A project report on financial appriasal in diversification project at the ugar sugar works limited athani

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A project report on financial appriasal in diversification project at the ugar sugar works limited athani

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A project report on financial appriasal in diversification project at the ugar sugar works limited athani

  1. 1. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Table of Contents: Particulars Topic Chapter I Executive Summary Chapter II Methodology Chapter III Introduction of Industries Chapter IV Company Profile Chapter V Introduction of the product Fragies Chapter VI Financial Appraisal Chapter VII Objectives Chapter SWOT analysis VIII Chapter IX Findings Chapter X BibliographyBabasabpatilfreepptmba.com Page 1
  2. 2. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Chapter I EXECUTIVE SUMMARYBabasabpatilfreepptmba.com Page 2
  3. 3. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” EXECUTIVE SUMMARY Financial Appraisal of project is one of the most crucial aspect in theproject finance and investment decisions. This analysis is made on an on goingproject. It is on the topic “Financial Appraisal on Diversification scheme ofFragies”. Fragies are sugar cubes in the form of ship. The analysis is based on the financial statement of the company. The mainfinancial statement used is Estimated Profit and Loss A/ C. The financial appraisal of THE UGAR SUGAR WORKS Ltd., is analysedthrough 5 years projection/ estimation in respect of Cash flow, Profit and Loss A/Cstatement, Cost of project, Cost of Capital, Opportunity Cost, Net Present Value ofproject, pay back period and Internal rate of return, sources of finance.The following were the objectives of the study 1. To know the cost of the Project. 2. Time frame required to complete the Project. 3. Financing Method. 4. Cost of Finance. 5. Human Resource Required. 6. Commercial Business. a. Preparation of Profit and Loss Account. b. Preparation of Cash in Flow Statement. c. Calculation of Net Present Value. d. Payback Period. e. Internal Rate of Return.The methodology that was followed was through Primary and Secondary dataBabasabpatilfreepptmba.com Page 3
  4. 4. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Chapter II METHODOLOGYBabasabpatilfreepptmba.com Page 4
  5. 5. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Methodology The project titled Financial Appraisal of diversification scheme is theanalysis of financial Appraisal of THE UGAR SUGAR WORKS Ltd., Ugar-Khurd. For this the reliance was on the primary data and secondary data. Theprimary data was collected through personal interview of the staff of Financedepartment, HR department, and Project manager. The secondary data was theestimated P&L A/C prepared by the company for the diversification project.Babasabpatilfreepptmba.com Page 5
  6. 6. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Chapter III INTRODUCTION OF INDUSTRYBabasabpatilfreepptmba.com Page 6
  7. 7. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Introduction of Industry India has been known as the original home of sugarcane and sugar. Indiansknew the art of making sugar since the fourth century. However the advent of modernsugar industry in India dates back to mid 1930s when a few vacuum pan units wereestablished in the sub-tropical belts of Uttar Pradesh and Bihar. Until the mid 50s, the sugar industry was almost wholly confined to the statesof Uttar Pradesh and Bihar. After late fifties or early sixties the industry dispersed intoSouthern India, Western India and other parts of Northern India. India is the largest consumer and second largest producer of sugar in theworld. The sufficient and well distributed monsoon rains, rapid population growth andsubstantial increases in sugar production capacity have combined to make India thelargest consumer and second largest producer of sugar in the world. The Indian sugar industry has not only achieved the singular distinction ofbeing one of the largest producer of white plantation crystal sugar in the world but hasalso turned out to be a massive enterprise of gigantic dimensions. With over 450 sugarfactories located throughout the country, the sugar industry is amongst the largestagro processing industries, with an annual turnover of Rs150bn. It plays a major rolein rural development and its importance for India stretches far beyond the role of asweetener supplier. The sugar factories located in various parts of the country work as nuclei fordevelopment of rural areas by mobilizing rural resources and generating employment,transport and communication facilities. Over 45mn farmers, their dependants and alarge mass of agricultural labor are involved in sugarcane cultivation, harvesting andancillary activities constituting 7.5% of the rural population. The sugar industryemploys over 0.5mn skilled and unskilled workmen, mostly from the rural areas.Babasabpatilfreepptmba.com Page 7
  8. 8. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Since the beginning of planning era, sugar industry operated under a policy ofpartial control in 1950-51 and 1951-52, followed by a continuous period of six yearsof decontrol between 1952-53 to 1957-58. This policy was followed under thepragmatic leadership of the then Minister of Food, Shri Rafi Ahmed Kidwai.However, with his departure, the perception of decontrol was lost. After alternating between control and decontrol, the government adopted thepolicy of partial decontrol in 1967-68 which has since been the mainstay ofgovernment policy except for two short periods of decontrol in the 1970s. Under thispolicy, the government procures 40% of production at controlled prices based on theStatutory Minimum Price for sugarcane, for supply through the Public DistributionSystem and the balance 60% is allowed to be sold by the mills in free market subjectto the monthly release mechanism. The details of past government policies for sugarindustry are provided in annexure 1. The levy quota for sugar mills has been brought down from the peak levels of70% in 1968-69 to the present levels of 40% as a gradual process of deregulation ofsugar industry. The number of operating sugar mills in the country has increased from 29 insugar year (SY) 1930-31 to 412 by SY1996-97 (sugar year = October 1 st to September30th). The addition in number of mills was at its peak during seventies when nearly100 mills were added between 1970 and 1980 to increase the number of operatingunits to 300. The development of industry in the past is as given in table below. The average capacity of the sugar mills in the industry has considerablymoved up from just 644 ton per day in SY1930-31 to 2656 ton per day. But still thegrowth in the Indian sugar industry was driven by horizontal growth (increase innumber of units) compared to the vertical growth witnessed in other countries(increase in average capacity)Babasabpatilfreepptmba.com Page 8
  9. 9. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Sugar year (Oct-Sept) Number of operating Average capacity ton crushed per sugar mills day 1930-31 29 644 1940-41 148 750 1950-51 139 882 1960-61 174 1172 1970-71 215 1394 1980-81 315 1718 1990-91 385 2088 . India is the largest consumer (18mn tonnes) and the second largest producer ofsugar after Brazil. The country produced 201 lakh tonnes (20.1mn tonnes), the highestever, in 2002-03. But there was a drastic drop in production in the following twoyears with just 135.46 lakh tonnes in 2003-04 and 130 lakh tonnes in `04-05. For thecurrent 2005-06 season, the production is expected to be between 180-185 lakhtonnes. While the production in Maharashtra is expected to double from 22.3 lakhtonnes in 2004-05 to 46 lakh tonnes in the coming season, Tamil Nadu, Gujarat,AndhraPradesh, Karnataka and Uttar Pradesh would also witness a significant rise inproduction.Babasabpatilfreepptmba.com Page 9
