Indian economy

Liquidity in the banking system continues to be in deficit

with banks borrowing an average of around Rs 50,000
crores from the RBI on a daily basis
Credit growth has come off from 23% levels to 20% levels
over the last six months. High rates of interest are impeding
credit demand
Borrowing costs for consumers as well as the industry has
gone up by around 250bps to 400bps over the last one year.
Lower credit off take is good for inflation as it lowers
aggregate demand in the economy.
 Indias exports for August 2011 at USD 24.3 billion was
down 17% month on month leading to worries of global
economic slowdown weighing on trade.
Imports were down by 4.95% leading to the trade balance
moving up by 27% month on month.
Slowing exports may weigh on the CAD (Current Account
Deficit), which closed 2010-11 at 2.6% of GDP from earlier
estimates of over 3% of GDP.
India Exports
India Imports
India inflation as measured by the WPI or Wholesale Price
Inflation for the month of August 2011 came in at 9.78% as against
a level of 9.22% seen in July 2011. The rise in inflation by 0.58%
month on month is accounted for by a sharp rise in primary article
inflation over the month of July to August
India Industrial Production
 Index of Eight Core Industries (Base: 2004-
05=100) June 2011

The Index of Industrial Production (IIP)registered a growth of 5.2%

compared to 4.4% registered in June 2010. During April-June 2011-12,
eight core industries registered a growth of 5.0% as against 6.8%
during the corresponding period of the previous year 2010-11.
Coal
Coal production (weight of 4.38% in the IIP) registered a growth of (-)
3.3% in June 2011 compared to growth of 0.8% in June 2010.
Crude Oil
Crude Oil production (weight of 5.22% in the IIP) registered a growth
of 7.7 % in June 2011 compared to a growth of 6.8% in June 2010
Natural Gas
Natural Gas production (weight of 1.71% in the IIP) registered a growth
of (-) 11.7% in June 2011 compared to growth of 25.4% in June 2010
Petroleum Refinery Products
Petroleum refinery production (weight of 5.94% in the IIP)
registered a growth of 4.7% in June 2011 compared to growth of 2.9%
in June 2010.
Fertilizers
Fertilizer production (weight of 1.25% in the IIP) registered a growth
of (-) 2.4% in June 2011 compared to (-) 6.7% in June.
Steel
Steel production (weight of 6.68% in the IIP) registered a growth of
12.5% in June 2011 compared to 4.3% in June 2010
Cement
Cement production (weight of 2.41% in the IIP) registered a growth
of (-) 0.8% in June 2011 compared to 3.7% in June 2010.
Electricity
Electricity generation (weight of 10.32% in the IIP) registered a
growth of 8.2% in June 2011 compared to a growth of 3.8% in June
2010.
India GDP Growth Rate
India Inflation Rate
 FDI

Calender year 2011 Amount of FDI inflows(US$ mn)

Jan 2011 1042

Feb 2011 1274

March 2011 1074

April 2011 3121

Year2001(upto April) 6511

Year 2010(upto April) 7141

%growth over last year (-)09%

INDUSTRY ANALYSIS
 Indian Sugar Industry

In India, it is classified under essential commodities

which makes it vulnerable to regulatory policies by the
regime.
The Sugar Year (SY) is from October to September.
Generate employment for 5,00,000 people directly and
indirectly.
453 Sugar mills in country currently operational.
Around 315 of total installed mills are in co-operative
sector,189 in private sector , 62 in public sector .
Sugar is a cyclic industry which follows a three year
cycle.
 Contd

The quantum of sugar produced by a mill is determined by

the factors like daily crushing capacity, duration of crushing
season and percentage of sugar recovery. [Tones Crushed
per Day (TCD), 180 days and 10-12%].
At present, sugar mills are required to provide 10 per cent
of their total production as levy sugar (Rs 13 / kg) for the
Public Distribution System (PDS).
SMP is the Govt. determined price at which sugar
manufacturers purchase cane from farmers whereas SAP is
the price at which sugar manufacturers sell sugar in the free
market.
 Indian Sugar Industry

India is the second largest producer of sugar cane after

Brazil.
India is the second largest producer of sugar (23 million
ton production ), it ranks 15th in export rankings as India
is the largest consumer of sugar in the world.
On the domestic front, the Indian sugar industry has a
turnover of Rs. 700 billion per annum (US $ 14.6 billion).
India ranks 6th in per capita consumption with Brazil being
the highest per capita consumer of sugar at 57.6 Kg per
capita.
India contributes about 12 per cent of world sugar
production
 Contd

