Dear Shareholders

On behalf of Avadh Sugar & Energy Limited it is my honour to address you all onthe closure of financial year 2020-21 of your company. India has shown immense potentialtowards fighting the pandemic and Indian economy witnessed a strong recovery during thesecond half of current fiscal.

Fiscal 2020-21 has been challenging for the world economies as there were uncertaintiescaused by pandemic. However the first half of the fiscal faced immense challenges formany businesses to survive against the dampened demand but there was a swift recovery ofbusiness activities during the second half. The leading economic indicators also guidedtowards economic and demand revival.The Government of India's support through variousmeasures in Union Budget and Reserve Bank of India's liquidity support to Indianbusinesses aided for the survival of many businesses in the country.The country'svaccination drive will thrust towards reaching normalcy. The International Monetary Fundin its recent forecast have mentioned Indian GDP to grow at 11.5 percent in 2021 embarkingIndia towards one of the fastest growing economy in the emerging markets followed byChina.

Industry Insight

During SS 2019/20 the sugar industry experienced lower output after a prolonged glut inthe previous seasons meanwhile sugar production in SS 2020/21 is likely to witness amarginal increase in the production at 30.7 mn tonnes. Uttar Pradesh the largest sugarproducing state is witnessing a lower production because of lower yields and crop diseasewhereas Maharashtra and Karnataka will report higher production during SS 2020/21. Thegovernment to support the sugar industry had devised various measures including exportMEAQ and Minimum Support Price (MSP) to support the sugar prices. The domestic sugarprices remain subdued hovering towards the MSP price because of reduction in sugarconsumption that saw an uptick towards 33.04 per kg in July 2020 with marginal correctionto 31.80 per kg in December 2020 as the second half of the fiscal saw demand pick-up fromindustries as well as individuals. The sugar millers continue to divert major part of thejuice and the molasses towards ethanol as the realizations were better than sugar. Goingforward GOI is targeting the ethanol blending to reach 20% by 2025 that encourages manysugar companies to invest in distillery capacities. Going forward with the strongvaccination drive the growth is envisaged to grip and the Indian sugar industry will beable to capitalize on the same.

Business Performance

The company continued to face headwinds during the first half of the fiscal overallperformance for the year experienced pressure on operating margins affected by lowerrealizations of co-generation segment. Sugar realizations recovered during the second halfof the fiscal along with improved ethanol realization; but the unexpected pandemic had amaterial impact on the performance during the end of this fiscal. However sugar being theessential commodity for consumption we expect the performance to improve going forward.

During FY21 our total income stood at Rs. 2710.52 crores against Rs. 2559.40 crores inFY20 PBT stood at Rs. 101.36 crore in FY21 against Rs. 106.16 crore in FY20 and ProftAfter Tax was at Rs. 77.58 crore in FY21 as against Rs. 88.61 crore in the same periodlast year.

Our Core Strategies

Avadh Sugar and Energy Limited with its wide experience in the industry and a strongbalance sheet has always been ahead of the curve towards capitalizing the positivestructural changes in the sector. To reap the benefits of changing market dynamics ofethanol industry the company has announced capex of Rs. 135.51 crores for debottlenecking& other efficiency improvement measures and expansion of distillery capacity to 320KLPD. The progress of the capex is in line with the expectations and shall aid towardsmargin enhancement once operational. The company is well poised to capitalize on theopportunities and further capex will advance the operational performance going forward.

Way forward

Avadh Sugar and Energy Limited with its potential and proficient team will be able towithstand the storm and up-rise strong towards the success. The company's strong rootswill enable it to re-gain the momentum and shine towards the growth path.

Warm regards

Nandini Nopany Chairperson