Professional Documents
Culture Documents
OF
BAJAJ HINDUSTHAN LIMITED
1
CONTENT
CHAPTER TITLE PAGE NO.
1 Certificate
4 Introduction
5 Objectives
6 Research methodology
types of research
1.1 data collection methods
2
1.13 reserves & surplus
1.14 loan funds
1.15 fixed assets
1.16 investments
1.17 inventories
1.18 debtors
1.19 significant non-recurring
income,expenditure and other items
1.20 division-wise operations
1.21 distillery division
1.22 power division
8 limitations
9 Findings and suggestions
10 Conclusions and recommendations
11 Bibliography
12 LIST OF TABLES
Table1:financial results
Table2:result of operations
Table3:balance sheet
Table4:balance sheet
Table5:profit and loss account
Table6:cash flow statement
Table7:consolidated balance sheet
Table8:consolidated profit &loss account
Table9:consoloidated cash flow statement
3
EXECUTIVE SUMMARY
The process of evaluating businesses, projects, budgets and other finance-related entities
to determine their suitability for investment. Typically, financial analysis is used to
analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in.
When looking at a specific company, the financial analyst will often focus on the income
statement, balance sheet, and cash flow statement. In addition, one key area of financial
analysis involves extrapolating the company's past performance into an estimate of the
company's future performance.
In this project I have done the finanacial analysis of bajaj hindusthan limited. The Bajaj
Group came into existence during the turmoil and the heady euphoria of India's freedom
struggle. Late Shri Jamnalal Bajaj ji, founder of the Bajaj Group, was a confidante
and disciple of Mahatma Gandhi and was deeply involved in the effort for freedom.
Kamalnayan, the eldest son of Jamnalal Bajaj, succeeded his father in 1942, at the
age of twenty-seven. Putting the nation before business, he devoted himself to the later
only after India achieved independence in 1947. But when he did so, he put his heart and
soul into it. Within a short while, he not only consolidated the Bajaj Group, but also
diversified into various manufacturing activities elevating the Bajaj Group to the status it
enjoys till this day.
Bajaj Hindusthan was established in 1931. since then it has been weaving a success
story as Indias number one intergrated Sugar Company with Sugar, Industrial Alcohol
(including ethanol) and Power as its key products. The Company has fourteen sugar mills
[including four of its 75% subsidiary Bajaj Hindusthan Sugar and Industries Ltd.
(BHSIL)] with distilleries at six locations (including one of BHSIL) and bagasse-based
power generation plants at all the locations, spread across the length and breadth of UP,
the largest sugar producing state in India. The Company has a strong track record of
profitability have declared dividend in 73 out of BHLs 76 years of existence. It has
nurtured a tradition of strong relationships with farmers for mutual benefit and they are
very much a part of our family. We have forayed into a relatively value-additive business.
In this project report we have given the complete financial analysis of the company.
4
5
Rahul Bajaj Chairman
Madhur Bajaj Vice Chairman
Rajiv Bajaj Managing Director
Sanjiv Bajaj Executive Director
6
Rahul Bajaj
Chairman
Rahul Bajaj is an Honours Graduate in Economics and Law and a Business
Graduate from the Harvard Business School. He was appointed Chief Executive
Officer of Bajaj Auto in 1968 and took over later as Head of the Bajaj Group of
companies.
Madhur Bajaj
Vice Chairman
After graduating in Commerce, Mr Bajaj did his MBA from Lausanne, Switzerland. Joined as
DGM in March 1983, took over as General Manager - Aurangabad Division in June 1986, as its
Chief Executive in October 1988, became President of Bajaj Auto in September 1994, Executive
Director in May 2000 and is Vice Chairman since July 2001.
Sanjiv Bajaj
Executive Director
Mr. Sanjiv Bajaj, who took charge as the Executive Director in April 2004, is a Mechanical
Engineer from Pune University. He obtained a Masters Degree in Manufacturing Systems from
the University of Warwick and an MBA degree from Harvard Business School.
Mr. Sanjiv Bajaj joined as an Officer on Special Duty in 1994, took over as the General Manager
(CF) in 1997 and Vice President (Finance) in April 2001.
Abraham Joseph
Vice President (Research & Development)
Mr. Joseph started his tenure in Bajaj in July 1989 as a Graduate Trainee Engineer, took over as
General Manager (R&D) in April 2005 and is currently the Vice President (R&D) since April 2007 .
He is a Mechanical Engineer from the National Institute of Technology, Bhopal.
7
Pradeep Shrivastava
President (Engineering)
Mr.Pradeep Shrivastava joined Bajaj in April 1986. He took over as Vice President (Engineering)
in April 2005 and is currently the President (Engineering) since July 2007. After receiving a
degree in Mechanical Engineering from IIT - Delhi, Mr. Shrivastava obtained a graduate diploma
in Production and Finance from IIM Bangalore in 1986.
S Sridhar
CEO (2 Wh)
Mr. Sridhar joined Bajaj in March 2001 as GM (Sales) for two wheelers, took over as Vice
President (Marketing & Sales 2W) in April 2005 and is currently the CEO (2WH) since July
2007. He holds an Engineering Graduate degree in Agriculture
R C Maheshwari
CEO (Commercial Vehicles)
Mr. Maheshwari joined Bajaj in July 2007 as CEO (CV). He is a gold medallist Mechanical
engineer from BITS, Pilani.
Rakesh Sharma
CEO (International Business)
Mr. Sharma joined Bajaj in October 2007 as CEO (IB). He holds a Post Graduate Diploma in
Management from IIM Ahmedabad
8
C P Tripathi
Vice President (Corporate)
Mr. C.P. Tripathi started in Bajaj in January 1996 as the Vice President (Waluj Plant ), took over
as Vice President (Operations) in April 2001 and is Vice President (Corporate) since July 2007. A
Science Graduate from Agra University, Mr. Tripathi also holds a degree in Mechanical
Engineering from the Indian Institute of Technology, Kharagpur.
N H Hingorani
Vice President (Commercial)
Mr. N.H. Hingorani joined Bajaj in 1997 as the General Manager (Materials), took over as the Vice
President (Purchase) in 1998 and is Vice President (Commercial) since February 2006. Mr.
Hingorani holds a degree in Mechanical Engineering from the Malaviya Regional Engineering
College, Jaipur.
Kevin P D'Sa
Vice President (Finance)
Mr. Kevin Dsa began his career with Bajaj in September 1978 and is presently the Vice President
(Finance). After acquiring a Bachelors degree in Commerce, he completed his CA in 1978 and
ICWA in 1981.
9
K Srinivas
Vice President (Human Resources)
Mr. Srinivas joined Bajaj in January 2000 as the DGM (HRD) and is now the Vice President (HR).
He holds a Bachelors Degree in Electrical Engineering from VJTI, Mumbai
Ranjit Gupta
Vice President (Insurance)
Mr. Ranjit Gupta started in Bajaj as the General Manager (Co-ordination) in 1988, and moved on
to become the Vice President (Materials ) in 1995, then Vice President (HRD) in 2000 and is now
Vice President (Insurance).
Mr. Gupta did his Masters Degree in Mechanical & Electrical Engineering from the Indian Railway
Institute of Mechanical & Electrical Engineers. He was honored with a fellowship from the Institute
of Electrical Engineering (London) and was also inducted as a member of the Institute of
Mechanical Engineers (London).
J. Sridhar
Company Secretary
Mr. J Sridhar is the Company Secretary since July 2001. A graduate in Commerce and Law, Mr.
Sridhar also did his FCA, FCS and MMS. Prior to joining Bajaj, he was the Controller of Finance
and Company Secretary, Maharashtra Scooters Ltd., a Bajaj Auto joint venture
10
Board of Directors
Rahul Bajaj Chairman
Madhur Bajaj Vice Chairman & Whole-Time Director
Rajiv Bajaj Managing Director
Sanjiv Bajaj Executive Director
D.S. Mehta Whole-Time Director
Kantikumar R. Director
Podar
Shekhar Bajaj Director
D.J. Balaji Director
Rao
J.N. Godrej Director
S.H. Khan Director
Mrs. Suman Director
Kirloskar
Naresh Director
Chandra
Nanoo Director
Pamnani
Manish Director
Kejriwal
P Murari Director
Niraj Bajaj Director
11
D.J. Balaji Chairman
Rao
S.H. Khan
Naresh
Chandra
Milestones
2
007
A Bajaj Auto Commissions New Plant at Pantnagar, Uttarakhand
pril
F 200 cc Pulsar DTS-i launched
ebruary
J Bajaj Kristal DTS-i launched
anuary
2
006
A Bajaj Platina launched
pril
2
005
D Bajaj Discover launched
ecember
J Bajaj Avenger DTS-i launched
une
F Bajaj Wave DTS-i launched
ebruary
2
004
O Bajaj Discover DTS-i launched
ctober
A New Bajaj Chetak 4 stroke with Wonder Gear launched
ugust
M Bajaj CT100 Launched
ay
J Bajaj unveils new brand identity, dons new symbol, logo and brand
anuary line
12
2
003
O Pulsar DTS-i is launched.
ctober
O
107,115 Motorcycles sold in a month.
ctober
J
Bajaj Wind 125,The World Bike, is launched in India.
uly
F Bajaj Auto launched its Caliber115 "Hoodibabaa!" in the executive
ebruary motorcycle segment.