  10. 10. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” The sugar factories located in various parts of the country work as nuclei forthe development of rural areas by mobilizing rural resources and generatingemployment, transport and communication facilities. Over 45 million farmers, theirdependants and a large mass of agricultural labour are involved in sugarcanecultivation, harvesting and ancillary activities. The industry employs over 0.5mnskilled and unskilled workmen, mostly from the rural areas. After alternating between control and decontrol, the government adopted thepolicy of partial decontrol in 1967-68 which has since been the mainstay of thegovernment policy except for two short periods of decontrol in the 1970s. Under thepresent policy, the government reserves 10% of the production at controlled prices forsupply through the Public Distribution System (PDS) and the balance 90% is allowedto be sold by the mills in the free market subject to the Monthly Release Mechanism.The levy quota for sugar mills has been brought down from the peak levels of 70% in1968-69 to the present level of 10% through a gradual process of deregulation of thesugar industry. The Indian sugar industry has always been highly regulated by way ofrequirements of essence for setting up or the expanding of the sugar factoryrestrictions and control on the sale and dispatches of sugar, fixation of satisfactoryminimum cane price payable, fixation of levy sugar price, restriction on import andexport, restriction on stock holdings and so forth. With the government decision toliberalize the economy since 1991, some of the restrictions were removed The number of operating sugar mills in the country has increased from 29 in1930-31 to 453 in 2002-03. The average capacity of the sugar mills has considerablymoved up from just 644 tonnes per day in 1930-31 to 3343 tonnes per day in 2002-03.The growth in the Indian sugar industry was driven by horizontal growth (increase innumber of units) compared to vertical growth witnessed in other countries Indian sugar industry can be broadly classified into two sub sectors, theorganised sector, i.e, sugar factories, and the unorganised sector, i.e, manufacturers oftraditional sweeteners like gur and khandsari. The latter is considered to be a ruralindustry and enjoys greater freedom than the sugar mills. The production oftraditional sweeteners gur and khandsari is quite substantial. Gur is unrefined sugarand khandsari is non-centrifuged sugar. These are mostly used in villages and ruralfolk as sweeteners and also as important sources of nutrition. Though the trendsindicate a progressive shift from traditional sweeteners to white sugar over the years,Babasabpatilfreepptmba.com Page 10
  11. 11. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”they still account for about 37% of total sweetener consumption in India. Since the sugar industry in the country uses only sugarcane as an input, sugarcompanies have been established in large cane growing states like Uttar Pradesh,Maharashtra, Tamil Nadu, Karnataka, Punjab and Gujarat. Maharashtra leads in thenumber of sugar mills, which are mainly in the cooperative sector, and also in sugarproduction, followed by Uttar Pradesh. The farmer’s cooperatives own and operatethe largest of the industrys total capacity. They are concentrated primarily inMaharashtra and Eastern Uttar Pradesh. The largest number of sugar companies in theprivate sector is located in south India, in the states of Tamil Nadu, Karnataka andAndhra Pradesh. Uttar Pradesh has also some private mills which are operating in avery large scale. Out of the 453 sugar mills in the country, 269 are in the cooperativesector, 184 in the private sector and 67 in the public sector. Besides, 136 units in theprivate sector are in various stages of implementation. In India sugar productionfollows a 5-7 year cycle. Sugar production increases over a 3-4 year period, reaches ahigh, which in turn, results in lower sugar prices. As a result of lower sugar price,realizations of sugar mills, the sugarcane arrears increase. The increase in sugarcanearrears results in lower sugarcane production, resulting in lower production for thenext 2-3 years. Because of lower sugar production, the prices shoot up resulting inincreased area under sugarcane cultivation during the next season. Due to heavy domestic consumption (approximately 18mn tones), India is notin a position to export sugar in large quantities. This year the export could be aroundfive lakh tonnes. The export would be primarily the obligation that the importers ofraw sugar would have to fulfil. Moreover, the mills would find it more profitable tosell in the domestic market rather than export it. Currently, export price for whitesugar is $340-350 a tonne f.o.b (Rs 15,375-15,825). In the domestic market, mediumsugar is ruling at Rs 18,740-19,270 a tonne, while small sugar is quoting at Rs18,110-18,410.Babasabpatilfreepptmba.com Page 11
  12. 12. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Chapter IVBabasabpatilfreepptmba.com Page 12
  13. 13. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” COMPANY PROFILE Company ProfileBabasabpatilfreepptmba.com Page 13
  14. 14. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” History and Origin About sixty years ago Ugar Khurd was a small hamlet in the erstwhileprincely state of Sangli. It was however blessed with two great advantages. On itssouth flowed the perennial river Krishna and on the north, was situated the railwaystation of Ugar Khurd on the meter gauge line between Miraj and Bangalore, nowchanged to broad gauge. Conditions were ideal for somebody to harness the two advantages andexploit the fertility of the loamy soil. An abortive attempt was made in late thirtiesto start a sugar industry. After that, the then ruler of Sangli invited the lateDr.S.R.Shirgaokar - who had previous experience of setting up a sugar factory atKolhapur, to embark on the unexplored venture which he did with great dexterityand the slumbering village of Ugar Khurd was transformed into a hummingindustrial township in a few years. Today, Ugar is equivalent to a mini city with adecent sized population and having agriculture concentrated employmentsurrounding the sugar manufacturing focused township. Dr. S. R. Shirgaokar deputed his competent nephew Shri.V. S. Shirgaokarto purchase a sugar plant from Moholi Sugar Factory in Sitapur District in Biharand install it at Ugar Khurd. The Ugar Sugar Works hence found a very competentnavigator in one of its visionaries- Late Shri V.S.Shirgaokar. The 500 TCD plantwas purchased, installed and the first crushing season was started on the 21st ofApril, 1942. The crushing capacity of the company underwent further expansion.(10,000TCD) Presently, the crushing capacity of the organization is 14,000 TCD.(Ugar, Unit-Tasgaon SSK, Unit-Phalatan)Present Scenario of The Ugar Sugar Works Ltd:Babasabpatilfreepptmba.com Page 14
  15. 15. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” The present capacity of cane crushing is 10 thousand Metric tones per day.The work performed during the season period is in the three shifts. First Shift is from4.00 am to 12.00 pm, second shift from 12.00 pm to 8.00 pm and third shift from 8.00pm to 4.00 am. The crushing of sugar cane is carried out in two mills known as 33 X66 (small mill) and 42 X 84 (big mill). The cane carried through bullock carts iscrushed in 33 X 66 and the cane carried through truck and tractors is crushed in 42 X84. This order will change only if there is any problem to one of the mill. The sugar is packed in 50 kgs. and 100 kgs. Bags. This sugar bagging processis fully automatic.Board of Directors: 1. Mr. Rajendra V. Shirgaokar 2. Mr. Prafulla V. Shirgaokar 3. Mr. Shishir S. Shirgaokar 4. Mr. Baba N. Kalyani 5. Mr. Bapugouda S. Patil 6. Mr. Shrikrishna N. Inamdar 7. Mr. V. Balsubramaniam 8. Dr. Mallappa R. Desai 9. Mr. Madhusudan B. Karmarkar 10. Mr. Manohar G. Joshi 11. Mr. Algonda B. Kage 12. Mr. Deepchand B. ShahBabasabpatilfreepptmba.com Page 15
  16. 16. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Group of Companies: 1. The Ugar Sugar Works 2. SB Reshellers Pvt. Ltd. 3. Shantaram Machineries Pvt. Ltd. 4. Sadashiva Sugars Ltd. 5. Tara Tiles Pvt. Ltd. 6. The Pavilion Hotel 1. Finance DepartmentBabasabpatilfreepptmba.com Page 16
  17. 17. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Finance is the most important department in the organization. It plays veryimportant role in the organization. Finance is the life blood of each and everybusiness. Management of financing is planning and controlling of firm’s financialresource. The finance officer occupies a key position. He is one of the dynamicmembers of the top management key, and his role day by day is becoming moreintensive and significant in solving the complex management problems. The Finance Department is subdivided into three departments as under. A. Accounts Department B. Cane Accounts Department C. Cost and Audit Department Accounts Department: Deals with day to day financial activities ofmaintaining accounts i.e. entry of day to day transactions, issue of cheque,preparing Trial Balance, Profit and Loss Account, Balance Sheet, maintainingBank Accounts, Cash Management, Purchase and Sales Accounts. The books ofaccount maintained by the company are:1) Sales records: Sales records are maintained for each of the sold sugars and other product.2) Purchase Records: Purchase records are maintained for the purchase of various items.3) Expenses Records: The records are maintained for the purpose to make entry for various expenses incurred in a particular period of time.4) Stock Records: Stock records are maintained to know the levels of stock of various items for the particular period of time .These are both in terms of rupees and units.5) Budgets: A budget provides an easy method of continuous monitoring of activities of the organization. A master budget, which takes into, accounts all activities of an organization.Babasabpatilfreepptmba.com Page 17
