1995
DHARANI SUGARS AND CHEMICALS LIMITED
CHAIRMAN'S SPEECH
I have great pleasure in welcoming you all to this Eighth Annual General
Meeting. The Report of the Directors and the Audited Accounts for the year
ended 31st March 1995 have been with you for some time now and therefore I
seek your permission to treat them as read.
YEAR IN REVIEW
The year ending March 1995 has proved to be the best in your Company's
history both in terms of physical and financial performance. The Company
crushed 6.30 lakhs metric tonnes of cone during the year under review which
is the largest quantity handled by your Company since commissioning in
1989-90. This also registered nearly 200% increase over last year's
crushing figure of 2.11 Lakh metric tonnes. The total income increased by
177% and reached Rs. 6424 Lakhs as against Rs. 2319 lakhs for the year
1993-94. Profit after tax has reached a record figure of Rs. 648 lakhs
registering an increase of 214% over previous year's profit of Rs. 207
Lakhs.
This spectacular achievement is the result of your Company s sustained cane
development efforts coupled with a favourable monsoon and the efficient
management of resources by the dedicated team of your employees.
DIVIDEND
I believe that shareholder value is a combined function of growth and
profitability. The year under review being a milestone year of performance,
your Directors have recommended a handsome dividend of 25%, subject to your
approval as against 20% in 1993-94.
INDUSTRY POSITION
India has emerged as one of the largest producers of Sugar in the world
accounting for 12.4% of world's total Sugar production. However, we
continue to have a very low per capita consumption of sugar at 13 kgs. per
year against the average world per capita consumption of 23 kgs. per year.
It is paradoxical that a country which has emerged as the largest producer
of Sugar has a law per capita intake and suffer at certain times due to
scarcity of sugar.
The managements of the individual Companies in the industry, have
therefore, to monitor their operations very carefully while the Government
also has a special responsibility in this regard. Any adhoc policy decision
relating to the sugar industry will cause considerable harm to the
country's interest in view of the magnitude of the industry. A surplus or
shortage situation in the availability of sugar should be handled very
delicately by export or import of sugar at the best possible price and also
at the opportune time. The Government should involve the industry in
planning for the necessary export or import of sugar. In my view, the
private sector is better equipped to handle the export and import of sugar
by optimum management of resources.
I need hardly point out here that the developments in the 1993-94 and 1994-
95 seasons have come about in an entirely unexpected manner. The situation
now is in strong contrast with the conditions noticed in the second quarter
of 1994 when price for free sugar increased in anticipation of a shortage
of sugar and due to delay in taking decisions for import. While the
shortage of sugar experienced in the fiscal year 1994-95 was overcome with
imports, the rebound in production to an all time peak of 145 Lakh metric
tonnes in the 1994-95 season from 98.30 Lakh metric tonnes in the 1993-94
has enabled the country to completely dispense with the imports and also
effect large exports. The Government has understood the need for enabling
larger soles by sugar mills in regions like ours to sell sugar in remotely
located centres by granting a rebate in railway freight charges. Exports
also have been permitted in the required quantities in the light of
performance by the industry. With internal sugar consumption also
improving, the record output is coming in handy. The opportunity for
building-up buffer stocks should also be utilised. I am sure, with all
these new developments, the sugar industry will be able to achieve
reasonable profit ability and meet also the requirements of domestic
consumers in full measure. The prospects for the 1995-96 season also are
promising. You will appreciate, therefore, the importance of timely
decisions regarding import and export.
The industry is unnecessarily bearing an avoidable burden in the form of
Levy Sugar and this cannot continue for a long time. The industry has to
become competitive in the truest economic sense and has to be enabled to
compete with international giants in the sugar industry. This can be
achieved only by scrapping the levy sale and allowing the market to decide
the price. Here, I would hasten to add that, keeping in view the dispersal
of sugarcane production and the location of sugar factories, de-licensing
of
setting up new factories would affect the sugarcane producers and therefore
the licensing of new sugar capacity by Central Government should continue
for some more time. In fact, any step towards de-licensing will have a far
reaching negative impact on the stability and productivity of the sugar
industry. Instead of solving problems, it will open up a Pandora's Box of
bottlenecks, problems and conflicts. The industry and the country will be
better off if the present sugar licensing policy continues.