2
001
N Bajaj Auto launches its latest offering in the premium bike segment
ovember Pulsar.
J
The Eliminator is launched.
anuary
2
000
The Bajaj Saffire is introduced.
1
999
Caliber motorcycle notches up 100,000 sales in record time of 12
months.
Production commences at Chakan plant.
1
998
J
Kawasaki Bajaj Caliber rolls out of Waluj.
une 7th
J
Legend, Indias first four-stroke scooter rolls out of Akurdi.
uly 25th
O
Spirit launched.
ctober
1
997
The Kawasaki Bajaj Boxer and the RE diesel Auto rickshaw are
introduced.
1
995
N
Bajaj Auto is 50.
ovember 29
Agreements signed with Kubota of Japan for the development of
diesel engines for three-wheelers and with Tokyo R&D for ungeared Scooter and
moped development.
The Bajaj Super Excel is introduced while Bajaj celebrates its ten
millionth vehicle.
One million vehicles were produced and sold in this financial year.
1
994
13
The Bajaj Classic is introduced.
1
991
The Kawasaki Bajaj 4S Champion is introduced.
1
990
The Bajaj Sunny is introduced.
1
986
The Bajaj M-80 and the Kawasaki Bajaj KB100 motorcycles are
introduced.
500,000 vehicles produced and sold in a single financial year.
1
985
N The Waluj plant inaugurated by the erstwhile President of India,
ovember 5 Shri Giani Zail Singh.
Production commences at Waluj, Aurangabad in a record time of
16 months.
1
984
J
Foundation stone laid for the new Plant at Waluj, Aurangabad.
anuary 19
1
981
The Bajaj M-50 is introduced.
1
977
The Rear Engine Auto rickshaw is introduced.
Bajaj Auto achieves production and sales of 100,000 vehicles in a
single financial year.
1
976
The Bajaj Super is introduced.
1
975
BAL & Maharashtra Scooters Ltd. joint venture.
1
972
The Bajaj Chetak is introduced.
1
971
The three-wheeler goods carrier is introduced.
1
970
Bajaj Auto rolls out its 100,000th vehicle.
1
14
960
Bajaj Auto becomes a public limited company. Bhoomi Poojan of
Akurdi Plant.
1
959
Bajaj Auto obtains license from the Government of India to
manufacture two- and three-wheelers.
1
948
Sales in India commence by importing two- and three-wheelers.
1
945
N Bajaj Auto comes into existence as M/s Bachraj Trading
ovember 29 Corporation Private Limited.
In the border less global business scenario, all the major businesses of Bajaj
Organization are continuously upgrading their scale of operations. This is a
continuous process in line with our passion for growth.
15
Mr. Shishir Bajaj, Chairman & Managing Director
Mr. Shishir Bajaj, Chairman & Managing Director of the Company, belongs to the
promoter - Bajaj Group. After completing his MBA from New York University majoring
in finance, Mr. Bajaj joined the Company in 1974 and since then has been been
shouldering the overall responsibility of the Company. He is holding the position of
Managing Director of the Company since July 1988.
Mr. Kushagra Nayan Bajaj is the Jt. Managing Director of the Company. A Bachelor of
Science in Economics, Political Philosophy and Finance from the Carnegie Mellon
University, Pittsburgh, USA, he earned his Master of Science in Marketing from the
Northwestern University, Chicago, USA.
Mr. Bajaj was Chief Executive of the Company between August 2001 and April 2007,
responsible for overall operations.
Mr. I.D.Mittal, a sugar professional joined the Company in July 2002 and was inducted
on the Board of the Company as Executive Director in October 2002. He holds a
Diploma in Mechanical Engineering from Roorkee University and is having a total work
experience of 38 years in sugar industry in India. Prior to joining Bajaj Hindusthan, he
was associated with Balrampur Chini Mills Limited as Group General Manager.
Mr. Niraj Bajaj, a Director of the Company since October, 1999, belongs to the promoter
- Bajaj Group. He is a commerce graduate and MBA from Harvard Business School,
U.S.A. He is associated with Mukand Limited for over 22 years and is presently
Managing Director of that company, which has diversified business interest in the field of
steel, foundry, industrial machinery, machine tools and road construction. He holds
directorship in various other Bajaj group companies.
Mr. D S Mehta has been on the Board of Bajaj Hindusthan Ltd since January 1986. He
holds directorship in various other Bajaj group companies. He graduated with an honours
degree in commerce from Mumbai University and he is an alumnus of Sydenham
College. He is a fellow member of both the Institute of Chartered Accountants of India
and the Institute of Company Secretaries of India. He has been associated with the Bajaj
group of companies since 1966 and has more than 30 years experience in corporate law,
taxation, finance and investment.
16
Mr. M.L. Apte, an industrialist having interest in sugar business is associated with Bajaj
Hindusthan Ltd. as Director for over 33 years. A former Sheriff of Mumbai, he was also a
former President of Maharashtra Chamber of Commerce, Bombay Chamber of
Commerce, Cricket Club of India, Indian Sugar Mills Association, Member of the Indian
Cotton Mills Federation and former Chairman of the Textiles Committee. He is currently
the Chairman of the Apte Group of Companies and a Director of Grasim Industries Ltd.
and Tata Asset Management Pvt. Ltd.
Mr. Suresh Kotak, having vast business experience specially in the field of cotton,
agricultural commodities, etc. is associated with the Company as Director since
December 2002.
Mr. Suresh A Kotak is Chairman, Kotak & Co. Ltd, Kotak Chemicals Ltd., Kotak
Ginning & Pressing Industries Ltd and promoter of Kotak Mahindra Finance Ltd. and is
also a Director of Esugar India Ltd. He presently is the Vice Chairman of Indian Chapter
of International Chamber of Commerce (ICC). He is a member of Managing Committee
of Federation of Indian Chambers of Commerce and Industry (FICCI) and The
Associated Chambers of Commerce and Industries Ltd (ASSOCHAM).
Mr. Ravindrakumar V Ruia is the Executive Director of the Dawn Mills Company
Limited and is actively associated with the day-today affairs of Dawn Apparels Limited,
subsidiary of the Dawn Mills Co. Ltd. as its Director. Mr. Ruia joined the Board of Bajaj
Hindusthan Ltd. in April 2001. He is also a Director of Special Paints Ltd., Sigma Paints
(Karnataka) Ltd. apart from various other Ruia group companies.
He is also Committee Member of The Bombay Mill owners' Association, Indian Cotton
Mills Federation and Bombay Textile Research Association and is associated with various
public charity trusts as Trust.
17
First production : 24. 11. 2007
Employee : 428
Bajaj Sugar Ltd is a modern integrated plant located in rich sugar belt of UTTER
PRADESH. Using sugarcane as raw material the plant crushes 5000 tones a day to
produce high quality crystal white sugar as a finished product. the quality of sugar
produced by Bajaj. SUGAR commands customer preference and enjoy a good brand
image in the market. It adds value to its business by using Baggage, one of the byproduct,
to co-generate power that in turn is supplied to the state electricity grid.
One of the key focus areas of the unit is to work very closely with more than
35000cane growers who supply sugarcane. The company runs an intensive cane
development programme to increase the sugar content in cane and also its varietals
balance, as well as to increase yield per hectare. These efforts include disturbing
18
seeds of high sugared varieties and making fertilizers, pesticides and insecticides
available at fair and in some cases subsidies rates to the farmers to encourage
cultivation. The development team also works closely with the farmer to educate
them improve their yields.
AREA NETWRK
It has been already stated that this particular plant has been taken by BAJAJ.GROUP. It
has various agents and depots which are liable of purchasing raw material (sugar cane)
for a specific fixed amount from the different rural areas. They are treated as authorized
purchase center of the organization.
