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DBSILAR2019-20.Pdf Forward-looking statement In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements - written and oral - that we periodically make, contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in our assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind. We undertake no obligation to publicly update any forward- looking statements, whether as a result of new information, future events or otherwise. Contents 02 06 Corporate snapshot Financial highlights 08 20 The COVID-19 impact Managing Director’s overview and response 24 31 Our stakeholder value- Management discussion and creation model analysis 44 49 Notice Directors’ report 74 91 Corporate governance report Business responsibility report 101 156 Standalone financial Consolidated financial statements statements Green Balance At Dalmia Bharat Sugar, we believe that a balanced approach towards environmental preservation and economic priorities represents the foundation of our long-term sustainability. The result of this priority is that ‘green’ is integral to our strategic mindset. An investment in our revenue mix comprises a growing proportion of products considered environment- friendly; a growing investment in equipment minimises emissions and discharge; an investment in our people comprises an orientation towards holistic environment responsibility. What defines Dalmia Bharat Sugar… Ethos Pedigree Management Products Vision Dalmia Bharat Sugar The Company is The Company not only We want to be amongst enjoys a legacy of many spearheaded by produces sugar but also the top integrated decades. On the back Mr. Jai Hari Dalmia and processes byproducts players in the industry of a rich experience of Mr. Gautam Dalmia, who like bagasse and with a special impetus 25 years in the sugar are aided by a capable molasses to generate on generating the industry, the Company senior management. power and manufacture highest return on capital has emerged as one of ethanol and organic employed for our stake the major players in the manure. holders. Indian sugar sector. 2 | Dalmia Bharat Sugar and Industries Limited Manufacturing facilities Footprint Responsibility Listing The Company has a compliment of state-of-the-art Headquartered in Delhi, Dalmia Bharat Sugar The Company is listed integrated manufacturing facilities located in five the Company has its has been one of the on BSE and NSE with a different locations across the country to cut down manufacturing facilities most respected sugar market capitalisation of on logistics costs and improve the transit time to spread located in two manufacturers in the H396 crore as on 31st customers. The Company’s five manufacturing plants different states in the country on the back March, 2020. are as follows: country. From these of superior values, manufacturing facilities, environment-centricity Ramgarh Unit, Uttar Pradesh the Company extends and people-centricity, Nigohi Unit, Uttar Pradesh its footprint across the validated by the entire country with its Occupational Health Jawaharpur Unit, Uttar Pradesh sugar produce, the major and Safety Management Shri Dutta Sakhar Karkhana in Asurle Porle, markets being UP and (OHSAS), Environment Maharashtra Maharashtra. Management System Shri Ninaidevi Sakhar Karkhana in Karungali, (EMS), Bonsucro and Maharashtra Food, Safety and Quality (FSQ) certifications. Annual Report 2019-20 | 3 Our transformation since inception 1994 100 2,500 Revenues Installed capacity (H in crore) (TCD) 2020 2,172 35,500 Revenues Installed capacity (H in crore) (TCD) 4 | Dalmia Bharat Sugar and Industries Limited 1994 1 7,200 620 Number of Number of farmers Employees sugar plants associated with us 2020 5 1.5 lakh 2,300 Number of Number of farmers Employees sugar plants associated with us Annual Report 2019-20 | 5 How we have grown over the years (H crore) (H crore) 271 353 398 2308 2105 2172 FY18 FY19 FY20 FY18 FY19 FY20 Revenue EBITDA Aggregate sales increased by 3% to The Company’s EBITDA increased H2,172 crore in FY2019-20 due to from H271 crore in FY2018-19 to increasing demand and improved sales H398 crore in FY2019-20. footprint. (H crore) (%) 12 17 18 134 187 198 FY18 FY19 FY20 FY18 FY19 FY20 Net profit EBITDA margin The Company’s net profit in the year The Company reported a 156 bps under review increased by 6% to H198 increase in EBITDA margin in FY2019- crore. 20 through a superior product basket comprising value-added products and improved operating efficiency. 