  18. 18. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Following are the budgets prepared: i. Budget Profit and Loss A/C. ii. Budget Trading A/C. iii. Budget Fund Flow Statement. iv. Budget Balance Sheet. v. Sales Budget. vi. Cash Budget.vii. Expenses Budget. Cane Account Department: Deals with the farmers in purchasing cane andmaking time to time payment, advance payment, transporting, maintaining thedetail information through Weigh Bridge Department about weight of the canewhile it comes to the factory, maintaining daily report like Crushing Report, SugarBagging Report, Baggasse and other material like Trash, Ash, Sugar, Chemicalsand other raw material in and out. Cost and Audit Department: The functions of Cost and Audit Department: 1. The internal audition of various areas of each and every department including revenue and expenditure side. 2. Cost Accounting work of U.S.W. Ltd. Products like sugar, rectified spirit, denatured spirit, power and Indian made liquor product. 3. Periodical physical checking of following departments about their inventory books of accounts of the stores, time keeper office etc. 4. Preparation of additional data feedback for management audit committee or any other department required. 5. Special audit of various departments like Agriculture Department, Account Department, Time Keeper Office, R & D Department, Civil Construction Projects, Cane Purchase Department Etc. 6. Checking of Closing Stock Statement. 7. Suggesting remedial actions in case of increased cost. The software package used in finance department is Tally and Own Createdsoftware by the IT Department.Babasabpatilfreepptmba.com Page 18
  19. 19. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” 2. Personnel Department This department undertakes the activities like Recruitment, Selection,Labour Welfare Activities, Social Activities. Department holds a meeting once ina week with Top Management. The department has four different committees. 1. Canteen Committee 2. Work/ Grievance Cell Committee 3. Safety Committee 4. House Keeping Committee Labour Welfare Activities o Statutory Provisions: The Ugar Sugar Works provides the statutory provisions under the Factories Act 1948 like Safety, Health Awareness, Work Environment, Lighting, Ventilation, Drinking Water Provision, Spittoon, and Toilet. The Labour Welfare Officer deals personally with the employee problems may be related to workplace or personal life of the employee. He councils the employee or worker personally and try to settle the problem. Additional Facilities: Education: Ugar Sugar Works has contributed whole-heartedly in the field of education, towards the betterment of the residents of this region. Bal Mandir:Babasabpatilfreepptmba.com Page 19
  20. 20. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” This is a playschool for the young children Shri Hari Vidyalaya: Shri Hari Vidyalaya is a school, which is home to over 3000 students. This school has a curriculum which covers the following mediums of instruction under the primary and secondary sections :  English Medium  Marathi Medium  Kannada Medium Shri Hari Vidyalaya Pre-University & Degree College: This college is operating for a number of years at Ugar Khurd. It has Arts, Commerce and Science (first year) faculty’s for a Bachelors Degree. It houses over a 1000 students Shri Babukaka Shirgaokar Technical Educational Trusts: Industrial Training Institute (ITI): The ITI was started in the year 1994 in honour of our then MD, Shri Babukaka Shirgaokar.:Babasabpatilfreepptmba.com Page 20
  21. 21. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” This institute provides technical training in the following disciplines i. Fitter ii. Electrician iii. Instrument Mechanic iv. Computer Technology Trade v. Cutting and Sewing Hospital: The Dr. Shirgaokar Hospital is very well equiped in the following areas:Babasabpatilfreepptmba.com Page 21
  22. 22. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”  State of the Art Laboratory  X-Ray Units  An Air-conditioned Operation Theatre  Dental and Orthopedic Section  Accommodation for 32 indoor patients (32 beds)  Qualified staff of doctors and nurses to take care of the patients.  Treatment at subsidized rates  Eye camp every week Quarters Approximately 132 apartments and 400 quarters provided on rent-free basis.Babasabpatilfreepptmba.com Page 22
  23. 23. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Biogas Biogas supplied to workers colony (for 85 quarters at concessional rate) Food Grains Food Grains are distributed to workers free of cost once in a year. Additionally Ugar’s sugar is provided to shareholders and cane growers at a well discounted rate. TV Cable Connection TV Cable connections are given at nominal charges. Medical Camp Organising various types of medical camps viz. Dental, Eye, Tubectomy, ENT, Diabetic Detection Camp, Blood donation, etc. Workers Day Celebrating workers day on 2nd October every year and felicitating the retired workers and high performers during the year. Training Programme Organizing Workers / Staff Training Programme. Ugar Wartha Circular of monthly Ugar Magazine. Alcoholics Anonymous Group Meeting Conducts the Alcoholics Anonymous meeting for the group of fellows, who desires to give away drinking through the inter group (self-supported) of General Service office of Alcoholics Anonymous (India). Meeting held twice in a week. Sakhar Shala Project The non formal school runs for the childrens of the Harvesting workers(Gabali) during crushing season to bridge the gap of academic year and to keep touch with education during stay at factory(work) site, with the help of social organizations like Lions Club & Mahila Mandal.Babasabpatilfreepptmba.com Page 23
  24. 24. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Awards: Shri S V Parthasarathys Award for outstanding performance in sugar industry for the season 1984-85 National Safety Award 1984 for largest Accident free Period Social Activities Arranges Camps like “Netra Shibir”, Dental Camp, Arrangement of Place,Water and other necessary things at the time of Laxmi Yatra once in a year.Provides donations for other religious works, educational institutes, and sufferersof natural calamities. 3. Information Technology (IT) Department: IT Department distinct The Ugar Sugar Works from other sugar factories.It has its own IT Department, which is very well developed. This departmentdevelops the software as per the requirements of the different departments. Itefficiently solves any technical problem related to the computer hardware as wellas software in the different department. Various qualified and efficient hardwareand software engineers are there in this department.Babasabpatilfreepptmba.com Page 24
  25. 25. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” 4. Purchase Department: This department accepts the requisitions from the different departments, inwhich the material needed, quality and quantity is mentioned. They have thevendors list and they ask quotations from them. Finally after receiving thequotation they place the order to appropriate vendor. The purchase order has fourcopies. From that one has sent to Accounts Department, one to the Vendor, one tothe department from which the requisition is received and last is retained withthemselves for reference. This department work according to the Just In Timemethod. Means it does not blocks the funds of the company. Purchase Department does not place orders for capital goods. It deals withthe materials, which are necessary to run day-to-day activities of production,stationary material etc. This department uses the software developed by their IT department fromFoxPro for keeping records and placing orders. Also they use the other windowsprograms like Ms-Office (Ms-Word, Ms-Excel, Ms-PowerPoint) fordocumentation. 5. Issue Department This department is also known as Stores Department. The materialpurchased from Purchase Office first comes to the stores department. Here thestores incharge records the transactions means takes the stock and files thedocuments received from the vendor and purchase office. Then this departmentsupplies or issues the material to other departments according to their need orrequisition.Babasabpatilfreepptmba.com Page 25
  26. 26. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” 6. Production Department The Ugar Sugar Works Ltd, production department comprises the FactoryManager with his team of Engineers and Operators. He reports to the chief i.e.works manager. Here the main production is sugar. For producing the sugar thereis a very vast process. Engineers and operators do this process. Here one moresmall but very important process joins to the process of producing sugar i.e.chemical mixing into the cane juice. For this there is a small department calledchemical department. Then after this all process the final product i.e. Sugarproduces. Within all this some by products are also obtained like baggase,molasses, steam etc. The production department does all above-mentionedprocess. Sugar bagging i.e. production of sugar for the last season i.e. 2005-06 is 7. Cane Purchase Office Department This department deals in purchasing cane from farmers for sugarproduction. It maintains all the details of the farmer and the cane also. In thesedetails they mention the type of sugar cane, area, farmer name, transporter name,no. of kilometers the place or farm is from factory etc. Then they make a bondwith the farmer for giving the cane to the factory and lastly issue the CanePurchase Order to the farmer. 8. Research and Development Department (R&D) This is one of the most important department in the Ugar Sugar Works Ltd.The company carries the research and development in Sugar cane, processmodification for sugar production, quality liquor and Ethanol production,Improvement in Technology, Co-Generation and bio-methanation from press mudand zero effluent discharge system. This results in Product improvement, costreduction, product development, import substitution etc.Babasabpatilfreepptmba.com Page 26
