SUGAR INDUSTRY- SCENARIO IN INDIA
According to AISTA (All India Sugar Traders Association) in the year 2022-23 the sugar production increased by about 2.9% with estimated production of 31.9 million tones.
India is the worlds second largest producer of sugar after Brazil with estimated production of 31.9 million tones plus opening stock of 8.3 million tones with the mills. The total availability of sugar in the country is expected to be 40.2 million tones which is slightly lower than previous year.
GOVERNMENT POLICIES FOR SUGAR INDUSTRY
The Central Government came out with a slew of corrective measures and supportive mechanisms during the year 2018-19, providing much needed support to the sugar industry reeling under pressure to be rescued from the mounting cane arrears and the high debt burden. Most of these measures continued during 202223 as the Government continued to cap the quantity of sugar, which mills in the country could sell and at a minimum selling price. These measures stabilized sugar price in the country with greater degree of transparency, discipline and accountability. Some of the important policy directions issued pertaining to the sugar industry are as follows:
SOFT LOAN BY CENTRAL GOVERNMENT
On March 02, 2019, the Central Government announced a scheme of soft loan of Rs. 10,540 Crore with interest subvention of 7% on actual rate of interest charged by bank, for a period of one year. The Government also provided that all loans sanctioned & disbursed by May 31, 2019 would be covered by the scheme. As regard to us, we have not received any Soft Loan/Financial Assistance from Central Government.
OVERVIEW- SUGARCANE
The sugar season 2021-22 started with record opening stocks of 8.3 MT. This led to crash in sugar prices leading to a liquidity crisis for sugar mills which in turn resulted in the accumulation of huge cane dues. In order to support the industry and cane farmers, various measures were taken both by the Central Government in the form of soft loans, cane production subsidy, transport subsidy on sugar exports, fixing of minimum sugar price (MSP) and interest subvention for setting up of ethanol capacities and the State governments in the form of soft loans and cane subsidies which provided some respite to the sugar industry.
Despite the various policies and incentives by the Government, unless the surplus stock is cleared from the country, the scenario may not undergo any significant change. It is expected that the pressure on the sugar price would continue to remain given the over-supply scenario. To cope with this problem, the Central Government also allowed export of some sugar and blending of ethanol has been allowed to be increased to 20% by the year 2023.
COMPANY STRUCTURE AND DEVELOPMENT
The Company is located at Village Banondi, PO: Shahzadpur, Teh. Naraingarh, Distt. Ambala, Haryana. The plant started with an initial crushing capacity of 2500 tons of cane crushed per day (TCD), which has been gradually increased to 4000 TCD. The Company has one of the most modern and efficient sugar factories in the country.
OPERATIONAL PERFORMANCE
The crushing for the season 2022-23 started on November 15, 2022 and cane crushed during season 202223 was 48.421 Lac Qtls as compared to 46.256 Lac Qtls in the last season.
Particulars | Unit | Sugar Season | ||
2022-23 | 2021-22 | 2020-21 | ||
Cane Crush | Lacs Qtls | 48.421 | 46.256 | 49.787 |
Recovery | % | 10.68 | 10.58 | 10.93 |
Sugar Production | Lacs Qtls | 5.172 | 4.893 | 5.441 |
FINANCIAL PERFORMANCE
(Amount in Lakhs)
Weaknesses
• The State Government decides sugarcane prices in a manner that is not linked to sugar prices. Unviable sugarcane prices may impact the profitability of the Company.
• High Cane arrears due to low sugar prices.
• Risk of coercive measures by the State Government on account of huge cane arrears. Opportunities
• Higher recovery, Higher rates of by-products of Sugar.
• Government support towards production of Ethanol.
Threats
• Due to domestic surplus, there could be a softening in the sugar prices affecting the profitability.
• Increase in State Administrative Price of Sugarcane by the State Government.
• Reduction of Co-generation tariffs.
FUTURE OUTLOOK
The sugar industry will be a major player in producing cost effective energy and fuel from its by-products bagasse and molasses. Bagasse can be processed for co-generation of power, ethanol produced from molasses can be used for blending with petrol for motor fuel.
INTERNAL CONTROLS AND SYSTEMS
Your company has in place an adequate internal control system in order to ensure that all transactions are authorized, recorded and reported correctly and that all assets are protected against the perils of unauthorized use or disposition. Towards enhancing the efficiency of internal controls, services of consultants are hired wherever necessary, and their suggestions are reviewed and implemented. The Audit Committee of the board also meets periodically to review the internal controls, internal audit findings, action taken reports and to advise the management on corrective policies, if any.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company considers human capital as a critical asset and success factor for smooth organizational work flow. Efforts are made to improve skills, knowledge and performance of employees by timely training, job satisfaction and enrichment. The Company has added to its fold, experienced manpower in line with future areas of growth.
CAUTIONARY STATEMENT
The above Management Discussion and Analysis Report contains "forward looking statements" within the meaning of applicable laws, and regulations and is futuristic in nature. All statements that address expectations or projections about the future, including, but not limited to statements about the Companys strategy for growth, market position, expenditures and financial results are forward looking statements. The
Companys actual results, performance or achievement could thus differ materially from those projected in any such forward looking statements. Investors are requested to make their own independent judgments before taking any investment decisions and the Company assumes no responsibility.
Date: 23.10.2023 | |
Place: Naraingarh | By the order of Board of Directors |
Naraingarh Sugar Mills Limited | |
SANDEEP SINGH GHUMAN | |
Chairman & Whole Time Director | |
DIN:07275838 |
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www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.