EXECUTIVE SUMMARY

      The report is regarding of business establishment. The study is to formulate effective study
with respect to working capital management.           

      The study can be considered to explore the variables affecting the business behavior. The
study has an insight in understanding the various attributes of the product as well as other factor
which influences business behavior and effective formulation of marketing strategy with respect
to working capital management. 

      The study on working capital management with respect to sugar industry was insight by my
guide at the organization to understand the business, which in a very difficult position.

                 

      The study throws light on some important findings, which are sources of primary information
of the company.

                  

      DSCL uses sophisticated technology such as computer, electronic mass media, automatic
machines, co-generations, computerized switching, etc.

                  

      The company not only aims at improving socio-economic status of rural farmers engaged in
sugar production but also has a multiplier on the village economy.

                   

      To conclude, I agree that the study has been experience to me, which highlighted all
theoretical concepts of my study. The suggestions may be helpful to DSCL to overcome
problems they are facing.

INDUSTRY PROFILE:  

INTRODUCTION: 

    The word 'Sugar' is derived from the Sanskrit word 'assugar' sugarcane in factor originated in
India. Sugar is an important commodity in our daily life. The sugar industry evolves a lot of
investigation and money exchange that's why it has occupied an important place in the National
Economy in the country. 
    India occupies a very prominent position being one of the largess producers; sugar industry in
India is the second largest Agro based industry. India, in-spite of being one of the largest
producers of sugar in the world, the export ratio is the lowest among the sugar exporting
countries. Hardly 2% of the total production is exported. 

    India being a populous country, the sugar consumption has increased tremendously creating a
large difference in supply and demand. However to meet the growing demand, the country is
successfully exploiting the resources to increases the production. 

    About 80 B.C. sugar cane was perhaps taken eastward i.e. China, where it found suitable soil
for development. About 327 B.C. when Alexander the great invaded India he and his solders was
the first European to sugar cane in India. Their return to westward they took sugar cane to
Europe, but it was about 700 A.D. that it was actual cultivated there. It was between the 4th and
6th centuries that the art of making sugar was discovered in India. The cane was cut into pieces
and crushed by the heavy weight and the juice thus obtained was bailed and stirred until solid
found. These solids being of even shapes and sizes were called 'SARKARA' the Sanskrit term
for gravel. The larger solid were called 'KHAND' from the word 'Candy' was descended. The
case against the Japanese sugar there command the Indian market was refused to Tariff board
and the sugar industry protection Act was passed by the Indian Legislation in 1932. Foundation
is being these laid for what proved to be dynamic enterprise of gigantic dimension with
proportioned economic value. 
 
 
 

GROWTH AND DEVELOPMENT OF THE SUGAR INDUSTRY: 

     During the first 5 year plan target of sugar production was originally fixed at 15 lakh tones
against the actual output of 11.16 lakh tones in 1950-51. However finding that consumption
demand was considerably going up the production target by a mid plan revision was raised to
181 KW tone. For achievement of the same a conditional plant capacity both by way of new
increase in capacity of the unit. 

     The rate of the industry in second plan was also equally commended by 1960 to 1961 it
established a record production of 30-29 lakh tones with an installed capacity in the industry
registered a further since to about 37.1 lakh tones. In 1965-1966 reason which was the last year
of the 3rd 5 years plan, the industry achieved a production of 35-37 lakh tones excluding the
target of 35 lakh tones fixed for it under the plan. 

     After 1965-66 there was a gap of 3 years, as the fourth five years commenced from 1st April
1969. The products in 1966-1967 declines sharply to 22-30 lakh tones due to decline in overall
ability cane cot by drought condition and reduction in cane average by 227 in factory areas
compared to 1965-1966. It was anticipated that in case of the policy of total control continued.
The production would register a sharp decline with this in view, the government adopted the
policy of capital de-central on sugar with effect from 1st oct 1965 with the ltd. flexibility
available under policy. 

     Sugar mild paid higher cane prices which helped maximize sugar production. The production
in the next two reasons 1967-1968 and 37.6 tones respectively. 

     For the fourth five years plan the govt, had initially fixed the sugar production target of 47
lakh tones and the targeted licensed capacity at 48.65 lakh tones due to slow progress in the
establishment of capacity target to 55 lakh tones accordingly issued the licenser. 

     There were only 29 factories during the years 1931 but now the number of factories is more
than 500. Sugar industry is providing employment to about 65 million sugar cane farmers and
there a family in India 9% of the rural population is directly or indirectly connected with the
sugar industry. 7 lakh out of this are skilled and semi-skilled workers employed with sugar
factory. 

     In the current years some of the sugar industries are achieving a good profit this is due to
effective Utilization of the by products to run their own industries likes rectifier, spirit alcoholic
liquors pharmaceutical. In recent years sugar industry in India has begins it export sugar thus
earning a valuable foreign exchange. 

Development of sugar in India: 

      Sugar industry is the second biggest industry in India next to textile more than 500 sugar
factories are working in India in public, private and co-operative sector. The sugar industry is
making rapid progress in India will as in whole world. 

Location: 

     The location as pattern of sugar industry is greatly influenced by the character of location
distribution of sugar cane with in the country and entirely on physical geographical factors.
Nature plays a dominant role in determining the location of sugar industry. 

     Sugar grows both in tropical and sub-tropical regions. There were only 29 factories in India
during the year 1931 brought tremendous in the number of location. The number of factories in
operation as grown from 29-140 in 1950-1951 out of which 110 were northern parts of India. 
Finally the number of factories has grown 286 in 1997-1998 to 358 in which nearly 56% of the
factories are located in the northern India. 

     The recent years the location factories have influenced the disposal to sugar industry to south.
The source center of sugar cane grown in the tropical is greater than sub-tropical reasons and
development of cane in south is mainly responsible for bringing about location changes in the
industry. 