  27. 27. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Sugar Cane: The main objective of the Research and Development team is tomake continuous effort to find out dual purpose sugarcane varieties with highsucrose, high yielding potential and reasonably high fibre content. There are 40odd new sugarcane varieties under trial in this department.Short Duration Crops: The work with wheat, soybean and sunflower isreasonably successful as rotation of crops and useful indications are likely to beobtained.Future Plans of Action:a) To popularize the technique of using Wormi-compost and Boiler ash.b) Replacement of Muriate of Potash by organic Bio-k, a product of SSP Plant of concentration. Evaporation and drying system for zero pollution.c) To locate soybean varieties resistant to rust.d) To find out effective biological measures, which would cause no ecological problems and shift from the paradigm of pesticidal control to biological control so as to successfully combat white Woolly Aphid trouble (Ceratovacuna lanigera Zehnt) with conobartha aphidivora (Dipha), Micromus Sp.(Brown lace wing) and syrphidfly.e) To identify multipurpose cane varieties, which can give good yields, good recoveries, high fibre and resistant to insect pests.f) To utilize Moist Hot Air Treatment Plant (MHAT) to prolong the life of productive good cane varieties.g) To establish Leaf Sheath Moisture, Soil and Plant Tissue Culture Laboratory.h) Replacing 50% chemical fertilizers with suitable combination of organic and bio-fertilizers to get the best cane both from the point of quality and quantity.Babasabpatilfreepptmba.com Page 27
  28. 28. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Different Product Manufactured The Ugar Sugar Works Limited is the flagship company of the ShirgaokarGroup of Companies. This organization is located in a township by the name-Ugar Khurd, Karnataka, close to the border of Karnataka & Maharashtra. UgarKhurd is nicely located on the banks of the river Krishna.The main businesses of parent company are manufacturing of: 1. Sugar 2. Power 3. Indian Made Liquor 4. Industrial Alcohol 5. Ethanol1) Sugar: The Ugar Sugar Works Limited is the largest ‘single location’ manufacturerof sugar in Southern India with a licensed capacity of 10,000 TCD. Ugarmanufactures more than 1.5 million bags of sugar annually. The main product ofBabasabpatilfreepptmba.com Page 28
  29. 29. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”the sugar manufacturing process is White Crystal Sugar. This white crystal sugar is manufactured in the following grades : i. M-30 ii. S-30 iii. SS-30 Byproducts: Bagasse: Bagasse is a residual material left after the extraction of juice from sugar cane. In Ugar Sugar, it is captively used as a fuel by which the industry is self sufficient for its fuel requirement. The excess is saved to the tune of 5% of weight of the cane crushed. The saved bagasse can be selectively used as fuel in the lean period / off-season or sold to the interested parties. Filter cake: Filter Cake commonly known as Press mud is the suspended impurities separated during the process of cane juice clarification by the sulphitation process. The material is used as manure and the factory manages to sell the filter cake to the cane growers at concessional rates & achieves recycling of the matter back to fields. Final Molasses: It is a highly viscous left-over material containing sugar / reducing sugar and organic/inorganic impurities. It is a raw material for distilleries of our organization.Babasabpatilfreepptmba.com Page 29
  30. 30. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”2) Power: Cogeneration is a process, which simultaneously produces two or more forms of useful energy such as electrical power and steam, electric power and shaft (mechanical) power etc. Ugar has been a pioneer of cogeneration in the sugar industry in India, Over the years, The Ugar Sugar Works has reached (in 2-3 phases) a capacity of 44 MW of power, of which 15 MW is used for captive consumption and the balance 28 MW is fed to the grid (KPTCL). Power shortage has made the sugar industry realize that by using high–pressure Boilers and Turbines from the same amount of input fuel, (i.e. Bagasse)they can generate up to 2 to 3 times more power and after meeting the captiverequirements, the surplus power can be exported to the grid. A sugar factory requires both electrical power & process steam for itsoperation. With the Indian Government announcing various fiscal incentives forthe use of non-conventional renewable energy for cogeneration in sugar factories,it has become a viable proposition to adopt high pressure & efficient boilers usingbagasse to generate steam & power economically to make available surplus powerfor export to the grid.Babasabpatilfreepptmba.com Page 30
  31. 31. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” This is the single largest cogeneration plant in all of India using non-conventional energy sources i.e. bagasse and trash. Our group has now startedconsulting to sugar industries in India as well as in overseas through our groupcompany - Ugar Power Generation Consultants Pvt. Ltd (UPGCL). The focus ofthis new outfit revolves around consulting on new co-generation projects,equipment procurement, erection & implementation right up to finalcommissioning in the cogeneration sector. Lots of steps have also been taken by the organization to ensure maximumconservation of energy.3) Indian made Liquor: Ugar currently has two distilleries in premises at Ugar Khurd. The first oneis an old distillery of capacity 30,000 LPD, while the second one is a newlyconstructed distillery from Praj Industries, Pune having a capacity of 45,000 LPD.The Praj Distillery runs on the continuous fermentation technology. The wholeunit of distillation process is having material of construction in copper, whichgives a very good quality of spirit. This plant is having a high level ofcomputerization and automation.Babasabpatilfreepptmba.com Page 31
  32. 32. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Two distilleries with a total capacity of 75,000 bulk liters per day.The primary products coming out of the distilleries are: i. Rectified Spirit ii. Indian Made Liquors iii. Absolute Alcohol (Ethanol) iv. Arrack v. Industrial Alcohol Some of the well-known brands in the marketplace are Old Castle PremiumWhisky, Old Castle Rum, US Rum, US Whisky, Vatted Malt Whisky, SandpiperWhisky, Gentlemans Whisky, Ugar Doctors Brandy, Gagarin Vodka and US Gin. New Projects & GrowthSugar Ship EOU EOU for the Manufacture of Sugar Cubes in the form of Ships. The UgarSugar Works Ltd. Has received approval for setting up a 100% Export OrientedUnit for the manufacture of sugar cubes in the form of ships at Ugar Khurd. The Building work is in progress and the machinery will be imported fromM/s. Klockner Haensel Processing GMBH Germany (JV Partner) who will beproviding the necessary technology. The machinery is expected to be installedBabasabpatilfreepptmba.com Page 32
  33. 33. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”between March 2006 & July 2006 and commercial production will begin fromAugust 2006. The entire production of sugar ships will be exported to FragiesVerwaltung GMBH, Germany, who have agreed to purchase the entire productionof 45,00,000 boxes p.a. for a period of 5 yearsGreenfield Project - Sadashiva Sugars Ltd. Location Nainegali Village, Taluka & District: Bagalkot, State: Karnataka.It is about 0.5 km from the NH 13 Land Area The land measuring about 162000 sq. mts shall be required for the entire factory and administrative setup. Main Product White crystal Sugar By Products a) Cogeneration b) Power c) Press-mud Licenced Capacity Sugar – 2500 TCD (expandable to 5000 TCD) Cogeneration Power Plant – 15MW The land acquisition and machinery procurement work is in progress. Theinstallation of machinery will be completed by the end of 2006 and 2006-07 willbe a trial crushing season for Sadashiva Sugars.Babasabpatilfreepptmba.com Page 33
  34. 34. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Greenfield Project-Jewargi Location Malli Village, Taluka: Jewargi, Dist: Gulbarga, State: Karnataka. It is about 15 kms from Sindagi on the State Highway No.12 Land Area The land measuring about 162000 sq. mtrs shall be required for the entire factory and administrative setup Main Product White crystal Sugar By Products a) Cogeneration b) b) power c) press-mud Licenced Sugar – 2500 TCD (expandable to 5000 TCD) Capacity Cogeneration Power Plant – 15MW The land acquisition and machinery procurement work is in progress. Theinstallation of machinery will be completed by the end of 2006 and the 2006-07crushing season will be a trial season for this new project.Ugar Sugar-Unit Tasgaon SSKThe Ugar Sugar Works-Unit Tasgaon SSK (Leased Plant) The Company has taken on lease, Tasgaon Taluka Sahakari SakharKarkhana Ltd., Turchi, (Tasgaon). This plant is having a capacity of 2750 TCD perday. The lease agreement with Tasgaon SSK has been signed for a period of 6years.Babasabpatilfreepptmba.com Page 34
