INDEX Page no

1. Introduction_________________________________1

2. Review of Literature__________________________6

3. Research Methodology________________________8
3.1 Introduction
3.2 Research Statement
3.3 Research design
3.4 Objectives of Study
3.5 Nature of Data and Sources of Data
3.6 Sample selection
3.7 Hypothesis
3.8 Tools for data collection

4. Scope and limitation of the study________________12

4.1 Scope of the Study
4.2 Limitation of the Study

5. Lay out of the study__________________________13

Bibliography
 1. INTRODUCTON
1.1 Indian Sugar Industry

India is known as the original home of sugar and sugarcane. In global sugar
economy, the Indian Sugar Industry has achieved a number of milestones. It is the
second largest producer of sugar in the world. This industry is the second largest agro
processing industry in India after textile. More than 500 thousand people are directly
employed. More than 45 million people in the rural population of India depend on
Sugar Industry for their livelihood. Its contribution to the central and state exchequers
is of high order. The Indian Sugar Industry has been accounting for around 1% of
GDP of the country in the recent past.
Sugar production in India is concentrated in six states namely Maharashtra,
Uttar Pradesh, Gujarat, Tamil Nadu, Karnataka and Andhra Pradesh which together
account for 85-90% of sugar production in the country. The Indian Sugar Industry is
highly fragmented with over 450 mills and no single player having a market share of
over 5%. Around 60% of the mills are in the cooperative sector, 35% in the private
and the rest are in public sector. The sugar industry can be broadly classified into two
sub-sectors, the organized sector i.e. sugar factories, and the unorganized sector i.e.
manufacturers of traditional sweetener like gur and khandsari.
India is the largest consumer of sugar in the world with annual consumption of
about 20.40 million mt. It also happens to be the second largest producer of sugar,
next to Brazil, with production in the year 2007 with 22.33 million mt. Global
production from cane as well as beet is around 170 million mt currently.
About 80% of global sugar production is from sugarcane. It has been clearly
established that sugarcane is the cheapest source of sugar; the cost of sugar production
through the cane route can be as low as 40% of that of sugar from the sugar beet route.
One of the major producers of sugar through the beet route, the EU has already begun
cutting down on production realizing the futility of competing with cane.
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1.2GLOBAL SCENARIO

World's Largest Sugar Producing

Countries 2006-07

Brazil
India
EU-27
China
US
Thailand
Others

Brazil is the largest producer of sugar in the world. Even in 2007, it was the
largest producer with 30.34 million mt, followed by India with 20.33 million mt.
While in case of world sugar consumption, India ranks higher than Brazil with a
consumption of 20.40 million mt.
1.3 INDIAN SUGAR INDUSTRY

The cooperative sector of the sugar industry in India has played a major role in
the growth of India‟s sugar Industry. After independence, the Govt. of India decided to
industrialize the country building up a large and growing sector and accordingly the
principle of cooperation was assigned an important role for the country‟s economic
development of industries based on agriculture produce such as sugarcane. The Govt.
of India gave preference to cooperative sector in licensing of new sugar factories. This
policy continued to de licensing of sugar industry in August 1998. As a result of the
preferential policy given to cooperatives, the sugar industry progressed by leaps and
bounds and the Indian sugar

