EID Parry (India) Ltd, a part of the Rs 24,300 crore Murugappa Group, is planning to reduce its current debt this fiscal to achieve a manageable debt to equity ratio.
The company, which has a Rs 930-crore long-term and Rs 860-crore short-term debt, is aiming at a debt to equity ratio of 0.5 from the current 1.1, said the company's senior management. It also expects the sugar facilities it acquired outside Tamil Nadu to start offering benefits in the next two years.
Speaking to the shareholders in the recent annual general meeting, A Vellayan, chairman of EID Parry, said the company was witnessing a fall in the debt and it's likely to reduce further in the near future. Shareholders could see the results starting from this fiscal, he added.
On the capacity expansion the company carried out in the recent past, he said, "it was a well thought out strategy to expand in sugar processing outside Tamil Nadu. We did not choose Maharashtra because we felt of not being able to manage them. Over the next one to two years, you will see the benefits of this expansion."
The company had been merging some of the subsidiary units into itself, as part of consolidation of its sugar business. It has merged the Sankili unit in Andhra Pradesh and Haliyal Unit in Karnataka, part of Parry's Sugar Industries Ltd, during 2012-13 and the operations were fully integrated with EID Parry during 2013-14.
Sadashiva Sugar Ltd, a wholly-owned subsidiary, merged with EID Parry effective April 1, 2013, with which the company has two sugar factories besides a leased sugar factory through Parrys Sugar Industries, in North Karnataka, which is a high recovery zone.
While the performance of distillery and power resulted in positive Ebidta, the company's results were adversely affected by the sugar operations consequent to high cost of production and lower realisation. The Ebitda for 2013-14 was Rs 83.23 crore compared with Rs 256.22 crore in 2012-13.
"The major factors affecting the performance have been the lower cane crushed consequent to drought conditions particularly in Tamil Nadu, muted sugar prices in the second half of the financial year and cane price announcements by state governments unrelated to the sugar price," said Vellayan.
He said the sugar industry was expecting the Karnataka and Tamil Nadu to work out a revenue sharing formula on the lines of recommendations of Rangarajan Committee, which would be a win-win for the farmers and industry in the long term run. The Karnataka government has already taken a positive step towards this, and the company is expecting the Tamil Nadu government would also help the industry on the issue.
