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Bajaj Hindusthan Sugar Ltd.

BSE: 500032 Sector: Agri and agri inputs
NSE: BAJAJHIND ISIN Code: INE306A01021
BSE 15:41 | 30 Mar 2.59 0.12
(4.86%)
OPEN

2.52

HIGH

2.59

LOW

2.48

NSE 15:45 | 30 Mar 2.55 0.10
(4.08%)
OPEN

2.50

HIGH

2.55

LOW

2.45

OPEN 2.52
PREVIOUS CLOSE 2.47
VOLUME 312285
52-Week high 10.08
52-Week low 2.34
P/E 3.08
Mkt Cap.(Rs cr) 294
Buy Price 2.59
Buy Qty 178293.00
Sell Price 2.58
Sell Qty 11689.00
OPEN 2.52
CLOSE 2.47
VOLUME 312285
52-Week high 10.08
52-Week low 2.34
P/E 3.08
Mkt Cap.(Rs cr) 294
Buy Price 2.59
Buy Qty 178293.00
Sell Price 2.58
Sell Qty 11689.00

Bajaj Hindusthan Sugar Ltd. (BAJAJHIND) - Chairman Speech

Company chairman speech

Dear Shareholders

In any industry the event of production reaching historical heights is usually a causefor celebration. For the sugar industry however it is not necessarily that sweet anoccasion. With production reaching 33 million tonnes this year and the next year openingstock at 14.62 million tonnes as per ISMA (Indian Sugar Mills Association) the industrywill be witness to record inventories. In spite of a potential 4 million tonnes shortfallin production next year due to drought in the states of Maharashtra and northern parts ofKarnataka the industry will still be facing piled-up inventories. Add to this theRs.19000 crore of dues to be paid to cane farmers and we have a very busy year ahead ofus to rethink and re-strategise along with the Government to look for ways and means toaddress the host of concerns for the ailing sugar industry. In the past year we witnessedefforts by the Government to reduce the dues to sugar cane farmers and a direct provisionof financial support to the industry. Export subsidies and policies on ethanol capacitycreation were meant to bring in some financial prudence. While these were welcomemeasures the desired relief and benefits are not yet visible. The welcome step of raisingof minimum sales price of sugar (sugar MSP) to Rs.31 a kilo though provided some reliefbut is still way below the average cost of production. The sugar MSP has to be morerealistic. Introducing an element of dual pricing would be a welcome step where sugarused for industrial purposes could be sold at a free market price while sugar MSP couldbe reserved for the retail market. This would be a good step that would enable a test offree market pricing of sugar albeit in a limited manner.

The Government's support in creation of capacity for Ethanol production will go a longway in improving the bottom line for sugar producers. A constant demand for ethanol fromoil companies is important so that these new production capacities don't become an addedchallenge for the industry. Increasing the blending proportion from 7% to higher levelswould help propel this demand. This would have a sustained effect on the future of theethanol industry and give ethanol production long-term financial viability. Presentinternational sugar prices do not provide much relief for sugar exporters and it isessential to extend export subsidies. Several mills have not been able to fully availtheir export subsidies as over 35% of the industry were not able to participate due toproduction defficiencies or other reasons. There were also a few who could have exportedmore but whose quotas were capped. These issues need to be addressed to reap benefitsfrom the export markets. The good news is next year there is an expected supply dearth of2 million to 4 million tonnes in global markets that should bring prices up. Themill-specific export quota regime should be broad-based and converted to anindustry-specific export target. This would enable better utilisation of the exporttargets and would not limit those who want to export more.

Increasing the target to 7 million tonnes next year from the present 5 million tonneswould also ease the domestic inventory status. Improved logistic infrastructure forexports would provide a helping hand too. As an example Bangladesh imports 2.5 milliontonnes of sugar from India which could be better facilitated through the waterways andboth the governments are now addressing this jointly at a policy level. Quick executionsuch as this could help the sugar industries based in the Northern parts of India. YourCompany continues to be the leading sugar and ethanol manufacturer in India with itsfourteen sugar plants having an aggregate sugarcane crushing capacity of 136000 TCD sixdistilleries having aggregate capacity to produce Industrial Alcohol of 800 kilo litresper day and fourteen co-generation plants having a total power generation capacity of 449MW. During the year ended March 31 2019 the Company processed 16.761 MMT of sugarcane asagainst 14.765 MMT in the previous year. The Company sold 1953160 MT of sugar and328600 MT of molasses during the year as against 1462198 MT of sugar and 121136 MTof molasses during the previous year. The Industrial Alcohol / Ethanol production was107724 KL as against 113165 KL in the previous year. Alcohol / Ethanol sale during theyear was at 124841 KL as against 117323 KL during the previous year. During the yearPower generation at fourteen of our plants were at 949.4 Million Units (MUs) as against852.2 MUs in the previous year. The Company exported 338.9 MUs of power as against 316.5MUs during the previous year.

The resounding mandate for the incumbent Government at the Centre will create stabilityand favourable evolution of policies at all levels. We at Bajaj Hindusthan look forwardto supporting the building of this great nation in all spheres and segments of thesociety. We are happy to partner the society and the government in propelling our economyto create a "New India" which we all aspire to. As always we take great pride inour excellent team of employees whose unfailing commitment has led us into anothersuccessful year. We are an industry where our input costs are fixed and our output pricesare defined through policy. Our managers successfully steer production and use financialforesight to execute and manage businesses despite that. The team has become adept atreinventing the wheel to circumvent every challenge that appears before them.

We are optimistic about the future. We are hopeful that the central and stategovernments will use this decisive mandate to bring about policy changes to minimiseregulation of the sugar industry so that we can look forward to a period of robust growth.Linking cane prices to market prices of sugar remains the biggest enabler to ensuringrobust growth for the sugar industry. I take this opportunity to thank all thestakeholders including central and state government authorities bankers shareholderssuppliers customers and business associates for their support in managing the Company.

Warm regards

Kushagra Bajaj

Chairman & Managing Director