1. 51Fixed Assetsa)Decreasing. b)No depreciation reserve (unable to replace old assets out of its own resources).

2. Assets Rs. in million Fixed assets161514 Current assets -Cash5432 -Receivable from Bibo12131517 -Other Receivables2233 -Pre-paid1111 -Inventory1320131 Total current assets33403524 Total Assets49554938

3. 61Current Assets: = due from Bibo:Rs.17 m -Book debt =Rs.6.71 m on 30.06.72 - Interest over the = Rs.10.29 m period 1972-80 ____ 17 m Bibo had made counter claims These are doubtful debts. No provision for bad debts. Liquidity overstated. Interest treated as miscellaneous Income. Treating interest as misc. income understated operating losses by Rs.10.29 million. Accumulated loss rises from 114 million to 124 million.

4. 71Other Receivables Loans given to cane growers. Aging detail. Loans of Rs.0.5 million outstanding for 6-10 years. Doubtful/bad loans. No provision. Liquidity overstated. 83LiquidityCurrent and quick ratios. Poor liquidity. Actual ratios much lower in view of doubtful debts. Cannot repay its current obligations.

5. Table-3 Current and Quick Ratios Rs. in million Year end June 301977197819791980 Current assets33403524 Current assets less inventory & pre-paid 19 2122 Current liabilities40555351 Current ratio0.8:10.7:10.6:10.5:1 Quick ratio0.5:10.3:1 0.4:1

6. Table-4 XYZ SUGAR MILLS PROFIT AND LOSS ACCOUNT Rs. in Thousands Year1976-771977-781978-791979-80 Sales 58,000%52,000%42,000%20,000% Cost of Sales Cane, carriage & incidentals 35,0006038,0007324,0005716,00080 Salaries & Wages 6,000107,000136,000146,00030 Excise duty15,0002611,0002111,000262,00010 Depreciation1,0002 28002 4 Others3,00053,40073,00072,00010 Total:60,00010360,40011644,80010626,800134 Gross Profit (loss) (2,000)3(8,400)16(2,800)6(6,800)34

7. Operating & Non-Operating Expenses Admin & selling3,0005 54,000105,00025 Financial4,50084,60095,500138,00040 Total:7,500137,600149,5002313,00065 Operating (loss)(9,500)16(16,000)30(12,300)29(19,800)99

8. ANALYSIS OF PROFIT & LOSS ACCOUNT No.DATA/FACTS/DOCUMENTSFINDING 1.Table-4 Profit & Loss AccountsBottom line figures: operating losses. Never made profit. 2.Table-4Various costs as % of sales. Constantly reducing sales. 3.Table-5 Production and capacity utilization. Reduced sugar production. Below capacity utilization. 4.Non availability of cane; feasibility report Erroneous assumption in PC 1 5.Table-6 Sugarcane procured locally Only 5 to 44% of plant’s requirement (of 185,000 tons) met locally. 6.Table-7 Total procurement of cane.Cane crushing capacity = 1500 tons/day normal crushing season = 120 days. Full requirement of cane never met. During 1979-80, growers switched to turmeric, they also preferred gur making due to its high price.

9. 7Table-8 Area-wise procurement of sugar-cane Between 42% to 60% cane brought from far-off places. Result was excessive cost of transportation, drying up of cane (less recovery percentage).

10. Table-5 Production and Capacity Utilization Tons 1976-771977-781978-791979-80 Cane crushing capacity 185,000 Cane crushed140,292166,27193,93114,375 Capacity utilization76%90%51%8% Sugar produced11.34414,0158,0071,206 % recovery8.08%8.43%8.55%8.38%

11. Table-6 Procurement of Sugar Cane Locally 1976-771977-781978-791979-80 Quality procured (Tons) 81,44481,36737,8578,392 Procurement as % of total requirements 44% 20%5%

12. Table-7 Total Procurement of Sugar-cane 1976-771977-781978-791979-80 Cane procured (tons) % of requirement 140,292 76% 166,271 90% 93,731 51% 14,375 8%

13. Table-8 Area-wise Procurement of Sugar-cane TONS 1976-771977-781978-791979-80 Qty % Sugar-cane produced from Local Area A Distt. (200 km North) B Distt. (150 km South) C Area (150 km East) D Area (300 km West) Total: 81444 58% 28316 20% 12395 9% 16707 12% 1430 1% 140,292 100% 81367 49% 44415 27% 18361 11% 18268 11% 3860 2% 166,271 100% 37857 40% 15976 17% 19164 20% 12870 14% 7864 9% 93,731 100% 8392 58% 801 6% 2439 17% 2627 18% 116 1% 14,375 100%