Bajaj Hindusthan Sugar Limited · NSE:BAJAJHIND
Bajaj Hindusthan Sugar — Q3 FY2009 Earnings Presentation
15 slides from Bajaj Hindusthan Sugar's earnings presentation, August 2009
Slide 1: 3rd Quarter Result Presentation
Not for circulation 3rd QUARTER RESULT PRESENTATION August 2009 This presentation is not an invitation or an offer to subscribe for or sell any securities of the company to any person and is for general information only.
Slide 2: Disclaimer
Disclaimer This presentation contains certain “forward looking statements.” These forward looking statements that include words or phrases such as Bajaj Hindusthan Limited (the "Company") or its management “believes”, “expects”, “anticipates”, “intends”, “plans”, “foresees”, or other words or phrase
Slide 3: Global sugar industry snapshot
Global sugar industry snapshot India is the largest consumer and second largest producer of sugar in the world Top sugar consumers (MMT) Top sugar producers (MMT) 25.5 34.6 18.5 22.8 15.9 12.2 16.1 14.0 9.6 6.9 6.3 5.7 5.6 3.4 India EU China Brazil USA Russia Mexico Brazil India China EU USA Mexico
Slide 4: Global demand supply scenario set to tighten
Global demand supply scenario set to tighten BHL believes that low sugar inventories will drive sugar prices globally (million tonnes) SY 02 SY 03 SY 04 SY 05 SY 06 SY 07 SY 08 SY 09E Opening Stocks (A) 58.9 58.7 68.1 67.1 61.3 64.3 73.8 78.0 Production (B) 138.3 150.4 143.7 141.2 151.4 167.4 167.8
Slide 5: Domestic industry currently at low supply…
Domestic industry currently at low supply… BHL believes that the Indian sugar industry is at the beginning of a potential upcycle (million tonnes) SY 02 SY 03 SY 04 SY 05 SY 06 SY 07 SY 08 SY 09 SY 10E SY 11E Opening Stock (A) 10.7 11.3 11.6 8.5 4.0 * 3.6 9.2 8.1 2.3 0.0 Production (B) 18.5 20.1 14.
Slide 6: … leading to sugar cycle turning favourable for BHL
… leading to sugar cycle turning favourable for BHL BHL believes that Indian sugar inventories are at a low Typical Sugar Cycle (5-7 Years) Higher & Lower Lower Increase in Increase in Higher Decline in Delayed prompt Lower sugarcane sugar sugar area under sugar sugar payments payment to profitabili
Slide 7: BHL – leader in sugar industry in India and Asia
BHL – leader in sugar industry in India and Asia Amongst the top sugar manufacturers globally in terms of capacity Brief overview Group structure Largest sugar manufacturing company in Asia and amongst the top sugar companies in the world Installed Sugarcane Crushing Distillery Power Capacities 96
Slide 8: Ideally positioned to exploit upturn in sugar cycle
Ideally positioned to exploit upturn in sugar cycle Capable of servicing the sugar deficient northern markets 1 Leader in sugar industry in India and Asia Size helps garner larger proportion of available raw material Reduces per unit cost * 2 Strategically located **** *** ***** * *** * * ** P
Slide 9: Uttar Pradesh has lower production volatility
Uttar Pradesh has lower production volatility BHL believes it is favourably positioned Maharashtra v/s Uttar Pradesh Cane Sugar production volatility (Million MT) Year Uttar Pradesh % change Maharashtra % change 150.00% SY95 3.61 32.93% 5.03 82.99% SY96 4.38 21.34% 5.39 7.34% 100.00% SY97 4.08 (6.74
Slide 10: Low conversion cost to drive profitability
Low conversion cost to drive profitability BHL expects its margins to benefit from economies of scale and enhanced realizations from by- products Average sales realization & raw material cost (Rs./Bag) By-product realization (Rs./Bag) 1,962 212 222 1,670 1,500 1,770 1,467 1,368 1,369 1,415 1,363 1,6
Slide 11: Improve leverage to maximize profitability
Improve leverage to maximize profitability Currently no significant capex envisaged Historical leverage position (US$ mn) Efforts underway to 1,171 reduce leverage... 3.6x 1,197 1,197 FCCB Buyback 1,071 Preferential 905 issue to 751 882 promoters 2.4x 753 2.6x 633 USD $ 150 million QIP offer
Slide 12: Financial & Operating Performance – BHL Standalone
Financial & Operating Performance – BHL Standalone Revenues and EBITDA (US$mn) Nine months ended June 30* 364 376 310 (Figures in US$millions) 2008 2009 277 274 Net Sales/Income from Operations 270 244 65 57 Operating Costs (226) (187) 46 36 44 EBITDA 44 57 FY06 FY07 FY08 9MFY08 9MFY09 Depreciation
Slide 13: Raw Sugar Imports by BHL
Raw Sugar Imports by BHL Is profitable at current sugar selling prices Raw Sugar Import details Quantity MT 289,000 Contracted Cost Cents/Pound 14.5 Rate in US$ CIF USD/Ton 374.2 Exchange Rate INR/USD 48.25 Rate Ex Port Rs/Ton 18,056 Landed Cost at Factory Rs/Ton 20,214 Conversion Cost Rs/Ton 2,350
Slide 14: Sugar Production by BHL Group
Sugar Production by BHL Group BHL group production Bajaj Group aims at over 50% higher production in FY 10 over FY 09 FY09 FY10 E FY11 E Own Raw Total Own Production Refining Production Production Tonnes 136,000 136,000 136000 94 95 125 Lakh quintals 673 730 1530 % 9.03% 9.80% 9.80% Lakh quintals 60
Slide 15: To summarize…
To summarize… 9 Global demand supply scenario for sugar to tighten further 9 Low Indian inventories to support increased sugar prices over the next 2 years 9 Sugar industry is at the beginning of a strong up-cycle 9 BHL well-positioned to take advantage of the up-cycle 9 Improved leverage to maximiz
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