Focus on improving operating efficiency to continueNew Delhi: Dwarikesh Sugar Industries Limited (DSIL) is engaged in the business of manufacture of sugar and allied products. From a humble beginning in the year 1995 when it first commissioned its 2,500 TCD sugar plant at Bundki in Bijnore District its metamorphosis into an integrated sugar conglomerate in now complete. It now has 3 sugar plants with a combined capacity to crush 21,500 tons of sugarcane a day. All the plants are state of the art, based on most modern technology.
While two of its plants are located in Bijnore District, its third plant is in Bareilly district. It has cogeneration infrastructure to export 56 megawatts of power every hour (after meeting captive power requirement of nearly 30 megawatts) and a distillery to distill 30 KL of Industrial alcohol/ ethanol a day. It is one among the very few sugar companies who have been regular in paying sugarcane dues to the farmers.
DSIL is reputed for its operating efficiency and has year on year recorded loftiest parameters of operating efficiency.
Year 2008-09 - Snapshot:
1. Net sales of INR 462 crores, up by 69% as compared to previous year
2. Post tax profit of INR 25 crores as against loss of INR 25 crores in the previous year
3. Board recommends dividend of 15% (INR 1.50 per share of INR 10 each)
4. EBIDTA of INR 126 crores is at 27.28% of net sales - in percentage terms, one among the highest in the industry.
5. Cash profit of INR 65.90 crores
6. EPS of INR 14.42 per share of INR 10 each (after considering dividend on preference shares)
7. CEPS of INR 34.61 per share of INR 10 each.
8. Book value per share as on 30th September, 2009 - INR 87.28
9. In terms of recovery, two of Company's plants held the coveted first and second position in the State of Uttar Pradesh
10. Healthy increase in selling price of byproducts.
11. Interest cost higher because of execution of 2 major projects in the year before.
Going forward:
1. Sugar price expected to sustain at reasonably higher levels - Global deficit in production predicted
2. Power to be key driver of revenue.
3. New energy policy announced by the State augurs well for the industry.
4. Significant contraction in interest costs in 2009-10 - Lower utilization of working capital limits on account of accelerated releases. Possibility of debt recast resulting in prepayment of some debts.
5. Availability of cane will be an area of concern and will keep the industry on tenterhooks.
Mr. G R Morarka, Chairman and Managing Director, said "The year 2006-07 and 2007-08 were very challenging as the market conditions were totally skewed against the industry. Prices of sugar had plummeted to abysmally low levels. However backed by surge in sugar prices, the year 2008-09 saw renaissance in the fortunes of sugar industry. Upside effects of better sugar prices more than made up the flipside effects of lower capacity utilization. While there is trepidation over cane availability and capacity utilization, the surge in price appears sustainable. The past few years have been very difficult and it required concerted efforts on the part of all concerned within the organization and support and help of all our business associates to survive and beat the adversity. However the industry has now entered an exciting phase. Going forward, there will be intense struggle for survival and the men in the industry will be separated from boys. We shall be relentless in our focus on improving operating efficiency and shall ruthlessly attack costs. I am reminded of a quote from Mr. Winston Churchill who very famously said that "the biggest mistakes are made in good times". Our endeavor would be to remain rooted to the ground and keep doing reality checks on ourselves, on the sector and on the economy and do not get swayed into committing mistakes."
For further information, contact:
Vijay S Banka.
Dwarikesh Sugar Industries Ltd.,
Tel: 91 22 22832468
Facsimile: 91 22 22047288
Email: vsbanka@dwarikesh.com
