Sugar Balance:

World sugar balance (Million tons, raw value)

Source: ISO- May 2011

World sugar prices:

World market values fell steeply during March’11 and April’11 reflecting sharp increase

in sugar availability. Both raw and white sugar demonstrated a downward correction. This year,

sugar has been the worst performer of the 24 commodities on the standard & poor’s GSCI index.

Kinsmen predict volatility to be contained within a downward trend. The reported reduction in

net long positions indicates the fading investor interest in sugar futures on expectations of further

Price easing.

On the demand side, last year higher prices have eaten into the consumption in, India,

china and major sugar consumers.

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.

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2.3. Sugar Prices:

Despite OGL announcement made and stock holding limits increased by the Government,

open market prices continue to retain below the cost of production. The continual higher monthly

releases by Government might be an obvious reason for poor domestic prices that have made

sugar mills lose continuously for more than four months. The estimated surplus over domestic

Off-take may be a constraint for sugar prices to improve in the near term.

2.4. Sugar Futures

The spot and futures prices of sugar witness a bearish trend.

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3. COMPANY PROFILE

Ponni Sugars (Erode) Ltd is an offspring of Ponni Sugars and Chemicals Ltd (PSCL)

under a Demerger Scheme sanctioned by the Hon’ble High Court of Madras on 10th September

2001. In terms of the Scheme, the company took over the business of Erode Undertaking with

concurrent transfer of major part of stakeholders’ interest in PSCL to the company.

The Erode sugar mill was set up with 1270 TCD capacity in 1984 in a record time of 12

months. It achieved full capacity crushing during the very first year of its commercial operation

that enabled declaration of a maiden dividend of 10% in that very first year, a record in the

annals of sugar industry. It was a trendsetter in mobilising surplus cane during its infancy

stage from neighbouring sugar mills and extending crushing season to well above industry

average. Its capacity was expanded to 2700 TCD in 1994.

The Erode sugar mill has successfully implemented an innovative Lift Irrigation

Scheme by bringing in dry lands under cane cultivation, utilizing the effluent discharge of the

neighbouring paper mill. This has helped secure multitudinal benefits – providing a dependable

and perennial source of irrigation to farmers in the neighbourhood, increase of land value

manifold in the region, transforming the livelihood of local rural population, resolving the raw

material needs of sugar and paper mills and addressing ecological concerns in effluent discharge

Right at its inception, Ponni was structured on the concept of total diversion of

bagasse for paper. Accordingly it installed a coal fired boiler and later added a multi fuel boiler

in place of conventional bagasse fired boilers. It has a bagasse tie up arrangement with

Seshasayee Paper and Boards Ltd for a mutually beneficial and rewarding long term relationship.

Ponni is an efficient and quality producer of sugar, catering to both domestic and

international markets. It is a venerable partner for villagers growing sugarcane in its

neighbourhood. It enjoys cordial relationship with employees. It firmly believes in transparent

and fair dealings with all its stakeholders by following sound corporate governance norms both

in letter and spirit.

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Ponni Sugars is the brainchild of late S Viswanathan, affectionately referred to as SV by

his friends & associates, a renowned industrialist of the South. SV was a lawyer-turned freedom

fighter-turned industrialist of a unique genre. He was a close associate of late Jaya Prakash

Narayan. He teamed up with Sri R Venkataraman, former President of India, to practise Law at

Chennai. He joined in 1977 the House of Seshasayee, a Managing Agency firm of repute in that

era.

With the untimely death of Sri V Seshasayee, SV took on the mantle, and established

in quick succession between 1978 and 1962 four industrial enterprises, namely, Seshasayee

Industries Ltd, Neyveli Ceramics and Refractory’s Ltd, SEMCO Meters Ltd and Seshasayee

Paper and Boards Ltd. He later established Ponni Sugars and Chemicals Ltd, SPB Projects

and Consultancy Ltd, Esvin Advanced Technologies Ltd etc.

The magnum opus of SV was the creation of Tamil Nadu Newsprint and Papers Ltd. He

took total charge and responsibility from concept to commissioning of this pioneering venture.

