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Dwarikesh Sugar Industries Ltd.

BSE: 532610 Sector: Agri and agri inputs
BSE 00:00 | 24 Sep 70.00 1.00






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OPEN 72.90
VOLUME 137513
52-Week high 83.90
52-Week low 23.00
P/E 13.11
Mkt Cap.(Rs cr) 1,318
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 72.90
CLOSE 69.00
VOLUME 137513
52-Week high 83.90
52-Week low 23.00
P/E 13.11
Mkt Cap.(Rs cr) 1,318
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dwarikesh Sugar Industries Ltd. (DWARKESH) - Director Report

Company director report

Your Directors take pleasure in presenting their 27th (Twenty Seventh)Annual Report together with the Audited Accounts for the year ended 31st March2021.


Particulars Year Ended 31.03.2021 Year Ended 31.03.2020
Gross profit before depreciation interest & tax 20834.99 14146.73
Less: Depreciation 4089.40 3686.56
Finance Costs 4765.38 3302.77
Profit / (Loss) before tax and exceptional items 11980.21 7157.40
Profit / (Loss) before tax 11980.21 7157.40
Tax expenses 2826.38 (188.01)
Profit /(Loss) after tax 9153.83 7345.41
Total comprehensive income / (loss) 9520.34 6550.93


Your Directors recommend payment of equity dividend of 125% i.e H1.25/- per EquityShare of Face value of H1/- each which includes a dividend of 25% to commemorate SilverJubilee celebration of the Company. The outgo on account of equity dividend amounts toH2353.77 lakh.


During the year a sum of H1500 lakh has been transferred to Capital RedemptionReserves in terms of the requirement of section 55(2)(c) of Companies Act 2013 consequentto redemption of Preference Shares (series II) during the financial year.


Impact of Covid-19:

The COVID-19 pandemic continues to dominate global economic sentiment still forcinggovernments to enforce lockdowns or restrictions on all major economic activities. Thecrisis has hurt sales margins and growth. In 2020 the largest health and economiccrisis in recent history forced companies across sectors into extraordinary measures toprotect their people and maintain operations. As the priority for the Company are itsstakeholders focus and emphasis are made to ensure the health and well-being of allemployees and on minimizing disruption to services for all our customers.

Work from home is still instilled in many location offices of the Company which hasreinforced customer and employee confidence in the Company While thefirstwave of thepandemic was somewhat reined in with the extended nation-wide lockdown the second wave ofpandemic has stuck with vengeance.Whilethefirstwave was about hunger jobs and livelihoodthe second wave which is more infectious is about lives. DSIL has redesigned its standardoperating procedures and set strict protocols for the benefit of its employees and theirfamilies. The impact of second wave of the pandemic has so far not resulted in significantbusiness disruptions.


Distinguishing features of the crushing operations in your company are given in thesucceeding paragraphs.

Metrics of sugarcane crushed sugar produced and recovery achieved during the year isgiven hereunder:

Sugarcane crushed and sugar produced across three units (2020-21)

Particulars 2019-20 2020-21 Change
Crushing (lakh quintal) 328.07 397.14 21.05%
Recovery (Gross - adjusted) 12.44 12.20 -1.92%
Recovery % (Net) 12.28 11.54 -6.03%
Production (lakh quintal) 40.35 45.93 13.83%

Sugarcane crushed & sugar produced during season 2020-21

Particulars 2019-20 2020-21
Crushing (lakh per quintal) 336.66 354.96
Recovery % (Gross – adjusted) 12.46 12.28
Recovery % (Net) 12.30 11.38
Production (lakh per quintal) 41.11 40.27

For ongoing crushing season 2020-21 (up to 30th April 2021) vis--vis upto same date in SS 2019-20.

Highlights 2020-21

• Sugarcane crushing higher by 21% than last year.

• Net Recovery @ 11.54% as compared to recovery of 12.28% last FY. This recoveryis after considering diversion of B heavy molasses at Dwarikesh Nagar (DN) plant. Gross– adjusted recovery is 12.20% vis--vis 12.44% last FY.