There are 553 installed sugar mills in the country with a

production capacity of 180 lakh MT of sugar.
These mills are located in 18 states of the country, with
Maharashtra contributing over one-third of it.
About 60% of these mills are in the co-operative sector, 35% of
the total are in the private sector and rest in the public sector.
Almost 75% of the sugar available in the open market is
consumed by bulk consumers like bakeries, candy makers, sweet
makers and soft drink manufacturers.
The crushing season in the country starts from October and
reaches its peak in January before finally ending in March or
April of the next year
 Raw Material (Sugar cane)
In India, sugarcane is the key raw material, planted once a
year during January to March.
About 60% of the crop in India is grown in sub-tropical
region (Uttar Pradesh) while 40% of the crop is grown in
tropical region (Tamil Nadu, Karnataka, Maharashtra,
Madhya Pradesh).
Maharashtra and Uttar Pradesh together produce
about 60% of the sugarcane grown in India with both
states producing almost equal amounts.
On average, crop yields are better in the sub-tropical
region due to less variability in the mean monthly
temperatures.
 Raw Material (Sugar cane)

India's sugarcane yield is estimated at 65,000 kgs per

hectare, higher than the global average of around 63,000
kgs per hectare.
Sugar cane prices comprises more than 70% of the total
costs of Sugar production.
Of the total sugar sold in the free market (non-levy),
around 61% is accounted for by the industrial
and small business segments, also referred to as indirect
consumption. Household segment accounts
for the rest 39%. Low income household account for 25%
of the total non-levy market.
 Demand-Supply
Demand Drivers
30% of total consumption is
directly used by households,
while 70% is used indirectly.
The Sugar consumption is
expected to grow at rate of 4-
4.5% because of-
-steady growth in population of
1.3-1.p.a.
-growth of peer capita income by
6.5-7.5 p.a.
Supply Constraints
Reduction in cultivation area
by about 17% during SY
2008-09,would result in
reduction in production of
sugarcane to 280 MT.
The farers are shifting to
alternate crops like weat ,
jowar, bajra which are more
profitable
 Indias Sugar Scenario(mn tonnes)

Sugar yr. Oct-Sep 2006- 2007-08 2008- 2009-10 2010-

07 09 11E
Opening stock 1 st Oct 3.7 10.2 9.9 3.5 5.0
Production 28.3 26.3 14.6 18.92 25
Imports 0 0 1.3 6.0 0
Total Availability 32.0 36.5 28.1 28.42 30
Domestic consumption 20.2 21.7 22.3 23.42 23
Exports 1.7 4.9 0.0 0 1.5
Total off take 21.9 26.6 22.3 23.42 24.5
+consumption
Closing Stock as on sep 30 10.2 9.9 3.5 5 5.5
Closing stock/Domestic 50.5 45.62 15.7 21.3 23.9
consumption(%)
 Government Policies and Interventions

Statutory Minimum Price (SMP) and State Administered

Price (SAP) As sugar falls under essential commodities, it is being
regulated by the state government in coordination with the Center. For
the season 2009-10, the regime is under tremendous pressure for
declaring SMP as this crop has fallen from surplus to deficit category.
Subsidies The Govt. has given transportation subsidy to sugar
exporters in order to release excess stocks piled up at millers end.
Levy sugar The govt. is planning to increase levy quota (for BPL
under PDS) from current 10% to 20-25% due to concern of increasing
sugar price.
Stock limits Sugar may be subject to stock limits in a year, which
are being imposed in essential commodities in India.
Indian government heavily discourages import of white sugar and
slaps 60% duty on the import
 CONTD.
Govt of India has asked sugar mill companies to sell a part
of their monthly non-levy quota every week, failing which
the unsold quantity will be converted into levy sugar and
sold at subsidised rate through the public distribution
system.
Govt. looks to partially relax the norms for millers to sell
non-levy sugar quota for this year(2011 )in the open market
by giving them seven more days to sell the allocated
quantity, the government said in a order.
The price has fallen by nearly a quarter since hitting a
record high of 3,972.3 rupees on Jan 7.
 MAJOR PLAYERS

Bannari Amman Group One of the largest Industrial conglomerates

in South India, Bannari Amman Group does manufacturing and trading of
sugar, alcohol, liquor, granite, cotton, and yarn. The service sector includes
wind power energy, education, health care, and real estate.
Dwarikesh Sugars Dwarikesh Sugars is aiming to be the market leader
of the sugar industry. They also plan 10,000 environmentally friendly trees
on the premise as well as in surrounding areas, winning them many laurels.
Rajshree Sugars Listed on both the National Stock Exchange (NSE)
and the Bombay Stock Exchange (BSE), Rajshree Sugars has interests in
sugar, distillery, power and biotechnology.
Rana Sugars Since its beginnings in 1993, Rana Sugars has established
itself in the sugar industry. Today, its business spans sugar, alcohol, power
generation and textiles. Knowing that sugar is a vital part of the rural
economy, Rana Group is actively involved with the farming community.
.
 CONTD..

