TABLE OF CONTENTS

CHAPTER 1 INTRODUCTION AND 1-4

EXECUTIVE SUMMARY

CHAPTER 2 COMPANY PROFILE 5-8

CHAPTER 3 OBJECTIVE OF THE COMPANY 9-30

CHAPTER 4 PERFORMANCE HIGHLIGHTS AND 30- 33

PROCESS FLOW CHART

CHAPTER 5 INVENTORY MANAGEMENT 34-45

CHAPTERS 6 ABC ANALYSIS AND RATIOS 46-60

CHAPTER 6 FINDINGS AND SUGGESTION 61-63

CHAPTER 7 CONCLUSION 64-64

BIBILOGRAPHY 65-65

ANNEXURE 66-98INTRODUCTION TO SUGAR INDUSTRY

The sugar industry occupies a prominent place among the organized industries in India. Sugar industry hold second rank next to cotton textiles industry in importance.It provides employment to nearly 5 lakhs of people directly. Sugar is essential product in India. Considerable quantity of sugar is produced since old days. India produces white sugar, Khandasari, and Jaggery. There are about 450 industries working through out the country. Among them 120 are in private sector 235 in cooperative sector and 95 are in public sector. In Karnataka state there are about 40 sugar industries established. Out of 40, 20 are in private sector, 18 are in cooperative sector, and remaining 2 are in public sector. The sugar industries are located in rural areas and have an in intrinsic symbiotic relationship with rural masses. Some units are also in position to supply surplus power to the grid thru Bagasse based co-generation system.

Type of sectorsIn IndiaIn Karnataka

Cooperative sector23518

Private sector12020

Public sector9502

Total45040

EXECUTIVE SUMMARYInventory control is the process whereby investment in materials and parts carried in stock is regulated within predetermined limits set in accordance with inventory policy established by the management.

In modern competitive one of the burning problem of every business and industries that of cost control and cost reduction. An all-pervasive effort for cost control and cost reduction is of paramount, importance for survival and growth of every industrial enterprise. This is why inventory management as a scientific device for controlling inventory cost and eliminating wastage, is now regarded as an integral part of industrial management. Inventory management does not involve any human factor, as it concerns itself not with men but with inventory.

It is one the widely used techniques for the control of inventory. Objective of ABC control is to vary the expenses associated with maintaining appropriate control according to the potential savings associated with the proper level of such a control. A may account for more than half the total value usage in the inventory. These items required very careful management and special careful estimates of future usually class C items which in total account for only a few percent of the total value of usage very little effort should be devoted to forecast the requirement of items. The intermediate class B items justify a reasonable but routine effort in forecasting demands and managing inventory.

The basis for my study is the theory related to inventory. The theory collected is as follows, Meaning and definition of inventory, objectives & significant of inventory and techniques of inventory and what are the Benefits derived to Company by holding inventory.

BACKGROUND AND INCEPTION OF THE MALAPRABHA SUGARSChairperson of factory is Mr. R. S. TALEWAD. Company is situated in Timmapur village near by Lokapur, Mudhol taluka, Bagalkot district and its registered office is in Factory sight

The Factory has more than 500 employees on its roll including some officers and technical experts. Human resources being the most important assets of the company all the efforts are made to enhance the motivational level and efficiency of the employees.

NATURE OF BUSINESS CARRIED

SUGAR PRODUCTION (RANN SUGAR)The plant is capable of crushing about 2,500 Tons Cane per Day (T.C.D.) and would be producing export quality crystal white sugar using the latest techniques in the country. The factory one of the most advanced in India.sh Robust and reliable equipment of latest design, high efficiency, and low power consumption have been installed continuous operation all around the year. Due to abundant cane available in the area of operation, a minimum duration of season of 7 to 8 months is assured i.e. to say about 5 lacs tones of sugarcane will be crushed during the season to produce around 6.2 lacs quintals of sugar. When this is done, the turnover of the company right from beginning would be Rs.100 corers and after meeting all the obligations, there will be sizable surplus per year.POWER GENERATION (RSSK POWER)The company has undertaken to establish a mega project to generate power using non conventional energy fuel i.e. bagasse which is a byproduct coming out of sugarcane and available in plenty at the location employing very high pressure (67ata) and high efficiency boilers and turbo generator sets. Out of 12.5 megawatts of power generated, 4.2 mgt will be used for captive consumption, living a balance of 8.5 mgt to be sold to Karnataka Power Transmission Corporation Ltd, K.P.T.C.L (Formerly Karnataka Electricity Board) all around the year.

Under the 10 year power purchase agreement entered into between the factory and KPTCL. The power to be exported to grid at 110kv would be paid for through an assured letter of credit at Rs.3.02per unit initially with an escalation of 5%.

Every year i.e. to say 8.5 MW of exported power will generate a revenue of about Rs.16 crores per year and after meeting incidental expenses for generation, there will be a sizable surplus per year, which makes it a highly attractive preposition.

M/s. Indian Renewable Energy Development Agency Ltd.(IREDA), New Delhi, the Govt. of India undertaking has rightly considered this project as a First Co-generation Plant in Co-op sector in Karnataka and has financed the project in a big way towards establishment of this project

BY-PRODUCTS The company has ambitious plans to utilize various by-products in a systematic way as fallows.

BAGASSE

1. Power Generation

2. Paper production

3. Particle Board

4. Cattle Feed & Furfural

MOLASSES:

1. Butanol

2. Yeast

3. Industrial Alcohol

4. High Protein Molasses

FILTER CAKE:

1. Manure

2. Refined Wax

PRODUCT PROFILE

SUGAR PRODUCTION (RANN SUGAR) The plant is capable of crushing about 2,500 Tons Cane per Day (T.C.D.) and would be producing export quality crystal white sugar using the latest techniques in the country. The factory one of the most advanced in India. Robust and reliable equipment of latest design, high efficiency, and low power consumption have been installed continuous operation all around the year. Due to abundant cane available in the area of operation, a minimum duration of season of 7 to 8 months is assured i.e. to say about 5 lacs tones of sugarcane will be crushed during the season to produce around 6.2 lacs quintals of sugar. When this is done, the turnover of the company right from beginning would be Rs.100 corers and after meeting all the obligations, there will be sizable surplus per year.

POWER GENERATION (RSSK POWER) The company has undertaken to establish a mega project to generate power using non conventional energy fuel i.e. bagase which is a byproduct coming out of sugarcane and available in plenty at the location employing very high pressure (67ata) and high efficiency boilers and turbo generator sets. Out of 12.5 megawatts of power generated, 4.2 mgt will be used for captive consumption, living a balance of 8.5 mgt to be sold to Karnataka Power Transmission Corporation Ltd, K.P.T.C.L (Formerly Karnataka Electricity Board) all around the year.

Under the 10 year power purchase agreement entered into between the factory and KPTCL. The power to be exported to grid at 110kv would be paid for through an assured letter of credit at Rs.3.02per unit initially with an escalation of 5%.

Every year i.e. to say 8.5 MW of exported power will generate a revenue of about Rs.16 cr per year and after meeting incidental expenses for generation, there will be a sizable surplus per year, which makes it a highly attractive preposition.

M/s. Indian Renewable Energy Development Agency Ltd.(IREDA), New Delhi, the Govt. of India undertaking has rightly considered this project as a First Co-generation Plant in Co-op sector in Karnataka and has financed the project in a big way towards establishment of this project.

2. COMPANY PROFILE:

LOCATION :The RAYATAR SAHAKARI SAKKRE KARKHANE

NYIYAMIT (R.S.S.K.N)

Factory: Timmapur Mudhol, Tq: Mudhol

District: Bagalkot

ESTABLISHED IN :25/11/1999

REGESTERED NO :DSK/REG/182-83

WEEKLY HOLIDAY :SUNDAY

WORKING SHIFT :4 am to 12 pm, 12 pm to 8 pm, 8 pm to 4 am

CHAIRMAN :R.S.Talewad

M.D

: S.S. PujariFINANCIAL :The Karnataka State Co-operative sugar Factories

INSTITUTION Ltd, Bangalore

OF THE COMPANY

Shri Ryatar Sahakari Sakkare Karakhane N, Rannanagar Timmapur

Tq: Mudhol.