  35. 35. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Commercial pro Ugar Sugar-Unit Tasgaon SSK has crushed a total of 2.22lac MT for the season 2005-06. The total bagging for this season amounts to 2.50lac quintals.duction has commenced.Ugar Sugar-Unit New Phaltan Sugar The Ugar Sugar Works-Unit New Phaltan Sugar W The Company hastaken on lease New Phaltan Sugar Works Ltd., situated at Sakharwad TalukaPhaltan Dist.Satara. This plant is approximately 100 kms from Pune.orks (LeasedPlant). This plant has a capacity of 1250 TCD. The lease agreement with NewPhaltan Sugar has been signed for a period of seven years. Commercial productionhas commenced. Ugar Sugar-Unit New Phaltan Sugar has crushed a total of 1 lacMT for the season 2005-06.Babasabpatilfreepptmba.com Page 35
  36. 36. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Chapter V INTRODUCTION ABOUT THEDIVERSIFICATION “FRAGIES”Babasabpatilfreepptmba.com Page 36
  37. 37. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Introduction about the Diversification Project “FRAGIES” The production of new product called “fragies” is a sugar cube in the formof ship. This unique project is undertaken in the village Ugar-khurd, Dist:-Belgaum , State:- Karnataka. The company has entered into a buy-back agreement with the FragiesVorwaltung GMBH Germany. The project is unique in itself. It is first time in theworld such a project is undertaken, because the sugar cubes will be introduced inthe form of ship. What are fragies:- Fragies are a floating and exciting alternative to therather dull sugar cubes. To allow easy dosing through their weight is exactly alike,3 grams. Fragies are produced of three sugar components of different states ofaggregation. The sophisticated combination makes floatable fudges out of whichthe boats are formed. “Fragies” make the ideal media for any catering, customer client, theshowbiz or the convience sector. It has a appealing look.The fragies will be introduced in four varieties. 1.Fragies Coffee 2.Fragies Cappuccino 3.Fragies Tea 4.Fragies TasteBabasabpatilfreepptmba.com Page 37
  38. 38. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” The color make the difference so that ‘fragies taste’ comes with anadditional flavour. As an extra effect all four varieties of ‘fragies’ exhibit adifferent dissolving speed. The longer they float the more fun in cup of drinking.By ProductFragies will not have any by product.Availability of raw materials, water, power.1) Raw material: The plant is located close to the existing sugar factory. The raw material forfragies is sugar, which is easily and readily available. The raw material i.e. sugarrequired is 10% of the production i.e. Rs226.80 lacs.2) Water: Ugar Khurd is blessed on its south flowed the perennial river Krishna. Theexisting infrastructure at Ugar which caters for the main sugar plant is alsoavailable for this plant.3) Power: Power will be drawn from the co-generation plant of the main product.Market for finished product: The company has entered into buy-back arrangement with the fragiesVerwaltung GMBH, Germany. The Germany Company has agreed to buy 22.5Million boxes (i.e. approximately 56.25 lakh Kgs.) within period of five years orup to achievement of net profit of 3.5 Million euros by the manufacturer whicheverBabasabpatilfreepptmba.com Page 38
  39. 39. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”is earlier. The customer will establish the letters of credit for the purchase of theproduct.Technology and Know-how: The Germany Company has agreed to provide the necessary technologyand Know-how. Kloeckner Hacnsel Processing GMBH, Germany, will supply theentire machinery. The product will be manufactured as per the specificationprovided by the Germany Company.Packaging of the Product: Proper packing of fragies is very important. As each fragies consists of just3 gms. It is very delicate. Importance of this product lies in its shape, design. Socare should be taken that the product is handled carefully. So packaging is ofutmost important. The product will be accepted only up to maximum 2% ofdefects. Packaging will be given on contract basis. One of the company fromRatnagiri will supply the packaging material.Rationale of EOU Plant: 1. As it is located very close to the existing sugar plant at Ugar Khurd, the raw material and power availability is in abundance. 2. The company will also save on transportation cost of raw materials. 3. The company has entered into a technological agreement with the German company who has also agreed to the buy back the production for a period of five years. 4. This will be an opening for the company in the field of exports.Babasabpatilfreepptmba.com Page 39
  40. 40. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” 5. Sugar fragies being a futuristic and fancy product has an appeal in the urban area across the world. Chapter VFinancial AppraisalBabasabpatilfreepptmba.com Page 40
  41. 41. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Financial Appraisal Capital Investment includes all the expenditures which are expected toproduce benefits to the firm over a long period of time, encompasses both tangibleand intangible assets. Some companies classify capital expenditure in a manner,which provides useful information for decision-making. Which project to be selected is one of the critical decision-making process. Itdepends on certain criteria. Identifying financial appraisal of project is one of thecritically important and complex stage. The shareholder wealth maximization goalstates that the management should endeavor to maximize the net present value of theexpected future cash flows to the shareholder of the firm. NPV refers to thediscounted sum of the expected net cash flows. The shareholder wealth maximization goal reflects the magnitude, timing andrisk associated with the cash flows expected to be received in the future byshareholders. The NPV is discounted at the rate of cost of capital.Cost of capital is the minimum expected rate of return. The company must earn, theminimum return so as to satisfy the shareholders.Babasabpatilfreepptmba.com Page 41
  42. 42. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Chapter VII ObjectivesBabasabpatilfreepptmba.com Page 42
  43. 43. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Objectives of the Project 7. To know the cost of the Project. 8. Time frame required to complete the Project. 9. Financing Method. 10. Cost of Finance. 11. Human Resource Required. 12. Commercial Business. a. Preparation of Profit and Loss Account. b. Preparation of Cash In Flow Statement. c. Calculation of Net Present Value. d. Payback Period. e. Internal Rate of Return.Babasabpatilfreepptmba.com Page 43
  44. 44. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Introduction Finance is regarded as the life blood of the business enterprise. This isbecause in the modern money oriented economy finance is one of the basicfoundations of all kinds of economic activities. Decisions with regard to the investment in the current assets and fixed assetsare significant as they determine the size of the firm, financial requirement, extent ofbusiness risks etc. Investment decision pertains to long term investment is crucial. It isabsolutely necessary that the firm should carefully plan its investment program so thatit may get the finances at the right time and they are put to most profitable use. Anopportune investment decision can give spectacular results. On the other hand an illadvised and incorrect decision can jeopardize the survival of biggest firm.1. To Know the Cost of Project: Cost of the project means the capital expenditure. It includes investment infixed assets. The overall cost of this new project is estimated to be Rs.22, 70,00,000i.e. 384745.76 Euro (1 Euro = Rs.59). The main machinery costs Rs.17, 70,00,000,which also includes erection cost. The machinery is tailor made. This machinery isexclusively used for the production of fragies. The machine cannot be alternativelyused for production of any other products. The Germany Company has agreed toprovide the necessary technology and Know-how. Kloeckner Hacnsel ProcessingGMBH, Germany, will supply the entire machinery. The cost of ancillary machineryis Rs.2, 00,00,000. The building cost Rs.3, 00,00,000. The project building is erectedBabasabpatilfreepptmba.com Page 44
