ugar sugar works ltd share price Management discussions


Industrial Structure and Development:

The ownership of the sugar industry is a combination of public, private, and co-operative sectors. Sugar is produced in almost all the major Indian States. Maharashtra, Uttar Pradesh, and Karnataka contribute to more than 75 % of the countrys total production. Tamilnadu, Andhra Pradesh, Bihar, and Gujarat are the other major sugar-producing States.

The sugar production in the country during the year 2021-22 will be around 350 Lakh tons compared to 302 Lakh tons in the previous year. This is after considering the diversion towards production of Ethanol. The sugar production during the year 2022-23 is likely to be better in the current year due to good weather and water supply. The plantation of crops in Maharashtra and Karnataka will increase substantially

The short-term outlook for sugar looks to be reasonably good on account of stable domestic prices, good export of sugar, and diversion to Ethanol.

However, the Ethanol supply and exports prove to be a silver lining for the industry in the years to come

Opportunities and Threats:

Opportunities:

To control falling prices, the government has introduced release mechanism and has also declared minimum selling price which is likely to go up to Rs.3300 per quintal.

- Environmental friendly power generation from co-generation units equipped with high-pressure boilers and turbines is getting maximum energy output.

- Bio-composting processes and conversion of organic and inorganic matter into bio-manure to ensure zero liquid discharge from the distillery.

- The Government of India is promoting Ethanol blending as per the National Biofuel Policy. There have set a target of achieving 20% blending of Ethanol with petrol by the year 2025. Currently, we are close to 10% blending in this financial year.

The interest rates have started coming down.

Threats:

The sugar industry presently is coming across the following threats:

- Shortage in the availability of farm labor for harvesting and transportation, loading and unloading of sugar cane.

Continuous increase in FRP for the last 3 to 4 years has increased in cane procurement price, without any increase in the MSP of sugar.

An increase in the number of sugar factories in the surrounding area and also an increase in their crushing capacity, leading to higher competition.

Segment-wise Performance:

Sugar:

During the Current Year the Company has crushed 27.51 Lakh MT of sugar cane from both Ugar and Jewargi unit (as against 22.87 Lakh MT during the previous year) and produced 31.08 Lakh QTLs of sugar (as against 26.40 Lakhs QTLs of sugar during the previous year) at the recovery of 11.55% and 10.75% respectively for Ugar and Jewargi unit. The crushing and recovery during the year have improved due to the good monsoon and increased yield and area of sugarcane.

Industrial and Potable Alcohol:

The company has produced 270.37 Lakh BLS of Industrial and Potable Alcohol during the year (against the last years production of 271.31 Lakh BLS).

Co-generation (Ugar&Jewargi):

We have generated 1925.24 Lakh kW power during the year at Ugar and Jewargi Unit (as against 1704.22 Lakh during the previous year) and have exported 1021.58 Lakh kW of power during the year (as against 928.24 Lakh KW during the previous year). We have supplied power to the exchange through Electric Supply Companies (ESCOMS). The power generation has improved due to good crushing.

Adequacy of Internal Control:

The Company has a proper and adequate system of internal control to ensure that all assets are safeguarded and protected. The Internal Auditor submits a report covering almost all the areas of operations.

Human Resources Development:

The Company provides regular training and all-round exposure to the employees and staff. The Company has a well-equipped township with recreational facilities such as a clubhouse, playground, swimming pool, gymnasium, etc. The Company also operates a Cooperative Society, Hospital, School, and College for the benefit of the workers and the general public.

The Company has a dedicated workforce of 1262 people (including the Jewargi unit) comprising of 969 permanent, 248 seasonal, and 45 employees in Honorarium.