Dear fellow stake holders, 

Welcome to all of you at the 17th Annual General Meeting of your Company. It is my proud privilege to address you on this special occasion and share my thoughts with you.

The year gone by:

The year gone by had its share of challenges. Economic meltdown was faced by few economies. These economies were mainly from Europe. Consequently many other economies were jolted. India did not face too many problems as India has a strong regulatory frame work and the banking systems and polices followed are more robust. Powered by robustness of systems, Indian economy recorded impressive levels of growth.

However corruption and scams raised their ugly heads time and again. Though growth was not adversely impacted as the same is on auto trigger, confidence of the common man was indeed shaken up. Political uncertainty continues to prevail. Glaring disparities between the haves and the have-nots continue to impact our future projections of growth as the country still struggles to cope with the myriad problems of illiteracy, unemployment and inadequate infrastructure. Though lot of importance has been bestowed on the growth of infrastructure, the growth in the sector has been a tad slow. There is yawning gap between polices and their speedy execution.

Sugar Industry: 2009- 10:

The year 2009-10 for the sugar industry was an arduous year. It started off on a promising note. However as the year rolled by, ground reality was found to be far more different.

1. Sugar prices started surging during the first quarter of the year. The same was on account of deficit production globally and estimated lower production during the year
2. Production estimates at 15 million tons.
3. Price of sugar on a rollercoaster ride, scaling a high of ` 4,100 per quintal in January, 2010.
4. Mad scramble for procurement of sugarcane by sugar mills. Sugarcane prices driven to high of ` 250 per quintal.
5. Central Government initiated a series of measures to put a lid on the rising sugar prices. Reversal in price of rapid and fast. While sugar prices feel, sugarcane price stay put at higher levels.
6. Realization dawned on all concerned that production will not be all that low. Eventual production 18.8 million tons.
7. Irreversible damage done to the industry on account of hara-kiri committed by industry in procuring sugarcane.
8. Sugar price continues to be under pressure.
9. Though the fundamentals of the industry are strong, political posturing on the part of both Central Government and State Government has resulted on jettisoning of the interest of the industry.
10. In the entire value chain the Mills are the weakest links.

Dwarikesh Sugar Industries: 2009-10:

The overall negative environment prevailing in the industry impacted the working of your Company as well. Increase ion levy sale obligation, higher sugarcane cost, oscillating sugar prices together pulled the performance down. While sugar price did rise, the rise was less than commensurate with the increase in procurement cost of sugarcane.

Highlights 2009-10

For the umpteenth year recovery recorded at DN plant was the highest in the state of Uttar Pradesh.

Recovery clocked at DD plant, however, was a cause of concern. Massive cane development efforts have been embarked upon in the Command Area of DD unit that are aimed at bringing varietal change, planting of more and more sugarcane and better farming practices. Although DD is a new unit, the plant is technically balanced and is capable of operating at optimal capacity. Efforts are focused on augmenting cane supplies and I am confident that things will improved substantially, going ahead.

Crushing continues at all the units, although it is on the verge of closure at DD unit.

Going forward:

Uncertainty prevails in the industry. Lack of credible production estimates and pressure of higher food inflation do not offer leeway to the Central Government to introduce industry friendly policies. Issue of deregulation is also on the backburner.

Cash flows of the industry are battered and bruised. It is an undisputed fact that the fundamentals of the industry are very strong, both at domestic level and at international level. What is required is a level playing field. As of now the interests of the industry are sacrificed at the altar of the interests of farmers and sugar consumers. It must be borne in mind that the interests of the all concerned are complimentary in nature. Farmers and mills have to co-exist. Without either there is neither.

Sooner or later we expect that sugarcane price will be linked to sugar prices. The ROI of the industry will be such that industry will be able to focus on improving productivity and production the benefits of which will be available to all concerned.

Summing up:

I would like to take this opportunity to thank you for all your support. I seek your continued support in our endeavor to achieve better results in future. I would also like to use this opportunity to thank all our business associates, our employees who are the fulcrum of our organization, our farming brethren who have reposed immense confidence is us, our Banks and Financial Institutions who have proved to be our reliable and trustworthy friends, various Government agencies and last but not the least the illustrious members of our Board who have provided their valuable guidance whenever required.
 
- Gautam R Morarka
(Chairman and Managing Director)
Date: 16th March,2011