  45. 45. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”in the premises of present sugar factory. So there is no any addition investment in thepurchase of land. Here we can say that land is efficiently utilized by the organization. Cost of Project: Particulars Amount Main Machinery - 17,70,00,000 Ancillary Machinery - 2,00,00,000 Building - 3,00,00,000 Total Cost of Project - 22,70,00,0002. Time frame required to complete the Project: This project has not still started with the production. The erection of thebuilding and installation of the machinery will be completed by November 2006.The company has entered into buy-back arrangement with the fragies VerwaltungGMBH, Germany. The Germany Company has agreed to buy 22.5 Million boxes(i.e. approximately 56.25 lakh Kgs.) within period of five years or up toachievement of net profit of 3.5 Million euros by the manufacturer whichever isearlier. After five years either the contract may be renewed or the known how willbe registered by the name of Ugar Sugar Works.3. Financing Method: One of the important function of finance manager is to assemble requiredamount of funds from different sources. Problem of finance is not much felt by thesole trading organization, partnership firms etc. because they are run on small scale.But the real financial problem is faced by corporate enterprises, which are operated onBabasabpatilfreepptmba.com Page 45
  46. 46. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”a very large scale. It is necessary to be familiar with different sources of funds formeeting various financial requirements of an organization. The method of collectingfunds is linked up with the period and the purpose for which funds are required. It isalso necessary to consider the cost of capital before taking any decision relating to theselection of sources funds supply. The Ugar Sugar Works Ltd. Is a Public Ltd. Company under private sector.Public company is a company where the shareholders are more than fifty. Ugar SugarWorks has 18000 shareholders with share capital of Rs.9 Cr. These shares are listedin Bombay stock exchange with the face value of Rs.1 each. As per the Companies Act of 1956 the company is allowed to issue onlyequity share. The company cannot issue debentures and preference shares. Theadditional fund requirement is fulfilled by borrowings i.e. long-term loans. A firm’s capital generally consists of own fund and borrowed funds thatrepresent combine investment in a business. The optimum capital structure is one thatmaintains the ideal ratio between different types of securities issued by the company. For this new project i.e. the production of fragies the company has not issuedany equity shares. It has raised funds through internal/retained earnings i.e. promoterscontribution and borrowings. This unit is 100% export oriented.Promoters contribution: Promoters contribution is nothing but the retained earnings.The entire amount of profit is not distributed by the way of dividend to theshareholders. It is also referred to as self- financing or internal financing or re-investment. It is nothing but the re-investment of on savings accumulated over theyears by transferring certain portion of the net profit to the reserves of a company. When the company uses the fund of one unit to the unit, it is known as IntraFund Transferring. It is a most economical method of financing. It is an ideal sourceof financing for expansion, modernization and diversification. It is neither expensivenor subject to any legal complications.Borrowings / Loans: Generally loans are meant to serve the long term financialpurposes of a business concern. Loans represent and advance granted on a separateaccount called loan account. Interest is charged on the whole amount sanctioned tothe customers.Babasabpatilfreepptmba.com Page 46
  47. 47. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” The loan is borrowed from Robo Financial Institution, Singapore Branch atrate of 4.5%. The company will get the loan in the form of Euros, which will be thenconverted, into Indian currency. The company has to pay back the loan again in theform of Euro. As the devaluation of currency is subject to fluctuation the company,uses forward cover/hedging to avoid risk. After every 6 months this forwardcover/hedging is renewed.Capital Structure:Particulars AmountBorrowing / Loan from Robo International - 14,16,00,000Promoters Contribution / Internal Fund - 8,54,00,000 22,70,00,0004. Cost of Financing / Capital: Cost in simple terms means sacrificing something such as time, money,material, man hours for the production of goods any other factor, it too has cost. The project’s cost of capital is the minimum required rate of return on fundscommitted to the project, which depends on the riskiness of its cash flows. Theinvestment project undertaken by a firm may differ in risk, each one of them will haveits own unique cost of capital. Cost of capital determines the suitability of investmentproposals. When a company has before it, two different investment proposal, in orderto select best investment proposal, which will give more return, the calculation of costof capital is essential. Thus the cost of capital is “The Rate that must be paid to obtain funds forbusiness activities”. It is the minimum rate of return a company earns on itsinvestment in order to give expected income to the equity shareholders.Significance of Cost of Capital:a. Investment Evaluation: The primary purpose of measuring the cost of capital is its use as a financialstandard for evaluating the investment project. In the NPV method, an investmentproject is accepted if it has a positive NPV. The project’s NPV is calculated byBabasabpatilfreepptmba.com Page 47
  48. 48. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”discounting its cash flow by the cost of capital. In the sense, the cost of capital is thediscount rate used for evaluating the desirability of an investment project. In the IRRmethod, the investment project is accepted if it has an internal rate of return greaterthan the cost of capital.b. Designing Debt Policy: The debt policy of a firm is significantly influenced by the cost consideration.The interest tax shield reduces the overall cost of capital, though it also increases thefinancial risk of the firm. In designing the financial policy, that is, the proportion ofdebt and equity in the capital structure, the firm aims at maximizing the firm value byminimizing the overall cost of capital. The cost of capital can also be useful indeciding about the methods of financing at a point of time.c. Performance Appraisal: The cost of capital framework can be used to evaluate the financialperformance of the top management. Such an evaluation will involve a comparison ofactual profitability of the investment projects undertaken by the firm with theprojected overall cost of capital, and the appraisal of the actual cost incurred by themanagement in raising the required fund.Component of Cost of Capital: The cost of capital consists of different sources of capital. i. Cost of Equity ii. Cost of Preference Shares iii. Cost of Retained Earning iv. Cost of Debti. Cost of Retained Earning: Undistributed and accumulated profit represents Retained Earning. RetainedEarning is also a source of funds that can be used by a company conveniently withouthaving to pay any dividend on these funds. Therefore, it is assumed that the source ofBabasabpatilfreepptmba.com Page 48
  49. 49. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”finance is cost free. In fact, retained earnings have opportunity cost. The opportunitycost of retained earning is dividend sacrificed by the shareholders. Had this dividendbeen paid to the shareholders, they would have invested on some other companyshares and earned at least a minimum rate of return which is calculated in a similarmanner as the cost of equity capital, without giving effect to income tax andbrokerage cost consideration.Computation of cost of Retained Earnings:Kr = Ke ( 1 – t ) ( 1 – b )Here:Kr = Cost of Retained EarningKe = Cost of EquityT = Tax RateB = Brokerage RateKe = 8%T = NilThe project is 100% export oriented so the tax is exempted.B = Nil∴Kr = Ke ( 1 – t ) ( 1 – b )∴Kr = 8%ii. Cost Debt Capital: Cost of debt capital is the rate of return expected by the lenders. It is the rateof interest and debt advance. Therefore cost of debt is equal to the rate of interestpayable on debt (before tax). Interest payable by the company is subject to taxdeduction. Hence, cost of debt before tax should be adjusted for tax effect.Computation of cost of Debt after tax:Kda = kd ( 1 – t )Here:Kd = Cost of Debt before TaxKda = Cost of Debt after TaxT = Tax RateKd = 4.5% i.e. the interest rateT = NilThe project is 100% export oriented so the tax is exempted.Babasabpatilfreepptmba.com Page 49
