• Chairman's Speech

Chairman’s Speech

Good morning Ladies and Gentlemen

Welcome to the 26th Annual General Meeting (“AGM”) of your Company through video conferencing. In view of the Covid 19 pandemic MCA and SEBI through its various circulars permitted to conduct AGM through Video Conferencing / Other Audit Visual Means and your company has appointed Central Depository Services (India) Limited (“CDSL”) to provide the facility to conduct AGM through Video Conferencing. On behalf of the Board of Dwarikesh, I thank you for joining us today. Your presence is indeed a true testimony of your involvement with and support to the Company.

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 on the future of 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 2020.

It’s a pleasure to inform you that the Company has strengthened its business foundation through capacity expansion and lower debt which will result in improved performance in future. During the year, there has been decline in revenues and growth in profit after tax due to weak sugar realizations, which has affected the growth of most sugar industry. However, from wider perspective, the Company’s performance was creditable as it addressed number of challenges i.e., decline in debt payment, timely payment to farmers, increased cane planting and setting up new distillery plant which will reap maximum benefits in near future

Let me make you walk through the financial numbers of the FY 2019-20. The financial performance may be considered satisfactory as the industry operated in an extremely challenging environment

  • During the financial year, the company had earned revenue from operations of Rs. 1,336 crores vis-à-vis Rs. 1,084 crores in the previous year. There is significant improvement in the revenue from operations during the year under review. The same is attributable to the increased releases under the monthly release mechanism administered by the Central Government & aggressive exports done by your company under the MIEQ & MAEQ schemes initiated by the Government
  • EBIDTA, during FY 2019-20 is Rs. 141 crores as compared to Rs. 165 crores earned during previous FY. Lower EBIDT both in absolute terms as well as % terms is mainly attributable to the reduction in power tariff with effective from 1st April, 2019. Reduction in power tariff was steep and more than 40%.
  • During the year under review your company earned EBDTA of Rs. 108 crores as compared to Rs. 144 crores earned in the previous FY.
  • Earning before tax is at Rs. 72 crores when viewed in conjunction with that of the previous FY Rs. 111 crores.
  • Earnings after tax at Rs. 73 crores is as compared to the earnings after tax of previous FY of Rs. 95 crores

Global Sugar Industry – emerging trends

  • The SS 2019-20 is expected to conclude as a deficit year with an estimated deficit of about 9 million tons. Estimated production at 167 million tons is lower by about 8 million tons as compared to previous sugar season.
  • The estimated deficit is mainly on account of estimated lower sugar production in all key geographies including Brazil, India and Thailand. High price of crude during the major part of season resulted in more sugarcane being diverted for ethanol manufacture in Brazil. Brazil went on a overdrive in its ambitious ethanol blending program and only 35% of the cane juice was used for making sugar while the rest was used for making ethanol.

Indian Sugar Industry

  • India’s sugar production figure for SS 2018-19 which was at 33.2 million tons is now pegged at 27.2 million tons during SS 2019-20 Approximately 1 million tons of sugar production is estimated to have been sacrificed in favor of ethanol production through B-heavy molasses & juice route.
  • Some sugar mills have attempted production of ethanol from sugarcane juice. UP’s production is an all-time high of 12.6 million tons whereas Maharashtra at 6.2 million tons caused a drag in production numbers.

Uttar Pradesh sugar sector highlights, 2018-19

  • UP State has clocked sugar production in excess of 12.6 million tons, an all-time high. This is in spite of some use of B heavy molasses for ethanol manufacture.
  • Higher production is attributable to early closure of Jaggery & khandasari units in the wake of pandemic & lockdown and consequent non-diversion of sugarcane and additional availability of sugarcane to sugar mills.
  • Record production of more than 12.6 million tons & regulated release mechanism has resulted in higher sugar stock levels of sugar mills. Not only are the godowns full, but mills are compelled to store sugar in the open subjecting same to perils of inclement climate. The cane arrears are also at an high of around Rs. 13,000 crores
  • The tariff of power evacuated by the industry to state grid has been revised downwards by more than Rs. 2 per unit (more than 40% decline), effective 1 st April, 2019. The same is being litigated
  • Outbreak of COVID 19 and lockdown coupled with social distancing norms & higher standards of hygiene has opened an opportunity of sugar mills to make sanitizers with ethanol, as the basic feedstock. This will help enable sugar mills to fulfill their social obligations
  • As per the survey results area under sugarcane cultivation in UP for SS 2020-21 is higher by at least 5%. SS 2020-21 therefore promises to be yet another season of bumper sugar production.
  • SAP for sugar season 2019-20 remained unchanged at Rs. 315 per quintal for general variety and Rs. 325 per quintal for the early variety.

Dwarikesh Sugar operational snapshot

SS 2018-19 vis-à-vis SS 2019-20 across three units

Particulars 2018-192019-20
Crushing (lac per quintal) 306.84 374.17
Recovery % (combined) 12.31 12.26
Production (lac per quintal) 37.77 45.89

(Adjusted recovery after considering sugar sacrifice in favor of ethanol higher than 12.4%)


The outbreak of COVID 19 has exposed the fragility of life. There have been casualties galore across the Globe. It has demanded Social-distancing and practicing the highest standards of hygiene have emerged as the only viable options to break the chain of this virus.

  • Your company has never faltered in playing its part in nation building and in ensuring the welfare of all its stakeholders – farmers, shareholders, consumers and employees alike.
  • With the unfortunate Covid-19 pandemic that gripped the world in 2020, at Dwarikesh we thought it is our duty to help accelerate the production of hand sanitizers in the region so as to not only fulfill our social obligation but also to meet the massively growing demand.

Government Initiatives (Macro)

  • National infrastructure pipeline: To achieve a GDP of US$5 trillion by 2025, the government announced a National Infrastructure Policy entailing an investment of C102 trillion in five years
  • Corporate tax relief: The government moderated the corporate tax rate to 22% from 25%; it announced a new tax rate of 15% for new domestic manufacturing companies, strengthening the Make in- India initiative.
  • The new effective CIT would be 25.17%, inclusive of a new lower surcharge of 10% and cess of 4%. India’s CIT is now closer to the global average statutory CIT of 23.03%.
Summing Up:

Dwarikesh Sugar will continue to maximize efficiencies and economies within its control. We will strive to set the loftiest benchmarks of efficiencies.

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, CDSL and last but not the least the illustrious members of our Board who have provided their valuable guidance whenever required.

Thank You
G R Morarka
August 11, 2020