Rana Sugars Pvt. Ltd. – a Study on Capital Structure and Cost of Capital of Companies
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INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITYFINANCIAL MANAGEMENT – II (MBA-FT – YEAR-I, TERM-III)GROUP ASSIGNMENTA Study on Capital Structure and Cost of Capital of CompaniesSUBMITTED TO:PROF. AMOLA BHATTSUBMITTED BY:SECTION: __C__ GROUP NO.: __15_Roll No.NameSignature161358Shubham Ghotankar161337Parag Jyoti Borah161339Rachit Kulshreshtha161334Nehal Parwal DATE OF SUBMISSION: 15th Feb, 2017 INDEXAcknowledgement Industry Information Companies Information Capital Breakup Financial Statements Promoters Stake Cost of Equity Notes to Accounts Comparative Analysis (Intra firm) Inter-firm Analysis Interpretations and Suggestions References ACKNOWLEDGEMENTWe wish to say thanks to Professor Amola Bhatt for giving us such a wonderful opportunity to work on this assignment. We got to know the various financial issues facing the Sugar industry. We went through various internet sites and accessed Ace Equity database. Our learning and knowledge about the industry have been strengthened. We also did inter firm and intra firm analysis, which revealed to us various facts which have been hidden from us. We got to know how to practically apply the theories which have been taught to us in Financial Management 2 subject.
Indian Sugar IndustrySugar, the second-largest agro-based industry in India, is a sector of immense importance to the Indian economy. ISI impacts livelihoods of about 50 million farmers and their families and provides direct employment to over 5 lakh skilled and semi-skilled persons in sugar mills and related industries. It covers 5 million hectares of land. For past two sugar seasons (SS; refers to the period October 1 to September 30) ended SS2015-16, the ISI has been witnessing a challenging phase marked by extreme volatility in sugar prices and lopsided margins for the sugar mill owners. The sugar prices started declining from August 2014 on account of surplus sugar stock both in domestic and global markets. Sugar production exceeded the sugar consumption levels for past five consecutive SS from SS2010-11 to SS2014-15. Wholesale price of sugar slumped from Rs.33.76/kg in August 2014 to a low of Rs.26.40/kg in August 2015 and remained below Rs.30/kg for almost half of production period in the SS2015-16. The situation at present, however, seems totally reversed where the major cause of concern for the government is surging sugar price. The sugar price started picking up from September 2015 and since then it has been on a continuous uptrend. In August 2016, sugar price prevailed at Rs.37.86/kg in wholesale market and crossed the price level of Rs.40/kg in the retail market. The production and consumption pattern of sugar in India is shown below. (Source: Indian Sugar Mills Association) [pic 1] COMPANY-1 161358 Rana Sugars Pvt. Ltd.Introduction:Rana Group of Companies made a humble begnning in mid 80’s when Rana Gurjeet Singh, group’s Managing Director , set-up Agro Boards Limited a Kraft Paper unit in Punjab Sucess of this maiden venture was duly recognised by apex state owned industial promotion corporations and this led venturs of Rana Group with different state owned corporations. Rana Sugars Ltd. was founded in 1992 by collaboration with Punjab AgroCorporation. In year 2002 RSL has setup a Demonstration Co-generation Project to produce extra power from the Bagasse (by-product of sugar) and export it to Punjab State Electricity Board. Capital Structure:RANA SUGARS 16-Mar15-Mar14-Mar13-Mar12-MarTotal Shareholders’ Funds199.28182.55237.52261.46256.06 Long Term Borrowings250.5239.05240.27238.45229.29Other Long Term Liabilities00.000.0000Short Term Borrowings514.66502.67510.72406.72376.22Other Short Term Liabilities0.920.861.510.640.37TOTAL DEBT766.08742.58752.50645.81605.88 TOTAL CAPITAL STRUCTURE965.36925.13990.02907.27861.94Balance Sheet (Rana Sugars Ltd.):Balance Sheet of Rana Sugars——————- in Rs. Cr. ——————- Mar 1615-Mar14-Mar13-Mar12-Mar[pic 2] 12 mths12 mths12 mths12 mths12 mths[pic 3] EQUITIES AND LIABILITIES SHAREHOLDERS FUNDS Equity Share Capital153.54153.54153.54153.54153.54Preference Share Capital41.0941.0941.0941.0941.09Total Share Capital194.63194.63194.63194.63194.63Reserves and Surplus4.64-12.0942.8966.8361.42Total Reserves and Surplus4.64-12.0942.8966.8361.42Total Shareholders Funds199.28182.55237.52261.46256.06NON-CURRENT LIABILITIES Long Term Borrowings250.5239.05240.27238.45229.29Long Term Provisions5.425.334.912.591.53Total Non-Current Liabilities255.92244.39245.18241.05230.83CURRENT LIABILITIES Short Term Borrowings514.66502.67510.72406.72376.22Trade Payables262.4207.18185.87190.36156.57Other Current Liabilities206.72171.99155.37148.86167.04Short Term Provisions0.920.861.510.640.37Total Current Liabilities984.7882.71853.48746.58700.19Total Capital And Liabilities1,439.901,309.641,336.181,249.091,187.08ASSETS NON-CURRENT ASSETS Tangible Assets446.89439.49452.83454.08479.28Capital Work-In-Progress28.7134.3932.4639.5624.51Fixed Assets475.6473.88485.29493.63503.79Deferred Tax Assets [Net]32.2232.195.5900Long Term Loans And Advances2.965.058.6312.411.41Total Non-Current Assets510.78511.11499.51506.03515.19CURRENT ASSETS Current Investments00.090.090.090.09Inventories645.27586.78638.65546.07517.07Trade Receivables74.0257.4659.4557.5345.39Cash And Cash Equivalents28.4813.9932.7520.0322.12Short Term Loans And Advances181.16136.64105.67119.1585.84OtherCurrentAssets0.193.570.060.21.37Total Current Assets929.12798.53836.67743.06671.88Total Assets1,439.901,309.641,336.181,249.091,187.08OTHER ADDITIONAL INFORMATION CONTINGENT LIABILITIES, COMMITMENTS Contingent Liabilities176.62180.56.388.7515.55CIF VALUE OF IMPORTS Raw Materials2.41.74007.48Capital Goods6.375.313.061.730EXPENDITURE IN FOREIGN EXCHANGE Expenditure In Foreign Currency0.40.540.920.537.68REMITTANCES IN FOREIGN CURRENCIES FOR DIVIDENDS Dividend Remittance In Foreign Currency—–EARNINGS IN FOREIGN EXCHANGE FOB Value Of Goods0.70.1–13.49Other Earnings0.250.12—BONUS DETAILS Bonus Equity Share Capital—–NON-CURRENT INVESTMENTS Non-Current Investments Quoted Market Value—–Non-Current Investments Unquoted Book Value—-CURRENT INVESTMENTS Current Investments Quoted Market Value—–Current Investments Unquoted Book Value—–[pic 4]Source : Dion Global Solutions Limited