These are divided into following areas:-
Bajaj hindusthan ltd. (U.P)
Bajaj Hindustan Ltd. (BHL) a part of the Bajaj group, is India number one sugar &
ethanol manufacturing company , headquartered at Mumbai (Maharashtra),India
The company has ten plants, which are all located in the northern India state of Uttar
Pradesh (U.P)
19
1- Golagokarannath, Palia Kalan & khambarkhera ( District- Lakhimpur kheri )
crushing capacity 96000 tcd (tone crushed per day)
2- Barkhera (District Pilibhit) crushing capacity 96000 tcd (tone crushed per day)
3- Kinauni (District Meerut) crushing capacity 96000 tcd (tone crushed per day)
6- 6- Biali (District- Bijnore) crushing capacity 96000 tcd (tone crushed per
day)
8- 8- Paratappur (District- Deoria ) crushing capacity 6000 tcd (tone crushed per
day)
9- 9- Rudauli (District- Basti) crushing capacity 15000 tcd (tone crushed per
day)
10- 10- Kundarkhi (District- Gonda) crushing capacity 12000 tcd (tone crushed
per day)
20
2007-08 sugar season , BHSIL will have a crushing capacity 40000 tcd . The Bajaj
Hindustan group as a whole will have an aggregate sugarcane crushing capacity of
136000 tcd .The group has a distillery capacity to produce 800000 liters of Alcohol
per day
MANAGEMENT HIERACHY
21
Unit Head
Marketing Development
Officers
Superintendent
22
Clerk
Worker
23
Unit head
Chemists
Assistant Chemists
Workers
Laboratory boys
Head of Department
Chemists
Assistant chemists
Laboratory.
24
PURCHASE DEPARTMENT
Unit Head
Purchase officers
(mostly engineers)
Deputy purchase officers
Clerks
ACCOUNT DEPARTMENT
Unit head
Assistant Manager
Data Operators
Clerks
25
SECURITY DEPARTMENT
Security Head
Manager Officer
Security Officer
Security Superiors
Watchman
PERSONAL DEPARTMENT
Manage
Assistant manager
Officers (P&A)
Time Keepers
26
VOCATIONAL GUIDELINES
INTRODUCTION:-
GUIIDANCE:-
27
As a process guidance includes the gathering of substance creative knowledge of the
developing characteristics and pattern of the biological being.
Through counseling and other techniques these data used in ways which
recognize the sensitive and dignity of the individual guidance place emphasis upon
realistic self appraisal rational planning, preparation for alternatives individual problem
solving and analysis of ones social interactive processes. It facilitates the development of
the individual towards self determined goals.
As he move through critical period in his life.
VOCATION GUIDANCE:-
According to the definition adapted by the NATIONAL VOCATIONAL
GUIDANCE of USA, in 1937 - Vocational guidance is the process of assisting the
individual to choose an occupation, prepare for it, enter upon and progress it.
If there is only one occupational goal for all, there would again be no question of
choice and therefore no question vocational guidance.
Occupational maladjustment is a casual element in industrial accidents, industrial
fatigue, low productivity and poor moral and that is often responsible for an
unduly high rate of labor turnover.
28
4. Vocational guidance from the financial point of view of the society.
Cost of the products are increase so they become expensive besides it, chance of
secondary and inferior type of goods are increase towards the society ; by heavy
turnover.
5. from the health point of view.
Wrong choice of the occupation adversely affects the health of workers.
From the point of view of the personal and social values.
29
The selection of a particular vocation is not confined to a single fixed
decision, but a time extending process involving a series of social and
personal factors.
Vocation guidance services should be based on the principle of individual
differences.
Differences strategies need to be used to a cater to the individual vocational
needs of the student.
Vocational guidance service must fulfill the vocational needs of the every
individual.
30
APPROACH
Various approaches are followed in organizing vocational guidance:
Carrier corner is a display place for imparting vocational information.
A talk (carrier) by a professional on various aspects of an occupation or a group of
related occupation or a group related occupation in carrier talk.
A panel of speaker invited for discussion on a variety of career in engineering,
accountancy, agriculture etc is called career conference.
In vocational counseling the assistant is given to the individual to understand and
solve his vocational problem.
Simulated interview sessions are interned to train the students and individuals to
acquire the necessary skills for facing interviews for the jobs.
31
The adolescent seeks help in situation which create ambiguity and uncertainty for
him because of lack of information or conflicts between what is known about
himself and the occupational behavior.
Occupational information should not be rejected in the counseling situation to
early, nor should it to be given until the counselee is ready to use and act upon the
information.
Individual will differ in their knowledge of occupation as well as in their
vocational development , they seek to know the range of occupation open to
them , the factor important in choosing occupation and how to use and gather
occupational information so as to make the most productive use of themselves.
VOCATIONAL COUNSELING:-
Fix time and date for counseling session
Begin the session as per schedule
Create a congenial atmosphere through easy communication.
Assist the counsels to explore his need and potentials.
Review world of work with the counselee
Assist the counselee to choose relevant occupation
Get the feedback from counselee
Terminate the session slowly.
32
CARRIER TALK:-
To enable to get information about careers directly from an experienced person.
To enable to get opportunity to clarify doubts.
PHASE OF THE ACTIVITIES:-
Decide the topic which has got importance
Prepare a brief note about what is expected from the speaker and send it to the
speaker
Choice of suitable themes
Selection of the speaker
Decision of date and time
Preparation of career and brief.
Co-ordination of career talk program
ORGANIZATIONAL DETAIL:-
The theme should be interactive nature and useful to the participants. It should be clear
and specific. The speaker should posses the ability to handle the group situation and a
knowledge of the occupational structure and trends.
CAREERS CONFRENCES:-
A careful selected planning committee chaired by a counselor who has the ability
to get things accomplished and has previous experience in conducting or
organizing career conferences, should work within several months in advance of
the conferences.
The conferences should be so scheduled as to permit follow up activities or a kind
of culminating activity the success of the conferences will depend upon the co-
operation of the faculty and administrators and their early environment.
Prior survey of the vocational interests of the individual is necessary.
33
SIMULATED - INTERVIEW
OBJECTIVES-
To enable to get opportunity to acquire the necessary skills of facing an interview.
To enable get over complexes like frightening behavior which come in the way of
best performance at the interview.
PHASE OF ACTIVITY:-
Select interviewer and interviewee.
Brief the interviewee and the interviewer about specific role to be played.
Organized the simulated interview session.
Obtain feedback.
OCCUPASSIONAL MONOGRAMS:-
It gives general study of an occupation which presents the nature of the occupation, size
and distribution of labor force, outlook personnel requirements, preparations, working
conditions and other details.
OCCUPASSIONAL ABSTRACTS:-
Composite and concise summary in the approximately three thousand words of the
available literature in the occupational area.
34
OCCUPASSIONAL BRIEFS:-
Written description of about fifteen hundred words of the various type of specialties in an
occupation.
JOB DESCRIPTION:-
Statement of the duties qualifications and the factors involved in a job in an
industry.
Occupational titles and definitions :-
Mature which give the name, title, definition, code number and description or
definition of the occupations.
CARRIER FUNCTION:-
Portrayal of an occupation through an experience of fictitious characters.
AUDIO VISUAL MATERIALS:-
Tape recording (Audio and Video).
Slides.
Films.
Poster and charts.
Bulletin board materials.
Pictures of former students at work.
ROLE:-Playing, socio drama and simulated training materials.
35
INTRODUCTION
Before giving explanations about the financial analysis about the company it is
necessary to explain about what is financial analysis. The process of evaluating
businesses, projects, budgets and other finance-related entities to determine their
suitability for investment. Typically, financial analysis is used to analyze whether an
entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a
specific company, the financial analyst will often focus on the income statement, balance
sheet, and cash flow statement. In addition, one key area of financial analysis involves
extrapolating the company's past performance into an estimate of the company's future
performance.
1 . FINANCIAL ANALYSIS
Financial Analysis refers to the assessment of a business to deal with the planning,
budgeting, monitoring, forecasting, and improving of all financial details within an
organizational performance.
Financial referred to as financial statement analysis or accounting analysis) refers to an
assessment of the viability, stability and profitability of a business, sub-business
or analysis (also project).
It is performed by professionals who prepare reports using ratios that make use of
information taken from financial statements and other reports. These reports are usually
presented to top management as one of their bases in making business decisions.
36
1.1 GOALS
1.1.1. Profitability -its ability to earn income and sustain growth in both short-term and
long-term. A company's degree of profitability is usually based on the income statement
which reports on the company's results of operations;
1.1.2. Solvency - its ability to pay its obligation to creditors and other third parties in the
long-term;
1.1.3. Liquidity - its ability to maintain positive cash flow while satisfying immediate
obligations;
Both 1.1.2 and 1.1.3 are based on the company's balance sheet, which indicates the
financial condition of a business as of a given point in time.
1.1.4. Stability- the firm's ability to remain in business in the long run, without having to
sustain significant losses in the conduct of its business. Assessing a company's stability
requires the use of both the income statement and the balance sheet, as well as other
financial and non-financial indicators.
1.2 METHODS
Financial analysts often compare financial ratios (of solvency, profitability, growth, etc.):
1.2.1 Past Performance - Across historical time periods for the same firm (the last 5
years for example)
1.2.2 Future Performance - Using historical figures and certain mathematical and
statistical techniques, including present and future values, This extrapolation
method is the main source of errors in financial analysis as past statistics can
be poor predictors of future prospects.
