mawana sugars ltd share price Management discussions


SUGAR BUSINESS

Sugar Season 2022-23

Sugar season 2022-23 started with opening stock at 70 Lac Tons. All India Production is estimated at 328 Lac Tons and the closing stock is estimated to be around 61.5 Lac Tons. Sugar sale price during the period April 2022 till March 2023 moved in the range of Rs.3400-3550/qtl. Since the production estimate has been cast lower at 325-330 Lac

Tons, sugar sale price is expected to remain firm during April

2023 to March 2024.

World Sugar surplus is likely to be lower in SS 2022/23 as reported by different Trade Houses. World sugar sale price will continue to be driven by Crude (Sugar/ Ethanol Parity), Currency, and Indias Export policy. The supply-demand position is once again shifting against earlier projections of surpluses which could drive world sugar sale price upwards.

DISTILLERY BUSINESS

The average All India blending percentage touched 11.65% in the tender year 2022-23 (as of 07.05.2023) and some of the States, including Uttar Pradesh, Haryana, Punjab, Uttarakhand, Bihar, and Karnataka, achieved higher blending percentage upto 11.9 percent.

Government has fixed target of ethanol blending to 20%

2025.

Nanglamal Distillery has recorded the highest-ever ethanol production during the FY 2022-23 and the supplies to the Oil Marketing Companies is progressing well.

RISKS AND CONCERNS

The incidence of certain insect pests such as Top Borer, Early Shoot Borer etc. in sugar cane crop has increased over last one year. The major impact of Top Borer is seen in

Cane Variety CO-238 which occupies the major portion of Companys cane area. Efforts are being made to control its incidence by integrated pest management techniques and also replacing the CO-238 cane variety in the coming years so that its impact in Companys command area is minimized.

DETAILS OF SIGNIFICANT CHANGES

Details of significant changes as required under SEBI(LODR)

Regulations, 2015 are as under:

Sl.

Particulars

As on As on

No.

31.3.2023 31.3.2022
1. Debtors Turnover Ratio 41.50 37.71
2. Inventory Turnover Ratio 1.90 1.72
3. Interest Coverage Ratio 3.03 4.50
4. Current Ratio 1.16 1.22
5. Debt Equity Ratio* 0.92 1.01
6. Operating Profit Margin 3.29% 5.13%
7. Net Profit Margin 1.16% 2.29%
8. Return on Net Worth 4.00% 8.00%

*Long term and short-term debts has been considered. Please refer to note no. 51 of Standalone Financial Results for variation in Key Financial Ratio.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has proper and adequate internal control systems which provide reasonable assurance regarding all financial and operating functions and compliance with statutory provisions.

The Company has an internal audit section besides an independent external Chartered Accountants firm which undertakes internal audits throughout the year. The internal auditors reports are regularly reviewed by Senior Management and Audit Committee of the Board for its implementation and effectiveness.

The Company endeavors to constantly upgrade internal controls and periodic evaluation of the same is being undertaken.

Use of SAP and other software systems have also resulted in strengthening the internal controls and accurate reporting of operational and financial data.

HUMAN RESOURCES

The business environment is very dynamic & challenging, and the market is very competitive. Company recognizes the importance of HR function and attaches high priority to it. Necessary steps have been taken to create a high-performing team to encourage motivated and participative work culture including training of personnel and establishing a communication flow mechanism through an HR help desk at all levels. This has helped to provide better service and forged sound relationships between employees and the HR department. An empowered HR function helps to focus on sourcing quality manpower in time. Company has taken initiative to induct young and dynamic Trainees from professional institutes directly and has recruited Trainees in Engineering/Production/Distillery and cane stream.

Going forward digitization, automation, and innovation will be focused areas. The goal is to involve/encourage employees, set up a reliable feedback system, invite suggestions and cultivate a culture of appreciation or recognition.

CAUTIONARY STATEMENT

Some of the statements in this Management Discussions & Analysis, describing the Companys objectives, projections, estimates, expectations and predictions may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied. Important developments that could alter your Companys performance include change in material costs, technology developments and significant changes in political and economic environment, tax laws and labour relations.