Bajaj Hindusthan Group

Corporate Presentation April 2008

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Presentation Outline
 Global Industry Overview  Indian Industry Overview  Group Overview

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Global Sugar Industry Overview

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World Sugar
      

Produced in more than 120 countries About 78% is produced from sugarcane Beet sugar has gone down from 40% in 1990 to 22% in 2006-07 The cost of sugar from cane is less than the cost of sugar from beet About 70% of production is consumed in the country of origin The balance 30% is traded in world markets In 2006-07, almost 41% of export market was controlled by Brazil, 9% by EU, 8% by Australia & 4% each by Thailand & UAE

Source: CRISIL Research 4

World Sugar Production
Country / Reg ion Brazil India EU China USA Thailand Mexico Sub-Total Top 7 % of Total World Others World Total +/- YoY MM T, Raw Value 2007-08e 2006-07 2005-06 2004-05 2003-04 34.23 32.64 32.64 28.50 30.77 20.94 17.45 17.38 21.03 13.59 13.04 9.58 7.66 7.66 6.71 7.89 7.03 5.08 5.58 5.54 5.50 114.89 114.05 101.48 68.0% 68.3% 67.1% 27.73 13.80 21.95 9.86 7.15 5.43 6.00 91.92 65.1% 26.14 14.74 20.21 10.90 7.85 7.28 5.36 92.47 64.3% 51.28 143.75 -4.4%

53.98 52.90 49.79 49.18 168.87 166.95 151.27 141.09 1.2% 10.4% 7.2% -1.9%

Source: F.O. Licht's International Sugar and Sweetener Report - World Sugar Balances - Report dated 27.3.08

• After increasing 7.2% in 2005-06, production up by 10.4% in 2006/07 This increase was primarily due to the following: • Favourable climatic conditions across the world, with no adverse incidences • With higher Sugar prices, prices of Cane also increased, incentivising Farmers to switch crops to Sugarcane – resulting into Bumper Cane crop & Sugar production
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4% 5.9% 1.8 153.2% 2.7 55.9 168.1 157.70 -4.2 56.0 72.2 48.1 146.9 51.69 10.0 78.2% 1.0 52.0 52.4% 1.6% 42.3 68.1 166. Raw Value 2004-05 2003-04 67.5% 5.1 51.0 54.2 141.4 67.5% 47.2 141.09 1.8 56.3% .World Sugar Balance Sugar Opening Stock Production Imports Consumption Exports Closing Stock Stocks as % of Consumption Stocks as No.0 61.3 64.2% 43.0 160. of Months + / .0 144.11 -1.26 7.1 80.3% 2.1 143.0 64.6% 5.4% 5.8% 47.Consumption (%) Source: Company Estimate 6 2008-09e 2007-08e 2006-07 2005-06 80.8% 5.78 -5.3 151.7% 6.2% 5.7% 50.9 61.1 MM T.Production (%) + / .0 162.2 72.8 49.3 54.9 51.4 52.

Ethanol Production in Brazil Source: Datagro 7 .

Sugarcane output breakdown in Brazil Source: Datagro Use of Sugarcane for Ethanol to grow from around 50% in 2006-07 to around 57% in 2008-09 8 .

International Retail Prices Prices in India amongst lowest in the world Source: Illovo Sugar 9 .

0 30.6 47.0 20.0 10.8 43.0 60.World Sugar: FAPRI 2007 Agricultural Outlook Figures for 2006-07 Kilograms Huge Potential 10 .0 40.4 18.6 Brazil Mexico Russia EU USA India China Sugar prices versus alternate sweeteners Per capita income Population growth The age profile Sugar availability Consumer preference Technological advances and Government policies        Source.0 50.1 31.8 38.6 8.0 57.Per Capita Sugar Consumption  Factors determining consumption:  Per Capita Sugar Consumption of Top 7 Consumers 70.

