EID Parry is a major Indian sugar producer and part of the Murugappa group. It produces sugar, bio-pesticides, and nutraceuticals. The sugar industry in India faces challenges from fluctuating global sugar prices and rising sugarcane costs. EID Parry's financial performance was negatively impacted by low sugar prices in the first three quarters of the fiscal year, though its bio-pesticides and nutraceuticals divisions saw increased revenue. The company is focusing on innovation, differentiated products, and higher-value retail segments to boost performance.

1. WAC Project B Group 10
Written Analysis and Communication
Project B
EID Parry
By
PGDM B17 / 055 – Gokulnath K S
PGDM B17 / 074 – Mohit Lalchandani
PGDM B17 / 081 – Milan Agrawal
PGDM B17 / 128 – Shreya Khanna
PGDM B17 / 160 – Vijayashree
PGDM B17 / 162 – Vishnu Raam S

2. WAC Project B Group 10
EID Parry
Thisreportgivesa detailedcompanyanalysisof EIDPARRYoverthe last3 yearsi.e.from2013 to 2016.
Company overview
EID PARRY Limitedisapart of the Tamil NadubasedINR 269 BillionMurugappagroupand the largest
sugar producerinsouthIndiaand isone of the top five sugarproducersinthe country. It is a dominant
playerinsugar industrywithinterestsinpromisingareasof bio-pesticidesandnutraceuticals.
Economic Scenario
2014-15
 The global economygrewat 3.4%
 GDP of India7.3%
 A global surplussugarproductionfor4 years,beginningfrom2011, continuedtotiltthe demand
- supplyequilibrium,sending sugarpricesona downwardspiral.
 Sugar pricestrailedatRs.22000/ Mt, the lowestinthe lastsix years.
2015-16
 The global economyreflectedasubduedgrowthat3.1% as againstthe projectedestimateof
3.5%
 GDP of INDIA 7.6%
 Accordingto the USDA estimate,withthe growingdemandforrenewable energies,rising
demandforglobal sugarconsumption,andsupportive governmentpolicies,the industryis
expectedtooutperforminthe nextfiveyears.Due tocyclicality,however,worldprice of sugaris
still expectedtoremainhighlyvolatile.
Quantity produced (2014) Quantity produced (2015)
GLOBALLY 175 million MT 172 Million MT
INDIA 24.8 million tons 23.7 million tons
 In India,declineinproductionbecauseof droughtimpactingyieldsinMaharashtra,Karnataka
and AndhraPradeshandthe destructionof plantedcropsbyEl Ninoinduced floodsinTamil
Nadu.Consequently,sugarpricesare expectedtorise,due tofall inproduction.
 Sugarcane Price
There has beena steadyincrease inthe Fairand
RemunerativePrice (FRP) stipulatedbythe Central
Governmentatwhichsugar millsare obligedto
purchase sugarcane fromfarmers,withoutany
correspondingincreaseinthe sale price of sugar.
YEAR FRP
2013-14 Rs.2100
2014-15 Rs.2200
2015-16 Rs.2300

