Dhampur Sugar Mills Ltd
An integrated sugar mill based in UP has a crushing capacity of 39,500 TCD and its products include power, ethanol, chemicals, refined and plantation white sugar. The consolidated performance for the year ended 30th September 2008 has been good. It has been good because it has managed to turnaround. Its net sales rose 12% and it managed to reduce its operating expenses by 10%, though interest outgo rose 74%. It managed to post a PAT of Rs.3.63 crore as against a whopping loss of Rs.60.66 crore in Sep 07’.
Sugar trading proved to be its biggest earner, reporting a 110% rise while manufacturing revenue rose 13%. Substantial addition to the revenue came from its co-generation plant, which added on Rs.128.74 crore. Ethanol income rose 16%. The company has computed results for the accounting year considering the cane price at Rs 110/- per quintal for season 2007-08, which was paid based on the interim order of the Hon´ble Supreme Court pending final decision in the matter.
U.P. Govt. has announced SAP of sugarcane, for season 08 – 09 at Rs.1,400 per MT, which is being challenged by U. P. Mills and hearing in Allahabad High Court is due today. Due to this, the crushing in U. P., which generally starts by middle of October, every year has not yet commenced. This year’s crushing in U. P. is not likely to be more than 140 days against 175 days on an average. As U. P. produces one-third of the sugar in India, the total sugar production of India in this season is likely to be about 19 million tonnes against estimates of 21 million tonnes and 26.5 million tonnes of 07 – 08. Post crushing season, getting over in April 09, as also general elections getting completed by then, sugar prices will rise by about Rs.3 per kg. This will sharply improve the profitability of all sugar mills, as major quantity of sugar produced would get sold post April 09.
The sugar sector is likely to have good future ahead in view of lower sugar production in India at about 19 million tonnes in season 08 – 09 against 26.5 million tonnes of 07 – 08. Due to this, sugar prices are likely to rise by about Rs.3 to Rs.4 per kg. from April 09 onwards. The stock touched a new low yesterday at Rs.19.50 and it hovering around the same levels. At the current rate it qualifies a good buy.