An Analysis On The Current Sugar Industry Finance Essay - Free Essay Example

In todays Globalization and competition, the performance of a firm not only depends upon the financial performance but also with other industry related factors such as Economies of scale, Product range, Growth rate of the Company, Difference in size etc. It is very necessary for the firm to compare it with peer competitors or benchmark with another firm in order to understand the performance and where it lacks and how to over come and be a market leader. As an Analyst for a firm, my role is to check: Review the Financial Statements, Ratios and compare to know the position of the firm. Examine the financial information for the past 3 years To prepare reports and send it to the Investors. Performing an Analysis on Competitors Preparing in Financial plan and Capital Budgeting decisions Conclusion on where does the firms stands right now in the industry The Industry which I have chosen is Sugar Industry is to study about it and provide valuable information to the investor. SUGAR INDUSTRY The Sugar industry is one of the primary industries as well as a booming sector in India and this industry prevails only with the availability of Sugar canes. This is the reason why many of the factories are situated only where Canes are grown. How ever sugar cane production is somewhat less in demand. The Government of India fixes the prices for the raw materials supplied to these Industries. The number of sugar mills in India has gradually increased over the years making India as one of the largest producer of Sugarcane. These Industries still follow the Dual-pricing scheme and compulsory levy to the public Distribution sector. Some of the Sugar Industries situated in India are Haryana, Uttar Pradesh, Andhra Pradesh and Tamil Nadu. Some of the Sugar Industries in India: Shree Renuka Sugars Ltd Shakthi Sugars Ltd Balrampur Chini mills Ltd Dhampur Sugar mills Ltd Bannari Amman Sugars Ltd Andhra Sugars Ltd Out of these players in the market, the firm which I am going to Analyze is SHREE RENUKA SUGARS LTD. SHREE RENUKA SUGARS LTD The Company was incorporated on 1998 by Narendra Murkumbi and Vidya Murkumbi. Its head quarters are located in Belgaum (Karnataka) and corporate office in Mumbai. The Company is the largest cane crushing manufacturers with 4000 tons per day refining capacity. Its main cane crushing operations are located at Karnataka and Maharashtra. The Company is also planning to expand it Sugar refining capacity in Karnataka. Among the 5 Peer Competitors, the benchmark company for Shree Renuka would be Balrampur Chini Mills ltd. REASON FOR CHOOSING THE FIRMS: According to the Financial Reports, Balrampur Chinis Market Cap is (Rs cr) 2213.82 and sales turn over of (Rs cr) 1704.58. The net profit as of now is 226.51(Rs Cr). The other companies stock shows a major dip in Market Cap, sales turn over. For Sakthi Sugars the Market Cap is just Rs 199.68 Cr and for Dhampur Sugars is Rs 340.42 Cr. Shree Renuka Sugars has an Sales Turn Over of Rs 2234.20(Rs Cr) and Market Cap of Rs 4464.22 Cr even though the net profit was low 143.50 Rs Cr compared to Balrampur Chini ltd. The Book value per share for Balrampur Chini for last year was 45.77 Rs and for Renuka Sugars ltd were 39.27. Total Cash bank balances for Balrampur Sugar ltd last year was Rs 32.97 cr and for Shree Renuka Sugars was Rs 7.06 cr. Other 4 companies performances do not exceed or come up with the 2 companies chosen, either due to bad sales performance or inadequate net profit. Balrampur Chini Mills Ltd The Company is one of the largest sugar production firms in India including various operations such as cogeneration of power and manufacturing of Organic manure. 