SUBSIDY/FISCAL INCENTIVES: 
      Government of India has provided the following subsidies/fiscal incentives for industries that
produce energy under renewable energy sources, for which the    company is eligible: 
 
 

     Income tax holiday for 1st five years and 30% exemption for next 5 years. 

     Accelerated depreciation rates for the machineries installed in the power generating units. 

 Confessional customs duty / duty free imports.

 Capital / interest subsidy.
 Energy buyback, power wheeling and banking facility.
 Electricity tax exemption.
 Capital subsidy from the state government at Rs.25 lakh per M W exported.

COMPANY PROFILE: 

    The DSC Ltd., Kukkuwada Mill started in Davangere local. The location of Sugar Mill has
been well choosing the climate conditions are extremely congenital without extremes of cold of
not weather. The factory recurred area is quite fertile scold and will to integrity. Hence the yield
of cane in this area is high as about 50 tones per acre all high Sugar cane varieties grown in the
area. 

     There is very good scope for improving the capacity there are facilities for efficient disposal
of press mud. 

BACKGROUND AND INCEPTION OF THE COMPANY 

     The proposal to set up a Sugar Factory at Kukkuwada took a concrete shape with the
development of vast irrigation facilities created by the net-work of canals of Bhadra Dam in the
Taluk of Davangere, Channgiri, Honnali and Harihar and nearly 1,20,000 hectares of land
brought under irrigation in 1979-80 within a radius of 100 km from the present location of
Davangere Sugar co ltd., at Kukkuwada village. 

      DCS Ltd. was established during 1970 in Kukkuwada village (Incorporation date is 28th sep
1970). Sugar cane is the major Raw material for the. Production of sugarcane irrigation facility is
very important. In this area Bhadra canal water is flowing it is important point for location of this
factory. Aim to manufacturing good quantity sugar and it’s by products and to give employer it
to the village people. 
 

      In the sugar map of the world India occupies a very prominent position being one of the
largest producers. Sugar industry in India ranges among the major agro-based industry. Sugar
industry has been "producing more as well as marketing" so it is necessary to look into the aspect
in detail. 

     The fully exploit this vast irrigation potential, a sugar factory with a crushing capacity of
1250 TCD was established by name DAVANGERE SUGAR COMPANY LTD., as a joint sector
Government Company in the year 1970 at the initiative of the local Formers, Leaders of the
above taluk with the active financial participation and guidance of Karnataka Agro Industries
Corporation (KAIC) and Karnataka state Industrial Investment and Development Corporation
Ltd., (KSIIDC)., who substantially contributed to the Equity funds of the company. All India
Financial Institutions like IDBI, IFCI, and ICICI also participated in the Equity of this Company
to some extent. 

Capital Structure: 

     The companies authorized capital of 5,00,00,000 equity shares of Rs.10/- each. In this issued
equity shares 3,68,56,457 equity share of Rs.10/-each. Subscribed, called-up and paid-up capital
3,68,56,457(333890994 equity shares of Rs. 10/-each) in this that the calls-in-arrears Rs. 0.00 its
net capital is Rs. 368564570. 

    After the induction and interest taken by M/s Shamanur Family into the new management, the
co. is making steady progress all new. The crushing capacity has increased in stages as follows; 

1st stage from 1250 TCD to 1500 TCD at a cost of Rs. 110.00 lakhs

2nd stage from 1500 TCD to 2200 TCD at a cost of Rs. 1900.00 lakhs

3rd stage from 2200 TCD to 2500 TCD at a cost of Rs. 2500.00 lakhs

4th stage from 2500 TCD to 3500 TCD at a cost of Rs. 3500.00 lakhs 
 

      Under the 1st phase milling capacity was increased by adding one fi-brizer and process
capacity was increased by adding and filter .and also one pan. 

        The factory was fully established by 1974 at a cost of Rs.400 lakhs with the contribution as
follows:- 
 

SL. PARTICULAR RS.IN RS.IN

NO. LAKHS LAKHS

1 KQuity   160
  a) Karnataka Agro Industries Corporation 25.00   
    25.00

b) KSIIDC
  c) All India Financial Institutions like IDBI, 10.00  
ICICI
  d) Local Farmers and others 100.00  
       

2 TERM LOAN   230

  a) IDBI 70.00  

  b) IFCI 50.00  
  c) ICICI 50.00  

  d)LIC 40.00  

  e) State Bank of Mysore 20.00  

3 Debentures 10 10
  GRAND TOTAL   400
 

     The ex: - Of Shamanur Sugar Limited which is fully owned by the Shamanur Family (who
have also large state in Davangere Sugars) has shown how the working of the Sugar Mill with
Co-generation of power and supply to the Grid could change the entire picture and has it has
made handsome progress during the 1st crushing season itself because of bumper revenue from
power export. It is therefore imperative and essential that co-generation should be practiced in
full by modernizing the Sugar factory and also increase the crushing capacity to around 3500
TCD, so that a 24 MW power generation can be ensured from the bagasse generated by crushing
3500 TCD giving an annual additional net revenue of about Rs. 35 crores per annum from power
alone. 

     After Establishing a co-generation plant along with enhancing the capacity to 3500 TCD, Rs.
54.00 crores to Rs. 89.00 crores and will easily result in a overall net surplus of Rs.10-15 crores a
year after repayment of the taxes, duties and all other liabilities. This is the genesis for the
conception of the project of co-generation in Davangere. Sugars which involves not only setting
up of 24 MW Turbine with high pressure boiler, but devalued the management to modernize the
Sugar Factory to increase the crushing capacity to about 3500 TCD. 

NATURE OF THE BUSINESS CARRIED: 

      DSC Ltd., was established during 1970 in Kukkuwada village (Incorporation date is 28th Sep
1970) 
The nature of business in DSCL is as follows: 

     The main production of DSCL is manufacturing of sugar. Their main input for production is
sugarcane, Sugarcane is the major Raw material for the production of sugar and for the
production of sugarcane irrigation facility is very important. In this area Bhadra canal water is
flowing it is important point for location of this factory. Aim to manufacturing good quantity
sugar and it's by products and to give employer it to the village people. 