Board of DirectorsShri. Ramann .S. Talewad Chairman

Shri. A.B.Gorphade Vice Chairman

Shri. S.S.pujari Managing Director

Shri. D.S.Patil Director

Shri. R.A.Tungal Director

Shri. K .N. Paraddi Director

Shri. U.V.Sarawad Director

Shri. A.M.Patil Director

Shri. G.P.Patil Director

Shri. A.P.Patil Director

Shri. R.T.Patil Director

At every Annual General Meeting one third of the total number of Directors, whose period of office is liable to retire by rotation shall retire in accordance with the provisions of section 255 and 256 of the company Act. 1956 and they are eligible for reappointment.

Financial Institutions

HUDCO New Delhi

BDCC Bank Bagalkot

BDCC Bank Bijapur.

SKDCC Bank SIRSI.

CANARA Bank Lokapur.

Auditors M/s. Biradar Assistant Co-op Audit Jamakhandi Management Team

Shri R. N. Patil, Chief Engineer

Shri M. M. Shendri, Chief Chemist

Shri M. T. Patil, Cane Manager

Shri V.V. Tulasigeri, Off Suptd

Shri S. K. Kulkarni Accounts officerEngineers and Consultants

M/s. Amminabhavi and Hegde Architects & Engineers (P) Ltd., Dharwad

M/s. Avant Grade Engineers & Consultants (P) Ltd., Chennai

M/s. Walachandanagar Industrial Ltd, Pune

Objective of the Company

1.To carry on the business of manufacturers, refiners, producers, importers, exporters and dealers in cane sugar, bet Sugar, starch sugar, khandasari sugar and jaggery of all kinds and varieties and their bye products.

2.To carry on the business of manufacturers refiners, producers, importers, exporters and dealers in all kinds of sugars products, molasses, combustible fuel, Yeast and other fermentation, organic and inorganic chemicals, starch, syrups all alcoholic substances, acetone, spirits, sugar candy, glucose, confectionery and canned fruits.

3.To carry on the business of distillers. Brewers molesters, compound, rectifiers and dealers in all kinds of spirits and alcohol, liquors, like rum, gin, whisky, brandy and beer, special syrups, aerated waters, tinctures, essences, pharmaceutical and other chemical preparations, chemical fertilizers, manures, boot polish, wax, power alcohol and the like.

4.To carry on the business of manufacturers and dealers in melada, bagasse, bagasse boards, papers, paper pulp carbon dioxide, hydrogen, potash cane wax, fertilizers and cattle feed.

5.To carry on the business of agriculturists horticulturists and planters of all kinds and description.

6.To employ or pay experts, foreign consultants and other in connection with the prospecting planning, execution and development of all or any of the business which the company is entitled to carry on.

7.To carry on the business of transport operators of all kinds and description.

8.To set-up an Institute for training people in sugar technology sugar plants power generation, paper plants etc. and give implant training to the successful personal India and Abroad.

9.To carry on the business of cultivating growing, buying, selling, manufacturing or otherwise dealing in agriculture and its products including sugar cane, bagasse products, beet sugar, raw sugar and to acquire purchase sell manufacture construct, sugar mills, and khandasari mills, distillery and laboratory mills, paper mills co-generation of power, particle boards etc.

10.To buy sell, import, export prepare and to carry on the business of canners, preservers and dealers in fruits, honey-fresh and per servable products and generally to carry on the manufacture and trading in jams, jelly, pickles, chutney, vinegar, ketchup, juices, squashes, syrups, drinks, beverages, essences, ice-creams, milk preparations and other preparation where the sugar is used .

Administration Department

Administration department is the main department in the organization. They are total number of 38 employees working in this department. is divided into 6 sections and they are as below :

1. Share section.

2. Purchase section.

3. Stores section.

4. Sales Section.

5. Time office section.

6. Computer section.

7. Security section.

8. Telephone operating section.

SHARE SECTION : The Share section is one of the important sections because more than half of the total authorized capital is collected from shareholders. In this factory the share are class

1. Grower shares

A class2. Non-Grower Shares D class3. Society share

B Class

4. Out of Area Share

E class

5. Govt share

C Class

The person who wants to become a member has to follow the procedure / rules. He has to fulfill appropriate application given by the share section authority. If the board of directors approve the application in body meeting, then only he is treated as shareholder of the factory. After the approval he has to pay the amount equivalent to face value of the share.

There is no transferability of share. If at all he wants to transfer his shares, he has to transfer to such a person who is the member of the factory. If he transfer to another person it is not valid and such shares get cancelled. For the identification of its members, the factory issues share certificate and identity cards to such share holders.

PURCHASE SECTION:Purchase officer

Clarks

Attainders

Hear this section will get the requisitions from different departments of company. According to the requirements it arranges to purchase materials and supplies to each and every departments required materials in time.

Steps involved in purchasing the materials:

A. Raising requisition :

It is the first step and necessity for particular can be used only by the user of the material.

B. Scrutinizing requisition :

The manager scrutinizes the demand of materials. He examines whether the item mentioned in the requisition note is necessary or not.

C. Vendor selection :

After scrutinizing, if a material is necessary then tender advertisement is given or if they have permanent vendors. The manager chooses the power vendor. The BOD does selection of vendors.

D. Enquiry :

After selecting a proper vendor enquiry is sent to the vendor.

E.Receiving Quotation :

The purchase manager receives the quotations from vendors to whom the enquiries are sent. Through there quotations a right vendor is choosen.

E. Sending purchase order : Lastly the purchase order is placed to the selected venders. In this way purchase of material takes place.STORES SECTION

Stores keeper

Clarks

Tool room Clark

Diesel room Clark

Attainders

Tool room attainders

Clarks

Daily wage labours

Attainders

Store section is also important section in the administrative department. All types of materials are kept in this section. Which are required for the factory smooth running. The section works day and night. Shift is changing every 8 hours. This section is maintained by the stores keeper. The main work of this section is providing the materials to the required departments.

Those stores section maintains some books like :

a. Transport.

b. Bin card

c. Daily issued.

d. Monthly issued.

It is also one of the section under Administration department, there are total of 7 employees working in this section.

PROCEDURE OF WORKING AT PRESENT:

STORES:

Handling of materials: First, they receive the stores purchase indents from concerned section heads for requisition to purchase item needed for the crushing or off season work. Then they mention the present stock of item in the purchase indents, after verifying the stores. Then only they forward the purchase indents.

After receiving the materials from suppliers they seek the quality approval of the same materials. After getting the approval materials are placed to the respective to the racks they issue the materials by adapting FIFO method.

They issue the materials to the workers of the factory on loan and retainable basis on daily loan or personal loan.

STORES ACCOUNT:

After receiving the materials from suppliers quantity will be verified. The details of the materials will be entered in to transport registered and approved memo will be sent to the concerned departments for getting quality approval. They keep bin cards for each different items receipt from the suppliers with details.

DIESEL BANK:

They issue diesel to the party against indents brought by the parties and issued is entered in the daily issue register.

TOOL ROOM:

Tool room is personnel issue the materials to the workers on temporary loan and retainable basis entering in the register.

List of the registers:

1. Transport register.

2. Approval memo book.

3. Bin card files.

4. Purchase order.

5. Stores purchase indent

TIME OFFICE :

Supendent

Clerks

Time office is one of the important sections of administration department. There are 5 employees working in this department.

Functions:

1. Showing the absent report to the HODs

2. To receive the attendance cards from the workers

3. To put attendance of the workers in the master role

4. It arranges the duty to the workers, maintains working bell

5. It maintains salary register book.

Types of Leaves:

1. Sick leaves :

Sick leave provided to employees 15 days Per year

2. Casual leaves :

Casual leave provided to employees 12 days Per year

3. Earn leaves :

If employee attends 30 days in a month then he is eligible for 3 days Earn leave

Shift working :

In a shift of 8 hours the factory is providing 4 types of shifts.

