Simbhaoli Sugars LimitedSimbhaoli Sugars LimitedSimbhaoli Sugars LimitedSimbhaoli Sugars LimitedIntegrated Sugar ComplexesIntegrated Sugar Complexes

Corporate and Sector AnalysisMUMBAI  INDIA 

JANUARY  28, 2010

Presentation contentsPresentation contentsPresentation contentsPresentation contents• Company overviewp y

– Business overview– Financial overview

• Q 1 FY10 update

– Future growth Plans• Indian sugar scenario• Indian sugar scenario

– Govt regulations– Sugar balancingSugar balancing– Short term outlook

• Global sugar scenariog– Demand and supply– Price trends

Corporate AnnouncementGREENFIELD 1000 TONES PER DAY WHITE SUGAR REFINERY AT 

Corporate Announcement

KANDLA, GUJRAT, WEST COAST, INDIACOMMENCEMENT 2011

Sugar/ Refining

Branding

Sugar and

Potable alcohol

Agri development

BUSINESS  SSLOVERVIEW SSLPort based refining

Alcohol/Ethanol

Cogeneration ofImport/ Exports Cogeneration of power

Import/ Exports

TheThe FacilitiesFacilities// CapacitiesCapacitiesThe The FacilitiesFacilities/ / CapacitiesCapacities

Si bh li B ij th Chil iFacilities 

Simbhaoli (Western 

UP) 

Brijnathpur (Western 

UP) 

Chilwaria (Eastern UP) 

Total Brijnathpur

Simbhaoli

Sugar from Cane (TCD) 

9500 4000 6600 20100

Sugar from 850 550 600 2000

Chilwaria

gRaw (TPD) 

850 550 600 2000

Alcohol/ ethanol (KLD)

90 60 60 210ethanol (KLD) 

Surplus Power (MWH)

18 16 34

Organic Manure  (000’mt) 

17 9 9 35

• SSL integrated complexes19 IMFL bottling tie ups in 11states apart from UP

Company Overview (1/2)Company Overview (1/2)Sugar and Sugarcane

l h d k d b f l• Complete sugarcane processor with de‐risked business profile– white sugar from cane– raw refining from caneraw refining from cane– Setting up a port based 1000 TPD refinery

• Second largest sugar refining capabilities in India with 2000 TPDg g g pcapacity

• Year round production of sugar

• Strong Agri linkages with over 130,000 sugarcane farmers

• Large institutional customer base, multiple brands in sugar

• First Sugar Co in India to receive all international qualitycertifications (ISO 9000, 14001, HACCP). A Star Export House

Company Overview (2/2)Company Overview (2/2)Company Overview (2/2)Company Overview (2/2)By productsBy products

• Present in all segments of alcohol

• Offering multiple brands in potable spirits in domestic (pan• Offering multiple brands in potable spirits in domestic (pan India) as well as international markets

• Export of surplus power to State gridExport of surplus power to State grid

• Year round power generation capacity

• Other by products: CO2, methane gas, manureOther by products: CO2, methane gas, manure

• Technology edge with an independent research and consultancy subsidiaryy y

• International trading business‐ independent subsidiary

Simbhaoli Sugars: Value ChainSimbhaoli Sugars: Value ChainSugar Raw  Value added exports

CaneRaw sugar

pof EC grade sugarsImport of raw sugar for refining for domestic/ export marketPort BasedExport of ENA and IMFL products

Port Based standalone  refinery*

Potable alcohol (12 brands)Industrial alcoholENA/ RSCarbon dioxide

Technology Vertical

Integrated sugar complexes

International MarketAlcohol/Ethanol

(Molasses)

Ca bo d o de

(Molasses)

Bio-manure(Press mud)

Supplying white and speciality sugars including

icing, breakfast, cubes, candy, pharma sugarsBy products Sugar

Power co-generation with

CDM benefits (Bagasse)

( )

Local Market

Retail Outlets Trade BuyersInstitutional

(Bagasse)

Clients include Coca Trust brand has

Consumers

Clients include Coca-Cola, ITC, Heinz, PepsiCo,& GlaxoSmithKline

Trust brand has significant share of North Indian branded sugar

market*project under implementation

Simbhaoli today hasSimbhaoli today has• capabilities to carry out off‐ season raw refining with minimum 

conversion losses (Already processed 63,000 mt raw in 2009/10 season. 260,000 mt in 2009 off crop) 

