E.I.D-Parry has mitigated the risks in sugar business by expanding outside Tamil Nadu to other Southern States with high sugar recoveries and clear policies on sugarcane pricing, said the company’s Executive Chairman A Vellayan.

At the Murugappa group company’s annual general meeting, he said shareholders will see the benefit of E.I.D-Parry’s spread of 10 sugar mills across Tamil Nadu, Andhra Pradesh and Karnataka.

Sugar yields range around 11.50 - 12.50 per cent a tonne of sugarcane in Karnataka, well over the recoveries in Tamil Nadu. Also in Karnataka and Andhra Pradesh, sugarcane prices are linked to sugar prices. There are also no restrictions on production and supply of ethanol or sale of cogeneration power, he said.

Things would have been tough for the company if it had remained in Tamil Nadu alone. However, in the next couple of years, it is inevitable that the State too follow a national-level policy.

The company has achieved this widespread presence through acquisitions and mergers without raising capital, he said, explaining the reasons for the finance costs jumping by ₹60 crore to ₹196 crore in 2013-14. Its debt will come down in the next couple of years, he assured shareholders.

The company’s share capital is a modest ₹17.85 crore. Given its asset base, this represents huge value to shareholders.

The company has also diversified into nutraceuticals business, nutritional supplements based on antioxidants such as spirulina products, astaxanthin and lycopene. This, along with its bioproducts range, is a sunrise sector and is expected to expand in the next few years. This will further reduce any risks arising from the sugar commodity business, which is cyclical, he said.

Q1 results During the quarter ended June 30, 2014, the company reported a net loss of ₹26.16 crore on an income of ₹645.59 crore. In the comparable quarter in the previous year, it reported a net loss of ₹72.31 crore on an income of ₹404.73 crore.

Related Topics
comment COMMENT NOW