Licht.O.2004.2011.Growth in consumption in Asia 90 Going towards 47% 80 70 Asia's Consumption (MMT) 60 50 40 30 20 10 1998.1999.2012.2007.2003.2002.2005.2008.2000.2010.2009.2006. ~44% Was 40% of total World consumption of consumption Source: F.2001.201499 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Currently. BHL 11 .2013.

Indian Industry Overview 12 .

Sugar Production Process Sugarcane Harvesting Transporting Sugarcane to Plants Cane Crushing & Juice Extraction Planting of Sugarcane Farms – Cultivation of Land for Sugarcane Planting Evaporation Converting Juice into Syrup Packing of Sugar Grading of Sugar Centrifugal separation of Sugar Crystals & Molasses Boiling of Syrup Crystallization of Sugar Drying of Sugar 13 .

2nd Ratoon. except from May to September In UP cane planting is done during 2 periods –  80% during 15th February to 30th April (Spring planting) 20% during 15th September to 20th October (Autumn planting)   Once planted.Sugarcane – Varieties & Crop Cycle      Early Maturing Variety – 10 to 11 month crop General Variety – 11 to 12 month crop Late Maturing Variety – 12 to 14 month crop Planting can be done anytime in the year. 3rd Ratoon and so on 14  . can produce crop for 3 to 6 years  First year crop is called “Plant Crop”. and thereafter 1st Ratoon.

irrigation. infrastructure development (road. power). 15 . etc. pesticides. harvesting. fertilizers.Factors affecting Cane Cultivation       Soil – Sandy loam soil Climate – Warm and humid Temperatures – Between 20 to 40 degree centigrade Rainfall – Between 700 mm to 1200 mm Seed Selection – Quality and treatment of seeds Mill Support –  Support / Subsidies for seed procurement and treatment. transportation.

529 10.Apr Paddy : July .471 60% 185% 88% 132% Sugarcane Wheat Pad dy 1 Wheat+1 Pad dy Note: 1 Wheat & 1 Paddy cro p can be d one in a year Wheat : Nov .971 7.) Earnings Cost Earnings as a % (Rs.500 15./Qtl./Acre) (Rs.Sep Source: Company Estimate 16 ./Acre) (Rs.029 8.215 7.285 12.000 36./Acre) (Rs.Crop Dynamics for Farmer Crop Yield SP To tal Cultivation Net Earnings (Qtl./Acre) of Cost 250 20 20 110 1.000 17.500 20.500 20.000 800 27.000 16.

45% Bagasse.Sugar Cane Material Balance Typical Sugar Cane Material Balance W ater. 33% Press Mud. 11% 17 . 5% Sugar Losses. 2% Recoverable Sugar. 4% Molasses.

Typical Sugar Cycle 18 .

5 17.6 M MT FY06 FY07e FY08f FY09f FY10f 4.9% 18.6 FY02 10.8 1.1% 29.2 16.7 18.3% 24.Exports Imports Closing Stock Closing Stock (Months) Stock-to-use Ratio F Y01 9.1 4.8 5.0 1.5 12.0 10.Domestic . F10 demand based on Tuteja Committee Report (Dec 04). Govt.2 5. Department of Food and Public Distribution.7 28.2 3.1 11.5 23.0 24.6 2.4 3.5 1.3 18.2 24.2 0.2 FY03 11.6 18.0 24.5 17.2 20.4 8.4 7.K.4% 32.0 22.7 7.0 23.6% 62.5 18.0 23.5 5. headed by Shri S.0 3.5 1.0 17.6% 65.5 2.1 19.3 20.7 7.1 17.0 5.2 FY05 8.2 12.7 2.0 7.9 16.5 18.9 0.5 7.7% Source : BHL.Total .0 24.2 7.7 3.2 1.4 13. of India 19 . Tuteja.1 3.5 7.9 3.7 26.1 19.6% 22.1% 21.4 FY04 12.6 19.0 2.India’s Sugar Demand-Supply Equation Particulars Opening Stock Production Demand .3% 45.6 61.0 26.7 21. the then Secretary.

headed by Shri S.Potential Demand for Sugar Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Demand based on historical growth rate of 4% (Million MT ) 24.6 32.8 34. Department of Food and Public Distribution.5 26. F10 demand based on Tuteja Committee Report (Dec 04).4 31.0 28.4 40.0 24. of India 20 .0 41.1 28.0 25.7 Source : BHL.0 25.0 26.0 26.2 30.5 27.5 25.4 31.K. Tuteja.9 38.1 29.2 35. Govt.5 36.0 31.7 29.0 27.6 28. the then Secretary.8 30.3 29.6 Demand based on g rowth rate of 2% (M illion MT) 24.0 27.

