paidi.aswani project

8/12/2019 Paidi.aswani Project

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CONTENTS

CHAPTER-1 Introduction

CHAPTER-2 Research MethodologyCHAPTER- Industry !ro"leCHAPTER-#

Company profle

CHAPTER-$ Theoretical %ra&e 'or(CHAPTER-)

Analysis and inter!retationCHAPTER-* %indings and suggestions

APPEN+I, i.liogra!hy


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INVENTORY MANAGEMENT

INTRODUCTIONMaterials management is a 'womb to tomb' concept, is so all

encompassing a multi-role in its functional activities that it would be less

difficult to describe it than to define it.

"Materials management is that coordinated function responsible to

plan for, acquire store, move and control materials (including final

products), to optimize usage of facilities, personnel, capital funds and to

provide service to the user in line with the organizational aims". "he

!lanning, rganizing, #taffing, $irecting and controlling the management of

the '%esource' called 'Materials', as distinct from other well understood

resources li&e Mone and Men". he Materials management includes the

primar responsibilities which are generall found in the purchasing

department, plus all other maor procurement responsibilities, including

inventor management, traffic, receiving, warehousing, surplus and salvage. he term nventor means a descriptive list of articles. t refers to

the #toc&s of the product of a firm are offering for sale and the components

that ma&e up the !roduct. he significant part of current assets of large

maorit of companies is inventories. n financial parlance inventor is

defined as the sum of the values of raw materials, fuels, spare !arts semi

processed materials and finished goods at stores. he definition of inventoris *stoc& f goods that is held for future use+.

Concept of Inventory Management:

he dictionar meaning of "nventor" is a detailed list-stoc& of goods

in this". practical definition from the material management angle would be


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"tems of stores or materials &ept in stoc& to meet future demands of

production, repairs, maintenance, construction etc". #ince the materials held

in the inventor are idle resource, another definition of inventor would be

"an idle resource of an &ind which has an economic value".TYPES O INVENTORIES:

!n!"#e$ goo$":

hese are the goods which are either being purchased b the firm or

are being produced or processed in the firm. hese are ust read for sale to

customers. nventories of finished goods arise because of the time involved

in production process and the need to meet customers demand promptl. fthe firms do not maintain a sufficient finished goods inventor, the run the

ris& of losing sales, as the customers who are unwilling to wait ma turn to

competitors.

%or&'!n'progre"":

t refers to the raw materials engaged in various purchase of

production schedule. he degree of completion ma be varing for differentunits. #ome units might have been ust introduced while some others ma

be /01compleete or others ma be 201complete.he wor&-in-progress

refers to partiall produced goods.

Ra( mater!a)":

he raw materials include the materials which are used in the

production process and ever manufacturing firm has to carr certain stoc&

of raw materials in stores. hese units of raw materials are regularl issued

transferred to production department nventories of raw materials are held to

ensure that the production process in not interrupted b a shortage of these

materials.


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S!gn!f!cance of Inventory:

he definition of nventor from the material management angle

would be *tems of stores or materials &ept in stoc& to meet future demands

of production, repairs, maintenance, construction, etc".n an manufacturing operation, on an average 30 to 401 e5penditure

is on materials alone. lso nventor represents about 601 of the compan's

assets. hese are one of the most active elements of a business organization.

7ence with the high volume and value of inventor items, the inevitabilit

of nventor requires the most effective control over these with information

about the nventor on hand, the nventor on transit and the inventor onorder from the vendor and the status of sales histor report.

ne maor factor having an important bearing on the inventor is the

nventor carring cost, which is made up of, the interest on the mone

invested on the materials in stoc& warehousing cost including rentals, ta5es,

insurance, labor cost, overheads li&e electricit, water and maintenance cost

of material handling equipment.

.


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899$ :% 79 #;$apital invented in the

materials.

n efficient inventor management can help to achieve better

utilization of this nvestment with considerable degree of success. !roviding

all the required raw materials, consumable stores, components etc., to themanufacturing units at the right time and place, at the lowest possible cost

and adopting inventor control measures, using good material handling

practices are the principle obectives of stores management.

he efficient with whom the nventor is managed will invariable

determine the efficienc of the production and levels of profits of the

enterprises. 7ence *nventor management+ has attained significant status in

the present da business and industrial management.

he increasing specialization in industr, widening range of

technical equipments, fast development in science and technological field

here forced the inventor management also to innovate and improve its

performance and contribute to efficienc and econom in production.


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SCOPE O T*E STUDY

?. nventor management is one of the &e areas in finance. t plas

main and important role in the organization.

6. he stud concentrates on the methods and techniques are followed b isfor its management.

@. he present stud also concentrates on the importance of inventor

management.


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O+,ECTIVES O T*E STUDY

o stud the pattern of organization management and inventor

factors of).

o analzes the inventor classification and its management and

control.

o stud the relevant costs, cost saving measures and find out

drawbac&s.

o stud the general concept of inventor management.

o e5amine the methods and techniques of inventor control in.


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-IMITATIONS O T*E STUDY

?. #ome information is highl confidential so it is ver difficult to get thedata from the organization.

6. he result realized are applicable to this firm onl the maor constraints

on this endeavor. =here the polic of time and information, the scope of the

wor& is confined to the inventor management rather than material

management as a whole.

@. he management of time for proect completion is also a factor that limits

e5tensive stud of the nature of proection process and its implications on

inventor aspects


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RESEARC* MET*ODO-OGY

Co))ect!on of $ata:

he methodolog in this content involves the process of collection

of data from primar and secondar sources and interpreting the same b

using the analtical tools and techniques utilizing the consequent finding to

put forward liable and insightful suggestions to the compan.

Pr!mary Data:

large part of primar data was collected in the course of m

interaction with the personnel concerned departments and also developed in

consultation with costing manager, material manager and officers. he data

collected was regarding various aspects of inventor management li&e lead-

time, ordering cost, carring cost and wor&ing of online computerized stores

sstem.

Secon$ary Data:

?. he secondar source of data is the # manual of materialdepartment, 6. >ompans annual reports, audit reports, balance sheet

and other compan records ournals.

CONTRI+UTION O T*E STUDY

?. #tud is primaril for the researcher for gaining practical

&nowledge of the concept of nventor management. 6. :or the organization nventor management is an on going

process and this stud will help them to identif an aspects that are not

generall covered b them.

@. :or the creditors the inventor turn over is ver important for


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getting their mone in time!%:A9 : 8$;#%8

*!"tory an$ Deve)opment of S.gar In$."try !n In$!a ndia has been as the original home of sugarcane and sugar. ndians &new theart of ma&ing sugar since the fourth centur. 7owever the advent of modern sugarindustr in ndia dates bac& to mid ?2@0s when a few vacuum pan units wereestablished in the tropical belts of ;ttar !radesh and Bihar. he #ugar industr is predominantl localized in ;ttar !radesh, particularlin the districts of Meerut, #aharanpur, Binour, Bareill, Muzaffarnagar, Moradabad,Bihar and in the eastern coastal districts of ndhra !radesh. f we refer to the historicalevents in the #phere of #ugar ndustr, ;ttar !radesh and Bihar occupied thepredominant position as far as the location pattern of the industr is concerned and stillthese #tates are enoing the same position. he reasons for such heav concentration in

the #tates of ;tter !radesh and Bihar are manifold. he unique position which ;tter!radesh enos in respect of cane cultivation is due to the advantages conferred b therich and fertile alluvial soil of the Cangetic plain, the bul& of which contains adequatequantities of lime and potash, the presence of thin varieties of cane admirabl suited tothe climate conditions of the region and the e5istence of cheap and e5tensive irrigationfacilities. he concentration of sugarcane crop in compact bloc&s enables the sugarfactories to get supplies of sugarcane direct from the fields. Moreover, the cost of thecane cultivation is less and the cultivators are not accustomed to raise alternative cropsli&e groundnuts, chilies, plantains, etc.

n recent ears the sugar industr spreading to other parts of ndia, notabl in the

southern states on Maharastra, Darnata&a, ndhra !radesh and so on. #ince sugar mills

got to be near the sugar fields, #ugar mills are getting established near places where

#ugarcane can be and is grown. lso, the consumption of sugar is widespread and sugar

is demanded practicall in all areas. nd, therefore there is in recent ears tendenc in

the case of sugar industr towards its dispersal in different parts of the countr.

ndia is the largest consumer and second largest producer of sugar in the world. he

sufficient and well distributed monsoon rains, rapid population growth and substantial

increases in sugar production capacit have combined to ma&e ndia the largest

consumer and second largest producer of sugar in the world.


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he ndian #ugar industr has not onl achieved the singular distinction of being one of

the largest producer of white plantation crstal sugar in the world but has also turneout

to be a massive enterprise of gigantic dimensions. =ith over /30 sugar factories located

throughout the countr, the sugar industr is amongst the largest agro processing

industries, with an annual turnover of %s?30bn. t plas a maor role in rural

development and its importance for ndia stretches far beond the role of a sweetener

supplier.