• Sugar production higher on account of higher quantity of sugarcane crushed.

• Lower recovery is on account of sub-optimal weather conditions resulting in dropin yield in case of ratoon crop & resultant drop in recovery from its crushing.

• Recoveries clocked by the company still among the highest in North India.

• In an endeavor to broad-base and optimize revenues from sale of ethanol as alsoto moderate the production of sugar at two of three sugar units of the company namelyDwarikesh Nagar (DN) and Dwarikesh Puram (DP) entire quantity of sugarcane was crushed bygenerating B heavy molasses which was captively used in the distillery at DwarikeshNagar.

Performance of cogeneration division: Metrics of power sold:

Unit 2019-20 2020-21
Power sold in lakh units Amount in H /lakh Power sold in lakh units Amount in H/lakh
DN 290.16 847 294.76 893
DP 651.57 1922 622.61 1905
DD 691.06 2039 791.86 2423
Total 1632.79 4808 1709.23 5221

Performance of Distillery:

During the year 308.26 lakh ltrs of industrial alcohol (previous FY 130.10 lakh ltrs)was produced and 317.32 lakh ltrs of industrial alcohol was sold. A revenue of H16067lakhs was generated which included revenue of H146 lakhs from sale of by-products.

During the previous FY revenue of H5601 lakhs was generated of which H5600 lakhs wason account of sale of 115.62 lakh litres of industrial alcohol and balance on account ofsale of by-products.


Global sugar industry scenario

For the global industry SS 2019-20 was a minuscule surplus year estimated at less than1 million tonnes while SS 2020-

21 is expected to be a deficit season with the International Sugar Organizationestimating a deficit at close to 5 million tonnes. Production increase is expected fromIndia; Thailand production numbers do not seem encouraging on account of a drought effect;persistent unfavorable weather across the European Union also expected to affectproduction as well.

The Government of India announced a policy of exporting 6 million tonnes of sugar. Onaccount of lower sugar production in Thailand Indonesia procured sugar from India.

The recent spurt in crude prices resulted in Brazil diverting sugarcane juice forethanol manufacture although in SS 2020-21 CS Brazil is estimated to produce record 38.3million tonnes of sugar and Brazil estimated to produce 41.8 million tonnes.

From a low of around 11 cents per pound in June 2020 raw prices rebounded to 12.75cents per pound in August 2020 rising to around 14.75 cents per pound in November 2020mainly on account of a lower availability of Brazilian sugar for export. Around February2021 raw sugar prices moved northwards in spite of an export subsidy program announced byIndia and was quoted around 16 cents per pound. Raw sugar is presently priced at around 17cents per pound. The white sugar prices also moved in tandem and rose from US$ 360 PMT inAugust 2020 to in excess of US$ 460 PMT.

The Indian sugar industry review

India's sugar season 2020-21 commenced with an opening stock of 10.7 million tonnes. Asper the latest estimates of ISMA sugar mills across the country are likely to produce30.2 million tonnes of sugar after considering 2 million tonnes of diversion of productiontowards ethanol. The total availability of sugar in 2020-21 SS is likely to be about 40.9million tonnes. Considering a consumption of 26 million tonnes and export of 6 milliontonnes India could end up with a closing stock of 8.9 million tonnes of sugar.

On the export front performance was creditable in the last three to four months. Sugarmills signed around 54 lakh tonnes of sugar export contracts and 40 lakh tonnes ofphysical dispatches completed. Global sugar prices picked up and crossed 17 cents perpound for raw sugar on the news of declining production in Brazil thus helping India inbetter contracts being signed. With the global sugar prices now stable it is expected thatIndia should be able to export 60 lakh tonnes by end September 2021. However unlike lasttwo years exports to Iran did not happen this time. During the last two years Indiaexported substantial quantities of sugar to Iran mainly because Iran had substantialrupee deposits in Indian banks against the rupee payment India was making for the oilimports from Iran. However with US sanctions becoming stricter and India not buying oilfrom Iran the rupee balance in Indian banks of Iran reduced and therefore there werehardly any sugar exports to Iran in the current season. Notwithstanding setback in case ofexport to Iran India is expected to successfully complete the targeted export of 6million tonnes much before September 2021.