This was the first ever mill to produce, successfully, newsprint out of sugarcane bagasse

anywhere in the world and it received the acclaim of World Bank. This continues to be one of

the top profit performers for the Tamil Nadu Government.

SV entered the sugar industry rather late in his illustrious career. Sugar was just

incidental to his cherished goal. He despised the denudation of precious forest wealth in

producing paper. He realized long before that for the long-term survival of paper industry, a

strategic shift to a sustainable, viable alternative source of raw material was imperative. For this,

he sought to create an interdependence, which he called a marriage, between paper and sugar

industries to resolve the raw material shortage for paper industry, strengthen the viability of

sugar industry and simultaneously preserve forest cover and protect environment for public

good.

SV in this resolve promoted Ponni Sugars, which became the first sugar mill in the

country to use alternative fuel in its boilers and release its bagasse in entirety for paper making.

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SV was a rare phenomenon rising from his obscure beginnings to set up industrial

enterprises o f great national significance, with enviable records of adherence to the code of

business ethics. He fused the values of commerce and nationalism in his corporate creations.

He was prone to take high risks and loved to be challenged. The risks, in fact,

spurred him into action. Of taking risks, he said, “Legitimate risks are to be taken to make

progress in one’s Endeavour’s. If we do our homework thoroughly and convince ourselves of

the success of the project and its larger usefulness to the society, if we have no vested interests,

we can embark on any risky project.”

SV passed away on 22nd July 2001 after a brief illness. He was a ‘Visionary’ par

excellence and ‘Karmayogi’, non-peril.

3.1. Date Chart:

26-12-1996 Company incorporated under the name  SPB Sugars and Chemicals Limited 27-01-2000 Name of the company changed to Ponni Sugars (Erode) Limited 10-09-2001 Demerger Scheme for the transfer of Erode Undertaking of Ponni Sugars and

Chemicals Ltd established in 1984 to the company effective 01.04.1999. Sanctioned by High Court of Madras.

18-10-2001 Completion date of Demerger Scheme which comes into effect from 01.04.1999.

3.2. Factory Factsheet:

Year of Establishment : 1984 Initial Capacity (TCD) : 1270 Present Capacity (TCD) : 2700 Factory Area (acres) : 33.71 Colony Area (acres) : 9.10 No of Employees Regular   - 233   Seasonal – 138

: 371

No. of Employee Quarters : 147No. of Cultivators : 7477Annual Cane Area under Registration (acres)

: 21300

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3.3. Group Companies:

Seshasayee Paper and Boards Limited

Seshasayee Paper and Boards Ltd (SPB) is a large paper mill situated at Erode, Tamil Nadu concentrating on production of fine papers. SPB was established in 1960. Today SPB produces over 120,000 tpa of fine papers and exports around 20% of its turnover. The manufacturing range is from 28 gsm to 270 gsm in its varied MF, MG and Yankee machines. SPB is ISO 9001 and 14001 certified.

High Energy Batteries (India) Limited

High Energy Batteries (India) Limited (HEB) manufactures Silver Zinc and Nickel Cadmium batteries for defense and space research. HEB is located at Mathur, near Trichy, Tamil Nadu. The Indian Armed Forces and Space Research Institutions are its valued customers. HEB is well known for its quality and ability to develop need specific batteries for defense and space research. HEB is ISO 9001 and 14001 certified.

 SPB Projects and Consultancy Limited

SPB-PC is an engineering consultancy company based at Chennai, Tamil Nadu, India, offering a wide range of engineering and technical services in the pulp & paper, sugar, industrial power generation, ceramics and environmental management sectors. In the long run SPB-PC would aim to become a global engineering outsourcing company leveraging its vast and varied engineering skills for various applications while retaining its core skills and eminence in the industries it serves today.

Esvin Advanced Technologies Limited

Esvin Advanced Technologies Limited (Esvin Tech) is situated at Chennai with its research and production facilities located around Erode, Tamil Nadu. Esvin Tech was floated in 1988. The company has since then successfully developed a Gasification Technology (with American Collaboration) for treatment of liquid effluents, patented a process for manufacture of liquid sugar from raw sugarcane juice at Ponni Sugars, promoted the awareness of enzymatic bleaching through large scale manufacture and mill scale trials both in India and China, and is currently manufacturing biofertilisers, biopesticides etc at its facilities in Erode.

