Dwarikesh Sugar Industries Ltd. · NSE:DWARKESH
Dwarikesh Sugar Industries — Investor Presentation (December 2005)
61 slides from Dwarikesh Sugar Industries's investor presentation, December 2005
Slide 1: Dwarikesh Sugar Industries Ltd. Presentation
Dwarikesh Sugar Industries Ltd. Presentation
Slide 2: Index
Index • World Sugar Scenario • Sugar Industry • Dwarikesh – About the company – Distinguishing features – Board – Financial and Operation Results – Risk and concerns • GDR Issue • Objects of the issue • Sound Investment
Slide 3: World Sugar Scenario: Production
World Sugar Scenario Sugar Production (million Tonnes) Centrifugal Sugar, Raw Value) 2001-02 2002-03 2003-04 2004-05 2005-06 Total Africa 8.03 8.53 8.301 8.265 8.265 Cuba 3.6 2.25 2.45 1.3 1.45 Total Central America 3.645 3.801 3.895 4.027 4.052 USA 7.167 7.644 7.847 7.146 6.824 Total North America
Slide 4: World Sugar Scenario: Consumption
World Sugar Scenario Sugar Consumption (million Tonnes) Raw Value 2001-02 2002-03 2003-04 2004-05 2005-06 Total Africa 9.881 10.514 10.378 10.494 10.691 Cuba 0.7 0.7 0.7 0.7 0.7 Total Central America 1.511 1.639 1.558 1.595 1.614 USA 9.028 8.955 8.971 9.269 9.267 Total North America 15.462 15.585 16
Slide 5: World Sugar Demand-Supply Scenario
World Sugar Scenario WORLD SUGAR DEMAND -SUPPLY SCENARIO 150000 145000 Million Tons 140000 135000 130000 Sugar production 125000 2001- 2002- 2003- 2004- 2005- Sugar consum ption 02 03 04 05 06 Season
Slide 6: Indian sugar consumption
Indian sugar consumption relative to other large countries Contry wise consumption (in ‘000 Metric Tonnes Raw Value) 2001-02 2002-03 2003-04 2004-05 2005-06 India 19760 19980 18810 18800 19300 China 8650 9355 10950 11800 12000 Brazil 9450 9750 10400 10650 10850 USA 9028 8955 8972 9090 9176 Pakistan
Slide 7: Indian Sugar Industry
Indian Sugar Industry • 398 sugar factories located across the country with highest number located in Maharashtra & U. P. Over 50% of the units have capacity of less than 2,500 TCD which is the minimum economic size Most of these units are unviable & loss making due to inefficient operations and
Slide 8: Continued…
Continued… • Contributes Rs. 27bn Crores to exchequer [US$ 600 Million ] • Comprises 7.5 per cent of India’s rural population • Number of farmers 5 Million • Rs.180bn payment to cane farmers every year [ US$ 4 Billion ] • Can generate 4000 MW surplus eco-friendly power from bagasse • Has the potenti
Slide 9: Demand and Supply
Demand • Greater urbanization and rising standard of living have given a boost to the usage of sugar. • Industrial consumption for sugar is growing due to rapid growth of the food & beverages industry. • The expected sugar consumption for the season ending 2006 was estimated at 18.5-19 mn Tons & the
Slide 10: State wise sugar production
State wise sugar production (‘000 Tonnes) 2000-01 2001-02 2002-03 2003-04 2004-05 (P) Andhra Pradesh 1022 1048 1210 886 980 North Bihar 288 342 408 274 254 Gujarat 1073 1056 1251 1066 797 Haryana 586 624 636 582 400 Karnataka 1613 1550 1868 1116 1050 Kerla & Goa 23 13 14 10 8 MP & Chhattisgarh 93 71
Slide 11: Government Policy
Government Policy Hitherto controlled by Government of India(GOI) with intention to decontrol in phased manner. GOI regulates & controls the rates of sugarcane supplied by farmers. 10% of the production has to be sold to the GOI at a fixed price and is used for PDS. The Sugar Industry has be
Slide 12: Factors affecting cane cultivation
Factors affecting cane cultivation Soil – Sandy loam soil Climate – Warm and humid Temperatures – Between 20 to 40 degree centigrade Rainfall – Between 700 mm to 1200 mm Seed Selection – Quality and treatment of seeds Mill Support – Support / Subsidies for seed procurement and treatment,
Slide 13: Sugarcane varieties and cane cycle
Sugarcane varieties and cane cycle Early Maturing Variety – 10 to 11 month crop General Variety – 11 to 12 month crop Late Maturing Variety – 12 to 14 month crop Planting can be done anytime in the year, except from May to September In UP cane planting is done during 2 periods – 80% durin