• effective cane development for increasing sugarcane availability and improving recoveriesimproving recoveries 

• value addition through innovation, branding and quality improvementimprovement

• utilisation of equipment and power generation round the year

Business plan (09‐10)

Off‐ season Season plan Total Status

Raw processing (MT) 160,000 200,000 360,000 Processed 80,000 mtp g ( )

Cane sugar (MT) Nil 170,000 160,000 During current season

Power generation (MWH)

11,000 90,000 101,000 Round the year generation, ith b d l(MWH) with bagasse and coal

Alcohol (KLD) 11,340 32,130 43,470 Tendering the ethanol to OMCs

Technology EdgeTechnology EdgeTechnology EdgeTechnology Edge• Technology business through company named gy g p y

Integrated Casetech Consultants Pvt Ltd

• Providing following services at national and g ginternational levels:– Technology UpgradationTechnology Upgradation

– Energy Management

– Agri DevelopmentAgri Development

– Maintenance and Support

• Working on a large number of projects• Working on a large number of projects

• Achieved a top line of Rs 20 mn in the current fiscal

• Shall emerge as a ‘technology hub’ in the sugar space

Raw Refining OperationsRaw Refining Operations• Season and off season raw refining capabilities with technical expertise

• Imported/contracted 2.4 lakh mt raw for off crop period (already refined0.08 mmt)

• Plan to refine 3.6 to 4 lakh mt in 2009‐10 season in addition to sugar cane

• Procured raw at an average price of US$ 525 pmt

Simbhaoli Monthly Sugar Production Plan (cane and raw)

40,000

50,000

20,000

30,000

40,000

in M

T

0

10,000

JULY AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEPJULY AUG  SEPT OCT  NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP

July 2009 to Sept 2010Off season Off season

Typical cost sheet for Processing Raw and Cane Typical cost sheet for Processing Raw and Cane (per (per mtmt of white sugar)of white sugar)

Particulars  Raw (Rs)  Cane (Rs)

Industrial Recovery   96.50% 9.25%

cost of raw /cane per ton 32200 2500

33368 27027Cost of Raw Material 33368 27027

Internal Transportation Cost 1700 1000

Processing Cost 2000 3000Processing Cost 2000 3000

Factory Cost and Overheads  600 2100

Total 37668 32727Total

By products credit 115 2900

Net Cost 37553 29827E ti t d lli i 42000 37200Estimated selling price 42000 37200EBIDTA Margins 4447 7373EBIDTA %  10.59% 19.8

SSL has purchased sugar at average rate of Rs 24,150 per mt so far and achieved An EBIDTA of over  20% on sugar operations for Q1 FY10

Agriculture ManagementAgriculture Management• Pioneer in various cane development area

– Propagating high yield high sugar variety COJ 238, 239, 118– Making available land preparation equipment, plants protection devices– Intensive and integrated pest management system– Demonstration farming, field trials and continuous training to farmers

• Mechanisation of cane farming

• Encouraging farmers for multi‐cropping with sugarcane– Acting as facilitators for entire crop cycle for multiple crops

– 2,000 hectares area in 2009‐10 (plan 5,000 hectares in three years)

Industrial yield of Simbhaoli plant vs Industry AverageIndustrial yield of Simbhaoli plant vs Industry Average

10

11

%

8

9

9

10

Rec

over

y

8 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

SSL Industry average

Brand BuildingBrand BuildingggSugar Alcohol

• In consumer and institutional packs

• Branded sugars under brand Trust.