1.2.3 Comparative Performance - Comparison between similar firms.
These ratios are calculated by dividing a (group of) account balance(s), taken from
the balance sheet and / or the income statement, by another, for example :
37
Net income / total assets = return on assets (ROA)
Stock price / earnings per share = P/E ratio
They say little about the firm's prospects in an absolute sense. Their
insights about relative performance require a reference point from other
time periods or similar firms.
One ratio holds little meaning. As indicators, ratios can be logically
interpreted in at least two ways. One can partially overcome this problem
by combining several related ratios to paint a more comprehensive
picture of the firm's performance.
Seasonal factors may prevent year-end values from being representative.
A ratio's values may be distorted as account balances change from the
beginning to the end of an accounting period. Use average values for
such accounts whenever possible.
Financial ratios are no more objective than the accounting methods
employed. Changes in accounting policies or choices can yield drastically
different ratio values.
Financial analysts can also use percentage analysis which involves reducing a
series of figures as a percentage of some base amount.For example, a group
of items can be expressed as a percentage of net income. When proportionate
changes in the same figure over a given time period expressed as a
percentage is known as horizontal analysis.Vertical or common-size analysis,
reduces all items on a statement to a common size as a percentage of some
base value which assists in comparability with other companies of different
sizes.As a result, all Income Statement items are divided by Sales, and all
Balance Sheet items are divided by Total Assets.
38
two or more time periods and is presented side-by-side to allow for easy
analysis.
Most businesses produce annual and monthly financial statements and comply with
record-keeping requirements, yet financial statement analysis is often overlooked or not
performed on a systematic and timely basis so as to obtain insight into the financial
performance of the business. Other businesses seek to interpret and assess their financial
statements yet lack the tools to do so. To assist decision makers, analysis-one provides a
structured framework of financial analysis tools to analyse financial statements and
deliver actionable insight from the business intelligence contained within.
Financial ratio analysis is employed for Income Statement Analysis and Balance Sheet
Analysis and is incorporated in the Financial Scorecard Tool, to provide a unique picture
of a company's financial position. Key financial ratios measured by analysis-one
represent standard performance measures used by the accounting profession on a daily
basis, and seek to analyze the income statement and balance sheet from a variety of
financial performance perspectives, which include - Profitability, Liquidity, Efficiency,
Asset Usage and Gearing.
Financial statements are prepared to meet external reporting obligations and also for
decision making purposes. They play a dominant role in setting the framework
managerial decisions. But the information provided in the financial statements is not an
end in itself as no meaningful conclusions can be drawn from these statements alone.
However, the information provided in the financial statements is of immense use in
making decisions through analysis and interpretation of financial statements.
When computing financial ratios and when doing other financial statement analysis
always keep in mind that the financial statements reflect the accounting principles. This
means assets are generally not reported at their current value. It is also likely that many
39
brand names and unique product lines will not be included among the assets reported on
the balance sheet, even though they may be the most valuable of all the items owned by a
company.
These examples are signals that financial ratios and financial statement analysis have
limitations. It is also important to realize that an impressive financial ratio in one industry
might be viewed as less than impressive in a different industry.
The balance sheet reports a company's assets, liabilities, and stockholders' equity as of a
specific date, such as December 31, 2010, September 28, 2010, etc.
The accountants' cost principle and the monetary unit assumption will limit the assets
reported on the balance sheet. Assets will be reported
40
you may surmise, these items are often the most valuable of all the things owned by the
company. (Brand names purchased from another company will be recorded in the
company's accounting records at their cost.)
The accountants' matching principle will result in assets such as buildings, equipment,
furnishings, fixtures, vehicles, etc. being reported at amounts less than cost. The reason is
these assets are depreciated. Depreciation reduces an asset's book value each year and the
amount of the reduction is reported as Depreciation Expense on the income statement.
While depreciation is reducing the book value of certain assets over their useful lives, the
current value (or fair market value) of these assets may actually be increasing. (It is also
possible that the current value of some assetssuch as computersmay be decreasing
faster than the book value.)
Current liabilities such as Notes Payable (due within one year), Accounts Payable, Wages
Payable, Interest Payable, Unearned Revenues, etc. are also likely to have current values
that are close to the amounts reported on the balance sheet.
Long-term liabilities such as Notes Payable (not due within one year) or Bonds Payable
(not maturing within one year) will often have current values that differ from the amounts
reported on the balance sheet.
Stockholders' equity is the book value of the company. It is the difference between the
reported amount of assets and the reported amount of liabilities. For the reasons
mentioned above, the reported amount of stockholders' equity will therefore be different
from the current or market value of the company.
41
By definition the current assets and current liabilities are "turning over" at least once per
year. As a result, the reported amounts are likely to be similar to their current value. The
long-term assets and long-term liabilities are not "turning over" often. Therefore, the
amounts reported for long-term assets and long-term liabilities will likely be different
from the current value of those items.
Bajaj Hindusthan Limited (BHL) was incorporated on 23rd November, 1931 under the
name - The Hindusthan Sugar Mills Limited on the initiative of Jamnalal Bajaj - a
businessman, confidante, disciple and adopted son of Mahatma Gandhi. He sought
Gandhiji's blessings in this new venture, which, apart from being a sound commercial
proposition would also meet a national need. Till then, there were barely thirty sugar
factories in the country.
The site selected for the first plant was at Golagokarannath, district Lakhimpur Kheri in
the Terai region of Uttar Pradesh (UP), an area rich in sugar cane. The original capacity
of the factory was 400 tons of cane crushed per day (tcd). Subsequently, this capacity was
increased in stages and is currently 13,000 tcd. The distillery Unit at this plant
commenced production during the end of World War II in 1944. In the initial few years,
the major output was in the form of power alcohol as an additive to petrol, which was
then in short supply. The unit was the first to supply alcohol-mixed petrol to the army.
In 1967, a new Company - Sharda Sugar & Industries Limited - was established as a
subsidiary of Hindusthan Sugar Mills Limited. Under this new subsidiary, a sugar plant
with a cane crushing capacity of 1400 tcd was set up in 1972 at Palia Kalan, a large cane
supplying centre at a distance of about 70 kilometres from Golagokarannath. The
objective of this new Unit was primarily to help the cane growers of the area supply their
42
produce to the new location closer to their fields, thereby cutting down on transportation
costs. The capacity was subsequently increased in stages to reach the present 11,000 tcd.
In the year 1988, The Hindusthan Sugar Mills Limited was renamed as Bajaj Hindusthan
Limited and shortly thereafter in 1990, Sharda Sugar & Industries Limited was
amalgamated with Bajaj Hindusthan Limited.
The Company embarked on an aggressive Greenfield expansion drive in 2003-2007,
starting with a plant at Kinauni, near Meerut (UP), which was completed in a record time
of just seven months as against the industry norm of 18-24 months. This facility
commenced commercial production in November 2004.
At the end of the expansion project in 2007, BHL had ten sugar manufacturing locations
across UP with a cane crushing capacity of 96,000 tcd and was also the countrys largest
ethanol producer with an output of 480 KL/ day.
In an acquisition move, the Company took over the Pratappur Sugar and Industries
Limited (PSIL), district Deoria, Eastern UP in December 2005. This Plant, in operation
since 1903, had a crushing capacity of 3,200 tcd, which was increased to 6,000 tcd in the
subsequent sugar season 2006-07.
PSIL was subsequently renamed Bajaj Hindusthan Sugar and Industries Limited (BHSIL)
and became a subsidiary of BHL. This acquisition provided BHL a strategic foothold in
the sugar-deficient region of Eastern UP and reaffirmed the consolidation that took place
in the sugar industry.
BHSIL embarked upon significant new expansions. While the capacity of its existing
sugar plant at Pratappur was enhanced, three new sugar units were also set up in virgin,
cane-rich areas of East UP at Rudauli (district Basti), Kundarkhi (district Gonda) and in
Utraula (district Balrampur). BHSIL then, had a crushing capacity of 40,000 tcd and a
distillery with the capacity to manufacture 160 kilo-litre per day of ethanol. The total
industrial alcohol/ ethanol capacity of the Company, including its subsidiary, was 800
KL/ day.
43
With the commissioning of three bagasse-based power co-generation plants at
Kundarkhi, Rudauli and Utraula, BHSIL had an aggregate power generation capacity of
95.8 MW. Combined with the power generation capacity of 325 MW from BHL, the
Companys total generation capacity is 420.8 MW. After meeting its own energy needs,
the Company has a surplus of 90 MW. It supplies a significant part of this surplus power
to the UP state grid.