Slide 14: Sugar Manufacturing Process
Sugarcane Transporting Harvesting Sugarcane to Plants Planting of Sugarcane Cane Crushing & Juice Extraction Farms – Cultivation of Land for Sugarcane Sugar Evaporation - Converting Planting Manufacturing Juice into Syru Process Packing of Sugar Boiling of Syrup - Crystallization of Sugar Grading of
Slide 15: Sugarcane material balance
Sugarcane material balance BAGASSE 33% PRESS MUD WATER 4% 45% RECOVERABLE SUGAR 11% MOLASSES 5% SUGAR LOSSES 2% * Chart not to scale
Slide 16: Key operational parameters
Key operational parameters Capacity Utilisation •Crushing rate (Tonnes / Day) •Duration of the season (Number of days) Cane Drawal •Cane crushed by plant vs. total cane produced in plant’s culturable area (%) Breakdowns and Stoppages (Number of hours lost) •No cane, mechanical or electrical fa
Slide 17: Cost of production
Cost of production On an index of 100 which is the world average cost of production, Australia is the lowest followed by Brazil & Thailand . Even with the fragmentation, India’s overall cost of production is indexed at 67 due to higher cane price compared to other countries. Cost of production is hi
Slide 18: Landed cost of imported sugar
Landed cost of imported sugar BASE PRICE [US$ FOB] 300 FREIGHT 65 C & F PRICE 365 IMPORT DUTY - COST WITH DUTY 365 PORT, INCIDENTALS & OTHERS 35 LANDED COST [US$] 400 RS. / US$ 46 LANDED COST [RS.] 18400 PLUS IMPORTER’S MARGIN 5% OF COST 920 SALEABLE EX PORT PRICE 19320
Slide 19: DSIL: An introduction
DSIL: An introduction • Promoter & Persons Acting in Concert : Mr. Gautam R. Morarka Morarka Finance Ltd Dwarikesh Trading Co. Ltd. • Incorporated in November 1993. • Plant located at Dwarikesh Nagar(DN),Dist Bijnor,U.P and Dwarikesh Puram(DP),Village Bahadarpur, Post Afzalgarh which is nearing comm
Slide 20: Infrastructure
Infrastructure • Effluent Treatment Plant with almost zero discharge of effluent. • Well equipped R&D Laboratory. Dwarikesh Dwarikesh Particulars Total Nagar Puram Total land availability (acres) 86 58 144 Command area of cane 24,304 23,374 47,678 (Hectares) Total Sugar Storage capacity 7,50,000 2,0
Slide 21: Board of Directors
Board of Directors • GAUTAM R. MORARKA • SURESH NEOTIA • MUKUND G DIWAN • SHAILESH VAIDYA • K P MEDHEKAR • MILIND VICHARE • L. N. HEDA • BAL KUMAR AGARWAL Contd.
Slide 22: Key Promoters and Directors
GAUTAM R. MORARKA : Key Promoters and Managing Director having rich & varied experience of running Sugar Industry, distillery, investment and finance companies. Under his leadership company has grown by leap and bounds and has expanded the capacity of Sugar unit from 6500 TCD to 12000 TCD. Besides t
Slide 23: Directors continued
K P MEDHEKAR : Mr. K. P. Medhekar is a retired IPS officer and former Director General of Police Maharastra, Ex-Member of the Public Service Commission, Vice Chairman of International Institute of Security and Management. MILIND VICHARE : Mr. Milind Vichare is the Deputy General Manager of Industria
Slide 24: Distinguishing Features
Distinguishing Features • Dwarikesh Nagar Unit was erected & commissioned in 14 months. • Dwarikesh Nagar Unit to have run for the full crushing season - in the trial season itself. The quantity of cane crushed in the first season - 385000 tons - is the highest ever for a new sugar plant. • Achieved
Slide 25: Distinguishing Features Contd.
Distinguishing Features Contd. • Distinction of clearing the sugar cane dues first for all the seasons consistently since 1995-96 including the cane arrears arising out of Supreme Court Judgment in May, 2004. • Factory with one of the lowest process losses. • Provides school, medical center, communi
Slide 26: Niche
Niche • Efficient cost management reflected in the higher GPM & NPM than most other companies in the sector. • Efficient Financial Management reflected in the D/E ratio of 1.04. • High recovery due to better cane management and operational efficiencies. The efforts made towards cane development have
Slide 27: A sound business model..
