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Shree Renuka Sugars Ltd.

BSE: 532670 Sector: Agri and agri inputs
NSE: RENUKA ISIN Code: INE087H01022
BSE 00:00 | 22 Jun 13.40 -1.05
(-7.27%)
OPEN

14.25

HIGH

14.30

LOW

13.25

NSE 00:00 | 22 Jun 13.45 -0.95
(-6.60%)
OPEN

14.45

HIGH

14.45

LOW

13.20

OPEN 14.25
PREVIOUS CLOSE 14.45
VOLUME 680352
52-Week high 22.40
52-Week low 12.42
P/E
Mkt Cap.(Rs cr) 2,569
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 14.25
CLOSE 14.45
VOLUME 680352
52-Week high 22.40
52-Week low 12.42
P/E
Mkt Cap.(Rs cr) 2,569
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Shree Renuka Sugars Ltd. (RENUKA) - Chairman Speech

Company chairman speech

Dear Shareholders

The year 2016-17 saw a significant rally in domestic sugar prices in India asproduction witnessed an unprecedented decline. Droughts in the previous two years coupledwith low water availability in key sugarcane growing regions including Karnataka andMaharashtra led to lower acreage of sugarcane in south India. Therefore raw materialavailability for your Company was affected severely and we could not fully benefit fromthe rise in sugar prices. Production of ethanol and power also suffered as a result.Despite a better performance in sugar refining the Company has been struggling to serviceits current level of debt.

Debt Restructuring

After considering various options we decided to go for a comprehensive debtrestructuring package accompanied by a large injection of new capital (` 784crores) from Wilmar International of Singapore. As a result of this exercise we expectthe long-term debt to drop to ` 1471 crores. In addition we would have ` 580 crores oflong duration NCDs paying a coupon of 0.01%. We expect the final closing of the debtrestructuring exercise before 20th February 2018.

We also continue to make all efforts to sell our Brazilian subsidiaries. However sofar we have not met with success in this endeavour. Currently world sugar prices are lowand the investment climate in Brazil is not positive. Also we have had legal challengesto our resolution process in Brazil from one of our banks. While we continue all effortsto dispose of these assets we have also ring-fenced the parent company from all financialobligations to its overseas subsidiaries.

Coming to the financial results on a consolidated basis in 2016-17 revenues grew22.4% to ` 122981 million and EBITDA by 257.2% to ` 10602 million. Significant interestcost at ` 9318 million continued to burden operations resulting in losses for the year2016-17 reaching ` 10397 million compared to ` 18092 for the previous year.

Speaking of the Brazilian operation revenues for the year 2016-17 grew 20.4% to `28132 million while the EBITDA grew nearly 296% to ` 7574 million driven by the firmsugar prices prevailing in 2016-17. Our mills focussed more on production of sugar tomaximise profits resulting in significant decline in ethanol production.

Looking Forward

Despite good monsoon during the year 2016-17 a major setback was the unevenspread of rainfalls especially in the southern part of the country resulting in a54% decline in sugarcane production in the region. Going forward I believe the rawmaterial situation will improve in 2017-18 and normalise fully in 2018-19. Withthis we expect our quantity of sugar produced from cane to increase. It will also boostour production of ethanol and co-generation power. The Government of India has recentlyannounced a nearly 5% increase in the procurement price of fuel ethanol creating furtherincentive to maximise production of the same.

Diversification Advantage

As the environment norms get stringent our diversification to ethanol andco-generation power from bagasse (renewable energy) business provides significant scope togenerating more revenues. These businesses while facilitating in meeting socialobligations at the same time contributes to our business sustainability with significantbottomline contribution. The Government's focus on ethanol blending with fuel andenhancing power generation from renewable sources continues to provide fillip to thesebusinesses.

Message to Shareholders

We are at an important juncture of existence whereby a series of future-focussedinitiatives shall bring back sweetness to our business. While we are determined tocome out of the debt trap we are also confident of creating value for our shareholders.I thank all our stakeholders for supporting us during the difficult times.

Warm regards

Narendra Murkumbi