Shakarganj sugar mills limited

INTERNSHIP REPORT
ORGANIZATION:
SHAKARGANJ SUGAR
MILLS
Submitted To:

Mr. RASHID SAEED

Submitted By:

AHMAD MUSTAFA
ROLL NO: 48
M.B.A Evening
5th Semester
SESSION(2010-14)
ahmedkazmi89@hotmail.com

DEPARTMENT OF BUSINESS ADMINISTRATION

BZU BAHADUR SUB CAMPUS

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LAYYAH

Dedications:
I dedicated this efforts to my branch supervisor
and operational manager who supported me and
courage me in the financial analysis and other
necessary postulates belonging to my internship report
and also to my Parents & Teachers who guide and
encourage me during the Preparation of this report and
I want to say my Parents & Teachers.

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Acknowledgement:
All the thanks and praises for Allah who bestowed
guidance and wisdom to mankind and enabled me to complete this
work. I am very thankful to all my Superiors i.e. who helped me
a lot to produce this report. I am thankful to my department
who accepted my request to do internship in Shakarganj
Mills Limited. I am also grateful to all employees of the
Shakarganj who guide me during the course of internship. The
behavior of all the department supervisors is very good to me
because they gave me a lot of time to guide me the mechanism of all
departments in which I worked. I am also thankful to the management of
Shakarganj Mills Limited who gave me all the valuable
support and opportunities to complete 06weeks Internship
program and compile this report.

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Executive Summary:
Sugar is most important industry of Pakistan. The report is on Sakarganj
which is a highly reputed organization in sugar industry.Sakarganjsugar mill is one of
the pioneers of the sugar industry in Pakistan. Sakarganjsugar mill was established in
1964. Company is ISO certified and producing sugar and other by products. There are
many departments here among them chemical, cane, account and admin departments
have major role. Admin department is main department which is handling all the
matters of company. It is responsible for rules and regulations, security attendance of
employees and other facilities to workers. Finance department is the most important
department of company. It is responsible for sale, sale tax, payments, receipts,
provident fund, salaries and store sections. It keeps and provides sufficient funds at
the time of production. My internship also related to finance department and their
complete procedure and software vouchers are written in detail in report. In banking
section different bankers of company are there who provides loans and collects
deposits on behalf of company. Store department is responsible for inventories of
finished goods, work in process and new purchases. P.D made by head of store
sections sent to main account section where accountant checks the rate, quantity and
price and made a voucher. This voucher after approval from finance manager sent to
R.D for further and final approval. After R.Ds approval that product is purchased.
Different accounting policies like depreciation, going concern, payments, and receipts
have been discussed. After this purpose of this analysis to business, investor,
management and government have been shown. At last of repot problems of sugar
industry has been discussed and few recommendations are suggested to management
of Sakarganj. This report accentuates the details of my learning and observation at
Sakarganj. It also includes the actual forms that are used in this organization to
carryout basic business processes. And, I am sure that this report will provide you a
complete and clear image of organization.

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TABLE OF COTENTS
Introduction to All Departments

PAGE NO
1

Task Assigned to me During Internship

My week wise activity while working as internee

2
3

Impplication of Class room learning in organization

SWOT Analysis

PEST Analysis

Financial Analysis

Intiative that i take as a manager there

14

Suggession

14

Introduction to the department where I worked:

ADIMINISTRATION DEPARTMENT:
The main function of this department is to handle all the administrative
matters and maintaining discipline. The main goal of this department is to provide
easy working environment. This is very important department of the organization as
the name shows; Admin department is the department which is dealing matters about
administration this department plays very important role for maintaining discipline in
the mills. This department has to administrate all the operations of the organization.
Admin department is working under Admin Officer, who has much more experience
about administration matters.