ShiftTime

I4 am to 12 pm

II12 pm to 8 pm

III8 pm to 4 am

General Shift8-30 am to 5-30 pm

TELEPHONE OPERATING SECTION:

In this section EPABX system is i.e. Electronic Private Automotive Branch Exchange. Hear only one person is operating in this section. He is the person who connects the incoming calls to different departments of the factory and also out going calls.

SALES SECTION:

Sales officer

Godoun clerk

Consultant Clarks

In this section sales of the following products produced takes place are sugar, molasses, bagasses and power. This factory is producing three types of sugars they are M-30, S1-30 and S2-30 grades. And also it producing by products like molasses, bagasses, pressmud. These are used by factory it self only like molasses and press mud are used in distillery / Ethanol production, and bagasses is used in production of power. And power is exported to KPTCL

.

This section will take care of all the sales transactions. The sale of sugar is done according to the notification by the central government and has such factories follows certain government rules in sales of sugar. Accordingly, Karnataka state federation of co-operative sugar factories limited will give figures of bags to sell within a month.

PROCEDURE FOR SALE:

The organization undertakes selling activities in three methods;

1. Free sale: Free sale is done within the country. Hear company will invite tenders from different buyers at a 10 days notice. The sugar is sold to that buyer who quotes or bids highest price. Tenders are called periodically. If the rate is not satisfactory the tender will be cancelled. In free sale sugar is being done to bulk purchases on the bases of tenders, these bulk purchases then sell the purchased sugar to retailers.

2. Levy sale: It is also done within the state of Karnataka and being sold to the government of Karnataka on levy bases. The government then distributes outlets at predetermined, reasonable pric 3. Export: Sugar is sold outside the country on the contract bases. According to the rules and regulation of the contract it will be done.MARKATING DEPARTMENT

The marketing department is also comes under sales section. The factory does not have separate marketing department but it is controlled by the sales section.

INTRODUCTION ABOUT THE MARKETING:

The term marketing has been derived from the word market. Market is generally understood as a place or geographical area where buyers and sellers meet and enter in to transactions involving transfer of ownership of goods, services and securities.

Marketing is a social and managerial process by which individual and group obtain what they need and want through creating, offers and exchanging the products of values with others.

FEATURES OF MARKETING:

It is consumer oriented.

It starts and ends with consumer.

Marketing is a system.

It is goal oriented.

It is a continue process.

It is a guiding element of business.

COMPUTER SECTION:

The total number of employees working in this department is 4. This section is to maintain all types of records that are very important for the organization and the following departments are computerized in the factory,

a) Weigh bridge department

b) Cane accounts department

c) Time office department

d) Laboratory department

e) Stores department

f) Sales department

g) Purchase department

h) General accounts department

i) Sales accounts section

SECURITY SECTION:

Security officer

Assistant security officer

Security guard

The security section is operating under the administrative department. It is also working in three shifts as mentioned under time office section. Hear in this department the employees are recruited on the yearly contract basis. There are total 42 guards working in this section.

The main works of this section are as follows:

They are maintaining peace and discipline within the factory area.

Time maintenance of worker.

They check the incoming materials as per the vouchers, if they are right, they will records inwards and seal the bill and leave inside.

If outgoing material from the industry that person must and should have gate pass and it will be entered in outwards.

FINANCE DEPARTMENT Accounts of finance department are the main and the hart of every department of the company or industry. Hear in this factory, the accounts section maintains all the transactions related to the factory dealings. The sale accounts, purchase accounts, etc are maintained and this department prepares P&L account, Balance sheet, etc.

In RSSK is divided finance department or accounts department in two sections.

General account section

Cane account section

In the above chart 50% of the labour is working in the general account section and 50% are in the cane accounts section.

1. GENERAL ACCOUNTS SECTION:

In general accounts section book keeping is followed. General account transactions like receipts and payments registers are maintained. Receipts include sales process of sugar, molasses, share amount, etc. Payments include salary, tax, etc. maintaining audit and audit rectification is done, annual account and monthly account are prepared and maintained.

Some other types of registers are maintained by this section are :

a. Advance register

b. Contractors register

c. Contra register

d. Fixed assets register

e. Bank register

f. Expense register

2. CANE ACCOUNTS SECTION:

This section maintains the cane accounts and cane bills. This section purchases the cane on daily basis and prepares accounts of forthrightly basis. In addition, will take care of all cane suppliers accounts and department manager separates accounts for cane suppliers.

The section will provide cane bill once in a month desired by the higher authority. While giving cane bill, department will debut all the expenses and advances which is given to the cane suppliers in terms of seeds, fertilizers and transportation facilities and also harvesting of the cane that all the expenses are given by the factory.

The registers maintained in this section are :

a) Self harvesting payment registerb) Harvesting billsc) Cultivator payment register

Finance:

Our company was able to get working capital finance to the extent of Rs. 42.52 crores. The bankers of the company have extended their fullest co-operation in sanctioning and releasing working requirement, which enabled our company to make payments of cane bills of the farmers. The company has paid Rs. 1000 per MT as first installment for the cane supplied during the year.

CANE DEVELOPMENT DEPARTMENT

Cane Manager

Office manager Cane Cane Procurement Manager Cane Dev Manager

Cane Officers Cane Officers

Field Assisnants Field AssisnantsObjectives of the CDD:

To get best quality of cane at a right time To improve the variety of the cane To provide all facilities like seeds, fertilizers, unloading and loading charges Main objectives are to receiving exactly 2500 TCD To undertake seeds development programVarieties of Sugar cane:

1.COC671 {Early Maturity}

2.CO8011 {Middle Maturity}

3.CO86032 {Early Maturity}

4.CO8021 {Early Maturity}

5.CO94012 {Early Maturity}

PRODUCTION DEPARTMENT

The production department is one of the core parts in every process based industry. In addition, it plays a vital role in the organization for smooth going in every sugar industries; Production department is divided in to two sections.

1. Engineering department

2. Manufacturing department

Chief Engineer

Mechanical

Electrical section

Workshop

Stores

Section

section

Cane

Boiler

Weighment

section

Cane unloading Power

Arrangements generatio

1.Mechanical section :

This includes all the mechanical process that is right from the cane weighment till milling ( obtaining of sugar juice ) for further processing. This section includes 4 main steps they are..

a. Cane unloading arrangement

b. Cane preparation

c. Milling

Cane weighment arrangements : Cane weighment is totally computerized process. Hear the cane weightment is carried through electronic platform called weigh bridge . This electronic platform is of two types. One with the capacity of 40 tons for lorry and tractors and other with a capacity of 10 tones for only cart.

Hear after weighing the cane a slip is provided so that particular farmer which has the details of total weight of the cane, total trips, timing, vehicle number, variety of sugarcane and other details. And after this when the vehicle comes back after unloading the sugar cane, empty vehicle weight all their data stored in the computer and final copies

listed for further actions.

Cane unloading arrangements : Hear the weighed sugar cane is unloaded and sent further for cane preparation. Further unloading cane there are 2 unloaders with the help of sling attached instruments cane is loading on the feeding table.

Cane preparation :

After feeding the sugar cane on feeding tables with the help of levelers which avoid overloading of sugar cane is sent to primary cutter, which cut the sugar canes in to small pieces, further fine fibers are obtained from there process by passing them in the fibrizer.

Milling :

After fibrizering the cane passing the prepared fiber cane through a set of mills carries on milling weighted hot water is also added in the course of crushing for better extraction of juice. After crushing the juice is sent for further processing.

Electrical section :

This section has two other sub sections. They are

i) Boiler section

ii) Power section

Boiler section :

40 tons / hrs capacity 2 boilers of 66 kg / cm2 pressure mainly use fuel as waste of cane called bagasses. This waste of cane (bagasses) is used in generation steam for production of electricity.

Power generation :

Process chart of Co-generation

Water treatement

Make up water

Feed water tank

Deareator tank

Pumping

Stream drum

Turbine

Generator [ electricity ]

Functions of power generation department are given below.