Shree Renuka Sugars With its focus on sugar, bio-fuels, and allied
products of renewable energy, SRSL is the largest sugar and ethanol
producer in coastal India. Its main operations are located in
Maharashtra and Karnataka
KK Birla Group of Companies, Kolkata, that own Upper Ganges
Sugar & Industries (UGSIL), The Oudh Sugar Mills Ltd & Gobind Sugar
Mills Ltd
Indias largest sugar and ethanol manufacturer company, Bajaj
Hindusthan Ltd., Mumbai, has many plants in Uttar Pradesh.
Balrampur Chini Mills Ltd, of Kolkata, West Bengal
Bannari Amman Sugars Ltd., Coimbatore, Tamil Nadu
Andhra Sugars, West Godavari district, Andhra Pradesh
Dhampur Sugar Mills, Ltd, Bijnor, Uttar Pradesh
Dwarikesh Sugar Industries Ltd .
Comparision.
BEST AND WORST PERFORMER
 Company Analysis

COMPANY ANALYSIS
 Bajaj Hindustan Limited:

Bajaj Hindustan ltd. A part of the Bajaj group , is

India s largest sugar and ethanol manufacturing
company headquartered in Mumbai
They have 14 sugar plants in different parts of the state of
Uttar Pradesh and their production capacity of 136000
tonnes of crushed sugar per day.
Currently the company has the largest sugarcane crushing
capacity in India of over 56000 tonnes crushed per day.
The company is slated to undertake huge expansion plans
to take its current crushing capacity of 56000 tcd to about
100000 tcd
 Contd

BHL is Indias largest ethanol producer. It is the

pioneer of Indias fuel ethanol programme. BHL is
currently producing 38 million liters of ethanol in a
year.
In anticipation of emerging market demand, the
Company has increased its ethanol manufacturing
capacity to nearly 218 million liters per year.
 Contd..

BHLs wholly owned subsidiary, Bajaj Eco-tec

Products Limited (BEPL), produces environment-
friendly Medium Density Fibre Boards (MDF) and
Particle Boards (PB), both from its bagasse waste.
Both MDF and PB are invaluable substitutes for
wood in construction and furnishing.
BEPL is among the very few units in the world to
manufacture MDF and PB that is completely wood-
free
BUSINESS OVERVIEW:
The company is operating in only one segment i.e. production of sugar.
Company is looking forward overseas market for growth in demand for
ethanol blended fuel.
BUSINESS RISK:
Demand and supply gap in domestic as well as international market
which leads to fluctuations in commodity price.
MARKET RISK:
There is very little market risk in this segment, considering sugar as a
necessity commodity, every household requires sugar in their daily
cooking
VOLUME BASED BUSINESS:
The sugar prices on the other hand are controlled by the
government authorities as it is a basic necessity for the
household. Therefore, the profits of the company are totally
based on the volume of their business.
The more sugar they produce, their turnover will increase
accordingly and thereby adding additional profits to the
company s account.
SHARE HOLDING PATTERN:
 Dividend Smmary

For the year ending September 2010, Bajaj Hindusthan

has declared an equity dividend of 70.00% amounting to
Rs 0.7 per share. At the current share price of Rs 39.40
this results in a dividend yield of 1.78%.