Import of alcohol will take place to meet the demand of industrial sector.All India Basis PARTICULARS ALCOHOL PRODUCTION Demand POTABLE INDUSTRIAL BLENDING WITH PETROL AT 5% LEVEL Total Demand Surplus / (Deficit) Year 07-08 Year 08-09 Year 09-10 2.160 560 2. 4.100 2. The above information is as per the industry sources. in demand of Alcohol for Industrial use / Ethanol for blending. Alcohol Production / Demand . Else there will be a redn.600 (200) 1. Demand for ethanol will increase.170 1.350 1. Blending percentage has been taken at the rate of 5 % level.Alcohol Demand – Supply Projections Mln.220 600 2.080 1. The dip in alcohol production is on account of reduction in cane production which means reduced availability of molasses.800 (700) 1. 3. 21 . Ltrs.990 (640) NOTE : 1.100 500 2. if blending percentage is increased to 10%. if International prices are at reasonable level.400 2. 2.000 1.

Per MT Sugar 0% Duty 10% Duty 360 320 360 340 340 45 45 45 45 45 385 385 405 365 405 10% 10% 10% 385 424 405 402 446 10 10 10 10 10 33 33 33 33 33 33 33 36 32 35 459 501 481 477 524 40 40 40 40 40 19.) 320 45 365 365 10 33 30 438 40 17.027 20.Current duty 60% 22 .Import Dynamics of Sugar Base Price (US$ fob) Freight * C&F Price Import Duty (%) Cost with duty Port & incidentals Inland Transportation Importer Margin (8%) Landed Cost (US$) Rs.077 20. / US$ Landed Cost (Rs.978 18.364 * Import from SE Asia Columns in blue indicate current FOB price No threat of imports .500 Import Dynamics .228 19.

10 5. / Month 1.62 0.55 Kg.) Impact on Family's Exp. / Annum 1.02 2.40 23 .88 0.49 18.78 3. / Month Imp act of Sugar Price Increase 15. / Month 18.75 Kg.50 1.50 2.16 2. / Kg.00 1. Lig ht & L ubricants (10 Items) Coal & Mining Mineral Oils Electricity M anufactured Products Sugar Other Food Products Beverages. (80% of Income) Family's Expense on Sugar Which is If Sug ar Prices Increase by (Rs.23 Family's Sugar Requirement Retail Sugar Price 3.14 0.48 Per Capita Income Per Capita Income (@ Rs.36 4. Alloy & Products Machinery & Machine Tools Transport Equipments & Parts T otal Weig htage Assu mp tions 797 31.Sugar : Largely price-inelastic Wholesale Price Index .75 Sugar Price Increased by (%) Weightage of Sugar in WPI (%) 100.30 Family's Total Exp.62 0. 0. of Members in a Family Family Income Per Capita Consumption of Sugar Per Capita Consumption of Sugar 14.40 / $) Per Capita Income 22.20 8.75 6.39 11.283 US $ / Annum Rs. / Month Rs.30 11.93 2.75 0. Per Month M onthly Exp.880 2.11 3.62 0.3% % of Family's Total Exp.40 6.62 0. Up by (%) Impact on Wholesale Price Index 63.34 8. Tobacco & Tobacco Products Textiles Wood & Wood Products Paper & Paper Products Leather & Leather Products Rubber & Plastic Products Chemicals & Chemical Products Non Metallic Mineral Products Basic Metal. / Annum Rs.52 8.11 15. / Month 140 Rs. Budg et Rs.62 7.657 5 13.04 7.07 11.Commodities Basket Co mmod ities Primary Articles (98 Items) Food Articles Non Food Articles Minerals Fu el.627 Rs. / Month 7.04 1.80 0.17 2.00 3.00 WPI Up by (Points) 1.63 0.56 3.02 No.00 Rs.33 3.34 9. 10.92 1.50 0.60 Kg. Pow er.99 5./Kg.