3. WAC Project B Group 10
 In additiontothe FRP,some State Governmentsfix ahigherprice forcane,calledthe State
AdvisedPrice (SAP).Overthe pastfew years,the SAPhascontinuouslyincreased.
 Sugarcane accounts foraround 80 percent of the cost of sugar production.Consequently,rising
sugarcane priceshave ledtoan increase inproductioncosts,affectingoperatingmarginsand
puttingmillsunderpressure.
ROLE OF GOVERNMENT
 Increasedthe basiccustomsdutyon raw sugar importsfrom25% to 40%, to reduce imports
 extendingsoftloanstosugarmills,tohelpthemfromthe liquiditycrunch
 exportsubsidyof 4,000/MT, forraw sugar
 the FoodMinistryhas announcedanincrease inthe importdutyfor sugar from15% to 40% to
protectthe sugar industryfromthe influx of cheapimports
 specifiedaMinimumIndicative ExportQuota(MIEQ) foreachsugar mill toreduce theirhigh
sugar inventoriesandtoachieve financial liquidity
Industry Scenario:
Sugar Industry- Withan annual productioncapacityof over 30 millionmetrictonne (MMT),the Indian
Sugar Industry(ISI) isthe secondlargestproducerof sugarinthe world.Itis alsothe secondlargest
agro-basedindustryinthe countryaftercotton.
Sector: The sugar industrycan be dividedintotwosectorsincludingorganizedandunorganizedsector.
Sugar factoriesbelongtothe organizedsectorandthose whoproduce traditional sweetenersfall into
unorganizedsector.Gurand khandsari are the traditional formsof sweeteners.
EID Parry’s Products- Rawsugar, Plantationwhite sugarandRefinedsugar.
Power:
 PowerCogenerationplantsatNellikuppam, PugalurandPudukottai continuedtoexportpower
underShortTerm OpenAccess(STOA) duringthe year.
 Duringthe year,the companyobtainedEnvironmentalclearance forexpansionof its
Cogeneration plantatPudukottai from15.5 MW to 19.5 MW.
Distillery:
 The company produced657.42 Lakh Litresof alcohol duringthe year15-16 as against643.12
Lakh litres in14-15, an increase of 2% overthe previousyear
SUGAR
Parry’s Pure Refined
sugar
Parry’s White Label
sugar
Parry’s Cubes sugar Parry’s Flavored sugar

4. WAC Project B Group 10
 The company isinthe processof expandingitsExtraNeutral Alcohol productionfacilityto
75KLPD from30 KLPD.
 Duringthe year the sugar divisionregisteredaturnoverof 2171 Crore as against 1948 Crore in
the previousyear
Sugar Plantsand Distilleries: E.I.D-Parryhasfactoriesateightlocations.
Bio-Pesticides:
 The Bio-PesticidesDivisionregisteredaturnoverof 104 Crore in 2015-16 as comparedto 94
Crore in the previousyear,accountingfor4% of the Company’srevenue
 Exportsale of Neemazal Technical registeredagrowthof 15% over2014-15
Nutraceuticals:
 The NutraceuticalsDivision’sstandalone turnoverwasat 72 Crore in2015-2016 as compared to
74 Crore of previousyearrepresenting3% of the Company’sturnover
 PremiumorganicSpirulinasalesdroppedby22% mainlydue todecrease indemandfromthe
Asiapacificmarket.
 On a consolidatedbasisthe Nutraceutical Businessregisteredsalesof 235 Crore as comparedto
230 Crore inthe previousyear.
Market Size:
The IndianSugar Industryaccountedformore than
15% of the total worldsugarproductioninlast5
yearsendingSS14-15.
 As onJanuary 31, 2015, Indiahad 703
sugar mills .
Market Growth:
The sugar industryinIndiaisexpectedtoreachINR
1,033.5 billionbyFY’2020
 Future Growth of Indiasugar marketisexpectedto
be led by increasing sugarcane yield, rising demand of sugar by the consumers and increasing sugar
recovery rate.
 Shree Renuka Sugars is one of the largest producer of sugar in the country with rising demand from
othercountriescompeteswithotherplayersinthe industry such as, Bajaj Hindusthan, Balrampur Chini
Mills Ltd and Triveni Engineering and Industries.
Competitors:

5. WAC Project B Group 10
Factors affectingthe Industry:
Environment: Inorder to reduce pollutionhazards,industryisimplementing“Environment
managementsystem“(EMS) toimprove economicandenvironmental performanceof sugar processing
unit
Technology:The departmentof FoodandPublicDistributorof Indiaistakinginitiativesfortechnological
up gradationinsugar mills
Government:The industryoperatesunderstrictlegal regulations.Althoughinsome casesitaffectsthe
industryandproducers.
Socio Economic: About7.5% of the rural populationbanksonsugarcane farming.The sugarindustry
directlyemploysaround2 millionworkers,andthere isalsosignificantindirectemploymentgeneration
throughvariousancillaryservices.
Company Performance:
EID Parry concentratesmainlyonthree productsSugar,Bio-productsand Nutraceuticalsandunder
these ithas sub-productswhichare givenasfollows,
Products:
 Bio-products- aimedforcropprotectionandproduction
 Nutraceuticals- MicroAlgal Technology- 1)OrganicSpirulina 2)Zanthin 3)OrganicChlorella
4)Astaxanthin
Markets:
NAME LAST PRICE M-CAP NET PROFIT TOTAL ASSET
EID Parry 250.85 4,411.72 -66.45 2,100.02
Balrampur Chini 112.80 2,763.68 99.42 2,731.54
Bajaj Hind 14.45 1,637.99 -114.28 8,741.67
Shree Renuka 13.40 1,244.61 -285.30 6,496.24
Sakthi Sugars 29.90 355.36 -55.07 1,178.06
Crop Protection Crop Production
Azadirachtin Neemazal F
Abda Neemazal T/S
AbdaGold Indika
AbdaDrip Avana
Yieldsmor ParryneemandNeemOil

