Piccadily Sugar & Allied Inds Ltd Management Discussions.

In the last two sugar seasons 2017-18 & 2018-19, the Indian sugar industry has emerged as the leading producer of sugar in the world piping Brazil from the top most sugar producers position. The domestic sugar industry supports nearly 50 million cane farmers and their families, and provides direct livelihood and employment to them. It is the biggest employment generator in the rural areas. Many of the rural families thriving in the six lac villages of India are dependent on the sugar industry and long -term viability of the industry is key to them. There are about 530 operating sugar mill in the country, out of which 201 are in cooperative sector &329 are in private sector.

Sugar Availability position in the Country.

There is too much sugar in the country, leaving a lot of sugar in hand even after we meet countrys annual consumption requirement .In 2017-18 sugar season, the country produced about 324 Lac tones of sugar. With 39 lakh tons of sugar of carry forward sugar stocks from the previous season, the total sugar availability in the season, was almost 365 lacs tones . The total sugar off take in 2017-18 was 258 lac tones (internal consumption 254 lac tones & exports 2.64 lac tones). The season closed with sugar stocks of 107 lac tones, which was carried forward to the current sugar season of 2018-19.According to ISMAs Sugar production estimate for the current season it is expected to be another bumper sugar production year for the country with 330 lactones of sugar production. The total sugar off take in the current season is expected to be around 295 lactones, which includes expected domestic sugar consumption 263 lac tones & expected sugar exports 35 lac tones. Hence, the season which ends in another 4 months is likely to see a record closing stocks of 142 lac tones, which is unprecedented in the history of domestic sugar industry (Total sugar availability 437 lacs tones minus total sugar off take 290 lac tones)

Sugar Exports

The Government has promoted sugar exports during years of surplus sugar production at the beginning of the 2018-2019 sugar season. Mills were given individual sugar export quotas to be fulfilled by them in the current season. The intended sugar export target for the current season was 5 million tones, but due to lower global sugar prices and other procedural issues, total sugar exports in the current season is expected to be around 3.5 millon tones, which means that there will be an un exported quota of 1.5 million tones, which will remain un- exported in the current season and continue to burden the sugar stocks.


There has been remarkable progress in the ethanol program me. The Government is providing soft loans to sugar mill distilleries & stand alone distilleries to expand their ethnol capacity. It is expected that the country will meet 10 % mandatory target in another year, which would be a huge achievement by the sugar mills. Sugar mills are able to produce ethanol from B heavy molasses, C heavy molasses and directly from cane juice, with a remunerative price on ethanol supplies to oil marketing companies. In the long term , with more Ethanol production capacity in the country, it will easier for the sugar industry to manage some of the surplus sugarcane, as diversion to ethanol would be much simpler.

Opportunities & threats

One big problem faced by sugar mills due to surplus sugar production is ensuring timely cane price payment to farmers, which is within 14 days from the date of cane purchase. Surplus sugar production availability of sugar and mills are unable to recover their basic cost of producing sugar. On the other hand due to high cane price which has to be paid to the cane farmers irrespective of mills paying capacity or financial viability of mills delay on timely cane payment to farmers.


Haryana (Bawal Distillery)

The Excise &Taxation Department of Haryana in its Excise Policy for the year 2018- 2019 has fixed the sale price of country Liquor (Ex Distillery issue price) Rs.261-for quarts, Rs.282 for Pints and Rs. 320 for Nips per case plus taxes etc.

Punjab (Patran Distillery)

The Excise & Taxation Department of Punjab in its Excise Policy for the year 2018-2019 has fixed the sale price of country Liquor (Ex Distillery issue price) as below plus texes etc.:

50 Degree Rs 60 Degree Rs 75 Degree Rs
QUARTS 279.02 QUARTS 333.29 QUARTS 377.40
PINTS 302.07 PINTS 356.34 PINTS 400.45
NIPS 370.51 NIPS 424.78 NIPS 468.89

Out Look/Projection:

Sale of 5.00 lacs cases of Punjab Medium Liqour at Patran Sale of 8.00 lac cases at Bawal-Haryana Ethanol -As per tenders

Risk and Concern

The steep escalation in the prices of sugarcane & raw materials will adversely affect profitability of sugar mill & other products of the company.

Competition from the other distilleries in the state of Punjab may affect the sale of Country Liquor.

Internal Control System &their Adequacy

The auditor have felt that the company has a reasonable system of authorization at proper levels with necessary controls on the purchase ofsugar cane, issue of materialsand components&other related system of Internal control is commensurate with the size of the company. They also felt that the company has areasonable system of recording receipts of raw materials and components and the company is recording the sales and purchase through the software. The Software engineers regularly check software program me.

Material Development in HRD/IR

The company has appointed regular staffof43 persons in various departments along with contractual & seasonal staff for the efficient working of all the units of the company.

Other Key Indicators

Details of significant changes (i.e. Change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof

Sr.no. Particulars 2018-19 2017-18 % Increase/ Decrease Explanation For Change
i Debtors Turnover Ratio 13.38 61.87 -78.38 Due to increase in sales and credit period
ii Inventory Turnover Ratio 7.60 1.67 355.10 Increase in stock in Hand
iii Interest Coverage Ratio -0.05 -24.22 99.81 Due to increase in net profit after tax
iv Current Ratio 0.37 0.24 54.65 Due to investment of retained earnings in Current assets
V Debt Equity Ratio 0.34 0.28 21.66 -
vi Operating Profit Ratio (%) -1.04 -47.95 97.83 Due to increase in sales and profitability
vii Net Profit Ratio (%) 0.84 -1.64 151.40 Due to increase in sales and profitability
viii Change in Net Worth Ratio (%) 2.21 -0.81 371.58 Change in Net Worth due to increase in net profit