Introduction - Shodhganga : a reservoir of Indian theses @...

Chapter-VII : Case Study

142

Introduction

The main aim of the study is to have a deep insight into the system of

accounting disclosure practices in sugar industry of Western Uttar

Pradesh and further to identify the areas of accounting which are not in

accordance to standard accounting practices and resultantly leaving

confusion or ambiguity in the minds of the users of accounts

In the present global economic situation of our country where

mergers and takeovers are taking place most of the investment decisions

are being taken on the basis of financial statements and information. If

accounting disclosures are not made according to standard accounting

practices the investor cannot make comparative analysis of such

statement of accounts, then the purpose of financial statements will be

grossly defeated.

In the view of the above it was felt necessary to under-take the study to

evaluate the application of accounting standards in sugar industries.

Sugar mills of Western UP are selected for the study as it appears as the

major sugar producing area in sugar industry.

In the current study two cases of sugar industry has been discussed. In

the first case that is in main case study Simbhaoli sugar industry has been

studied and in the short case study Dhampur sugar industry has been

selected for study.


143

7.1 CASE I - MAIN CASE STUDY - SIMBHAOLI

SUGAR MILLS

Introduction

Simbhaoli sugar mill was established in 1933. It has been a major

producer of for producing sugar in India. Simbhaoli Sugars is a

technology company with a business mix that produces a number of

products viz. refined (sulpher-less) sugar, specialty sugars, quality liquor,

co-generated power, extra neutral alcohol (ENA), ethanol, bio-manure

and technology consultancy. Being India's largest integrated sugar

refinery, the Company has pioneered path-breaking innovations in sugar

refining (Defeco Remelt Phosphotation and Ion Exchange technology),

high value, niche products (specialty sugars) and clean energy

(ethanol). Simbhaoli Sugars has been producing top quality sugars since

eight-decades.

It was established in 1933 by Sardar Raghbir Singh Sandhanwalia.

Simbhaoli Sugars was amongst the first sugar plants to be set up in north

India. Today, it has been evolved into a 1500 crore organisation, which

is professionally and technology driven. It has three sugar complexes -

Simbhaoli (western Uttar Pradesh), Chilwaria (Eastern Uttar Pradesh)

and Brijnathpur (Western Uttar Pradesh) have an aggregate crushing

capacity of 20,100 TCD.


144

Simbhaoli sugar was established by Sardar Raghbir Singh Sandhanwalia

as a partnership firm, with a seed capital of ` 10 lakhs. The other three

partners were Col. Buta Singh, Col. Nau Nihal Singh and Joginder Singh

Mann. Sardar Raghbir Singh Sandhanwalia was the dominant partner

with an 82% share.

With the expansion of business in 1936, Simbhaoli was incorporated as a

private limited company with an authorized capital of ` 12 lakhs and a

paid up capital of ` 9.6 lakhs. It issue 1200 shares of ` 1000 each.

In 1989, it went public and has been listed on Indian Stock Exchange for

the past 20 years. In 1992, it acquired a distillery and there by converted

the Simbhaoli sugar plant into an integrated sugar complex. This

distillery was owned by the family as an independent company.

In 1999-2000, the families re-organized their ownership structure. With

the three families and their descendents decided to withdraw themselves

in favour of one family group (descendents of the founding promoter).

Descendents were holding 11% of equity in the company as there share.

Today, Simbhaoli is part-owned by the third and fourth generations of

this family, represented by Gurmit Singh Mann and Gurpal Singh, who

are the only family nominees on the board. As per the vision of the

company should be an environment friendly, stakeholder centric,

innovative, professionally managed, and integrated sugar refining

company with low cost global technologies producing range of value

added products.


145

Organisation Structure

Company has a strong organization work culture based on merit,

integrity, transparency and inclusiveness. It is aspired to be a learning

organization leveraging world class technology. Management encourages

ideas, innovation, excellence, enterprise and teamwork in employees.

It also behaves as a global corporate citizen. The underlying principles

behind the Company‟s organization structure are empowerment,

transparency and flexibility in decision making and implementation. The

Board of Directors as trustees of stakeholders carry the responsibility for

ensuring that the Company stays the course in enhancing shareholder

value and interests.

Board of Directors

Chairman & Managing Director/Promoter

Gurmit Singh Mann

Deputy Managing Director/Promoter

Gurpal Singh

Executive Directors

G.S.C. Rao

Sanjay Tapriya

Gursimran Kaur Mann

Non-Executive Directors

S.K. Ganguli

S.C. Kumar

Yashwant Varma

B.K Goswami

Ram Sharma


146

Key Management Team

Empowered managers across the Company manage the day-to-day

affairs of the organization subject to the overall superintendence and

control of the Board of Directors.

Table No 7.1 Key Management Team

Name Functional Role

G. S. C. Rao Chief Executive Officer (CEO)

Sanjay Tapriya Chief Financial Officer (CFO)

Gursimran Kaur Mann Executive Director (Commercial)

Indeep Singh Bhatia Unit Head Simbhaoli Sugar Plant

Naveen Tyagi Unit Head Brijnathpur Plant

A. K. Singh Chief General Manager, Unit Chilwaria

V. P. Chouhan Unit Head, Chilwaria Plant

R. K. Singh Unit Head Simbhaoli Distillery

A. K. Srivastava Corporate Head, Technical

Sunil K. Gupta Corporate Head Accounts and Finance

A. P. Singh Corporate Head, Cogeneration

Shiv Sinha Head Marketing (Quality Spirits)

Rajiv Bhatia Head Marketing (Sugar)

Dilip Jain Head Project Development

Kamal Samtani Company Secretary


147

Achievements

Simbhaoli sugar mill is fully compliant to world-class quality standards. It

has quality control efforts extend from the lab to the farmland to the

manufacturing floor. Research farms at Simbhaoli, Chilwaria and

Brijnathpur grow different cane varieties noted for their quality and yield

attributes. The crop varieties are then closely scrutinised for disease and

pest resistance at the lab. Based on these findings, a continuous feedback

is provided to farmers, with whom we are in close contact at every stage

of the crop cycle.

It became the First sugar company in north India and only Second in

India who have FSSC 22000:2011certification it has also been

recommended for continuation of ISO 9001:2008 and ISO

14001:2004

It has been HACCP certified for Food Safety

It is first company in North India to export EC-II grade refined sugar to

the European market for direct consumption, with major customers

including almost all the major sugar trading houses.

Trust sugar is being preferred by the likes of Coca Cola, Pepsi, Taj

Hotels, Oberoi Hotels, Indian Railways, Nestle, Hamdard, Dabur,

Café Coffee Day, Barista, Haldiram, Midas Foods, amongst other

In the 80s, Simbhaoli played a lead role in introducing COJ-64, a new

sugarcane variety in western Uttar Pradesh. This wonder sugarcane


148

seed had the highest sugar content compared to other varieties

available at that time. COJ-64 earned the Company the goodwill of

the farmers and led to a surge in cane development in the region.

Simbhaoli Sugars has introduced multi cropping in most of its

command area. The Company is acting as facilitator for entire crop

cycle for multiple crops and encourages the farmers to cultivate

sugarcane with other crops.

Research and Development Activities

Sugarcane Development Activities are carried out for promoting early

ripening, high-sugared varieties. Regular workshops, meets and field

trials under Institute-Industry interface are organized.

Programs for boosting yield are also carried out by “Ratoon

Management” technique. Regular demonstration trials and training

programs are arranged at the doorstep of the farmer. Further facilities

for soil testing by establishing mobile soil testing labs and use of micro

nutrients/bio manure are arranged.

Farmers are helped for selecting high quality clones by checking the

suitability of high sugared clones in the local environment.

Various Measures for controlling insects, pests and diseases are taken

by arranging insecticides and pesticides to farmers at subsidized rates

and further giving cash subsidy to Cane Development Council for

distribution of insecticides, pesticides and agriculture equipment.


149

At Simbhaoli, the entire system of field survey planning, bonding,

scheduling of supply tickets, procurement and delivery of the

harvested crop and payments has been computerized. Payments are

credited directly into the bank accounts of farmers, thereby ensuring a

speedy and fair settlement of dues. Radio connectivity links the plants

with the divisional offices and farmer service centers in the cane areas

- providing farmers real-time information at their fingertips! The

farmers can access information about their land holdings, cane

varieties, supply tickets, payments and loan adjustment details as well.

We are also promoting the latest technological advances amongst

cane growers. The rule

Simbhaoli India Foundation (SIF)

Simbhaoli‟s community outreach programs have transformed the lives of

over 130,000 village folk. Simbhaoli India Foundation (SIF) has been

specially established to implement programs in the field of education,

healthcare, water, social welfare, infrastructure development and income

generation.

The Company's employees are important stakeholders in the foundation,

and have contributed (with a matching grant from the management) in

cash to set up the corpus fund. Additionally, the foundation is partnering

NGOs and Government departments to improve the quality and reach of

its programs.


150

Simbhaoli Global

Simbhaoli sugars have an associate company named Simbhaoli Global

Commodities DMCC with the Dubai Multi Commodities Centre Authority

in the Free Trade Zone of Dubai, United Arab Emirates. Simbhaoli

Global leverages its historical links and partnership with sugar mills and

key trading houses around the world. Its mandate includes export,

import, trading and hedging in the Indian and international markets

including cross border transactions.

Technological Advancements

Simbhaoli complex deploy cutting-edge Defeco Remelt Phosphotation

and Ion Exchange (DRPIE) technology, thereby eliminating the use of

sulphur and other harmful chemicals. Since sugar refining is a continuous

process therefore it conduct detailed analysis to measure the colour,

sediment level, ash content, particle size distribution and bacteria levels in

the sugar at each and every stage of manufacture. The aim behind it is to

produce 100 per cent purity, high colour integrity and nutritional content.