In December 2010, BHSIL was amalgamated with BHL
The Companys growth initiative has been led by a strategic focus of attaining global
scales of manufacturing and cost competitiveness. Such benchmarking provides BHL
advantages of cost and higher domestic market share where demand is expected to
outstrip supply for the next few years. BHL is in a unique position. While its planning
and processes are benchmarked against global practices, its activities are directed at
contributing to the Indian rural economy at a local, grassroots level, primarily in the
uplifting of the farmers. The Company embarked on an expansion, the scales of which
are unprecedented worldwide, providing tremendous opportunities of employment,
infrastructure and community development and contributing to the growth of the rural
economy of UP.
Mission
To be the leader in our chosen business area, create an organisation that all our
constituents are proud to be associated with, set benchmarks that will become the
standard for others to emulate and through ethical business practices create wealth for our
stakeholders.
vision
44
To transform bajaj hindusthan ltd. into a dynamic and vibrant business entity where
growth is an ethos and the long-term value creation for our stakeholders is the paramount
objective.
Mr. Shishir Bajaj, Chairman & Managing Director of the Company, belongs to the
promoter - Bajaj Group. After completing his MBA from New York University majoring
in finance, Mr. Bajaj joined the Company in 1974 and since then has been been
shouldering the overall responsibility of the Company. He is holding the position of
Managing Director of the Company since July 1988.
Mr. Kushagra Nayan Bajaj, Vice Chairman and Joint Managing Director
Mr. Kushagra Nayan Bajaj is the Jt. Managing Director of the Company. A Bachelor of
Science in Economics, Political Philosophy and Finance from the Carnegie Mellon
University, Pittsburgh, USA, he earned his Master of Science in Marketing from the
Northwestern University, Chicago, USA.
Mr. Bajaj was Chief Executive of the Company between August 2001 and April 2007,
responsible for overall operations.
Mr. D S Mehta has been on the Board of Bajaj Hindusthan Ltd since January 1986. He
holds directorship in various other Bajaj group companies. He graduated with an honours
degree in commerce from Mumbai University and he is an alumnus of Sydenham
45
College. He is a fellow member of both the Institute of Chartered Accountants of India
and the Institute of Company Secretaries of India. He has been associated with the Bajaj
group of companies since 1966 and has more than 30 years experience in corporate law,
taxation, finance and investment.
Mr. M.L. Apte, an industrialist having interest in sugar business is associated with Bajaj
Hindusthan Ltd. as Director for over 33 years. A former Sheriff of Mumbai, he was also a
former President of Maharashtra Chamber of Commerce, Bombay Chamber of
Commerce, Cricket Club of India, Indian Sugar Mills Association, Member of the Indian
Cotton Mills Federation and former Chairman of the Textiles Committee. He is currently
the Chairman of the Apte Group of Companies and a Director of Grasim Industries Ltd.
and Tata Asset Management Pvt. Ltd.
Mr. Ravindrakumar V Ruia is the Executive Director of the Dawn Mills Company
Limited and is actively associated with the day-today affairs of Dawn Apparels Limited,
subsidiary of the Dawn Mills Co. Ltd. as its Director. Mr. Ruia joined the Board of Bajaj
Hindusthan Ltd. in April 2001. He is also a Director of Special Paints Ltd., Sigma Paints
(Karnataka) Ltd. apart from various other Ruia group companies.
He is also Committee Member of The Bombay Mill owners' Association, Indian Cotton
Mills Federation and Bombay Textile Research Association and is associated with various
public charity trusts as Trustee.
Mr. D. K. Shukla
46
Mr. Dinesh Kumar Shukla, is a B. A. and M. S. W. He retired as an Executive Director
(Personnel) in February, 2003 from Life Insurance Corporation of India (LIC). During his
tenure with LIC, he occupied positions like Regional Manager - Marketing, Group
Pension and Superannuation Schemes of LIC at Kolkata (Eastern Zone) as well as In-
charge of 3 LIC divisions viz. Raipur, Jabalpur and Bhopal. Mr. Shukla has been
associated with the company as nominee of LIC since October, 2001 and also as a
member of the Audit Committee. After withdrawal of his nomination by LIC in
November, 2008, Mr. Shukla has been re-inducted as a director of the Company in
December, 2008.
Mr. Alok Krishna Agarwal has been a member of Board of Directors of Bajaj Hindusthan
Limited since April 2007. He is the founder managing partner of Juris Consultus, New
Delhi. He was admitted to the Bar Council of India in 1988. He is an associate member of
the Bar Council of Delhi, the Supreme Court Bar Association, the International Bar
Association, the Indo American Chamber of Commerce and Federation of Indian
Chambers of Commerce and Industry.
Dr. Sanjeev Kumar, Director (Corporate and Legal Affairs) has been a member of Bajaj
Hindusthan Limited since March 2009. He was formerly the Group President of
corporate and legal of the Company since June 2004. He obtained a Masters in
Commerce in 1979, a Doctorate in 1996, an LL.B. in 2001, a Diploma in intellectual
property rights laws in 2001 and a Diploma in Literature. In addition, Dr. Sanjeev Kumar
has been a Cost Accountant since 1981 and a Company Secretary since 1982. Dr. Sanjeev
Kumar has approximately 26 years of professional experience.
2.4 Milestones
2001 onwards
47
New 7,000 TCD plant near Meerut commenced operations in November 2004.
First unit to crush 20 million quintals of cane during the drought year 2002-03.
Achieved record profit of Rs. 283.51 million in FY 2003.
Turnover up by 25% (on annualised basis).
Production up by 25%.
Crushing of sugar cane up by 26%.
GOI changes the free to levy sugar sale ratio from 70:30 to 85:15.
1991-2000
LOI received to increase cane capacity to 10,000 MT per day for Gola unit
Construction Board Ltd. amalgamated with bajaj hindusthan ltd.
Palia capacity increased to 5,000 TCD
The cement plant is sold to J K Udaipur Udyog Ltd. for Rs. 1475 million
Board of directors decide to dispose of the cement unit.
1981-1990
Company applies for a license to increase capacity from 4,800 TCD to 10,000 TCD
Complete decontrol of cement effective March 1, 1989
Sharda Sugar & Ind. Ltd. receives LOI to expand its capacity from 1,400 TCD to
5,000 TCD.
The company changes its name to bajaj hindusthan ltd.
Capacity of cement plant increased from 4 to 6 million tons per annum
Bonus shares issued of Rs. 1.12 million in the ratio of 4:1
Expansion of Gola plant from 3,600 to 4,800 tons completed
Golden jubilee year
Sharda Sugar & Ind. Ltd. amalgamated with bajaj hindusthan ltd.
48
2.5.1 Bajaj school at maqsoodapur
The CSR philosophy of Bajaj Hindusthan is driven by the consistent and unflinching
commitment of the Companys businesses to function ethically and to contribute to the
economic and social development of the community it operates in. This improves the
quality of life of the workforce and employees families as well as that of the local
population, including sugarcane growers, and the society in general. It also contributes to
enhance the qualify of the physical environment.
As part of its Corporate Social Responsibility initiative, Bajaj Hindusthan Ltd. is working
hard at the grassroots level towards the development of natural and human resources and
their efficient and judicious use. Under the related activities, the company has initiated
49
and integrated community development programs for stressed farmers in the suicide-
prone zone of Wardha district in the Vidarbha region, focusing particularly on water
harvesting and its efficient utilization. Under the integrated water resources development
programme, BHL constructs Check Dams, Percolation Tanks and Ponds/ Farm Ponds,
besides working on the revival of rivers through the dredging and widening of river beds,
bori bandhs, inter-linking of water bodies through link water channels/ canals, wells and
bore wells, recharging through rain water, gabion structures and farm bunds, etc. Along
with water harvesting measures, the company is equally emphatic on the efficient use of
water in the agriculture sector. It promotes micro irrigation systems like drip and
sprinkler irrigation systems, horticulture plantation, dairy farming and less water-
intensive short duration cash crops. Dedicated efforts have seen us reach 101 villages of
Wardha district and consequently, 8380 acres of agricultural land and 4473 farmers have
directly benefitted. All these programs are being planned and implemented through an
experienced professional team under the Kamalnayan Jamnalal Bajaj Foundation based at
Wardha.
Appreciating BHLs efforts, NABARD has now joined hands with us for the promotion
of horticulture (Wadi Project) and the Confederation of Indian Industries (CII) too has
recognized our water harvesting efforts. BHL has won the CIIs National Award for
Excellence in Water Management 2010 in the category Excellent Water Efficient Unit -
Beyond the Fence 2010.
2.6 Products
Sugarcane, is broadly classified into three varieties early, general and unapproved. Cane
is sowed during February and October every year. The first seed growth is known as the
plant and subsequent growth after harvesting from the stem is known as Ratoon. The
early variety has more sugar content than the general variety.
50
Every farmer within the command area of the Mill is provided with a calendar, which
tells him when he can expect a Mill Supply Ticket (Purchy), against which he will deliver
the sugarcane.