9 Sugar factories are located in Uttar Pradesh and have an Aggregate crushing capacity of cane -73500 TCD. The Company has increased its capacity through well planned expansion and Acquisition of smaller companies in India. COMMON SIZE BALANCE SHEET: It is a statement on how all the items in balance sheet-Assets and Liabilities are converted into percentage of a common base figure. This helps the Investor, Analyst to analysis easily between companies or between time periods. It could be explained either in Vertically or Horizontal statements. COMMON SIZE INCOME STATEMENT Income statement refers to a financial statement usually prepared by Accountants to provide a summary of the revenues and expenses incurred by the business. It is sometimes called Profit and loss statement. It is one of the 3 major financial statements. The first is the Balance sheet and 2nd is Cash flow. It is very important for the investor to know income and expense of the firm. With the help of this statement, a firm is able to assess the net profit/ loss. Common size income statement is represented as a percentage of the value of the sales. This is mainly done to compare and analyze between 2 companies or different time intervals. COMMON SIZE BALANCE SHEET FOR SHREE RENUKA SUGARS LTD Balance Sheet Particulars Sep 07  Sep 08  Sep 09  (Rs in Crores) 12 mths % 12 mths % 12 mths % Sources Of Funds       Total Share Capital 24.81 2.52% 27.6 1.70% 31.69 1.24% Equity Share Capital 24.81 2.52% 27.6 1.70% 31.69 1.24% Share Application Money 6.26 0.64% 23.09 1.42% 20.59 0.80% Preference Share Capital 0 0.00% 0 0.00% 0 0.00% Reserves 304.68 31.00% 589.26 36.21% 1211.92 47.27% Revaluation Reserves 0 0.00% 0 0.00% 0 0.00% Networth 335.75 34.16% 639.95 39.33% 1264.2 49.31% Secured Loans 621.09 63.20% 827.58 50.86% 1257.99 49.07% Unsecured Loans 25.91 2.64% 159.76 9.82% 41.53 1.62% Total Debt 647 65.84% 987.34 60.67% 1299.52 50.69% Total Liabilities 982.75 100.00% 1627.29 100.00% 2563.72 100.00% Particulars Sep 07  Sep 08  Sep 09  (Rs in Crores) 12 mths % 12 mths % 12 mths % Application Of Funds       Gross Block 631.37 64.25% 778.87 47.86% 1406.62 54.87% Less: Accum. Depreciation 69.06 7.03% 87.72 5.39% 149.76 5.84% Net Block 562.31 57.22% 691.15 42.47% 1256.86 49.03% Capital Work in Progress 207.73 21.14% 513.95 31.58% 242.31 9.45% Investments 16.76 1.71% 150.57 9.25% 105.99 4.13% Inventories 100.17 10.19% 186.91 11.49% 1002.32 39.10% Sundry Debtors 38.69 3.94% 48.64 2.99% 104.27 4.07% Cash and Bank Balance 20.71 2.11% 7.47 0.46% 7.06 0.28% Total Current Assets 159.57 16.24% 243.02 14.93% 1113.65 43.44% Loans and Advances 186.23 18.95% 323.12 19.86% 753.86 29.41% Fixed Deposits 9.96 1.01% 5.92 0.36% 203.22 7.93% Total CA, Loans Advances 355.76 36.20% 572.06 35.15% 2070.73 80.77% Deffered Credit 0 0.00% 0 0.00% 0 0.00% Current Liabilities 122.94 12.51% 248.95 15.30% 1013.44 39.53% Provisions 38.98 3.97% 53.09 3.26% 100.41 3.92% Total CL Provisions 161.92 16.48% 302.04 18.56% 1113.85 43.45% Net Current Assets 193.84 19.72% 270.02 16.59% 956.88 37.32% Miscellaneous Expenses 2.11 0.21% 1.61 0.10% 1.67 0.07% Total Assets 982.75 100.00% 1627.3 100.00% 2563.71 100.00% Table(1.1)-Shree Renuka Sugars Ltd BALRAMPUR CHINI MILLS LTD Particulars Sep 07  Sep 08  Sep 09  (Rs in crores) 12 mths % 12 mths % 12 mths % Sources Of Funds       Total Share Capital 24.82 1.15% 25.55 1.08% 25.68 1.20% Equity