Simbhaoli sugar conforms to international quality standards with an

ICUMSA of less than 45 I.U. Great care is taken to maintain international

standards of hygiene and handling; and use high quality, food-grade

packaging materials.


151

As a company that has always prided itself as a 'cutting-edge

technology company', Simbhaoli has notched up an impressive string of

'innovations'.

Simbhaoli was the second sugar mill in western Uttar Pradesh to

introduce mechanical loading of sugarcane, which led to even feeding

and higher boiler efficiency.

When its expansion plans hit a road block due to shortage of power,

shortage of centrifugals was overcome by introducing single curing. This

unleashed dormant capacity without incurring any additional expense.

The Company also pioneered automatic cane weighing, and

computerized the whole system of cane indenting and payments way

back in the early 80s.

Then, timers were put on belt-driven centrifugal machines to control

losses and increase production. Significantly, automation was introduced

in the boiler system but one of its path-breaking innovations was in sugar

refining when it replaced the conventional double sulphitation

manufacturing process with the revolutionary Defeco Remelt

Phosphotation and Ion Exchange (DRPIE) technology. DRPIE is an

internationally accepted refining process which eliminates the use of

sulphur and other harmful chemicals. DRPIE sugar is 100 per cent pure

EC grade (below 45 IU) sugar and sparkling white totally free from

suspended solids and impurities.


152

The latest example is the conversion of bagasse-fired or single-fuel boilers

into multi-fuel ones. This simple innovation has given us the capability to

process the raw sugar during the off season.

Plants

Company has three Distilleries

1. Simbhaoli Distillery Division, Simbhaoli, District Ghaziabad, Uttar

Pradesh - 245 207,

2. Chilwaria Ethanol Division, Chilwaria District Baharaich, Uttar

Pradesh - 271 801,

3. Brijnathpur Ethanol Division, Brijnathpur, Distt. Ghaziabad, Uttar

Pradesh- 245 101,


153

Sugar Manufacturing Units

1. Simbhaoli sugar Division, Simbhaoli, District Ghaziabad, Uttar

Pradesh - 245 207,

2. Chilwaria sugar Division, Chilwaria District Baharaich, Uttar Pradesh

- 271 801,

3. Brijnathpur sugar Division, Brijnathpur, Distt. Ghaziabad, Uttar

Pradesh- 245 101,

Products

Simbhaoli sugars have fully integrated three sugar refineries with the

distillery, co-generation and bio-compost units. Most of the sugar

produced confines to EU grade. The result is energy conservation,

optimal utilization of by-products, cost savings and most importantly, a

product portfolio that includes specialty sugars, potable liquor, ethanol,

power and organic manure. In 2002, Simbhaoli pioneered the 'specialty

sugar' segment in India. Simbhaoli introduced brown sugar, sugar cubes

(white and brown), icing sugar, table sugar, breakfast sugar, candy sugar,

pharma-grade sugar, sugar sachets and tubes - under the Trust brand

name. New consumer packs (in different weight denominations) were

introduced.

Our state-of-the-art distilleries are fully compliant with world-class quality

standards such as ISO 9001:2000, ISO 14001:2004 and HACCP. The


154

spirits are processed from 'sulphur-less ENA', which in turn, is produced

from sulphur-less molasses, there-by ensuring product integrity. Most

importantly, the spirits are distilled using the revolutionary 'four column'

distillation process. Great care is taken to maintain international

standards of hygiene and handling; and use high quality, food-grade

packaging materials.

Company has a strong retail presence in ten states in India: Uttar

Pradesh, Delhi, Rajasthan, Himachal Pradesh, West Bengal, Bihar,

Sikkim, Assam, Arunachal Pradesh, Andhra Pradesh, Kerala, Haryana,

Uttarakhand, Jammu and Kashmir, Tripura, Chandigarh, Orissa and

Meghalaya.

1. Sugar

The Trust range of specialty sugars includes white crystal sugar, table

sugar, icing sugar, breakfast sugar, sugar cubes (white and brown),

Demerara sugar, Turbinado sugar, Muscovado sugar, candy sugar, and

pharmaceutical-grade sugar. All white sugars have an ICUMSA rating of

less than 30 I.U.

Trust brand has found acceptance across market segments - beverages,

confectionary, Indian sweets, candy, pharmaceuticals and hospitality. All

sugar products are 100% vegetarian and ISO 9001:2008, ISO

14001:2004 and FSMS 22000:2004 certified.


155

Table No 7.2 Types of Sugar

S. No Trust Sugar Type Features

1 Trust Sunhera

Mineral Sugar

• Healthier sugar with the goodness of

sugarcane

• Naturally rich in iron and calcium

• Ideal sweetener for all uses

• Maintains natural taste and colour of food

2 Trust Classic

Pure Mishri

• Sulphur less mishri with no harmful

chemicals

• Pure & hygienic

• Ideal for

• Temple prasad

• Medicinal use

• Mouth freshener

3 Trust Brown

Sugar

• Distinguished by sticky- textured, golden

brown crystals; rich aroma: and a distinct

taste.

• Enhances the flavor of coffee, desserts, ice

cream and ginger bread

• Serves as a superb crunchy topping for

confectionery, muesli and fresh fruits; glazing

for meats; and a key input for mock-tails.

• 100 per cent pure, natural and wholesome

• Rich in calcium, phosphorus, iron and

magnesium.


156

4 Trust Premium

icing Sugar

• Ultra fine sparkling white.

• 100% pure and clean

• Blends smoothly, melts quickly and

dissolves in an instant.

• Maintains taste & color of food.

• Ideal for icing, fondues, whipped creams,

filling, frostings and glazes.

5 Trust Classic

Super fine Sugar

• Superfine Sugar dissolves instantly

• Ideal sweetener for:

o Cold beverages, breakfast cereals and

juices

o Dairy desserts, milk & puddings

o Bakery snacks, cakes & cooking

o Crispiness in dry mixes

o Sweetmeat preparations

o Fruit & Salad dressing

• Conforms to European standards (< 50 I.U)


157

6 Trust Classic

Sulphur less

Sugar

• Sulphur-less Sugar with no harmful

chemicals

• UV irradiated bacteria free

• Free flowing sparkling white grains


7 Trust Classic

Sugar cubes

• Sparkling white sulphur-less sugar cubes

• Dissolves instantly

• Hygienically packed


8 Classic Sugar

Sachet

• Superfine sugar, dissolves instantly



9 Mineral Sugar

Sachets

• Golden crystals naturally rich in iron and

calcium

• Maintains natural taste & color of food


10 Brown Sugar

Sachets

Dark brown crystals add depth to the taste of

coffee


158

2. Fuel Ethanol

It has three fuel-ethanol plants at Simbhaoli, Chilwaria and Brijnathpur.

Our aggregate production capacity is 180 KLD, which makes us one of

the largest ethanol players in the country. The distinguishing features of

our molasses-based ethanol plants are automation, molecular de-

hydration sieve technology, low cost production and full integration with

the sugar unit.

3. Extra Neutral Alcohol (ENA)/Rectified Spirits

The three distilleries at Simbhaoli, Chilwaria and Brijnathpur have an

aggregate capacity to produce 180 KLD of ENA or rectified spirit.

Simbhaoli ENA is rated as one of the finest spirit bases for a range of

premium spirits.

4. Clean Power

Bagasse, a by-product of the sugar manufacturing process is being used

to generate power for captive consumption and export to the national

grid. The Company's current aggregate power generation capacity stands


159

at 64 MWH of which, 34 MWH is surplus and free for export to state

utilities. The biomass-based co-generation projects are in the process of

being accredited by UNFCCC under the Clean Development Mechanism

program.

5. Bio-Manure

The three bio-manure plants at Simbhaoli, Chilwaria and Brijnathpur

have an aggregate production capacity of 44,000 MT per annum. The

bio-manure is being marketed under the SOM brand name. The SOM

range includes organic manure, Neem plus, paddy special, bio-extract

liquid organic manure, bio enzyme and phosphate rich organic manure.

6. Fruit Juice

Trust Sipp is company‟s first brand offering in the fast growing, instant

natural fruit-drink mix market. It is available in four flavours, Sipp is a

100% natural drink mix – without any preservatives or artificial colours.

Trust Sipp, the recently launched instant natural fruit-drink mix is

available in four refreshing flavors – Tender Coconut, Orange Delight,


160

Tangy Lemon and Alphonso Mango. Presentation includes an attractive

500g family pack and 12g/19g single-serve sachets.

Trust Sipp is a natural thirst quencher with the goodness of vitamin C, A,

E and B. Just add water, stir and top up with ice for pure, wholesome

refreshment, glass after glass. It does not contain any preservatives or

artificial colours and flavours.

Table no 7.3 Types of Juices

S.

N0

Fruit Mix Juice

1 Trust Sipp: Alphonso

Mango

• Packed with real fruit juice • Delightful refreshing taste • Vitamin A, B, C & E enriched • No need to add sugar • No preservatives, artificial colors or flavors

2 Trust Sipp: Tangy Lemon

3 Trust Sipp: Orange

Delight

4 Trust Sipp: Tender

Coconut

• 100% natural real tender coconut water • Contains natural minerals • No added color, flavor or preservatives


161

7. Potable Spirits

Simbhaoli has de-risked its business model by achieving multiple revenue

streams. Simbhaoli Sugars has a seven-decade track record of producing

quality ethanol, rectified spirits, extra neutral alcohol and potable liquor.

Established in 1943, Simbhaoli was amongst the first distilleries to be set

up in North India. Now company has three distilleries - Simbhaoli

(western Uttar Pradesh), Chilwaria (eastern Uttar Pradesh) and

Brijnathpur (western Uttar Pradesh) - with an aggregate capacity of 210

kilo litres per day (KLD). This includes the capacity to produce 180 KLD

of ethanol, rectified spirits and extra neutral alcohol. Furthermore,

company has bottling tie-ups in Uttar Pradesh, Jammu and Kashmir,

Punjab, Himachal Pradesh, Uttaranchal, West Bengal, Kerala, Assam and

Orissa. Presently, we are producing more than one million cases of

quality spirits every year. Over the years, company has successfully

established brands across different quality and price touch points.