6 | Dalmia Bharat Sugar and Industries Limited (%) (x) (In lakh MT) 13 13 16 5.0 6.1 5.6 0.30 0.35 0.32 FY18 FY19 FY20 FY18 FY19 FY20 FY18 FY19 FY20 RoCE Debt-equity ratio Sugar production The Company made a prudent The Company’s gearing stood at 0.32 Sugar production in FY2019-20 investment in profitable niches and in FY2019-20 as the Company utilised decreased to 5.6 lakh MT on account of value-added products, strengthening surpluses to repay debt. sugar diversion to ethanol through the returns for shareholders. B Heavy route. (%) (in crore units) (in thousand kilolitres) 52 59 55 33 45 68 11.83 12.19 11.63 FY18 FY19 FY20 FY18 FY19 FY20 FY18 FY19 FY20 Recovery Power production Distillery production The Company’s sugar recovery was The Company’s power production The Company’s distillery production relatively lower at 11.63% due to reduced to 55 crore units due to no increased to 68 thousand kilolitres due diversion of sugar towards ethanol. off season co-gen operations in UP on to higher production capacities installed account of reduced UP power tariff. during the year. Annual Report 2019-20 | 7 Managing Director’s overview The fact that our EBITDA growth was sharper indicates the robustness of our business model and our preparedness in capitalising on improvements in sectorial realities. 8 | Dalmia Bharat Sugar and Industries Limited I am pleased to present a record performance on the occasion of the 25th year of our Company. The performance would have been better but for a decline in our cogeneration earnings following a directive by the Uttar Pradesh Electricity Regulatory Commission that moderated our tariff realisations during the year under review. During the financial year under review, output moderated the country’s sugar Dalmia Bharat Sugar reported an EBITDA inventory from 5 months to 4 months of of H398 crore, which is one of the highest consumption. This decline in projected THE principal in our existence, 13% higher than the inventory strengthened sugar realisations message IS that previous fiscal. The Company reported a by 10% during the course of the year. The THE Company’S 6% improvement in profit after tax, which fact that our EBITDA growth was sharper corresponded to a positive increase in indicates the robustness of our business BALANCE Sheet earnings per share. model and our preparedness in capitalising HAS BEGUN to on improvements in sectorial realities. The fact that this improvement came EVOLVE AND following only an average 10% increase in The principal message in this preparing the average realisation of our core product communication is not a review of the (sugar) represents a validation of what we Profit & Loss Account of the last financial to create A always believed: that a patient accretion year. The principal message is that the foundation in manufacturing capacity, investment Company’s Balance Sheet has begun FOR sustainable in superior technologies (agricultural to evolve and preparing to create a and manufacturing), right-sizing our foundation for sustainable long-term long-TERM manufacturing facilities around sugar and growth. For a business that was perpetually growth. by products as well as a sound financial vulnerable to cyclical impacts, we now structure would translate into a significant believe that we possess the visibility of improvement in our operating financials multi-year robustness where the sharpness the moment the sectoral cycle improves. of the growth curves will be increasingly smoothened with a greater visibility in This turn in the sectorial cycle was evident revenue growth and profit growth across during the last financial year when India the coming years. passed through substantial decline in sugar output: from 322 lakh quintals to Interestingly, this visibility has more to 272 lakh quintals in FY2019-20. This decline do with cash flows – the heart of any was on account of an aberration in climatic successful enterprise – than revenues or factors and drought-like conditions in parts profits. We believe that for a business that of Maharashtra. This sharp decline in cane was perpetually engaged in growing its Annual Report 2019-20 | 9 manufacturing assets through long-term translate into a higher return on capital debt on the one hand and mobilised employed in our sugar business. adequate pipelines of working capital on On the ethanol side, too, we have a the other to sustain operations, we are compelling case building up. Through finally at a point where we have started the timely switch to the manufacture deleveraging our Balance Sheet. of ethanol through the B-Heavy route, Following THE This deleveraging is the result of a number we are generating superior return on OUTBREAK OF COVID-19, of developments expected to moderate capital compared to what we would THE Company the capital intensity in our business.
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