Nov 30, 2009, 06.08 PM | Source: CNBC-TV18

Interest cost to rationalize going forward: Dwarikesh Sugar

In an interview with CNBC-TV18, Vijay Banka, Chief Financial Officer, Dwarikesh Sugar Industries, speaks about the company's results and the sugar prices.

Vijay Banka, Chief Financial Officer, Dwarikesh Sugar Industries
Dwarikesh Sugar has announced its FY09 results. The company's FY09 net profit was at Rs 25 crore versus net loss of Rs 25 crore. Its net sales were up 69% at Rs 462 crore versus Rs 273.4 crore.

In an interview with CNBC-TV18, Vijay Banka, Chief Financial Officer, Dwarikesh Sugar Industries, speaks about the company's results and the sugar prices.

Here is a verbatim transcript of an exclusive interview with Vijay Banka on CNBC-TV18. Also watch the accompanying video.

Q: What were your average realizations this quarter and what are you factoring in terms of sugar prices? 

A: After two frustrating years we now have had a year in which we could cheer something about. The operating results have been good, we have reported for the full year a profit of about Rs 25 crore, which is against the loss of Rs 25 crore which we had booked last year. So, its been a good year, there were difficulties to begin with—capacity utilizations were very low, recovery was very less but then there was a resurge in the price of sugar on account of lesser production of sugar not only in India but across the globe. So, the prices have firmed up and that is primarily what has led to improvement in performance. We on our part have been relentless in ensuring that our operating efficiencies are the best, costs are attacked ruthlessly but the sugar markets has really helped well.

Q: You had two major projects which were executed last year, interest costs have come in slightly higher on account of that, so your prognosis on how interest costs may pan out for your company and also power is emerging as a very strong segment for you, so what’s the outlook there?

A: Yes, interest cost for the year has been higher mainly because we executed two major projects last year involving a total outlay of nearly Rs 400 crore. But going forward we expect interest costs to rationalize for a couple of reasons because of the lower availability of sugar in the country and the releases have been accelerated and under the government release order we are asked to release more and more sugar into the market. So, the stock levels are lower and working capital utilizations are pretty low, also we are making efforts to prepay some of our debts and we are making sincere efforts to deleverage our debts. So, I think in the coming year the interest costs are going to come down, that’s a positive development. On the power front, yes the state electricity board has increased price by Re 1 a unit which is again a very welcome development and we expect the power revenues to go up in future. Another welcome development is that announcement of energy policy by the state government and open access subject in a couple of conditions is going to be made available to the sugar companies. 

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