A sound business model.. • Renowned Board consisting of eminent personalities • Observance of Corporate Governance • Voluntary Dematerilasation of company’s Equity shares in the year 2000 • Bonus Issue of 13 equity shares for every 100 equity shares held in the year 2001. • Consistent profit making
Slide 28: Social Commitment
Social Commitment • Adopted village Rajpura where existing roads of the village have been strengthened, sanitary facilities have been provided • Youth Orientation – The youth of the village who have undergone ITI course are being provided intensive training in the factory for a period of one year. •
Slide 29: Farmer Relationship, Technology & Infrastructure, Human Resources
Farmer Relationship, Technology & Infrastructure, Quality & Production , Human Resources • Enjoys good relationship with farmers in its command area. • Company has installed latest technology and machinery to achieve the highest operational result. • DSIL has a team of dedicated, committed and train
Slide 30: Operations: Cane Crushed
Operations CANE CRUSHED 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004 96 97 98 99 00 01 02 03 04 05 SEASONS
Slide 31: Operations: Sugar Production
Operations SUGAR PRODUCTION
Slide 32: Operations: Recovery
Operations RECOVERY
Slide 33: Regional Recovery
REGIONAL RECOVERY 11 P er cen tag e 10 9 8 2000- 2001- 2002- 2003- 2004- Central U.P 01 02 03 04 05(p) All INDIA Dwarikesh
Slide 34: Synopsis
Synopsis 1999- 2000- 2001- 2002- 2003- 2004- 00 01 02 03 04 05 CANE CRUSHED 66.35 65.75 74.98 86.48 75.19 80.15 (Lakh qtls) SUGAR PRODUCED 6.56 6.78 7.67 8.89 7.52 8.4 (lakh qtls) RECOVERY 9.90 10.32 10.21 10.20 10.39 10.48 (%)
Slide 35: Financials: Sales
Financials SALES Sales for the year ending 30th September 1999 2000 2001 2002 2003 Years
Slide 36: Financial Results
Financial Results Rs. in Million Rs. in Million Year ended Year ended 30.09.2005 30.09.2004 Gross profit before depreciation, interest & tax 468.79 288.63 Less: Depreciation 55.02 46.06 Interest 59.36 70.38 Profit before tax and exceptional items 354.41 172.19 Less: Exceptional Item 2.09 62.77 Profi
Slide 37: Balance Sheet Ratios
Balance Sheet Ratios 2000-01 2001-02 2002-03 2003-04 2004-05 Debt Equity 0.97 0.94 0.91 0.72 1.04 Ratio Inventory Turnover 2.20 4.51 1.45 4.20 4.14 Ratio Current Ratio 1.42 1.28 1.14 0.95 1.76 Fixed Assets Turnover 1.67 1.71 1.82 1.73 1.01 Ratio Fixed Assets Coverage 1.82 2.07 2.34 2.75 1.82 Ratio (
Slide 38: Per Share Data
Per Share Data 2000-01 2001-02 2002-03 2003-04 2004-05 Earnings per share (EPS) 2.63 0.41 1.75 12.13 23.17 (Rs.) Cash earnings per share 7.50 6.10 7.42 18.23 28.00 (CEPS) (Rs.) Dividend (Rs.per Equity 1.50 0.50 0.50 2.00 6.00 Share) Dividend 15% 5% 5% 20% 60% Payout % Book Value 46.03 45.94 40.23 50
Slide 39: Segment wise contribution in turnover
Segment wise contribution in turnover Percentage 2005-06 2006-07 2003-04 2004-05 Projected Projected Sugar 98.81 95 92 88 Co-Gen 1.19 3 3 8 Distillery 0 2 5 4 Total 100 100 100 100
Slide 40: Segment wise EBIT
Segment wise EBIT Percentage 2005-06 2006-07 2003-04 2004-05 Projected Projected Sugar 74.89 89 89 80 Co-Gen 25.11 8 8 17 Distillery 0 3 3 3 Total 100 100 100 100
Slide 41: Summary of profit & loss account
Summery of profit & loss account Particulars F.Y. 2002-03 F.Y.2003-04 F.Y.2004-05 F Y 2004-05 (Rs. Mln) (Rs. Mln) (Rs. Mln) (US$ Mn) Sales (Net of Excise) 794.22 1430.97 1548.82 33.67 Other Income 3.11 4.47 4.40 0.10 Total Income 797.33 1435.44 1553.22 33.77 Raw Materials Manufacturing Exp. 862.98 8
Slide 42: Summary of balance sheet
Summary of balance sheet Particulars – Year Ended 30 September 2003 2004 2005 2005 (Rs. Mln) (Rs. (Rs. US $ Mln) Mln) (Mn) Sources of Funds Equity Share Capital 75.60 75.6 125.65 2.73 Cumulative Redeemable Preference 61.00 11 11.00 0.24 Share Reserves and surplus 228.56 303.17 756.94 16.46 TOTAL SHA
Slide 43: Comparative Analysis
Comparative Analysis Name of the Balrampur Bannari Amman Bajaj Ponni Dwarikesh Company Chinni Sugar Ltd. Hindust Sugars(er Sugar Ind. Mills Ltd. an Ltd. ode) Ltd Units 4 2 2 1 1 For the Year ended 31st Mar, 05 31st Mar, 05 30th Sept,04 31st Mar, 05 30th Sept,04 Capacity(TCD) 29000 9000 24000 2500 65