6. WAC Project B Group 10
Indianconsumersugarmarketisof 25 milliontonandoutof 65% is cateredto institutionandrestgoes
to the retail.Asa Sugar product,it isavailable inSupermarketstores,self-service stores,kiranasandin
some online webstores.AsaBio-productandnutraceutical product,itisavailable inmedical stores,
pharmaceutical storesandtogether,some of the productsare available online
Brand:
Indianconsumersugarmarketisof 25 milliontonandoutof 65% is cateredto institutionandrest goes
to the retail.The retailssegmentaccountsforaverysmall share of 5% of overall sugarsalesinthe
countryand for EID Parry,retail accountsfor 2% of itssales.While othercompetitorsare competingon
price,EID Parry hasdecidedtofocuson differentiatedsugar-relatedofferingstoboostmarketshare.
Despite this,asa Brand,it has introducedAmrit- a100% natural cane sugar, as part of its strategyto
boostretail sugarsaleswithvalue-addedproducts.
Innovation:
The R&D divisionis focusedondevelopingsugarcane varietieshavinghighyield,bettersucrose content
and greaterpestresistance.Associatingwithsugarcane farmerswithITenabledservices,suchas
Remote Sensing,GeographicInformationSystemandGlobal Positioningsystemformappingand
monitoringsugarcane growingareas.
IntegratedCane ManagementSystemhelpsandguide the framersinthe followingway,
1. On surface andsub-surface dripirrigation
2. Cane trash mulching
3. Soil mappingandsoil nutrientanalysis
4. Detailedfarmboundarymapping
5. Mechanical harvestingandsoon
Operation:
Sugar: Duringthe yearunderreview,the total revenueof the Companyfromoperationswas 29121.44
lakh,46.80% higherthan 19836.63 lakhin the previousyear.OperatingLoss(Lossbefore Interestand
Tax) was 1071.78 lakhas against 92.45 lakh profitinthe previousyear.The interestcostwas 1526.85
lakhduringthe current Financial Yearasagainst 1666.43 lakhduringthe previousyear.
The primaryreasonfor the losswas lowsugar pricesduringthe first9 monthsof the Financial Year
whichoffsetthe achievementsof the Companyonall otherfronts.
Financial performance withrespecttooperationalperformance:
Sugar season Cane crushed
(MT)
Recovery Sugar Produced
(Qtls.)
Powerexported
(LakhUnits)
2013-2014 5,55,165 11.70 6,49,550 187.39
2014-2015 6,66,234 12.12 8,07,475 236.69
2015-2016 5,82,886 11.84 6,90,212 208.28