To generate power at high quantity.

To distribute it to different areas, as KPTCL.

To provide better working conditions to their workers for safety.

4 MW, 11 KV turbo alternator using for home consumption.

Around 8.5 MW is exported to KPTCL.

Power production 12.5 MW per hour.

3. Workshop :

In this workshop machinery work is done. The spares, materials are fabricated using lathe machines in the workshop shaping like square cutting and other etc. are also done in the workshop. Following machines are used in the workshops.

Lathe machines for round job.

Radial drilling machine for drilling work.

One Hacksaw machine for cutting.

One grinding machine for tool grindings.

Workshop is the main section in the engineering section.

Stores :

Various section spare parts are stored in stall system and all the units are computerized and given a code number. Bin card and other system are followed hear. These stores materials are normally required for preventive maintenance during seasons and off seasons for servicing and overalling.

MANUFACTURING DEPARTMENTManufacturing section is again divided in to 3 sub sections.

Laboratory

Manufacturing process

Godown

Laboratory :

The factory is having well equipped lab, and the main activity of the lab is to check the content of sugar in the sugar cane and fixing the correct shape and size of the sugar. The lab prepares hourly reports which advise on the addition of the other chemicals in production.

Other concerned activities of the laboratory : It determines the percentage of water contents in the dilution of the juice.

It determines as well as managing the temperature of boiling juice.

Choices of colors and size of sugar.

To manage time and quality.

It decides the percentage and contents of chemicals to be added during production.

It finds the pH of water through universal indicator.

Chemicals used in the production of sugar.

Burnt-lime bleaching agent and pH controls (juice clarification)

Sulphur major bleaching agent.

Orthophosphoric acid-bleaching agent.

Flocculent - setting aid.

Caustic soda - clearing.

Washing soda - clearing.

Phosphoric acid - setting.

Hydros a pan bleaching agent ( color ).

Ammonium biflouride formalin-quality maintain and preservative.

Mill sanitation chemical to prevent generation of bacteria and increases the rate of boiling.

Mesopropile alcohol.

Commercial HCL. Bleaching powder for cleaning purpose.

PRODUCTS :

Finished products :

The finished product is sugar, which is produced from the sugar cane. There are 3 varieties of sugar produced. They are,

S1-30

S2-30

M2-30

By products :

There are three types of by products produced during the manufacturing of sugar from sugar cane. They are,

Molasses

Bagasses

Fresh mud

Power

Molasses is used as major content in production of wines and other alcoholic products. So it is sold to liquor industry of income 0.50 crores is earned per month.

Bagasses is also used as one of the by product obtained during the process. It is used as fuel for boilers to produce steam through which electricity is obtained. The electricity obtained is used for the factory itself and surplus is sold to KPTCL.

Fresh mud is yet another by product produced during the process. It is sold to farmer during the process. Which they in turn use it as fertilizer to grow sugar cane. It is also sold to fertilizer units and also feed to the cattle.

PERFORMANCE OF THE FACTORY :

Sl. No.Details2003-20042004-20052005-20062006-20072007-2008

1Starting date of crushing5-11-200321-10-200402-11-200528-10-200620-11-2007

2Closing date of crushing13-1-200418-1-200521-4-20069-6-200726-5-2008

3Total crushing ( MT )1,15,3211,05,6873,51,9535,20,2883,79,020

4Total sugar produced (Qts)1,27,3001,15,8504,00,1506,08,5494,46,699

5Recovery (%)10.68%10.88%11.39%11.69%11.65%

PROCESS FLOW CHART

FUTURE GROWTH AND PROSPECTUS

1. Expansion of companys business

2. Distillery and Ethanol project

1. Expansion of companys business Our directors are pleased to inform that the company has been permitted for the enhancement in cane crushing capacity from 2500 T.C.D. to 3500 T.C.D. From govt. of Karnataka in its global investors meeting held during Sept 2006.

Distillery/Ethanol Project:

Our board of directors has received a letter of intent from Govt. of Karnataka to take up distillery unit. Further our decision and approval given in the 9th annual general meeting to establish a distillery/ethanol project, implementation of distillery project commenced by appointing M/s. Vasantdada Sugar Institute, Pune, as a consultant for the said project. However this decision had to be dropped as no financial institutions/bankers come forwarding for financing the project, due to loss is incurred by the company during 2002-03 and depressing sugar scenario.

SWOT Analysis of the company

1. STRENGTH

a. It is located in the place where good infrastructure is available.

b. The companys concentration towards the quality of the product.

c. The technological standard of the company.

d. Modern equipments.

e. High production efficiency.

f. Good sources of raw material.

g. Power generation.

2. WEAKNESS

a. The company needs improvements and should concentrate on timely customer

Service.

b. The company must improve labour payments

c. Labors turnover.

d. The promotion procedure in the organization is too rigid.

e. No specific dept. such as HRD.

f. Large number of sugar factories within 25-30 kilometers.

g. No scheme offers are given.

3. OPPORTUNITIES a. Expansion of projects like paper unit, ethanol production, bio-fertilizers, and power generation.

b. All these above projects will give the company maximum profits.

4. THREATS Stiff competition by brands like Prabhu sugars, Nandi, Godhavari sugars, Nirani sugars and other.

Importance of Inventory Management:-

Investment in inventory normally accounts for about 1/3 value of the total assets and for an average manufacturing concern, cost of inventory represents about one half of the product cost. Because inventory constitutes such a significant part of product cost since the cost is controllable, proper planning, purchasing, handling, accounting and control of inventories is of great significance.

Inventory management is now great significance in a view of imperative need for productivity growth. Optimal utilization of all available resources and avoidance of all types of waste especially in case of raw materials is required for an ambitious programmer of economic growth.

The importance of inventory management lies in the fact that many significant effort for the reducing the materials cost will go along way in improving the profitability and rate return on investment.

Following are the benefits of optimum inventory management:

It provides a check against the loss of materials through carelessness or pilferage. Inventory management ensures an adequate supply of materials, stores, spares etc. Minimizes the stock out and shortages an avoids a costly interruption in operations.

It reduce length of manufacturing cycle to the minimum.

It enables the management make cost and consumption between operations and periods.

Scope of the study :-

Inventory management being a very important concept in all the companys having a void coverage often calls for the managerial attention. In the modern times inventory management has become the integral part of the all companies. So all the firm give special importance for inventory management. The major objective of the study is to examine the effectiveness of inventory management system adopted by R .S. S. K.N. The study mainly focuses on the techniques used by this company to control the inventory.

INVENTORY MANAGEMENT:

In modern competitive one of the burning problem of every business and industries that of cost control and cost reduction. An all pervasive effort for cost control and cost reduction is of paramount, importance for survival and growth of every industrial enterprises. This is why inventory management as a scientific device for controlling inventory cost and eliminating wastage, is now regarded as an integral part of industrial management. Inventory management does not involve any human factor, as it concerns itself not with men but with inventory.

Meaning of Inventory:

The dictionary meaning of inventory is stock of goods, of a list of goods; various authors understand the word inventory differently. In accounting language it may mean stock of initial goods only. In a manufacturing concern, it may include raw materials; work in process and stores etc. To understand the exact meaning of the word inventory we May study it from the usage side or from the side point of entry in the operations. Inventory includes the following things.

1. RAW MATERIALSRaw material form a major input into the organization. They are required to carry out production activities uninterruptedly. The liquidity of raw materials required will be determined by the rate of consumption and the time required for replenishing the supplies. The factors like the availability of our materials and the government regulations, etc. to affect the stock of raw materials.

2.WORK IN PROGRESSThe work in progress is that stage of stocks, which are in between the materials and initial goods. The raw materials enter the process of manufacture but them yet party in a final shape of initial goods. The quantum of work in progress depends upon the time taken in the manufacturing process. The greater the time taken in a manufacturing the more will be the amount of work in progress.

