Shree Renuka Sugars Limited · NSE:RENUKA

Shree Renuka Sugars — State Level Sugar Conference 2015

26 slides from Shree Renuka Sugars's conference presentation, April 2015

  1. Slide 1: Low Sugar Prices - Causes & Outlook

    LOW SUGAR PRICES- CAUSES & OUTLOOK STATE LEVEL SUGAR CONFERENCE 2015 1

  2. Slide 2: Primary Causes for Low Sugar Prices

    PRIMARY CAUSES FOR LOW SUGAR PRICES 2

  3. Slide 3: The Old Sugar Cycle has Converted to a Structural Sugar Surplus

    The Old Sugar Cycle has Converted to a Structural Sugar Surplus Sugar Surplus/Deficit in India (million tons) 10.0 8.5 8.0 6.0 4.5 3.6 3.7 4.0 3.2 2.4 2.0 0.8 0.2 - 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14(P) 2014-15 (E) (2.0) (2.4) (4.0) (3.7) (6.0) (5

  4. Slide 4: Maharashtra Sugar Production over the years

    Maharashtra Sugar Production over the years Maharashtra Sugar Production (million tons) 12.0 10.5 9.9 10.0 9.1 9.1 9.0 8.0 8.0 7.7 7.1 6.0 5.2 4.6 4.0 2.2 2.0 0.0 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 E 4 Source: ISMA, Maharashtra Cane Commissioner

  5. Slide 5: Increased Sugar Production in the Country

    Increased Sugar Production in the Country India Sugar Production (million tons) 29.0 27.7 26.3 25.1 24.4 24.4 24.0 18.9 19.0 14.5 14.0 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14(P) 2014-15 (E) Main reasons for increase in sugar production in recent years are: 1. Use of new cane varieties which

  6. Slide 6: Use of new Cane Varieties leading to increased yields

    Use of new Cane Varieties leading to increased yields  Increase in Agricultural Yields in Maharashtra & UP due to use of high yielding cane varieties tons/hectare 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 E CAGR Maharashtra 79.0 84.8 87.0 83.4 79.6 80.9 88.8 2.0% Uttar Pradesh 52.3 58

  7. Slide 7: Profit from Sugarcane vs. Competing Crops

    Profit from Sugarcane vs. Competing Crops Returns from Sugarcane & Competing crops in Maharashtra in 2013-14 (Rs./Hectare) 120,000 113,000 100,000 80,000 60,000 60,000 52,000 43,000 40,000 34,000 26,000 20,000 17,500 - Soybean Cotton Wheat Maize Soyabean + Maize + Wheat Sugarcane Wheat 7 Source: Agr

  8. Slide 8: Support prices of Sugarcane vs. Competing Crops

    Support prices of Sugarcane vs. Competing Crops Minimum Support Prices- Growth Rate 2,500 2,200 2,100 2,000 1,700 1,391 1,450 1,400 Rs./quintal 1,500 1,285 1,350 1,310 1,250 1,100 1,120 1,080 1,000 1,000 1,000 500 - 2010-11 2011-12 2012-13 2013-14 2014-15 * Note: Sugarcane prices are in Rs./ton Whea

  9. Slide 9: Statutory Sugarcane Price has been Increasing Rapidly

    Statutory Sugarcane Price has been Increasing Rapidly… Cane Price SMP/FRP (Rs./ton cane) 2,500 2,300 2,200 2,100 2,000 1,700 1,500 1,450 1,391 1,298 1,000 857 857 839 848 500 - 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 9 Source: Commission for Agricultur

  10. Slide 10: But Sugar Prices have been Volatile & Recently Very Bearish

    But Sugar Prices have been Volatile & Recently Very Bearish 35,000 Sugar Price (Rs./ton sugar) 30,296 30,000 28,719 29,226 28,258 25,890 26,200 25,000 22,800 20,215 20,000 15,769 15,000 14,195 12,051 12,462 10,000 5,000 - 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-1

  11. Slide 11: Recent Drop in Sugar Prices

    2450 2650 2850 3050 3250 3450 2200 2400 2600 2800 3000 3200 3400 Source: ISMA 3241 Oct' 12 Oct' 12 3496 3421 3138 Nov' 12 Nov' 12 3215 3245 Dec '12 Dec '12 3280 Jan' 13 Jan' 13 3066 3012 Feb' 13 Feb' 13 3176 3153 Mar' 13 Mar' 13 2923 Apr' 13 Apr' 13 2885 3150 May' 13 May' 13 3125 2880 Jun' 13 Jun' 1

  12. Slide 12: Cost of Production vs. Ex-mill Sugar price

    Cost of Production vs. Ex-mill Sugar price Cost of Production Vs Ex-Mill Prices Rs./Qtl. (2014-15) 3600 Cost of Production Rs. 3500/- on SAP @ Rs. 271/- (U.P) 3400 3200 3000 Cost of Production Rs. 2930/- on FRP @ Rs. 220/- with average recovery of 11.5% (Mah) 2964 2800 2800 2750 2700 2650 2600 2683