Share Capital 24.82 1.15% 25.55 1.08% 25.68 1.20% Share Application Money 0 0.00% 0 0.00% 0 0.00% Preference Share Capital 0 0.00% 0 0.00% 0 0.00% Reserves 839.17 39.03% 989.35 41.66% 1149.58 53.54% Revaluation Reserves 0.18 0.01% 0.18 0.01% 0 0.00% Networth 864.17 40.19% 1015.08 42.74% 1175.26 54.73% Secured Loans 1210.59 56.30% 1250.68 52.66% 972.03 45.27% Unsecured Loans 75.56 3.51% 109.2 4.60% 0 0.00% Total Debt 1286.15 59.81% 1359.88 57.26% 972.03 45.27% Total Liabilities 2150.32 100.00% 2374.96 100.00% 2147.29 100.00% Particulars Sep 07  Sep 08  Sep 09  (Rs in crores) 12 mths % 12 mths % 12 mths % Application Of Funds       Gross Block 1970.32 91.63% 2374.18 99.97% 1770.1 82.43% Less: Accum. Depreciation 382.52 17.79% 498.17 20.98% 0 0.00% Net Block 1587.8 73.84% 1876.01 78.99% 1770.1 82.43% Capital Work in Progress 370.93 17.25% 8.21 0.35% 6.66 0.31% Investments 3.43 0.16% 5.49 0.23% 126.57 5.89% Inventories 432.99 20.14% 556.39 23.43% 343.43 15.99% Sundry Debtors 46.18 2.15% 48.99 2.06% 17.1 0.80% Cash and Bank Balance 14.77 0.69% 33.76 1.42% 32.97 1.54% Total Current Assets 493.94 22.97% 639.14 26.91% 393.5 18.33% Loans and Advances 249.41 11.60% 334.29 14.08% 369.14 17.19% Fixed Deposits 1.67 0.08% 1.37 0.06% 0 0.00% Total CA, Loans Advances 745.02 34.65% 974.8 41.04% 762.64 35.52% Deffered Credit 0 0.00% 0 0.00% 0 0.00% Current Liabilities 521.85 24.27% 444.99 18.74% 417.12 19.43% Provisions 38.21 1.78% 46.33 1.95% 102.1 4.75% Total CL Provisions 560.06 26.05% 491.32 20.69% 519.22 24.18% Net Current Assets 184.96 8.60% 483.48 20.36% 243.42 11.34% Miscellaneous Expenses 3.21 0.15% 1.78 0.07% 0.53 0.02% Total Assets 2150.33 100.00% 2374.97 100.00% 2147.28 100.00% Table (1.2)- Balrampur chini Mills Ltd COMMON SIZE INCOME STATEMNT Particulars Sep 07 Sep 08 Sep 09 Income  Sales Turnover 827.58 100.00% 1805.34 100.00% 2320.64 100.00% Excise Duty 29.53 3.57% 47.6 2.64% 86.43 3.72% Net Sales 798.05 96.43% 1757.74 97.36% 2234.21 96.28% Other Income 11.43 1.38% 0.14 0.01% 5.59 0.24% Stock Adjustments -49.58 -5.99% 61.08 3.38% 581.51 25.06% Total Income 759.9 91.82% 1818.96 100.75% 2821.31 121.57% Expenditure  Raw Materials 465.48 56.25% 1365.05 75.61% 2241.15 96.57% Power Fuel Cost 37.18 4.49% 17.3 0.96% 31.31 1.35% Employee Cost 25.37 3.07% 37.35 2.07% 51.44 2.22% Other Manufacturing Expenses 60.89 7.36% 54.74 3.03% 47.84 2.06% Selling and Admin Expenses 32.84 3.97% 91.28 5.06% 55.18 2.38% Miscellaneous Expenses 10.6 1.28% 19 1.05% 12.86 0.55% Preoperative Exp Capitalised 0 0.00% 0 0.00% 0 0.00% Total Expenses 632.36 76.41% 1584.72 87.78% 2439.78 105.13% Particulars Sep 07 Sep 08 Sep 09 Operating Profit 116.11 14.03% 234.1 12.97% 375.94 16.20% PBDIT 127.54 15.41% 234.24 12.97% 381.53 16.44% Interest 24.64 2.98% 84.06 4.66% 101.44 4.37% PBDT 102.9 12.43% 150.18 8.32% 280.09 12.07% Depreciation 24.92 3.01% 36.48 2.02% 62.46 2.69% Other Written Off 0 0.00% 0 0.00% 0 0.00% Profit Before Tax 77.98 9.42% 113.7 6.30% 217.63 9.38% Extra-ordinary items 0 0.00% 18.24 1.01% 0 0.00% PBT (Post Extra-ord Items) 77.98 9.42% 131.94 7.31% 217.63 9.38% Tax 23.56 2.85% 39.15 2.17% 74.14 3.19% Reported Net Profit 54.43 6.58% 92.79 5.14% 143.51 6.18% Total Value Addition 166.88 20.16% 219.67 12.17% 198.62 8.56% Preference Dividend 3.55 0.43% 0 0.00% 0 0.00% Equity Dividend 4.96 0.60% 5.96 0.33% 31.69 1.37% Corporate Dividend Tax 1.45 0.18% 1.01 0.06% 5.39 0.23% Per share data (annualised)       Shares in issue (lakhs) 248.1 29.98% 2759.63 152.86% 3169 136.56% Earning Per Share (Rs) 20.51 2.48% 3.36 0.19% 4.53 0.20% Equity