  50. 50. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”∴ Kda = kd ( 1 – t )∴ Kda = 4.5% ( 1 – t )∴ Kda = 4.5%Weighted Average Cost of Capital (WACC): In financial decision making, overall cost of capital known as composite costof capital is more useful than specific cost of capital. Overall cost of capital is anaverage of the cost of each source of funds employed by the company. Weightedaverage method is one of the methods of calculating the overall cost of capital. WACC is the weighted average of the cost of different sources of finance,weights being attached on the basis of proportion which each source of finance bearsto the total fund. According to ICMA (London) Weighted Average Cost of Capital isthe average cost of company’s finance weighted according to the proportion eachelement bears to the total pool of capital, weighing is usually based on marketvaluation current yields and cost after tax. Weighted Average Cost of Capital plays an important role in determining thecapital structure, because the optimum capital structure lies at that point whereWACC is minimum. In the evaluation of investment project, WACC is considered tobe the minimum rate of return required from a project so as to enable the firm to payan expected rate of return to the investors. Computation of Overall Cost of Capital Name Capital Proportion Cost of WACC Capital After TaxRetained Earnings / Promoters 8,54,00,000 37.62% 8% = 0.08 3.00%ContributionBorrowings/Debt 14,16,00,000 62.37% 4.5% = 0.045 2.80% 22,70,00,000 100% 5.80%WACC = 5.80%Babasabpatilfreepptmba.com Page 50
  51. 51. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Computation of Cost of Debt after Tax. Kda = kd ( 1 – t )∴ Kda = 4.5% ( 1 – t )∴ Kda = 4.5%Computation of Cost of Retained Earnings.∴Kr = Ke ( 1 – t ) ( 1 – b )∴Kr = 8%Working Note: 1. Calculation of proportion of different sources of capital. 8,54,00,000 a. Proportion of Retained Earnings = 22,70,00,000 = 37.62% 14,16,00,000 b. Proportion of Debt = 22,70,00,000 = 62.37%Option II: The company if totally depends on equity the cost of capital is 8%. Which ismore than WACC. If the company totally depends upon borrowing the cost of capital is between8% to 9%, which is again more than the WACC. Therefore the optimal capital structure is one which has comprises Debt andEquity. As per the workout the cost of capital is less when the capital structureconsists of different sources, which can be concluded from the above computations.Babasabpatilfreepptmba.com Page 51
  52. 52. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”5. Human Resource Required: The machinery used for the production of fragies is fully automatic. Itrequires maximum 10 skilled employees to control the machinery. It is estimated thatother 35 workers will be needed for packaging and loading of finished product.Therefore the total workers required are estimated to be 45. The 10 skilled employees are given special training to handle the machinery.The expenses incurred for training is 7.5 lakhs. Every year the unit has to incur theexpense of Rs.1.5 lakhs for food hygiene.Babasabpatilfreepptmba.com Page 52
  53. 53. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”6. Commercial Business:a. Preparation of Projected Profit and Loss Account Particulars 30/09/06 30/09/07 30/09/08 30/09/09 30/09/10 30/09/11IncomeGross Sales - 2369.21 2493.90 2493.90 2493.9 2618.60 0Less: Excise Duty - - - - - -Net Sales - 2369.21 2493.90 2493.90 2493.9 2618.60 0ExpendituresRaw Materials Consumed - 226.80 226.80 226.80 226.80 226.80Purchase of traded items - - - - - -Store spares etc. consumed - - - - - -Subtotal(A) - 226.80 226.80 226.80 226.80 226.80Power, Fuel and Water - 184.05 184.05 184.05 184.05 184.05Repairs and Maintenance - 32.85 32.85 32.85 32.85 32.85Staff Cost - 37.13 40.84 42.88 42.88 42.88Depreciation and Amortisation - 292.14 248.08 210.73 179.08 152.25Subtotal(B) - 546.16 505.81 470.51 438.86 412.03A+B - 772.96 732.61 697.31 665.66 638.83Opening WIP - - - - - -Closing WIP - - - - - -Cost of Goods Produced - 772.96 732.61 697.31 665.66 638.83Opening Stock of Finished - - 38.65 36.63 34.87 33.28GoodsClosing Stock of Finished - 38.65 36.63 34.87 33.28 -GoodsCost of Production - 734.31 731.63 699.08 667.24 672.11Gross Profit - 1634.89 1759.27 1794.82 1826.6 1946.49 6Admin & Selling Exp - 532.00 540.10 540.10 540.10 548.21Interest Cost 28.28 50.90 39.59 28.28 16.97 5.66Operating Profit (28.28) 1052.00 1179.58 1226.44 1269.5 1392.62 9Other Incomes - - - - - -Profit before Tax (28.28) 1052.00 1179.58 1226.44 1269.5 1392.62 9b. Preparation of Cash In Flow Statement.Babasabpatilfreepptmba.com Page 53
  54. 54. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” An analysis of cash flows is useful for short run planning. A firm needssufficient cash to pay debt maturing in the near future, to pay interest and otherexpenses and to pay dividend to shareholders. The firm can make projections of cashinflows and outflows for the near future to determine the availability of cash. Cash inflow statement for the year 2007 Particulars Amount Sales Revenue - 23,69,21,000 Less: Operating Expenses Raw Materials - 2,26,80,000 Power, Fuel and Water - 1,84,05,000 Repairs and Maintenance - 32,85,000 Staff Cost - 37,13,000 Administration - 5,32,00,000 Interest Cost - 50,90,000 Depreciation - 2,92,14,000 PBT - 10,13,34,000 Add: Depreciation - 2,92,14,000 Cash In Flow - 13,05,48,000 Cash inflow statement for the year 2008 Particulars Amount Sales Revenue - 24,93,90,000 Less: Operating Expenses Raw Materials - 2,26,80,000 Power, Fuel and Water - 1,84,05,000 Repairs and Maintenance - 32,85,000 Staff Cost - 40,84,000Babasabpatilfreepptmba.com Page 54
  55. 55. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Administration - 5,40,10,000 Interest Cost - 39,59,000 Depreciation - 2,48,08,000 PBT - 11,81,59,000 Add: Depreciation - 2,48,08,000 Cash In Flow - 14,29,67,000 Cash inflow statement for the year 2009 Particulars Amount Sales Revenue - 24,93,90,000 Less: Operating Expenses Raw Materials - 2,26,80,000 Power, Fuel and Water - 1,84,05,000 Repairs and Maintenance - 32,85,000 Staff Cost - 42,88,000 Administration - 5,40,10,000 Interest Cost - 28,28,000 Depreciation - 2,10,73,000 PBT - 12,28,21,000 Add: Depreciation - 2,10,73,000 Cash In Flow - 14,38,94,000 Cash Inflow Statement for the Year 2010 Particulars Amount Sales Revenue - 24,93,90,000 Less: Operating Expenses Raw Materials - 2,26,80,000 Power, Fuel and Water - 1,84,05,000 Repairs and Maintenance - 32,85,000 Staff Cost - 42,88,000 Administration - 5,40,10,000 Interest Cost - 16,97,000 Depreciation - 1,79,08,000 PBT - 12,71,17,000 Add: Depreciation - 1,79,08,000 Cash In Flow - 14,50,25,000 Cash Inflow Statement for the Year 2011 Particulars Amount Sales Revenue - 26,18,60,000 Less: Operating ExpensesBabasabpatilfreepptmba.com Page 55
  56. 56. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Raw Materials - 2,26,80,000 Power, Fuel and Water - 1,84,05,000 Repairs and Maintenance - 32,85,000 Staff Cost - 42,88,000 Administration - 5,48,21,000 Interest Cost - 5,66,000 Depreciation - 1,52,25,000 PBT - 14,25,90,000 Add: Depreciation - 1,52,25,000 Cash In Flow - 15,78,15,000 CHART SHOWING ESTIMATED ANNUAL CASH FLOWS 180000000 160000000 140000000 120000000 CASH FLOWS IN RS 100000000 YEAR 80000000 CASH INFLOWS 60000000 40000000 20000000 0 2007 2008 2009 2010 2011 YEARBabasabpatilfreepptmba.com Page 56
  57. 57. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”c. Calculation of Net Present Value. The reorganization of the time value of money and risk is extremely vital infinancial decision-making. If the timing and risk of cash flows is not considered thefirm may make decisions that may allow it to miss its objectives of maximizing theowner’s welfare. The welfare of owners would be maximize when wealth or NPV iscreated from making financial decisions.Time Preference for money: Time Preference for money is an individual’s preference for possession of agiven amount of money now, rather than the same amount at some future time. Mostindividuals value the opportunity to receive money now higher than waiting for one ormore periods to receive the same amount. Three reasons to the individuals time preference for money – I. Risk – As an individual it is not certain about future cash receipts he/she prefers receiving cash now. II. Preference for Consumption – Preference for consumption over future consumption of goods and services either because of urgency of their present wants or because of the risk of not been in a position to enjoy future consumption.Babasabpatilfreepptmba.com Page 57
  58. 58. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” III. Investment Opportunities – Most individuals prefer present cash to future cash because of available investment opportunities to which they can put present cash to earn additional cash.Required Rate of Return : The time preference for money is generally expressed by an interest rate. Thisrate will be positive in the absence of any risk. It may be therefore called the risk freerate. The required rate of return may also be called the opportunity cost of capital ofcomparable risk.Present Value: Present Value of a future cash flow (inflow or outflow) is the amount ofcurrent cash that is of equivalent value to the decision maker. Discounting is theprocess of determining present value of a series of future cash flows.Net Present Value: Net present value of a financial decision is the difference between the presentvalue of cash inflows and present value of cash outflows. In the NPV method, aninvestment project is accepted if it has a positive NPV. The project NPV is calculatedby discounting its cash flow by the cost of capital. Computation of Net Present Value: Year Cash Inflow Discount Rate Present Value of @ 6% Cash Flow I. 13,05,48,000 0.943 12,31,06,000 II. 14,29,67,000 0.890 12,72,40,000 III. 14,38,94,000 0.840 12,08,70,000 IV. 14,50,25,000 0.792 11,48,59,000 V. 15,78,15,000 0.747 11,78,87,000 60,39,62,000Babasabpatilfreepptmba.com Page 58
