Managing Director''s Address

MD’s Speech at 23rd Annual General Meeting

Good morning Ladies and Gentlemen,

It gives me immense pleasure to welcome you all to the 23rd Annual General Meeting of your Company. While all AGMs are special this AGM is more special because we are recommending payment of dividend after many years. The year has been a turnaround year as we were able to clock impressive financials. Our stand that if and when the sector will turnaround, we will benefit the most is now vindicated. Our focus on cane development initiatives, logistic prudence and plant efficiencies has resulted in clocking the best ever group recoveries during the season 2016-17. Through the unique opportunity provided by the AGM, I shall share my thoughts with you, take you through the operations of the company and brief you of the contemporary developments which will have far reaching implications in strengthening of the sugar industry.  With your kind permission, I take it that you have read the audited financial statements and the Directors' report for the year ended on the 31st March 2017.


The year under review proved to be an inflection point for India’s sugar industry, especially well-managed sugar companies in Uttar Pradesh. The improvement was on account of a sustained stability in sugar realizations after years of price weakness. Some of the well-managed sugar companies capitalized on this recovery in realizations by complementing it with an increased in recovery – a double-impact. The result was that some sugar companies such as yours reported their best-ever financials. We capitalized on this development by right-sizing our Balance Sheet through accelerated debt repayment. The gearing achieved is among the lowest ever, a virtual inflection point in our existence. We intend to leverage our enhanced competitiveness and try and liberate and insulate ourselves from the cyclicality associated with the industry and have a sustained growth.

For the first time after many years, the season 2016-17 was a deficit year, both globally and domestically. While the world deficit was numbered in excess of 6 million tons production in India was a low of around 20.3 million tons. From a high of 8.3 million tons of sugar produced in season 2015-16, Maharashtra’s sugar production declined to less than 4.2 million tons in season 2016-17. Production in Uttar Pradesh, which was 6.85 million tons in season 2015-16, rose to nearly 8.8 million tons of sugar in 2016-17. With an opening stock of 7.7 million tons, production of 20.3 million tons, consumption of 24.5 million tons and import of 0.5 million tons, the estimated closing stock was 4 million tons. Sugar prices were thus broadly range-bound between Rs. 3,500 to Rs. 3,600 per quintal. Various measures of Central Government & State Government coupled with realignment of market dynamics on account of global as well domestic contraction in sugar production has breathed a new life in the industry which was on the way of being vanquished in the wilderness.

The sugar production during season 2017-18 is expected to bounce back to between 25 and 25.5 million tons with a share of nearly 10 million tons from Uttar Pradesh. The Global situation is also likely to turn surplus from deficit and the same has already started impacting the international sugar prices. From a high of 22 cents per pound in September, 2016, the prices are now at 14 cents per pound, recovering from a low of 12 cents per pound, a month ago. With the threat of imports looming, the Government was quick to increase import duty on sugar from 40% to 50% to curb possible dumping. F & RP of sugarcane for the season has been raised from Rs. 230 per quintal to Rs. 255 per quintal linked to recovery of 9.50%. 

Ethanol & Co-generation:


Ethanol, a pure alcohol form, is being encouraged by the Government to be used as an additive to fuel. Blending ethanol with automotive fuel enhances fuel combustion, moderates vehicle pollution and generates foreign exchange savings. Lofty target of 20% bio-fuel blending by 2017 has been set the Government. At Rs. 39 per liter ethanol offers attractive opportunity for sugar mills to add value. Ethanol has been brought under the category of declared goods, ensuring the unrestricted and uninterrupted inter-state movement of bio-fuels. More policy initiatives may be needed as OMCs have struggled to achieve the government-mandated blend. Ethanol prices can be linked to crude prices so that it is market driven.


Cogeneration is an initiative to produce two energy forms from one fuel (one form of energy being heat and the other being electrical or mechanical energy). In a conventional power plant, fuel is combusted in a boiler to generate high- pressure steam used to drive a turbine, which in turn drives an alternator through a steam turbine to produce electrical power. Sugar mills in India consume their captively-generated bagasse to run mills during the season and generate steam to run boilers and turbines. The surplus energy is exported to the state electricity grid. Cogeneration offers unique opportunity to sugar mills optimize revenues and maximize profits.