Recently, we have re-commenced the supply of premium spirits to the

armed forces.


162

Table No7.4 Different varieties of Potable spirits

Category Range Brand

Premium

whisky

Scotch Blended, Malt,

Blended, Malt

Verdict

Whisky Plain, Scotch Blended,

Malt, Blended, Malt

Old Tribute, Seven Knights, High Birds.

Rum Matured, Coffee, Cola Seven Knights, High Birds,

Hunter's

Gin Dry, Orange, Lemon Seven Knights, High Birds, Ice

Blue Tango/Duet

Vodka Plain, Green Apple,

Peach, Orange, Lemon

Xing, Seven Knights, High Birds

Pastis Aperitif Anise


163

Shareholding Pattern

Table No 7.5 Shareholding pattern as on September 30, 2012

Category No. of Shares

held

%

A: Indian Promoters 12193381 43.20

Sub-Total (A) 12193381 43.20

B: Non – Promoters Holding:

Mutual Funds 1700 0.01

Foreign Institutional Investors (FII) 2123908 7.52

Financial Institutions and Banks 1000 0.00

Private Corporate Bodies 6800491 24.09

Indian Public (individuals ) 6868020 24.33

NRIs / OCBs 95832 0.34

Any other (Clearing Members) 144278 0.51

Sub-Total (B) 16035229 56.80

Grand Total (A+B) 28228610 100.00

Financials

The balance sheet , P&L A/c and cash-flow statements of Simbhaoli

sugar mills are given below:


164

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ans

and

ad

van

ces

12,9

29

.20

16,2

15

.23

13,5

55

.33

6,0

70.6

54

,95

8.5

91

,81

4.8

71

,71

0.8

1O

ther

cu

rren

t as

sets

13,6

00

.00

--

--

94,8

70

.95

77,4

63

.37

67,8

57

.87

27,7

46

.25

24,4

48

.10

23,2

08

.44

18,0

00

.29

Les

s: C

urr

ent

liabili

ties

and

pro

visi

on

sC

urr

ent

liabili

ties

80,3

25

.12

66,9

18

.83

54,4

27

.06

15,2

38

.27

19,6

26

.01

11,0

24

.70

9,7

91.2

5P

rovi

sio

ns

541

.59

920

.80

1,6

65.1

63

,18

7.1

21

,75

6.9

62

44

.97

61.5

28

0,8

66

.71

67,8

39

.63

56,0

92

.22

18,4

25

.39

21,3

82

.97

11,2

69

.67

9,8

52.7

7N

et c

urr

ent

asse

ts

14,0

04

.24

9,6

23.7

41

1,7

65

.65

9,3

20.8

63

,06

5.1

31

1,9

38

.77

8,1

47.5

2P

rofit

an

d lo

ss a

cco

un

t 4

,18

3.9

45

,73

0.1

9-

6,0

03.7

53

,09

3.5

8-

864

.37

TO

TA

L

77,0

17

.92

81,1

28

.97

74,0

07

.76

77,7

47

.49

61,1

24

.27

31,1

28

.00

28,6

06

.69

BA

LA

NC

E SH

EET


165

31/0

3/20

1230

/09/

2010

30/0

9/20

0930

/09/

2008

30/0

9/20

0731

/03/

2005

31/0

3/20

04R

s. L

acs

Rs.

Lac

sR

s. L

acs

Rs.

Lac

sR

s. L

acs

Rs.

Lac

sR

s. L

acs

Rs.

Lac

s

INC

OM

ESa

le o

f pro

duct

sG

ross

sal

es12

3,58

3.33

149,

206.

2110

0,07

9.00

66,1

33.9

197

,560

.86

5094

2.91

3389

9.32

Less

: Exc

ise

duty

3,63

0.11

23,0

40.2

929

,446

.56

22,5

88.7

631

,914

.35

11,9

23.3

410

,988

.84

Net

Sal

es11

9,95

3.22

126,

165.

9270

,632

.44

43,5

45.1

565

,646

.51

39,0

19.5

722

,910

.48

Oth

er in

com

e5,

260.

606,

344.

959,

242.

151,

102.

3973

2.07

513.

7742

4.14

125,

213.

8213

2,51

0.87

79,8

74.5

944

,647

.54

66,3

78.5

839

533.

3423

334.

62

EX

PE

ND

ITU

RE

Man

ufac

turin

g an

d ot

her

expe

nses

116,

213.

2213

2,60

1.67

62,9

70.0

139

,757

.89

67,0

16.0

531

172.

820

828.

01P

rofit

/(lo

ss)

befo

re in

tere

st, d

eriv

ativ

e lo

ss, d

epre

ciat

ion

and

tax

9,00

0.60

-90.

816

,904

.58

4,88

9.65

-637

.47

8360

.54

2506

.61

Inte

rest

15,0

92.4

78,

471.

836,

311.

023,

963.

753,

495.

8925

43.2

921

09.3

8D

eriv

ativ

e lo

ss-

30.8

656

.55

2,11

2.12

-235

.5-

-P

rofit

/(lo

ss)

befo

re d

epre

ciat

ion

and

tax

-6,0

91.8

7-8

,593

.49

10,5

37.0

1-1

,186

.22

-3,8

97.8

658

17.2

539

7.23

Dep

reci

atio

n/am

ortis

atio

n5,

850.

254,

023.

983,

705.

313,

260.

242,

524.

8411

86.8

310

96P

rofit

/(lo

ss)

befo

re tr

ansf

er fr

om r

eval

uatio

n re

serv

e-1

1,94

2.12

-12,

617.

476,

831.

70-4

,446

.46

-6,4

22.7

046

30.4

2-6

98.7

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rans

fer

from

rev

alua

tion

rese

rve

105.

814

.58

49.7

40.0

660

.98

50.3

361

.03

Pro

fit/(

loss

) be

fore

tax

and

exce

ptio

nal i

tem

-11,

836.

32-1

2,60

2.89

6,88

1.40

-4,4

06.4

0-6

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.72

4680

.75

637.

74E

xcep

tiona

l ite

ms

(Net

)-9

,305

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--

--

2450

.14

-P

rofit

/(lo

ss)

befo

re ta

x-2

,530

.35

-12,

602.

896,

881.

4022

30.6

163

7.74

Cur

rent

tax

787.

23Le

ss: M

AT

cre

dit e

ntitl

emen

t-7

87.2

3C

urre

nt ta

x (M

AT

Cha

rged

off)

378.

25-

--

--1

75.0

6-

Def

erre

d ta

x (b

enef

it)/ c

harg

e-4

,454

.85

-5,1

33.4

3-3

16.5

2-1

,555

.73

-1.7

-870

.05

229.

59Fr

inge

ben

efit

tax

--

19.9

859

.562

.7-

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rofit

/(lo

ss)

afte

r ta

x1,

546.

25-7

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7,17

7.94

-2,9

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7-6

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ture

red

empt

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ote

19 in

sch

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e 17

)-

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--

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9.63

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--

Bal

ance

car

ried

to b

alan

ce s

heet

--

--6

,003

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-3,0

93.5

810

9.63

-864

.37

Ear

ning

s pe

r sh

are

(Rs.

)B

asic

/ Dilu

ted

befo

re e

xcep

tiona

l ite

m-1

8.34

-32.

2133

.11

-14.

65-3

2.8

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2-4

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ic/ D

ilute

d af

ter

exce

ptio

nal i

tem

5.98

-32.

2133

.05

-14.

65-3

2.8

10.0

2-4

.28

PR

OFIT

AN

D L

OSS A

CC

OU

NT


166

31/0

3/2

01

23

0/0

9/2

01

03

0/0

9/2

00

93

0/0

9/2

00

83

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00

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00

53

1/0

3/2

00

4R

s. L

acs

Rs.

Lacs

Rs.

Lacs

Rs.

Lacs

Rs.

Lacs

Rs.

Lacs

Rs.

Lacs

Rs.

Lacs

A.

CA

SH

FL

OW

FR

OM

OP

ER

AT

ING

AC

TIV

ITIE

S :

Net

pro

fit/(l

oss

) befo

re t

ax a

nd

exce

ptio

nal item

s-1

1,8

36.3

2-1

2,6

02.8

96

,88

1.4

0-4

406

.4-6

361

.72

468

0.7

5-6

37.7

4A

dju

stm

en

ts f

or:

Dep

reci

atio

n (

net

of re

valu

atio

n r

ese

rve)