3.CONSUMABLES:

These are the materials, which are needed to smoothen the process of production. These materials were not directly enter production but they act as catalysts etc.. Consumables may be classified according to their consumption and criticality. Generally, consumables stores to not create any supply problem and form a small part of production costs. They can instances where these materials may account for much value than the materials. The fuel oil may form a substantial part of cost.

4.FINISHED GOODS There are the goods, which are ready for the consumers. The stock of initial goods provides a buffer between production and market. The purpose of maintaining inventories to ensure proper supply of goods to customers. In some concerns the production is undertaken on order basis, in these concerns they will not be need for finished goods the need for finished goods inventory will be more when production is undertaken in general without waiting for specific orders.

5.SPARES

Spares also form of part of inventory. The consumption pattern from materials, consumables, finished goods are different from that of spares. The stocking policies of spares for different from industry to industry. Some industries like transport will require more space than the other concerns. The costly spare parts like engines, maintenance spares etc. are not discarded after use, rather they are kept in ready position for further use. All decisions about spares are based on the financial cost of inventory on such and the cast that may arise due to their non-availability.

PURPOSE-BENEFITS OF HOLDING INVENTORIES:

Although holding inventories involves blocking of firms funds and the cost of storage and handling, every business enterprise has to maintain a certain level of inventories to facilitate uninterrupted production and smooth running of business. In the absence of inventories a firm will have to make purchases as soon as it receives orders. It will mean loss of time and delays in execution of orders, which sometimes may cause loss of customers and business (stock out). Therefore also needs to maintain inventories to reduce ordering costs and avail liquidity discounts etc.. Generally speaking, there are three main purposes or motives of holding inventories.

1. THE TRANSACTION MOTIVE: Which facilitates continuous production and timely execution of sales orders.

2. THE PRECAUTIONARY MOTIVE : Which necessitates the holding of inventories for meeting the unpredictable changes in demand and supplies of materials.

3. THE SPECULATIVE MOTIVE: Which induces to keep inventories for taking advantage of price fluctuations, saving in the ordering costs and quantity discounts etc.

RISK AND COST OF HOLDING INVENTORIES:

The holding of inventories involves blocking of a firms funds and incurrence of capital and other costs. It also exposes the firm to certain risks; the various parts risks involved in holding inventories are as below

1. CAPITAL COSTS

Maintaining of inventories result in blocking of the firm's financial resources. The firm has therefore to arrange for add both the cases the firm incurs a cost. In the former case, there is an opportunity cost of investment while in the latter case; the firm has to interest to the outsiders.

2. STORAGE AND HANDLING COSTS

Holding of inventory is also involves costs on storage as well as handling of materials. The storage costs include the rental of the godown, insurance initial funds to meet the cost of inventories. The funds may be arranged from own resources or from outsider. But in charges etc

3. RISK OF PRICE DECLINE There is always a risk of reduction in the prices of inventories by the suppliers in holding inventories. This may be due to increased market supplies, competition or general depression in the market.

4. RISK OF OBSOLESCENCEThe inventories may become obsolete due to improve technology, changes in requirements, change in customers taste etc.

5. RISK DETERIORATION IN QUALITYThe quality of the materials may also deteriorate while in the inventories are kept in stores.

INVENTORY MANAGEMENT:

The investment in inventory is very high in most of the undertakings increased in a manufacturing wholesale and retail trade. The amount of investment is sometimes more in inventory than in other assets. In India, a study of 29 major industries has revealed that the average cost of materials is 64 paise and the cost of labour and overhead is 36 paise in a rupee. In industries like Sugar, the materials cost is as high as 68.75% of the total cost. About 90% of part of working capital is invested in inventories. It is necessary for every management to give proper attention to inventory management. The proper planning of purchasing handling, storing and accounting should form a part of inventory management. An efficient system of inventory management will determine (a) what to purchase (b) how much to purchase (c) from where to purchase (d) where to store etc.

There are conflicting interests of different departmental heads over the issue of inventory. The finance manager will try to invest less in inventory because for him it is an idle investment, whereas production manager will emphasis to acquire more and more inventories as he does not want any interruption in production due to shortage of inventory. The purpose of inventory management is to keep the stocks in such that neither there is over stocking nor under-stocking. The over stocking will mean a reduction of liquidity and targeting off other production processed: under stocking on the other hand will result in stoppage of work on the investment in inventory should be kept in reasonable limits.

OBJECTS OF INVENTORY MANAGEMENT:

The main objectives of inventory management or operational and finances the operational objectives mean that the materials and the spares should be Honorable in the sufficient liquidity is so that work is not disrupted for want of infantry. The finance object means that investments in inventories should be remain idle and minimum working capital should be locked in it the following are the objectives of inventory management.

1.To ensure continuous supply of materials spares and finished goods so that production should not suffered at any time and the customers demand should also be met.

2.To avoid both over stocking and under-stocking inventory.

3.To maintain investments in inventory is at the optimum level as required by the operational and sales activities.

4.To keep material cost and control so that they contribute in reducing cost of production and overall costs.

5.To eliminate duplication in ordering or replenishing stocks. This is possible with the help of centralizing purchases.

6.To minimize losses through deterioration, pilferage, wastages and damages.

1. To design proper organization for inventory management. A clear-cut accountability

2. should be fixed at various levels of the organization.

8.To ensure perpetually inventory control so that materials shown in stock ledgers should be actually lying in the stores.

Responsibility of inventory specialists:

Controlling and authorizing finding for material so that the proper kind, quality and quantity is available at the correct time and place.

Maintaining records and controls over material in stock, planned for distribution system.

They decide upon inventory levelKinds and fixation of inventory level:

The various levels fixed for effective inventory control are as follows

MINIMUM LEVEL:It represents the quantity below which the inventory of any item should not be allow to fall, in other words an enterprise must maintain minimum quantity of stocks. The following factors should be considered in order to fix minimum stock level

Reorder level

Lead time

Average rate of consumption of material

Where,

Minimun level =Reordr level-Aerage consumption*lead time

Maximum level

It represents the level beyond, which the stock in hand is not allowed to exceed .This is because of the cost involved in holding more than required stock.

RE ORDER LEVEL:

When the quantity of materials reaches at a certain figure the fresh order is tended to get materials again. The order is sent before the materials reaches minimum stock level. The reordering level or ordering level is fixed at between the minimum level and maximum level. The rate of consumption, number of days required replacing the stocks and maximum quantity of materials required on any day are taken into account while fixing the reordering level. The ordering level is fixed with the following formula.

Re order level = maximum consumption X maximum Re-order period.

MAXIMUM LEVEL:

It is the quantity of materials beyond which the firm should not exceed its stocks if the quantity exceeds maximum level limit then it will be over stocking. Your firm should avoid over stocking because it will result in high material costs. Over stocking will mean blockading of more working capital, more space for storing the materials, more wastages of materials and more chances of losses from obsolescence. Maximum stock level will depend upon the following factors.

1. The availability of capital for the purchase of materials.

2. The maximum requirements of materials at any point of time.

3. The availability of space for storing the materials.

4. The rate of consumption of materials storing lead-time.

5. The cast of maintaining the store.

6. The possibility of fluctuation in prices.

7. The nature of materials. If the materials or perishable in nature then they cannot miss told for long.

8. Availability of materials. If the materials are available only during seasons then they will have two bestowed for the rest of the period.

Maximum stock level = reordering level + reordering quantity - (minimum consumption X minimum reordering period)

SAFETY LEVEL:

The consumption rate of materials and lead time dont remain constant and therefore to guard against the uncertainty, an extra stock is always maintained which is known as safety stock.

A safety stock of materials is maintained as insurance against stock depletion due to increase usage or unusually long delivery times, which cause the stock to fall below minimum level. The main objective behind keeping safety stock is minimizing stock out cost.

OBJECTIVES OF THE STUDY:

To study the inventory management in the organization.

To identify the loop holes if any in the inventory management system.

To apply the modern inventory management techniques like

ABC

HML

VED

SDE

EOQ

JIT

Based on the above to give suggestion

INVENTORY CONTROL TECHNIQUES:

Inventory control techniques are employed by the inventory control. Organization within the frame work of one of the basic inventory model, viz., fixed order quantity systems or fixed order period system.