#ince the beginning of planning era, sugar industr operated under a polic of partial

control in ?230-3? and ?23?-36, followed b a continuous period of si5 ears of

decontrol between ?236-3@ and ?23E-3F. his polic was followed under the pragmatic

leadership of the Mi ister of :ood, #ri %afi hmed Didwai. 7owever, with his

departure,theperceptionofdecontrolwaslost.fter altering between control and the Covernment adopted the polic of partial

decontrol in ?24E-4F, which has since been the mainsta of Covernment polic e5cept

for two short periods of decontrol in the ?2E0s. ;nder this polic, the Covernment

procures /01 of production at controlled prices based on the #tatutor Minimum price

for sugarcane, for suppl through the !ublic $istribution #stem and the balance 40 1

is allowed to be sold b the mills in free mar&et subect to the monthl release

mechanism. he details of past Covernment policies for sugar industr are provided in

anne5ure ?.he lev quota for sugar mills has been brought down from the pea& levels

of E01 in ?24F-42 to the present levels of /01 as a gradual process of deregulation of

sugar industr.

he number of operating sugar mills in the countr has increased from 62 in sugar ear

(#


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>98#;# : #;C% MAA# 8$ >%;#78C

>H< 8 8$

#ugar ear

(oct-sept)

8umber of operating

#ugar mills

verage capacit ton>rushed per da

?2@0-@? 62 4//

?2/0-/? ?/F E30

?230-3? ?@2 FF6

?240-4? ?E/ ??E6

?2E0-E? 6?3 ?@2/

?2F0-F? @?3 ?E?F

?220-2? @F3 60FF

?224-2E /?6 6434

6000-0? /6@ @000

600@-0/ /3@ @600

S!gn!f!cance of S.gar !n$."try

Sugarcane and sugar beet are two main sources of white crstal sugar in the world. ut

of the worlds total white crstal sugar production about E01 comes from sugarcane and

@01 from sugar beet. More than ?00 countries in the world cultivate sugarcane while @3

countries produce sugar from sugar beet. bout ?6 countries produce sugar both from

sugarcane and sugar beet. =orldwide sugarcane occupies an area of 60.? million

hectares with a total production of ?@?F.? million tones and productivit of 43.3 tons perhectare. sia has the highest area (2.0F million hectares) and contributes /61 towards

worlds sugarcane production.

he main B-products of sugar industries are

Molasses


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Bagasse

:ilter ca&e

?. Molasses is used to produce chemicals, spirit and alcohol.

6. Bagasse is the raw material for manufacturing paper.

@ :ilter is used for manure.

#ugar is not onl for domestic purpose but also it is used as semi industrial goods for the

manufacturing of foodstuff. #o sugar industr has direct or indirect effect on other

industries. he different tpes of significances of #ugar industr are

Sugar industry Multi-product complexes :

here are /3@ sugar mills in operation in the countr. few more are in the

pipeline. he e5isting mills have to diversif into *sugar-ethanol cum-electricit+

generation comple5es. round ?000 such comple5es will have to be established to

process @E30 million tones of cane into value added products, with an investment of

%s.?, @6,430 crores.

=ith @E30 million tones of sugarcane, the countr can produce ?4 million tones of

sugar, ?0 million tones of aggerIgur, 6/4.?3 billion liters of ethanol and 62F.@3 billion

D=7 of surplus electricit after providing for captive consumption. he domestic

mar&et can absorb the production of ?4 million tones of aggerIgur.Prof!)e of In$!an S.gar In$."try

8umber of factories /3@

>ane price per ton %s.230

nnual pament for cane 30 million

8o. of cane farmers 30 million#ugar production 66 million tones(raw value)

Halue of sugar output %s.6E,000 crores per annum

nnual ta5 contribution e5chequer %s.6,E00 crores


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9mploment including ancillaractivities

6 million people

:uel 9thanol of 31 blend(value) %s.400 crores per annum

>urrent e5port of con-generatedpower(value) %s.E30 crores per annum

he production of 6/4.?3 billion liters of ethanol can successfull replace ?/E.42 billion

liters of petrolIdiesel valued at %s./, 26,@00 crores. =ith conunctive utilization of @@

million tons of domestic production of petroleum products with 6/4.?3 billion liters of

ethanol the countr can manage without an import of petroleum products. he

production of 6/4.?3 billion liters of ethanol for utilization as fuel for automobiles has to

be treated as deemed e5ports. his will control the emission of carbon mono5ide, nitrico5ide and other particulars to the atmosphere under permissible limits and protect the

people from serious health disorders in the urban centers.

Sugar Industry-Employment generation:

dditional sustainable emploment for around E4 million persons will be generated in

the agricultural sector to redeem over @00 million people suffering under the clutches of

povert. he additional inflow of %s.@, ?0,000 crores in to the rural sector as sugarcane

prices and wages for agricultural labor will dramaticall recharge the springs of theeconom. he agricultural residue generated from the crops can be processed and

converted into valuable feed for over ?30 million mulch animals to generate additional

revenue of %s.@,00,000 crores annuall.

he sugarcane sector can thus additionall generate products and services worth %s.F,

F?,F03 crores. he countr can manage the demand for automobile fuel with conunctive

use of ethanol with the domestic availabilit of petroleum products. he countr can

generate sustained emploment and save around 60,000 dollars per annum on the import

bill. 9thanol production can be stepped up to over @00 billion liters to meet further

increases in demand for fuel for automobiles. he countr can thus comfortabl manage

an increase in demand for fuel for automobiles and emerge with comfortable trade


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surpluses.

Role of sugar industry in the generation of electricity:

he countr has to step up generation of electricit b over ?, 00,000 M= to

meet the ever increasing demand. he additional generation of electricit, namel,

62F.@3 billion D=7 valued at %s.F2, 303 crores has a read mar&et and will provide a

powerful thrust to generate additional products and services worth %s.6E,36,6EF crores

in other sectors of the econom.

Progre"" of ".gar !n$."try .n$er f!ve year p)an":

he planning commission estimated the requirements of white sugar in the

countr b ?233-34 at ?.3 million tons per annum. he rated capacit of the industr in

?230-3? of ?.3/ million tons of sugar per annum was considered sufficient to meet the

demand, provided the measures were ta&en to utilize the idle capacit b shifting the

unfavorabl located factories to more suitable sites to e5pand un-economic units and to

increase the suppl of the sugarcane to factories so as to raise the average number of

wor&ing das from ?00 to ?60. t was visualized that no new factor needs be

established during the period of the plan for meeting the estimated requirements

n pril ?234 were ?/E sugar factories registered under the ndustries

ct, ?23?, with an annual capacit of about ?.42 million tons of sugar. n addition therewere ?@ factories, which were ling idle for the last several ears. heir capacit was

about 3?, 000 tons per annum. hus there were ?40 sugar factories with an annual

capacit of about ?.E/ million tons. f these, ?/@ with a rated capacit of about ?.4F

million tons of sugar per annum wor&ed during the ?233-34 season.

n the recommendations of the $evelopment >ouncil for sugar industr, the planning

>ommission fi5ed the targets of capacit and production to be achieved b ?240-4? at6.30 million tons and 6.63 million tons of sugar respectivel. he later figure was lin&ed

with estimated domestic requirements of sugar in the final ear of the plan.

t was not possible to attain the capacit target of 6.30 million tons envisaged in the

second plan mainl due to the acute shortage of foreign e5change which made it

necessar to curtail imports of sugar mill machiner and to &eep the e5pansion of the


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industr in abeance till the manufacture of sugar mill machiner was underta&en in the

countr.

n the sugar industr, the stage of self-sustained growth was reached b the end of the

second plan period. he third envisaged e5pansion of sugarcane output of ?00 million

tons, mainl through an improvement in sugarcane ield per acre of land. fter ma&ing

an allowance for diversion of sugarcane for igger manufacture and other miscellaneous

use, about @3 million tons of sugarcane was e5pected to be available for sugar

production. o cope with crushing of these supplies, e5pansion of capacit to @.3 million

tons per ear was proected under the third plan. hrough out of the plan period the

production of sugar in the countr was e5pected to meet the internal demand in full and

the surplus was e5pected to be e5ported. t the close of the plan the production of

sugarcane stood at ??2.4 million tons and sugar production increased to @3.4 la&h tons.he number of factories at the end of the third plan was 600.

he production programme for the sugar industr envisaged an

output level of /E la&h tons to be achieved b ?2E@-E/, partl through the establishment

of new units primaril in the co-operative sector. here was a bumper sugar production

of /6.30 la&h tons during the ear ?242-E0, against the previous seasons production of

@3.30 la&h tons. ncluding the carr-over from the ?24F-42 season, the total available

quantit was 33.3/ la&h tons. he total off-ta&e, including 6.3 la&h tons earmar&ed for

e5ports, was @3.30 la&h tons. his left a carr-over stoc& of about 60 la&h tons. But

sugar production fell in ?2E0-E? and ?2E?-E6 to @E./ and @?.? la&h tons respectivel.