5,7

44.4

54

,00

9.4

03

,65

5.6

13

22

0.1

82

46

3.8

61

13

6.5

103

4.9

7U

nre

alise

d f

ore

ign

exch

an

ge f

luct

uatio

n4

1.8

2-

-1

09

1.1

8-2

85.8

9-

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ivid

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e f

rom

su

bsi

dia

ry C

om

pan

y-5

.34

--

--0

.36

--

Inte

rest

15,0

92

.47

8,4

71.8

36

,31

1.0

23

96

3.7

53

63

8.8

254

3.2

92

10

9.3

8L

ease

Ren

tals

--

--

-6

3.5

77

9.9

5G

ain

on

bu

y b

ack

of

FC

CB

--1

38.5

1-7

,296

.02

--

--

Defe

rred

em

plo

yee c

om

pen

satio

n e

xp

en

se-3

.96

37.2

6.1

9-

--

-N

on

co

mp

ete

fee

-2,0

00

.00

--

--

--

Pro

fit

on

sale

of

fixed

ass

ets

-10

0.5

3-3

.64

-49

.88

-11

.27

-1.6

9-0

.56

-0.2

4L

oss

on

sale

of

fixed

ass

ets

-2

7.3

50

.68

--

--

'Pro

fit

on

sale

of

curr

en

t n

on

tra

de in

vest

men

ts-0

.36

--

--1

.29

--

Inte

rest

in

com

e-7

34.3

6-4

85.3

4-1

23.1

4-2

8.6

3-1

91.7

7-7

.92

-14

.37

Tra

nsf

er

fro

m C

ap

ital-

gra

nt-

in-a

ids

-2-1

.33

-2.0

82

.77

-1.7

4-1

.17

-1.1

8

Operating profit/(lo

ss) before w

orking capital changes

6,195.87

-685.93

9,383.78

3831.58

-741.8

8414.46

2570.77

Ad

just

men

ts f

or

chan

ge in

:T

rad

e a

nd

oth

er

rece

ivable

s-3

,740

.86

-3,3

22

.02

-8,8

13

.98

-16

63

.84

708

.67

-12

70

.87

-12

2.3

1In

ven

tori

es

-14

,11

7.9

42

,94

7.2

9-2

6,1

75.0

1-1

286

.58

572

4.2

2-4

852

.78

-36

96

.48

Tra

de p

ayable

s1

5,9

15

.51

13,0

64

.75

39,3

58

.64

-30

09

.81

612

9.8

91

19

3.9

149

2.2

2

Cash (used)/generated from

operations

4,252.58

12,004.09

13,753.43

-2128.65

11820.98

3484.71

244.2

Dir

ect

taxes

(paid

)/re

fun

d1

,37

4.5

8-1

,280

.45

38.7

9-1

67.2

5-3

54.5

4-2

5.9

42

9.0

9

Net cash flo

w from

operating activities before exceptional item

s5,627.16

10,723.64

13,792.22

-2295.9

11466.44

3458.77

273.29

Diffe

ren

tial ca

ne p

rice

200

7-0

82

,51

1.4

0-

--

-2

45

0.1

4-

Net cash (used) / from

operating activities

3,115.76

10,723.64

13,792.22

-2295.9

11466.44

1008.63

273.29

B.

CA

SH

FLO

W FR

OM

IN

VESTIN

G A

CTIV

ITIES :

Pu

rch

ase

of

fixed

ass

ets

-2,2

16

.94

-3,8

08

.04

-4,7

30

.40

-89

07

.72

-30

52

5.1

9-1

021

.43

-18

86

.98

Sale

of

fixed

ass

ets

106

.79

122

.21

97.5

85

8.3

30.3

81

5.9

46

1.3

6In

vest

men

t m

ad

e in

su

bsi

dia

ries

-27

.8-

-39

.94

-1

7.6

6-

-0.5

Invest

men

t m

ad

e in

jo

int

ven

ture

s-7

70.9

6-

--

--

25.5

Pu

rch

ase

of

mu

tual fu

nd

s-3

00

--

--

--

Sale

of

mu

tual fu

nd

s3

00

.36

--

--

--

Marg

in m

on

ey

8,7

96.1

5-7

,596

.65

-4,1

88

.24

--

--

Co

nsi

dera

tio

n p

urs

uan

t to

sch

em

e o

f arr

an

gem

en

t1

3,6

00

.00

Less

: B

ala

nce

co

nsi

dera

tio

n r

ece

ivable

-13

,60

0.0

0-

--

--

--

Div

iden

d in

com

e f

rom

su

bsi

dia

ry C

om

pan

y5

.34

--

-0

.36

--

Inte

rest

rece

ived

816

.15

63.7

11

15

.97

38.4

51

62

.47

5.5

91

4.1

2

Net cash used in investing activities

6,709.09

-11,218.77

-8,745.03

-8810.97

-30314.32

-999.9

-1786.05

C.

CA

SH

FLO

W FR

OM

FIN

AN

CIN

G A

CTIV

ITIES :

Pro

ceed

s fr

om

iss

ue o

f equ

ity s

hare

s/equ

ity w

arr

an

ts2

,26

3.4

91

0.9

76

82

.83

754

.14

-2

7.4

41

.45

Pro

ceed

s fr

om

lo

ng t

erm

bo

rro

win

gs

6,0

00.0

06

,71

8.2

29

,07

4.8

112301

160

95

.53

241

.15

207

7.0

3R

ep

aym

en

t o

f lo

ng t

erm

bo

rro

win

gs

-16

,37

0.8

2-7

,784

.84

-9,5

32

.16

-25

62

.32

-51

11

.76

-75

3.4

3-1

030

.1C

han

ges

in c

ash

cre

dit a

cco

un

t1

5,6

94

.36

10,7

37

.89

1,5

25.4

73

56

5.0

98

77

.67

216

5.6

249

0.7

3R

ep

aym

en

ts o

f p

refe

ren

ce s

hare

cap

ital

--2

16

-596

--

269

.94

-60

5.5

6In

tere

st p

aid

-15

,33

1.0

6-8

,256

.17

-5,9

40

.61

-27

62

.49

-33

71

.06

-19

93

.91

-16

50

.66

Div

iden

d p

aid

-0.0

6-0

.1-0

.03

-0.2

3-8

83.4

9-

-0.7

3P

aym

en

t o

f F

CC

B p

rem

ium

-31

8.7

1-

--

--

Co

ntr

ibu

tio

n t

ow

ard

ch

ari

ty r

ese

rve r

ece

ived

-5.2

92

.47

1.9

20

.06

1.1

7-3

.91

1.4

3

Net cash from

financing activities

-8,068.09

1,212.44

-4,783.77

11295.25

7608.06

6.88

1283.59

D.

Net increase/(decrease) in cash and cash equivale

nts

1,756.76

717.31

263.42

188.38

-11239.82

15.61

-229.18

E.

Cash

an

d c

ash

equ

ivale

nts

(o

pen

ing b

ala

nce

)C

ash

an

d b

an

k b

ala

nce

s1

,81

6.2

81

,09

8.9

78

35

.55

970

.37

122

10

.19

287

.28

516

.46

Cash

an

d b

an

k b

ala

nce

s tr

an

sferr

ed

pu

rsu

an

t to

sch

em

e o

f arr

an

gem

en

t-1

40.1

4-

F.

Cash

an

d c

ash

equ

ivale

nts

(cl

osi

ng b

ala

nce

)C

ash and bank bala

nces (D

+E)

3,432.90

1,816.28

1,098.97

1158.75

970.37

302.89

287.28

CA

SH

FLO

W STA

TEM

EN

T


167

Analysis

The Company's financial statements are prepared in compliance with the

requirements of the Companies Act, 1956 and Generally Accepted

Accounting standards. The estimates and/or judgments have been made

on a consistent, reasonable and prudent basis to reflect true and fair view

of the state of the affairs of the Company. Moreover the company is

undergoing regular audits by its auditor therefore it could be well said

that company is following the accounting standards. The findings after

analyzing the company‟s annual reports and discussion with

management, accountants and its auditors are as follows:

1. Change in the Accounting Year: Since its origin the Company

was having its accounting period of twelve months. The Company

has changed its accounting year from October- September period

to April-March to facilitate comparative analysis with other

companies, and have a uniform accounting year under the Indian

Companies and Income Tax Acts. Accordingly, the current

accounting period covers 18 months period commencing from

October 1, 2010 to March 31, 2012. According to the accounting

standard AS- 1 proper disclosure of accounting policies should be

there. On changing the accounting Year Company has disclosed it

in its auditors report.


168

2. The Cash flow statement of the company is prepared under the

"indirect method” set out in Accounting Standard-3 prescribed in

Companies (Accounting Standards) Rules, 2006. Cash-flow

statement is compulsory for all the firms of level 2 and listed

companies

3. Valuation of Inventories: Stores, spare parts and tools and

appliances are a part of inventory and mostly they are valued at

cost or under. Stock-in-trade is valued at the lower of cost and net

realizable value. The basis of determining cost for different

categories of inventory differs from item to item. It is mandatory to

value inventory under AS-2. Simbhaoli Sugars Value inventory

differently for different items as given in table 7.6. Here company

has changed its policy for valuing inventories in the accounting

year 2007-2008. Since 2004 the company has been valuating

inventories (raw material and processed goods) by Annual

weighted average method. Processed goods are valued at material

cost plus appropriate share of labour and manufacturing

overheads. After wards it has started valuating inventories (raw

material and processed goods) by FIFO, material cost plus

appropriate share of labour and manufacturing overheads. It has

started valuating By-products at estimated realizable cost. Raw

material is valued by First in first out (FIFO) after 2007-2008.


169

Table No 7.6

INVENTORIES

2004 To 2007 2008 To 2009 2010

Stores And

Spare Parts

monthly weighted average

monthly weighted average,

monthly weighted average,

Raw Material AWA FIFO FIFO

By-products at estimated realizable values

Process

Stocks/

Finished

Goods

AWA, material cost plus appropriate share of labour and manufacturing overheads

FIFO, material cost plus appropriate share of labour and manufacturing overheads

FIFO ,material cost plus appropriate share of labour and manufacturing overheads

Note: AWA- Annual Weighted Average Source: company‟s annual reports

4. Research And Development The details relating to Research

and Development activities carried out by the Company are stated

in Form B of company‟s annual Report as required under the

Companies (Disclosure of Particulars in the Report of Board of

Directors) Rules, 1988. In Major practices SSL has continued its

cane development program including distribution of sugarcane

seeds for varietal replacement, pest and insect control etc to

augment cane supplies in its reserved areas. It has propagated

schemes for multi-cropping of different crops with sugarcane to

maximize the earnings of the farmers. Assistance(s) have been

obtained from banks and sugar development fund. The benefits of


170

these initiatives will be available in the long term in the form of

improved farm yield and healthy cane crop. Further Measures

have been taken to reduce steam and water consumption to

achieve economy of scales. New high pressure energy efficient

boilers with high degree of automation are installed to increase

power generation and saving thereof. Major benefit that has been

derived is Power consumption reduced significantly while sale of

power increased. Company saved bagasse that will be helpful in off

season raw processing and power generation.