PREPARING FOR THE FUTURE
Your company has been taking efforts to strengthen itself to meet the
impact of the cyclical nature of sugar industry by economically exploiting
the by-products, namely, molasses and bagasse. We have already set-up a
Distillery with a capacity of 30 KLPD Industrial Alcohol in the existing
complex in Dharani Nagar, Vasudevanallur, Nellai Kattabomman District. I
have pleasure in informing you that this Distillery has been recently
commissioned successfully.
Our project for executing a 2500 TCD Sugar Mill at Polur, Tiruvannamalai
Sambuvarayar District alongwith a 15 MW Co-generation Power Unit has been
progressing as per schedule and, subject to unforeseen circumstances, this
should become operational by end of this year. This planning will be
facilitating the achievement of significant economies, besides, effective
utilisation of by-products. The project cost on this expansion involving a
capital outlay of Rs. 7710 Lakhs is being financed partly by Term Loan from
ICICI, SCICI and IREDA to the extent of Rs. 5000 Lakhs and an
equity/internal accruals of Rs. 2710 Lakhs. The Fourth Unit at Bhadrak,
Orissa is also taking shape well and commercial production is expected in
1996-97 season.
The total acreage under sugarcane and the quality of the standing crop in
all our factory command areas are extremely good and we hope to crush more
than 13.00 Lakh metric tonnes during the coming season. Better capacity
utilisation and captive utilisation of molasses and bagasse in our
Distillery and Co-generation Unit will help your Company to achieve still
better results for the period ending March '96.
You, the Shareholders, have been our great source of strength all these
years and we are committed to maximise the value of your investment. Our
continuing aim is to ensure that this objective is achieved by sustained
growth and planned expansion and diversification. Our existing units and
the new projects will enable us to become one of the leading Integrated
sugar companies in India. We are planning to raise additional equity
through a Public issue shortly and we seek your cooperation to make it a
big success.
NATION - AT CROSS ROADS
We are now at a crucial stage in our nation's life. India is currently
facing severe political, economic and social challenges. But, looking of
India's past, I am hopeful that we shall meet these challenges
successfully with the required will and determination.
During the Pre-Independence and the period immediately following the
Independence, we were a nation of well defined goals and clear vision. We
had a definite direction of development and growth. We had a philosophy
of social upliftment and human values. At present, we appear to have last
all these. It is so depressing to note that we do not seem to look at
the long term future of our country. Most of the programmes, plans, and
activities, are of a short term nature and most of the time they are
politically motivated. I am also afraid that the intelligenzia of India
has taken a detached view of society and they are not playing the
dynamic role which is expected of them in shaping and formulating the
character of India. Besides promoting industrialisation and development, we
need to make a concerted attempt to build the character of our nation. A
nation without character will eventually destroy itself. Politics without
commitment to the nation's welfare will further accelerate the path of
degradation.
At Dharani, we are committed to do our share for character building and
social development. And, as a taken of our efforts, your company has been
supporting many educational causes to benefit the cone growers,
employees and the general public in rural areas. The Group today manages
three Matriculation Schools, two Industrial Training Institutes and an Arts
and Science College. A lot more has to be done, and with your continued
support, we hope to do more in the near future.
ACKNOWLEDGEMENT
I take this opportunity to thank every member of Dharani Family for having
displayed vision, creativity and rare ability to achieve higher
productivity in every sphere. We are implementing many new projects and we
would not have achieved the current status without the dedicated and
committed service of our people. I express my heartfelt appreciation to
you, the shareholders far the support and encouragement and look forward to
your continued support for our efforts in the future.
We have received the needed assistance and active support from the All
India Financial Institutions, namely, ICICI, SCICI, IDBI, IFCI, IREDA &
IRBI in all our ventures and we would like to record our sincere
appreciation far their help and guidance. Our bankers Indian Bank, State
Bank of India and Federal Bank are always helpful to us and we thank them
far their assistance. We are also thankful to the Government of India and
the Governments of TamilNadu and Orissa far their encouragement and
support.
I and the fellow Members of the Board thank the sugarcane growers who are
the foundation of our factories. Their enthusiasm and co-operation have
been valuable far our continued success and I assure them of our commitment
towards their welfare. Once again I thank you all.
Dr. PALANI G. PERIASAMY
Chairman
Place : Madras
Date : 21th September, 1995