=ith the raise in open mar&et price of sugar, its production in ?2E6-E@ again short up

and stood at @F.F la&h tons. n the final ear of the fourth plan (?2E@-E/), sugar

production further rose to @2.3 la&h tons.

!lan nnual sugar production in

million tons

:irst 6.0@

#econd 6.3@

hird @.34


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:ourth /.E0

:ifth 3.E0

#i5th 4.60

#eventh F.6E9ighth ?/.F

8inth ?2.?

enth 6?.@

he fifth plan proposed to set up sugar production from @./0 million tons at the end of

the fourth plan to 3.E million tons b the end of the fifth plan. dditional capacit was to

be encouraged primaril in the co-operative sector, emphasis being laid on integrated

and large plans to secure the advantages of economies of scale. his was to facilitate

economic utilization of b-products of the industr leading to an overall improvement in

its performance. #ignificant advance was also e5pected to be made in the diversification

of raw material base with the production of beet sugar, programs for the cultivation of

sugar beet formed a part of the agricultural development plan.

#ugar production in ?2F0-F? stood at 3,?/F thousand tons. here were @0E sugar

factories with the installed capacit of 4 million tons.

$uring the si5th plan period, mainl due to ear-to-ear fluctuations of sugarcaneproduction, sugar industr underwent severe stress and strain. #ugar production

fluctuated from 3? la&h tons to F/ la&h tons during the si5th plan period.

he seventh plan target is to increase sugarcane production from ?F0 million tons in

?2F/-F3 to 6?E tons in ?2F2-20. he capacit and production targets for sugar

production at the end of the seventh plan period are proected at ?0.E million tons and

?0.6 million tons respectivel.

utput obectives have generall been met, though at the end of the 9ighth plan in ?224-

2E actual production is estimated to have fallen short of the target of ?/.F million tons of

plantation white sugar due to short-term crop fluctuations. he end of the 8inth :ive-

ear plan in 600?-06 has set the target for output set at ?2.? million tons.


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$uring the ?0thplan period, the annual incremental growth in consumption has been

at 2 la&h tons per annum. :or the first time the ndian Covernment has fi5ed a target of

?3 la&h tons per annum for e5port in this period. 7owever, production target was fi5ed

at 6?.@ million tons &eeping in view, the large carr forward stoc&s at the beginning of

the period and to correct the demand-suppl distortions presentl caused. hese targets

are achievable loo&ing at the performance of the industr in the past with a production

of ?F.3 million tons achieved in 6000-0?.

he tenth plan targets an annual C$! growth rate of F percent. =hile the target

loo&s ambitious, growth rate of 4-4.3 percent is achievable. s sugar consumption is

income-driven, the enth plan period should prove positive for the sugar sector.

!roblems of #ugar ndustrJ

n view of fairl strict Covernment control on sugar and its bproducts, the industr

faces some problems while receiving a certain amount of protection from the

Covernment. he factor has to ma&e available a fairl large share of its product at a

controlled rate for mar&eting through Covernment channels (lev sugar). t can sell a

specific quantit in the free mar&et when the Covernment announces the release quota,

which limits the profitabilit of the factor.

#ometimes there is compulsion for e5port the international mar&et price is lower than

the local mar&et price. he price of molasses is fi5ed b the Covernment at a ver lowlevel (%s.40Iton) thus reducing the income of the industr.

he average production of sugar and recover of sugar is fairl low in man

states and is detrimental to the industr as a whole. n man #tates recover is between F

to 2 percent as against about ?? percent in Maharashtra. n man #tates sugarcane

production is ver low, i.e. around /0 tons per hectare or more in some states li&e

Maharashtra, ndhra !radesh etc.

Hariation in rainfall has a tremendous effect on this industr li&e an other agro industr.

7owever the maor factor affecting the profitabilit of the sugar industr is the

increasing cost of inputs coupled with limitations regarding the sale of products

described above. he cost of labor, irrigation, transport, seed material and chemicals has


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gone up considerabl during the last few ears. 7ence the farmers have to consider

ma5imizing the use of land b integrating sugarcane production with other operations.

Pro/)em" of S.gar !n$."try !n In$!a are a" fo))o("J

SIC0 UNITS:

ne of the maor problems of the industr is the e5istence of a large no. of sic& units.

he are unable to run at brea&-even units. he reason attributed to this use of outdated

machines resulting in-efficienc and high cost structure. n 8orthern ndia this problem

is particularl accurate a distressing.

Harious reasons, which cause a unit to sic&-lower recover, are factor

equipment, duties and disagreement between partners of people in the management. he

worsening industrial relations prevail which in their turn lead to stoppage of wor&. Brea&

down of transport facilities to carr cane from the fields to the factor at the proper timeand disputes between cane growers and sugar producers results in uncertaint in the

suppl of raw materials.

REGU-AR MEASURES:

n the food front, sugar industr has attracted much public attention than an other

industr over the ears because it is an agro based industr and an essential item of mass

consumption. #o, naturall all section of people i.e., legislations, politicians, &isen

leaders, labor leaders and public at large in intervene to e5tent pressures and pulls often

in different directions. #ugar has been put to most rigid control to which no other

industr has been subected.

PAYMENT O *IG*ER PRICES O CANE:

he sugar mills have to pa much higher price for the purchase of cane than

what is statutor fi5ed for instance, in ?2E/-E3 crushing season, sugar mills in central

and western up had paid of %s ?/30 per quintal of cane, those in east ;.!. and Bihar had

to pa %s ?@30 per quintal as against the notified statutor cane price %s F30 per quintal.

DENIA- O AIR RETURN:

stud of finances of EE sugar factories for the period of ?243-44 to ?2E0-E? made b

%eserve Ban& of ndia points out declining trend in profitabilit of these companies.

heir sales that showed arise of ?@.@1 in ?244-4E rose onl b F.31 and 0./1 during


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?240-E0 and ?2E0-E? respectivel. But the rates are divided and maintained. n recent

ears a fair rate of investment has been denied to sugar industr.

*IG* E1CISE AND OT*ER DUTIES:

Basic consist had shot up due to the various statutor provisions li&e theimplementation of the second wage board. ward rate of depreciation under the income

ta5 rules increased can fright charges etc., the local levies in certain states have gone up.

n 7arana, for instance, cane less had been double in co-operative sectors. !ac&ing

charges and price of consumable stores also substantiall.

GOVERNMENT CONTRO-S:

Covernment control over all aspects of the production and sale of sugar e5tends to the

level of wholesalers in the distribution chain. ll sugar wholesalers need to obtain a

license issued b the government notifications for the amount of inventories the can

maintain.

2 3Covernment of ndia regulates K controls the rates of sugarcane supplied to the

mills b farmers. he #tatutor Minimum !rice (#M!) announced b C ear is used

as a benchmar& b the #tate Covernments to fi5 their #tate dvised !rice (#!). he

#! could be a recover lin&ed average or ust a flat rate. Covernment enforces a dual

pricing polic for the sugar industr. !resentl /0 1 of the production is sold at a fi5edprice to the government, which is used for !$# and other mar&et operations.

6.he government controls suppl of sugar in the open mar&et through monthl

sugar release notifications based on mar&et conditions and thus influencing the open

mar&et prices to a great e5tent.

43#ugar e5ports were governed b the #ugar 95port !romotion ct,?23F, which

stipulates that the Covernment can use 60 percent of the countrs total production for

sale abroad he Covernment de-canalized e5ports in ?22E allowing private parties to

e5port sugar. he government has also put sugar imports on pen Ceneral Aicense

(CA) allowing private parties to import sugar.

/. he C charges a higher e5cise dut on free sale sugar in comparison to lev

quota, so as to recover the subsid provided for !$# suppl. n addition, under the #ugar


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>ess ct ?2F6, a cess is charged to sugar sold in the domestic mar&et, which directl

goes to #ugar $evelopment :und (#$:).

3. >urrentl the government levies an e5cise dut of %s.@F0 per ton on lev sugar

and %s.E?0 per ton on free sale sugar. n addition %s.?/0 per ton is levied as cess

for domestic sale of sugar.

4. he center has recentl handed over powder to the state governments to control

movement of molasses. he state governments used to control pricing of

molasses and bagasse. n last few ears, these controls are dispended with the

molasses based alcohol however continues to be under the licensing provisions.

GRO%T* O SUGAR INDUSTRY IN AND*RA PRADES*:

#ugar industr is mostl located in the regions, which are fertile and suitable for

growing sugar. ndhra !radesh is one among fertile regions of ndia and has been a

sugarcane cultivating state for long time.