State Government policy initiatives

The Uttar Pradesh government strengthened the sugar industry’s viability with the announcement of a reasonable increase of Rs. 25 per quintal in the state advised price (SAP) for FY 2016-17. However, the State Government withdrew benefits to the sugar industry like waiver of purchase tax, entry tax and society commission. Besides, the two-tier payment mechanisms that had been provided earlier were also done away with.

The responsible handholding by the Central and State Governments played a crucial role in the sugar industry’s revival in Uttar Pradesh. The government focused on the timely clearance of cane price to be paid to farmers and improved sugarcane yields.

Sugar mills in Uttar Pradesh – Season 2016-17 recoveries – credible achievement 

Sugar mills in Uttar Pradesh clocked Extra-ordinary recoveries: As against average recovery in the range of 9.25% to 9.50% normally recorded by sugar mills in Uttar Pradesh, average recovery in excess of 10.60% was clocked by sugar mills. This was mainly on account of revolutionary sugarcane variety Co 0238. The phenomenal rise in the recovery is attributable to focused & dedicated cane development efforts planned and executed by sugar mills. A couple of mills have closed their crushing season with a recovery in excess of 12%. The continuing cane development efforts are also focused in helping farmers maximize their yields, in addition to encouraging them to grow early variety of sugarcane. Efforts are continuing to minimize the harvest to crush time. Weather did not play truant and helped in improved recoveries. 

Dwarikesh – HIGHLIGHTS: 2016-17

Your company continued with its excellence performance and clocked high recoveries. Table below is illustrative of the improvement in recoveries

Season 2016-17 vs Season 2015-16 (completed season)





% Change

Crushing (Lac/Quintals)


















Recovery %

















Production (Lac/Quintals) *

















·         Significant increase in cane availability & cane crushed. Cane crushed more than 58% over previous season in DD unit. In case of DP unit nearly 34% increase was achieved.

·         DN and DP units recorded recovery of more than 12%, a hitherto unknown occurrence in Uttar Pradesh

·         Recovery of DN & DP the first and the second highest in North India. Recovery of 12.34% clocked at DN unit among the top five in the Country.  

·         Group recovery of 11.78%, among the highest in North India. Record sugar production in DP unit. 


On account of excellent all round performance and on account of favorable market conditions. Our financial score card is reproduced below:

Dwarikesh - Financial scorecard:

                                                                                                                                            Lac `







Net Sales


























*Exceptional income of Rs. 323 Lakhs (Previous Year Rs. 492 Lakhs) is added to EBIDTA and EBDTA


Futuristic Vision of the Sugar Sector 2017-18 & contemporary developments:

Promising sugar production season is forecasted in Brazil. Robust sugar across geographies expected to drive the world’s sugar output by 6.6% to 187.80 million tons.

Production in Maharashtra expected to rebound. UP production expected around 10 million tons

Season 2017-18 is expected to commence with an opening stock of 4 million tons, lowest in the recent history. With production and consumption evenly matched, the stock position will be similar to last season. The stock will be enough to meet domestic demand.

Sugar prices have shown signs of resurgence and presently around `3,700. Sugar prices expected to sustain at present levels. Since the Government has increased FRP, any price less than Rs. 4,000 shouldn’t raise alarm.

Certain pronouncements by both Central Government & state Governments are very inspiring. State Chief Minister has on various occasions opined that increase in sugarcane price is not a panacea to the problems of farmers. He has stressed that timely payment and increase in the income of farmers by way of improvement in yields’ is the key to the wellbeing of farmers. The State Government is committed to doubling up the income of farmers by the year 2022.

Central Government has advised the State Government to follow FRP for sugarcane pricing rather than the arbitrary SAP. This augurs well for the sugar industry in Uttar Pradesh as the sugar mills in UP have historically suffered on account high & arbitrary SAP. High sugar prices would induce cyclicality whereas time tested FRP would result in sustained growth of farmers and the sugar industry. With the increase in the recovery in UP the gap between FRP and SAP is narrow and can be bridged in due course. While it may be trifle difficult to implement FRP, the policy intent is in the right direction and ways and means can be found to implement FRP.

Implementation of FRP will pave way for implementing the revenue sharing model proposed by Dr. Ranagrajan. From being vendors to the sugar mills, farmers will become partners of sugar mills and thus thrive from the growth of industry. Sugar mills will also be hedged against untoward/ drastic fall in sugar price. However with sustained policies, improving dynamics and performance of sugar mills, cyclicality should be a thing of past and sugar industry should march ahead with its head held high. With both Central & State Governments of same political party affiliation, the policies impacting sugar industry should be aligned and in sync with another.

