Y






  
Shree Renuka Sugars
Balrampur Chini
˜ 
r hiraj Manik (61)
r
arun Markandeya (62)
r nkit Mehta (63)
r hummas Mehta (64)
r Siddharth Misra (65)
Y 

r eriew of the Sugar Industry
r Introduction to Shree Renuka Sugars and
Balrampur Chini
r SW nalysis
r Ratio nalysis
r eerage
r he Way forward
=   



  

r Indian sugarcane industry catalyses rural growth

r Industry employs 2million rural skilled/semi
skilled workers
r he Indian sugar industry enjoys an annual
turnoer of  billion and contributes more
than 22.5 billion to the exchequer
r Sugarcane is grown oer 5million hectares (3%
of total arable land)
Sugar Producing States
è 

r ollow a 6 to 8 years cycle
- 3-4 years higher production
- ollowed by 2-3yrs of lower production
r fter 2 consecutie years of declining sugar production
(2 - 8 & 2 8-
) production resurged in 2
-1
r India¶s total sugar production in 2 1 -11 is forecast at
24. million tonnes
r  R production forecast lower at 5.6 million tonnes
compared to 6.6 million tonnes last yr
r 2 1 -11 sugarcane production is forecast higher at 325
million tonnes compared to 282 million tonnes in 2
-
1
j 
r Consumption to increase to 24.5 million tonnes
r Bulk consumers account for about 6 % of mill
sugar demand
r Most of KH
SRI sugar is consumed by
local sweets manufacturers
r ur is consumed in rural areas for household
consumption & feed use.
è 



r Measures by I
r ased sugar prices significantly
r Closing stock forecast higher at 5.36 million
tonnes in 2 1 -11 compared to 3.
8 million
tonnes in 2
-1
 V
 SUG  PUCES
r BRAZIL
m Largest Producer of Sugar in the world
m Expected Production in 2010-11: 639 Million Tons

r CHINA
m 3rd Largest Sugar Producing nation
m Expected Production: 13 Million Tons
m Largely due to better weather conditions and prices

r THAILAND
m 4th Largest Producer of Sugar
m Expected Production: 7.78 Million Tons
m Increase in Sugarcane support prices
 V
 SUG  PUCES
r PAKISTAN
 Production: 4.73 Million Tons
 Mainly Domestic Consumption

r MEXICO
 5th Largest Producer of Sugar
 Production of 5.01 Million Tons up to May 2008 ʹ Increase of 6.3% over
the previous year
  


r gri-business and bio-energy group
r 5th largest Manufacturer in the world, #1 in India
r resence in Brazil ia the acquisition of quipa
and
ale o Iai S cucar  lcool (
I)
r India resence:
Ł  sugar mills
Ł Crushing capacity of 35k tons / day (Indian
facilities)
Ł Refinery capacity: 1. Million tons per year
!

 j 
r ne of the argest Sugar Manufacturing
Companies
r
sugar factories with an aggregate Crushing
capacity of 35 tonnes/day
r Concentrated in astern 
=
Y
  


Strengths Weaknesses
r argest Sugar Refining r Regulated Industry
capacity in India r
ot a diersified Company
r ully Integrated player
r ained presence in Brazil with
the acquisition of quipa S

pportunities hreats
r Moe to Branded Sugar r oernment olicies
r Confectionary Market r Rainfall ependent
r thanol prospects
=
Y
!

 j 
Strengths Weaknesses
r xcellent armer relations r Heaily Regulated Industry
r ully Integrated player r
ot a diersified Company
r ocus on operational
efficiency

pportunities hreats
r ood Industrial Buyer r oernment olicies
Market r Rainfall ependent
r thanol prospects business
r Rising cane prices
 
 è
 

romoters romoters

11.99 M s Body
Corporate
§ .9 21.52 §1.92
16.54 inancial M s
Institutions 24.85
II s inancial
25.§5
5.8§ Inst
ther 11.11 4. 8 II s
5.1§
§. 5 Inestors
eneral thers
ublic
 

 


  
in millions
è

 
           
otal 8 66 486 18151 223
8 55


Income
BI  1 21 12
218 3685 246
B 46 8 113 216 56 6
 563 544
2 1435 41 2
S 23.
8 21. 4 2.8 4.

6.2

et Worth 214
3336 6383 12625 1
5

et Block 11
4 5623 6
12 1256


2*

*
ote: 2
-1 Renuka sugars Raised Rs 52 Crores in ebt and
acquired ssets in Brasil , hence the high
et Block
!

 j  


  
in millions
è

 
           

otal
Income 1,61
.5 1,623.13 1,6 5.62 1, 3.21 1
86.6

BI  46. 4 1
.23 341.12 454.42 24
.22

B 364.88 -35.13 122.64 263.54 4
. 6
 2
1.5
-41.84
. 3 226.51 28.2
S 1.5 -1.6
3.8 8.82 1.

et Worth

5.83 864.1 1, 15. 8 1,15.26 12 6.34

et Block 1, 36.6 1,58.8 1,86. 1 1, .1 1.