Dividend (%) 20 2.42% 20 1.11% 100 4.31% Book Value (Rs) 132.81 16.05% 22.35 1.24% 39.24 1.69% Table (2.1)- Shree Renuka Sugars Ltd Particulars Sep 07 Sep 08 Sep 09 (Rs in Crores) Income       Sales Turnover 1476.32 100.00% 1553.66 100.00% 1771.02 100.00% Excise Duty 100.39 6.80% 96.84 6.23% 90.87 5.13% Net Sales 1375.93 93.20% 1456.82 93.77% 1680.15 94.87% Other Income 17.81 1.21% 17.26 1.11% 6.23 0.35% Stock Adjustments 229.39 15.54% 131.54 8.47% -283.17 -15.99% Total Income 1623.13 109.94% 1605.62 103.34% 1403.21 79.23% Expenditure  Raw Materials 1354.88 91.77% 1079.67 69.49% 763.38 43.10% Power Fuel Cost 4.02 0.27% 5.13 0.33% 0 0.00% Employee Cost 78.88 5.34% 87.29 5.62% 95.5 5.39% Other Manufacturing Expenses 28.34 1.92% 34.36 2.21% 80.02 4.52% Selling and Admin Expenses 24.39 1.65% 29.6 1.91% 0.06 0.00% Miscellaneous Expenses 23.39 1.58% 28.45 1.83% 9.83 0.56% Preoperative Exp Capitalised 0 0.00% 0 0.00% 0 0.00% Total Expenses 1513.9 102.55% 1264.5 81.39% 948.79 53.57% Particulars Sep 07 Sep 08 Sep 09 (Rs in crores) Operating Profit 91.42 6.19% 323.86 20.84% 448.19 25.31% PBDIT 109.23 7.40% 341.12 21.96% 454.42 25.66% Interest 63.09 4.27% 100.96 6.50% 96.85 5.47% PBDT 46.14 3.13% 240.16 15.46% 357.57 20.19% Depreciation 80.22 5.43% 117.21 7.54% 107.94 6.09% Other Written Off 1.43 0.10% 1.43 0.09% 0 0.00% Profit Before Tax -35.51 -2.41% 121.52 7.82% 249.63 14.10% Extra-ordinary items 0.38 0.03% 1.12 0.07% 13.91 0.79% PBT (Post Extra-ord Items) -35.13 -2.38% 122.64 7.89% 263.54 14.88% Tax 6.48 0.44% 25.61 1.65% 37.01 2.09% Reported Net Profit -41.84 -2.83% 97.03 6.25% 226.51 12.79% Total Value Addition 159.04 10.77% 184.84 11.90% 185.42 10.47% Preference Dividend 0 0.00% 0 0.00% 0 0.00% Equity Dividend 0 0.00% 12.78 0.82% 77.03 4.35% Corporate Dividend Tax 0 0.00% 2.17 0.14% 13.09 0.74% Per share data (annualised)       Shares in issue (lakhs) 2481.55 168.09% 2555.36 164.47% 2567.55 144.98% Earning Per Share (Rs) -1.69 -0.11% 3.8 0.24% 8.82 0.50% Equity Dividend (%) 0 0.00% 50 3.22% 300 16.94% Book Value (Rs) 34.82 2.36% 39.72 2.56% 45.77 2.58% Table (2.2)- Balram pur chini Mills Ltd FINANCIAL RATIOS: In order to know the financial health of the firm, it is very important for an Analyst to review by comparing with other firms performance. Here comes the importance of Financial Ratios .It is a ratio used to compare one figure appearing in the financial statements with other figure appearing in the same set of financial statements. TYPES OF ACCOUNTING RATIOS Below are some of the ratios calculated for Shree Renuka Sugars ltd ascertaining the position of the firm. PROFITABILITY RATIOS This ratio enables the firm to measure the success of the firm at generating profits Gross Profit Ratio It refers to the gross profit received from sales. It is explained below Gross Profit Ratio= Gross Profit/ sales * 100 2007 2008 2009 116.2/732.4*100 218/1815.2*100 368.5/2234.2*100 15.8% 12.1% 16.5% Net profit Ratio It is used to determine the overall profits of the firm. The net profit is got after deducting Profit after tax. The Formula is: Net profit Ratio= Net Profit / Sales * 100 2007 2008 2009 54.4/732.4*100 92.7/1815.2*100 143.5*2234.2*100 7.42% 5.10% 6.42% Operating Profit Ratio It refers to profit earned by the company over a period of time from its business operations. It explains about the earning capacity of the firm. The formula is Operating Profit Ratio = Operating profit / Net sales * 100 2007 2008 2009 104.7/732.4*100 218.3/1815.2*100 362.9/2234.2*100 14.29% 12.02% 16.24% LIQUIDITY RATIOS It explains about the companys ability to meet its short term commitments. 