  59. 59. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Present Value of Cash Flow = 60,39,62,000 Less: Investment = 22,70,00,000 Net Present Value 37,69,62,000 d. Payback Period This is traditional method of evaluating the investment project. It is alsoknown as Pay Off method of Capital Budgeting. Under this method, time required torecover the original cost of investment through the income, it generates is found out tomeasure the suitability of project. In other words, pay back period implies, thenumber of years required for capital expenditure to pay for itself. An investmentproject the cost of which can be recovered within a shortest period of time can beadjudged to be an ideal investment project. In order to determine the pay back period,the net income generated by investment project without depreciation is considered.Net income after charging tax but before depreciation is determined in order to knowthe actual cash generated by a project. Pay back period represents length of timerequired to recover the original cost of investment through the cash flows generatedby it. If the cash flow is constant for all the years the pay back period can beascertained with the help of following formula. Cost of Investment Pay Back Period = Net Cash Benefits after Tax The cash inflow of this project is uneven. So the pay back period is calculatedin the following manner.Babasabpatilfreepptmba.com Page 59
  60. 60. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Computation of Pay Back Period Cash Inflow Cash Outflow / Investment 13,05,48,000 22,70,00,000 14,29,67,000 9,64,52,000 14,38,94,000 14,50,25,000 15,78,15,000 Pay Back Period = 1 Year 8 MonthFor Rs. 14,29,67,000 = 12 MonthsFor Rs. 9,64,52,000 = ? = 9,64,52,000 * 12 Months 14,29,67,000 = 8 Monthse. Internal Rate of Return: This is one of the discounted cash flow methods of evaluating investmentprojects. It is also known as yield method, marginal efficiency of capital method,time adjusted rate of return method etc. This method gives time value to money byapplying appropriate discount rate to the future cash flows. Internal rate of returnmethod attempts to find out present value of streams of net cash inflows resultingfrom an investment project to equate with the present value of cash outflows. An appropriate discount rate cannot be found out at stretch. Internal rate ofreturn is nothing but the rate of earning of an investment project. It is the discountingrate which equates present value of total net cash inflows resulting from aninvestment proposal with the present value of total cash outflows. If the internal rateof return is higher than the cut off rate the investment project may be accepted,otherwise rejected. In case of single investment project, if the internal rate of return isgreater than the cut off rate, the project will be accepted and if it is less than the cutoff rate is rejected. Excess NPV Over Cost Difference BetweenBabasabpatilfreepptmba.com Page 60
  61. 61. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”IRR = Lower Rate + of Investment * Lower Rate and Difference Between NPV Higher Rate Calculate at Higher Rate & Lower Rate Computation of IRR Computation of IRR Discount Rate @ 6% Year Cash Inflow Discount Rate Present Value of @ 6% Cash Flow I. 13,05,48,000 0.943 12,31,06,000 II. 14,29,67,000 0.890 12,72,40,000 III. 14,38,94,000 0.840 12,08,70,000 IV. 14,50,25,000 0.792 11,48,59,000 V. 15,78,15,000 0.747 11,78,87,000 60,39,62,000 Computation of IRR Discount Rate @ 40% Year Cash Inflow Discount Rate Present Value of @ 40% Cash Flow I. 13,05,48,000 0.714 9,32,11,000 II. 14,29,67,000 1.224 17,49,91,000 III. 14,38,94,000 1.589 22,86,47,000 IV. 14,50,25,000 1.849 26,81,51,000 V. 15,78,15,000 2.035 32,11,53,000 1,08,61,53,000 Computation Of IRR Discount Rate @ 50% Year Cash Inflow Discount Rate Present Value of @ 50% Cash Flow I. 13,05,48,000 0.667 8,70,75,516 II. 14,29,67,000 0.444 6,34,77,348 III. 14,38,94,000 0.296 4,25,92,624 IV. 14,50,25,000 0.198 2,87,14,950 V. 15,78,15,000 0.133 2,08,31,580Babasabpatilfreepptmba.com Page 61
  62. 62. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” 24,26,92,018 Computation of IRR Discount Rate @ 60% Year Cash Inflow Discount Rate Present Value of @ 60% Cash Flow I. 13,05,48,000 0.625 8,15,92,500 II. 14,29,67,000 0.391 5,59,00,097 III. 14,38,94,000 0.244 3,51,10,136 IV. 14,50,25,000 0.153 2,21,88,825 V. 15,78,15,000 0.095 1,49,92,425 20,97,83,983Investment = 22,70,00,000Higher NPV Over Investment = 24,26,92,018Lower NPV Over Investment = 20,97,83,983 Excess NPV Over Cost Difference BetweenIRR = Lower Rate + of Investment * Lower Rate and Difference Between NPV Higher Rate Calculate at Higher Rate & Lower RateIRR = 50% + 1,56,92,018 * ( 60 – 50 ) 3,29,08,035 = 50 + 4.76 = 54.76 %Babasabpatilfreepptmba.com Page 62
  63. 63. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Chapter VIII SWOT ANALYSISBabasabpatilfreepptmba.com Page 63
  64. 64. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” SWOT AnalysisStrength: 1. Assured Market: The Market is assured for final Product. Verwaltung GMBH, Germany will take the final product. 2. Unique Project: The production of sugar cubes in the shape of ship will be introduced first time in the market. 3. Availability of Raw Material: Sugar is the raw material for the production of fragies, which is easily available from the existing sugar factory. The plant will even not face the shortage of power and water, as it is available from the existing main plant.Weakness: 1. Employee Requirement: The employees required should be highly skilled and trained. 2. Maintenance & Repair: For the maintenance and repair of the machinery the company has to depend on the contracted company.Threats: 1. Fluctuation: Fluctuation in the foreign currency is the only threat.Babasabpatilfreepptmba.com Page 64
  65. 65. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Opportunity: 1. International Market: It is the good opportunity to enter in the International Market. 2. To Nation: It helps nation to earn foreign currency. Chapter IX FINDINGSBabasabpatilfreepptmba.com Page 65
  66. 66. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” FindingsProfit & Loss Account: From the estimated profit and loss account it is estimated that the cost ofproduction will gradually go on decreasing. The production is almost constant. Theprofit will also go on increasing gradually.Financing Method: The project is financed through debt and promoters contribution in the ratio of1.6 : 1. The accepted debt equity ratio is 2 : 1. As the ratio of debt is 1.6 the capitalstructure is in good position. The unit in case of need of cash can still borrow thedebt.Cost of Capital: The capital structure for this project consists of debt and promoterscontribution. The project has three options of financing. Option-I. 100% Borrowings. If the project is 100% financed throughborrowings the cost of capital would be between 8% to 9%.Babasabpatilfreepptmba.com Page 66
  67. 67. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Option-II 100% Equity. If the project is 100% financed through equity thecost of capital would be 8%. Option-III. The project is actually financed through borrowings and promoterscontribution. As we have seen in the earlier computation, the overall cost of capital is5.80% i.e. 6%. Hence, the cost of capital of the project is less.Net Present Value: Net Present Value of this project is 37,69,62,000. As per the acceptance rulepositive NPV is accepted. As the NPV of this project is positive, we can say that theproject can be accepted.Pay Back Period: An investment project the cost of which can be recovered within a shortestperiod of time can be adjudged to be an ideal investment project. As per thecalculation the pay back period of this project is very short i.e. just 1 year 8 months,which is very profitable.Internal Rate of Return: If the internal rate of return is higher than the cut off rate the investmentproject may be accepted, otherwise rejected. In case of single investment project, ifthe internal rate of return is greater than the cut off rate, the project will be accepted.The cut off rate of this project is 6% and IRR is 54%. Hence this project is veryprofitable to the company. Overall we can say that the project will turn to be very profitable to thecompany.Babasabpatilfreepptmba.com Page 67
  68. 68. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Babasabpatilfreepptmba.com Page 68
  69. 69. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]” Chapter X BIBLIOGRAPHY BIBLIOGRAPHY1. FINANCIAL MANAGEMENT BY I M PANDEY2. FINANCIAL MANAGEMENT BY KHAN AND JAIN3. FINANCIAL MANAGEMENT BY A D BHAT4. COMPANY WEBSITE5. MAGAZINES6. ANNUAL REPORTSBabasabpatilfreepptmba.com Page 69
  70. 70. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Babasabpatilfreepptmba.com Page 70
  71. 71. FINANCIAL APPRIASAL IN DIVERSIFICATION PROJECT AT THE UGAR SUGAR WORKS LIMITED, UGAR [ATHANI]”Babasabpatilfreepptmba.com Page 71

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