droughts etc.Sugar Industry Risks  Environmental Risks  Climatic conditions such as monsoons.  Substitution Risks    Crop switching due to non-receipt of timely payment Crop switching due to better realisations for alternate crops Diversion of cane to Gur/Khandsari manufacturers  Regulatory Risks    Fixation of arbitrary cane prices Control of end product prices by the Government Direct imports of sugar by the Government and subsidised sales to check domestic prices 24 .

Recent Developments 25 .

What went wrong? Massive Over-production of Sugar – In India and Globally  Estimate of 22MT in FY 06-07 wrong. actual production was over 28 MT  High sugar prices led to high cane prices  Expansion of crushing capacities led farmers to grow more cane  High cane prices led to massive crop switching from all other crops to sugarcane  High oil prices made people believe more ethanol will be made and less sugar Conclusion – global surplus in sugar led to depressed sugar prices 26 .

which shall determine cane price. criteria’s and formula.Recent Positive Developments 1.  For all future years (07-08 onwards) – incorporate transparent norms. criteria’s and formula into rules of the act. Allahabad High Court Final Order:   Quashes SAP (State Government) price for 2006-07 & 2007-08 of Rs. otherwise follow SMP 27 . Until then price will be SMP.125/qtl Form Committee of Experts to re-fix cane price for 06-07 based on transparent norms.

118 / Qtl – potential saving of around Rs.100 Cr.125 / Qtl.Recent Positive Developments .    Adjustment of excess payment allowed from amount payable to farmers No coercive action against mills Allahabad High Court order holds good in all other aspects 28 .Continued  Supreme Court Interim Order:  Interim relief to the Sugar Mills by reducing 2006-07 Cane price from Rs. to Rs.

Recent Positive Developments . Ethanol Blending Program – All India    5% blending mandatory from October 2007 at Rs.Continued  2004 UP Government Sugar Promotion Policy   Stayed by Lucknow High Court on basis of Promissory Stopple Group continuing to avail benefits 4.50/litre for 2 yrs 10% blending to be made mandatory from October 2008 Group production of 11 crore litres out of production of 15 crore litres booked 29 . 21.

Continued  Supreme Court Judgment on Molasses Sales – Companies having sufficient captive consumption not required to compulsorily sell 20% of molasses production to liquor manufacturers – positive impact of around Rs. Potential upside thereon  Due Recognition by BSE – BHL included in BSE “A” Group w.e. 3rd March 2008 30 .Recent Positive Developments .f.15 – 20 Crore  Sugar Levy Price – Being revised upwards with retrospective effect.

Sugar production in SS 2007-08 to be around 26 Million Tons. Major reasons being:      3. 4. lower than the earlier estimate of 31-32 Million Tons 2. 5. Mustard Drop in Sugarcane yield Drop in Area under sugarcane cultivation Around 3 Million Tons of Raw Sugar likely to be exported in SS 2007-08 Sugar Inventories likely to be at lower levels Sugar prices already firming up 31 . 1.Going Forward 1. 25-30% Lower Sugarcane prices Higher prices for other crops – Wheat (Rs.000/MT) Massive Crop switching from Sugarcane to Wheat.

Group Overview 32 .

Bajaj Hindusthan Group    # 1 in India # 1 in Asia Amongst the top 5 in the World 33 .

plants have Distilleries & 9 have Surplus Power Co-generation  Strong track record of profitability – have declared dividend in 73 out of BHL’s 76 years of existence  Strong relationships with farmers based on track record of regular payments  Entered into more profitable business of making MDF from bagasse 34 . in 1931 – weaving a success story since last 76 years  Key products – Sugar.Group Overview  India’s largest Sugar & Ethanol manufacturer  Estd. Ethanol & Industrial Alcohol  Group has 14 Sugar manufacturing plants – all in UP. the largest Sugar manufacturing state in India  6 Mfg.