Inventory techniques represent the operations aspects of inventory management and help to realize the objective of inventory management and its control.

Several techniques of inventory control are in use and it depends on the policy of the firm product, the techniques most commonly used are

1. Always Better Control (ABC) Classification

2. High, Medium and Low (HML) Classification3. Vital, Essential and Desirable (VED) Classification4. Scare, Difficult and Easy to obtain (SDE)5. Fast moving, Slow moving, and Non moving (FSN)6. Economic Order Quantity (EOQ)7. Max minimum System 8. Two bin System9. Material Requirement Planning (MRP)10. Just In Time (JIT)11. Distribution Logistics (DL)a) ABC Analysis: It is one the widely used techniques for the control of inventory. Objective of ABC control is to vary the expenses associated with maintaining appropriate control according to the potential savings associated with the proper level of such a control. A may account for more than half the total value usage in the inventory. These items required very careful management and special careful estimates of future usually class C items which in total account for only a few percent of the total value of usage very little effort should be devoted to forecast the requirement of items. The inter mediate class B items justify a reasonable but routine effort in forecasting demands and managing inventory.b) HML Analysis: Since the total annual usage is considered in case of ABC Analysis, quite a few items which fall in B category although the unit cost (cost per unit) is quite high. If controls are exercised on the basis of ABC only, the importance of these items will be much less than A or B items even though the inventory or transaction of one unit of these items will mean quite a lot money. Therefore, it is necessary that the unit cost is also considered in order to find out the importance of items on the basis of unit cost. Limits of units costs are fixed for high costs items (H), medium costs items (M) and low cost units (L) and all items are segregated into H, M and L categories depending on there unit cost.

This analysis is quite useful in deciding the safety stock in relation to the availability of the material.

c) VED Analysis:

The materials classification on the items is called VED analysis. VED stands for vita, Essential and Desirable.

Vital items which render the requirement or the whole line operation in the process totally and immediately inoperative, unsafe and if these items go out of stock or not readily available, results in losses of whole production of whole period.

E-Essential items which reduce the equipments, performance but not render it inoperative, results or unsafe, non-availability of items may result in temporary loss of production or dislocation of production work replacement can be done without any delayed, without affecting the equipments performance seriously, temporary repairs sometime possible.

D-Desirable items which are mostly non functional and dont effect the performance of the equipment.

d) FSN Classification :

Materials can be classified on the basis of movement as fast moving slow moving and non moving FSN according to their consumption patterns. FSN analysis is specially useful to combat obsolete items whether spare parts, raw material or component. Cut off points of three classes are usually in items of number of issues in previous few years depends on the peculiarities of an individual concern.

e) SDE Analysis:

SDE stands for scarce, difficult and easily available items in the local market. Scarce items are generally in short supply; usually these are raw material, spare parts and imported items. Difficult items are not available in local markets, and have to be produced from for off cities or items for which there are a limited a number of supplies or items for which quantity suppliers are difficult to get.

The SDE analysis proves to be very useful, in industrial situations where certain materials are in scare supply, and gives proper guidelines for deciding inventory policies.

f) XYZ Analysis:

For the effective management of stores, the stock can be split as high valued, middle value or low valued XYZ classification. This technique helps in identifying the items, which are being extensively stocked. X items are those whose inventory values are high while Z items are those whose values are low. Understandably Y items fall in between these tow categories. XYZ classification may be used in the conjunction for the better results.

g) Minimum-Maximum Techniques :

The Minimum maximum system is often used in connation with manual inventory control system.

The minimum quantities is established in the same way as any re-order point.

The effectiveness of minimum-maximum system is determined by the method and precision with which the minimum.

h) Two Bin Technique:

One of the oldest system of inventory control is the two bin system, stock of each item is separated into two bins.

One bin contains stock, just enough to last from the data a new order is placed until it is received in inventors.

The other bin contains quantities of stock, enough to satisfy probable demand during the period of replenishment

i) Material Requirement Planning (MRP):

MRP is a new solution to an old problem having stock of materials a lowers on hand when heeded without carrying excess inventory.

j) E.O.Q. Model : There are two basic questions relating to inventory management

1. What should be the size of the order

2. At what level should the order be placed.

To answer this question the economic order quantity model is helpful. General E.O.Q. includes 3 types of costs, that are carrying cost, ordering cost & shortage cost.

i) Just in Time : The management of inventory has become very sophisticated in recent years. In certain industry the production process it self lends to just in time (J I T) inventory control. As the name implies, the idea is that the inventories are acquired and inserted in the production at the exact time they are needed. This requires efficient purchasing, very reliable and an efficient purchasing, very reliable and an efficient inventory handling system. One thing that has made this possible is advent of instant information through sophisticated computer networks. The coordination of varies suppliers in an efficient manner is known as supply chain management.

j) Distribution Logistics: An exciting and profit promising way of using systems logistics in planning and control is the expansion of inventory control to include other factors. This system is referred to here as distribution logistics. In its advance form. It treats the entire logistics of business ranging from sales forecasting through purchasing and processing materials and inventorying to shipping the finished goods as a single system.

The goal is usually to optimize the total cost of the system in operation while furnishing a desire to level of customer service meeting certain constrains such as financially limited inventory levels.

ABC Analysis : These important items usually designated as class A may account for more than half the total value usage in the inventory. These items require very careful management and special careful estimates of future usually class C items which in total account for only a few percent of the total value of usage very little effort should be devoted to forecast the requirement of items. The inter mediate class B items justify a reasonable but routine effort in forecasting demands and managing inventory.

The ABC approach means of category inventory items into three class, A, B and C according to potential amount to be controlled.

A- Items, which are the 10%

B- Items, which are the 20%

C- Items, which are the 70%

A.B.C. Analysis

A.B.C. analysis is a selective technique of controlling different items of inventory. In actual practice, thousands of items are included in business as inventories. But all these items are not equally important. According to this technique, only those items of inventory are paid more attention which are significant for business. According to this technique, all items are classified into 3 categories A.B. and C. In A category those items are taken which are very precious and their quantity .

ABC ANALYSIS - 1

One of the most important considerations of control is the value of annual consumption of inventory items in a year.

Only a small number of inventory items consume a very large share of inventory consumption during the year.

A little larger number of inventory items covers a moderate share of annual inventory consumption.

A very large number of items just cover a very small share of annual inventory consumption.

These facts gave birth to the concept of ABC analysis.

ABC ANALYSIS 2

It has been observed that in an industrial unit only 10% of items have 70% of the annual inventory consumption.

20% of the items have 20% of annual inventory consumption, and

70% of the items have only 10% of the annual inventory consumption.

Since 70% of the annual consumption of inventory is covered by only 10% of the items in the inventory, these items deserve highest attention and are classified as A items

Similarly 20% of the items covering 20 % of the inventory investment are B class items.

Balance 70% of the inventory items are termed as C class items.

STEPS IN ABC ANALYSIS:

The steps in computing ABC analysis are:

a .Determine the annual usage in units for each item for the past one-year.

b. Multiply the annual usage quantity with the average unit price of each item to calculate the annual usage in for each item.

c. Item with highest volume usage annually is ranked first. Then the next lower annual usage item is listed till the lowest item is listed in the last.

Arrange the items in the inventory by cumulative annual usage and by cumulative percentage. Categorize the items in A, B , and C categories..

1. Current Ratio

Current ratio may be defined as the relationship between quick or liquid asset and current liabilities. This is a measure of general liquidity & is most widely used to make analysis of short-turn financial position or liquidity of firm. It is calculated by dividing the total current assets by total current liabilities.

Current Ratio= Current Assets

Current Liabilities

TABLE-1.1 Current Ratio (in lakhs)YearCurrentCurrentRatio

AssetsLiabilities

2006-20073363.893268028.621010.42

2007-20084178.112678685.38140.48

2008-2009349.345767745.309180.45

INTERPRETATION

An arbitrary standard of current ratio is 2:1 indicates that for every one rupee of current liability two rupee of current assets is available. From the graph it is below the standard this shows that there is no short term solvency of the company .

