ADM ro[ect keport

Andhra Sugars |td

Ior the years 2008 to 2010



ANDnkA SUGAkS L1D AuM ro[ecL

SYW

ACKNOWLEDGEMENT

Wo vouId Iiko lo oxpioss oui doop gialiludo lo Prnf. 5. K. PadhI, Assislanl Iiofossoi in
Accounling & Iinanco, foi pioviding us lho oppoilunily lo voik on lhis assignnonl vhich
hoIpod us lo undoisland lho vaiious oIononls of Cosls in a nanufacluiing concoin. Wo vouId
Iiko lo lhank hin foi lho conslanl suppoil and guidanco vhich vas oxlionoIy hoIpfuI in
voiking on lhis assignnonl. This piojocl couId nol havo loon conpIolod vilhoul lho faciIilios
and iosouicos piovidod ly XIMB lo voik on lhis assignnonl. Lasl lul nol lho Ioasl, vo vouId
aIso Iiko lo lhank oui lalch-nalos foi lhoii conslanl oncouiagononl.



AvanLl Campa u110138
Mahesh 8ao u110142
ushkar Slngh u110133
Shashank uewangan u110163
Sukanya uwlvedy u110173
1anvlr 8aza u110179

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Contents
1 Company roflle 4
2 roflL Loss SLaLemenL (excludlng non operaLlng lncome expenses) 3
21 llndlngs 3
3 CosL Comparlson SLaLemenL 6
31 llndlngs 6
4 ClasslflcaLlon lnLo llxed varlable cosL 7
41 llndlngs 8
3 CalculaLlon of ConLrlbuLlon /v raLlo 8L 8
6 8eference 9















ANDnkA SUGAkS L1D AuM ro[ecL

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Company Profile

Andhra Sugars, incorporated in 1947, is engaged in the manufacture and
sale of sugar, Organic and Inorganic Chemicals, Edible & Non-Edible
Vegetable Oils and Non-Conventional Power Generation at Tanuku, Kovvur,
Guntur, Taduvai, Saggonda and Ramagiri in Andhra Pradesh.
The Tanuku plant manufactures 5000 TCD of Sugars and Taduvai plant 2500
TCD. Its by-product Molasses which is the raw material for Sugar is being
produced @ 15 KL per day capacity in the initial stage in the Alcohol plant at
Tanuku. Later this was increased to 30 KL per day. Bagasse is being used for
Co-generation of Electricity. The Caustic Soda plant is having production
capacity of about 112,000 MT per annum. The by-products for Caustic Soda
plants are Hydrogen and Chlorine. The production capacities of Caustic Soda
at Saggonda plant were increased from 100 TPD to 175 TPD to meet the
future demand for Caustic Soda and other Chloro-alkali Industry products.
Andhra Sugars also operates 2.025 MW Wind power at Ramagiri and a Co-
generation power plant at Taduvai. Since the company owns 2 Caustic Soda
plant where Electricity is the raw material along with salt, it is necessary to
have access to power at economical costs.
In 1994, the company came out with the second public issue of Rs. 11.30
lac. The company modernized the plant to incorporate the DCDA process in
its sulphuric acid plant and commissioned an aspirin granulation plant built
with indigenous technology. A sulphuric acid plant of 250 tpd was set up at
the new chemical complex at Saggonda. It came out with a rights issue of
NCDs to part-finance the project. In Feb, 2000 and Feb, 2001 the company
as per its Letter of Offer redeemed the first and second installment of NCD.
JOCIL, Andhra Farm Chemicals Corporation and Hindustan Allied Chemicals
are the subsidiaries of the company.
The company has been selected by ISRO for setting up a plant for the
manufacture of HTPB. This plant is expected to be commissioned in the
current financial year.