7. WAC Project B Group 10
Power:
The total powergeneratedbyourCo-generationplantwas540.84 lakhunitsas againstthe 382.75 lakh
Unitsgeneratedduringthe previousyear.The revenue fromsale of powerwasat`1442.13 lakhas
against` 785.64 lakhduringthe previousyear.
Production:
Sugar Industry – Domesticscenario
The domesticsugarproductionupto March 31, 2016 stoodat 23.7 milliontonnes,withadropof 1.1
milliontonneslessthanlastyear.Lowerproductionalongwithexportsbroughtdownthe closingstocks
to around7.6 millionMTin SY2016 fromaround9.5 millionMTinSY2015. The decline in productionis
mainlydrivenbysevere droughtinthe sugarproducingStateslike MaharashtraandKarnataka,which
impactedsugarcane availability.
Human Resource
In a challengingandcompetitiveenvironment,the Companybelievesthatpeople are the key tosuccess
and continuestofocusonpeople capabilitiesbyleveragingtechnologyandcreatingalearning
environment.The HumanResourcesfunctionproactivelydevelopsinnovativeandbusinessfocused
methodstoattract, develop,motivate andretaintalent.Humanresourcesstrategyiscloselyalignedto
keybusinessandstemsfromthe organisationpurposewhichis –“To buildCredible,Reliable&Capable
Human Capital todeliversuperiorIndividual andBusinessperformance”.
Technology
Co-generationisthe conceptof producingtwoformsof energyfromone fuel.One of the formsof
energymustalwaysbe heatand the othermay be electrical ormechanical energy.Cogeneratedpower
has environmental benefitsintermsof replacingfossilfuelsandisalsorenewableinnature.Fora sugar
mill,optingforcogenerationof powerhasthe advantagesof gettinganadditional streamof revenueby
sellingelectricitytothe consumerthroughpowergrids. The powerproducedthroughco-generation
substitutesthe conventional thermal alternative andreducesgreenhouse gasemissions.
In the present scenario, where fossil fuel prices are shooting up and there is a shortage and non-
availability of coal, co-generation appears to be a promising development.
Financial Performance:

8. WAC Project B Group 10
A P&L 2015-16 2014-15 2013-14 2012-13
Rs. Crores CAGR %
Net Sales (excl other income) 2310 2081 1782 2041 3%
Interest 135 142 189 116
PBDIT (excl.other income) 144 379 255 584 -30%
PBIT (excl.other income) 39 277 158 477 -47%
PBT (incl. other income) -96 135 -31 361 -28%
PAT (incl. other income) -66 148 26 331 -33%
Rs/share
EPS (PAT/No. of equity) -3.78 8.43 1.51 19.08
2015/16
over 2012-13
B BALANCE SHEET 31/3/16 31/3/15 31/3/14 Change
1 Net Fixed Assets 1456 1505 1529 -5%
2 Investments - long term 778 683 544 43%
3 Current Assets
a short term investments 2 2 2 0%
b All current assets except short term investment1086 1530 1477 -26%
4 Current Liabilities
a short term borrowings 202 929 857 -76%
b all current liabilities except short term borrowings1355 868 694 95%
5 Working capital -269 662 783 -134%
(3b- 4b)
6 Capital employed 1967 2852 2858 -31%
1 +2+3 less 4b
7 Net Worth ( Shareholders funds) 1291 1369 1279 1%
Share capital + Reserves&Surplus
8 Total debt 809 1602 1785 -55%
Note : If debt and interest cost is not negligible, then only compute B9 & B10
31/3/16 31/3/15 31/3/14 2%
9 Debt/Equity 0.6 1.2 1.4 -55%
(Debt to include all borrowings ( long and short term) and exclude creditors & provisions)
(Equity is total shareholders funds)
10 Interest cover 0.29 1.0 0.8 -65%
(PBIT/Interest)
PROFIT - The above comparisonshowsthe netperformance of the companyintermsof salesandprofit.
As we can see thatthere has beena huge decrease in EBITin year2015-16 as comparedto 2014-
2015.This wasmainlydue torise in supplyandlow sugarprice over the firstthree quartersof 2015-16.
EPS – Earningper Share has decreaseddue Lossincurredinthe 2015-16.

