Vijay S Banka, Whole-time Director and CFO, Dwarikesh Sugar Industries

India Infoline News Service | Mumbai | October 05, 2017 12:14 IST

Vijay S Banka, Dwarikesh Sugar Industries
Vijay S Banka is a Whole-time Director and CFO of Dwarikesh Sugar Industries. A Chartered Accountant by qualification, he has been a member of the Board of Directors of the company since May 2010. Banka has over 25 years of experience in handling finance and strategy in various capacities. He has been associated with Dwarikesh Sugar for nearly a decade now. He is a graduate from Mumbai’s Sydenham College of Commerce and Economics.
Dwarikesh Sugar Industries Ltd is a leading sugar producer. The company has three fully automated and highly efficient sugar mills, located in Uttar Pradesh’s sugarcane-rich belt of Bijnor and Bareilly districts. It has combined production capacity of 21,500 tonnes of sugarcane per day. Modern and technologically advanced units help the company to harness sugar byproducts such as ethanol, industrial alcohol and bagasse-based power production as growth enabler. Focused R&D initiatives have enabled the company to ensure streamlined and quality supply of sugarcane, enabling high recovery and production levels. The company’s combined production capacity is 21,500 tonnes of sugarcane per day.
In an interaction with IIFL, Vijay S Banka, said, “With our continued emphasis on superior cane variety selection, lower cut-to-crush tenure and lower process loss, we expect to maintain better recovery levels and achieve a commensurate increase in sugar production.”
Excerpts of the interview:
How is the company planning to ramp up production for the upcoming festive season?
In season 2016-17, we crushed 283.40 lakh quintals of cane and produced 33.38 lakh quintals of sugar. Our company has been able to register the best recovery in north India as per last season’s statistics. Current indications suggest that we will be able to crush 10-15% more sugarcane during the ensuing season. With our continued emphasis on superior cane variety selection, lower cut-to-crush tenure and lower process loss, we expect to maintain better recovery levels and achieve a commensurate increase in sugar production.
How has this monsoon season impacted the sugar industry?
Monsoon season has been reasonable although heavy rains in the last week could marginally impact the yields. Sugar mills in Uttar Pradesh are expected to start the crushing season early and production level is therefore expected to be better. As per the first advance estimate of the agriculture ministry, sugarcane output might increase to 337.69 million tonnes this year from 306.72 million tonnes last year on account of good rains.
Dwarikesh Sugar’s debt to equity ratio stood at 1.59x as of FY17. What are company’s plan to reduce debt in upcoming quarters?
The management’s biggest priority is to liquidate the long-term debt on our books. Last year, we commenced the year with Rs 301 crore in long-term debt; this had been moderated to Rs 145 crore by year-close through accruals generated from the business and proceeds from a qualified institutional placement of Rs 59 crore. This debt moderation had a sweeping impact on our gearing, we were able to graduate a year-start debt-equity ratio of 2.58 to 0.46 by the end of 2016-17. We are hopeful of liquidating all our long-term interest-bearing debt in 2018.
Please share the company’s  capex  plans for the next couple of financial years?
The management has outlined three priorities:
·To liquidate Rs 145 crore of long-term debt on our books
·To automate our plants and update the technologies and de-bottleneck the pain points to enhance efficiency and achieve better average  crush  rate
·To correct molasses distillery mismatch (we presently consume only  a-third  of all the molasses that we generate and market the rest) to a scenario where we consume two-thirds of all the molasses that we generate through a planned doubling of our distillery capacity
· To seek attractive acquisition targets that could broad base our sugar (and byproduct) manufacturing capacity
Can you throw some light on Dwarikesh Sugar’s plant-wise capacity utilisation? 
Capacity as on 31st March 2017 Dwarikesh Nagar (Bijnor) Dwarikesh Puram (Bijnor) Dwarikesh Dham (Bareilly) Aggregate
Sugar (TCD) 6,500 7,500 7,500 21500
Cogeneration (MW) 17 33 36 86
Distillery (LPD) 30,000 - - 30,000

As on March 31, 2017, Dwarikesh Puram and Dwarikesh Dham plants generated 7,500 TCD sugar each whereas Dwarikesh Nagar plant generated 6,500 TCD sugar aggregating to the 21,500 TCD sugar that we produced. Our Dwarikesh Dham plant generated 36MW of power of the total 86MW that we generated from all our three plants. Our Dwarikesh Nagar plant, which has a distillery, produced 30,000 LPD alcohol as on March 31, 2017.
What kind of growth do you envisage for the Indian sugar industry?
Earlier, our sugar industry was more dependent on the sugar crushed in Maharashtra, but things are steadily changing. Sugar companies in Uttar Pradesh have shown their potential and to some extent have been able to meet the sugar demand of India. The prices have been stable and the industry is showing signs of fulfilling the domestic sugar demand. Moreover, the government has been acting as a catalyst in the growth story of Indian Sugar Industry. In the short to medium term, we expect stable sugar prices, nearly stable sugarcane price, better stock to consumption ratio and good top-line and bottom-line for efficient and well-managed sugar companies.