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 Industry achieved the distinction of being the world‟s largest sugar producer
during 1988 to 1993 and gain during 1995-96. However, the liberalization of economy
in June 1991 the cooperative sector of sugar industry could not expand at the same
pace as before because of financial institution‟s reluctance to grant funds and slowly
their growth has come to a grinding halt.
The Indian Sugar Industry is a key driver of rural development supporting over
about 55 million sugarcane farmers, their dependants and a large mass of agricultural
laborers involved in sugarcane cultivation, harvesting, machine manufacturing etc. of
almost 607 sugar mills and ancillary activities, constituting some 7.5 % of the rural
population. Besides about 0.5 million skilled and semi-skilled workers, mostly from
the rural areas are engaged in the sugar industry.
The bulk of the Indian sugarcane cultivation and hence, location of the sugar
mills, is in the states of Uttar Pradesh, Maharashtra, Tamil Nadu, Karnataka, Andhra
Pradesh, Gujarat, Punjab, Haryana and Bihar. The annual production is in the range of
300 to 350 million tons of sugarcane out of which about 30% is used for gur and
chewing purposes and balance for producing sugar. Sugar production during 2011-12
was a little over 28 million tons second only to Brazil‟s production of about 33 million
tons. Uttar Pradesh with 30% and Maharashtra with 27% of the sugar production top
the nine states. While Bihar, Punjab and Haryana are at the other end of the spectrum
with less than a million tons of production per annum, the balance states produce in
excess of 1 million tons each per annual.
Production growth over the last half century has been a little under 5%
Compound Average Growth Rate with typical cycles of 4 to 7 years.
Of the total of about 400 mills in the country, over 60% are either in the cooperative or
government sector and the balance of about 40% in the private sector. The states of
Maharashtra, Karnataka and Tamil Nadu have relatively larger share of cooperative
mills. However, over 50% of the output is accounted for by the private mills and the
share of the private sector has been steadily increasing.
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 The average land holding of cane farmers is very small and fragmented. The
bulk of the holdings are reported to fall between 1 and 4 hectares. Around 50 million
farmers, including indirect labor are believed to be dependent on this crop. It is also
very labor intensive in terms of cutting labor required for harvesting cane. Indian farm
productivity ranges from 40 tons per hectare to 110 tons per hectare against the global
average of about 64 tons per hectare, however, even within India, states like Tamil
Nadu have farms reporting harvests in excess of 120 tons per hectare. Sucrose content
wise, it ranges from 9 to 11% with an overall national average of about10%.
The cost of sugarcane is as high as 70% of the value of the sugar produced by
the mill, farm productivity and sucrose content of the cane are, hence, critical factors
which impinge on the economics of operations. Sugarcane is also highly perishable
with the sucrose content dropping drastically beyond 24 hours from the time of
cutting. In fact, perhaps owing to the rather un-economical land size and populist
pressures Indian cane prices are probably the highest in the world, paradoxically,
Indian domestic retail sugar prices are one of the lowest in the world thanks to the
paranoid reluctance of the government from letting them rise to their natural levels
Every ton of sugarcane can produce about 100 kg of sugar on an average as also
about 45 kg of molasses and 300 kg of bagasse. Alternatively, the sugarcane juice can
be converted directly into about 70 liters of alcohol in lieu of the sugar and molasses.
The Indian government has now decided to permit millers to convert the sugarcane
juice either into sugar and molasses or directly into alcohol.
1.4 Demand
Domestic demand for sugar is about 20 million tons with average annual growth
rate of about 3.5% (against the world average of about 2.2%) India is the world‟s
largest consumer of sugar; total global demand is in the region of 160 million tons.
Unlike Brazil which exports over 70% of its production, the bulk of India‟s production
is consumed domestically with occasional imports or exports of a few million tons to
tide over deficits/surpluses.
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 Increasing GDP and changing life styles and food habits are driving down the
demand for gur in India with a proportionate increase in demand for sugar. About 70
per cent of the sugar demand is from institutions including confectionary units, soft
drinks plants, etc. while the rest of the volume is accounted for by households for
direct consumption.

Sugar is India‟s second largest agro-processing industry with around 400

operating mills. The 203 cooperatives are a dominant component of the Industry
accounting for over 56% of the total capacity of around 19 mt per annual of sugar. Of
the 203 cooperatives nearly 83 (or 41% of total cooperatives) are concentrated in
Maharashtra, followed
by UP with 28 mills of the 197 non cooperative and/or private sugar mills
nearly 78 (or 40%) are located in UP, followed by TN, AP and Karnataka.

The sugar manufacturing industry is highly fragmented with none of the players
having a market share greater than 3%. Although cooperatives account for around
43% of the total production in the sugar industry their share has gradually declined.

Because of the higher number of units in states such as Maharashtra and

Gujarat, the cooperatives dominate sugar production in these states. By comparison,
private and other sugar mills dominate sugar production in UP, AP, Haryana and TN.

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2. REVIEW OF LITERATURE
Indian Sugar Industry – A Comparative Study by Dr. G. A. Nikam (2006) is an
attempt to find out cost trend, profitability and operational efficiency of the sugar mills
of two states, Uttar Pradesh and Maharashtra. The study also attempts to compare the
working of the sugar mills of different regions of Uttar Pradesh and Maharashtra.