The much-awaited increase in minimum support price of sugar appears to be on thebackburner. Similarly there does not appear any urgency on the part of Government toimplement the recommendations contained in the report by Dr. Rangarajan.

The Government set an ambitious target of ethanol blending and increased theprocurement price of ethanol across all feedstocks. Contracts for 303 crore ltrs weresigned the increase auguring well for the industry. The season 2020-21 witnessed moresugar units producing ethanol from B Heavy molasses and some sugar units directly fromsugarcane juice. The real transformation is expected from SS 2022-23 onwards when moresugar companies produce ethanol directly from sugarcane juice resulting in a substantialsacrifice of sugar production that moderates the problem of surplus sugar production.

At the beginning of the existing sugar year ethanol procurement by oil marketingcompanies was tardy. Huge quantities of ethanol were allotted to depots of OMCs whichwere not equipped with adequate storage facilities. In the chaos allotments wereunilaterally terminated and allotments of sugar mills were shifted to far-flung depotsresulting in logistic challenges. However problems were resolved following the activeintervention of Food Ministry Oil & Petroleum Ministry and the State Government;normalcy resumed and ethanol offtake improved.

The outbreak of the COVID-19 pandemic at the beginning of the financial year did nothamper sugar production which continued uninterrupted following Government supportalthough sourcing intermediate inputs did pose some temporary challenges. However sugardemand suffered disruption of almost 1 to 1.5 million tonnes. The situation improved andnormal operations resumed in the subsequent months. The second wave of pandemic coulddisrupt operations although in the absence of a lockdown the impact is difficult toestimate.

Thanks to the export initiative embarked up on by the central government sugar stocksat the end of the SS are estimated at around 9 million tonnes. From a high of 14.6 milliontonnes at the close of SS 2018-19 the decline represents a creditable improvement. Theethanol blending program played a role although its importance will be increasinglyvisible in the years to come when the increased utilization of sugarcane juice / syrup forethanol manufacture could result in an increased sacrifice of sugar production and amoderated domestic sugar balance.

The sugar industry in India continues to be dependent on Government intervention. Itentered an orbit of perpetual surplus production although in a small measure it isexpected to replicate the Brazilian model by limiting its sugar production and maximizingethanol production. The Government and industry are taking required measures in thisdirection and the government's support comprises the following:

y Retention of minimum ex-factory selling price of sugar at H3100 per quintal.There is a clamor for an increase in the

MSP to H3400 per quintal so that the ability of sugar mills to clear cane price duescould be strengthened.

y Monthly release mechanism to regulate and moderate the availability of sugar inthe open market.

y Announcement of Maximum Admissible Export Quota (MAEQ) of 6 million tonnes andsubsidy of H6000 per metric tonnes to mills exporting sugar under the allotted quota forwhich a budget of H3500 crore was earmarked.

y Ethanol procurement price for Ethanol Season Year

2021-22 (November to October) fixed at H45.69 per liter in the case of ethanol madefrom C-Heavy molasses H57.61 per liter in the case of ethanol made from B-Heavy molassesand H62.65 in case of ethanol derived directly from sugarcane juice. However a long-termpricing policy is desirable to catalyze increase in ethanol capacities.

The Government was requested to announce early an export policy for season 2021-22 toenable mills to calibrate their production plan and capitalize on remunerativeinternational sugar prices.

The Uttar Pradesh sugar industry report card

y The Sugarcane price for the SS 2020-21 (SAP) has remained unchanged.

y During SS 2020-21 UP State is expected to clock sugar production in excess of10.5 million tonnes as compared to 12.6 million tonnes of sugar production in SS 2019-20.Gross recovery thus far is 11.50% and net recovery in excess of 10.75%. Recovery across UPwas lesser than last year.

y The lower estimated production is attributable to devastation caused by red roton sugar crop across UP and mainly in East UP and also lower than expected yield in caseof ratoon crop. Increased sacrifice of sugar in favor of ethanol has also played a role inlowering the sugar production estimates in the State.

y Stock levels of sugar continue to be high posing problems of storage & higherinterest costs.

y Cane price arrears continue to be high and presently in excess of H11700crore. A few groups account for more than 40% of the cane price arrears. Delay in receiptof power dues continues to pose challenges although sugar mills have received theirpayments for power evacuated during SS 2019-20.