000 TCD Distillery – 640 KLPD Surplus Co-gen – 90 MW • Integrated operations enable the group to tide over business cycles BHSIL Sugar – 40. MDF – 160. 210 No further expansion in Sugar or Distillery businesses 35 .Well Integrated.000 m3 p. diversified Business House BHL Sugar – 96.000 TCD Distillery – 160 KLPD Surplus Co-gen – 15 MW BEPL PB – 50.a.000 m3 p.a.

Sugar deficient markets & excellent relationship with farmers. Economies of scale (lowest cost producer).36 . reducing dependence on rainfall  Maharashtra heavily dependent on rainfall 3 Maharashtra  Size Size helps garner larger proportion of available raw material  Reduces per unit cost 4  Efficiency Profitability is a function of efficiency which hinges on sugar recovery.Success factors in the Indian Sugar Industry – How is BH Group placed? 1 2   Raw Material Security Location ** ** * * *** ** ** ** * * **** ** ***** * ** * * * *** * * * * **** ** ** ** * * UP ** *** * Proximity to sugarcane critical (Uttar Pradesh & Maharashtra) Uttar Pradesh most favorably positioned • Dominant producer accounting for more than 30% of total sugarcane production in India • Proximity to sugar deficient markets resulting in higher price realizations • Well irrigated. throughput and control over production costs * Major Sugar Producing States Cane Growing Areas in UP Sugar Deficient States Sugar Balanced States 5  Relationship with Farmers Prompt payment to farmer imperative to ensure sufficient sugarcane supply BHL & BHSIL score high on all the above factors – in terms of Raw Material availability.

Manufacturing Facilities • Gangnauli (Distt.Balrampur) BHL Presence (10 loc) BHSIL Presence(4 loc) Cane growing Areas 37 . Shahjahanpur) • Kunderki (Distt.Basti) • Pratappur (Distt. Gonda) • Rudauli (Distt. Muzaffarnagar) • Bilai (Distt Bijnor) • Kinauni (Distt Meerut) • Barkhera (Distt.Saharanpur) • Thanabhawan and Budhana (Distt. Pilibhit) • Gola. Deoria) • Utraula (Distt.Lakhimpur) • Maqsudpur (Distt. Palia and Khambarkhera (Distt.

3 Alco hol Pro d. 38 .4 0. Power KL/Day MW 85 145 160 320 800 800 105 Sugar Prod. Lac L trs.4 0.8 1.3 0.000 31. TCD 17.000 136.Group Capacity Expansion & Production Year Su gar Cap.4 1.000 56.200 95.500 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 Est.000 24. 199 245 283 648 894 1. M MT 0.000 Distillery Exportable Cap.

0% 3. 1 353 103 60 30 CAGR F04-F07 50.1% 31.8% Financial Year : Oct – Sep 39 .BHL Financials – Profitability Rs.744 248 102 51 F 08 Qtr.487 350 278 191 F 07 1.6% -5. Crores Description Revenue EBITDA EBIT PAT F04 515 111 91 61 F 05 855 218 183 140 F 06 1.

1 55 20% 44% F 05 25% 16% 0.BHL Financials – Key Ratios Description EBITDA / Revenue PAT / Revenue Debt / Equity Current Ratio Inventory (Days) ROCE ROE Financial Year : Oct – Sep 40 F04 21% 12% 2.4 83 2% 4% .9 24 16% 23% F 06 24% 13% 1.5 30 10% 14% F 07 14% 3% 2.1 2.0 2.8 1.3 2.