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Cane Department:
Cane department is the major department of any sugar mill. This department is
purchasing sugarcane from growers. The head of the cane department is known as
cane advisor. There is a cane Inspector who is under the direct supervision of cane
advisor. The cane Inspector examines the work and steps that are undertaken for the
cane development. Also a large number of field men are working under the direct
supervision of Cane Manager. The field men make crops survey and determine the
cane area of the growers. The whole area covered by the production process has been
divided into 7circles The Field officer & 3 field men supervises each zone. The main
reason of dividing the area into zones is to encourage more quantity of cane.Various
stages of cane development and procurement are as follows
OBJECTIVES OF CANE DEVELOPMENT DEPARTMENT

To get high yield of sugarcane to the factory in right time.

To improve variety of cane
To develop the backward area
To provide all facilities like seeds, fertilizers, unloading and loading charges
To maintain registration of cane, gang and plantation.
To undertake seed distribution programme

The soil of this area is varying alluvial fertile soil is there on the bank of
Krishna and Ghataprabha rivers. Further upwards, there is a medium deep black soil,
vary fertile well drained light to medium clay soil, which has received heavy
application if from yard Manu science last 10-12 years also is presently in some parts.
The main function of cane development department is to arrange for raw
material, which is required to the factory. For this the order is received by priority
basis ( that is growers who grows sugar cane first in his lead ). They also provide a
loading gang with 8 to 10 members per village and also a bonded tractor for
transportation.
FINANCE DEPARTMENT:
The head of this department is known as Finance Manager. The Department
has two sections.96Main Account Section97Cane Account Section there are Assistant
Account Officers under the control of Finance Manager. They supervise the activities
of main account section and cane account section respectively The Finance Manager
control all the financial activities of the project along with general administration and
make arrangement of funds to meet the requirement of the project.

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My responsibility:
My responsibility in administrative department is to check the attendance of
employee and then record into the computer on daily basis and maintain the discipline
during working activity.
My responsibility in finance department is to fill the voucher, general invoice,
commercial invoice, local invoice, ledger posting, record the account and reconcile
the bank statement.
In cane department I spend most of time in field survey that include the circle in
charge work and also get the information about the former bio data in a statement
forms also work with zonal in charge of the area to check the work of circle in charge.

Week wise activity while working as internee:

As an internee in Sakarganj I spent my first&second week in administrative
department.where my activity was to check the attendance of employee and
then record into the computer on daily basis and maintain the discipline during
working activity.
As an internee in Sakarganj I spent my third&fourth week in finance
department.where my activity was to fill the voucher, general invoice,
commercial invoice, local invoice, ledger posting, record the account and
reconcile the bank statement.
As an internee in Sakarganj I spent my fifth&sixth week in cane
department.where my acctivity was to make crops survey and determine the
cane area of the growers.

Implication of class learning into the organization:

My implication of class learning in organization is to record the daily
transaction and posting into ledger and posted in computer software.
Reconcile the bank statement.
Showing good behavior with employee.
Good communication
Operational management.
During my work I follow the rules regulation.

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Data entry into computer software.

SWOT ANALYSIS:
STRENGTHS
The Promoter is young political background and has vast industrial experience
in the field of Sugar and is having good relationship with the local farmers.
This may help them in sugarcane procurement.
No difficulty is envisaged in availability of raw material i.e. sugar cane, as the
project is coming up in the area of sugar cane growing belt with a good
irrigation facilities and good recovery.
The area will not suffer draught as the Lift irrigation system of Almatti Dam
as already implemented hence the Sugar recovery in the area is good.
The co-generation of power of 16 MW will improve the profitability of the
company.
The by-product viz. molasses will bring additional revenue as it will be sold to
distillery units as raw material.

WEAKNESSES
Co-Gen plant being capital intensive, economics of operations suffer in case of
shortened season.
Government policy of full decontrol of sugar during 2003-04.
Sugar imports will have bearing on the profit margins of the company.
Any disturbance in the co-gen plant would interrupt sugar manufacturing
operations totally. The cost of such interruptions can be extremely high on
account of production loss, machine failure, and spillage of juice, sugar and
quality degradation.
The promoters are having political background and changing loyalties by the
local farmers may affect them in sugarcane procurement.
OPPORTUNITIES

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Setting up of further downstream projects like manufacture of ethanol or a

distillery for manufacture of liquor.
THREATS
Raw material, cane, being an agricultural product its availability and prices are
dependent upon vagaries of monsoon.
Tough competition from other sugar factories.
Failure to adopt modern technology.
Unable to satisfy the needs of workers, this might make them to leave the
organization.