Dwarikesh – Financial Scorecard:

Particulars 2020-21 2019-20
(H lakh) (%) (H lakh) (%)
Net revenue (from operations) operations) 183885 100.00 133613 100.00
EBITDA 20835 11.33 14147 10.59
EBTDA 16070 8.74 10844 8.12
EBT 11980 6.52 7157 5.36
EAT 9154 4.98 7345 5.50

y Revenue from operations during 2020-21 is up by 37.62% as compared to the revenueduring 2019-20. Significant improvement in revenue growth is attributable to the increasedreleases under the monthly release mechanism administered by the Central Governmenthigher exports both under MAEQ 2019-20 & MAEQ 2020-21 and higher revenues from thedistillery segment. Partial benefits of the expanded distillery capacity have accruedduring the financial year.

y EBIDTA during 2020-21 is H20835 lakh as compared to EBIDTA of H14147 lakhduring previous FY. Higher EBIDTA as compared to previous FY is on account betterperformance across all segments.

y EBDTA during the year under review your company earned EBDTA of H16070 lakhas compared to H10844 lakh earned in the previous FY.

y Earning before tax is at H11980 lakh when viewed in conjunction with that of theprevious FY (H7157 lakh).

y Earnings after tax at H9154 lakh is as compared to the earnings after tax ofprevious FY of H7345 lakh.

y During the year incidence of finance costs and tax expenses is higher ascompared to the previous year.

Salient features:

y Sugar prices were range bound throughout the year. 2020-21 begun on a somber noteas pandemic COVID 19 struck the world even as country-wide lockdown was announced in Indiato stymie its spread. However the lockdown resulted in temporary & immediatedestruction in demand of sugar. However since sugar is classified as an essentialcommodity normalcy soon returned with the combined efforts of the Government andIndustry.

y During the year your company exported significant quantity of sugar both underMAEQ 2019-20 and 2020-21. Not only raw sugar was exported but white sugar was alsoexported.

y Distillery capacity expansion plan that was undertaken was successfullyconsummated during the year. Your company is now fully geared up to operate the distilleryplant at its rated capacity of 130 KL. The benefits of the expansion have partiallyaccrued during the FY. Full benefits will materialize and be conspicuous during the comingFY more so as your company is optimizing the mix of feedstock

y Your company is constantly evaluating avenues of revenue maximization and costoptimization. Your company's name is synonymous with efficiency as the company has clockedhighest recoveries year after year by focusing on efficiency both in cane management &plant operations.

y Another area of focus for your Company has been to rein in the finance costs.During the year under review the finance costs were higher as several of the Central

Government schemes such as creation of buffer stock under which the carrying cost ofthe buffer stock is borne by the Government ended during the year. Additionally sincesugar is sold under monthly release mechanism your Company was compelled to carry highinventory though the company actively & aggressively participated in the exportprogram with a view to temperate the inventory levels. The long-term debts presentlycarried in the Company's books are at subsidized rates. The long-term loans of the companyare rated ‘A' (+) with stable outlook and Commercial paper program (short term) hasbeen accorded the highest rating of A1 + by ICRA.