#ugar industr continuous to pla an important role in econom of the ndhra

!radesh state, as sugarcane is one of the important commercial corps. he installed

capacit of @6 sugar factories is 3/000 in ?F co-operative mills. ?0E00 .>.$. in public

sector units and 60630 .>.$. in E private mills. here are ?/0 &handasari mills in the

state.

$uring the season of ?2FE to ?2FF, the sugar factories in the state crushed 34 la&h tons

of sugarcane with an average recover of 2./@1. he factories produced about 3.6F la&h

tons of sugar. he co-operative sugar mills, alone, crushed 63.0E la&h tons of sugarcane

and produced 6.66 la&h tons of sugar. n the public section 8izam sugar factor and the

private sector mills account of to the remaining crushing and production. he 4E

Dhandasari units crushed F.6@ la&h tons of sugarcane in ?2FE-FF.

ndia has been divided into three areas based on the sugar recover attained b the

factories. he factories where the recover is more than ?01 are grouped into high


22/86

recover area, where the recover varies between 2 and ?01. he cane crushed b

centrifugal factories in ndhra !radesh also increased due to the increase in the

production of sugarcane. n the ear ?2E?-E6, 6/20 thousand tons was crushed in the

average crushing season of ?0/ das, this figure increased to 343E thousand tons in ?60

das.

he total average under sugarcane cultivation as E000 hectares in the ear ?230-3?

contributing about E1 of the total average under sugarcane cultivation in ndia. he

sugarcane average in ndhra !radesh reached to a pea& level in the ear ?2E/-E3. i.e.,

?2300 hectares, representing a growth rate of almost of @001 over that of ?230-3?. his

tpe of growth was not witnessed since ?2E/-E3. $uring the recent ears, this is

decreasing and this figure has come down to ?@600 hectares since ?2F3-F4 and ?3000

hectares in ?2FE-FF.he total sugar production in ndia in ?230-3? was ??.@/ la&h tons and for ndhra

!radesh it was onl 0.63 la&h tons ma&ing 0.6 1 total production. n ?2F3-F4, the total

production of sugar in ndia has gone up to E0,?40 tons and for .!., it was 2,3E3 tons.

his was increased to ?0,6F4 tons in the ear ?2FE-FF. But in the ear ?2F4-FE the

production was come down to F,F0F tons.

ndhra !radesh had been suppl state as far as sugar is consumed till ?2EE-EF during

which ear the total production was 3,4/3 tons leaving a suppl production of more than

?30 tons i.e., total production was ?22 thousand tons. his is due to lower production of

sugar with in the state because of poor suppl of cane to the factories.

ransport of cane is not easil supplied to the factories due to lac& of road

facilities. herefore, farmers are ma&ing sugar in their near fields. he cane price also is

not favorable. oo instance, the cost of sugarcane price is ris&ed due to new tpes of

measures. he price for sugarcane fi5ed b the factor is low, which is not economical

and it is the reason for the short production in ndhra !radesh.

But in sugar production, ndhra !radesh has a favorable position. %ecentl Covernment

of ndhra !radesh announced to establish 4 more factories. f the price of sugarcane is

increased and loans to farmers raised, the position will be more stable and it will be in an


23/86

increasing trend.

Based on the estimation of 41 C$! growth rate and 61 population growth rate for the

period ?22F-22 to 6000-0?, the demand for sugar is e5pected to grow at the rate of E1

for the corresponding period. his will lead to increase in demand for sugar from ?3.3

mn ton in ?22F-22 to ?E.E3 mn ton in 6000-0?. he per capita consumption of sugar is

e5pected to increase from ?3.3 &g in ?22E-2F to ?4.4 &g in ?22F-FF and ?E.E &g in 6000-

0?. :or the season ?22F-22, imports are estimated at 0.F mn ton. t is e5pected to drop

for season ?222-6000 to 0.4 mn ton and to 0./ mn ton in 6000-0?.

B estimating sugar ccle to top in season ?222-6000 b cloc&ing a growth of E1

and then witness a drop in production for the season 6000-0?, the closing stoc& will

come down to @.@ mn ton b #eptember @0 th600? from the present level of 3./ mn ton

b #eptember @0th ?22F.Co'operat!ve "ector

he central financing institutions viz., ndustrial :inance >orporation of ndia, ndustrial

development ban& of ndia, ndustrial credit nvestment >orporation of ndia and Aife

nsurance >orporation of ndia are the main agencies for the term lending to >o-

operative #ugar factories, which have been established. he provide 431 of the proect

cost in terms of financing pattern evolved b the 8ational >o-operative development

corporation.

he progress of the co-operative sector of the sugar industr during the past

two of decades can be seen from the figures. s compared to @/ co-operative sugar

factories producing onl ?E./E of the total sugar production in ?24?-4E, there were

man as ?2/ co-operative sugar factories in operation during ?2F4-FE producing 3.21

of the total output to the countr.

NATIONA- EDERATION O CO'OPERATIVE ACTORY -TD

he 8ational :ederation of >o-operative #ugar :actories Atd., completed 6E ears

of its successful wor&ing as on @0th Lune ?2FF. Ai&e earlier ears, the federation

continued wor& as per it subective.

s far as licensing is concerned though the fresh guidelines for Ethplan show that the


24/86

preference will be given to >o-operative sector, it is apprehended that, ver few factories

ma be established in the >o-operative sector due to increase in the grower share capital

and due to non availabilit of sufficient cane for the first crush of the factor with in a

radius of /0 &ms. herefore, the federation has been repeatedl pleading with

government to direct the #tate Covernment to subsidize the short fall in the growers

share capital and to change the parameters for oining on the access of recover. #o that

proper incentives can be availed b new units and e5pansion proects.

Co'operat!ve ".gar factor!e" !n An$#ra Pra$e"#:

ndhra !radesh has a pride of place in having pioneered in the organization of

co-operative sugar factories in the countr. he first co-operative sugar factor in the

#tate is 9D!!D sugar factor, started its production in ?23?-36 seasons. he

main aim of organizing industr in co-operative sector is to up-lift the riots in bac&wardareas. here are at present a number of co-operative sugar factories.

#i5 new co-operative sugar factories have completed the construction and

gone into production during the ear ?2F@-F/. riginall the factories have entered

agreement with machiner supplies in the last quarter of ?2E6 and first quarter of ?2EE.

s per the original schedule the factories were e5pected to go into crushing b ?2EF-E2.

$ue to several factors li&e non-availabilit of funds, non-processing of loan applications

b the central financing institutions and for non-availabilit of the incentives due to de-

central of sugar, the sugar factories could not compile to the construction in time.

>onsequent to this, the proect has been escalated from %s.400 la&hs to %s.200 la&hs.

hough the #tate Covernment, have underta&en the proect cost, the government could

not be in a position to fulfill commitment full due to stringent financial position.

he ndhra !radesh #tate :ederation of >o-operative sugar has the unique

distinction of having as one of its members, the 9ti&oppa&a co-operative sugar factor,

which is the first proect, set up in the countr as an e5periment in the co-operative

sector for sugar production.

he federation has been plaing effective role in the organization and proper

development of co-operative sector of the industr in the state. he contribution of co-


25/86

operative sector to the state production has been significant, being over 631.

:rom the ever start, the federation realized the importance of cane development.

:or the success of industr it has been ta&ing necessar measures for the development of

qualit cane. n the light of the financial assistance provided b the 8ational co-

operative development corporation and to ma&e more service to the factories, the

federation has engaged technical e5press in the field of sugar technolog, finance and

engineering. he federation has a programme to economic the e5penditure to the

factories underta&ing bul& purchases of important items of consumables required b

individual factories and also to &eep initialization between the factories b suppling un-

required items of one factor to another factor in need and there b reduce inventories.

t is also under advice consideration to centralize the sales activit b operating at

two or three centers for all co-operative sugar factories so that the should get thebenefit of the econom.

he federation has underta&en the field men on the factories in the development of

cane and cultivation. he federation is encouraging factories to participate in seminars

and refresher courses conducted from time to time for the benefit of managing directors,

accounts staff engineers, chemists and agricultural officers etc., of the co-operative sugar

factories. his goes a long wa in ma&ing the managerial and supervisor staff, of the

factories more equipped in respective field of activit.

;nder the direction of commissioners for sugar the technical staff, the

federation gave all necessar assistance to the nearl established factories. he

federation also assists the factories in the recruitment of technical staff, claiming

incentives to all other matters connected with the running of the factor.

he progress of the co-operative sector the sugar industr during the past two of

decades can be seen from the figures. s compared to @/ co-operative sugar factories

producing onl ?E./E percentage of the total sugar production in ?24?-E4 there were

man as ?2/ co-operative sugar factories in operation during ?2F4-FE producing 3.21

of the total output to the countr.