PEST Analysis:
Political Analysis

Political stability
Risk of military invasion
Legal framework for contract enforcement
Intellectual property protection
Trade regulations & tariffs
Favored trading partners
Anti-trust laws
Pricing regulations
Taxation - tax rates and incentives
Wage legislation - minimum wage and overtime
Work week
Mandatory employee benefits
Industrial safety regulations
Product labeling requirements

Economic Analysis

Type of economic system in countries of operation

Government intervention in the free market
Comparative advantages of host country
Exchange rates & stability of host country currency
Efficiency of financial markets
Infrastructure quality

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Skill level of workforce

Labor costs
Business cycle stage (e.g. prosperity, recession, recovery)
Economic growth rate
Discretionary income
Unemployment rate
Inflation rate
Interest rates

Social Analysis

Demographics
Class structure
Education
Culture (gender roles, etc.)
Entrepreneurial spirit
Attitudes (health, environmental consciousness, etc.)
Leisure interests

Technological Analysis

Recent technological developments

Technology's impact on product offering
Impact on cost structure
Impact on value chain structure
Rate of technological diffusion

The number of macro-environmental factors is virtually unlimited. In practice, the

firm must prioritize and monitor those factors that influence its industry. Even so, it
may be difficult to forecast future trends with an acceptable level of accuracy. In this
regard, the firm may turn to scenario planning techniques to deal with high levels of
uncertainty in important macro-environmental variables.

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

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Current Liabilities
TABLE-1.1 Current Ratio
Current
Current
Year
Assets
Liabilities

Ratio

2007

430076093 141205546 3.04

2008

343665293 224758035 1.5

2009

336389326 802862101 0.42

2010

417811267 868538140 0.48

2011

349345761 774530918 0.45

INTERPRETATION:
The above table shows that NSLs current ratio has decreased from 3.04 to 1.5
in the year 2005 and 2006 and in the year 2007 it was drastically fluctuated to 0.42
and then the year 2008 it raise to 0.48 but again decreased to 0.45 in the 2009 .The
company had the fluctuation of 24.20% increase in current assets and 8.18% in
current liabilities. In the year 2009 the current assets has decreased by 16.38% and
10.82% in current liabilities. An ideal current ratio is 2:1 for every one rupee of
current liabilities, current assets of doable rupee are available. The current ratio
determines margin of safety for creditors, there has been decrease in the ratio during
2009 compared with 2008.
2. Quick Ratio/Acid Test Ratio:
Quick ratio establishes relationship between quick or liquid assets & current liabilities. It is
also known as acid test ratio. An asset is said to be liquid if it can be converted into case within short
period of time without loss of value. The prepaid expenses and stock were excluded.
Quick ratio

Quick asset
Current Liabilities

Year

TABLE-1.2 Quick Ratio

Quick
Current

Ratio

2007

Assets
2842892837

Liabilities
141205546

2.01

2008

177992977

224758035

0.79

2009

138313276

802862101

0.17

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2010

127813793

868538140

0.15

2011

170711841

774530918

0.22

INTERPRETATION:
The above table shows that the quick assets of NSL has decreased from 2.01
to 0.79 in the year 2005 and 2006 and had drastically fluctuation to 0.17 and 0.15 in
the year 2007 and 2008 and had slight rise to 0.22 in the year 2009.The company had
fluctuation 7.59% decrease in quick asset and and 8.18% increase in current liabilities
and in the year 2009 there was increase in quick asset 33.56% and 10.82% decrease in
current liabilities. This ratio measures firms ability to serve short term liabilities. The
ideal quick ratio is 1. A low quick ratio represents that firms liquidity poison is not
good.
3. Debt-Equity Ratio
Debt-Equity ratio shows the relative contribution of creditors and owners.
Debt-Equity also known as External-Internal equity ratio. It is calculated to measure
the relative claims of outsiders against firm assets.