     Harvesting and processing season may very from country to country and area to area and
factory to factory depending on the convenience. Usually, the harvest start in July/ August and
continuous of April /May. Some factories have the continuous supply of cane throughout the
year, and they process them in whole year without idle of the factory. 

      Their sub production is power; they generate power and use it for Production of Sugar.
During the season of sugar they generate power with the help of bagasse which is sub product of
sugarcane. And during off season they will generate power with the help of coal. By this we will
come to know that their main nature of business is production of Sugar and generation of power.

VISION. MISSION. AND QUALITY POLICY : 

VISION: 

      DSC has dedicated to deliver over all value to there customers, delivering high quality
products, exceptional financial performance to company shareholders and complete satisfaction
to cane-growers, employees and stakeholders.

 Expansion of cane cultivation area to reach 30,000 acres of lad under cane cultivation.
 To plant, cultivate procedure, raise and trade in sugar cane, sugar beets and other crops.
 Diversification, Ethanal, Sugar refineries, one more sugar plant, starch manufacturing
unit and increase in existing crushing capacity from 3500 TCD 5000/7500 MT.
 Enter into joint venture.
 To expand the group of companies.

MISSION:

 Efficiency in production.
 Offering quality products and value for money to the consumers.
 Participating with the Government in policy formulation.
 Upgradation of technology in work of changing technological need.
 To provide better salary and welfare facilities to Employees.

QUALITY POLICY: 
 o Regarding quality planning to provide healthy and Sulphur free sugar to the
customers.

PRODUCT PROFILE: 

Meaning of sugar: 

      Sugar is a sweet, white or brown, usually crystalline substance obtained chiefly from
sugarcane or sugar beets and used commonly in food products, sugar means something sweet in
form of taste.

Formula: C12 H22 Oil  

    In chemistry, sugar refers to any of the class of carbohydrates to which this substance belongs.
Glucose, Lactose and Maltose are sugar. Most plants manufacture sugar. Sugar is soluble in
water, sweet to the taste and either directly or indirectly fermentable. 

UTILITIES OF SUGAR: 

    Sugar is necessary product, which provides carbohydrates to human body, which is the source
of energy for doing work; sugar is contained in sugarcane, fruits and other food items. 

The following are the main utilities of sugar 

 In our houses and hotels the sugar is commonly used for preparing Coffee, Tea, Sweets,
Badam milk etc.
 The different manufactures of chocolate, ice cream, soft drinks are often used the sugar
for preparing their products.
 Distilleries and Breweries, Alcohol producers will also use sugar in different forms.

POWER FROM SUGAR CANE: 

      Energy is one of the important requirements for carrying out all human activities since it is
required in some form or other. Man has to depend mostly on nature and environment for energy
sources. Most part of the country continues to be in grip of power shortage with demand for
outstripping generation. While the countries requirement for the entire year is in the order 445
billion units of power, availability. The increase in population accompanied by rapid
urbanization and industrialization led to increased use of fossil fuels, such as coal and oil. 

     The important feature of the sugar industry is its potential for generation of exportable power
from the use of bagasse as fuel. Bagasse as fuel has been in use for sugar making since time
immemorial. But its use for producing use for a much recent phenomenon. The oil crisis and
limited fossil fuel resources in the country forced energy planners to take for energy efficient
ways of producing sugar. Ministry for non-conventional Energy Sources (MNES) has established
the potential for surplus power generation from bagasse alone in India at 3500 MW. Every tones
of cane crushed can yield 80-90 kWh of power. 

BY-PRODUCTS IN SUGAR INDUSTRY: 

The main by-products of sugar manufacturing are: 

a. Bagasse

b. Molasses

c. Press mud

a) Bagasse. 

   A number of products can be prepared from different constituents of bagasse. Cellulose can be
used for the manufacture of paper cardboard, active carbon etc. Bagasse is also a suitable raw
material for plastic industry. 

Bagasse and its uses: 

   The by-product or residue of milling or diffusing cane is bagasse, the woody fiber of the cane,
in which the residual juice and the moisture from the extraction process remain. By the work
fiber is meant those all insoluble solids, fibrous or not. 

Bagasse,Storage: 

   Storage of bagasse produced at grinding season is necessary when it is to be used as raw

material for the other operations that are carried out continuously throughout the year. Fresh and
under graded bagasse gives the best result in pulping. 

Commercial utilization of Bagasse: 

1. Paper manufacturing
2. Wall board and insulating board
3. Production of cellulose

 
 

b) Molasses: 

      It accounts for an output of 3% to 4% of cane. Molasses utilized variety  of ways:

      Methylated Spirit,   Cattle   food, Fertilizer, Yeast,   Road surface,   Cheap confectionary,
Artificial silk, Chemicals] Power Alcohol, Fuel. 

c) Press mud: 

      Impurities are precipitated during the course of clarification of sugarcane juice. The cake,
which is discharged after washing, is called press mud. This mud contains certain mineral and
organic matter. 

Heavy Metals Raw Sugar

            Metal    Concentration (P.Pm)  

            Iron    5.0 – 12.0 

            Manganese   1.0 – 6.0 

            Copper    0.22 – 1.22 

            Zinc    0.5 – 1.0 

            Molybdenum   0.08- 0.30 

            Nickel    0.05 – 0.15 

            Chromium   0.004 – 0.07 

            Cobalt    0.04 – 0.06 

            Lead    0.0005 – 0.0006 
 

Area of operation – Global / National / Regional

Corporation Office:

DSC LTD., Kukkuwada

Davangere

Karnataka.

      DSC LTD has its area of operation at Regional level, it has it's another branch in Duggathi
Davangere. It head office is located at Bangalore. Though the company's major concern is
domestic market, it exports sugar to foreign countries when there are no Government's
restrictions. Pakistan, Srilanka and Bangladesh are the countries to which company exports
sugar.  