Labor Problems and Welfare by M. Mustafa (1990) is a systematic, comprehensive

and analytical study of the problems related to mill workers and welfare measures
introduced especially in the sugar industry.
Cane Sugar Manufacturing by Ram Bihari Mathur deals comprehensively with the
practical aspects of the manufacture of raw and white consumption sugar from
sugarcane.
Machinery and Equipment of the Cane Sugar Factory by L. A. Tromp (1936) is a
study of all the machinery and equipment used in a cane sugar factory.
Cane Sugar Handbook by Guilford L. Spencer and George P. Meade published
by John Wiley and Sons, Inc., London (1945) gives a concise survey of the
manufacturing and refining processes, provides selected analytical procedures and
reference tables for the control chemist and explains and compare methods of
chemical control.
Practical Hints on Sugar Factory Control by Dr. O. P. Talwar (1968) deals with
measures to remedy unknown losses in sugar industry, raise clarification efficiency,
minimize losses by various pan boiling schemes, as well as lower the final molasses
purity by high speed electrical centrifugation.
Sugar Cane in India by S. V. Parthaswathy (1972) discusses soil, climate, botany of
sugarcane, land preparation, seed, planting and Inter-culture, pests and diseases.

6
Sugar from scarcity to surplus by Hubert (1958) gives factual information on many
facets of sugar cane cultivation, irrigation system, construction of factories, old and
new equipment, trouble shooting, comparative value of different labour forces, role of
chemists in scientific quality control and production efficiency.

Souvenir published by The Sugar Technologists‟ Association of India, analyses and

promotes knowledge of the science and practice of sugar technology and other kindred
branches of science. Proceedings published by The Sugar Technologists‟
Association of India discusses the manufacturing and engineering aspects and
different co-products of sugarcane.
The handbook of Sugar Facts and Figures by United States Cuban Sugar
Council, New York (1948) has been prepared to promote a wider public understanding
of the sugar producing industry in the principal areas supplying the United States
market.
Sugar Industry in India by Prof. Ram Vichar Sinha (1988) analyses the
historical background of Indian Sugar Industry, agricultural economics of sugarcane,
problems of cane marketing and transport, technical performances, utilization of
byproducts, labor and relations, policies on sugar economy, fiscal and financial
aspects of the industry.

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3. RESEARCH METHODOLOGY

3.1 INTRODUCTION

The core concept underlying research is its methodology. The methodology controls the
study, dictates the acquisition of the data, and arranges them in logical relationships, sets up a
means of refining the raw data, contrives an approach so that the meanings that lie below the
surface of those data become manifest, and finally issue a conclusion or series of conclusions
that lead to an expansion of knowledge. The entire process is a unified effort as well as an
appreciation of its component parts.

According to P.M.Cook, “Research is an honest, exhaustive, intelligent searching for facts

and their meanings or implications with reference to a given problem. It is the process of
arriving at dependable solutions to problem through planned and systematic collection,
analysis and interpretation of data. The best research is that which is reliable, verifiable and
exhaustive so that it provides information in which we have confidence.”

3.2 RESEARCH STATEMENT

The research statement studied is entitled, “A Study of Financial Performance of Sugar

Industry of Gujarat State during 2002 to 2013” The present study focuses on the analysis of

the financial performance of the Gujarat Sugar Industry with the help of statistical tools like
mean, percentage, ratios, ANOVAs.

3.3 RESEARCH DESIGN

A Research design is a plan of action to be carried out in connection with a research project.
It is the conceptual structure within which research is conducted and it constitutes the blue
print for the collection, measurement and analysis of data. It is the specification of methods
and procedures for acquiring the information needed for solving the problem. Decisions
regarding what, where, when, how much, by what means concerning an inquiry or a research
study constitute a research design.

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3.4 OBJECTIVES OF THE STUDY

The objectives of the study are as follows:

 Main Objective

 To analyze and evaluate the financial performance of selected Sugar Factories

in particular and the Sugar industry in general.

 Subsidiary Objectives:
Subsidiary objectives of the study are as follows:

 To study overall financial health of selected Sugar Factories and sugar industry.