However the Central Government is keenly watching the sugar price scenario and is seen agile in tweaking the policies in ensuring that the price rise is not alarming and also ensuring that there is no free fall in the sugar price, which obviously will impact the ability of sugar mills to clear sugarcane dues in time.

The year FY2016-17 was marked by two historic national moments, both relevant to the Uttar Pradesh sugar industry. The first defining moment was the currency demonetization announced on 8 November, 2016, intended to enhance financial transparency. The immediate fall out of this measure was a lower diversion of sugarcane to alternative sweeteners, which increased the availability of sugarcane to sugar mills. Temporarily, demonetization resulted in sluggish demand and declining sugar realizations, but the sector regained its momentum in a matter of months.

The second important economic development was the roll out of GST. Both demonetization and GST rollout (Unified indirect structure) are expected to provide booster dose to Indian economy. We have successfully implemented GST rolled out by the Govt. Before the GST was implemented, sugar mills a duty of nearly Rs. 200 per quintal on sale of sugar and the presently applicable GST rate is 5%. GST therefore would not prove to be inflationary.

Dwarikesh – quest for excellence continues:

Cane Development: We continue to focus on improving not only our recovery but the yield of farmers. Interest of the company is perfectly aligned with the interests of the farmers.

a.     We constantly engage with farmers to encourage them to grow sugarcane & grow sugarcane of better variety which on the one hand will give better yield to farmers and on other hand helps mills to derive better recoveries.

b.    We also help farmers in sourcing better quality of pesticides, fertilizers etc. Often, we subsidize a portion of the cost of the same.

c.     Farmers are educated & encouraged to do trench farming, autumn planting & intercropping such that their revenues are maximized.

d.    Demonstration plots: We often identify certain plots of farmers as demonstration plots where best agricultural practices are followed for other farmers to be encouraged and replicate. 

e.     Cane development initiatives are customized according to the requirement of farmers, prevalent agro-climatic condition and other relevant factors. Nukkad Nataks & Kisan Goshtis are held to educate farmers to follow better agricultural practices 

Zero liquid discharge:

Pollution Control Boards have set formidable norms to reduce the liquid discharge. Efforts are now directed to not only recycle and reuse the process water, but to draw minimum ground water. Your company has taken many small steps with a view to optimize the use of process water, adequately treat the water to be discharged and make it suitable for irrigation.  The avowed objective of the Company is to achieve zero liquid discharge in the near foreseeable future. The company has also set up online monitoring systems to monitor the quality of liquid and air discharge.  The company is committed to play the role of a responsible corporate citizen. While the long term objective is to ensure zero liquid discharge in the short term the company has committed capital expenditure to ensure that effluent discharge is within the specified parameters.

Efficiency enhancement

Within the permissible resources, your Company is ceaselessly working to enhance efficiencies at its plants.  Incredibly low process losses recorded by Company over the years bears adequate testimony to spirit inculcated by your Company. Dedicated personnel of the Company are always looking to make subtle improvisation at the plant & equipment so as to save water, steam & power so that power generation & export can be maximized. Your Company is always scouting for new technologies so as to improve productivity of its plants.  In the last many years, on account of losses the budgetary allocation on modifications etc. were bare minimum. The company has now embarked up on debottlenecking of operation at all units to ensure that crush rate per day is enhanced and also productivity is maximized. 


Historical milestones and a variety of achievements characterize our company’s journey. I am pleased to inform you that the credit rating of the Company has been upgraded to A+ with stable outlook  by ICRA. It is a matter of added gratification that ICRA has recently awarded the highest rating of A1+ for our commercial rating program of Rs. 100 crores. It is undoubtedly a moment of immense pride for all of us who have been part of this inspiring journey.


"Timing, perseverance, and decades of trying has eventually made us look like an overnight success." Growth is never by mere chance; it is the result of ceaseless hard work put in by all stake holders and all of them working in tandem

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 for their tireless efforts in braving adversities, our farming brethren who are not only our partners but our backbone for having reposed immense confidence in us by growing & supplying sugarcane to 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

(Managing Director)


August 19, 2017