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Moneycontrol.com India | Chairman's Speech > Sugar > Chairman's Speech from Simbhaoli Sugar Mills - BSE: 507446, NSE: SIMBHSUGAR

Simbhaoli Sugar Mills

BSE: 507446  |  NSE: SIMBHSUGAR  |  ISIN: INE270C01017  |  Sugar

Explore Simbhaoli Sugar connections « Sep 07
Chairman's Speech Year : Sep '08
First of all, let me congratulate you on Simbhaoli Sugars completing
 75-years in the service of Indian agriculture and the farming
 community. I also thank you for your steadfast and invaluable support
 and long association with the Company.
 
 This has been a particularly difficult year for the world economy. The
 meltdown of the American and European financial systems and its domino
 effect worldwide has severely impacted developed and developing
 countries alike. This crisis is likely to create a new financial
 system, which may take more than expected time to stabilize.
 
 The crisis has led to a significant cut-back in investment flows and
 the availability of capital. The drying up of funds is squeezing the
 capacity expansion plans and working capital requirements of companies
 across industries. It’s also lowering investments in commodities,
 which, in turn, is reducing the quantum of transactions and price
 discoveries.
 
 Although global trends have put the Indian sugar industry under
 pressure, the impact has been somewhat less severe because of the
 intrinsic nature of the industry in our country. In India, the sugar
 industry is characterized by a large and ever growing, inward looking
 demand; sugar constitutes a small percentage of the household budget;
 the cash and carry nature of the business; and the fact that Indian
 farmers are less bank credit dependant - critical factors that have
 softened the effect of the latest global crisis.
 
 The real challenge for the sugar industry in India continues to be
 structural in nature: Government policies, unviable support prices,
 excessive sugarcane related regulations, rapidly changing farmer
 preferences (recent shift from sugarcane towards other food and cash
 crops), limited export opportunities and excess capacities created in
 certain regions.
 
 However, the industrial cycle is changing for the good, with a
 declining stock to use ratio. Sugar prices have started showing a
 positive trend, after indicating a turnaround in the sector. Integrated
 manufacturers are more likely to benefit in such a scenario.
 
 For Simbhaoli Sugars, this fiscal has been below expectations (in line
 with industry trends) mainly on account of lower free sale sugar
 prices, increase in input costs for both sugar and molasses and higher
 cane development expenses to support expanded capacity at Simbhaoli
 plant, high interest and depreciation charges due to completion of new
 projects. However, I can confidently state that the medium and
 long-term outlook of your Company continues to hold great promise.
 
 The diversification and modernization programme which we commenced a
 few years back as a part of our strategy to de-risk our business model
 is almost complete. With the exception of the second phase of the
 co-generation project at Chilwaria, all projects aimed at creating new
 capacities in sugar, potable liquor, ethanol and bio-power have been
 finished. The benefits of these multiple revenue streams will flow into
 our balance sheet from the next financial year.
 
 As one of the country’s top ten sugar producers, our aggregate crushing
 capacity is 20,100 TCD, with a capability to produce up to 300,000
 tonnes of white sugar every year. What sets Simbhaoli Sugars apart from
 its peers is its world-standard quality. Simbhaoli Sugars continues to
 be the country’s pre-eminent exporter of 45 ICUMSA grade sugar. ‘Trust’
 continues its journey in the market place as one of the fastest growing
 sugar brands. We are continuously investing in strengthening our brand,
 by way of new product offerings, convenient packaging and rapid market
 penetration.
 
 In the potable liquor business too, we are looking at new opportunities
 across product categories. Vodka has been identified as one of the
 fastest growing alcohol categories in the country.This year, we made an
 entry in the premium vodka segment by launching ‘Xing’ brand. In the
 whisky, rum and gin segments including country liquor, we continue to
 grow at a healthy 30 per cent per annum. Most significantly, we have
 achieved a 600,000 cases IMFL target in this financial year.
 
 Ethanol is an important business for us. Post the expansion and
 green-field projects, our ethanol production capacity now stands at an
 impressive 180,000 litres per day. We are well positioned to take
 advantage of the Government’s policy of blending petrol with 10 per
 cent ethanol. Our ethanol plants conform with the ‘environment first’
 approach of the Company.
 
 Another important business driver is generation and sale of surplus
 bio-power. We are in the process of stepping up capacity to a surplus
 of 30 MW/HR of bio-power during our crushing season, which we will
 supply at commercial rates to the State Utility.
 
 Simbhaoli Sugars is committed to playing the role of a model corporate
 citizen. This involves providing a safe working place, respecting the
 environment, demonstrating high ethical standards and caring for its
 farmers, its most important stakeholder. Our community outreach
 programmes are targeting the education, healthcare, infrastructure and
 income generation needs of our farmers and their families. Our cane
 development programmes including inter-cropping are aimed at improving
 quality and yield and boosting the earning capacity of farmers.
 
 I am confident that Simbhaoli Sugars will tide over these turbulent
 times with the same sense of fortitude, hard work and ingenuity it has
 displayed in its seventy five years long history.
 
                                                      Gurmit Singh Mann
                                           Chairman & Managing Director
 November 28,2008
Source : Religare Technova

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