He then harvests the cane and transports it either in a bullock cart or tractor trolley to the
mill. Cane is also bought at the mill's own centers within the command area. This cane is
then transported in trucks or through rail to the mill.
Cane is weighed using an electronic weigh bridge and unloaded into cane carriers. It is
then prepared for milling by knives and shredders. Sugarcane juice is then extracted by
pressing the prepared cane through mills. Each mill consists of three rollers:
1. Extracted juice mixed with water is weighed and sent to the boiling house for
further processing. Residual bagasse is sent to boilers for use as fuel for steam
generation
2. This juice is heated and then treated with milk of lime and sulphur dioxide. The
treated juice is then further heated and sent to clarifiers for continuous settling.
The settled mud is filtered by vacuum filters and filtered juice is returned to be
further processed while the oliver cake is sent out
3. The clear juice is evaporated to a syrup stage, bleached by sulphur dioxide and
then sent to vacuum pans for further concentration and sugar grain formation.
Crystals are developed to a desired size and the crystallized mass is then dropped
in the crystallizers to exhaust the mother liquor of its sugar as much as possible.
This is then centrifuged for separating the crystals from molasses. The molasses is
re-boiled for further crystallization
Thus, the original syrup is desugarised progressively (normally three times) till finally, a
viscous liquid is obtained from which sugar can no longer be recovered economically.
This liquid, which is called final molasses, is sent to the distillery for making alcohol.
The sugar thus is separated from molasses in the centrifuge is dried, bagged (50 Kg and
100 Kg), weighed and sent to storage houses.
51
Sugar is made in different sizes and accordingly classified into various grades i.e. large,
medium and small.
. Molasses:
Molasses is the only by-product obtained in the preparation of sugar through repeated
crystallization. The yield of molasses per ton of sugarcane varies in the range of 4.5% to
5%. Molasses is mainly used for the manufacture of alcohol, yeast and cattle feed.
Alcohol in turn is used to produce ethanol, rectified spirit, potable liquor and downstream
value added chemicals such as acetone, acetic acid, butanol, acetic anhydride, MEG etc.
The state government controls the export of molasses through export licenses issued
every quarter. Molasses and alcohol-based industries were decontrolled in 1993 and are
now being controlled by respective state government polices. Nearly 90% of molasses
produced is consumed by the industrial alcohol manufacturers and the remaining 10% is
consumed by the potable alcohol sector.
Bagasse:
Bagasse is a fibrous residue of cane stalk that is obtained after crushing and extraction of
juice. It consists of water, fibre and relatively small quantities of soluble solids. The
composition of bagasse varies based on the variety of sugarcane, maturity of cane,
method of harvesting and the efficiency of the sugar mill. Bagasse is usually used as a
combustible in furnaces to produce steam, which in turn is used to generate power. It is
also used as a raw material for production of paper and as feedstock for cattle.
By making use of bagasse sugar mills have been successful in reducing dependence on
State Electric Boards, for their power supply as it can procure up to 90-95% of its total
power requirement through captive generation from steam turbines.
Fly ash:
52
Fly Ash is the residual output from the boiler furnace after bagasse has completely burnt
out. This fly ash is used as a substitute for firewood. It is rich in potassium and is also
used by local farmers for cultivation.
Press Mud:
Press mud, also known as oliver cake or press cake, is the residual output after the
filtration of the juice. It is mixed with spent wash from the distillery and cultivated to
produce high quality bio-manure.
The summarized financial results of the company for the year ended September 30, 2010
are presented below:
Table1
2008-
2009-10 09
sales and other income 3,028.98 1814.89
profit before interest, depreciation and taxation 613.82 595.29
interest(net) 301.34 187.08
depreciation and amortisation 257.44 202.21
profit before taxation 55.04 206
provision for taxation(net) 0.1 0.66
provision for deferred tax 3.19 49.11
profit after tax 51.75 156.23
disposable surplus after adjustments 204.56 161.14
transfer to reserve for molasses storage tanks 0.33 0.16
transfer to general reserve 10.03 40
transfer to debenture redemption reserve - 27.5
53
proposed dividend 13.4 12.38
corporate dividend tax on proposed dividend 2.22 2.1
balance carried to balance sheet 178.58 79
2.8 Dividend
The board of directors of the company recommend , for consideration of shareholders at
the 79th annual general meeting , payment of dividend of 70% (re 0.70 per share)on
equity shares of the face value of re 1/- each for the year ended september30,2010. the
dividend paid during the previous year was also 70% .
2.9 Operations
The merger of subsidiary BHSIL with the company has further consolidated BHLS
leadership position in the Indian sugar industry. Post amalgamation the company now has
14 sugar factories with an aggregate sugarcane crushing capacity of 1,36,000 TCD , six
distilleries having capacity to produce industrial alcohol of 800 kilolitres per day and co-
generation plants having power generation capacity of 428MW.
The operations during the financial year ended september30,2010 at all the fourteen sugar
mills of the company, six distilleries and co-generation facilities were satisfactory.
Despite volatile conditions , the company had achieved commendable results during the
year 2009-10.
During the sugar season 2009-10 , the sugarcane crop acreage reduced in u.p
primarily due to deficient rainfall and relatively low sugar prices during the previous few
sugar
54
Seasons.. to meet the perceived shortfall in sugar production and with a view to
optimize its sugar production capacity utilization, the company had imported an
aggregate of 5,27,805 MT of raw sugar. However owing to a ban imposed in inward
transportation.
The conversion of bagasse fired boiler into multifuel boiler at our gangnauli,kinauni
&.maqsoodapur sugar units has been completed and put in operations successfully. Now
we have option to run the boiler on alternate fuels i.e with coal separately, with bagasse
separately and jointly with bagasse & coal as a fuel for the purpose of power export.
Sugar industry in India /of late has witnessed an intense volatility in sugar prices.
Considering the cyclical nature of industry the company constantly endeavours to evolve
a business model that can insulate itself from the vagaries of cyclicality of sugar business.
Since the year 2003, the company had expanded its sugar capacity rapidly from 24000
TCD to the present capacity of 1,36,000 TCD.
The power industry in India has been characterized by energy shortages as the gap
between demand and supply of power has been increasing. U.P government has also
announced U.P energy policy 2009 inviting private participation in the power sector to
generate over 32,000 MW of power by 2014. The company has been in the business of
power generation through the co-generation bagasse fired power generation plants
55
located at all its sugar units of which major part around 75%-80% was used for captive
purpose and surplus sold to the Uttar Pradesh government.
Phase1-450 MW
In the first phase the company had commenced project for an aggregate power generating
capacity of 400 MW comprising of 80MW thermal power plants at five locations on the
unused land available in the vicinity of the sugar mills of the company at khamberkhera,
barkhera, maqsoodapur, kundarkhi and utraula all located in the state of uttar
Pradesh.Subsequently the capacity of these thermal power plants were upwardly revised
to 450MW.
The company was awarded 1,980MW ultra mega thermal power project at lalitpur , Uttar
Pradesh . This project is proposed to be implemented through lalitpur power generation
company limited(LPGCL), a SPV created for this purpose by the government of U.P. The
approximate cost of project is estimated at around Rs.12000 crore. The company had
entered into a memorandum of understanding(MOU) with government of uttar Pradesh
and have acquired LPGCL from UPPCL to make it a subsidiary of the company with
effect from December10,2010.
The company has also been awarded another 1,980 MW ultra themal power project at
bargarh , district chitrakoot, uttar Pradesh. The cost of project is estimated at around
Rs.12000 crore. A memorandum of understanding has been executed with government of
uttar Pradesh in this regard. The bargarh TPP shall be implemented through another SPV-
Bajaj power generation private limited(BPGPL), a subsidiary of the company.
In addition to the bagasse and molasses , the sugar mill operations also generate sufficient
amount of press mud. At six out of fourteen units of the group, distilleries are attached to
56
the sugar plant. In these cases , such press mud is partly utilized gainfully in compost
taking with bio-methanated effluent for distilleries to accomplish zero discharge and rest
is sold at very nominal price. At other locations the entire quantity is sold at nominal
prices. The company has at time experienced great difficulty for disposal of the press
mud(approximately 4% of cane crushed).
With around 30-35% biomass content , press mud has the potential to be converted into
biogas through anaerobically . Keeping above in consideration and also in order to utilize
the press mud valuably the company has actively considered tapping renewable energy
from industrial waste. It was considered desirable to utilize the surplus press mud
generated in the sugar units which do not have a distillery attached by gainfully converted
it into biogas which in turn can also be consumed advantageously in power generation
through gas engine.
During the year bajaj hindusthan sugar and industries limited(BHSIL), a 75% subsidiary
of the company has ceased to be a subsidiary of the company pursuant to the scheme of
amalgamation of BHSIL with the company with effect from april1,2010 fixed as
appointed date.