2 most commonly used liquid ratios are Current Ratio and Quick Ratio. Those 2 are explained below. Current Ratio This ratio is refers to Current assets to Current Liabilities. The Ideal Current ratio should be 2: 1. Mostly creditors prefer high current ratio since it minimizes the risk and Shareholders prefer a higher one so that the assets are necessary for the stabilization of the business. It is also known as Working Capital Ratio. Formula is: Current ratio = Current Assets/ Current Liabilities 2007 2008 2009 159.57/122.94 243.02/248.95 1113.65/1013.44 1.29 Times 0.97 Times 1.09 Times Quick Ratio Those current assets which could be easily be converted into cash is Quick Assets. It refers to liquidity position of the firm. Current assets include Cash at bank, Bills receivable etc. It is also known as Acid Test Ratio. The Ideal Quick ratio is 1:1. The Formula is : Quick Ratio= Quick Assets (Current Assets Closing Stock)/Current liabilities 2007 2008 2009 355.76-100.17/122.94 572.06-186.91/248.95 2070.73-1002.32/1013.44 2.07 1.54 1.05 EFFICIENCY RATIOS These ratios are calculated to receivables turnover, repayment to creditors, use of equity and use of inventory and machinery. It also explains the value of companys assets. Sales / Fixed Asset Ratios This ratio measures the companys ability to generate net sales from fixed assets such as Land, plant and machinery etc. The Formula is Fixed Asset Ratio = Net sales/ Fixed Assets 2007 2008 2009 798.05/562.31 1757.74/691.15 2234.21/1256.86 1.41 2.54 1.77 SOLVENCY RATIOS Ratios which are used to whether the company is able to meet the long term obligations and all. It provides an over all picture of the companys debt obligations. Some of the solvency ratios are : Return on Capital employed(ROCE) The ratio is mainly used by the shareholder to know how much profit they have earned after investing in a particular company. This ratio shows the effectiveness on how much capital is being used to generate revenue. Formula is ROCE = Net Profit before Interest Tax/ Capital employed * 100 2007 2008 2009 102.62/671.81*100 197.76/1014.94*100 319.07/1331.21*100 15.27% 19.48% 23.9% Return on Total Assets Employed(ROTA) It gives an explanation of the managements efficiency on using its assets to generate earnings. ROA briefs you about how much earnings were generated. The assets comprises of both debt and equity. Formula is ROTA: Net profit before tax/ Total Assets *100 2007 2008 2009 77.98/982.75*100 113.7/1627.3*100 217.63/2563.71*100 7.93% 6.98% 8.48% Debt Equity Ratio A financial Ratio used to calculate the financial leverage as well as researching the Capital Structure of the company. A high ratio indicates bad performance and vice versa. Formula is: Debt Equity Ratio: Equity Share Capital/ Long term debts *100 2007 2008 2009 24.81/647*100 27.6/987.34*100 31.69/1299.52*100 3.83% 2.79% 2.43% RATIO ANLAYSIS OF BALRAMPUR CHINI MILLS LTD Below are the ratios calculated for Balrampur Chini Ltd Gross Profit Ratio 2007 2008 2009 99.28/1391.7*100 329.5/1475.6*100 454.4/1704.6*100 7.13% 22.32% 26.6% Net Profit Ratio 2007 2008 2009 -41.84/1391.7*100 97.03/1475.6*100 226.51/1704.6*100 -3.00% 6.57% 13.2% Operating Profit Ratio 2007 2008 2009 89.07/1391.7*100 327.39/1475.6*100 452.71/1704.6*100 6.39% 22.18% 26.55% Current Ratio 2007 2008 2009 745.02/521.85 974.8/444.99 762.64/417.12 1.4 2.19 1.8 Quick Ratio 2007 2008 2009 745.02-432.99/521.85 974.8-556.39/444.99 762.64-343.43/417.12 0.59 0.94 1 Fixed Asset Ratio 2007 2008 2009 1375.93/1587.8 