OWNERSHIP PATTERN

     DSC LTD. is basically Public Limited Company. The DSC Ltd., Kukkuwada Mill is started
in Davangere local. The majority of shares in the company i.e. 95% are held by M/S Shamanur
Family plays a vital role in the company management by virtue of their shareholding in the
company.

SHAREHOLDERS INFORMATION 

NO OF NO OF % OF NO OF % OF
EQUITY SHARE SHARE SHARE SHARE
SHARES HOLDERS HOLDERS HELD HOLDING
HELD        
1-500 9873 91.43 9,37,304 2.54
501-10000 500 4.63 22,28,177 6.05

10001 & above 429 3.97 3,36,90,976 91.41

Total 10816 100 3,68,56,457 100

Sources: This Information is as per 38th Annual report of DSC LTD., for the year 2008-2009.

Competitor’s information 

     As per sugar concern there are no competitors but for sugarcane competitors are there only for
sugarcane because government only fixes the price of sugar.   

The major competitors in Karnataka. 

 The Mysore Sugar Company Ltd.,

 The Godavari Sugar Mills Ltd.,
 Gangavathi Sugars Ltd.,
 Bannari Amman Sugars Ltd.,
  Shri Prabhulingeshwar Sugars & Chemicals Ltd.,

 
SL NAME OF THE STATE NO OF
NO FACTORIES
1 Andra Pradesh 37
2 Assam 1
3                       Bihar (south) 10
4 Chattisgadh 1
5 Goa 1
6 Gujarat (Sawrashtra) Gujarat (South) 5

16
7 Hariyana 16
8 Karnataka(Northwest) Karnataka (West) Karnataka 21
(Coastal)
18

5
9 Kerala 1
10 Madya Pradesh 8
11 Maharashtra (North) 70

Maharashtra (Central) 60

Maharashtra (South) 62
12 Nagaland 0
13 Orissa 7
14 Pondichery 2
15 Punjab 22
16 Rajastan 1
17 Tamil Nadu 38
18 Uttar Pradesh (Central) 39

Uttar Pradesh (East) 40

Uttar Pradesh (South) 25

19 Uttaranchal 10
20 West Bengal 2
  Total 518
 
 

INFRASTRUCTURE   FACILITIES: 

PLANT LOCATION: 

      Plant location is an important managerial decision, which decides the fate of the enterprise.
Ideal plant location is one, which results into the lowest cost of production and distribution. The
DSC ltd., has plant location in better condition that have the following facilities. 

1. Availability of Raw Material: 

     As the cost of raw materials in sugar industry constitute a large part of total production cost,
efforts should be made to establish the undertaking close to the source of materials. It helps to
continuity of production and reduces cost of transportation and thus ultimately enables the
factory to operate successfully. 

     The availability of raw materials i.e., sugarcane is sufficient for the production process of
DSC ltd., majority of cane that is being crushed is available within a radius of 20 km of the
factory. 

2. Source of Power: 

      DSC Ltd., is setting up a co-generation plant with 24 MW exportable capacity using bagasse
which is used in production process daily. 

3. Transport and Communication Facilities: 

    The better transport facility enables existence of storage handling and service facilities.
Davangere city is at distance of about 17 km from the project site. The project site is well
connected by Bangalore, Pune through railway and NH4 road. 

4. Climate condition: 
      The cordial reason for locating the plant near Davangere is favorable Agro climate
conditions, which are conductive to sugar development. Climate induces the efficiency of
workers to a considerable extent. The agriculture resources are available in abundant in this
location. , 

5. Supply of Labour: 

    The labour cost is an important item of the total production cost in every industry. DSC Ltd.,
has supply of labour from surrounding rural areas and Davangere district at cheaper cost. 

6. Banking and Credit Facilities: 

      These facilities are available in Kukkuwada where the DSC Ltd., is located and also in
Davangere city. State bank of Mysore, Indian Banks, Canara Bank and union Bank of India have
lent a helping hand in this regard. 

7. Water Facility: 

      For the purpose of cooling and waste disposal process large quantity of water way may be
needed. DSC Ltd., has water supply from the Shygale halla which is very nearer to the project
site. 

ACHIVEMENT/ AWARDS: 

1. International Award: "Best business leadership co-generation" awarded by the "Solar

Energy Society of India" associated with win-rock International, which is the award for
the best power plant in India. The award was given on 8th Feb 2006.
2. "SESI" Award for the "Co-generation Unit" in the year 2006. .
3. The Davangere Sugar Co., Ltd., has been best owed with owner of "INDUSTRIAL
EXCELLENCES" in technology and management by Institute of Indian Economic
Studies.
4. The managing director has best owed with the honor of "BHARATH UDYOGA
RATHNA AWARD" for achieving excellence in co., management to make it a
profitable venture, and installation of Co-generation Plant within a short period of 10
months.

WORK FLOW MODEL (END TO END): 

Process followed to manufacture Sugar from Sugarcane. 

1. Cane procurement.
2. Juice extraction.
3. Juice clarification.
4. Evaporation.
 5. Syrup clarification.
6. Crystallization process.
7. Conveying and grading of Sugar.
8. Sugar Packing, Weighers and Storage.

PROCESS FLOW DIAGRAM OF DSCL KUKKUWADA  

 
 

 
 
 

 
 
 

 
 

 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 

A brief description of the above process steps are given below. 

l. Cane procurement: 

       Matured cane is harvested and transported by tractors to the factory site, taking care that the
time gap b/w harvesting and milling is not more than 22 hours. Cane is harvested on the basis of
1. Age of the crop. 2. Hand refractometer bris and 3. Lab crusher test. 

2. Juice extraction: 

      For the convenience of milling, cane is cut into small fibers while conveying to mill. Fibrous
cane is compressed in a tandem of 4 mills in series to extract maximum juice. Compound
imbibitions are followed to extract the juice efficiently using hot condenses at 90° c. To avoid
microbial attack, mill sanitation is followed by addition of carbonate-based chemicals. Juice
gutters and receiving tanks are washed with hot water jet every 8 hrs. 