The company has a good dividend track report and has

consistently declared dividends for the last 5 years.
Chart of Bajaj Hind
 EID PARRY (INDIA) LIMITED IS A PUBLIC COMPANY,
HEADQUARTERED IN CHENNAI, SOUTH INDIA, WITH A
CONTINUOUS HISTORY OF BUSINESS ACTIVITIES OF MORE THAN
200 YEARS
BY 1819, A PARTNERSHIP FIRM NAMED PARRY AND DARE WAS
FOUNDED WITH THOMAS PARRY AND JOHN WILLIAM DARE AS
PARTNERS
PARRY & COMPANY LIMITED AND EAST INDIA DISTILERIES &
SUGARS LIMITED WERE MERGED TO FORM EID PARRY INDIA
LIMITED
MURUGAPPA GROUP TAKE OVERED EID PARRY FROM FINANCIAL
& PUBLIC INSTITUTION SUCH AS LIFE INSURANCE CORPORATION
OF INDIA, UNITED ASSURANCE CO, UNIT TRUST OF INDIA,.. ETC.
PARRY SET UP THE FIRST SUGAR FACTORY IN 1842 AT
BANDIPALAYAM AND CURRENTLY HAS ONE OF ITS UNITS
ESTABLISHED AT NELLIKUPPAM, CUDDALORE DISTRICT
 EID Parry is the first private sector company to start in
house R&D. Sugar Division contributes to over 65% of EID Parrys turnover.
Around 20% of the sugar production in Tamil Nadu is from EIDs stable.
EID Parry has 5 plants in the country situated
at Nellikuppam in Cuddalore district, Pugalur in Karur district, Pudukottai in P
udukottai district, Pettavaithalai in Trichy district and Puducherry. The
combined crushing capacity of all the five plants is 15800 (TCD) Metric Tonnes
of cane per day.

 Subsidiaries

Carborundum Universal Ltd

Cholamandalam Investment and Finance Company Ltd
Cholamandalam MS General Insurance Company Ltd
Coromandel International Ltd
Coromandel Engineering Company Ltd
Sadashiva Sugars Limited
EID Parry (India) Ltd
Parry Agro Industries Ltd
Tube Investments of India Ltd
Wendt (India) Ltd
 The Company recorded a revenue of Rs. 143550 Lakhs
(including other income of Rs. 17981 Lakhs) for the year ended
31st March, 2011.
The total gross sales of the company for the year 2010-11 grew by
9 % to Rs. 129115 Lakhs

from Rs.118576 Lakhs in the year 2009-10.

The consolidated turnover for the quarter ended 31st December,

2010 was Rs. 2454.12 crore (Rs. 2109.94 crore).
The Profit After Tax before Minority Interest and Share of
Associate for the quarter stood at Rs. 63.35 Crore
The consolidated turnover for the three quarters ended ended
31st December, 2010 was Rs. 7390.00 crore
 The Earnings Before Interest, Depreciation, Tax and Amortisation (EBIDTA)
for the year was Rs. 16139Lakhs
representing 13% of total sales and showed a dip of 53.54% over
previous years EBIDTA of Rs. 34738 Lakhs
Other subsidiaries
Parrys Sugar Limited
The Company during the year ended 31st March 2011, earned an
income of Rs. 11 Lakhs. After providing for tax of Rs. 3 Lakhs, the Profit
after Tax was Rs. 8 Lakhs. With the brought forward amount of Rs. 9
Lakhs, Rs. 17 Lakhs is carried to Balance Sheet

Coromandel International Limited

Coromandel achieved a turnover of Rs. 752795 Lakhs for the year
ended 31st March, 2011
 the profit after tax was Rs. 69446 Lakhs.

Parrys Sugar Industries Limited

Company recorded a revenue of Rs. 29852 Lakhs for the 12 months
period ended 31st March, 2011.

Sadashiva Sugars Limited

The Company recorded a revenue of Rs. 7060 Lakhs for the year ended
31st March, 2011
The Profit before Depreciation, Interest and Tax amounted to Rs. 787
Lakhs. After providing for depreciation, interest and tax, the loss after
tax was Rs. 2082 Lakhs
 Quarterly results-30th June 2011

The turnover for EID Parry ltd. For the quarter ended 30 th June.2011
grew at 397.13 cr as compared to 302.97 cr in the last quarter
The earnings before interest, depreciation & taxes (EBITDA) for the
quarter was 23.78 cr
The consolidated turnover for the quarter ended 30 th June, 2011 was
2,488.93 cr, The profit after tax before minority interest for the quarter
stood at 95.50 cr
 Future Plans

EID plans to expand its sugar business with an investment of Rs 8,500

million over the next two years and by acquiring Parry Neutraceuticals
as a subsidiary to focus on sugar and bio-products business.
It plans to expand the production capacities of sugar and alcohol and
set up co-generation plants at all its units
Once completed, the company would have a capacity to produce 0.8
million tons of sugar, 240 kilo litres of alcohol a day and a power
generation capacity of 130 mw.