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The Management of Rana Sugars Limited is pleased to present its Analysis Report covering segment wise performance and outlook.
World Sugar production in sugar season 2018-19 was estimated to be 186 million MT, whereas consumption of the sugar was expected to be 183 million MT. Brazil produced only 29 million MT sugar due to higher diversion of cane juice towards ethanol and a historical lower sugar mix of 36%. India emerged as the largest producer of sugar in the World which is expected to be produced around 33 million MT due to better weather, acreage and recovery.
Indian Sugar Market :
India has become largest producer of sugar in the world during the current year. India is also the largest consumer of the sugar. The Central Government has come out with some corrective measures and supportive policies. It has stabilized sugar price in the country and has introduced monthly release mechanism with effect from June 2018. The Central Government has fixed a Fair & Remunerative Price (FRP) of sugarcane for the sugar year 2018-19.
Minimum Sugar Price
The Central Government has notified that no producer of sugar shall sell or agree to sell white/ refined sugar in the domestic market at a rate below Rs.29/kg. However, subsequently, the Government increased the minimum selling price of sugar in the domestic market to Rs.31/kg during February, 2019.
The Government of India gave various incentives to sugar mills for producing ethanol from molasses or sugarcane juice. The recovery rate to be determined by considering every 600 litres of Ethanol as equivalent to one MT of production of sugar. The Central Government has also issued a notification to sell 10% ethanol blended petrol which has been greatly welcomed by the sugar industry.
In order to encourage the export of sugar the Government of India has provided scheme for payment of an assistance of Rs.13.88/quintal of sugarcane crushed during the 2018-19 season for export as under:-
i. For mills located within 100 KM from ports Rs.1000/Mt of sugar
ii. For distance more than 100 KM and mills located in coastal States Rs.2500/MT of sugar
iii. For distance more than 100 KM and mills located in other than coastal States Rs.3500/Mt of sugar
The Government of India has further provided soft loan to the farmers.
The sugar segment has been constituted the largest share of the Companys revenues. The revenue from the sugar during the year 2018-19 was Rs.792.46 Crores against Rs.750.29 Crores in 2017-18.
The Distillery Units has produced 30,64,852 BL Extra Natural Alcohol, 2,11,75,695 BL Ethanol and 8,51,842 cases of Liquor.
The Power Cogeneration Unit has produced 10,53,29,000 units of power during the year.
Opportunities and Threats
The impact of monsoon on the availability of sugarcane which is major raw material will be very significant. Further increase of FRP of the sugarcane will also have a impact on the financial position of the Company.
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 as motor fuel by blending it with petrol.
The season ahead should see the proper utilization of the co-generation plant capacity and therefore the exportable power will give rise to more revenues. Also due to the rate hike, the income/ profits will rise over the previous season.
The year of 2019-20 are going to be a balanced sugar production and surplus sugar will be produced by India. This year availability of water, Government policies on sugar and ethanol are the key factors for the future of sugar industry in India.
Risk and Concerns
Due to surplus sugar production in the country the rate of sugar may fall below the cost of sugar production. Also most of the time when India produce surplus sugar, the sugar production of the World also become surplus. Due to this export of sugar also become unviable.
INTERNAL CONTROL SYSTEM
The Company has an appropriate internal control system for its various functions with the ultimate objective of improving efficiency in its operations, better financial management and compliance with regulations and applicable laws. The Company has appointed an Internal Auditor. All operating parameters are well defined and monitored periodically. The detail internal audit reports are discussed at length at various levels and thereafter the said reports are also placed before the Audit Committee for review and discussion and, if required, further brought into the notice of Board of Directors.
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.
Statement in the Management Discussion and Analysis Report describing Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations, Actual results might differ materially from those either expressed or implied.
DECLARATION BY THE MANAGING DIRECTOR
I, Rana Inder Pratap Singh, Managing Director of Rana Sugars Limited hereby declare that all the members of the Board and Senior Management personnel of the Company have affirmed compliance with the Code of Conduct for Directors and Senior Management for the year ended March 31, 2019.
|For Rana Sugars Limited|
|Place : Chandigarh||Rana Inder Pratap Singh|
|Dated: 13th August, 2019||Managing Director|