3. Juice clarification: 

     Before clarifying the Sugar cane juice it is weighed for the material balance purpose.
Weighed juice is pumped to continuous liming and sulphita-tion tank; through a multi-pass
heater to a temperature 70° c to 75° c. heated juice is treated with milk of lime and So2 gas. To
reduce fluctuations in chemical reaction, film type continuous sulphur furnace and auto PH
control system is installed. Treated juice is pumped to a continuous clarifier, Precipitated non
Sugars settle at the bottom of each compartment and decanted clear juice comes out from the
upper portion of each compartment. There are 4 compartments in the clarifier. 

     Under-flow of the clarifier is sent to rotary Vacuum filter, to further recover Sugar from the
non-Sugar precipitated juice. Filtrate juice sent to filter for further refining the juice clarity. 
      Milk of lime is prepared after passing through lime slacker and classifier. (To maintain
quality of lime, fresh quick lime is procured from limekilns).To prepare sulphur dioxide gas,
superior quality rolled sulphur is burnt in a furnace, in the presence of compressed air. 

4. Evaporation: 

     Clear juice coming out from the clarifier is fed to multiple effect evaporator set, to
concentrate the juice to 58° to 60° bris. Condensate collected from evaporator later bodies is
used for mill imbibition purpose. 

5. Syrup clarification: 

     Concentrated syrup from evaporator outlet is sent to, syrup is treated with phosphoric acid
and patented flocculent to separate out non-sugar to the possible extent. Clarified syrup is
sulfated for further bleaching to improve color. Clarified and sulfated syrup is sent to pan floor
tanks to crystallize sugar. 

6. Crystallization: 

     To extract the sugar from cane syrup it is boiled in Vacuum Fans adopting 3 massecuite
systems. After extracting the maximum quantity of sugar, in the pans the left over liquors is
called final molasses, which is sold to distilleries. 

     Fresh cane syrup (mother liquor) is boiled in vacuum pans called as 1st massecuite or ‘A’
massecuite. From this massecuite, commercial sugar is taken out through centrifugal and liquor
is separated out. This other liquor after 1st extraction called 'A' molasses. To get required number
of sugar crystal and to maintain uniformity. 'A' massecuite is boiled on seed sugar collected from
sugar hopper. 

      'A' molasses is again boiled as 'B' massecuite. It is centrifuged and the sugar is melted using
pan condensate water. This melt is used in "A" massecuite boiling along with syrup. Massecuite
coming out from "B" massecuite centrifugal is called as "B" molasses. 

      "B" molasses is again boiled as "C" massecuite. Sugar coming out by the centrifuging of "C"
massecuite is melted and also used in "A" massecuite boiling. Molasses coming out from c-
centrifuged is called as final molasses. 

7. Conveying and grading of Sugar: 

      "A" massecuite (Bagging Massecuite) is centrifuged in fully automatic batch type centrifuged
in fully automatic batch type centrifuged to get commercial grade sugar. This sugar is discharged
on a hopper cum conveyor. While conveying the sugar to grader, it is treated with hot and cold
air to remove moisture and to bring down the sugar to 38°c before packing / bagging. Magnets
are provided just above the sugar hopper and at the bottom of sugar elevators to separate out
metal pieces if any. 

8. Sugar packing, weighers and storage: 

      Graded sugar is sent to sugar silos. These sugar silos are attached with auto weighers. Sugars
are bagged according to market requirement either in 50 kg pack or 100 kg pack. For 50-kg
packing normally High-Density Poly Eurethane (H.D.P.E) bags with polytene linking are used.  

      In the sugar godown bags are stacked carefully in lots. These lots are covered with Low
Density Poly Eurethane (L.D.P.E) black sheets to prevent moisture entertainment. 

Brief Description of Co-gen Process. 

Boiler: 

      Make  : BHEL 

      Capacity : 80Ton per hour 

      Pressure : 67 kg 

      Temperature : 500oc 

      Type  : Bid-rum natural circulation boiler 

 

Turbo Generator: 

      Make  : BHEL 

      Capacity : 22 MW 

      TYPE  : Double extraction cum conducting

      When the cane is crushed the expressed juice is sent out the process for production of sugar.
The by-product after expressing juice coming from the mills is known as Bagasse, which
contains 50% moisture and fiber. The same is used as a fuel for generating steam. The bagasse
coming from the mills is fed to boiler for generating high-pressure steam. In addition to Bagasse,
other biomass fuels like Groundnut shell, Coffee Husk, Paddy Husk, Saw Dust, and Wood-chips
etc are also used for steam generation. 

     As it is a high-pressure boiler the water quality should be maintained properly. For this
purpose there is a water treatment plant to supply the required demineralized (DM) water for
boiler and soft water for cooling purpose. For controlling the air pollution there is an Electro
Static Precipitator (ESP) in the boiler, which collects the fly ash, so that the dust concentration in
flue gas is maintained well within the norms. 

      The high-pressure steam is passed through the turbine for generating power. The required
low-pressure steam is drawn from turbine and sent to Sugar Plant for processing. The turbine,
which is coupled with generator power at 11 kV. This power is used for sugar plant as well as
co-gen plant operation and the surplus power is evacuated to the KPTCL grid. The 11 kV is
stepped up to the transmission voltage of 66 kV. The power is evacuated to the substation, which
is 6.5 km from the site through tower lines. 

FUTURE GROWTH AND PROSPECTUS

1. To expand 3500 TCD to 5000 TCD

2. To bring 30,000 acres of land under cane cultivation
3. To crush at least 8, 00,000 M T of sugar cane every year
4. To generate Rs 60,000 crores worth power
5. To export Rs 50,000 crores sugar every year
6. To establish Ethanol plant

 
 

Mckensy’s 7s framework with reference to organization under study  

      The 7s Model is a tool for managerial analysis and action that provides a structure with
which to consider a company as a whole, so that the organization's problems may be diagnosed
and a strategy may be developed and implemented. The 7s is a framework for analyzing and
their effectiveness. In looses at the 7 key elements that make the organizations successful, or not;
Strategy, Structure, Systems, Style, Skills, staff and Share values. 
 