Quick Ratio/Acid Test Ratio

Quick ratio establishes relationship between quick or liquid assets & current liabilities. It is also known as acid test ratio. An asset is said to be liquid if it can be converted into case within short period of time without loss of value. The prepaid expenses and stock were excluded.

Quick ratio

= Quick asset

Current Liabilities

YearQuickCurrentRatio

AssetsLiabilities

2006-20071383.132768028.621010.17

2007-20081278.137938685.38140.15

2008-20091707.118417745.309180.22

INTERPRETATION

Table 1.2 reveals that quick ratio of the company is not higher than standard 1:1. This shows that the firm liquidity position is not so good.

Absolute Quick Ratio/cash Ratio

Cash ratio is the strongest measurement of liquidity. Since cash is the most liquid assets, a financial analyze may examine cash ratio & its equivalent to current liabilities. Trade investments or marketable securities are equivalent of cash therefore they may be included in computation of cash ratio.

To calculate absolute quick ratio we consider cash in hand, cash at bank & marketable securities.

Cash Ratio

= Cash + Marketable securities

Current Liabilitiesyearquick assetcurrent liablitiesRatio

2006-07228.303268028.621010.028

2007-0867.869878685.38140.0078

2008-09679.058597745.309180.087

INTERPRETATION

Table 1.3 reveals that absolute quick ratio is below the standard ratio i.e. 0.5:1 indicates that 50 paisa worth of absolute liquidity assets are sufficient to meet one rupee worth of current liabilities. In all 3 years it indicates that there is no sufficient liquidity in a firm.

Leverage Ratios Leverage ratios are also known as capital structure ratio. These ratios indicate mix of funds provided by owners & lenders. As a general rule these should be appropriate mix debt & owners equity in financing the firms assets.

Leverage ratios are calculated to judge the long long-term financial position of the company. Some of the popular leverage ratios are:

a. Total Debt Ratio

Debt ratio may be used to analyze the debt ratio by dividing Total debt (T.D) by dividing Capital employed (C.E) or net assets (N.A).

The total debt include short and long term borrowing from financial institutions, debentures, bounds, deferred payments, arrangements for buying capital equipments bank borrowings, public deposits etc.

Debt Ratio= Total Debt

Capital Employed

Year Total Debt Capital Employed Ratio

2006-20075671.686472175.32.61

2007-20085650.927662180.184952.59

2008-20096273.971672239.832742.8

INTERPRETATION

Table reveals that ratio is decreasing in the year 2008 .this shows that debt capital is less than own capital.in the year 2009 increasing.

Fixed Assets to Net Worth This ratio establishes the relationship between fixed assets & Shareholders fund i.e. Share Capital plus reserves & Surplus & retained earnings. The ratio can be calculated as follows.

Fixed Assets to Net worth Ratio =Fixed Assets (After Depreciation) X100

Year Fixed AssetsShareholder FundRatio

2006-075688.280762175.32.61

2007-085701.888582180.184952.62

2008-095712.660872239.832742.55

Shareholders fund

INTREPRETATION

Table reveals that percentage of fixed assets value contributed by its owners is decreasing in the year2007-2008 . .in the year 2009 fixed assets value contributed by its owners is increasing It implies that funds are not sufficient to finance the fixed assets & the firm has to depends upon outside to finance fixed assets .

Current Assets to Proprietors funds ratio

This ratio is calculated by dividing total current assets by shareholders funds. It indicates the extent to which proprietor funds are invested in current assets. There is no rule of thumb for this ratio & depending upon the nature of the business there may be different ratios for different firms.

CA to PF ratio= Current Assets

Proprietors FundYear Current AssetsProprietors FundRatio

2006-073363.893262175.31.55

2007-084178.112642180.184951.92

2008-093493.457612239.832741.56

INTREPRETATION

Table reveals that proprietors fund & investments are increasing. & Current assets are decreasing .It was 1.56 in the year 2008-09.

Profitable Ratios The primary objective of a business undertaking is to earn profits. Profit is the difference between revenue & expenses over a period of time. Profit is output of a company & company will have no further if it fails to make sufficient profit Profits are thus a useful measure of overall efficiency of a firm.

These ratios are calculated to measure the operating efficiency of the company. Beside management, creditors, owners are also interested in the profitability of the company. Generally profitability ratios are calculated either in relation to sales or in relation to investment. The various profitable ratios are:1. In Relation to Sales

a. Gross Profit Ratio G.P.Ratio measures the relationship between gross profits & sales; it is usually represented in percentage. Thus Gross profit margin highlights the production efficiency at a concern

G.P.Ratio= Gross Profit X 100

Sales

G.P.Ratio indicate the extent to which selling price of goods per unit may decline without resulting in losses on operations of firm. It reflect efficiency with which firm produces the product.

Year Gross Profit SalesRatio

2006-07817.511695925.3268913.8

2007-08981.564974534.3512321.65

2008-09795.318987362.0698710.8

INRTEPRETATION

Table reveals that gross profit of the company has increasing in 2006-07 gross profit was 13.8, which was increased to 21.65 in 2007-08 but further gross profit was decreased 10.8 in 2008-09. The efficiency of firm is not satisfactory

Net profit ratio

Net profit ratio establishes the relationship between net profit & sales & indicates efficiency of management in manufacturing. Selling, administrative & other activities of the firm. This ratio is used as a measure of overall profitability & it helps in determining the efficiency of the firm to carry on its business.

Net Profit Ratio=

Net Profit after tax X 100

Year Net ProfitSalesRatio

2006-07152.459385925.326892.57

2007-08510.457644534.3512311.26

2008-090.914237362.069870.01242

Sales

INRTEPRETATION

This ratio indicates firms capacity to face the economic conditions, higher the ratio better the profitability. From the table it is clear that in 2006-07,2007-08, profit was increasing year by year marginally and in the 2008-2009 decreasing the profit.

.Operating Ratio It is the relation between cost of goods sold & operating expenses on one hand & the sales on the other hand. It measures the cost of operations per rupee of sales.

Operating Ratio =

Operating Cost X 100

Sales

Year Operating CostSalesRatio

2006-075929.975835925.32689100.8

2007-084472.000494534.3512398.62

2008-095453.115357362.0698774.04

INTREPRETATION

Table reveals that the operating ratio shows decreasing trend for the 3 years which means there is an increase in the profit.

Expenses Ratio It indicates the relationship of various expenses to net sales. Expenses ratio are calculating by dividing each item of expenses or group of expenses with net sales to analyze the causes for variation in operating ratio.

Administration, office, selling & other Expense Ratio:

This ratio indicates the relationship at administrative, selling & other Expenses to the sales of the company. Here normally lower the expenses higher the profitability.

Administration, office, selling & other Expenses = Expenses X 100

SalesYear Expenses SalesRatio

2006-07683.214555925.3268911.53%

2007-08924.743954534.3512320.39%

2008-091082.767227362.0698714.71%

INTREPRETATION

There is no role of thumb for this ratio, as it may differ from firm to firm depending upon nature of business. Table shows the comparative expenses ratio is in fluctuating trend.

Profitability in relation to Investment

Return on shareholders Investment:

Return on shareholders investments, popularly known as ROI. It is the relationship between net profit after tax & shareholders funds. Thus this ratio is considered as affective indicator of the companys profitability because it reflects the success of management in the efficient utilization of the owners investment.

ROI=. Net Profit after Tax X 100

Shareholders fund

Year Net Profit Shareholder FundRatio

2006-07152.459382175.37.01%

2007-08510.457672180.1849523.41%

2008-090.914232239.832740.04%

INTREPRETATION

The table reveals how were the resources of a firm were being used. So higher the ratio better will be the result The ratio of ROI has increased to 23.41% when compared to 2006-07 . There is no return on shareholders fund because the company shows the profit

Activity Ratios: Funds are invested in various assets in business to make sales & earn profit. The efficiency with which assets are managed directly affects the volume of sales. The better the management of assets, the larger is the amount of sales & the profit. Activity ratio measures the efficiency or effectiveness with which a firm manages its resources or assets. These ratios are also called turnover ratio because they indicate the speed with which assets are converted or turned over into sales.

a. Inventory Turnover Ratio:

Inventory turnover ratio indicates the number of times stock has been turned over during the period & evaluates efficiency with which a firm is able manage inventory.

