Dear Shareholders,
On behalf of Avadh Sugar & Energy Limited, it is my honour to address you all on
the closure of financial year 2020-21 of your company. India has shown immense potential
towards fighting the pandemic and Indian economy witnessed a strong recovery during the
second half of current fiscal.
Fiscal 2020-21 has been challenging for the world economies as there were uncertainties
caused by pandemic. However, the first half of the fiscal faced immense challenges for
many businesses to survive against the dampened demand but there was a swift recovery of
business activities during the second half. The leading economic indicators also guided
towards economic and demand revival.The Government of India's support through various
measures in Union Budget and Reserve Bank of India's liquidity support to Indian
businesses aided for the survival of many businesses in the country.The country's
vaccination drive will thrust towards reaching normalcy. The International Monetary Fund
in its recent forecast have mentioned Indian GDP to grow at 11.5 percent in 2021 embarking
India towards one of the fastest growing economy in the emerging markets followed by
China.
Industry Insight
During SS 2019/20 the sugar industry experienced lower output after a prolonged glut in
the previous seasons, meanwhile sugar production in SS 2020/21 is likely to witness a
marginal increase in the production at 30.7 mn tonnes. Uttar Pradesh the largest sugar
producing state is, witnessing a lower production because of lower yields and crop disease
whereas Maharashtra and Karnataka will report higher production during SS 2020/21. The
government, to support the sugar industry, had devised various measures including export
MEAQ and Minimum Support Price (MSP) to support the sugar prices. The domestic sugar
prices remain subdued hovering towards the MSP price because of reduction in sugar
consumption that saw an uptick towards 33.04 per kg in July 2020 with marginal correction
to 31.80 per kg in December 2020 as the second half of the fiscal saw demand pick-up from
industries as well as individuals. The sugar millers continue to divert major part of the
juice and the molasses towards ethanol as the realizations were better than sugar. Going
forward GOI is targeting the ethanol blending to reach 20% by 2025 that encourages many
sugar companies to invest in distillery capacities. Going forward with the strong
vaccination drive the growth is envisaged to grip and the Indian sugar industry will be
able to capitalize on the same.
Business Performance
The company continued to face headwinds during the first half of the fiscal, overall
performance for the year experienced pressure on operating margins affected by lower
realizations of co-generation segment. Sugar realizations recovered during the second half
of the fiscal along with improved ethanol realization; but the unexpected pandemic had a
material impact on the performance during the end of this fiscal. However, sugar being the
essential commodity for consumption we expect the performance to improve going forward.
During FY21 our total income stood at Rs. 2710.52 crores against Rs. 2559.40 crores in
FY20, PBT stood at Rs. 101.36 crore in FY21 against Rs. 106.16 crore in FY20 and Proft
After Tax was at Rs. 77.58 crore in FY21 as against Rs. 88.61 crore in the same period
last year.
Our Core Strategies
Avadh Sugar and Energy Limited with its wide experience in the industry and a strong
balance sheet has always been ahead of the curve towards capitalizing the positive
structural changes in the sector. To reap the benefits of changing market dynamics of
ethanol industry the company has announced capex of Rs. 135.51 crores for debottlenecking
& other efficiency improvement measures and expansion of distillery capacity to 320
KLPD. The progress of the capex is in line with the expectations and shall aid towards
margin enhancement once operational. The company is well poised to capitalize on the
opportunities and further capex will advance the operational performance going forward.
Way forward
Avadh Sugar and Energy Limited with its potential and proficient team will be able to
withstand the storm and up-rise strong towards the success. The company's strong roots
will enable it to re-gain the momentum and shine towards the growth path.
Warm regards,
Nandini Nopany Chairperson