Key Highlights

During FY'14, sugar business reported a loss of about Rs 122 crore, as cane crushing during the SY 2012-13 ended Aug 2013, was lower. The company crushed about 45 lac tons of cane, as compared to about 65 lac tons in previous season. Lower crushing was primarily due to lower rainfall in Tamil Nadu and Andhra Pradesh region resulting in lower cane production.

However the company was able to improve upon the recovery rate which stood at 9.8% during FY'14.

For FY'15, management expects cane crushing to be up by at least about 14-15% in volume terms, given the current scenario and ample rainfall in Andhra Pradesh region.

The company is carrying an inventory of about 3, 30,000 tons of sugar valued at about Rs 26 per kg.

As per the management, the prices of sugar have started to increase from April'14 onwards and are up by about Rs 2 per kg on YoY basis. Management expects the prices to remain stable around this level till July'14 and from there on depending upon the demand and how new season starts, prices will move. However management doesn't expect the prices to come down and things should be better in H2 FY'15.

Management reiterated that the sugar business needs to be seen on an yearly basis and not on quarterly basis because of accounting practices of the sugar industry.

The 600Tons of Refinery plant at Kakinada, which was not operational due to non availability of gas, will finally, start operations from July'14 onwards. The company was able to fix a coal based Boiler for the operations.

There was a change in depreciation policy by the company in FY'14, which has resulted in lower depreciation of about Rs 29 crore in FY'14.

Both Bio Products and Nutraceuticals business are expected to do well in FY'15. For Nutraceuticals, the company is in constant efforts of reaching near to the retailers and customers as possible because that's where the maximum margin is. Most of the business in Nutraceuticals comes from international operations and US subsidiaries is working closely to reach to the retailers directly for better margins. Management expects margins to improve in this segment in next couple of years and is hopeful that this segment will grow significantly in next 3 to 4 years.

Overall management is cautiously optimistic about FY'15 and is more in a positive frame of mind to do business, given the steady government.