Debt-Equity Ratio

Total Debt
Net Worth

TABLE-2.1 Debt Equity Ratio

Year

Total Debt

Net Worth Ratio

2007

554110249

43052429

0.61

2008

499246293

63171947

0.62

2009

547168647

568828076

0.52

2010

565092766

570188858

0.82

2011

627397167

571266087

0.93

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INTERPRETATION:
The table shows that the total debt ratio of NSL had increase in the year 2005
and 2006 from 0.61 to 0.62 and had fluctuation to 0.52 in the year 2007 and further
increased to 0.82 in the 2008 and 0.93 in the year 2009. The company had increase in
the total debt by 3.27% and 0.23% in net worth and in the year 2009 the debt was
increased by 11.02% and 0.188% in net worth. Debt equity ratio measures ultimate
solvency of the company. It provides a margin of safety to creditors, thus when the
ratio is smaller the creditors are more secured. An appropriate debt equity ratio is
0.33.A ratio higher than this is an indication of risky financial policies.
4. Current Assets to Proprietors funds ratio
This ratio is calculated by dividing total current assets by shareholders funds.
It indicates the extent to which proprietor funds are invested in current assets. There is
no rule of thumb for this ratio & depending upon the nature of the business there may
be different ratios for different firms.
CA to PF ratio

Current Assets
Proprietors Fund
TABLE-2.2 Current Assets to Proprietors Fund

Year
2007

Current Assets

Proprietors Fund Ratio

430076093

217335000

1.97

2008

343665293

217400000

1.58

2009

336389326

217530000

1.55

2010

417811264
349345761

218018495
223983274

1.92
1.56

2011

INTERPRETATION
The table of current assets to proprietary ratio shows that the ratio has been
decreased by 1.97 to 1.58 in the year 2005 and 2006 and 1.55 in the year 2007 and then
raise to 1.92 in the year 2008 and then decreased to 1.56 in the year 2009.There was raise in
current asset by 24.20% in the year 2008 and proprietary fund by 0.22% and further in 2009
there was decrease by 16.38% in current asset and there was increase by 2.73% in
proprietary fund This ratio indicates the extent to which proprietors fund are invested in
current asset
5.Gross Profit Ratio

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G.P.Ratio measures the relationship between gross profits & sales; it is usually
represented in percentage. Thus Gross profit margin highlights the production
efficiency at a concern
G.P.Ratio= Gross Profit
X 100
Sales
G.P.Ratio indicate the extent to which selling price of goods per unit may decline
without resulting in losses on operations of firm. It reflect efficiency with which firm
produces the product.
TABLE-3.1 Gross Profit Ratio
Year
2007

Gross Profit

Sales

Ratio

32048846

269842495

0.11

2008

119992232

622678642

0.19

81751169

592532689

13.8

98156497
79531898

453435123
736206987

21.65
10.8

2009
2010
2011

INRTEPRETATION:
The above table shows the gross profit ratio of NSL the table indicates that the
ratio in the year 2005 was 0.11 and in the year 2006 it raised to 0.19.further it had
drastically change in gross profit to 13.8 in the year 2007 and 21.65 in the year 2008
,but decreased to 10.8 in the year 2009.The company had fluctuated by increase of
20.06% in gross profit and decrease by 23.47 % in the year 2008 and in the year 2009
there is decrease in gross profit by 18.97% and increase in sales by 62.36%.
The gross profit indicates the degree to which the selling price of goods per unit may
decline without resulting in losses on operation of the firm .It reflects the efficiency
with which firm produces its products.
6. Operating Ratio
It is the relation between cost of goods sold & operating expenses on one
hand & the sales on the other hand. It measures the cost of operations per rupee of
sales.
Operating Ratio =