3.4. Board of Directors

The composition of the Board is well balanced with expertise drawn from Industry, Management, Finance and Agriculture. All except the Managing Director are non-executive

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Directors. The Chairman is non-executive and the number of Independent Directors is more than 1/3rd of the total strength. Director’s Profile:

Name/Title Qualification Expertise in specific functional areas

N Gopala Ratnam Chairman

B.Sc (Physics) B.E (Mech)

Renowned specialist in pulp & paper technology, having experience in management of projects, operations and overall management of diverse industries engaged in pulp, paper, sugar and batteries.

Dr L M Ramakrishnan Vice Chairman

M.B.B.S., D.L.O Doctor turned educationist engaged in the management of educational institutions. Well respected by the local farming community.

Arun G Bijur Director

B.E (Chemical- Engineering)

Long and varied experience in managing large scale projects involving coordination of all phases of engineering, procurement, construction, startup and commissioning activities of various Pulp and Paper mills, Sugar mills and Ceramic units.

Bimal Poddar Director

B.Com Varied experience in the spheres of finance, administration & general management. Widely travelled throughout the world on business visits.

C K Pithawalla Director

B.E (Mech) A successful NRI businessman having diverse interests in UK, Germany and Switzerland.

N Ramanathan Managing Director  

ACA, ACSAICWA 

Professional expertise in diverse disciplines of Finance, Taxation, Accounts and General Management.

S K Ramasamy Director

Intermediate Agriculturist having experience in sugarcane cultivation and having wide contacts among local farming community.

N R Krishnan, IAS (Retd)

Director

B.Sc (Hons), M.Sc.,

Rich and varied experience in Administration and General Management. Held several high positions in State and Central Governments. Served as non-executive director on the Boards of several large Public Sector Undertakings and Financial Institutions.

V Sridar   Director

 B SC, ACA Rich experience in Banking, Finance and General Management. Held several high positions in commercial banks and National Housing Bank.

Dr Mrs Nanditha Krishna   Director

 Ph D An Authority on indology and an environmental educationst. Specialised in Indian Art and Culture, Environmental History and Ecological Heritage of India and Cambodian Art.

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  3.7. Committees:

Audit Committee Finance Committee

Securities Transactions cum

Investors Grievance Committee

Remuneration Committee

V Sridar (Chairman)N Gopala Ratnam

(Chairman)N Gopala Ratnam

(Chairman)V Sridar

(Chairman) Bimal Poddar Bimal Poddar Arun  G Bijur N Gopala Ratnam

Dr. L.M. Ramakrishnan Arun G Bijur N. Ramanathan Dr.L.M. RamakrishnanN R Krishnan N. Ramanathan N R Krishnan

3.6. Key Executives:

Name / Designation

Qualification Experience Functional Responsibility

R.Chandramouli President

B.Sc, ANSI

More than 3 decades of experience in sugar industry operation and general management

Chief Operating Officer in charge of Erode Sugar Mill

K.Yokanathan   Chief Financial Officer 

B.Com, ACAVast experience in the area of finance, accounts, taxation, marketing and administration

In charge of finance, accounts, marketing and general administration of the Mill

M.Shanthan   Vice President (Cane) 

M.Sc,(Agri)Vast experience in sugar cane development and management.

In charge of cane development operations of the mill

3.7.Offices:

Registered Office          Factory     Esvin House, No.13 Old Mahabalipuram Road,Seevaram Village, Perungudi , Chennai 600 096

 Odapalli, Cauvery R.S. Pallipalayam, Erode 638 007

Phone : (044) 39279300       Phone : (04288) 247371 (8 lines)Fax : (044) 24960176   Fax : (04288) 247363Email : admin@ponnisugars.com Email : gen@ponnisugars.com

Other Offices:

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       New Delhi 

Mr. V. SwaminathanB-213,Second floor Phase - I, Naraina Industrial Area New Delhi 110028Ph : 27792779/60Mobile: 9910233676E-mail: hinergy@bol.net.in

