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Ponni Sugars (Erode) Ltd.

BSE: 532460 Sector: Agri and agri inputs
NSE: PONNIERODE ISIN Code: INE838E01017
BSE 00:00 | 22 Oct 248.25 6.05
(2.50%)
OPEN

241.15

HIGH

252.00

LOW

238.00

NSE 00:00 | 22 Oct 248.90 7.35
(3.04%)
OPEN

245.90

HIGH

253.60

LOW

238.05

OPEN 241.15
PREVIOUS CLOSE 242.20
VOLUME 10439
52-Week high 382.50
52-Week low 131.15
P/E 8.48
Mkt Cap.(Rs cr) 214
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 241.15
CLOSE 242.20
VOLUME 10439
52-Week high 382.50
52-Week low 131.15
P/E 8.48
Mkt Cap.(Rs cr) 214
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ponni Sugars (Erode) Ltd. (PONNIERODE) - Chairman Speech

Company chairman speech

PONNI SUGARS (ERODE) LIMITED ANNUAL REPORT 2010-2011 CHAIRMAN'S REPORT Dear Shareholder, I am glad to share with you the creditable, performance of your Company in a difficult year. Its topline has touched yet another two high on the strength of volume growth, despite deep fall in product prices. I had voiced my worst fears in my Cast year's communique on the negatives facing the Company. These were in the form of reduced cane availability, higher input costs and lower output prices. These factors did hit us hard during the year. 'But quite unexpectedly, we were hit harder by a steep fall in sugar recovery as wed. Under adverse climatic conditions, our sugar recovery dipped to a decade-low figure. We normally benefit by some buffer in this cyclic industry. It is in the form of remunerative prices in the market during times of low production or by way of higher output (through abundant and relatively lower cost cane availability) during times of sluggish market conditions. It however was a double whammy this time for our Company to face lower production and lower prices together during the downturn. It hence gives me considerable satisfaction to report that our Company has maintained a healthy topline and commendable bottomline for the year, while most of our peers have indeed suffered stifling losses in the sugar segment. 'We have been largely helped in this endeavour by low cost sugar inventories carried over from last year and the prudent provisioning we had made in the previous year for the adverse impact of raw sugar import contract. 'While our operating margin tanked by 75%, we could contain the fall in PBT and PAT at 50% compared to last year. Sugar fundamentals have doubtless changed during 2010-11 sugar season with the re-emergence of surplus after two successive years of significant deficit. Nevertheless, current stock levels cause no alarm to warrant such horrendous hammering of sugar prices. Continual clamp on OGL exports when world prices were high, persistent pursuit of restrictive trade norms on bulk users of sugar and excessive monthly releases unleashed month after month have cumulatively contributed to the collapse of market sentiments. It is imperative that India as the single largest sugar consumer must remain self-sufficient on sugar-production, if not a regular exporter in the global market. We have only to look at our immediate past to draw the lessons when a sudden spurt in Indian demand forced by domestic, production setback drove world sugar prices to dizzy heights. In that process, the Indian consumer eventually endedup paying a whopping 100% increase in the price for sugar in a matter of just couple of months. It is axiomatic that domestic production stability is sine qua non for domestic price stability for a large country like ours. In this content, it would be too naive to forget the fact that the swift and significant recovery in Indian sugar production recorded in 2010-11 is undeniably on the strength of remunerative cane price voluntarily paid by sugar mills in excess of mandatory cane prices. This was possible only by reason of vibrant sugar market and viable sugar prices strengthening the cashflows of sugar mitts. This delicate balance is unfortunately disturbed and destabilized too often, accentuating the volatility in sugar cycles. It is simple economics that sugar mills cannot for too long operate in a negative cost-realization structure and their shocks get systemically passed on to the cane farmer, with only a limited lag. your Company remains sanguine towards sustaining reasonable volume of cane crushing during Fy 2011-12. It has taken effective steps to shore up the cane quality, enhance yield and improve recovery. Sugar prices might only remain range bound in the near term Interest cost is bound to surge considerably based on higher level of borrowings and further fuelled by higher rates of interest. It looks we would be cruising through the bottom of sugar cycle in 2011-12 with all concomitant challenges. 1 still believe we should be able to post positive results for they ear. The Co-generation Project on a capital outlay of Rs.110 crores is progressing per schedule. We have tied up the debt component through Canara Bank. We target to commission this before end of March 2012. I am indeed thankful to you for your unstinted support to the Management in all its endeavours. While we do foresee a difficult year in FY 2011-12, your Company Should be able to show resilience in combating the challenges and strive to meet realistic expectations of stakeholders. Warm regards N. Kopala Ratnam Place: Chennai Date : 27th May 2011
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