During the financial year ended march 31 , 2010 BEPL recorded a turnover of
RS.154.63 as against Rs.59.48 crore during the previous year. The net loss after
57
tax for the year was reduced to Rs.50.57 crore as agaibst Rs.73.95 recorded
during the previous year.
During the year the proposed plans of carrying on the business of manufacture
and sale of specialty chemicals through this subsidiary were abandoned. The
entire pre-operative expenditure aggregating to Rs.0.63 crore on the aforesaid
project has since been written off. The name of the company was therefore
changed from bajaj eco-chem products private limited to bajaj energy private
limited with effect from march 19,2010. After obtaining approval of
government of uttar Pradesh , these five under construction power projects
were assigned to be developed by bajaj energy private limited. As per the terms
and conditions stipulated by the government of u.p , BHL is obligated to hold
26% of the equity of his SPV. Also BHL and this SPV shall have the joint
responsibility for setting up these projects .
The project has been appraised by SBICAP trustee company limited on behalf
of a consortium of lenders and financial closure for debt aggregating to
Rs.1740 crore has been achieved. The equity requirement for the project has
been estimated at Rs.580 crore . Till date , BHL has subscribed equity to the
tune of Rs.137.81 crore and Rs.149.88 crore has been subscribed by an entity
belonging to the promoters of BHL.
58
During the year too, no business as envisaged to be undertaken through this
wholly owned subsidiary in brazil could be commenced. The amount invested
by the company had remained deployed in bank deposits.since the company did
not see any opportunity of commencing business soon,the process of its
winding up and repatriation of capital has been initiated.
During the year bajaj hindusthan (Singapore) pte.ltd, a wholly owned subsisiary
of the company in Singapore decided to commence operations of trading in
commodities like sugar, coal etc. The company also plans to acquire a coal
mine located in Indonesia.
To meet the fund requirements of its business, BHL has further invested a sum
of us$27 million equivalent to Rs92.3 crore in this subsidiary.
The financial year of this subsidiary has been changed from October-september
period to april-march period with effect from march 31,2010. No business
operations has been commenced upto march 31,2010. With the aggregate
expenditure during the period amounting to Rs.0.03 crore , the net loss for the
period was Rs.0.03 crore and accumulated carried forward loss upto march
31,2010 is Rs0.12 crore.
2.11 Persons constituting group within the definition ofgroup as defined in the
momopolies and restrictive trade practices act , 1969 , for the purpose of
regulation 3(1)(e)(i) of the securities and exchange board of India (substantial
acquisition of shares and takeovers) regulation , 1997, include thw following:
59
Sr.no Name of the entity
3. Anandmayi trust
4. Apoorv trust
15. Bajaj hindusthan limited employees sports & cultural activities welfare
fund
60
18. Bajaj infrastructure finance corporation pvt.limited
61
37. Lambodar sugars pvt.ltd
Sugar mills
62
1.Golagokarannath , district lakhimpur kheri, uttar Pradesh
Distillery
63
5. Gangnauli , district saharanpur, uttar Pradesh
Co-generation
64
OBJECTIVES OF THE STUDY
65
RESEARCH METHODOLOGY
Research is an original contribution to the contribution to the existing stock of knowledge
making for its advancement. It is the pursuit of the truth with the help of study.
Observation for knowledge through objective and systematic approach of finding solution
to a problem is research. The systematic approach concerning generalization and the
formulation of a theory is also research.
The manipulation of things, concepts and symbols for the purpose of generalization
to extend, correctly and verify knowledge, whether that knowledge aids in
construction of theory or in the practice of an art.
66
The basic types of research are as follows:
67
Articles
Newspapers
Magazines
In this research, Firstly I have studied the company history, Cos Growth, cos products,
govt. policies for sugar industry, global & Indian scenario of sugar, risks & concerns for
better understanding of accounting policies & accounting procedures. After that I started
my project of Financial analysis of Bajaj hindusthan limited .
The first step calls for the researcher to define the problem carefully and agree on the
research objective. An old age saying-
68
company also includes assets and liabilities of the Amalgamated company as per the
scheme of amalgamation.
Table 2
During the year the production of sugar and molasses has increased to 10,97,380MT
and 4,,42,433 MT as compared to 4,93,268MT and 2,67,241 MT respectively in previous
year recording a growth of 122% and 65% respectively. This was mainly due to higher
availability of sugarcane and processing imported raw sugar. Similarly industrial alcohol
ethanol production was higher at 94,719 KL as compared to 32,070 KL in previous year
recording a growth of 195%. Power generation was also higher at 4,48,901 MW as
compared to 2,76,300 MW in previous year recording a growth of 62% largely due to
higher quantum of bagasse available from the crushing of sugarcane.
Looking to the reduced sugarcane crop acreage in sugar season 2009-10, the company
took necessary steps to ensure availability of cane so that mills can operate at optimum
capacity. Though, cane crop acreage reduced in u.p, the quality of sugarcane improved ,
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resulting into higher production of sugar and other related products i.e molasses and
alcohol. Recovery of sugar from sugarcane was also higher this year at 9.24% as against
9.09% in the previous year. The farmers have gain shifted from other crops to sugarcane
crop this year due to higher fair and remunerative price(FRP), State advisory price(SAP)
fixed by the central government and state government respectively and incentive paid to
cane growers by the sugar mills.
1.2 Turnover
Increase in revenue is due to higher quantum of sugar sold , higher sales realization of
sugar and revenue of amalgamated company for the period from april1,2010 to
september30, 2010.
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During the year the company sold 9,26,966 MT of sugar as against 6,72,180 MT during
the previous year, registering an increase of 38%. The company also sold 54,602 MT of
molasses as against 71,120 MT in the previous year , reporting a downfall of 23% due to
more molasses used for production of alcohol during the year.
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The depreciation for the year increased from Rs.202.21 crore to Rs.257.44 crore mainly
due to depreciation on revaluation of assets of the company as on april01,2010 and
depreciation on assets of amalgamated company i.e Bajaj hindusthan sugar and industries
limited w.ef april01,2010.
sources of funds
shareholder's funds
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net current assets 2,078.94 2,163.97
total 8,763.52 5,476.86
1.11 Capital
The company has allotted 1,45,00,000 new equity shares on January 4,2010 to the
promoter group of the company in terms of warrants allotted to them on may18,2009 on
preferential basis carrying right to subscribe for and be allotted one(1) fully paid equity
share of face value Re1 each per warrant, at a price of Rs.52.14 per equity share in
accordance with the SEBI preferential issue guidelines.
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Gross block increased from Rs.3,407.48 crore to Rs.6,509.87 crore was mainly due to
revaluatiom of certain assets of the company and assets of malgamted company w.e.f
April 01,2010.
1.16 Investments
During the year company invested Rs.137.00 crore in Bajaj energy private
limited(subsidiary) by subscribing to 69,90,000 equity shares of Rs.10each at a premium
of Rs186 per share and Rs92.31 crore in Bajaj hindusthan(Singapore) pte.ltd(subsidiary)
by subscribing to 2,70,00,000 equity shares of $1 each.
1.17 Inventories
The inventory of sugar at the end of the year was 4,60,097 MT equivalent tp 181 days
sales as compared to 95 days sales in the previous year. This was due to higher
production , raw sugar processed into white sugar and gradual liquidation of stocks due to
demand being met by import of white sugar and gradual liquidation of stocks due to
demand being met by import of white sugar allowed by the government.
1.18 Debtors
In line with the companys focus on effective working capital management , vigorous
efforts were made to recover dues from debtors. The debtors at the end of the year were
equivalent to 20 days sales as compared to 6 days sales in the previous year.
1.19.1 Income
The profit on sales of investment of Rs.16.61 crore and the provisions no longer required
/ credit balance appropriated,Rs.32.19 crore, were of a non-recurring nature.
1.19.2 Expenditure
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The loss on assets sold/discarded , Rs.0.10 crore is of a non-recurring nature.
2009-10 2008-09
Plant location zone Cane Sugar Sugar Cane Sugar Sugar
crushing recovery
production crushing recovery production
Gola Central 1.184 9.68 114583 0.857 9.53 81637
gokarannath u.p
Palia kalan 1.161 8.69 100797 0.857 9.31 79816
Kinauni Western 1.224 9.00 110100 0.788 8.72 68645
u.p
Thanabhawan 0.777 9.03 70208 0.541 8.77 47479
Budhana 0.981 9.37 91964 0.578 8.84 51038
Bilai 0.871 10.15 88528 0.470 10.04 47141
Gangnauli 0.454 9.07 41188 0.187 8.47 15851
khambarkhera Central 0.796 9.11 72607 0.529 9.16 48351
u.p
Barkhera 0.643 8.95 57538 0.344 8.79 30187
Maqsoodapur 0.376 9.20 34605 0.274 8.46 23123
Pratappur Eastern - - - -
u.p
Rudauli - - - -
Utraula - - - -
Kundarkhi - - - -
total 8.467 9.24 782118 5.425 9.09 493268
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alcohol/ethanol sales aggregated 63123 kilolitres in the previous year registering an
increase of 96%. In value terms the sale of industrial alcohol/ethanol during the year was
rs.162.82 as against Rs85.81 crore in the previous year registering an increase of 90%.