The ratio is calculated by dividing the net sales divided by average inventory at cost.

ITR= Net Sales .

Average Inventory at Cost

Average inventory should be taken for calculating stock turnover ratio. Adding the stock in the beginning & at the end of period & dividing it by 2 to calculate average inventory.

Year Net SalesAverage InventoryRatio

2006-075925.326893126.40081.9

2007-084534.351234846.230440.94

2008-097362.069873793.144341.94

INTREPRETATION Inventory Turnover ratio has decreased to 1.9 to.94 in the year 2007-08, in the year 2008-09 incresing the ratio to1.94..which signifies the firms efficiency in producing and selling is improving.

FINDINGS:

* The A items carry nearly about 7 to 8% of the total items similarly B items 11% and C items 81%.

* In the inventory A items very strict control because having high volume of the inventory management B items are moderate.

* The store department not maintaining levels of stock and any inventory techniques.

* In the year 2006-07 current ratio 0.42 . in the year 2007-2008 increased .but 2008-2009 decreased Company position is below standard ratio there fore company position is bad .

* In the year 2006-07 quick ratio is 0.17. next years decreased 2007-2008 ratio is 0.15 current position is increased 2008-2009.

* In the year 2006-05-7 absolute quick ratio is 0.028 but next year increased to year 2007-2008 company position is still bad but recovery to ratio.

* In the year 2006-05-7 debt Ratio is 2.61 but subsequent year increased year 2008-09 it has 2.80. company position still to recovery.

* Fixed asset to net worth Ratio in the year 2006-07, 2.61 next year increased but in the 2008-09 decreased by 2.55.

* Current Asset to Proprietary fund Ratio in the year 2006-07 1.55. subsequent years increased and decreased year by year.

Suggestion

From the study Ranna sugar found that is non professional in approach to be made to professional the systems in ranna sugars .

For examples:

Inventory management is mannual and no Analytical tools are used for management thus usages of ABC analysis is suggest in ranna sugars . The company should try to enhance the operating efficiency of firm by Periodic Analysis and review.

CONCLUSION R.S.S.K.N Company is leading manufactures of sugar in this part of the state. They are contributing to the development of the country as a whole. Our country needs more such units who can help in its develop. So that we can be a better and a bigger player in all the industrial sectors of the would. Todays market place is changing rapidly. Competition from around the corned the corner and around state is increasing. Their policy is to market quality products and to meet customer satisfaction and to attain quality leadership. .

B I B I L O G R P H Y

Financial Management : I.M.Panday

Production Management : K. Ashwatappa

ANNEXURE

ItemCdItemNameUOMunitpriceamtcum.con% of Cum.con

BM010001Cement Water Proof GP2Number130495.064350643500.99755

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BM010020SandBrass45756.0340202539453.93666

BM010022ThapyNumber430.01202540653.93857

BM010029Jely Brass211283.0269432810084.35624

BM010030GundNumber440.01602811684.35872

BM010031Metal Stone Size;20mmBrass121480.0177602989284.63404

BM010032Cement Poles Size: 7' lenght 4 X 4 WNumber900198.01782004771287.39653

BM010033Pencing Wire 12x12KiloGram161552.0839805611088.69841

BM020004Hinges: PVC Border Patti Size 5"Number2458.013925625008.71999

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BM020055Window WoodsSqr Feet7.45270.02011.55726008.87655

BM020056Towor Bolt S S 4"Number1030.03005729008.8812

BM020060Wood ScrewPkt275.01505730508.88353

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CG010001HD 755 DotMatrix Printer 9Wire 136Col Sl Nos. a)20011608375 b)20011608381Number618928.0113568124743819.338

CG010003UPS Champion Make (15 Min.Backup)Number61768.010608125804619.5025

CG010006Logitech Serial Mouse Number6229.01374125942019.5238

CG010008C.D Writer (L.G. Make)Number22217.04774126419419.5978

cg010016C D Re-writable ( L.G. Make)Number2113.0273126446719.602

CG010019HP Laserjet 3055 MFP (Scan Copy &Fax)Number66448.038688130315520.2018

CG010022Cotton Computer CoverNumber3156.0468130362320.209

CG010023ESYS Epc Cell 80 GB Computer Number617160.0102960140658321.8051

CG010024Leagal Software Windows XP-ProfessionalNumber26136.012272141885521.9954

CG010025Leagal Software MS Office 2007 BasisNumber27488.014976143383122.2275

CG010026Leagal Software Antivirous Net Protectiva NP(AV)Number22028.04056143788722.2904

CG010027T V S 755 Printer Logic CardNumber25198.010396144828322.4516

CG020005T V S Printer CarteidgeNumber2160.0320144860322.4565

CG020006Floppies 1.44 MB (Sony Make)Number5014.0700144930322.4674

CG02000780 Coloum Single Part (Comp. Papers) 10x12x1Number35249.08715145801822.6025

CG02000880 Coloum Two Part (Comp. Papers) 10x12x2Number5631.03155146117322.6514

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EG010001Fluorescent Tube 40W (Crompton Make)Number98140.039240171987026.6618

EG010003PT Bulb 100W,230VNumber19412.02328172219826.6978

EG010004PT Bulb 60W,230VNumber82111.09031173122926.8378

EG010005PT Bulb 40W,230VNumber414.056173128526.8387

EG010007HPMV Lamp 400W Metal HelidNumber47784.036848176813327.4099

EG010008HPMV Lamp 250W Metal HelidNumber35621.021735178986827.7469

EG010011Tube Light Choke 40WattsNumber288178.051264184113228.5416

EG010012HPMV Copper Ballast WBP30111 (450) 400WattsNumber191488.028272186940428.9799

EG010013HPMV Copper Ballast 250 WattsNumber251416.035400190480429.5286

EG010014Electronic Ignitor 400WNumber2242.0484190528829.5361

EG010015Electronic Ignitor 250WNumber394.0282190557029.5405

EG010017Tube Light Starter 40WattNumber53211.05852191142229.6312

EG010018Tube Light Side Holder (RoterHolder)Number28113.03653191507529.6879

EG010020Halozen Lamp 1000WNumber24165.03960191903529.7492

EG010021Halozen Lamp 500WNumber9152.01368192040329.7705

EG01002424V 40W PT BulbNumber130211.014322193472529.9925

EG010025Electric Bulb ZERO ( 0 ) Wat Number311.033193475829.993

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EG01004570 W Sodium Vapour LampNumber42521.021882195731630.3427

EG010048Metal Clad Socket 30 Amps 440 Volts (Stanly Make)Number1265.0265195758130.3468

EG010052Controle Gearbox For 250W HPMV Lamp Number11461.01461195904230.3694

EG010053Controle Gearbox For 400W HPMV Lamp Number51984.09920196896230.5232

EG010058Starter Holder for 40 Watts Flurosent TubesNumber812.096196905830.5247

EG010059S.V.Ballaset Size: 70 WattsNumber9864.07776197683430.6453

EG010062Porcelien Babbin Treak InsulatorNumber502.0100197693430.6468

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EG010065Choke 20 watt ( for tube light)Number8165.01320198163430.7197

eg010066Metal Held 150 W BulbNumber23732.016836199847030.9807

eg010067Metal Held Chouk 150 WNumber91197.010773200924331.1477

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EG010070PVC Cone for (tube side holder) Number2023.0460202213931.3476

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EG020013PVC Tee Size 3/4" (1/2")Number5510.0550203359131.5251

EG020014Saddeles Size 3/4"Number12218.02196203578731.5592

EG020015Rawal Plug No.10Box38.024203581131.5595

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