26/86

#;C% MAA# 8 8$7% !%$9#7 ($#%> =#9)

#.8 $#%> !%H9 #9>% !;BA> #9>% >-! #9>% A

? Hisa&hapatnam 8il 8il 3 3

6 =est Codavari @ 8il 8il @@ 9ast Codavari 6 8il 6 /

/ Drishna 6 8il 6 /

3 Hizianagaram 8il 6 ? @

4 8izamabad 8il ? ? 6

E Meda& 8il 6 8il 6

F >hittor 8il 8il 6 6

2 Cuntur 8il 8il ? ?

?0 #ri&a&ulam 8il 8il ? ?

?? 8algonda 8il ? 8il ?

?6 Dadapa 8il 8il ? ?

?@ nantapur 8il ? 8il ?

?/ 8ellore 8il ? 8il ?

?3 Darimnagar 8il 8il ? ?

?4 Durnool 8il 8il ? ?

?E Dhammam 8il 8il ? ?

?F otal E F 60 @/


27/86

PROI-E O DE-TA SUGERS -TD

*!"tor!ca) /ac&gro.n$ of De)ta S.gar" -!m!te$:

#ree 7anuman >o-operative sugars Atd., 7anuman Lunction was registered on @0-

02-?2E6 and the contribution started on ?E-??-?2E6 b the chief Minister #ri LalagamHengala %ao. #ree 7anuman >o-operative #ugars Aimited was established in 20 acres of

land. he machiner was supplied and established b the ndhra :oundr and

Machiner >ompan Atd., 7derabad. he installed capacit of the factor was

crushing per da. s on March ?22?, enrolled members in the societ are 4,@@/.

7anuman Lunction >o-operative #ugar Mills that was laid off in #eptember 600?

and revived in 8ovember 600? b $elta sugars Atd. t is one e5ample of the

implications of revival of closed #A!9s through privatization for varied sta&eholders of

enterprise reform programme in ndhra !radesh. >ontrar to the fears of a section of the

societ about the moves of privatization of sugar factories, transformation of 7anuman

Lunction >o-operative #ugar Mills into $elta #ugars Atd reveals a different realit.

!erceptions of the wor&ers, cane farmers and #ugar enterprises in the area demand

attention to appreciate the nature of implications of privatization programme.

>ross-section of the societ in the sugarcane belt of 7anuman Lunction >o-

operative #ugar Mills views privatization with hope and e5pectations for a brighter

future. 7owever, there are issues that need to be resolved to address apprehensions andconflicts of the pre privatization tangle. closer loo& at the ground realities ma&es one

believe that post privatization scenario after another crushing season is li&el to present

a different picture more in favor of the transition as b then the pending issues of pre and

post privation would be resolved meaningfull. ssues that require attention include

pament of ob severance compensation for the wor&force that is not absorbed b the

new management, capacit building of the surplus labor force, and resolution of the

pament of long standing arrears to the farmers. n #eptember 600?, the Covernment of ndhra !radesh privatizes the sugar factor

and running b the private management i.e., MIs $elta #ugars Aimited,

7anmanunction. he factor registered under >ompanies ct ?234. he present

capacit of the plant is enhanced to @000 M per da.


28/86

Cr."#!ng "ea"on:

Cenerall the season starts from 8ovember to pril of ever ear depending upon

availabilit of raw material i.e., sugarcane. he main obective of the industr is to

manufacture white crstal sugar from sugarcane through various manufacturing

processes. n addition to the main product, we obtain the b-products such as molasses,

bagasse and filter ca&e.

-ocat!on:

#ree 7anuman >o-operative #ugar Atd is located in #eri 8arasannapalem village,

Bapulapadu Mandal, Drishna $istrict, .!., beside 8ational 7igh =a 3(C8%oad)

which is about /6 &ms awa from Hiaawada and / &ms awa from 7anuman Lunction.

he 7ead ffice is on the factor site, the main railwa station is 8uzvid, which is at adistance of 4 &ms from the factor site, and the main railwa station is Hiaawada.

Aorries, bulloc& carts and tractors transport sugarcane and other materials. here are

two maor towns, Hiaawada at a distance of /6 &ms and 9luru at a distance of 6@ &ms

from the factor. :actor is connected to these two towns b railwa as well as

roadwas. he factor has nearest mar&eting facilit at Hiaawada which is one of the

biggest centers in #outh ndia. t offers a wide mar&et for sale of sugar and other b-

products.

here are three sugar factories in the immediate neighbor. he include

?.D>! limited, Huuru, which is at a distance of /0 DM#.

6.he =est Codavari >o-op sugar, Bhimadole that is at a distance of /@ DM#.

@.D>! #ugar Atd, challapalli at a distance of 43 DM#.

he main raw material of the sugar factor is sugarcane. he sugar production area of

the organization is ver vast. here are 640 villages in the area of operation of the

factor. he 640 villages are e5tended into ?4 mandals.

S!5e:

he crushing capacit of the plant is initiall ?630 tons per da. his plant is gravit

flow tpe. he white mass will flow b gravit pumps and avoided as the crstal ligers


29/86

are placed in the first floor along with the evaporator, pans in second floor. he present

capacit of the plant has e5tended to @000 M tons per da.

CANE PROCUREMENT PROGRAMME O DE-TA SUGARS -IMITED

$elta sugar factor has ?,400 cane growing members. hough it has ?,400 membersonl about ?00 are the active cane growers. $elta #ugars ltd commenced crushing

during ?2E/-E3 season. t has a new factor having the privilege to eno the benefit of

the general central government incentive scheme given to the new sugar factories. t has

to crush a minimum qualit of ?,46, 300 Ms. :or optimum point but so far it has not

crushed even ?, 00,000 Mts. t is due to mainl lac& of raw material. he area is ver

compact which is radius of about ?3 &ms from factor.

here are ?30 villages in the area of operation of the factor from where it has

enrolled the members. hese villages are e5tended into 2 mandals. he total land

holding of the members is about 4362 acres and the average holding of the members of

each members wor& out to /.F1. bout 201 of the area hold b the members is quiet

for cane cultivation. s per b law no.@@, it is obligator on the part of he member to

suppl cane 63 Ms. $uring each crushing season but due to lac& of proper irrigation

facilities, lac& of remuneration price to cane, riots are not showing such interest to grow

cane. #o to ma&e the cane cultivation economical, the compan has to provide good

seeds. Material incentives for earl maturing, high ielding and better varieties and to

ma&e cane cultivation viable to farmers. o achieve this obect, developing seed

nurseries and providing pesticides etc., to farmers is essential.

Po)!c!e" (!t# re"pect to Cane Gro(er":

>ane growers are the maor lin& in the suppl chain of sugar unit. >ane growers coe5ist

with sugar unit and vice versa. he interest of the sugar unit and the cane growers are

complementar to each other. he cost of sugarcane supplied b the cane growers

constitutes nearl F0-F31 of the total cost of producing sugar. $elta #ugars limited las

special emphasis on the cane development and welfare of farmers. >ane developmental

efforts are directed towards improvement in the quantit and qualit of sugarcane

produced.


30/86

Effort" to(ar$" 6.ant!tat!ve $eve)opment:

?. !rompt pament to farmers for sugarcane supplies.

6. :ield 9ducation b field officers on cane varieties and plantation techniques

through seminars, meetings, suppl of pamphlets and coordinating meetings with

e5perts from >ane $evelopment >ounsels and $rip rrigation companies.

@. :ree and subsidized distribution of pesticides and fertilizers.

/.95tending crop loans.

Effort" to(ar$" 6.a)!tat!ve $eve)opment:

23 peration of subsid schemes to encourage the farmers to cultivate more area.

73 !roviding seeds, fertilizers and pesticides to the farmers so that their crop is not

vulnerable to diseases etc., and improving the quantit.

43 >onducting trial demonstration on plots for different methods and varieties. >ane procurement programme starts with the surve wor& of assessment

of cane availabilities in the area of suppl no the plantation is completed. #uch

programme comprises of actual measurement of the acre age sugarcane plantation and

the date of plantation. n case of %aton, the date o harvesting has also to be recorded.

consolidated statement is prepared of this information for assessing period, the actual

cane availabilities also to arrive at possible maturing period for finalizing the harvesting.

Craphs and charts are prepared based on these dates for each section of cane suppl area

comprising the detailed information of all field and villages of the area. hese dates are

ver helpful for guidance for harvesting programme.

he factor staff will ta&e the maturing test a few months earlier from the date of actual

start of crushing. $uring the surve brides of the standing cane are observed on the spot

b hand and refract meters. he result of such surve recording the brides of the uice

are there brought to the laboratories where actual laborator tests are done for e5pected

sugar recover. #uch pre harvest maturit tests are continue till the period when thegeneral maturit in the cane salt sets in and then maturit tests ma not be necessar.

hen the harvesting as to which cane could be harvested earlier when the factor starts is

finalized.


31/86

Ear)y var!et!e":

his variet matures earlier than other varieties. he earl varieties plat will ta&e ??

months for mature and will ta&e from ?0 and half month to ?? months. #ome of the earl

varieties are

F4 H24

>o 420 E2?HF@

>o 4E? F3 64?

