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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.
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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.
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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.
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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
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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
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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
Chapter-VII : Case Study
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.
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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.
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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.
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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.
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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,
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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
Chapter-VII : Case Study
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.
Chapter-VII : Case Study
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.
Chapter-VII : Case Study
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)
Chapter-VII : Case Study
157
6 Trust Classic
Sulphur less
Sugar
• Sulphur-less Sugar with no harmful
chemicals
• UV irradiated bacteria free
• Free flowing sparkling white grains
• Conforms to European standards (< 50 I.U)
7 Trust Classic
Sugar cubes
• Sparkling white sulphur-less sugar cubes
• Dissolves instantly
• Hygienically packed
• Conforms to European standards (< 50 I.U)
8 Classic Sugar
Sachet
• Superfine sugar, dissolves instantly
• Hygienically packed
• Conforms to European standards (< 50 I.U)
9 Mineral Sugar
Sachets
• Golden crystals naturally rich in iron and
calcium
• Maintains natural taste & color of food
• Hygienically packed
10 Brown Sugar
Sachets
Dark brown crystals add depth to the taste of
coffee
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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
Chapter-VII : Case Study
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,
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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.
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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:
Chapter-VII : Case Study
164
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35
.74
19,8
66
.74
15,0
13
.96
Su
nd
ry d
ebto
rs8
,70
0.8
67
,27
3.7
35
,69
4.8
03
,69
4.5
32
,98
3.4
01
,22
3.9
49
88
.24
Cas
h a
nd
ban
k bal
ance
s6
,74
4.8
51
3,9
24
.37
5,6
10.4
11
,15
8.7
59
70
.37
302
.89
287
.28
Lo
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
Chapter-VII : Case Study
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
7T
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
,361
.72
4680
.75
637.
74E
xcep
tiona
l ite
ms
(Net
)-9
,305
.97
--
--
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-
-P
rofit
/(lo
ss)
afte
r ta
x1,
546.
25-7
,469
.46
7,17
7.94
-2,9
10.1
7-6
,422
.72
1185
.5-4
08.1
5T
rans
fer
to d
eben
ture
red
empt
ion
rese
rve
211.
5-
974.
5-4
08.1
5B
alan
ce b
roug
ht fo
rwar
d fr
om th
e pr
evio
us y
ear
-5,7
30.1
91,
739.
27-6
,003
.75
-3,0
93.5
82,
829.
14-8
64.3
7-4
56.2
2E
xcha
nge
fluct
uatio
n ad
just
men
ts (
Ref
er n
ote
19 in
sch
edul
e 17
)-
-56
5.08
--
--4
,183
.94
-5,7
30.1
91,
739.
27-6
,003
.75
-3,5
93.5
810
9.63
-864
.37
Ded
ucte
d fr
om g
ener
al r
eser
ve-
--
-50
0.00
--
Bal
ance
car
ried
to b
alan
ce s
heet
--
--6
,003
.75
-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
10.0
2-4
.28
Bas
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
Chapter-VII : Case Study
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
0/0
9/2
00
73
1/0
3/2
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-
-D
ivid
en
d in
com
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
Chapter-VII : Case Study
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.
Chapter-VII : Case Study
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.
Chapter-VII : Case Study
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
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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
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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.
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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
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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
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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.
Chapter-VII : Case Study
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.
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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
Chapter-VII : Case Study
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
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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.
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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.
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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:
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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.
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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
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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.
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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.
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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.
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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
Chapter-VII : Case Study
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.
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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”
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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
Chapter-VII : Case Study
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.
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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)
Chapter-VII : Case Study
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.
Chapter-VII : Case Study
194
Financials
The balance sheet, P&L A/c and cash flow statements of Simbhaoli
sugar mills are given below:
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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. -------------------
Chapter-VII : Case Study
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. ---
----
----
----
----
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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
Chapter-VII : Case Study
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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