kashipur sugar mills ltd share price Management discussions

KASHIPUR SUGAR MILLS LIMITED ANNUAL REPORT 2008-2009 MANAGEMENT DISCUSSION AND ANALYSIS The overall total sales turnover of your company for the period under review stood of Rs.6595.80 Lacs as compared to previous year Rs 7442.69 Lacs recorded a decline in turnover by 11.38%. As the production was only 1.73 Lac bags as against 3.72 lac bags in earlier year. As shown in the chart given below the mill could obtained only 19.34 Lac Qntls of Sugar Cane during the year as against 38.02 Lac Qntls crushed in previous year as there was overall shortage of sugar cane during the year. The decline in crushing was mainly due to substantial withdrawal of cane allotment to the mill by the UP Government where from the Company was getting ample quantity of cane. Moreover, the Uttrakhand state government has allowed a licence to a power kolhu with a capacity of 1250 TCD in the gate area of the factory. The year under review the Company is still finding it difficult in procuring the sugarcane as the Sugar mills are totally depended on the availability of cane in its command area. Due to losses in Sugar industries in the last two years there was a general decline in area under Sugarcane resulting in lower availability of cane to the Company as well. Operational Performance: Particulars Sugar Season 2008-2009 2007-2008 Commencement of the crushing season 21.11.2008 4.12.2007 Closing of Crushing Season 12.02.2009 13.03.2008 Cane Crushed (Lac Qntls.) 19.34 38.02 Recovery (percent) 8.66 9.58 Sugar Production (Lac Qntsl.) 1.73 3.72 Finance The cash flow remained under pressure because of losses continuously incurred by the Company through out the year. The company could not avail the favorable selling price prevailed during the off season rates as most of the stock was disposed off at lower rates. Your directors are hope full that the Company will certainly come out of the present phase and shall be able to make positive net worth in the next coming years so that desired level of working capital could be availed from the banks. The rehabilitation Scheme of the company was approved by Honble BIFR on 08.01.2008 and circulated on 01.02.2008. However, the Scheme could not be fully implemented. The Company has implemented its part of the approved Scheme. The Honble BIFR has issued directions to State Government of U.P and Uttrakhand for the implementation of the approved scheme. The Company has not accepted any deposit from the public. Industry Outlook There has been a drastic increase in the state advised price of sugar cane during the year under report as compared to previous year. The State Government announced SAP at Rs 143.00 per Quintal as against Rs 127.00 per Quintal for the year-2007-08. Though the sugar selling realization were also increased during the year but due to inadequate cane supply and resultant lower production of Sugar, the stocks were cleared before sugar prices went up substantially. The Sugar Mills are required to sell sugar as per release orders. There had been suspense about availability of Sugar Cane from the erstwhile-reserved area in Uttar Pradesh. Therefore any planning to bring value additions thorough Co-generation of power and manufacturing of Ethanol was not possible.