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Operating Cost X 100

Sales
TABLE-3.2 Operating Ratio

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Year
2007
2008
2009
2010
2011

Operating Cost

Sales

Ratio

179620260

269842495

66.56

498590333

622678642

80.07

592997583

592532689

100.8

447200049

453435123

98.62

545311535

736206987

74.04

INTREPRETATION:
The above table shows the firms operating ratio increasing drastically from
66.56 in the year 2005 to 80.07 and 100.8 in the years 2006 and 2007 but further
fluctuating to 98.62 in the year 2008 and 74.04 in the year 2009 .
There is a decrease in operating cost by 24.58% and 92.34% in sales but in the year
2009 there was increase by 21.93% in operating cost and 62.36% in sales.
An increase in the ratio over a previous period is an indication of improvement in a
operational efficiency of a concern the higher the ratio is more successful the business
is, but a lower ratio indicates large amount of manufacturing expenses.
7. Return on shareholders Investment:
Return on shareholders investments, popularly known as ROI. It is the
relationship between net profit after tax & shareholders funds. Thus this ratio is
considered as affective indicator of the companys profitability because it reflects the
success of management in the efficient utilization of the owners investment.
ROI=.
Net Profit after Tax X 100
Shareholders fund

TABLE-3.3 Return on shareholder investment

Year
Sales
Current Assets Ratio
2007
269842495
430076093
0.62
2008
622678642
343665293
1.81
2009
592532689
336389326
1.76
2010
453435123
417811264
1.09
2011
736206987
349345761
2.11

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INTREPRETATION:
The above table reveals that there is increase in the return on investment from
20% in the year 2005 to 29% in the year 2006 but fell down to 7.01% in the year 2007
.Further in the year 2008 there was a drastically raise to 24.41% but fluctuated to
0.04% in the year 2009.Through the analysis we found that in the year 2009 the net
profit was decreased by 99.82% and increased shareholders fund by 0.73. This ratio is
used to measure the overall efficiency of a concern, the higher the ratio the better the
results will be as this ratio reveals how well the resources of a concern are being used.
8. Activity Ratios:
Funds are invested in various assets in business to make sales & earn profit.
The efficiency with which assets are managed directly affects the volume of sales.
The better the management of assets, the larger is the amount of sales & the profit.
Activity ratio measures the efficiency or effectiveness with which a firm manages its
resources or assets. These ratios are also called turnover ratio because they indicate
the speed with which assets are converted or turned over into sales.
The various activity ratios are:
9. Inventory Turnover Ratio:
Inventory turnover ratio indicates the number of times stock has been turned
over during the period & evaluates efficiency with which a firm is able manage
inventory. The ratio is calculated by dividing the net sales divided by average
inventory at cost.
ITR=
Net Sales
.
Average Inventory at Cost
Average inventory should be taken for calculating stock turnover ratio. Adding the stock in the
beginning & at the end of period & dividing it by 2 to calculate average inventory.

TABLE-4.1 Inventory turnover ratio

Year
2007
2008
2009

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Net Sales

Average Inventory

Ratio

269842495

149040556

1.81

622678642

114404573

2.44

592532689

312640080

1.9

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2010
2011

453435123

484623044

0.94

736206987

379314434

1.94

INTERPRETATION:
The table shows the increase in the inventory turnover ratio from 1.81 to 2.44
in the year 2005 and 2006 .In the year 2007 there was a fluctuation to 1.9 and further
to 0.94 in the year 2008, but in the year 2009 there was a drastically increase to
1.94.The company had 23.47% decrease in net sales and increase by 55.00% in
average inventory but in the year 2009 there was increase in net sales by 62.36% and
decrease by 21.73% in average inventory. Inventory turnover ratio signifies the
liquidity of the inventory. A high ratio implies good inventory management, a low
ratio results in blocking of funds in inventory. The reference value of this ratio 9 and
the maximum conversion period is 388