THE 7-S MODEL 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1. STRUCTURE: 

      The design of an organizational structure is a critical task of the top management of an

organization. It is the skeleton of whole organization. It refers to organizational arrangement and
relationships. It prescribes formal relationships among various positions and activities.
Arrangements about reporting relationships, how an organizational member is to communicate
with other members, what roles he is to perform and what rules and procedures exist to guide the
various activities performed by member are all part of organizational structure. 

Organizational Structure of DSCL: 

      The top management of DSCL governs the activities of people who are dependent upon each
other for achieving common objective. In DSCL the required objectives are first determined,
grouped and duties are assigned to various employees according to the objectives. 

      The functional structure of DSCL is appropriate for an organization with several products in
one industry. The company ensures the maximum use of Principle of specialization. 

Board of Directors: 

1. S. Shiva Shankarappa (Chairman)

 2. S.S Ganesh (Managing Director)
3. S.S Mallikarjun (Director)
4. S.S Jayanna (Director)
5. K.V Somashekar ( Director)
6. K.P Surendranath (Nominee of IREDA)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Departmental Study : 

Production Department: 

     Production is any process or procedure developed to transform a set of inputs like Man,
Machine, Material, Money and management into a specified set of outputs like finished products
and service in proper quantity by achieving the objectives of an enterprise. 
      Production management is a set of general principles applied for production economics
facility design and schedule design, quality control, work-study and budgetary control. The sugar
industry in India adopted all the facilities which help in achievement of greater production like
location, layout, production control, Inventory control, quality control, labour control,
improvements in cost control and regarding socio-economic environment. 

       The DSCL has adopted advanced technology in their production process, the standards
recovery percentage in India is 10.8. In DSCL and they have the recovery percentage of 10.2. In
DSCL they are proposing to generating power about 24 MW by using bagasse. The generated
power will be used in crushing and also supply the power to grid. 

Stores: 

      The DSCL as very well managed stores, by storing the genuine standardize spares, which are
used in production process. They purchase the standardized spares in through tenders. 

      For the purpose of sugar process some chemical are also used like Ortho Phosphoric Acid
(OPA) burnt lime, sulphur, hydrogen peroxide and they are also stored. The final raw sugar is
stored in the store. The company store sugar in large quantity. Sugar is produced only in the
season. Because of unavailability of sugarcane in all season. 

Personal Department: 

      Human resource management is "the planning, organizing, directing and controlling of the
procurement development composition, integrating and maintenance of people for the purpose of
contributing and organizational individual and social goal. Personal department covers the entire
department and sections of an organization where the people are working. 

     Indian sugar companies require three of working group's permanent, Seasonal, temporary
with skills like highly skilled, semi skilled and unskilled workers,   according to the type of the
job. 

     In DSCL personal administrations along with general manager carry out the job of managing
human resource. The company has adopted electronic punching card system to maintain
attendance/absenteeism. In HR department also given some incentives and awards to employees
for whom showing better performance, seniority and experience. 

Marketing Department: 

     Marketing is the process of planning and executing the conception, pricing, promoting and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational goals. 

     Sugar is one of the essential commodities; marketing strategy is entirely different in sugar
when compared to other product, which are exposed to the open market operation. The demand
and the department of consumer affairs and public distribution systems, New Delhi, guide
marketing, controls supply theory at different levels and sales. Sales of are controlled under
"Release Mechanism" of quota of sugar regulated by the central government. Earlier two quotas
i.e. levy and non levy at 40% and 60% was fixed by the central government accounting for about
5-6% of buffer stock of sugar held by the sugar factories. Levy quota of 40% was sold to the
government to distribute sugar to the public under public distribution system and remaining 60%
sugar was sold in the open market through the dealers holding Essential Commodities License
(ECL). 

     DSCL has exported more than 2.5 million quintals of sugar in the last 2 years of all now in a
comfortable position holding only about 80,000 quintals of sugar. With the advent of new export
avenues to Srilankha, Maldives, Bangladesh, mainly with its good quality of sugar better price in
the open market indigenously. 

Finance and Accounts Department: 

      Finance and Accounts department performs the duty of generating funds on the basis of the
financial projections and achievements made by the company  and on  the budgeting  income, 
expenditure  is  controlled  and streamlined in a  planned way  on  the basis of budgetary
expenditure envisaged by various  production  departments both for production  and
maintenance. Finance department projects the financial projection of the company including its
expansion activities in addition to looking after day today financial arrangements. 

     DSCL has adopted financial management software system to arrive at the projected analysis
and function very efficiently and this helps the company to negotiate with financial institutions
and banks for its future financial needs well in advance. Finance package also included the
approach to sugar development fund and its formalities to be observed in getting financial
assistance from SDR. 

     Company has installed "Tally" system accounting. Account department works under the
finance department and submit of monthly, quarterly, and annual accounts for internal audit to a
separate audit from M/s Shanthappa and company Davangere. Accounts are maintained by
accounts staff, and accountant and preparation of trial balance, reconciliation confirmation of
balances from sundry auditors and salary debtors is his responsibility. Accountant also deals
sales tax and income tax matters. 

Functions: 

 It prepares and maintains journal books, cash and bank books, ledger accounts and trial
balance. The corporate office prepares profit and loss account and balance sheet.
 The department analyses the financial position of the organization by maintains the
required records by preparing and analyzing the financial statement of the company.

2. SKILL: 
      Waterman considers 'skills' as one of the most crucial attributes or capabilities of an
organization. 

      The distinctive competences - what the company does best, ways of expanding or shifting
competences. The term skills include those characters, which most people uses to describe a
company the dominate competence of an organization are part of the organization character. 