FE 62F F?H/F

2@ H 62E

M!$8-ate var!et!e":

MidIlate varieties ta&e more time for maturing in the >9 of %aton these ta&e at least ??

to ?? N month and in plant case the ta&e ?6 months. #ome varieties are

MidJ

EF03

E6?2

F3H??0

F20@6>o

AateJ

F2 HE/


32/86

F3 %?F4

FF ?F/

E6?2

Proc.rement Programme:

cane procurement programme start with the surve wor& of assessment of cane

availabilities in the area of suppl on the plantation is completed. #uch programme

comprise of actual measurement of the acre age sugarcane plantation and the date of

plantation. n case of %aton, the date of harvesting has also to be recorded.

consolidated statement is prepared of this information for assessing period the actual

cane availabilities also to arrive at possible maturing period for finalizing the harvesting

programme. Craphs and charts are prepared based on these dates for each section of

cane suppl area comprising the detailed information of all field and villages of the area.

hese dates are ver helpful for guidance for harvesting programme.

he factor staff underta&en prepares maturing test a few months earlier from the

date of actual start of crushing. $uring the surve brides of the standing cane observed

on the spot b hand refract meters. he result of such surve recording the brides of theuice are than brought the laboratories where actual laborator test are done for e5pected

sugar recover. #uch pre harvest maturit tests are continued till the period when the

general maturit in the cane salt sets in and ne5t maturit tests ma not be necessar.

hen the harvesting programmes as to which cane could be harvested earlier when the

factor starts are finalized.

he wor& of cane procurement programme has to be formulated for proper e5ecution.

he most harmful feature of the cane is less planning of the procurement programme or

the over suppl and accumulation of sugarcane in the factor ard. #ugar content in the

cane decreases soon after the cane is harvested and the cane dries out due to assertive

suppl or delaed transportation that affects the sugar recover drasticall. o avoid this

problem $elta #ugars ltd is fi5ing dates to harvest the cane to reduce the over suppl of

cane in some das.


33/86

he factor is getting cane from @0 to @E villages onl. t present the farmers are

cultivating cane mostl in upland area with the help of bore well irrigation. n some

areas the farmers are not interested to grow cane because of lac& of water during the

ield. his resulting cane cultivation un-remunerative. o ma&e the cane cultivation

remunerative, provision of bore wells is essential to supplement the canal irrigation in

the upland areas.

Mainl in the factor zone of the 7anuman Lunction, Bapulapadu mandal, the

farmers are cultivating in nearl 4362 acres (?22E-?22F) and the suppl of %aton is

@F.F@2 Ms to the factor. t is the highest procurement and the ne5t places are

!edavegi and 9luru mandal respectivel.

Rea"on" for "#ort fa)) of cane an$ recovery for "ea"on:

Irr!gat!on "o.rce:

$elta #ugars is private limited sector factor and the zone is spread over ?4 mandals of

Drishna $istrict. ;suall the sugarcane is being grown in upland area onl. he entire

sugarcane is affected b power cut since last 6 seasons. s, such ever ear, the

sugarcane is being dried up to some e5tent and also the lac& of continuous rains worse

the cane qualit.

-ate app)!cat!on of c#em!ca) fert!)!5er":

n $elta #ugars Atd, the cane growers are arising development of sugarcane ever

ear from $ecember to the march and with earl and mid cane varieties. But due to

power cut in the pea& summer month, the bore wells are not properl functioning to lift

the water and hence the farmers are being faced difficulties in appling chemical

fertilizers to the sugarcane fields due to non-availabilit of required irrigation.

App)!cat!on of c#em!ca) fert!)!5er"9 n!trogen !n #eavy $o"e:

n spite of several instructions and directions given b delta #ugars Atd agricultural staff

and other scientists, the growers are habituated in appling nitrogen with heav dose to

their cane fields.


34/86

Sa)!n!ty:

n analsis, it is observed that about 301 of bore well tater is highl salinated and low

sodium water.

Cane Deve)opment Epen$!t.re:

he factor is providing crop loans through the commercialized ban&s on tie up

arrangement at @,000 per acre and the factor is providing man facilities.

Organ!5at!on an$ Management

he organization has five departments. he $epartmental 7eads are accountable to

managing director who co-ordinate all the activities of the departments. 7e is

accountable to chairman and board of directors.

he departments of organization are as follows

?.dministrative $epartment

6.ccounts $epartment

@.9ngineering$epartment

/.griculture$epartment

3.Manufacturing$epartment

4.Mechanical$epartmentE.>ivil $epartment

23 A$m!n!"trat!ve Department:

he dministrative fficer is the 7ead of this $epartment. 7e is responsible to the

Managing $irector for his department activities. he $uties of the departments are as

follows

Purchasing

?.nventor control


35/86

6.#ales of sugar and molasses

@.!ersonal activities

/.#ecurit and other general matters

3.he administrative fficer directs, motivates the subordinates and controlling the

above activities. he following personnel assist administrative officerJ

)ffice manager

B)!urchase Manager

>)#tore Deeper

$)#ugar Codown n-charge

9)#ecurit


36/86

7; Acco.nt" Department:

>hief ccounts officer is the lead of this department. 7e is responsible to the Managing

$irector for the maintenance of the accounts of all divisions of the compan and his dutinvolved in preparation of balance sheets and correspondence with the investors, merchants,

ban&s and financial institutions. his department maintains @ account ledgers such as

i) cane ccounts

ii) #tore ccounts

iii) Ceneral ccounts

he following personnel assist >hief ccounts officer

i) Ceneral ccountant

ii) >ane ccountant

iii) #tore ccountant

4; Agr!c.)t.ra) Department:

>hief gricultural fficer is the head of this department. he main function of this

department is the procurement and development of sugarcane. >hief gricultural officer

estimates the sugarcane suppl of each season. hese estimates are useful to the organization

for preparing the budgets. he following personnel assist >hief gricultural officerJ


37/86

$eput >hief gricultural fficer

ssistant gricultural fficer

:ield men

hief 9ngineer is the head of this $epartment. 7e formulates the techniques of cutting and

crushing sugarcane suiting top the machiner and equipment. 7e ma&es the

recommendations regarding planning of engineering section, such as rehabilitation,

modernization. 7e has to supervise, plan schedule maintenance wor& with the assistance of

shift engineers. he plant and machiner of the factor are under his control. he following

personnel assist the >hief 9ngineerJ

ssistant 9ngineer

ssistant 9ngineer =or&shop

>ivil 9ngineerI9lectrical 9ngineer

#upervisor (>ivil 9ngineering)

Man.fact.r!ng Department:

he actual sugar production starts from the manufacturing department. he manufacturing

department is to see the good qualit of the sugar production. >hief chemist is the head of

this department, responsible for the overall operation of sugar manufacturing of the factor


38/86

from uice to final sagging sugar. 7e has to constantl endeavor to minimize sugar losses

and process and has to institute revise and chec& chemical control methods. he following

personnel assist the >hief >hemistJ

$eput >hief >hemist

Manufacturing >hemist

Aab and Bench >hemist

he Board has unfettered and completes access to an information with in the compan and

to an emploee to the compan. t meeting of the Board, it welcomes the presence of

managers who can provide additional insights into the items being discussed. he

information regularl supplied to the board includes

?. nnual operating plans and budgets, capital budgets update.

6. Ouarterl results of the compan and its operating divisions in

comparison with the budgets.

@. Minutes of the meeting of the board, udit committees as well as the

abstracts of the >ircular %esolutions passed.

/. Ceneral notices of interests of $irectors.

3. Materiall important litigations, show cause notices, demands,

prosecution and penalt notices.


39/86

4. :atal or serious accidents or dangerous occurrences an material

effluent or pollution problems.

E. n material default in financial obligations to an b the compan or

substantiall non-pament for goods sol b the compan.

F. #ignificant labor problems and proposed solutions.

2. #ale, lease, transfer of material nature of investments, subsidiaries,assets, which is not in the normal course of business.

?0. !rogress on the committed business plan of the compan unit-wise.

??. Ouarterl appraisal on the implementation of the code of corporate

governance.

here are no material significant related part transactions, pecuniar transactions or

relationships between $elta #ugars and its directors management, subsidiar or relatives

e5cept for those disclosed in the financial statements.

Env!ronment an$ po)).t!on contro):he compan continues to pursue its environmental friendl approach towards industrial

growth. he compan enos good safet record. >onstant improvements are being made in

the process and equipments, to minimize the discharge of effluents and emissions. :urther

the >ompan has established the effluent treatment plant to bring down the pollution levels

to zero.