  Mumbai

Mr .Rajan Ramji7/27 Grants Building, 3rd FloorArthur Bender RoadColabaMumbai 400 007Phone: (022) 22340217 / 22833677Fax: (022) 22049736E-mail: rajanjaguar@hotmail.com

Kolkata

Mr V.R.V. NarayanPreyasee’Flat No.1-C, 1st Floor No.2, Motilal Nehru RoadKolkata 700 029

Phone: (033) 24643771/ 24666018Fax:(033) 24643771E-mail: caloff@cal2.vsnl.net.in

3.8.Code of Conduct:

Statement of Values

The Company belongs to Esvin Group founded on cherished principles of high level of

integrity, trust, transparency, law abiding and societal value creation. It is stridently committed

to uphold the core values of the Group and promote professionalism and high standards of

business ethics in the conduct of its business.

Vision

The company is committed to excel as a trusted, socially responsible and customer driven

organization providing maximum value to all stakeholders.

Mission

The company would strive to manufacture quality products at competitive cost through

technology and team work.

Financial Reporting

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The Company shall prepare financial statements and maintain accounting records

fairly and correctly in conformity with applicable accounting and financial reporting

standards. There shall be true and faithful l disclosure of information and unrestrained

access to records to the auditors and statutory authorities. There shall be no wilful

omission of recording company transactions or manipulation of company accounts.

Internal Auditor shall have free and unhindered access to all company information with

liberty to interact with company officials at all levels.

Professional Environment

The company shall provide professional environment with singular emphasis on merit

and performance for the growth of employees. There shall be no discrimination in

recruitment or promotion on account of race, caste or religion.

Recruitment preference for unskilled jobs may however be given to the heirs of

employees dyeing in harness or to residents of the locality in which the company

operates and also in compliance of Government policy.

Political non-alignment

The company shall not support, directly or indirectly, any specific political party or group

or a candidate for political office.

Environmental Policy

The company shall provide a safe and healthy working environment. It shall diligently

adhere to all statutory and regulatory norms in the preservation and promotion of the

environment and bestow utmost care in not interfering with the environment of the territory it

operates in.

The company is committed to prevent wasteful use of natural resources and minimize any

hazardous impact of the development, production, use and disposal of its products and services

on the ecological environment.

Society Consciousness

The company shall not only comply with all relevant laws and regulations but also

actively assist in the improvement of the quality of life of the people in the locality in which it

operates. Its social responsibility endeavour would cover supporting community initiatives on

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health and family welfare, water management, vocational training and educational literacy.

Information sharing

The company shall provide timely, regular and reliable information on its activities

and cooperate with the media in making available required information on its structure,

operations and plans excepting those considered confidential.

It shall put on its website and furnish to Stock Exchanges price sensitive information

and periodical disclosures. It shall promptly respond to the information requirement of its

stakeholders and public.

Business Partners

The company is committed to establishing mutually beneficial relations with its

suppliers, customers and business partners and not indulge in any coercive or oppressive

business practices.

The company recognizes cane growers as its valued business partners and is committed to treat

them in a fair and equitable manner and strive for their continual knowledge and skill up

gradation.

Shareholders

The company is committed to enhance shareholder value and comply with all laws and

regulations governing shareholders' rights. It shall duly and fairly inform its shareholders of all

material developments of its business and disclose requisite information in accordance with

SEBI Regulations and Stock Exchange Listing Agreement.

Code of conduct

All Directors and Senior Management shall act within the bounds of the authority

conferred upon them with commitment to make policies and take informed decisions in the

best interest of the company and its stakeholders.

With a view to maintain the high standards that company has set, the following Rules/

Code of conduct shall be observed by all directors (which term shall also include senior

management where the context so admits) and by all its employees as well, as applicable.

All directors and employees shall diligently follow and steadfastly pursue the 'Statement of

Value' as basic tenets in their conduct.

Ethical conduct

All directors shall conduct their activities with honesty, integrity and fairness and display high

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moral and ethical standards, which shall be fair and transparent and be perceived to be as such

by third parties.

Conflict of interest

Directors shall not engage in any business, relationship or activity detrimental to or in

conflict with the interest of the company or the group. Related party transactions shall be

truly and faithfully disclosed to the CFO, Audit Committee and the Board.