On the job training 

     This type of training is also known as job instruction training as the most commonly used
method. Under this method the individual is placed on a regular job and taught the skills
necessary to perform that job. The trainee learns under the supervision and guidance of a
qualified worker. In this method the trainee as given the first hand knowledge and experience
under the actual working conditions. The trainee learns how to perform a job. 

Off the job training 

      Under this method of training trainee is separated from the job situation and his attention is
focused upon learning the material related to his future job performance. Since the trainee is not
distracted by job requirement he can place his entire concentration on learning the job rather the
spending his time in performing it. There is an opportunity for freedom of expression for the
trainees. 

      The company provides on-the job training for the newly recruit employee is made to work
under the experienced staff within the organization to attain required skill. The company
provides off-the job training for managerial level people, spinning master, maintenance and
electrical engineers. In DSCL there are three main sills clerical, technical and supervisory.
Clerical staffs will work according to their responsibilities given to them. Technical staffs like
mechanical engineers, chemical engineers arid others work according to there nature of work.
They should control over workers in the particular section. Supervisory are the departmental
heads, control with the particular area. 

STYLE  

      The DSCL follows participate style. Instruction flows from top management to the end
worker and vice versa there is participation of middle management as well as lower level
management in decision making. The top management takes the strategic major decision. 

     Here style implies the leadership approach of top management and the company's employee's
way of thinking and behaving. The style is the tangible evidence of what management considers
important, the way it collectively spends time and attendance and uses symbolic behavior. 

     DSCL is following Top down Decision making parameter to pertaining day to day operation
and employees are participative in this organization. 

STRATEGY: 
      Action a company plans in response to or anticipation of changes in its external environment.
Major action plan of DSCL is Prepare to develop Sugar production capacity of 8, 00,000 MT per
annum.

      A mission is very reason and jurisdiction for the existence of a firm. It is usually expressed in
terms of the benefits the firm that firm provides to its customer. An organization mission
statement states that what it is, why it exists and unique contribution it can make. 

      "To emerge as global mining organization with international standards of excellence,

rendering optimum satisfaction to all its stakeholders" 

Waste elimination: - During the process of extraction of Sugar they are getting many wastes
like Bagasse, Molasses and Press mud. But these wastes are reused as a raw material for some
other purpose like bagasse is used to generate power, molasses is used for manufacture of
chocolate or distilleries and press mud is used for Fertilization. Like this wastes are eliminated in
DSCL. 

SYSTEM:  

      Systems are more powerful than they are given credit. Systems refer to all the rules and
regulations and procedures both formal and informal that complement the organization structure.
It includes production, planning and control systems, capital budgeting system job cost
accounting systems, planning and budgeting systems, performance evaluation system. 

      For Ex:- In Davangere Sugar Company Limited, the company is an ISO9000 certified, so the
employees of the company has to follow the rules, regulations and procedures of the
international organization for1 standardization (ISO). In addition, this company has its own
corporate culture and every employee has to follow it. 

STAFF:  

     In 7-S framework the term "Staff" has specific connotation. According to waterman and his
colleagues, the term 'staff refers to the way organizations introduce young recruits into the main
stream of their activities and the manner in which they manage their careers as the new entrants
develop into future managers. 

     The people/human resource management- process used to develop managers, socialization

processes, and ways of shaping basic values of management cadre, ways of introducing young
recruits to the company, ways of helping to manage the careers of employees profile in DSCL.

Total number of employees in the company-449 

In this 

Skilled   - 165 
Semiskilled  - 14 

Unskilled  - 16 

Clerical  - 102 (including field executive) 

Supervisory & Others -48 

Managerial  - 20 
 

Contract Basis: Permanent - 53 

                  Seasonal - 08 

Trainees:  Permanent - 17 

                  Seasonal - 01 
 

SHARED VALUES: 

      Guiding concepts, fundamental ideas around which a business is built - must be simple,
usually stated at abstract level, have great meaning inside the organization even though outsiders
may not see or understand them.    

      It refers to a "set of values and aspiration that goes beyond the convention formal statement
of corporate objectives". Shared values are the fundamental ideas around which a business is
built. They are its main values. They are the broad motions of future direction that the way the
top management as a team wants to   express itself. 

      At DSCL kukkuwada they present their faith, they believe their core values. They strive
towards the achievement of their customer satisfaction, to provide safe working condition, to
maintain discipline at all levels, to provide a friendly, congenial working atmosphere, employee
satisfaction to the maximum. Their main concern is for their employees and their welfare. Equal
importance is given for the environment protection and towards production. 

SWOT ANALYSIS OF DSCL 

 

STRENGTHS: 
 

 DSCL has good reputation in sugar market. This is the result of long experience of
around 36 years in the sugar industry.
  The major strength of DSCL lies with the Production. DSCL will enjoy production
during seasons.
 Production Quality is the strength of the DSCL.
 Exemptions from sales taxes major dispatches are made from plant site.
 Support from state government.
 Its continuous and large production.

WEAKNESSES: 

 Transportation costs are high due to non-availability of trucks and other means of
transportation easily.

 Financial crush is another Weakness at DSCL.  Problems in efficient warehousing and

out bound transportation.

OPPORTUNITIES: 

 The Central Government has relaxed industry from the conduction of prior approval for
the exports. Now the sugar industries are free to export the sugar without the prior
approval of the Central Government.

 The Central Government on the other hand is encouraging the production of   ethanol.

 Recent Government policies of promoting sugar exports, mandatory mixing of Ethanol in

petrol and interest subsidies for generation of alternative energy have thrown open
various opportunities for the industry like understanding more quantity of sugar exports
and reduce burden on the domestic market, diversification into manufacture of Ethanol
from molasses and generation bagasse based power.
 These developments promise to be long lasting as it has positive feature for both the
consumers of sugar/power/petrol and also for the industry.
 The projection of shortage of sugar has provided another opportunity in the form of
important of raw sugar and processing of the same into white sugar and re-export. 
 In the area Bhadra canal water is flowing it is important point for location of this factory. 