1456.82/1876.01 1680.15/1770.1 0.86 0.77 0.94 Return on Capital Employed 2007 2008 2009 29.01/2150.32*100 223.91/2374.96*100 346.48/2147.29*100 1.3% 9.4% 16.1 Return on Total Assets Employed 2007 2008 2009 -35.51/2150.33*100 121.52/2374.97*100 249.63/2147.28*100 -1.65% 5.11% 11.6% Debt Equity Ratio 2007 2008 2009 24.82/1286.15*100 25.55/1359.88*100 25.68/972.03*100 1.93% 1.87% 2.64% Analysis and Interpretation Study: CONCLUSION After calculating each companys ratios we have studied each companys strength and weakness. For Shree Renuka Sugars Ltd, The Profitability of the Firm has decreased in the year 2009 which means that the Rate of Sales was increased over the period of time. There was an increase in gross profit from 12.1 % to 16.5 %. The Operating Expenses has been reduced indicating that the company has improved its Sales despite decrease in Net profit The Liquidity position of the firm was satisfactory 2009 where the Current ratio has increased from 0.97 to 1.09. But in 2007, it was 1.29 which means that the working capital was adequate enough to meet the short term obligations. For Quick ratio, it was better in 2007 but reduced to 1.05. Hence the company performance was all right and it has met the shareholders requirements. The Efficiency of the firm was also not so good despite a decrease in Fixed Asset ratio from 2.54% to 1.77%.This means that the Company has invested more funds in Fixed Assets in 2009 which means more Cane crushing equipment was installed in the plant. The ROI has increased from 15.27% to 23.9% in due to substantial increase in Profit Before Tax and similarly ROTA has also increased from 7.93% to 8.48%. The Debt Equity Ratio is not good in 2009 since it has not cleared all it debts. Overall the Solvency of the firm was not good. For Balrampur Chini Mills Ltd, The Gross profit and the Net profit of Balrampur Mills has increased considerably in the year 2009 from 7.13% to 26.6% and -3% to 13.2%. This indicates that the Sales has increased along with Gross Profit. Similarly the Operating profit has also jumped to 26.55% in 2009. This indicates that the Profitability position of the firm is very good. The Liquidity of the firm is satisfactory where the Current ratio was 1.8 times which means that the firm has more Working capital and was able to meet the requirements. The Quick Ratio was perfect in 2009 as there is a balance in both C urrent Assets and Current Liabilities. Over all, the short term liquidity position of the firm was satisfactory. The Fixed Asset Ratio was low compared to Shree Renuka Sugars Ltd showing that the company has not invested in any cost such as Purchase of machinery, Land etc. The ROI has increased adequately in 2009 at 16.1% which is a good sign for the shareholders and other investors. Even though the Return on Total Assets employed was bit low at -1.65 % in 2007 it has considerably increased in 2009 at 11.6%.The Debt Equity ratio is little bit higher than the previous company showing that the debts has not yet be cleared. As an Analyst over all, the firm Shree Renuka is better than Balrampur Chini Mills Ltd because of the liquidity position, ROI has also improved providing the shareholders the right place to invest. There was also an increase in sales over the last year 3 years improving the sales margin even though there was a fall in Net Profit due to recession in the las t year 2009. TREND ANALYSIS The trend analysis is a method to know the changes in the financial position and Operational efficiency between the time period chosen. It gives the