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Man.fact.r!ng Proce"":

Bull coc&s, truc&s, wagons or tractor bring the sugarcane. he cane cutting equipment called

levelers, which are also basicall cutters all having &nifes fitted on revolving shafts engines.

hese cutters as the rotate cut the sugarcane in small pieces as it moves towards the curser

rollers.

he first set of roller to which cane is first delivered b cane carrier consists of 6 or @

wheelers. on a three- roller mill, three heav iron rolls arranged in !ramid formation, two

below and one above so that the crushed cane mass passed through a set of rolls. t receives

double pressing first as it passes upwards. he top roll with the second of the lower rolls

facilities the conveance of the crushed cane mass. his is called as trash plate.

he crushed cane arriving to the mill rollers is scraped b scrapers, which have alsocurved iron plates grooved to suit roller grooves. 9ach one of the mills is so placed that the

crushed cane will rapidl pass through each mill in succession and each mill ield desired

uices and at the last mill the e5traction is considered to be completed.

n order to achieve complete e5traction, water and uice are sprin&led on crushed cane

called bagasse as it emerges from the mill e5cept the last mill. his process of adding water

or uice is called Maceration or mbition.

he crushed cane is delivered from one mill to another through endless beltscalled enter carrier. he action of maceration is to often the cane mass fibers and dilute and

remaining uice and ma&e it possible to e5tract last possible drops available drops.

andem ma consists of three consists of three to seven mills. he residue of the

crushed sugarcane emerges from the last mill called bagasse is conveed b further endless

belts called bagasse elevator and bagasse carrier to the boilers where there are steam

generation ta&es some times. he loss of sugar uice ma either be due to mechanical or

chemical cause. he uice is there after weighed and analsis of sugar available isascertained in the laborator. he uice is now a dar& opaque water fluid containing sucrose

between ?0.?3 to ??.03 and rest water. he total percentage of solids contained in the uice

including the sucrose and other impurit is termed as PBric&s and the ratio of sucrose to

bric&s are termed as Ppurit.


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:88>A !9%:%M8>9 : $9A #;C%# AM9$


42/86

SA-ES PERORMANCE O DE-TA SUGARS -IMITED


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79%9>A :%M9 =%D :

8H98%< M8C9M98

MEANING O INVENTORY

he inventor refers to the stoc& pile of the product a firms offering for sale and the

components that ma&e up the product. n other words, nventor is composed of assets that

will be sold in future in the normal course of business operations. he assets which firms

store as inventor in anticipation of need can be classified into

%aw Materials

=or&-in-progress(#emi finished goods) :inished Coods

=2;3 RA% MATERIA-S:'

nventor contains items that are purchased b the firm from others and are

converted into finished goods through the manufacturing process. he are important inputs

for the final product.

=7;3 %OR0'IN'PROGRESS:'

nventor consists of items currentl being used in the production process. he arenormall partiall or semi-finished goods that are at various #tages of production in a multi

stage production process.

=4;3 INIS*ED GOODS:'

t represents final or completed products which are available for sale, the inventor of

such goods consists of items that have been produced but are et to be sold. he ob of the

final manager is to reconcile the conflicting view points of the various functional areas

regarding the appropriate inventor levels in order to fulfill the overall obectives of

ma5imizing the owners wealth.

IMPORTANCE O INVENTORY:'

nventor plas cardinal role in ever organization. he profit of the organization

mainl depends on the inventor. nventor is the second largest value in the organization. t

is the liquid asset and the current asset of the organization. nventor storage is an important

activit in the organization.

O+,ECTIVES O INVENTORY MANAGEMENT

he obectives of the inventor management consist of two counter balancing partsJ


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o ma5imize the firms investment in inventor

o meet a demand for the product b efficientl organizing the firms production and

sales operation.

T*E MAIN AIM O INVENTORY MANAGEMENT:'he main aim of nventor Management the should be to avoid e5cessive and in

adequate levels of nventories K to maintain sufficient nventor for the smooth production

K sales operations effort should be made to place an order at the right time with the fight

source to acquire the right qualit at the right place K quantit.

a) 9nsure a continuous suppl of %aw Materials to facilitate uninterrupted production.

b) Maintain sufficient stoc&s of %aw Materials in periods of short suppl K anticipated

price customer service.

c) Minimize the carring and time, and

d) >ontrol investment in nventories K &eep it at an optimum level.

Ca."e" of !nventory:'

95ternal causesJ - >ustomers, #uppliers etc.

nternal causesJ - Mar&et, polic, production and #>M.

Pro/)em" (!t# #!g# !nventory:'

a) nterests, nsurance costs.

b) Oualit deterioration.

c) =ear and tear.

d) #torage and pilferage.

Inventory T.rnover Rat!o:'

?. %G>ost of productionIinventor

6. 7igher %Q Aow inventories

@. Aow %Q 7igh inventories

*!g# !nventory Rea"on":'

?. !roductionJ

6. More K Aow volume products

@. Aarge ccle times

/. 8ew and campaign product

3. 8on-moving products.

STORES9 SPARES AND PURC*ASES:'


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?. #tore Deeping.

6. #tore sstem

@. Harious stores operation.

/. Methods of pricing the material issues.

3. %eceiving section and issue department.

4. !urchase department.

E. #tores and #pares.

F. !urchasing sstem.

2. nventor.

$ifferent towards inventor. #tructure of inventor moc&s. :actors influencing inventor. >lassification of inventor.STORE 0EEPINGJ-

t is serving facilit, inside of an organization responsible for proper storage of the

material and then issuing it to respective department on proper requisition. hose items,

which are not in use for some specific duration e5ample #pare parts and the %aw materials,

are called stores and the building or space where these are &ept is &nown as #tore room.

ccording to Manard *the duties of stoc& &eeping are i.e. to receive materials are to

protect them while in storage from damage and unauthorized removal, to issue the materials

the right quantities at the right time to the right place and to provide these service promptl at

least cost+.

t is an establishment fact that more than government of the current assets is invested in

stores. hus for efficient and economic utilization of fond Rthe importance of store cannot be

ignored.

UNCTIONS O STORE 0EEPING:'

he main functions of store &eeping can be outlined as

?. %eceiving of goods in stores against damage and pilferage.

6. >ustodian of goods in stores against damage and pilferage.

@. 9ffective utilization of stores space.

/. o provide service to the organization in most economic wa.

3. !roper identification and eas location of them.


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O+,ECTIVES O STORE 0EEPINGJ-

?. 9as location of the items in store.

6. !roper identification of items.

@. #peed issue of material.

/. 9fficient utilization of space.

ACTORS O P-ANT -OCATION:'

Pr!mary factor"J-

%aw Material

Mar&et

:uel and power

ransport Aabour

Secon$ary actor":'

Momentum of earl start

ndustrial tmosphere

#pecial advantage of a place

#oil and climate

!ersonnel factors

7istorical factors

!olitical stabilit

#pecial concessions and benefits

Stage" !n pro$.ct!on contro):'

!lanning

%outing

#cheduling

Aoad

$ispatching

nspection

A$vantage" of pro$.ct!on p)ann!ng an$ contro):'


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9fficient service

voidance of rush orders

voidance of bottlenec&s

nventor control 9conom in production time

9quipment utilization

Type" of )ayo.t:'

!roduct or line laout

!rocess or functional laout

>ombined laout

!!%>7J-

he importance of an integrated approach of material management within the frame

wor& of the ndian environment and presents a comprehensive coverage of all aspects of the

subects, such as the operational details of stores sstems and procedures and modern

mathematical concepts also featured. #ince the theor is based on the practical e5perience

and research proects, it fulfills the needs for authentic literature in the field on materials

management.

P.rpo"e of Store":'

#tore plas a vital role in the operation of a compan. t is in direct touch with the

user department to the manufacturing divisions. :urther, stores is often equated directl with

mone, mone is loc&ed up in the stores.

T#e f.nct!on" of "tore" can /e c)a""!f!e$ a" fo))o(":'

o receive raw materials, tools, equipments and other items and ccount for them.

o provide adequate and proper storage and preservation to the various items.

o meet the demands of the consuming departments b proper issues.and account for the consumption.

o minimize obsolescence, surplus and scrap through proper

>odification, preservations and handling.

o highlight stoc& accumulation, discrepancies and abnormal >onsumption and effect

control measure.

o ensure good house&eeping so that material handling, materials !reservation,

stoc&ing, receipt and issue can be done adequatel.


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o assist in verification and provide supporting information for

Store" -e$ger:

he stores ledger is ver important because this facilitates the calculation of the value

of goods used for production purposes. t indicates the issue of materials purchase ofmaterials, finished goods. here are several methods for calculating the issue price of the

materials.

=2; IO:'

;nder this method is first issued from the earliest consignment on hand and priced at

which that consignment was placed in the stores. n other words materials received first are

issued first. his method is most suitable in times of falling prices because the issue price of

materials to be obs wor& orders will be high while the cost of replacements of materials will

be low.

=7; -IO:'

he issues under this method are priced in the reverse order of purchase i.e. the price

of the latest available consignment is ta&en. his method is sometimes &nown as the

replacement cost method because materials are issued at the current cost to wor& orders

e5pect when purchases were long ago.his method is suitable in times of raising prices

because material will be issued from latest consignment at a price which is closel related to

the current price levels.