Slide 44: EBDIT
EBDIT EBDIT for the year ending
Slide 45: PAT
PAT c O35 te w2 4 c 5 ¥ c Pr ea E ¢ ear ae STILE
Slide 46: Debt Equity Ratio
Debt Equity Ratio 1999.00 2000-01 200102 2002-03 200304 200405 Years
Slide 47: Earning per share
Earning per share “9 i
Slide 48: Book value per share
Book value per share a £ = 3 c A < 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year ending 30th September
Slide 49: Track record of equity dividend payment
Track record of equity divident payment
Slide 50: Enhancing shareholder value
Enhancing shareholder value Total shareholder return is a measure of the gain delivered to the shareholders of the company. Returns are calculated not only in terms of the dividend per share, but also in terms of capital appreciation in the underlying investment
Slide 51: Future Growth Plans
Future Growth Plans • Proposes to set up additional 15 MW co- generation capacity for supply of power to State Grid. • Contemplating another sugar factory of 7000 TCD.
Slide 52: DSIL: Risks and Concerns
DSIL: Risks and Concerns
Slide 53: Risks and concerns: DSIL's response
Risks and concerns: DSIL’s response • CYCLICALITY OF SUGAR INDUSTRY Response : Derisking Business Module – DSIL switched to integrated business model. Commissioned one distillery [ 30 KLPD], two Power Plants [ 26 MW] and integrated sugar complex to provide stability of revenue and profit. • AGRICULT
Slide 54: Risks and concerns: Financial risk
Risks and concerns: DSIL’s response • FINANCIAL RISK Sugar Industry being cyclical, adequate funds may not be available for working capital or long term needs. – Response : DSIL addressed its working capital and long term needs largely through internal accruals and low cost borrowings. – Attractive
Slide 55: Facts of the GDR Issue
Facts of the GDR Issue P/E in Book EPS per relation to Value per Industry P/E* share 2004-05 share 30.09.2005 EPS* 30.09.2005 ISSUE SIZE Avg P/E Max Min Rs. Rs. US $ 12 Million 8.41 20.9 4.3 23.17 70.24 * As on 8th December, 2005
Slide 56: Objects of GDR Issue
Objects of GDR Issue • For implementation of its business strategy. • For increase in the production capacity of sugar, co- generation and distillery. • For acquisitions. • For increase in the working capital requirements • For General Corporate purposes. • For repayment of the Existing Loans. • For
Slide 57: Sound Investment
Sound Investment • Well established profit earning & dividend paying company • Ability to withstand the cyclical fluctuation in sugar industry • Comfortable long term debt to equity ratio of 1.04. • Strong book value of Rs. 70.24 as on 30/09/2005 • High EPS of Rs. 23.17(for 2004-05) • Expansion plan
Slide 58: New developments: Ethanol blending
New developments… Government encouraging mixing of Ethanol with petrol • 5% Ethanol blending with petrol has been made compulsory with effect from 1st October 2003 in nine sugar producing States. • Govt. exploring admixture with diesel • Will save substantial forex • Eco-friendly product : answer of
Slide 59: New developments: Co-generation incentives
New developments… Attractive co-generation incentives • Electricity Bill 2003 passed to open up power sector • Sugar industry can generate 4000 MW surplus power by using bagasse as by product. • 100% captive power requirement currently generated from bagasse-fired boilers • 10% power in the country
Slide 60: Why power from Bagasse?
Why power from Bagasse? • All sugar factories are set up with cogeneration facilities to meet their captive requirement of steam and power. • Surplus bagasse available after meting requirement for captive power generation is as under : • Central U.P. 4% • Surplus bagasse can be sold to paper manufac
Slide 61: Thank you.
Thank you. No part of this presentation is to be circulated, quoted, or reproduced for any distribution without prior written approval from Dwarikesh Sugar Industries Ltd. Dwarikesh Nagar-246762, Dist. Bijnor, Uttar Pradesh. Certain part of this presentation describing estimates and future plans may
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