Project Management

Project Viability Report

Shree Renuka sugars limited

Submitted byPurusharth Mahajan Roll No. 33

Background and Inception of Company

Shree Renuka Sugars Limited (SRSL) is an integrated manufacturing company with strategic focus on Sugar and its allied products in Power and Ethanol. The Company was incorporated on 25th October 1995, key manufacturing facility of the company is in Munoli, Athani & Havalgah, Karnataka and also SRSL operate three leased facilities at Ajara & Arag in Maharashtra and at Aland in Karnataka. SRSL has the largest sugar refining capacity in India of 4000 tons per day (TPD). SRSL had started its commercial production of sugar at the Munoli unit and entered into a power purchase agreement with the Karnataka Electricity Board for sale of surplus electricity, being 7.55 MW for an initial period of 10 years from the date of commercial production and a renewal period of 20 years at the rate of Rs. 2.25 per kilowatt hour with escalation at the rate of 5% per annum. Initial Public Offering (IPO) of SRCL was released in the year of 2005. The Company plays a significant role in exports/imports due to its coastal position. In 2006, the company had inked a Memorandum of Understanding (MoU) with Brazilian sugar giant. SRSL is the single largest exporter out of India in 2006 -07. It has 21% market share in India's fuel ethanol market and has an aggressive growth plan of increasing its ethanol production capacity to 900 Kilo liter/day by Dec 2009. It also accounts for 20% of India's international sugar trade. Shree Renuka Sugars creates one of the largest Sugar/Ethanol Groups in Brazil with Equipav Deal.[9] Indian credit rating agency ICRA has maintained the long term rating of [ICRA]A+ on the company. Renuka sugars also owns a team in KSCA's Belgaum Premier League T20. The name of the team is Renuka Royals.

THE INITIATION PHASE

Shree Renuka Sugars Ltd has signed an agreement with Sri Lankas state investment arm, Board of Investment, for setting up a sugar refinery complex at Hambantota in the South. The proposal to establish sugar refinery plant was proposed by M/s Shree Renuka Sugars Ltd, India and they have formed its subsidiary local company Lanka Sugar Refinery Company (Private) Limited. Sri Lanka Ports Authority and Lanka Sugar Refinery Company (Private) Limited signed the Business Venture Agreement on 7th November 2012. The Business Venture Agreement was signed between Dr.Priyath B.Wickrama - Chairman of SLPA, Executive Director of SLPA Dr.Sanjaya Sedara Senarath and Mr.Rajesh Rawat - Director - Lanka Sugar Refinery(Private), Limited, Mr.William Dharmadas - Lanka Sugar Refinery(Private) Limited in the presence of

Hon. Deputy Minister of port and Highways - Rohitha Abegunawardhane. The refined sugar would be sold locally as well as exported from Hambantota Port. The sugar refinery would have a world-scale capacity and contribute to over 1 million tonnes of cargo movement for the Hambantota Port.

THE PLANNING PHASE

The investment is expected to be around $220-million for setting up a sugar refinery complex. The company can acquire around 41 acres of Land in Hambantota Port. This Business venture agreement is signed for a term of 25 years and the expected total investment of this Business Venture is US $ 220 M. The initial capacity of this plant is 2000 tons/ day, which will be expanded up to 3000 tons/ day subsequently. Raw sugar is expected to import by the Business Venture for refinement at this proposed plant. The company is planned utilize local human resource to the maximum level and expected to engage 1500 -2000 work force during the construction period. During their steady state of operation, nearly 300 -350 are expected to employ by them in various technical and commercial levels. Apart from the above nearly 1000 persons are expected to get indirect opportunities through this. The construction work of this plant is expected to complete within 24 months.

THE EXECUTION STAGE

The project would result in foreign exchange savings of nearly $450 million for the country. It will also create some 300 direct employment opportunities for locals and indirect employment for nearly 1,500 people. Shree Renuka Sugars Chairperson Vidya Murkumbi, said the company looked forward to starting the work on the project within few months. The Company already operates two port based sugar refineries with total refining capacity of 1.7 MTPA. The rated capacity of the Kandla sugar refinery is 3,000 tons per day and that of the Haldia refinery 2,000 tons per day. Operating Models : India importing : Import raw sugar, sell refined sugar locally (When India is sugar deficient) India exporting : Refine local raw sugar, sell internationally (When India produces surplus sugar) Tolling operation : Import & re-export to capture global refining margin

Advantages : Port-based location minimizes freight costs and enables cost efficient imports and exports of sugar Flexibility to shift focus from domestic market to export Gujarat refinery location enables competitive exports to the highly sugar deficit Middle East region Haldia refinery strategically located close to sugar deficit regions in East India and South-East Asia

SUGAR REFINING businesses in shree renuka sugars

the integrated sugar mills

The sugar refinery

The brand sugar retailing of renuka sugars

Specific areas in which R&D carried out by the Company. Production of ethanol from beet; Distillery Spent Wash Incineration Sugar recovery from refinery scum Condensate Polishing Unit (CPU).

Future plan of action Scaling up activities in the abovementioned areas of R&D; Implementing the proven innovations in all plants of the Company. Product improvement, with installation of CPU, reduction in cost of water management.

PROJECT PERFORMANCE AND CONTROL

Project managers will compare project status and progress to the actual plan, as resources perform the scheduled work. During this phase, project managers may need to adjust schedules or do what is necessary to keep the project on track. Shree Renuka sugars limited is committed to manufacture High Quality Refined Sugar to industrial and General consumer markets. Management shall periodically review the objectives to ensure their suitability, adequacy and opportunity for continuous improvements in the Quality Management System. SRSL aims to become the most efficient and market driven integrated processor of sugarcane in the world, while enabling the team to grow in learning and motivating atmosphere,

participating in the all round development of the community and delivering consistently on returns to all the shareholders. As Shree Renuka sugars Ltd. Has been not using EVA concept to measure the financial performance of the company. Though the traditional measures used by company gives the financial position of the company, but they lacks in showing the true picture of the company. So, to know the performance of Shree Renuka Sugars Ltd they can adopt the EVA concept. Use the capital properly to increase the EVA. If company utilize the capital properly then in the future company will maximise the value to its share holders. Maintain the growth in revenue. It will help to sustain the confidence of share holders to invest in company or to retain their money in companys shares. Cost of capital should be controlled and the amount of Net operating profit after tax should be increased in order to have a consistent high figure of EVA.