Increase in production and sale was due to availability of more sugarcane resulting onto
higher production of molasses.
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As at As at
Rs.crore sept30,2010 sept30,2009
sources of funds
shareholders funds
capital 19.14 17.69
equity share suspense 3.7
equity warrants 18.9
stock option outstanding 15.3
reserves&surplus 3,098.82 2,257.08
3,136.96 2,293.67
loan funds
secured loans 4,429.77 1,956.73
unsecured loans 1,113.36 1,118.42
5,543.13 3,075.15
deferred tax liability 83.43 108.04
total 8,763.52 5,476.86
ii.application of funds
fixed assets
gross block 6,509.87 3,407.48
less:depreciation 1029.96 774.98
net block 5,479.91 2,632.50
capital work in progess 91.28 131.28
5,571.19 2,673.78
investments 1,113.39 549.11
current assets,loans&advances
Inventories 1921.36 800.45
sundry debtors 163.1 28.57
cash&bank balances 479.2 112.35
loans&advances 1,424.21 2,093.05
3,987.87 3,034.42
less:current liabilities
&provisions
current liabilities 1,716.95 683.03
provisions 191.98 187.42
1,908.93 870.45
net current assets 2,078.94 2,163.97
TOTAL 8,763.52 5,476.86
1.24 profit and loss account for the year ended september30,2010
Table 7:
RS,CROR
E 2009-10 2008-09
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INCOME
Gross sales/income from operations 2970.27 1655.75
less:excise duty 96.67 72.01
net sales/income from operations 2,873.60 1583.74
other income 155.38 231.15
3,028.98 1814.89
EXPENDITURE
raw materials consumed 2,765.64 816.76
manpower cost 146.82 120.83
other expenses 246.27 138.28
interest&finance charges 301.34 187.08
depreciation&amortisation 257.44 202.21
increase/decrease in stocks -743.57 143.73
2,973.94 1608.89
profit for the year before
taxation 55.04 206
less:provision for taxation
current tax 16.35 33.09
deferred tax 3.19 49.11
wealth tax 0.1 0.1
fringe benefit tax _ 0.56
19.64 82.86
less:MAT credit entitlement 16.35 33.09
3.29 49.77
51.75 156.23
Transfers to:
reserve for molasses storage tanks 0.33 0.16
general reserve 10.03 40
debenture redemption reserve 27.5
proposed dividend 13.4 12.38
corporate dividend tax on proposed
dividend 2.22 2.1
balance carried to balance sheet 178.58 79
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basic earning per share
net profit/weighted average 51.75/206,133,8 154.6/150,148,20
no.of shares 23 7
1.25 Cash flow statement for the year ended September 30,2010
Table 8:
2009-2010 2008-2009
79
sale of investments 4512.83 -589.28
loans&advances -61.44 -55.47
dividends received 3.59 0.47
interest received 113.86 107.98
net cash used in investing activities -348.64 63.14
C cash flow from financing activities
proceeds from borrowings(net of repayments) 1674.18 -466.21
issue of convertible warrants 18.9
issue of equity shares & premium thereon
on issue of QIP 723.18
on conversion of equity warrants 56.7
issue expenses(QIP) 19.87
interest paid -391.95 -316.56
dividend paid(including tax thereon) -15.58 -9.83
net cash from/(used in) financing activities 1,323.35 -70.39
net increase/(decrease)in cash and cash equivalents 360.64 72.63
cash&cash equivalents as at oct01(opening balance)
earmarked for specific purposes 34.82 1.61
other balances 77.53 38.11
112.35 39.72
AS at
RS.CRORE sept30,2010 As at sept30,2009
1.sources of funds
shareholder's funds
capital 19.14 17.69
equity share suspense 3.7 -
equity warrants 18.9
stock options outstanding 15.3 16.18
reserves & surplus 2,845.67 2060.74
2883.81 2113.51
minority interest 202.97 65.06
loan funds
secured loans 5076.38 2865.78
unsecured loans 1273.37 1190.48
6349.75 4056.26
80
deferred tax liability 83.45 48.61
total 9520.38 6283.44
2.application of funds
fixed assets
gross block 6866.8 5295.13
less:depreciation 1109.77 1059.83
net block 5757.03 4235.3
capital work in progress 930.61 154.8
6687.64 4390.1
current assets,loans&advances
inventories 1967.43 956.44
sundry debtors 152.87 49.86
cash&bank balances 525.77 127.27
loans&advances 1435.1 1859.39
4081.17 2992.96
less:current liablities &provisions
current liabilities 1749.18 902.7
provisions 193.15 197.04
1099.74
net current assets 2138.84 1893.22
1.27 Consolidated profit & loss account for the year ended September 30,2010
Table10:
AS at
RS.CRORE sept30,2010 As at sept30,2009
income
gross sales/income from operations 3304.8 2115.29
less:excise duty 103.37 89.34
net sales/income from operations 3201.43 2025.95
other income 139.25 307.57
3340.68 2333.52
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interest&finance charges 344.03 345.66
147.
depreciation&amortisation (998.67 35
increase/decrease in stocks 3503.61 2228.37
1.28 Consolidated cash flow statement for the year ended September 30,2010
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Table 11
2009-10 2008-09
cash flow from operating activities
net profit/(loss) before exceptional items and taxation -162.93 105.15
adjustment for:
depreciation&amortisation 344.03 345.66
(gain)/loss due to foreign exchange fluctuation -14
provision for foreign exchange written back - -121.12
loss/(surplus) on sale of fixed assets -0.25 1.27
interest&finance charges 448 .13 358.74
dividend received -3.71 -0.47
profit on sale of investment -16.62 -
interest received -80.01 -80.61
employee's compensation expenses -0.88 -
676.69 503.47
513.76 608.62
operating before working capital changes
adjustment for:
trade and other receivables -34.1 -225.8
inventories -1595.53 -164.07
trade payables 396.21 -30.95
cash generated from operations -719.66 187.8
direct taxes paid -39.63 (14.22_)
net cash from/(used in) operating activities -759.29 173.58
cash flow from investing activities
purchase of fixed assets -1011.8 -166
sale of fixed assets 2.78 5.6
purchase of investments -4571.29 -589.28
sale of investments 4587.84 589.23
loans and advances -61.4 -46.07
dividend eceived 3.71 0.47
interest received 80.01 80.61
exchange fluctuation reserve on consolodation -0.53 0.62
net cash(used in) investing activities -970.68 -124.82
cash flow from finanacing activities
proceeds from borrowings 2302.68 -427.67
issue of convertible warrants - 18.9
issue of equity shares&premium theeon
om issue of qip 723.18
on conversion of equity warrants 56.7 -
minority interest 211.88 -
issue expenses -19.87
interest paid -427.21 -380.23
dividend paid -15.58 -9.83
net cash from/(used in) financing activities 2128.47 -95.52
net increase/(decrease) in cash and cash equivalents 398.5 -46.76
83
cash and cash equivalents as at oct1
earmarked for specific purposes 35.98 2.92
other balances 91.29 171.11
127.27 174.03
cash and cash equivalents as at sept30
earmarked for specfic purpose 14.51 35.98
other balances 511.26 91.29
525.77 127.27
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LIMITATIONS
High Cost
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FINDINGS AND SUGGESTIONS
FINDINGS
During the Summer Training at Bajaj Hindusthan Limited I get knowledge of accounting
policies and system of accounting and procedure . I also get the knowledge of functioning
and general administration of finance & accounts department.
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CONCLUSIONS AND RECOMMENDATIONS
RECOMMENDATIONS
Bajaj hindusthan limited is Indias largest sugar and ethanol manufacturing company. The
company has many weakness and strengths. The main weakness is that one should have a
good knowledge about SAP for accounts. Strengths is that the company has a good
functioning in finance and accounts department. I want to recommend to the bajaj
hindusthan limited is that the company should take measures to avoid that weakness.
CONCLUSION
The summer training period in Bajaj Hindusthan Limited is a great experience for me.
platform to interact with accounting policies of a company and learn about the accounting
During the study on financial analysis of Bajaj hindusthan limited. I get knowledge of
accounting policies of the company, system of accounting and procedure in SAP. I also
get the knowledge of functioning and general administration of finance & accounts
department.
In this report I also understand how company maintains their accounts. In this report I
I met many people but Mr. Sanjay Kumar Goyal (HOD Finance & Accounts) and Mr.
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BIBLIOGRAPHY
Source: F.O. Licht's International Sugar and Sweetener Report dated Oct. 29th 2008
www.answers.com
www.wikipedia.com
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