 
THREATS: 

 Ambiguity in the policy decisions of the Central Government regarding decontrol of

sugar industry has been a Damocles' sword hanging on the industry.
 Any hasty decision for the total decontrol of the sugar industry by removing the monthly
release mechanism would prove harmful in the short run, through it is in the interest of
the industry in the long run.
 Frequent changes in the policy decision of the state Government / state power
transmission corporations regarding purchase of power from the bagasse cogeneration
units, would hit at the very survival of the industry as a great majority of the units are
embarking on diversification into bagasse based cogeneration by sacrificing the
profitability in the sugar sector.
 The international market also is witnessing the surplus sugar and expectation of increase
in the international sugar prices is bleak.

 
 
 
 
 
 

FINANCIAL STATEMENT ANALYSIS OF DSCL 

BALANCE SHEET AS AT 31-03-2009 

 

SOURCE OF FUNDS Schedule As At 31-03-2009 As At 31-03-2008

1. Share holders Fund :    
a) Share Capital 1.01 36,85,64,570.00
b) Reserves and surplus 1.02 13,85,82,726.87
Total ‘A’   50,71,47,296,87
2. Loan Funds :    
a) Secured Loan 1.03 1,09,77,11,813.34
b)Unsecured Loan 1.04 1,11,19,677.96
Total ‘B’   1,10,88,31,491.30
Total (A+B)   1,61,59,78,788.17
APPLICATION OF FUNDS:    
1. FIXED ASSETS : 1.05  
 
36,85,64,570.00
6,83,07,077.29
43,68,71,647.29
 
1,20,21,19,191.27
1,11,19,677.96
1,21,32,38,869.23
1,65,01,10,516.52
 
 
a) Gross Block   1,36,85,00,318.63 1,32,25,99,159.77
b) Depreciation to – date   68,63,85,853.17 58,83,83,050.33
c) Net Block   68,21,14,465.46 73,42,16,109.44
d) Capital Works in progress   1,07,67,316.69 1,74,16,362.28
Total ‘C’   69,28,81,782.15 75,16,32,471.72
2. INVESTMENTS      
Total ‘D’ 1.06 5,35,900.00 5,35,900.00
3. Current Assets , Loans and      
Advances :
a) Inventories 1.07 50,28,88,491.87 45,21,28,310.14
b) Sundry Debtors 1.08 28,63,37,339.12 23,98,48,063.29
c) Cash and Bank Balances 1.09 19,35,74,021.06 4,63,02,992.81
d) Loans and Advances 1.10 14,02,13,905.40 26,33,97,549.85
Total ‘E’   1,12,30,13,757.45 1,00,16,76,916.09
Less: Current liabilities and provisions 1.11 28,67,05,078.55 19,77,81,345.58
Total ‘F’
Net Current Assets (E-F)   83,63,08,678.90 80,38,95,570.51
Deferred Revenue Expenditure Total         2.88.11.118.20 5,08,92,582.85
‘H’
Deferred Revenue Asset Total ‘I’   5,74,41,308.92 4,31,53,991.44
Total(C+D+G+H+I)   1,61,59,78,788.17 1,65,01,10,516.52
       
 
 
 
 

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31-03-2009 

INCOME SCHEDULE As At 31-03-2009 As At 31-03-

2008
SALE OF      
PRODUCTS:
1. Sugar:      
50,12,99,875.64 72,58,62,806.20
Domestic Sales
  3,36,76,500.00   6,89,86,550.00
Export Sales
2. Power   97,30,54,075.40 42,07,02,266.40
3. Molasses     5,29,91,091.00   1,27,39,836.00
4. Other Income 2.01   2,97,82,377.12      63,86,448.95
TOTAL   1,59,08,03,919.16 1,23,46,77,907.55
       
EXPENDITURE      

SUGAR UNIT:
Cane purchased   60,83,23,383.00 58,17,00,763.00
Cane Purchase     2,47,90,563.00      57,40,710.00
Tax
Cane 2.02   4,83,78,326.08    1,73,62,738.31
Procurement &
Dev. Expenses
Manufacturing 2.03 10,42,37,273.51 10,06,19,886.51
Expenses
Administrative 2.04   1,70,15,269.85   1,56,56,050.91
Expenses
Selling and 2.06      80,05,581.79      58,71,146.53
Distribution
Expenses
Financial charges 2.08   9,39,89,812.18   8,42,08,069.22
CO-GEN UNIT:      
Consumption of   50,70,45,171.80 18,07,26,782.00
coal
Financial Charges 2.08   4,23,29,513.00   4,40,41,807.00
Cogeneration 2.07   2,20,14,743.84   2,74,81,206.49
Expenses
Decrease(+) /   -4,96,59,242.00    3,58,79,023.00
Increase(-) in
Finished Goods
& By-Products
TOTAL   1,42,64,70,396.05 1,09,92,88,236.97
       
Profit Before                                        16,43,33,523.11    13,53,89,670.58
Depreciation and
Taxes
Less      
Depreciation:      
5,81,75,604.00     
Co-Gen Unit    
(Schedule 1.05) 4,17,45,717.58    9,99,21,321.58 10,54,31,593.83

Sugar
Unit(Schedule
1.05)
Operating Profit      6,44,12,201.53    2,99,58,076.75
Before Provision
for Taxes
Less provision      
for:      
        80,62,568.47        34,57,846.06 
Minimum
Alternative Tax         3,61,300.96         4,22,265.35
and Arrears of
Tax

Fringe Benefit
Tax and Arrears
of Tax
Profit after Taxes       5,59,88,332.10    2,60,77,963.34
Add: Deferred       1,42,87,317.48       97,82,681.49
Tax on Income –
A S 22
Net Profit (+) for     7,02,75,649.58    3,58,60,644.83
the year
Net Profit(+) /        36957330.64       10,96,685.83
Loss brought
forward from
previous year
Balance Profit      107232980.22    3,69,57,330.64
Carried to
Balance Sheet