=4; +a"e "toc& met#o$:'

9ach concern alwas maintains a minimum quantit of material in stoc&. his

minimum quantit is &nown as safet or base stoc& and this should be used when an

emergenc arises. he obective of this method is to issue the material according to the

current prices.

=


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stores ledger),phsical verification of three stores is made b a program of continuing stoc&

ta&ing.

=>; S!mp)e average pr!ce:'

* price which is calculated b dividing the total of the prices of the material to be

priced could be drawn b number of the prices used in that total+.

#imple average price is calculated b dividing the total of unit purchase prices of

different lots in stoc& on the date of issue b the number of prices used in the calculation and

quantit of different lots is ignored. his method ma lead to over-recover or under-

recover of cost of materials from production because quantit purchased in each lot is

ignored.

#uppose, following are three different lots of materials in stoc& when the material is

to be issuedJ

=?;%e!g#te$ Average Pr!ce:'

* price which is calculated b dividing the cost of materials in the stoc& from which

the materials to be priced could be drawn b the total quantit of materials in that stoc&+. he

weighted average price ta&es into account the price and quantit of the materials in store.

=@;Stan$ar$ Pr!ce:'

#tandard price is the predetermined price and both the receipts and issues will be

valued at this price. herefore, this price is neither the cost price nor the mar&et price. he

method is used b concerned which follow standard costing. he difference between the

actual purchase price and the standard price is charged to an account &nown as *!urchase

!rice Hariance ccount+.

-ocat!on an$ -ayo.t:'

More often than not, in the matter of locating the stores, materials management is

rarel consulted. he normal practice is to locate the stores near the consuming departments.

his minimizes handling and ensures timel dispatch. n stores laout, governing criteria are

eas movement of materials, good house&eeping, and sufficient space for men and materials

handling equipments, such as shelves, rac&s, pallets and proper preservation from rain, light

and other such elements.

hese problems are more important in the case of items that have a limited shelf life.ther important factors governing the location are the number of users and their locations,


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wide so that movement of for&lifts, trolles and ndustrial tractors are smooth.

#toc&ing must be in appropriate locations

so that handling is minimum.

/. ll stores equipment must be &ept in good order. his ncludes adequate maintenance

practice with regard to for&lifts, overhead cranes, trolles, conveors, etc. peration

must be trained in safet so that safet precautions are not overloo&ed.

3. 7ealth competition can be stimulated b installing *safet awards+ and cash prizes

which bring recognition to the concerned stores personnel for safet practices. his

also motivates other to practice safet.

Co"t A"pect" an$ Pro$.ct!v!ty:'

t is erroneousl covered that ever cubic meter of space must be utilized b stoc&s

for high efficienc. Her often such stoc&ing ma drasticall cut the speed of materials

movements and create bottlenec&s apart from affecting overall safet.

herefore maneuvering needs for handling equipment and for minimizing the time

required for stoc&ing, and issue, must be borne in the mind at the planning stage in order to

ensure real efficienc.

>osts involved in stores can be analzed under two heads, viz.., fi5ed and variable.

:i5ed costs are to be incurred irrespective of the utilization of space stores. he include

mone spent on land and buildings, rent interest, repairs, maintenance, insurance, etc.

Hariable costs var with the volume through output. he consist of handling cost,

damages, deterioration, obsolescence, etc. bviousl when the throughout or the volume

goods handled is high, the total cost per tone is low. his should be the aim of the stores

manager in order to optimize the costs in stores.

RO-E O INANCE MANAGER IN INVENTORY MANAGEMENT:'

ptimum level of inventor and finding ensures to the problems of 9O are the

recorder point and the safet stoc&. hese techniques are ver essential to economize the useof resources b minimizing the total inventor cost.he techniques of inventor management

are ver useful in data mining. he cases the board frame wor&s for maintaining inventories.

o the maorit of the companies, inventor represents a substantial investment. hus

the goal of wealth ma5imization is related to the financial manager has an important role to

pla in the management of inventor. he financial should see that onl an optimum amount

is invested in inventor.7e should be familiar with in inventor control techniques and ensure

that inventor is managed well. 9ffect would be reduce inventor investment and increase thefirms prospects of ma&ing profits.


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INVENTORY CONTRO-:'

nventor control renders to *he process whereb the investment in materials and

parts carried in stoc& is regulated within predetermined limits set in accordance with the

inventor polic established b the management.

nventor control refers to a planned method of purchasing and storing the material at

lowest possible cost without affecting the sales scheduled. nventor control therefore, is a

scientific method of determining what, when and how much to purchase and how much to

have to stoc& for a given period of time.

T#e Nee$ for Inventory Contro):

he rewards of inventor control sstem cannot be over loo&ed in the ndian conte5t

the idea behind this is,

>onserving valuable foreign e5change.

%elease of capital.

%eduction in cost.

T#e pr!mary o/ect!ve of Inventory contro) !":'

o minimize the idle time caused b shortage of inventor and inventor vailabilit of

inventor.


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8H98%< >8%A 9>78O;9# T

#elective inventor control nventor management techniques

?. B> nalsis ?. 9O (9conomic Ouantit)

?. Uost.

?. H9$ >lassification. B. >arring >ost.

?. :8# >lassification. 6. #stem of %e-ordering.

?. ## >lassification.

?. #-$-9 nalsis

?. 7MA nalsis

ECONOMIC ORDER BUANTITYJ-

ne of the maor inventor management problems to be resolved is how much

inventor should be added when inventor is replenished. f the firm is buing raw materials,

it has to decide lots in which it has to be purchased on cash replenishment.

hese problems are called order quantit problem and tas& of the firm is to determine

optimum inventor level involves two tpes of costsJ? rdering cost

6. >arring cost.

he economic order quantit is that inventor level, which minimizes the total of

ordering and carring costs.

Or$er!ng co"t":'

he term ordering cost is used in case of raw materials (or supplies)and includes the

entire costs of acquiring raw materials. he include costs incurred in the following activities.%equisitioning, purchase ordering, transport receiving, inspecting, and storing(store

placement), ordering cost increase in proportion to the number of orders placed the critical

and staff costs, however, dont var in proportion to the number orders placed, and one view

is that so long as the are committed cost the need not to be revo&ed in computing ordering

cost.

Carry!ng co"t":'

>ost incurred for maintaining a given level of inventor are called carring cost, the

include storage, insurance, ta5es, deterioration and obsolescences


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9O (economic order quantit) G68>9OG9conomic rder Ouantit

Gotal annual requirement for the item

Gordering cost per order of that item>Gcarring cost

IMPORTANCE O EOB:

n a real situation demand is never deterministic even if demand remains &nown over

a range of problem values the starting point for a design of an inventor sstem is P9O

even though b itself it is hot an inventor sstem another importance of P9O is its

ustifing the conventional B> and also elaborating it.

9O G #(M. >o)I #>c

he annual orderin cost is them G M>o I 9O

he annual carring cost is G (9O I 6) #.>c

he total inventor cost per annum becomes G

M>oI9O W(9OI6) #.>c.

ASSUMPTION O EOB:

?. he firm &nows with quantit the annual consumption of a particular item of

inventor.

6. he rate of consumption is stead over time.

@. he orders placed to replenish inventor are received at e5actl that point in time

when inventories reach zero.

/. he ordering and carring costs are constant over the range of possible inventor

levels.

A+C ANA-YSIS:'

B> nalsis is one of widel used inventor control tool. ;nder this we have to

classif materials according to their importance and concentrate more on critical items.

mportance of an item arises due to the two factors namel, consumption values and

criticall in use. >lassification of materials according to importance has its basis on the

promise *Hital :ew and rivial Man+.


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A C)a"" !tem":

>lass items are those which account ?0 to601 having usage value of E0 to F01.

hus a high test control should be e5ercises on *item+ .

+ C-ASS ITEMS MAINTENANCE:

s per the theor 60 to @01 of items account for the same percentage of value. hese

are less important than class items but are costl enough to warrant more attention to their

consumption. hese items cannot be over loo&ed but need lesser degree of control than those

in class .

C C-ASS ITEMS MAINTENANCE:

he usage value of the > class items are low so there is a lesser and no need for strict

control when there is a need. :or these items order in large quantities.

INVENTORY MANAGEMENT IN DE-TA PAPER MI--S -TD39 PAPER +OARDS

PVT -IMTED

$ifferent groups of inventories are maintained b the companies based on the tpe of

manufacturing. #pecial departments and separate stores and particular staff. o particular

areas are maintained. n !!M under materials department four groups are maintained. he

are.

?. Ceneral stores.

6. M#! stores.

@. uto stores.

/. >hemical stores.

he material department which is based at Hendra is a !art of administration function to

serve the user departments.

he department initials purchase indents for pulp, waste pa

paidi.aswani project

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