5. Government Grants: AS-12 is also followed and is specified by

the company. Government grants related to revenue are

recognized in the profit and loss account over the years necessary

to match them with the related costs. Government grants related to

depreciable fixed assets are recognized in the profit and loss

account over the useful life of the asset to which they relate.

6. Employee Benefits: The Company has classified the various

benefits provided to employees as Defined contribution plans

(including Superannuation fund and Provident fund) and Defined

benefits plans ( including Gratuity & Compensated absences –

Earned Leave/ Sick Leave/ Casual Leave), which have been

recognized in the profits and loss account. In accordance with the

Accounting Standard 15 (revised 2005), actuarial valuation was


171

done in respect of the aforesaid defined benefit plans and details of

the same are given in the annual reports.

7. Depreciation/Amortization: According to AS-6 depreciation

should be revealed in the Annual reports. The straight line method

at the rates applicable to the balance useful life of the relevant

assets as estimated by the valuer or at the rates and in the manner

specified in Schedule XIV to the Companies Act, 1956, whichever

is higher. In respect of other assets, the depreciation is provided by

applying the following method at the rates specified in Schedule

XIV to the Companies Act, 1956. Since 2004 depreciation on

Buildings other than Simbhaoli Distillery Division and Chilwaria

sugar division is down by Written down method. Depreciation on

Buildings (Simbhaoli Distillery Division and Chilwaria Sugar

Division) is done by Straight line method. Depreciation on Plant

and machinery (other than electric installations, typewriters and

office equipments is carried by written down method up-to sep

30,1987 and after wards by Straight line method. Railway

siding/electric installations/ typewriters and office

equipment/furniture and fixtures/motor lorries and vehicles are

deprecated by written down method. Refer table no.7.7.

Software is amortised on over its economic useful life of 10 years

on straight line method. Fixed assets costing up to ` 5,000 are fully

depreciated in the year of acquisition.


172

Table No. 7.7

Depreciation

2004 2005

To

2009

2010

Buildings(other than Simbhaoli Distillery Division and Chilwaria Sugar Division)

WDV WDV WDV

Buildings(Simbhaoli Distillery Division and Chilwaria Sugar Division

SLM SLM SLM

Plant and machinery (other than electric installations, typewriters and office equipments

UPTO SEP 30,1987 WDV after that SLM

SLM SLM

Railway siding/electric installations/ typewriters and office equipment/furniture and fixtures/motor lorries and vehicles

WDV WDV WDV

Software SLM ,over its economic useful life of 10 years

Note: WDV- Written Down Value, SLM- Straight Line Method

Source: company‟s annual reports


173

8. AS-17 states the requirement of segment reporting. Company is

reporting under three heads viz. Business segments, Geographical

segments and Segment accounting policies.

Based on the guiding principles given in Accounting Standard AS-

17 "Segment Reporting" notified by the Companies (Accounting

Standard) Rules, 2006, the Company's business segments include:

Sugar, Alcohol and Power. Since the Company's

activities/operations are primarily within the country and

considering the nature of products it deals in, the risks and returns

are same. There is only one geographical segment. The accounting

policies in relation to segment accounting are disclosed as Segment

revenue and expenses, Segment assets and liabilities, Inter segment

sales.

Inter segment sales between operating segments are accounted for

at market price. These transactions are eliminated on

consolidation. Inter segment sales between operating segments are

accounted for at market price. These transactions are eliminated on

consolidation. In the previous year, pursuant to the Notification

dated March 31, 2009 issued by The Ministry of Corporate Affairs,

amending Accounting Standard (AS) 11 - 'Effects of Changes in

Foreign Exchange Rates', the Company had chosen to exercise the


174

option under paragraph 46 inserted in the standard by the

notification. Accordingly with retrospective effect from 1st October

2007 onwards exchange differences on all long term monetary

items to the extent such items were used for financing fixed assets

were added to/subtracted from the cost of those fixed assets and

depreciated over the balance useful life of the assets.

10. Basis of Accounting: The consolidated financial statement have

been prepared in accordance with Accounting Standard 21 (AS-

21) -consolidated Financial Statements" and Accounting Standard

27 (AS -27) - "Financial Reporting of "Interest in Joint Venture" as

notified by Companies Accounting Standard Rules, 2006.

The subsidiaries considered in the consolidated financial

statements are: 2009-2010 To appoint a director in place of Dr. G

S C Rao, who retires by rotation and being eligible, offers himself

for re-appointment.

11. Contingent Liabilities not Provided for: In the year 2011-

2012 claims against the Company not acknowledged as debts `

707.30 lakhs (previous year ` 147.66 lakhs). All the above matters

are subject to legal proceedings in the ordinary course of business.

The legal proceedings, when ultimately concluded will not in the

opinion of the management, have a material effect on results of


175

operations or financial position of the company. This can be

considered as Disclosure of accounting treatment.

The financial statements are prepared under the historical cost

convention and have been prepared in accordance with the

mandatory accounting standards prescribed by The Institute of

Chartered Accountants of India and relevant presentational

requirements of the Act. However, attention is drawn to the

Auditors' qualification on deferred tax as per Accounting Standard

22.

7.2 SHORT CASE STUDY- DHAMPUR SUGARS

Introduction

Dhampur Sugar Mills was established in 1933. It began its operations in a

small town called Dhampur located in the state of Uttar Pradesh, India.

Lala Ram Narain ji was the founder of the two sugar mills one at

Dhampur and the other as a 50% partner, at Bareilly, in Uttar Pradesh.


176

Shri Murli Manohar ji eldest son of Lala Ram Narain ji took up the charge

in difficult circumstances in 1947 when the Indian Sugar Industry was

passing through a challenging phase.

He resisted efforts to divest the Dhampur unit and took over the

Managing Agency of the factory agreeing to pay a fixed dividend to his

partners. He accomplished this task successfully turned around the

fortunes of the Dhampur factory.

Dhampur Sugar Mills situated at Dhampur is one of the leading

integrated sugarcane processing companies in India. Initially Dhampur

sugar mill was having a crushing capacity of 300 tons of cane per day.

With its continuous and pioneering efforts to harness the full potential of

sugarcane, Dhampur sugars has expand its product range beyond sugar

to include renewable power, fuel ethanol, alcohol, extra neutral alcohol,

alcohol based chemicals and bio fertilizers.

Dhampur sugar is working with a mission to be a leading agriculture

based company and to manufacture and promote agriculture and other

green products, and also maximize the renewable energy potential of

agricultural commodities.


177

Parent Plant

Parent plant is situated at Dhampur. As mentioned above it was

established in 1933. Dhampur plant produces sugar(15000 MT of cane

per day),Renewable power (65 MW per hour), Alcohol ( 200,000 Liters

Per Day), Ethanol ( 100,000 Liters Per Day), Extra Neutral Alcohol

(50,000 Liters Per Day), Rectified Spirit (200,000 Liters Per Day),

Industrial Alcohol (200,000 Liters Per Day), Alco-Chemicals ( 150 Tones

of Ethyl Acetate Per Day), Industrial Gases ( 20 Tones of CO2 Per Day)

and Bio-fertilizer( 2000 Tons Per Annum).

Subsidiary Units

Dhampur sugar has three subsidiary units situated at Asmoli, Mansurpur

and Rajpura.

1. Asmoli: It is first subsidiary of Dhampur sugars located at Asmoli

Village Sambhal, in Moradabad (U.P.). This was established in the

year 1994 with the initial capacity of 3000 TCD. Presently this

plant is producing distillery(100,000 Liters Per Day), Sugar ( 9000

Metric Tons of Cane Per Day), Renewable Power (38 MW Per

Hour), Alcohol ( 100,000 Liters Per Day), Ethanol ( 100,000 Liters

Per Day), Extra Neutral Alcohol( 100,000 Liters Per Day), Rectified


178

Spirit( 100,000 Liters Per Day), Industrial Alcohol( 100,000 liters

Per Day) and Bio-fertilizer( 5 Tons Per Day).

Asmoli employs Defco-Remelt process with Ion exchange for

producing refined sugar. Asmoli has 40 MW Cogeneration

capacity. Up to 30 MW of the power generated is exported to the

UPPCL through the 132 KV line up to Sambhal Sub- station, 15

Km away from the site.

Asmoli Distillery Division with a capacity of 100,000 liters Ethanol

per day. The other products being produced are ENA (Extra Neutral

Alcohol) and Rectified Spirit. Bio-gas produced is consumed in-

house as fuel.

The factory is working on strong principle of Recycle - Reuse -

Reduce concept. In 2008, the bio-compost unit was established

where Press Mud, a by-product of the sugar manufacturing process,

is converted to Bio-fertilizer, utilizing the distillery spent wash,

thereby converting waste to wealth.

It also manufactures a very high grade of Quick Lime using a

Bagasse Fired Lime Kiln.

Asmoli has well maintained grounds for sports such as Cricket,

Football, Volleyball, Badminton and other outdoor and indoor

games. The Management has also arranged regular yoga and sports


179

coaching classes for the staff and their families. The factory is

significantly involved in the development of a Green- belt in and

around the premises.

Recently management has set up the Academy of Modern Learning

with one of its branches at Asmoli. The school is equipped with

modern learning and sports facilities and encourages co-curricular

activities to facilitate wholesome development of rural children

2. Mansurpur: Second subsidiary of Dhampur sugars was

established in 1985 at Mansurpur, Muzzafarnagar (U.P.). Initial

capacity of the plant was 1400 Metric Tones‟ Per Day. Products

include Sugar (8000 Metric Tons of Cane Per-Day) and Power (28

MW per-Hour).