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Profit & Loss Statement {excluding Non operating income &
expenses]

( ln 8s crores )
Mar ' 10 Mar ' 09 Mar ' 08
Income
Operating income 11 6021 4802

Expenses
aterial consumed 253.52 287.76 199.02
anufacturing expenses 81.15 95.23 102.89
Personnel expenses 60.96 52.23 49.41
Selling expenses 18.33 19.97 23.39
Administrative expenses 14.21 14.06 16.72
Depreciation 34.91 33.42 32.18
Operating Expenses 46308 026 42361

Operating profit 11403 9984 441

Findings

O The operating income first increased in 2009 then decreased in 2010.
O Similarly materials consumed have shown the same trend. This means
that materials consumed is directly varying with operating income.
O The Manufacturing expenses have regularly fallen over the years. This
indicates efficiency in the production process.
O Personnel expenses have regularly increased which shows increase in
the no. of employees or increase in compensation per employee.
O Depreciation: The Company is most probably using straight line
method of charging depreciation.
O Operating Profit has been constantly increasing.
ANDnkA SUGAkS L1D AuM ro[ecL

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Cost Comparison Statement

( ln 8s crores )
Mar ' 10
%
Change
YOY Mar ' 09
%
Change
YOY Mar ' 08
Cpenlng SLock 19387 193441 24343 2434876 19378
urchases 18941 213336 24139 238283 24779
Closlng SLock 13116 330372 19387 193441 24343
Ad[usLmenL 06 304132 121 10 11
D|rect Mater|a|s 2S3S2 118988 28776 4438848 19902

D|rect Labor 6096 1671433 223 3707347 4941

D|rect Lxpenses 6197 179423 7SS2 268041 776

r|me Cost 3764S 94003 41SS1 2744333 32603

Iactory Cverheads 1918 268899 1971 220641 2S29

Works Cost 39S63 909633 43S22 2388136 3S132

Adm|n|strat|ve Cverhead 1421 1066836 1406 139091 162

Cost of roduct|on 40984 877849 44928 2207369 36804

Se|||ng Cverheads 1833 821232 199 146216 2339

Findings
O Direct materials = Opening stock + purchases - closing stock
The closing stock has been constantly decreasing which implies at
decreasing holding cost.
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Purchases are also regularly falling & it is making use of the closing
stock for carrying on production. This way both closing stock &
purchases are falling, even though the activity levels have increased
from 2008 to 2010.
O Direct Labor have regularly increased which shows increase in the no.
of employees or increase in compensation per employee.
O The direct expenses have regularly fallen over the years. This indicates
efficiency in the production process.
O Factory & selling overheads have constantly decreased. This indicates
better control over the indirect expenses by the organization because
we know that activity levels have increased.
O As compared to 2008, it has dropped significantly in 2010 even though
production has increased.
Classification into Fixed & Variable cost

( ln 8s crores )
Mar ' 10 Mar ' 09 Mar ' 08
I|xed Cost
lacLory Cverhead 11308 11826 13174
AdmlnlsLraLlve Cverhead 9947 9842 11704
Selllng Cverhead 12831 13979 16373
34286 3S647 432S1
Var|ab|e Cost
ulrecL MaLerlal 23332 28776 19902
ulrecL Labor 6096 3223 4941
ulrecL Lxpense 6197 7332 776
lacLory Cverhead 7672 7884 10116
AdmlnlsLraLlve Cverhead 4263 4218 3016
Selllng Cverhead 3499 3991 7017
393884 433603 348179

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Findings
O Direct material, Labor & Expense vary directly with sales. So,
they are 100% variable.
O Administrative Overhead is 70% fixed & 30% variable.
O Factory Overhead is 60% fixed & 40% variable.
O Selling Overhead is 70% fixed & 30% variable.
O We see that the fixed costs are coming down each year.
O From 2008 to 2010, variable costs have gone up as expected
owing to increased production.
O Semi variable costs have been segregated into fixed & variable
costs.
Calculation of Contribution, PJv ratio & BEP

( ln 8s crores )
Mar ' 10 Mar ' 09 Mar ' 08
Sales
11 6021 4802

varlable CosL 393884 433603 348179

ConLrlbuLlon 183226 168907 129841

C/S 8aLlo (ln
) 3174889 2803389 2716223

llxed CosL 34286 33647 43231

8L (ln value) 1079912 1271S68 1S9232


O The BEP value is decreasing due to the double effect of decreasing
Fixed Cost & increasing C/S Ratio.
O This shows that the firm in addition to maintaining control over fixed
cost is also decreasing per unit variable cost or increasing per unit
selling price. This is why C/S Ratio is also increasing.
ANDnkA SUGAkS L1D AuM ro[ecL

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eference:
O http://www.theandhrasugars.com/