 To study the pattern of growth and development of Sugar industry in Gujarat.

 To make suggestions/comments about the functioning and development of

Sugar industry in Gujarat.

3.5 NATURE OF DATA AND SOURCE OF DATA

Collection of the data is essential part of research. The nature of data which is collected and
used for this research is secondary in nature. The relevant and required data has been
collected from journals, dailies, annual reports, magazines, literature and websites of selected
Sugar Co-operatives and through various search engines.

3.6 SAMPLE SELECTION

All Seventeen Sugar Factories have been From Gujarat State selected and compared for their
financial performance between the years 2002-03 to 2012-13Sugar Factories selected for the
research work are as follows:

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 1. Sugar Factory, Bardoli
2. Sugar Factory, Gandevi
3. Sugar Factory, Madhi
4. Sugar Factory, Chalthan
5. Sugar Factory, Maroli
6. Sugar Factory, Valsad
7. Sugar Factory, Sayan
8. Sugar Factory, Mahuva
9. Sugar Factory, Ukai
10.Sugar Factory, Vataria
11.Sugar Factory, Kamrej
12.Sugar Factory, Pandvai
13.Sugar Factory, Narmada
14.Sugar Factory, Kopar
15.Sugar Factory, Vadadara
16.Sugar Factory, Talala
17.Sugar Factory, Kodinar

3.7 HYPOTHESIS

In order to achieve the objectives of the study, the following hypothesis are framed:

1. Ho: There is no significant difference in the Current ratio of the Sugar Industries in
Gujarat State.
2. Ho: There is no significant difference in the Return on Capital Employed ratio of the
Sugar Industries in Gujarat State.
3. Ho: There is no significant difference in the Gross Profit ratio of the Sugar Industries in
Gujarat State..
4. Ho: There is no significant difference in the Net Profit ratio of the Sugar Industries in
Gujarat State
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5. Ho: There is no significant difference in the Operating profit ratio of the Sugar Industries
in Gujarat State.

6. Ho: There is no significant difference in the Expenses to Sales Ratio of the Sugar
Industries in Gujarat State.
7. Ho: There is no significant difference in the Interest Coverage Ratio of the Sugar
Industries in Gujarat State.
8. Ho: There is no significant difference in the Debt Equity ratio of the Sugar Industries in
Gujarat State.
9. Ho: There is no significant difference in the Fixed Assets Turnover Ratio of the Sugar
Industries in Gujarat State.

3.8 TOOLS AND METHOD OF DATA ANALYSIS

The present study involves calculation of different ratios to evaluate the financial
performance of Sugar Industry in Gujarat State Various tools like percentage, mean,
ANOVAs, and Ratio analysis are used in this study.

Ratios also provide a bird’s eye view of the financial condition of the company. The
following ratios have been computed for the present study.

 Current Ratio
 Return on Capital Employed
 Operating profit ratio
 Gross Profit Ratio :
 Net Profit Ratio
 Expenses to Sales Ratio
 Interest Coverage Ratio
 Debt Equity Ratio
 Fixed Assets Turnover Ratio
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4. SCOPE AND LIMITATIONS OF THE STUDY

4.1 SCOPE OF THE STUDY

The study is mainly intended to concentrate on the issues relating to the financial
Performance of selected units. Financial ratios like Current Ratios, Debt-Equity
Ratios, Operating Profit Margin Ratios, Gross Profit Margin Ratios, Net Profit
Margin, Return on Capital Employed, Interest Cover Ratios, Fixed Assets Turnover
Ratios and Expenses to Sales Ratio has been covered under the present study.

From every research study in the field of commerce some benefits in some way are
Derived by certain segments of an industry and the Indian economy in general. This
study can also be beneficial to the government, Sugar Manufacturing Association of
India, Gujarat state Sugar manufacturing association of Gujarat, state industrial policy
makers, Government decision making authority, aspiring entrepreneurs,Students and
teachers of commerce and management and researchers etc. This study will serve the
following objectives.

 One will have an overview of Sugar industry of Gujarat.

 It will throw light on various aspects relating to financial performance of Sugar

industry of Gujarat.

 It will help in judging the overall financial health of selected Sugar

manufacturing units and Sugar industry.