Mansurpur has a 100% back-end refinery following Defco Remelt

Phospho Flotation process to produce top quality refined sugar

which is being sold in 1 Kg and 5 Kg packs under the brand name

“Dhampure”.

Manusrpur lies in the rich belt of Cane Growers and sufficient cane

is available for crushing. Irrigation facility to maximum villages is

provided through big/small canals.


180

Mansurpur has a cogeneration facility of 28 MW and currently all

output is being sold to the grid.

Mansurpur sponsors a cultural entertainment program called Lok

Rang at District level, every year. From time to time it also

organizes Ram Lila, Folk Song, Mushyara, Kavi Sammelans and

Plays, to create awareness of Indian history, ethics and care for the

environment. Eye Camps and Family Planning Camps are also

arranged once a year for staff and the farming community around

the factory. The unit has a well equipped gymnasium and facilities

for Volley Ball, Kabaddi and Wrestling.

3. Rajpura: Third subsidiary of the Dhampur sugars is situated at

Rajpura Village Badaun (U.P.). it was established in 2006 with a

Initial Capacity of 7500 Metric Tons Per Day. It produces Sugar

(7500 Metric Tons of Cane Per-Day), Power (12 MW Per-Hour

and 35.6MW Per Hour under commissioning), Liquid Bio fertilizer

(1500 Liters Per-Month).

The Unit has a Cogeneration Capacity of 12 MW per Hour and

35.6 MW per Hour under commissioning.


181

The Unit is fully automated and has one of the lowest steam

consumptions in the country. Vertical Continuous Pans developed

by Dhampur are being used in “B” and “C” massecuites using 3rd

vapour for reduced steam consumption.

The unit has an intensive cane development program. It provides

the farmers, seeds of latest and high sucrose content sugarcane

varieties, supplies high quality pesticides on subsidized rates and

creates awareness of latest.

Management has recently set up the Academy of Modern Learning

with one of its branches at Gunnaur (near Rajpura). The school is

equipped with modern learning and sports facilities and

encourages co-curricular activities to facilitate wholesome

development of the rural children

Achievements of Dhampur Sugars

Dhampur Sugar Mills has been continuously striving to maximize the

potential of sugarcane and this focused and continuous effort has

resulted in Dhampur becoming one of India‟s leading integrated

sugarcane processing companies. Some of the major achievements of

Dhampur sugars are as:


182

1. Dhampur‟s innovativeness and emphasis on continuous R&D have

made the Company a technological leader in sugarcane processing

and green energy solutions.

2. Dhampur‟s pioneering efforts has resulted in the introduction of

new technologies like Fibrizors, Pressure Feeders, Pressure

Evaporation System with Falling Film Type Evaporator Bodies,

Vertical Continuous Pans, 105 at a bagasse fired boiler etc.

becoming the mainstay of Sugar technology in India.

3. Dhampur's sugarcane co-generation capacity is one of the largest

in the country and it has perhaps the highest ethanol

manufacturing capacity relative to it‟s cane crushing capacity, in

the country.

4. It is also the first and the largest producer of refined sulphur less

sugar in the country.

5. Dhampur has Cogeneration capacity of 70 MW – the largest in

India, in a single unit.

6. Dhampur is the first in the world to implement 105 kg/cm2 boiler

and turbine and has perhaps the most efficient cogeneration

system in the world.


183

7. The sports complex at Dhampur unit features an air-conditioned

squash court, indoor badminton courts, an indoor swimming pool,

table tennis facilities, a gymnasium and a volleyball court.

8. It has provided energy alternatives to an energy-starved country

through co-generation and ethanol.

First in India

1. Dhampur Sugar Mills was the first company in India to

manufacture sulphur-less refined Sugar.

2. Dhampur‟s has the ability to produce refined sugar both during the

season (where in the sugar from the sugarcane is first used to

manufacture raw sugar and subsequently refined to produce

refined sulphur-less sugar) and in off-season (when coupled with

cogeneration, Dhampur can use raw sugar procured from outside

to produce refined sugar).

3. In 1994, Dhampur was the first sugar company in India to start

eco-friendly cogeneration at one of it‟s 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. Dhampur was one of the

first to realize the tremendous potential it had towards reducing the


184

power deficit, by supplying to the grid, thereby contributing to the

bio-energy effort undertaken by the country.

Today, the Group‟s combined co-generation capacity stands at

154.7 MWH with 80 MWH of grid interactive power and an

additional 35.6 MWH is under commissioning, and is expected to

come on line by 31st Jan 2014.

4. Dhampur was the first in the sugar co generator in the world to

install and operate 105 kg/cm2 boiler and turbine, which has

increased efficiencies in bagasse usage and made it perhaps the

most efficient cogeneration unit in the world. Dhampur 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.

5. Dhampur 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.

Capacity of Dhampur Sugars

Dhampur owns and operates four integrated sugarcane crushing

complexes and has a capacity:

To crush 39,500 metric tons of cane per day.


185

To produce 4,200 metric tons of sugar per day.

To refine 1,700 metric tons of sugar per day.

To generate 154.7 MWH of renewable power and 35.6 MWH under

implementation.

To export 132.5 MWH of renewable power to the grid.

To produce 300,000 liters of alcohol/fuel ethanol per day.

To produce 150,000 liters of extra netural alcohol per day.

To produce 150 tons of ethyl acetate.

To produce 20 tons of Liquid carbon dioxide.

To produce 1500 liters of Liquid bio-fertilizers per month,

To produce 33,000 tons of bio-fertilizers per annum.

Board of Directors its board of directors consists of highly qualified

and experienced persons. It includes

1. Mr. V.K. Goel- chairman

2. Mr. A.K. Goel - Vice Chairman

3. Mr. Gaurav Goel- Promoter Director and Managing Director

4. Mr. Gautam Goel-Promoter Director and Managing Director.

5. Mr. Ashwani K. Gupta -Independent Director.


186

6. Mr. M.P. Mehrotra-Independent Director.

7. Mr. Harish Saluja - Independent Director.

8. Mr. Rahul Bedi-Independent Director

9. Mr. J.P. Sharma-Employee Director.

10. Mr. Priya Brat-Independent Director.

11. Mr.B.B.Tandon-Independent Director.

12. Mr. M.K.Jain-Nominee Director appointed by IDBI Ltd.

13. Mr. S.K. Wadhwa-Nominee Director appointed by Punjab National

Bank.

Research and Development

It assists farmers in the areas of sowing, manure, and improved cane

varieties through an intensive cane development program. Widening the

scope of traditional farmer factory relationship, Dhampur has been

involved in providing crop knowledge, modern cultivation techniques

and improved variety of seeds, better inputs for transportation and

irrigation and social welfare activities for the rural community near the

factories.


187

Social Responsibility

Dhampur sugars have striven to realize a corporate environment of

collaborative effort. It has worked towards continuous improvement in

every sphere of its activity. In quest for excellence it has given special

consideration to its social obligations, whether it is caring for the rural

hinterland or the environment it is living in. A significant and endearing

feat for the Group is that some of its employees have been a part of the

Dhampur family for two to three generations.

Dhampur believes in being a responsible and caring corporate citizen.

The Group not only contributes to the nations self sufficiency in power,

fuel ethanol, chemicals and sugar, but also shares its success with society

at large.

By providing employment to rural folk and sharing in the economic

development of farmers and their families, Dhampur has provided a

major impetus to the growth and development of the rural areas of India.

Caring for and preserving the environment has been a top priority.

Dhampur has undertaken the task of extensive plantation in and around

the factory complexes at various locations and so far the exercise has


188

been fairly successful. The local population is also encouraged to

undertake plantation drives.

Dhampur encourages use of renewable fuels, which not only save

national resources but are also eco–friendly. The Group today has

cogeneration facilities producing 145 MW of power from renewable

resources, which do not contribute to Greenhouse gasses.

Dhampur strives to be a good corporate citizen. While the manufacturing

activities contribute towards strengthening the rural fabric of the country,

extension of these activities to include by-product utilization boosts rural

development. This provides direct and indirect employment through

sugarcane complexes as well as infrastructure development through

trading activities and transportation.

Education

The Dhampur Group has educational facilities at its units. It has also

established model schools near Dhampur and Asmoli. These schools not

only provide quality education to the local population but also to

students from surrounding areas.


189

Management believes that quality education remains the bedrock for

integrated social development. Conceptualized by the Dhampur Group,

the Pushp Niketan School at the Dhampur Unit has emerged as a unique

model for imparting world class education to rural population. With a

1:30 teacher-student ratio, each child receives proper attention and care.

Dhampur has recently set up the Academy of Modern Learning with

branches at Asmoli and Gunnaur. The schools are equipped with

modern learning and sports facilities and encourage co-curricular

activities to facilitate wholesome development

Products: Dhampur sugar industries as the name reveals produces

sugar. With sugar it is producing many by products as ethanol, baggasse,

alcochem, bio fertilizers and many more. They are described as below:

1. Sugar Dhampur has a capacity to produce 1700 MT per day of

refined sugar and 2200 MT per day of sulphitation sugar.

Dhampur‟s refined sugar is also sold in one and five kg. Consumer

packs under the brand “Dhampur Sulphurless Sugar”


190

2. Power: cogeneration capacity 154.7 MWH and 35.6 MWH under

commissioning (80 MWH 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.

3. Ethanol: Ethanol is a generic name for Ethyl Alcohol which can

be produced by fermenting sugarcane molasses or juice. It is a

volatile, flammable and colourless liquid. Ethyl Alcohol has three

principle usages:

(i) Portable alcohol is used in varying ratios and blends in the

production of liquor. There are two main grades of portable

alcohol and they are:

a) Rectified Spirit or RS, which has a purity of 95%.

b) Extra Neutral Alcohol is produced by redistilling RS

and is used in the production of portable


191

(ii) Industrial Alcohol is produced by denaturing alcohol with

bitter ants and thereby making it unfit for human

consumption. This form of alcohol is called Special

Denatured Spirit.