 V

  

è

  

  


Sep 8 Sep
Sep 8 Sep

Inentory turnoer
ratio 3.14 5.16 12. 2.42
ebtors turnoer
ratio 3 .61 5 .84 4 .26 2
.22

Credit turnoer ratio 6.45 4.1 6.82 5.6

otal asset turnoer
ratio .5
.8 1. 8 .8
ixed asset turnoer
ratio .82 .
5 2.26 1.5

Inestment turnoer
ratio 3.14 5.16 12. 2.42
Y

r he inentory of Renuka sugars has increased
significantly compared to its increase in sales
r Collection period has reduced for Balarampur
Chini where has gone up for Renuka sugars
r ue to its eased ssets the sset turnoer for
Renuka sugars is higher compared to others
r ue to high inestments I

urnoer has
reduced for Renuka sugars
 è 


 

  

è


Sep 8 Sep
Sep 8 Sep

perating rofit
Margin(%) 22.23 26.6 13.31 16.82
ross rofit
Margin(%) 14.18 2 .24 11.24 14. 3

et rofit
Margin(%) 6.5 13.43 5.2 6.41
Return n Capital
mployed(%)
.42 16.13 12.18 12.4
Return n
et
Worth(%)
.5 1
.28 15. 8 11.55

Return on ssets 3
.65 45.5 22.2
3
.1

Y

r Balrampur chini operates at a higher operating,
gross, net compared to Renuka sugars
r his can be attributed to the relatiely low cost
of RM for Balrampur chini
r aourable RC for Balrampur Chini as
compared to Renuka Sugars
  


è

  

  


Sep 8 Sep
Sep 8 Sep

iidend er Share .5 3 .2 1
Return n Capital
mployed(%)
.42 16.13 12.18 12.4
Return n
et
Worth(%)
.5 1
.28 15. 8 11.55
iidend ayout
Ratio
et rofit 15.4 3
.8 .5 25.83

arnings er Share 3.8 8.82 3.36 4.53

Book
alue 3
.2 45. 22.35 3
.24

Y

r fter ±e  in 2 , Balrampur Chini has
gien a high iidend/share
r Balrampur Chini has a more inestor friendly
return with an increasing S and Return on

etWorth
   


è

  

  


Sep 8 Sep
Sep 8 Sep

Current Ratio 1. 2 1.4 .
1.15

Quick Ratio .65 . 1.15 .88

ebt quity Ratio 1.34 .83 1.6 1. 4

ong erm ebt
quity Ratio 1.11 .83 1.22 .

Interest Coerage 2.22 3.58 3. 8 3.81

otal ebt to
wners und 1.34 .83 1.6 1. 4

SCR 1.52 2.
4 1. 6 1.32

ixed asset coerage
ratio 1.5 1.82 .83 .


 j 
!"


2.5
r
 


  2 Sep- 6
 


 1.5 Sep- 
r  
  
 1
Sep- 8
.5
 
 

 
 Sep-

 Sep-1
Renuka Balrampur
Sugars Chini
r
!



 


  

"

  1.2
 

 #$
 1 Sep- 6
   .8
.6 Sep- 
.4 Sep- 8
.2 Sep-

Sep-1
Renuka balrampur
sugars Chini
 5
4.5
4
3.5
3 eries 1
2.5 eries 2
2 eries 3
1.5
1
.5

Category 1 Category 2 Category 3 Category 4

Y

r CR for Balrampur chini has improed and is
preferable compared to Renuka Sugars
r Both Companies hae the capability to raise
more debt
r Both companies are able to coer their interests
well
r Renuka sugars has a low SCR which is a
concern (ssuming 1 yrs as repayment period)
è  j

Better
urnoer
Ratios

Higher More
Balrampur
perating Inestor-
fficiency Chini
friendly

ood
Manage-
ment of
ebt

 ˜
 # j  

5
45
4
§5
§
25
2
15
1
5

sia S. urope
. frica ceania
merica merica
2
-1 (168 mn) 2 2 -21 (1
8 mn)

 
 # j  

r Sugar demand will increase from 168 mn tonnes
to 1
8 mn tonnes in 2 21
r sia¶s share will increase from 45% to 5 %
r India¶s Consumption will nearly double oer the
next 2 years
r frica will begin to emerge as a major consumer
from
% to 13%

 ˜
 # è 
 

4
§5
§
25
2 2 1 -11
15 2 2 -21
1
5

sia S. urope
. frica ceania
merica merica

 
 # è 
 

r Supply Mismatch
r Concentrated Industry
r urope ±  net importer from exporter
r Brazil key to fill demand
r Weather ±  key determinant
r Supply diersion to thanol


 
 
  
 

r ormula based olicy cane pricing is the need of
the industry
r Release mechanism to be dismantled
r utures market to be made more ibrant
r xport-Import policy to be aligned
r Sugar e-Regulation
!

 j  #
 
  

r Current ong erm ebt of Rs. 86 cr

r ebt free status in 2 years

r
o isible high capex expansion

r Can drie shareholder alue