10. Assets Turnover Ratio:

Assets are used to generate sales. Therefore a firm should manage its assets
efficiency to maximum sales. Assets turnover ratio shows relationship between sales
& assets. The various assets turnover ratio are:]]
i. Fixed Assets Turnover Ratio:
This ratio establishes the relationship between the costs of goods sold and
fixed assets. It can be calculated by.
Fixed Assets Turnover Ratio =

Sales
Fixed Assets

TABLE: 4.2 Fixed Assets Turnover Ratio

Year

Sales

Net Fixed Assets

2007

269842495

523585135

0.51

2008

622678642

532690595

1.16

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2009

592532689

568828676

1.04

2010

453435123

570188858

0.80

2011

736206987

571266087

1.29

INTREPRETATION:
The table reveals that there is increase in fixed asset turnover ratio from 0.51 in
the year 2005 to 1.16 in the year 2006 but decreased to 1.04 in the year 2007 and
drastically fluctuation to 0.8 in the year 2007 and raise in the year to 1.29 in the year
2009.The company had 23.47% decrease in net sales and increase in fixed assets by
0.23% in the year 2008 and further in the year 2009 it had increase net sales by 62.36%
and increase by 0.18% in fixed assets. One of the cautions to be kept in mind that when
fixed assets are old and substantially depreciated the ratio tenders to be high, because,
the denominator of the ratio will be low.
Working Capital Turnover Ratio=

Sales
Net Current Assets

TABLE: 4.4 Working Capital Turnover Ratios

Year

Sales

Net Current Assets

Ratio

2007

269842495

458642451.5

1.22

2008
2009
2010

622678642
592532689
453435123

162529306.4
2288870547
118907258.5

3.37
0.12
5.23

2011

736206987

72690853.4

8.15

INTERPRETATION
The table reveals that the working capital turnover ratio of NSL in the year 2005
was 1.22 and increased to 3.37 in the year 2006.but in the year 2007 there was a
drastically fluctuation to 0.12 in the year 2007 further there was a high increase in
working capital turnover ratio to 5.23 in the year 2008 and 8.15 in 2009.There is decrease
in net sales by 23.47% and 94.80% in net current assets in the year 2008 and in the year
2009 the net sales increased by 62.36% and decreased by 38.86% in net current assets.
The assets turnover ratio measures the efficiency of a firm in managing and utilizing the
assets. Higher turnover ratio, more efficient is the management utilization of the assets
while low turnover are indicative of under utilization of available resources and presence

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of idle capacity. In operational terms, it implies that firm can expand its activity level
without requiring additional capital investments.

As a manager my initiative that I will take are the following:

Sakarganj Sugar Mills Ltd needs these activities to act upon for improving its
performance.
For assuring safety and security of workers, there should be a separate department.
There should be a training program after three months or six month to provide the
employees required skill and to remove the gap from their performance. To make
employees punctual, there should be a card system.
There should be family quarters for all married workers. All the employees
especially those associated with production should be encouraged, and should be
involved in decision making and empowered to make innovative decisions. In this
way employees can add to the organization, a lot. E.g.
a new cost effective production technique can result in comparatively huge
profits.
Work should be divided in team and reward should be on team based rather than
on individual basis.
The shortage of water and fertilizers is remaining constant and government is not
taking any satisfactory action to reduce the shortage. Due to this shortage, sugar
cane crop is decreasing.

Suggestion:
There should be a safety department in the company to assure the safety of the
workers.
A regular training programme should be a permanent policy of the management
so as to provide not only the required skill to employees but also to help them
keeping their skills up to date.
There should be card system for every employee from helper to manager for
punctuality.
Wages of workers should not be less than Rs8000 per month.
There should be family quarters for all married workers.
There should be a high school and a college as well for boys and girls in the
factory area.
There should be transport facility for workers within the district.
All the employees especially those associated with production should be
encouraged, and should be involved in decision making and empowered to make
innovative decisions. In this way employees can add to the organization, a lot. E.g.
a new cost effective production technique can result in comparatively huge profits.

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Feed Back:AHMEDKAZMI89@HOTMAIL.COM

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