9. WAC Project B Group 10
C Profitability Ratios 2015-16 2014-15 2013-14 Change
1 PBDIT/Net Sales 6% 18% 14% -56%
2 PAT/Net Sales -3% 7% 1% -296%
 PBDIT has decreasedas compared to the previousyear due to increase in sugarcane pricesthat
is gross margin is positive butNet Margin(PAT) stands negative i.e at lossdue to high
depreciationand interestexpense.
D Turnover Ratios 2015-16 2014-15 2013-14 Change
1 Net Sales/Capital employed 117% 73% 62% 88%
2 Capital employed/Net worth 152% 208% 223% -32%
3 Net Sales/Working Capital -859% 314% 228% -477%
 Efficiencyhas increasedas compared to past year 2014-15, as the company is givingmore
emphasison using sustainable methodsofproduction.
 Gearingis a measurementof the entity’sfinancial leverage,whichdemonstratesthe degree to
which a firm'sactivitiesare fundedby owner'sfunds versuscreditor'sfunds.Here gearing ratio
has decreasedshowingthat debtin the company portfoliohas beenreduced.
 The negative WorkingCapital Turnover Ratio shows that the Current LiabilitiesExceedthe
Current Assetsi.e.the company is not usingits assets efficiently.
E 2015-16 2014-15 2013-14 Change
1 PAT/Net Worth -5% 11% 2% -352%
Dupont Analysis
 Return on Net Worthhas decreaseddue to oscillatingpricesof sugar which can be attributed to
an increase in supply ofsugar globally.
D VALUATION RATIOS 31/3/2016 31/3/2015 31/3/2014 Change
1 Market Price/share 218 176 134 63%
2 Book value/share Net Worth/No. of shares 75.92 80.54 75.24 1%
3 P/E -57.67 20.88 88.74 -165%
4 P/B Market Price/Book Value 2.87 2.19 1.78 61%
Market Price/EPS
 Since the P/E ratio is lessthan the Market price per share, we suggest the investor to" sell" the
share. As the Share isovervaluedand will soon get back to its intrinsicvalue.
SWOT Analysis:
Strengths:
1. EID Parryis the largestsugar producerinsouthIndiaand the fifthlargestinthe country.
2. It has beeninoperationforover225 yearsand hence iswell establishedandexperienced.
3. It seesfarmersnotas suppliersof rawmaterial butas customers.The companyguidesfarmersfrom
the momenttheyplantthe cane and registerwiththe company'scane managementsystem.

10. WAC Project B Group 10
4. It also concentratesinbio-pesticidesandnutraceuticals.The companyalsohasa significantpresence
inthe farminputsbusinessthroughits Coromandel International Ltdsubsidiary.
Weakness:
1. Volatilityinsugarcane pricesisaconcern.
2. Sugar industryisobligedtosupply10% of itsproductionat substantial concessionalprice,much
belowthe costof production,tothe Governmentforsupplytothe PublicDistributionSystem(PDS).
Opportunities:
1. Scope for technologyupgradation
2.Opportunitiesintermsof exporttonew emergingmarkets
Threats:
1.Cheapsugar importsare harmingthe existingsugarmillsinIndia
2.Sugar industryisveryvolatile asmanyfactorsincludingrainfall,cultivatedareaandtransportationcost
affectssugarcane pricesandmakesthisindustryveryvolatile.
Major Strategies:
2013-14
 Introduceddripirrigationandsolarpumpstoresolve the issuesof waterscarcityandpower
interruptionsrespectively.
 Developedanin-house steamconservationprocessthatconsumes 3% lesssteamforeveryton
of cane used.
 Introducedaninnovative “ParryRoller”designwhichhelpsusinrecoveringmore sugarfrom
everytonof cane used.
 Throughthe “BonSucro” initiative,farmersare educatedonseveral bestpracticesinfarming.
2014-15
 Parry pioneeredthe programme of introducingtrichogramma,abio-control agent,for
eliminatingthe use of chemical pesticidesinthe sugarindustry
 EID Parry has developedalastingcommitmentwithitsmostimportantstakeholder - the
farmers.
 It seesfarmersnotas suppliersof raw material butascustomers.
2015-16
 In September2015, the companyhas announcedplanstoadoptportfoliodiversificationand
investinbranddevelopmentasa meansof notchingup betterrevenues.
 In line withfuture strategiesof growth,capacityaugmentationandplantmodernizationwere
carriedout at the plantsat Haliyal andBagalkot.Togetherthese twoplantsatKarnataka
crusheda total 15.27 LMT of cane,an increase of 3.37 LMT overthe same periodof 11.89 LMT
for the previousyear.