 It will help in studying the pattern of growth and development of Sugar

manufacturing in Gujarat.

 It studies the trend of Sugar industry in Gujarat.

4.2 LIMITATIONS OF THE STUDY

1. The study is primarily based on a Gujarat Sugar industry only. Therefore,

it will have all the limitations normally associated with such studies based
on sample information.

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 2. The sample includes only Co operative Sugar Factories listed on Gujarat
State Co op Federation Gandhinagger. As the study is based on the
secondary data taken from Published, annual reports, the conclusion of
the study depends on the accuracy of such data reported by respective
companies.

3. As the study has been carried out for a period of Eleven years only i.e.
Financial years 2002-03 to 2012-13 and for the Sugar industry only, For
of the study with other similar studies, the factor affecting the respective
industry and Indian economy during the respective period
must be taken into consideration.

5. LAY OUT OF THE THASIS

 Chapter first on the basis of introduction of sugar industry and historical back
ground of it. It presents byproduct of sugar industry and its importance, legal
provision for licensing policy of government of India.

 Second Chapter about review of literature in this chapter described short note on
published books on sugar industry by different author
and thesis submitted by scholars.

 In the third chapter information about research methodology used in this thesis
including statement, objectives, nature and resource of data, sample selection.

 The chapter fourth introduction of selected sugar industry in Gujarat state. In

this chapter detail of all seventeen sugar factories are given

 Fifth chapter about ratios. its importance limitation and types of ratios given in
this chapter.

 Chapter six about analysis of variance of various ratios of sugar industry of

Gujarat state among the selected sugar companies during the study period.

 Chapter seven about analysis of variance of various ratios of sugar industry of

Gujarat state among the year of selected sugar companies during the study
period.

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  Chapter eight of trend analysis on the basis of ratios and ANOVAs

 Ninth chapter of conclusion and suggestions on the basis of ratio analysis, trend
analysis and ANOVAs.

Bibliography:
References:
1. Agarwal R.N.: Sugar Industry of India – My Recollection, Popular Prakashan Pvt.
Ltd., Bombay 1st Ed., 1976.

2. Ajit Narde ‘Sugar India’ Year Book 2000-2001 Anekant Prakashan, Jaisingpur,
Kolhapur, Maharashtra.

3. Carsberg B.V. & H.C. Edey: Modern Financial Management, Penguin U.K., 1969

4. Choudhary B. Roy: Working Capital Management, Eastern Law House, Calcutta,

1977

5. Cooperative Sugar Directory and Year Book, New Delhi, 1983-84.

6. D.G. Haspte, Progressive Sugarcane Farming in Maharashtra, Gyanshil

Prakashan, Pune, 1996.

7. Darda Rajendra & Others, Four Decades of Cooperative Sugar Industry (1950-
1990), Jai Datta Prakashan,Kolhapur, 1996.

8 .G.A. Nikam, ‘Future of Sugar Co-operatives in India’, “Co-operative Sugar”, June

1993 Vol. 24 No.10 New Delhi.

9.Govt. of India „Report of the High Power Committee on Sugar Industry, 1998.‟

10 .Gundurao S.N.: ‘Rehabilitation and Modernization of Sugar Factories in India:

Part I & II, 1965.

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11.Gupta L.C.: Corporate Management and Accountability towards a Joint Sector;
Macmillan, Madras, 1974

12.Inamdar N.R.: ‘Government and Cooperative Sugar’, Popular Prakashan,

Bombay.

13.I.S.O. Year Book, ‘Indian Sugar’ Vol. VIII No. 6, September 2003.114.Kamat
G.S.: ‘Management of Cooperative Sugar Factories in Maharashtra: Maharashtra
Rajya Sahakari Sakhar Karkhana Sangh, Bombay.

15.Karche R.M.: ‘Sugar Cooperatives in Developing Economy, Parimal Prakashan,

August, 1989.

WEBSITES:

 www.fcamin.nic.in/dfpd
 www.icra.in
 www.indiansugar.com
 www.sugaronline.com
 www.vsisugar.com
 www.staionline.org
 www.isecindia.com
 www.Sugaralliance.org.
 www.fda.gov.
 www.monitorsugar.com
 www.sugar.ind.com
 www.sugar.org
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