The main policies of the government in relation to the sugar industry during the yearwere: a. The Fair & Remunerative Price (FRP) for the crushing season 2017-18 was H255per quintal which has been increased to H275 per quintal fwhere the season 2017-18 waslinked to recovery @ 9.50% and the season 2018-19 is linked to recovery rate @10%. For SS2020-21 it has been increased to H285 per quintal linked to a recovery of 10%. b.Chronology of SMP/FRP announced by the Central Government on the basis of recovery isgiven herein under:

Season SMP/F&RP H/ Quintal
2000-01(SMP) 59.50*
2001-02 62.05*
2002-03 64.50*
2002-03 (Revised) 69.50*
2003-04 73.00*
2004-05 74.50*
2005-06 79.50&
2006-07 80.25&
2007-08 81.18&
2008-09 81.18&
2009-10 (SMP since replaced by F&RP) 129.84@
2010-11 139.12@
2011-12 & material orders have been passed 145.00@
2012-13 170.00@
2013-14 210.00@
2014-15 220.00@
2015-16 230.00@
2016-17 230.00@
2017-18 255.00@
2018-19 275.00#
2019-20 275.00#
2020-21 285.00#

* Linked to recovery of 8.50% & Linked to recovery of 9% @ Linked to recovery of9.50% # Linked to recovery of 10%

c. The Company is required to pay State Administered Price (SAP). For the crushingseason 2020-21 the State Government of Uttar Pradesh announced SAP which remainsunchanged as compared to previous season of 2019-20 i.e H315 per quintal for generalvariety of

Sugarcane H10 per quintal is extra payable for early variety & H5 per quintal isless payable for rejected variety.


There is no change in nature of business of the company.



The Company obtained all necessary approvals from the authorities for commencement ofProduction of Hand Sanitizers at its unit at Dwarikesh Nagar Bijnore Uttar Pradesh andthe said activity is covered by the main object of Memorandum of Association of theCompany and production of Hand Sanitizers started w.e.f. 25th April 2020.Production & sale / distribution of sanitizers is done more as CSR initiative for thebenefit of society.

The Company on 17th October 2020 commissioned a 40 MT per day capacity Co2plant within the precincts of its distillery at Dwarikesh Nagar unit. The plant envisagescapturing of Co2 emission from distillery operations and selling the same on commercialbasis. Though a small yet a very significant step as it reinforces the company'scommitment to provide clean & healthy environment to the society. The sale from saidproduct would be classifiedunder the head ‘Sale of products'.

The Company obtained necessary approvals from relevant Authorities for commencement ofDistillery operations at enhanced capacity of 130 Kilogram Ltrs per day (KLPD) from theearlier capacity of 100 KLPD at Dwarikesh Nagar Village Bundki Tehsil Nagina DistrictBijnor Uttar Pradesh w.e.f. 22nd November 2020. This added capacity can beused for making a range of distillery products such as Rectified Spirit Ethanol

Extra Neutral Alcohol (ENA) etc.


No significant the going concern status & Company's operations in future.


Your Company has in place adequate internal financial controls commensurate with itssize scale and operations. Such controls have been assessed during the year under reviewtaking into consideration the essential components of internal controls stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India. Based on the results of such assessmentscarried out by the management no reportable or significant deficiencies no materialweakness in the design or operation of any control was observed. Nonetheless your Companyrecognizes that any internal control framework no matter how well designed has inherentlimitations and accordingly regular audits and review processes ensure that such systemsare re-enforced on an ongoing basis. The internal financial controls with reference to theFinancial Statements are commensurate with the size and nature of business of the Company.


The paid-up Equity Share Capital as at 31st March 2021 stood at H18.83crore. During the year under review the Company has not issued shares or convertiblesecurities or shares with differential voting rights nor has granted any stock options orsweat equity or warrants. As on 31st March 2021 none of the Directors of theCompany hold instruments convertible into Equity Shares of the Company. During the year8% 1500000 Cumulative Preference shares (Series II) were redeemed in August 2020together with accrued dividend till the date of redemption.


Pursuant to Section 92(3) of the Companies Act 2013 the Company have placed a copy ofthe Extract of Annual Return of the Company in form MGT-9 on its website at:



The Board of Directors of the Company met four (4) times during the year on 10thJune 2020; 5th August 2020; 2nd November 2020 and 30thJanuary 2021.


The Company does not have any subsidiary in terms of provisions of Companies Act 2013.



