Narendra MurkumbiShree Renuka Sugars Ltd.

1st September, 2009

The Production Cycle

Impact on Industry

Impact on Farmers

Policy Changes

Industry’s Response

An agenda for the future

2

1) Supply – Demand Mismatch

2) Irregular Monsoon

3) Sugar – Cane Economics

4) Gur !

4

10.00

12.00

14.00

16.00

18.00

20.00

22.00

24.00

26.00

28.00

30.00

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09*

Production Consumption

52009 2008

6

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

600

800

1000

1200

1400

1600

1800

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09

Rs/MT

S M P Maharashtra Price of Cane Average Sugar Price

Cane Prices Sugar Prices

7

-

5,000

10,000

15,000

20,000

25,000

30,000

2005-06 2006-07 2008-09

Cane Arrears (As on 28th April, 2008)

Cane Arrears(As on 28-Apr-08)Source: Hindu Business Line

Rs. mln

8

Gur is used both as an alternative sweetener and as feedstock for illicit liquor production

Gur producers have low inventory and hence respond faster to changes in cane availability by tweaking the cane price

Gur-making is inherently an inefficient process with upto 30% of the juice not extracted by the rudimentary crushers employed

9

Doubling of overheads

Increased competition for

cane, hence low unit margins

Lower recovery of sugar per

ton cane due to shorter crop

cycle and weather stress

Decrease in production of by-

products viz. bagasse and

molasses11

StateCapacity Utilisation

Andhra Pradesh 52%

Gujarat 73%

Maharashtra 54%

Tamilnadu 78%

Uttar Pradesh 41%

Karnataka 63%

Others 50%

All India 53%

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2006-07 2007-08 2008-09 2009-10

Farm Incomes Cost of Cultivation

13*Estimates for 2009-10 Source: SRSL Research

Rs/Ha

Advance License Scheme: Imported raw sugar allowed to be refined and sold in the domestic market with an obligation to re-export in the next 3 years

Duty Free Raw Sugar Imports allowed without export obligation until 31st July ;

1 mln mt of White Sugar allowed to be imported by the Public Sector Trading Cos.

Duty Free Raw Sugar Imports extended till March 2010;

1 mln mt of White Sugar imports allowed till November, 2009 under Open General License

Production Estimates:18 – 20 mmt

Production Estimates:16 - 17 mmt

Production Estimate:15 mmt

15

(Feb, 2009)

(July, 2009)

(April, 2009)

Squeeze the inventory pipeline by bringing strict stock controls on traders backed by stringent laws

Restrictions on industrial users of sugar for inventory beyond 15 days consumption

Restriction on storage of sugar at ports with intention to accelerate flow of imported sugar to the market

16

18

Oct 08 – Sep 09 Oct 09 – Sep 10

Opening Stock - 1.4

Arrivals 2.4

Purchase Estimates 2.6

Refining 1.0 6.0

Balance 1.4 - 2.0 Source: SRSL Research Figures in mln mt

19

Oct-Mar Mar-Sep Totals

Uttar Pradesh 1.50 0.50 2.00

South India 0.60 0.90 1.50

Shree Renuka 0.55 0.85 1.40

Eid Parry 0.15 0.25 0.40

Maharashtra 0.70 0.00 0.70

Total India 3.50 2.50 6.00

Source: SRSL Research Figures in mln mt

The domestic sugar industry has supported the govt’s aim to supply cheap sugar to families classified as “below poverty line”

Industry expects a fairer price for this sugar based on expected cost of production

The price of the balance sugar, it is hoped, will be allowed to reflect market forces

20

Complete decontrol of sales and stocks

Cane price based on sharing of revenue

National Ethanol Programme

Access to the national power grid for

cogeneration under the open-access system

21

Acknowledgements

The Team at Shree Renuka

Mr. G K Sood

Pratik Vora

Sachin Wadhwa