(iii) Fuel Ethanol – This grade of alcohol is also termed as

Anhydrous Alcohol.

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.

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.


192

Ethanol blended fuels are advantageous due to the

following characteristics:

i. Renewable source of energy

ii. Use Molasses which is readily available and is a by-product of the

sugar manufacturing process

iii. Diversifies the Sugar Industry

iv. Utilizes industrial installed capacity, improving the economy of the

industry

v. Energy security, trade balance and risk reduction

vi. Reduce use of gasoline and ensures less dependence on imports of

oil

vii. Market opportunity for agricultural crops

viii. Rural economic development and boost to the agricultural sector

ix. Environmental benefits (reduced carbon dioxide and carbon

monoxide emission. It does not contribute to the harmful

greenhouse gasses)


193

x. 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.

4. Alcochem: production of Ethyl Acetate is 150 MT/day. Ethyl

acetate is the ester of ethanol and acetic acid. This colorless liquid

has a characteristic sweet smell (similar to pear drops) and is used

on a large scale for use as a solvent.

5. Industrial Gases: main industrial gas is Carbon Dioxide which is

produced nearly 20 MT/day. Carbon Dioxide (CO2) is a co-

product of distillery fermentation house, recovered and purified to

99.9%.

6. Bio-fertilizer: Liquid Bio Fertilizers and organic fertilizer is a bio-

product of Dhampur sugars. Production of bio fertilizers is near

about 500 liters per day and Organic Fertilizer is 33000 metric tons

per annum.


194

Financials

The balance sheet, P&L A/c and cash flow statements of Simbhaoli

sugar mills are given below:


195

Mar '1

2M

ar '1

1Sep '0

9Sep '0

8Sep '0

7Sep '0

6Sep '0

5Sep '0

4Sep '0

3Sep '0

2

12 m

ths

18 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

Total Share C

apital

62.8

16

2.8

16

1.6

16

1.6

15

9.2

80.9

48.6

34

8.4

94

0.5

34

0.5

3

Equity Share C

apital

53.9

85

3.9

85

2.7

85

2.7

84

7.6

34

6.1

63

4.4

93

4.3

52

6.3

92

6.3

9

Share A

pplication M

oney

00

0.8

40

.84

00

00

00

Preference Share C

apital

8.8

38

.83

8.8

38

.83

11.5

73

4.7

41

4.1

41

4.1

41

4.1

41

4.1

4

Reserves

422

.52

446

.11

437

.01

384

.85

351

.88

389

.42

67.8

45

3.7

84

4.1

1-1

.86

Revalu

ation R

eserves

00

00

00

00

00

Netw

orth

485

.33

508

.92

499

.46

447

.34

11

.08

470

.32

116

.47

102

.27

84.6

43

8.6

7

Secured Loans

857

.58

818

.53

700

.45

892

.91

657

.63

300

.73

346

.53

59

.08

351

.93

24

.14

Unsecured Loans

22.7

77.2

63

1.6

98

.09

7.6

51

6.8

69

.92

7.0

49

.53

11.5

4

Total D

ebt

880

.28

895

.79

732

.14

901

665

.28

317

.59

356

.42

366

.12

361

.43

335

.68

Total Liabilities

1,3

65.6

11

,40

4.7

11

,23

1.6

01

,34

8.3

01

,07

6.3

67

87

.91

472

.89

468

.39

446

.07

374

.35

Gross B

lock

1,4

46.7

61

,37

1.5

21

,27

0.6

21

,23

0.6

67

79

.42

416

403

.68

378

359

.54

344

.92

Less: A

ccum

. D

epreciation

461

.78

395

.22

311

.88

251

.08

197

.47

166

.63

178

.97

162

.71

147

.08

131

.93

Net B

lock

984

.98

976

.39

58

.74

979

.58

581

.95

249

.37

224

.71

215

.29

212

.46

212

.99

Capital W

ork in Progress

34.8

31

7.7

44

3.5

82

4.4

400

.87

333

.45

12.5

9.2

1.9

68

.5

Investm

ents

8.9

94

5.4

62

7.7

82

7.7

82

6.2

31

4.1

95

6.7

35

9.8

25

9.8

25

3.1

4

Inventories

710

.23

667

.29

419

.58

280

.93

180

.04

83.5

169

.86

128

.31

19

.36

115

.65

Sundry D

ebtors

216

.27

85.2

28

9.3

79.6

64

8.4

55

1.4

64

5.8

44

3.1

33.6

72

1.8

6

Cash and B

ank B

ala

nce

13.2

11

1.7

10.1

81

2.8

84

.54

15.0

78

.87

8.3

31

3.0

35

.78

Total C

urrent A

ssets

939

.71

764

.21

519

.06

373

.47

233

.03

150

.03

224

.57

179

.73

166

.06

143

.29

Loans and A

dvances

75.3

31

98

.16

109

.78

112

.01

118

.82

211

.35

144

.25

114

.74

99.8

54

5.3

1

Fixed D

eposits

01

1.0

72

6.8

66

.67

6.9

71

6.5

83

.44

3.1

60

.93

0.2

5

Total C

A, Loans &

A

dvances

1,0

15.0

49

73

.44

655

.74

92

.15

358

.82

377

.96

372

.26

297

.63

266

.84

188

.85

Deffered C

redit

00

00

00

00

00

Current Liabilities

645

583

.74

30

.51

156

.12

279

.83

167

.82

183

.67

108

.26

90.0

88

4.9

7

Provis

ions

33.2

32

4.5

32

3.6

91

9.4

91

1.6

81

9.2

49

.64

5.2

94

.94

4.1

6

Total C

L &

Provis

ions

678

.23

608

.23

454

.21

75

.61

291

.51

187

.06

193

.31

113

.55

95.0

28

9.1

3

Net C

urrent A

ssets

336

.81

365

.21

201

.53

16

.54

67.3

11

90

.91

78

.95

184

.08

171

.82

99.7

2

Miscellaneous Expenses

00

00

00

00

00

Total A

ssets

1,3

65.6

11

,40

4.7

11

,23

1.6

01

,34

8.3

01

,07

6.3

67

87

.91

472

.89

468

.39

446

.06

374

.35

Contingent Liabilities

45.2

24

2.6

28

32.6

75

4.6

33

59

.19

140

.25

95.7

81

00

.05

95.2

Book V

alu

e (R

s)

88.3

99

2.7

79

2.9

38

3.0

38

3.9

99

4.5

29.7

32

5.6

26.7

89

.32

Application O

f Funds

Sources O

f Funds

Bala

nce Sheet


196

Mar '1

2M

ar '1

1Sep '0

9Sep '0

8Sep '0

7Sep '0

6Sep '0

5Sep '0

4Sep '0

3Sep '0

2

12 m

ths

18 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

Sales Turnover

1,5

93.8

52

,39

8.9

29

77

.21

728

.84

646

.19

1,0

26.0

87

68

.29

502

.19

469

.66

427

.52

Excise D

uty

54.4

19

1.3

73

1.6

66

0.3

15

5.2

48.7

84

9.0

53

4.4

63

7.0

93

3.4

8

Net Sales

1,5

39.4

42

,30

7.5

59

45

.55

668

.53

590

.99

977

.37

19

.24

467

.73

432

.57

394

.04

Other Incom

e4

.52

35.2

81

3.9

7-4

.24

12

87.3

21

.86

-2.4

59

.94

-3.9

2

Stock A

djustm

ents

36.5

34

75

.46

-10

9.5

19

6.5

51

08

.52

-10

3.6

34.4

3-1

2.5

42

.96

38.0

1

Total Incom

e1

,58

0.4

92

,81

8.2

98

50

.01

760

.84

711

.51

961

.02

755

.53

452

.74

445

.47

428

.13

Raw

M

aterials

1,2

18.5

82

,33

9.4

75

29

.74

528

.69

608

.33

665

.53

526

.64

310

.72

323

.91

333

.85

Pow

er &

Fuel C

ost

4.2

14

.14

5.0

91

1.8

17

.17

12.6

82

5.3

61

4.0

37

.11

9.0

6

Em

ployee C

ost

58.9

69

2.6

84

4.1

84

3.0

73

9.6

35.3

22

8.3

42

4.5

12

4.8

72

5.0

6

Other M

anufacturing Expenses

27.6

23

6.2

22

6.1

52

3.2

61

7.6

41

6.1

12

0.5

61

2.7

91

3.2

31

1.4

6

Selling and A

dm

in Expenses

07

7.8

72

0.7

52

1.4

62

4.4

81

8.7

21

7.5

12.5

13.1

71

8.6

5

Miscellaneous Expenses

64.5

53

4.9

71

6.9

71

4.8

81

3.3

58

.58

11.0

29

.47

6.8

97

.17

Preoperative Exp C

apitalised

00

00

00

00

00

Total Expenses

1,3

73.9

22

,58

5.3

56

42

.88

643

.17

710

.57

756

.94

629

.42

384

.02

389

.18

405

.25

Operating Profit

202

.05

197

.66

193

.16

121

.91

-11

.06

116

.76

124

.25

71.1

74

6.3

52

6.8

PB

DIT

206

.57

232

.94

207

.13

117

.67

0.9

42

04

.08

126

.11

68.7

25

6.2

92

2.8

8

Interest

94.8

71

27

.24

84.7

38

6.4

84

5.9

62

9.2

64

6.7

14

3.3

63

9.8

44

0.5

4

PB

DT

111

.71

05

.71

22

.43

1.1

9-4

5.0

21

74

.82

79.4

25.3

61

6.4

5-1

7.6

6

Depreciation

67.6

69

6.1

76

1.5

85

3.3

73

3.2

32

0.2

21

8.5

71

6.9

81

5.9

71

5.5

1

Other W

ritten O

ff

00

00

00

00

00

Profit B

efore Tax

44.0

49

.53

60.8

2-2

2.1

8-7

8.2

51

54

.66

0.8

38

.38

0.4

8-3

3.1

7

Extra-ordinary item

s0

0.8

92

.03

16.0

2-0

.11

2.1

15

.43

1.6

13

.15

1.0

2

PB

T (Post Extra-ord Item

s)