• SSL spirits is producing brands inwhiskey, rum, vodka segmentsg

• Domestic sachets and cubes segmentgrowing over 30% annually

• New markets in different geographical

• Increasing its presence within India andoverseas

• Brands‐ Hunters/ Simbhaoli XXX• New markets in different geographicalareas

• Tie up with modern retail chains

C d k f b d d

Brands Hunters/ Simbhaoli XXX(Rum), Seven Knights (Whisky), SevenKnights Lemon flavor (Dry Gin), Xing(Vodka) and Ice Blue Tango (Pre mixed)

• Created export market for brandedsugars. Africa, middle east and Canadaare preferred destinations

( ) g ( )

• Developed new brands after extensiveresearch on product, packaging andconsumer preferences

• Constitute 8% of total segment sales(CAGR 15%). Target is to increase to25%

p

• Achieved 1 mn cases mark in 2008‐09.Target for 2009‐10 at 2 mn cases

Only sugar company nurturing and investing in brand building

INDIAN SUGARSUGAR INDUSTRY

Sugar flows from the surplus to deficit states. Most of the imports from Gujarat, Tamil Nadu and West Bengal

Indian Sugar BalancingIndian Sugar BalancingStructural deficit: change in sugar cyclesStructural deficit: change in sugar cyclesStructural deficit: change in sugar cycles Structural deficit: change in sugar cycles 

(in mmt white values)

Particulars 2009‐10 2010‐11 2011‐12 2012‐13Particulars 2009‐10 2010‐11 2011‐12 2012‐13Opening Balance  2.30  1.32  2.66  5.34 Production‐Sugar Cane 14 50 20 00 25 00 27 00Sugar Cane  14.50  20.00  25.00  27.00 

Imports‐Raw Sugar  5.75  4.00  3.00  ‐‐White Sugar 2 00 1 00 ‐ ‐White Sugar  2.00  1.00 Total Imports* 7.52  4.84  2.88  ‐Total Sugar Available  24.32  26.16  30.54  32.88 

Demand (Domestic) 23 00 23 50 24 00 24 50Demand (Domestic) 23.00  23.50  24.00  24.50 Export  ‐ ‐ 1.20  2.00 Closing Stock 1.32  2.66  5.34  6.38 Day’s requirement 21 days 34 days 67 days 78 days

SSL estimates

• In the years 2009 to 2012 anticipated import of 15 16 mmt of raw/white sugar

Day s requirement  21 days 34 days 67 days 78 days*Including 96% of Raw sugar  after processing

• In the years 2009 to 2012, anticipated import  of 15‐16 mmt of raw/white sugar

• Indian demand 19 kg/pa per capita still lower to world average

• Exports after 2009‐10 signify the pending export obligations deferred upto Mar 2011

Sugarcane availability Sugarcane availability 

240

280

320

360M

T)

120

160

200

240

Prod

uctio

n (M

0

40

80

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Concerns in cane availability Measures

Andhra Pradesh Karnataka Maharashtra Uttar Pradesh

Shift in the cropping pattern Sustained agri management initiatives

Higher margin from food crops Higher cane prices

Stagnant yield New varieties for improving per hectare yield

Water availability More irrigated area under cane cultivation

Cost of farming Multi cropping to increase farm earnings/ hedge risksCost of farming Multi cropping to increase farm earnings/ hedge risks 

Sugar Demand elasticity (1/2)Sugar Demand elasticity (1/2)Sugar Demand elasticity (1/2)Sugar Demand elasticity (1/2)Factors directing higher growth in Indian sugar demand byg g g g y3.75% p a:

– Population shift rural to urban (c.3.3% p.a. in 2007‐08 to 11‐12 )– Increase in population: Average 2% p.a. up to 2006‐07 and 1.5% pa

thereafter– Shift from direct to indirect consumptionp– Shift of consumption from alternate sweeteners to sugar

By 2011‐12, total sweetener consumption estimated at 29.9

mmt (27.8 kg per capita); sugar consumption at 24.9 mmt

(23.9 kg per capita)

Domestic Per capita consumption of alternate sweeteners

came down from 12.5 kg in 1980‐81 to 4.5 kg in 2008‐09g g

Price movementPrice movement

700

80040004500

Correlation between London White, Delhi M 30 and NY 11

300

400

500

600

700

20002500300035004000

USD

/MTRs

/Qtl

0

100

200

300

050010001500

TR

Delhi M 30  L 5 White NY 11

Domestic prices, in view of large imports are in sync with global prices. They areat the levels of over US$ 750 (FPB) for white sugar which is 29 years highNumber of GOI initiatives to reduce prices volatility . Critical is demand andp ysupply mismatch. May cause further rally in the pricesIndian demand and supply mismatch is similar to other countries vizPakistan, Indonesia, Iran, China and Russia