  13. Slide 13: Sugarcane Acreage & Cane Arrears Trend

    Sugarcane Acreage & Cane Arrears Trend Sugarcane Acreage 5.34 5.15 5.11 5.28 5.29 5.05 4.88 5.00 4.41 4.52 4.42 4.32 4.20 4.17 3.94 million hectare 4.00 3.66 3.00 2.00 1.00 - 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15E 20,0

  14. Slide 14: Global Scenario

    GLOBAL SCENARIO 14

  15. Slide 15: Comparison of Sugar recovery from cane

    Comparison of Sugar recovery from cane Sugar Recovery (%) 14.00% 12.98% 12.69% 12.00% 11.50% 10.76% 10.50% 10.00% 9.50% 8.00% 6.00% 4.00% 2.00% 0.00% Australia Brazil Thailand Maharashtra, Uttar Pradesh, All India India India 15 Source: Company Analysis

  16. Slide 16: Comparison of Sugarcane Price Globally

    Comparison of Sugarcane Price Globally Sugarcane Price for 2014-15 3,000 2,800 2,664 2,500 2,080 Rs./ton of cane 2,000 1,621 1,710 1,500 1,000 500 - Australia Brazil Thailand Maharashtra, Uttar Pradesh, India India Note: Prices include cost of harvesting & transportation 16 Source: Company Analysis

  17. Slide 17: Comparison of Sugarcane Price in terms of Sugar

    Comparison of Sugarcane Price in terms of Sugar Sugarcane Price per ton of sugar 35,000 29,474 30,000 25,000 23,165 Rs./ton of sugar 20,000 16,394 15,892 15,000 12,487 10,000 5,000 - Australia Brazil Thailand Maharashtra, Uttar Pradesh, India India 17 Source: Company Analysis

  18. Slide 18: Increased Co-relation in Global Sugar Price & Brazil Currency

    Increased Co-relation in Global Sugar Price & Brazil Currency 20 3.4 19 3.2 18 3 17 2.8 BRL/USD cents/lb 16 2.6 15 2.4 14 2.2 13 12 2 11 1.8 Raw Sugar #NY11 USD/BRL 18 Source: Bloomberg

  19. Slide 19: Outlook for Price

    OUTLOOK FOR PRICE 19

  20. Slide 20: Global sugar consumption expands, production decelerates

    Global sugar consumption expands, production decelerates Global Sugar Production & Consumption (mn tons) 190 185 184 184 184 182 182 182 180 178 175 175 173 170 170 166 165 161 160 155 150 145 2010-11 2011-12 2012-13 2013-14 2014-15E 2015-16E Production Consumption 20 Source: Food & Agriculture Orga

  21. Slide 21: Increase in per capita sugar consumption (kg/year)

    Increase in per capita sugar consumption (kg/year) 25.5 25.3 25.0 25.0 24.7 24.5 24.2 24.0 23.5 23.4 23.0 22.5 22.0 2010-11 2011-12 2012-13 2013-14 2014-15E 21 Source: Food & Agriculture Organisation of the United Nations

  22. Slide 22: Global Sugar Price

    Global Sugar Price  China sugar production expected to decline  Brazil sugar production has weather risk & ethanol parity may reduce sugar production  Thailand carrying huge sugar stocks  Importing countries have built sufficient stock over past two years NY 11- Future Price Forward Curve 15 14.

  23. Slide 23: India Sugar Surplus to Continue

    India Sugar Surplus to Continue India Sugar Production & Consumption (mn tons) 30.0 27.7 26.3 26.0 24.4 25.1 24.6 25.0 25.0 24.4 24.2 22.6 22.8 20.8 20.0 15.0 10.0 5.0 - 2010-11 2011-12 2012-13 2013-14 2014-15 (E) 2015-16 (E) Production Consumption 23 Source: ISMA, Company Sources

  24. Slide 24: Downside Pressure on Domestic Sugar Prices to Continue

    Downside Pressure on Domestic Sugar Prices to Continue  India likely to carry sugar stock of about 9.5-10 million tons at the start of next season  Preliminary estimate of sugar production in the country is about 26 million tons for 2015-16 season  With high opening stocks & production likely to

  25. Slide 25: Possible Positive Factors on Price

    Possible Positive Factors on Price 1) Weather problems in any major sugar producing country 2) Closure of sugar mills in Brazil & India due to financial stress 3) Strategic Stocks A. Creation of Strategic stock by Indian Government B. Addition to Strategic stocks by Chinese Government 4) Increased d

  26. Slide 26: Thank You

    sugar power ethanol Thank You 26

Shree Renuka Sugars — State Level Sugar Conference 2015 on 6ix