GREAT RECIPE FOR SWEET RE­TURNS

HERE IS WHY

Dalal Street Investment Journal - - RECOMMENDATIONS | EQUITY -

Strong fi­nan­cials Strate­gic lo­ca­tion of the plants Pos­i­tive sec­tor out­look

Dwarikesh Su­gar In­dus­tries Limited (DSIL) is one of the ma­jor su­gar pro­duc­ing in­dus­trial groups in India. In ad­di­tion to su­gar man­u­fac­tur­ing, the com­pany has di­ver­si­fied into other seg­ments such as power and in­dus­trial al­co­hol pro­duc­tion since its in­cor­po­ra­tion in 1993. The com­pany's two plants are lo­cated in Bi­jnor dis­trict and one is lo­cated in Bareilly dis­trict of Ut­tar Pradesh, which is as­so­ci­ated with highly fer­tile soil and high sug­ar­cane pro­duc­tion. The com­pany has a com­bined ca­pac­ity to crush 21,500 tonnes of sug­ar­cane per day. As on March 31, 2017, the com­pany gen­er­ated a to­tal of 86MW power and pro­duced 30,000 LPD of al­co­hol.

The com­pany is ex­plor­ing new mar­kets for its byprod­ucts which get gen­er­ated dur­ing su­gar pro­duc­tion as many in­dus­tries use th­ese byprod­ucts as their raw ma­te­ri­als. DSIL is plan­ning to liq­ui­date ₹145 crore of its long-term debt, au­to­mate its plants to en­hance ef­fi­ciency and seek at­trac­tive ac­qui­si­tion tar­gets that could broaden its su­gar and byprod­uct man­u­fac­tur­ing ca­pac­ity. IN­DUS­TRY OVER­VIEW: The In­dian su­gar in­dus­try pro­vides in­ter­mit­tent but lu­cra­tive in­vest­ment op­por­tu­ni­ties. India is the sec­ond largest pro­ducer of the agri-com­mod­ity su­gar. With 642 op­er­a­tional su­gar mills, In­dian su­gar in­dus­try has a to­tal worth of ₹80,000 crore, sec­ond only to Brazil. The govern­ment has been act­ing as a cat­a­lyst in the in­dus­try’s growth story. In the short to medium term, the su­gar and sug­ar­cane prices are ex­pected to be sta­ble and im­prove­ment in stock-to-

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