How much high is the high, is anybody’s guessHow much high is the high, is anybody’s guess

Changing sugarcane pricing mechanism Changing sugarcane pricing mechanism 

GOI has announced (Oct 22, 09) the change in cane price fixation system

• Fair and remunerative prices replaced• Fair and remunerative prices replaced

• Difference of FRP and SAP to be borne by the miller

• UP millers are paying yet higher price to the farmers based upon economic• UP millers are paying yet higher price to the farmers based upon economic 

viability: higher cane cultivation and paving the way for negotiated price 

mechanism. (Cane price for the season 2009‐10 in the range of Rs 205 to ( p g

245 per qtl)

• Levy sugar prices to be calculated based upon FRP. Expected to be Rs 19 per 

kg for 2009/10

• In UP, difference between SAP and FRP is about Rs 300 pmt. 

This will result in level playing field in sugar costs and substantial gains for 

non SMP states in the long run

Combined cane and refining model will now become the most viable business model in the state of UP

Concerns in Indian Sugar IndustryConcerns in Indian Sugar IndustryConcerns in Indian Sugar IndustryConcerns in Indian Sugar Industry

• Import of white is highly price sensitive Availability is• Import of white is highly price sensitive. Availability is limited globally

• Ensuring long term supply of sugar at correct prices will beEnsuring long term supply of sugar at correct prices will be difficult for GOI

• Raw sugar program curtailment in UPRaw sugar program curtailment in UP

• High domestic freights/ port storage facilities

• Emergence of ethanol on consistent/ sustainable basis• Emergence of ethanol on consistent/ sustainable basis

• Raw processing cost/ loss in conversion in sulphitationplantsplants

• Industrial and farm yields of sugar/cane

• Lower availability of capacity for off season refinery• Lower availability of capacity for off season refinery

ParticularsParticulars 0909‐‐1010 0808‐‐0909 0707‐‐0808 0606‐‐0707 ChangeChange

WORLD

EstimatesEstimates ProvisionalProvisional mmtmmt in %in %

Production 159.9 153.0 168.6 166.0 6.9 0.0WORLD SUGAR 

S

Consumption 167.1 164.3 162.2 155.0 2.8 0.0

Surplus / (Deficit) (7.2) (11.3) 6.4 11.0

INDUSTRYIN MMT

Import demand 52.1 48.2 46.0 46.1 3.9 0.1

Export availability 52.1 48.3 46.2 46.1 3.8 0.1

End Stocks 60.7 70.5 67.9 7.3 0.1

Stocks/ Consumption ratio in% 32.0 37.0 43.5 43.8

53.553.5

Global sugar trade is about 34% of sugar production. Falling stockGlobal sugar trade is about 34% of sugar production. Falling stock to use ratio (lowest in last ten years) implies higher sugar prices and high volatility. 

International Raw Sugar Prices Trend International Raw Sugar Prices Trend (cents per pound)(cents per pound)(cents per pound)(cents per pound)

60

70 Nov 1974Price remainedabove 30 cents10 months

50

10 months, peaked above 50 cents Ready to touch 

30 cents and 

Nov 1980Price remainedabove 30 cents7 months

30

40 conditionssimilar to 1974/ 1980 persist

7 months, peaked above 46 cents

20

0

10

71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Jan‐7

Jan‐7

Jan‐7

Jan‐7

Jan‐7

Jan‐7

Jan‐7

Jan‐7

Jan‐7

Jan‐8

Jan‐8

Jan‐8

Jan‐8

Jan‐8

Jan‐8

Jan‐8

Jan‐8

Jan‐8

Jan‐8

Jan‐9

Jan‐9

Jan‐9

Jan‐9

Jan‐9

Jan‐9

Jan‐9

Jan‐9

Jan‐9

Jan‐9

Jan‐0

Jan‐0

Jan‐0

Jan‐0

Jan‐0

Jan‐0

Jan‐0

Jan‐0

Jan‐0

Jan‐0

Jan‐

NY 11 Raw

Only two times in past 40 years prices touched 30 cents/pound and each time they gone up way above that level for a period of 7/8 month. However, in real terms, price increase in the past has been much higher giving adjustment of inflation over the period