information of the companys past performance and an idea on what will happen in the future. The Trend Analysis for Shree Renuka Sugars Ltd is explained below. During the year 2009, the Share holder fund has increased by Rs 31.69 Cr i.e. 1.4% and the Fixed Assets have also increased in by Rs 1256.86 Cr i. e 49.03% which indicates that the policy of the firm is to finance its fixed assets through long term sources, thereby not affecting the working capital. The Reserves has increased by Rs 1211.92 Cr i.e. 47.27% in 2009 over the last 3 years which means that the firm has utilized reserves which means the firm is good in profitability position. The long term debt has increased in 2009 by Rs 1299.52 Cr which means that the company is dependent on outside funds. The Current Assets is more than Current liabilities over the 3 y ears which shows that Company has adequate working capital The Cash has decreased in 2009 by Rs 7.06 cr i.e. 0.28% which shows that the liquidity position is in adequate. The Inventories has increased in 2009 by Rs 1002.32 Cr i.e. 39.10% which means that the Company is not able to make good Sales Overall, Shree Renuka Sugars Ltd is having a good financial position over the years but the liquidity position is not sound. Balrampur Sugars Ltd, The Shareholders fund in 2009 has increased by Rs 25.68 cr from Rs 24.82 cr which means that the capital has increased and the Fixed Assets has also increased to Rs 1770.1 which shows the company has invested in more in Fixed Assets thereby financing through long term finance. The Reserves has also increased considerably in 2009 by Rs 1149.56 Cr I.e. 53.54% to 39.03% which means that the company has retained its profits for future purpose resulting in good profitability position. The Inventories has decreased in 2009 by Rs 34 3.43 Cr i.e. 15.99% which shows the firm has god inventory management. The Cash balances has increased by Rs 32.97 Cr in 2009 which means the liquidity position is good The Current Assets in 2009 was Rs 762.64 Cr even though it was Rs 974.8 Cr which means the firm has used for working capital purpose. Overall, the position of the firm is stable even though they are not having any problems in working capital and the liquidity position is better than Shree Renuka Sugars Ltd. FUTURE ANALYSIS As an Analyst, the Sugar industry in India has been improving over the past few years. The Cane Crushing Operational efficiency is likely to increase in it costs and the company has to take the measures to reduce the Overhead costs, exercise control over man power etc. The domestic sugar industry has been going through different cycles. However the exports has enabled in increasing in demand in International Market. For Shree Renuka Sugars ltd, the Reserves are likely to improve in the future. Bagasse, a by product is used for energy purpose, paper production etc The Fixed Deposits are likely to increase in the next year which means that Bank Balances will improve The Liquidity position is likely to be stable for the next few year. Balram pur Mills Ltd is likely to improve based on liquidity position and necessary steps are done to improve the Working Capital Ratio. The Cash balances needs to be improved to meet the short term obligations. The Current Ratio should be improved an d maintain the ideal ratio 2 :1. As per my understanding, it is found out that the Sugar industry is a profitable industry and the benchmark firm Balrampur Chini Mills Ltd is doing better than Shree Renuka Sugars Ltd due to better Gross profit, net profit and Liquidity of the firm.