44.0

41

0.4

26

2.8

5-6

.16

-78

.36

156

.71

66.2

69

.99

3.6

3-3

2.1

5

Tax

15.5

1.7

46

.66

-9.7

6-1

7.9

15

1.0

71

0.5

80

.45

-0.7

0.1

1

Reported N

et Profit

28.5

48

.68

56.1

93

.6-6

0.6

71

02

.54

55.6

89

.54

4.1

5-3

1.8

6

Total V

alue A

ddition

155

.34

245

.88

113

.14

114

.48

102

.24

91.4

11

02

.78

73.3

65.2

77

1.3

9

Preference D

ividend

0.3

0.4

40

.30

.30

.31

.64

00

00

Equity D

ividend

6.7

45

.39

7.9

10

04

.61

3.4

40

00

Corporate D

ividend Tax

1.1

40

.95

1.3

90

.05

0.0

50

.88

0.4

80

00

Shares in issue (lakhs)

539

.06

539

.06

527

.06

527

.06

475

.65

460

.94

344

.19

344

.19

263

.21

263

.21

Earning Per Share (R

s)

5.2

41

.53

10.6

0.6

3-1

2.8

22

1.8

91

6.1

82

.77

1.5

8-1

2.1

1

Equity D

ividend (%

)1

2.5

10

15

00

10

10

00

0

Book V

alue (R

s)

88.3

99

2.7

79

2.9

38

3.0

38

3.9

99

4.5

29.7

32

5.6

26.7

89

.32

Profit &

Loss account

Per share data (annualised)

Incom

e

Expenditure

------------------- in R

s. C

r. -------------------


197

Mar '1

2M

ar '1

1Sep '09

Sep '08

Sep '07

Sep '05

Sep '04

Sep '03

Sep '02

12 m

ths

18 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

12 m

ths

Net Pro

fit B

efo

re T

ax

44.0

410

.42

62.1

1-6

.16

-78.

5815

3.61

66.2

69.

993.

45-3

1.88

Net C

ash F

rom

Opera

ting A

ctivitie

s51

.65

64.3

734

2.34

-14.

43-1

3.46

116.

1577

.93

50.7

624

.22

29.9

7

Net C

ash (used in)/from

Investing A

ctivitie

s-5

1.59

-113

.31

-47.

55-1

47.6

1-3

00.8

8-1

99.3

8-2

0.59

-26.

06-6

.4-3

.21

Net C

ash (used in)/from

Fin

ancin

g A

ctivitie

s-1

1.11

34.6

7-2

77.3

170.

0829

4.19

100.

75-6

0.56

-27.

17-9

.89

-33.

1

Net (d

ecre

ase)/in

cre

ase In C

ash a

nd C

ash E

quiv

ale

nts

-11.

05-1

4.27

17.4

98.

04-2

0.15

17.5

2-3

.22

-2.4

77.

93-6

.35

Openin

g C

ash &

Cash E

quiv

ale

nts

24.2

637

.04

19.5

511

.51

31.6

614

.12

15.5

313

.96

6.03

12.3

8

Clo

sin

g C

ash &

Cash E

quiv

ale

nts

13.2

122

.77

37.0

419

.55

11.5

131

.64

12.3

111

.49

13.9

66.

03

Cash F

low

----

----

----

----

--- in

Rs. C

r. ---

----

----

----

----


198

Analysis of Dhampur Sugar Industry

Dhampur sugar consistently followed the accrual basis of accounting. Its

accounts were prepared on the basis of accounting standards as per

Section 211(3C) of the Companies Act, 1956, issued by the Institute of

Chartered Accountants of India and the relevant provisions of the

Companies Act, 1956. The Company's financial statements are prepared

in compliance with the requirements of the Companies Act, 1956 and

Generally Accepted Accounting standards. Moreover the company is

undergoing regular audits by its auditor therefore it could be well said

that company is following the accounting standards. The findings after

analyzing the company‟s annual reports and discussion with

management, accountants and its auditors are as follows:

1. Change in the Accounting Year: In the year 2010, the financial

year 2009-10 of the Company was extended up to 31st March,

2011 from 30th September, 2010. Henceforth, the financial year of

the Company was recognized from 1st April to 31st March. The

financial year period changed as the Company needed to align its

accounts with the emerging changes in law and accounting. The

financial results for the period under review covered a period of 18

months, and are not comparable with the results of 2008-09, a

financial year that covered only 12 months. The year 2008-09

refers to 12 months ending September 2009, and 2009-11 refers


199

to 18 months ending March, 2011.after wards company changes its

accounting year.

2. Valuation of Inventories: Stores, spare parts and tools and

appliances are a part of inventory and mostly they are valued at

cost or under. Stock-in-trade is valued at the lower of cost and net

realizable value. The basis of determining cost for different

categories of inventory differs from item to item. It is mandatory to

value inventory under AS-2. Dhampur Sugars Value inventory

differently for different items. Company is valuing raw material at

cost and finished goods including in transit (molasses) at lower of

cost and net realizable value. Stock of finished farm products,

molasses and bagasse are carried at estimated selling price.

Packing materials, stores, spares, standing cane and other crops are

carried at cost while goods in process / work in process is carried at

estimated cost. Loose tools and instruments are carried at

depreciated value.

3. The Cash Flow Statement of the company is prepared under

the "indirect method” set out in Accounting Standard-3 prescribed

in Companies (Accounting Standards) Rules, 2006. Cash flow

statement is compulsory for all the firms of level 2 and listed

companies

4. Research and Development The details relating to Research

and Development activities carried out by the Company are stated


200

in Form B of company‟s annual Report as required under the

Companies (Disclosure of Particulars in the Report of Board of

Directors) Rules, 1988. Specific areas in which the Company

carried out R&D Planting of new varieties of early maturing seeds

for higher sugar recovery, yield in sugarcane and for early

commencement of crushing operations. Benefits derived as a result

of the above R&D includes Higher recovery per cent at units.

Efforts in brief made towards technology absorption, adoption and

innovation leads to improved juice clarification for the manufacture

of export quality, low ICUMSA sugar. Other benefits derived as a

result of above efforts e.g. product improvement, cost reduction,

product development and import substitution.

5. Depreciation/Amortisation: According to AS-6 depreciation

should be revealed in the Annual reports. The straight line method

at the rates applicable to the balance useful life of the relevant

assets as estimated by the valuer or at the rates and in the manner

specified in Schedule XIV to the Companies Act, 1956, whichever

is higher. In respect of other assets, the depreciation is provided by

applying the prescribed methods at the rates specified in Schedule

XIV to the Companies Act, 1956. Depreciation on plants and

buildings acquired after 31st March, 1989 is provided on straight

line method at the rates and in the manner prescribed in Schedule


201

XIV to the Companies Act, 1956. Depreciation on other fixed

assets is provided on written down value method at the rates and

in the manner prescribed in Schedule XIV to the Companies Act,

1956.

6. Government Grants: AS-12 is also followed and is specified by

the company. Government grants related to revenue are

recognized in the profit and loss account over the years necessary

to match them with the related costs. Government grants related to

depreciable fixed assets are recognized in the profit and loss

account over the useful life of the asset to which they relate.

7. Employee Benefits: The Company has classified the various

benefits provided to employees as Defined contribution plans

(including Superannuation fund Provident fund and ESIC) and

Defined benefits plans (including Gratuity & Compensated

absences – Earned Leave/ Sick Leave/ Casual Leave), which have

been recognized in the profits and loss account. In accordance with

the Accounting Standard 15 (revised 2005), actuarial valuation was

done in respect of the aforesaid defined benefit plans and details of

the same are given in the annual reports. Company's liabilities

towards gratuity are determined using the projected unit credit

method which considers each period of service as giving rise to

additional unit of benefit entitlement and measures each unit


202

separately to build up the final obligation. Short term benefits

(namely leave encashment) are provided for on accrual basis.

8. AS-17 states the requirement of segment reporting.

Company is reporting under three heads viz. Business segments,

Geographical segments and Segment accounting policies.

Based on the guiding principles given in Accounting Standard AS-

17 "Segment Reporting" notified by the Companies (Accounting

Standard) Rules, 2006, the Company's business segments include:

Sugar, cogeneration and distillery (chemicals). Since the

Company's activities/operations are primarily within the country

and considering the nature of products it deals in, the risks and

returns are same. There are four geographical segments. The

accounting policies in relation to segment accounting are disclosed

as Segment revenue and expenses, Segment assets and liabilities,

Inter segment sales.

Inter segment sales between operating segments are accounted for

at market price. These transactions are eliminated on

consolidation. Inter segment sales between operating segments are

accounted for at market price. These transactions are eliminated on

consolidation. The Company has opted for change in accounting

policy in respect of foreign exchange difference relating to

translation of long term foreign currency monetary liabilities in


203

accordance with the notification dated 31st March, 2009 issued by

the Ministry of Corporate Affairs.

9. Basis of Accounting: The consolidated financial statement have

been prepared in accordance with Accounting Standard 21 (AS-

21) -consolidated Financial Statements" and Accounting Standard

27 (AS -27) - "Financial Reporting of "Interest in Joint Venture" as

notified by Companies Accounting Standard Rules, 2006.

10. The financial statements are prepared under the accrual cost

convention and have been prepared in accordance with the

mandatory accounting standards prescribed by The Institute of

Chartered Accountants of India and relevant presentational

requirements of the Act. However, attention is drawn to

the Auditors' qualification on deferred tax as per Accounting

Standard 22.

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