World OutlookWorld Outlook• World consumption is projected to grow at 1.7% in 09/10, against CAGR of

over 2%

• Carry over stocks at 53.5 mmt are the lowest in recent past

• Consistent postponement of demand for high prices, means bunching ofpurchasepurchase

• This may push the world prices to extra ordinary levels (like in theyear1974, 60 cents per pound and 1980, 46 cents)

• Consumption increase in Indian subcontinent, China and Africa

• The ocean freight costs are rising means higher CIF costs

• China, per capita consumption at 14 kg (2008‐09) is showing an increase

• Rising crude price will create fresh interest in ethanol. At US$ 79 abarrel ethanol becomes economically viable in most of the countriesbarrel, ethanol becomes economically viable in most of the countries

With given scenario, world is getting into structural shortages of sugar

gg

g , g g g gfor medium term period, i.e. 3 to 4 years. This sugar cycle may be thebiggest

Gross turnover Rs 393 Cr , up by 102%

Net sales at Rs 325 Cr up by 162%

PBT Rs 51 Cr, turned positive: cash profit Rs 61 CrPBT Rs 51 Cr, turned positive: cash profit Rs 61 Cr

Refining of 80,000 mt of raw sugar 

A li i f R 32 800

FINANCIALFINANCIAL

Average realisation of sugar Rs 32,800 per mt

Closing stock of white sugar 94,400 mtFINANCIAL FINANCIAL OVERVIEWOVERVIEW(QTR(QTR DECDEC

Sugar sales at 83,800 mt

Systematic plans to reduce leverage by deploying (QTR (QTR DECDEC2009)2009)

y p g y p y g

o Most of the cash generation

o Long term fund raising for the purposeo Long term fund raising for the purpose

Reduced FCCB liability by 94% by buying back 

USD 31.11 mn FCCBs at 53.7% discount

Financial results for Financial results for quarter ended Dec 09quarter ended Dec 09 (Rs in mn)quarter ended Dec 09 quarter ended Dec 09  (Rs in mn)

Particulars  Quarter ended 

Dec, 09  Dec , 08  %  Change 

Gross Sales/ Income 3764.0     1947.4 ‐/Net Sales / Income 3083.0 1239.9 149Other operating Income 202.7 5.9 ‐Exchange gain 91.9 ‐ ‐Total Income   3377.6 1247.4 163Manufacturing Exp. 2180.8 818.7 130Staff Cost 97.1 81.4 19Other Expenditure 330.8 233.5 42Interest 157.2 129.6 21Depreciation 97.0 88.5 10Profit / (Loss) Before Tax 514.7 (104.3) ‐Cash Profit / (Loss) 611.7 (15.9) ‐Tax Expense 76.9 14.3 ‐Profit After tax 437.8 (118.6) ‐Avg realisation‐ Sugar (Rs. PMT) 32800 17620 86

Segment wise resultsSegment wise results (Rs in mn)(Rs in mn)Segment wise results Segment wise results  (Rs in mn)(Rs in mn)

Segment Total income EBIDTA EBIDTA %Segment Total income EBIDTA EBIDTA %

Sugar 3289.6 694.2 21.7

P 491 1 114 9 23 4Power 491.1 114.9 23.4

Alcohol 304.1 (24.1) (7.9)

Important• The benefits under UP sugar industry incentive scheme 

have not been taken into accounth l i i id d 3 k• The levy price is considered at Rs 13 per kg

• White sugar is valued at cost of production

Concerns and management responseConcerns and management responseConcerns and management response Concerns and management response • Low capacity utilisation: The sugarcane processing at 70% of capacity on 

account of lower cane availability in entire area However it is more thanaccount of lower cane availability in entire area. However, it is more than supplemented by raw processing

• Restriction on raw processing in UP: Company transferred most of the raw sugar to the factory before the rail movement restriction. So far regular in processing.

• Rising cane and raw sugar prices: to an extent mitigated by advance purchaseRising cane and raw sugar prices: to an extent mitigated by advance purchase of raw. Most of the cane is bought from sugar mills proximity resulting in lower freight. High cane price in this year will help in increased cane plantation in futurefuture.