Compliance with law

Directors shall comply with all applicable laws, rules and regulations both in letter and

spirit.

Confidentiality

Any information concerning the company's business and not in the public domain to

which the director is privy or has access must be considered confidential and shall not be

disclosed unless authorized to do so or when required by law.

Gifts and donations

No director shall receive or offer, directly or indirectly, any gift, donation,

remuneration, hospitality, illegal payment or comparable benefit which are intended or

perceived to be intended to obtain business or uncompetitive favours for the conduct of business.

Normal gifts on customary occasion or of commemorative nature may however be given or

received.

Protection of assets

Directors shall protect the company's assets, labour and information and not use them for

personal benefit unless approved as part of remuneration package.

Integrity of data furnished

Directors shall ensure at all times the integrity of data or information furnished to the

company.

Citizenship

Directors shall in private life be free to pursue active role in civic and political affairs

subject however that it does not adversely affect the business interests of the company or the

group.

General conduct

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Directors shall conduct themselves and their activities both in and outside the company in

such a manner as not to adversely affect the image or the reputation of the company.

Reporting

Directors shall bring to the attention of the Board, Chairman, or the Managing Director as

appropriate any information or development either within the company (relating to its employees

or other stakeholders) or external that could impact the company's operations and which in the

normal course may not have come to the knowledge or notice of the company.

Compliance - Monitoring

Compliance with these principles is considered an essential element in company's

business success. The Board and Audit Committee are responsible for ensuring that

these principles are communicated to, understood and observed by all employees as

appropriate.

Day-to-day responsibility is delegated to the senior management which is

responsible for implementing these principles, if necessary through more detailed operating

guidelines.

Assurance of compliance is given and monitored each year. Compliance with the code is

subject to review by the Board supported by the Audit Committee. The company appoints the

Company Secretary as compliance officer for the purpose of Code. Employees are expected

to bring to his attention any breach or suspected breach of these principles. Such reporting will

be held in strict confidence and no employee will suffer as a consequence of doing so.

3.9. Objectives:

Main objectives to be pursued by the company on its incorporation.

To carry on the business as manufactures, procedures, sellers, distributors, stockiest and

traders of sugars and its derivatives Molasses, a Bagase and all materials and substances

arising as by-products out of land in the course of manufacture of sugar.

To carry on the business as manufactures, procedures, brewers, slanders, distillers,

stockiest and traders of rectified sprit, gasohol, acetic acid, acetone, acetic anbydride

vinyl acete, polymers, plastic, poly vinyl chloride liquor and all products made there

from.

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To carry on the business as manufactures, procedures, packers, dealers, stockiest, and

traders of bulk drugs, pharmaceutical and medicinal preparation made out of by-products

of sugar or their derivatives.

To carry on the business of setting up an operating facilities for generation, co-

generation, transmission, distribution, supply, sales, sales either directly or through

others, energy including electricity for captive use or for sale to grids, using bagase, coal,

lignite, petroleum products or any other substances including wind, solar energy or any

other form of energy.

To grow, buy, alter, improve and deal in all kinds of sugarcane and other raw materials.

To purchase or hire goods, materials, machinery or services on credit or otherwise.

To enter into and adopt pre-incorporation contracts and to pay for preliminary and pre-

incorporation expenses of the company.

To undertake and excite any trust which may be considered beneficial to the company,

either directly or indirectly.

To amalgamate with any other company or components having objects altogether or in

post similar to those of this company.

Other objectives:

To carry on the business of clearing and forwarding agents for clearing and forwarding of

any and all goods by road, rail, air, sea or by any other means.

To carry on the business of manufactures, procedures, dealers, distribution and traders of

food stuffs, bakeries, confectionaries, mill products and beverages.

To act as underwriters, commission agents, advertising agents, travelling agents, brokers,

estate agents and hardware merchants.

To carry on the business of manufactures/dealers of cement and related products.

To act as financial, technical, management consultants and provide advice, service and

consultancy in various fields, such as secretarial, commercial. Statistical, financial, legal,

economic, labor, industrial, public relations and general administrations.

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