All Related Party Transactions entered during the financial year were in the ordinarycourse of business and at arm's

Related length basis. There were no materially significant

Party Transactions with the Company's Promoters Directors Management or theirrelatives which could have had a potential conflict with the interests of the Company.Transactions with related parties entered by the Company in the normal course of businessare periodically placed before the Audit Committee for its omnibus approval and theparticulars of contracts entered during the year as required to be provided under Section134(3)(h) of the Companies Act 2013 are disclosed in Form AOC-2 as Annexure I.

The Board of Directors of the Company has on the recommendation of the AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Companies Act 2013 the rulesthereunder and the Listing Regulations.



The Company has not made any loans or investments or given guarantees or providedsecurities under Section 186 of the Act during the year.


The Company did not have any fixed deposits at the beginning of the year nor has itaccepted any deposited during the year in terms of Section 74 of the Companies Act 2013.


MCA vide order dated 22nd January 2019 directed all companies who getsupplies of goods or services from micro and small enterprises and whose payments to microand small enterprise suppliers exceed forty five days during the year. The Company has notfiled MSME Return as all payments have been done within prescribed time.


In terms of the provision of Section 197(12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statementcontaining the disclosures pertaining to remuneration and other details as required underthe Act and the above rules are provided in

Annexure II.


A. Changes in Directors and Key Managerial Personnel

The terms of Shri B. J. Maheshwari & Shri Vijay S. Banka have expired on 30thApril 2021 and after the performance evaluation and as per recommendation of Nomination

& Remuneration Committee they are proposed to be reappointed in this AGM. Duringthe year Shri Gopal B. Hosur & Shri Rajan K. Medhekar has been appointed asAdditional Independent Directors in the Company and approval of their appointment isproposed in the AGM.

Shri G. R. Morarka Executive Director retiring by rotation & being eligibleoffers himself for reappointment.

Brief profile of the directors seeking appointment or reappointment is annexed to theNotice of Annual General Meeting as stipulated under Regulation 36(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations).

B. Declaration by an Independent Director(s) Re- Appointment & Meeting

Pursuant to the requirements of Section 149(7) of the Companies Act 2013 the companyhas received the declarations from all the independent directors confirmingthe fact thatthey all are meeting the eligibility criteria as stated in Section 149(6) of the CompaniesAct 2013.

Two Additional Independent Directors are proposed to be appointed in the ensuing AnnualGeneral Meeting of the Company for a period of 5 years as per the requirements of Section149 of the Companies Act 2013.

The Independent Directors met once i.e on 30th January 2021. The Meetingwas conducted without the presence of the Chairman Executive Directors and any otherManagerial Personnel.

C. Formal Annual Evaluation

Pursuant to the requirements of Section 134(3)(p) of the Companies Act 2013 read withRegulation 17 of the listing regulations the Board has carried out an annual performanceevaluation of its own performance the directors individually as well as the evaluation ofits Committees.

A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders etc.

The performance evaluation of the Independent Directors was carried out by the entireBoard. The performance evaluation of the Chairman and the Non-Independent Directors werecarried out by the Independent Directors who also reviewed the performance of theSecretarial Department. The Directors expressed their satisfaction with the evaluationprocess.

D. Policy on Directors' Appointment and Remuneration

Including Criteria for Determining qualifications Positive

Attributes Independence of a Director Key Managerial Personnel and Other employees

In line with the principles of transparency and consistency your Company has adoptedthe following policies which inter alia includes criteria for determining qualificationspositive attributes and independence of a Director.

Policy on Directors appointment and remuneration is available on company's website at Remuneration.pdf


As required under the provisions of Section 134(3)(c) of the

Companies Act 2013 your Directors confirm that: a. In the preparation of the annualaccounts the applicable accounting standards had been followed along with properexplanation relating to material departures. b. the directors had selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of thecompany at the end of the financial year and of the profit of the company for that year;c. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities. d.the directors had prepared the annual accounts on a going concern basis. e. the directorshad laid down internal financial controls to be followed by the company and that suchinternal financial controls are adequate and were operating effectively f. the directorshad devised proper systems to ensure compliance with the provisions of all applicable lawsand that such systems were adequate and operating effectively.