• Highly leveraged: Reduction in the long term debt by Rs 23 Cr. Present outstanding Rs 285 cr. Plan to pay nearly half of bank loans in next 12 months

• High interest costs: shall be reduced with lower debt position. 

• Higher closing stocks: An advantage because of anticipated price rise

GOI t l i i N f th i l ft i ill h t b• GOI controls on price rise: No further avenue is left as price will have to be determined by demand and supply forces

Shareholding pattern Shareholding pattern (Dec 31, 2009)(Dec 31, 2009)g pg p ( , )( , )

CategoryCategory PercentagePercentage

A. Indian Promoters 44.0Options pending allotmentOptions pending allotment

A. Indian Promoters 44.0

Sub‐total (A)  44.0

B. Non‐ Promoters 

ParticularsParticulars No of No of underlying underlying shares (mn)shares (mn)

% of % of expanded expanded capitalcapital

Mutual Funds, FIIs and Banks  5.1

Private Corporate Bodies  14.9

Indian Public (individuals)  34.2

ESOPs 0.80 3.27

FCCBs 0.55 2.22

Total 1.35 5.49NRIs / OCBs  0.5

Any other/ clearing member 1.3

S b t t l (B) 56 0

1.35 5.49

Sub‐total (B)  56.0

Grand Total (A+B)  100

Issued equity shares 23 2 mn of Rs 10 eachIssued equity shares 23.2 mn of Rs 10 each

Paid up share capital Rs 232 mn (USD 4.5 mn)

Aggregate of options pending for conversion: 1.35 mn

Expanded capital base: 24.54 mn shares (Rs 245 mn)

SETTING UP ASETTING UP A 1000 TPD PORT BASEDPORT BASED SUGAR REFINERYREFINERY  EXPANDABLE TO 1200 TPDTO 1200 TPD

Project Rationale Project Rationale jj• Likely Indian sugar deficit in future on regular basis

• Current year gap (7 mmt) to be fulfilled by import of raw/ white, out of which 5 mmt likely to be raw

N t l ti t d t 5 t I f t 3 t f 5• Next year, supply gap estimated at 5 mmt. In future 3 out of 5 years are likely to be domestic sugar shortfalls

• Indian sub continental and neighboring countries are having• Indian sub continental and neighboring countries are having sugar deficit

• Demand is increasing on regular basisg g

• Distance between raw processing facilities and port will determine the cost/ earnings

• The facility can be a tolling destination because of proximity to deficit areas

• In surplus years, domestic raws can be used for value addition

• Local Lignite and imported coal is available as fuel

Why Simbhaoli SugarsWhy Simbhaoli Sugars• Technology advantageTechnology advantage

– Technology available in house– Least conversion costs

C i l b l 3 5%– Conversion losses below 3.5%– Most competitive production

• Marketing advantageg g– Already producing and selling 45 icumsa sugar in Northern India– Locational advantages: proximity to domestic deficit areas– International market– International market

Marketing arrangementMarketing arrangement• Product mix: large, medium and small grains

• Sale within the radius of 700 km

P t ti l k t G j t R j th MP H t• Potential markets: Gujarat, Rajasthan, MP, Haryana, exports

• Institutional: 50 to 60% of production

• Sale through distributers and agentsSale through distributers and agents

• Molasses, a premium product will be sold at premium

• Potential to generate surplus power

Our Valued Customer BaseOur Valued Customer Base

For further information please contact For further information please contact harmeet@simbhaolisugars.comharmeet@simbhaolisugars.com

+919911987419+919911987419

Certain statements in this presentation with words or phrases such as “is likely to”, “should”, etc., and similar expressions or variation of these expressions or those concerning our future prospects are 

forward looking statements. Actual results may differ materially from those suggested by the forward‐looking statements due to a number of risks or uncertainties associated with the expectations. These g f p

risks and uncertainties include, but are not limited to, our ability to successfully implement our strategy and changes in government policies. The company may, from time to time, make additional written and oral forward looking statements, including statements contained in the company’s filings with the stock exchanges and our reports to shareholders. The company does not undertake to update any forward‐

looking statements that may be made from time to time by or on behalf of the Company