BHL – Sustained Sugar Profitability 1.400 1.200 1./Bag) 1.668 1.146 1.331 1.037 1. Cane Cost Margin BHL’s economies of scale and operational efficiency ensure sustained profitability at all points in the cycle 41 .257 1.180 1.020 1.000 800 600 400 200 900 956 977 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 Avg.761 1.416 1.363 (Rs.800 1.033 860 357 336 318 298 320 379 522 471 343 1.600 1.292 1.295 1. Selling Price Avg.290 1.

BHSIL 42 .

Company Overview 1. Ideally positioned to service sugar deficient North Eastern / Eastern markets. if reqd. 2. all in Eastern UP) Distillery : 160 KLPD Co-Gen : 15 MW Exportable surplus 6. BHSIL among India’s top 5 Sugar manufacturers Capacities in place: Sugar : 40. where Sugar realisations are marginally higher 7. 9. Support from multilateral agencies like IFC through subscription to FCCBs indicates confidence in business model and the company management 43 . 8.000 TCD (4 Units. Synergies with parent which has mills in Western & Central UP Close proximity to Kolkata provides opportunity to export sugar.

3 new Sugar mills with 34.Capacity Expansion SS 2008 .000 TCD Capacity SS 2006 1 Mill.Exportable Co-gen 15 MW 210 44 . 3200 TCD SS 2007 Cap expanded to 6000 TCD taking total capacity to 40.000 TCD .New Distillery of 160 KLPD .

BEPL 45 .

Products Overview  Particle Board (PB)   second generation substitute of plywood made from small pieces of wood chips and other agro waste cellulosic materials. look. bonded with resin under pressure Both PB & MDF     are regarded as “Engineered Wood” have durability. richness and feel of seasoned timber have excellent machinability and application properties Perfect substitute for solid timber & plywood 46 . texture. bonded with resin under pressure  Medium Density Fibre Board (MDF)   third generation substitute of plywood made by defribrizing wood and other agro waste cellulosic materials.

1.70% Market-share on day One 47 .000 Crores. m3 90 % pre-laminated. 1. about 0. rest wood based Dominated by organized sector Highly profitable from Sugarcane Bagasse (40-45% EBITDA Margin)    MDF      Industry size estimated at Rs.49 mln. about 0. 10% plain 60% Cheaper than Plywood Industry growing at 20 % + 50% imported Very few players – about 10 manufacturers – only 3 Agro based. 20% pre-laminated 50% Cheaper than Plywood Industry growing at 20 % + 85% imported Only 3 manufacturers – all wood based 100% organized sector Highly profitable from Sugarcane Bagasse (40-45% EBITDA Margin) Bajaj .67 mln.Indian Industry Overview         Particle Board Industry size estimated at Rs. m3 80 % plain.500 Crores.

fo 8 x 4 Sheet.per Kg. Pre-Lamination of PB & MDF is a Hot Press Process.8 x 4 size Costs Approx. besides being Low is also not uniform.Cost Comparison – Plywood / PB / MDF LAMINAT ING PLYWOO D (18 mm thickness) Plywood One Sheet .8 x 4 size Costs Approx. 63 39 15 6 123 25 147 59 60 % 74 50 % 1. The quality of Lamination. besides being High is applied uniform. Plywood Lamination is a Cold Press Process. other side barrier paper) Pre-Laminated MDF is Cheaper by Rs.One Sheet . 200/. the Pressure & Temperature. therefore is very good 2. Rs./Sq .250 Avg.Polish. Rs. Paint or Cheap Laminate Ad hesive (F evicol) 1 Kg. Approx Cost Rs.000 Avg. T otal Material Cost Labour Minimum 20% of Material Costs Cost of Laminating Plywo od COST O F PRE-LAMINATED PARTICL E BOARD (18 mm thickness) (One Side Laminated. 1. 2. the Pressure. The quality of Lamination therefore depends on individual Carpenter's skills 48 . Being Manual Process. Being Automatic Process. other side barrier paper) Pre-Laminated PB is Cheaper by COST O F PRE-LAMINATED MEDIUM DENSITY FIBRE BOARD (18 mm thickness) (One Side Laminated. Lamin ate Top Side .F t. Other Side .

a major user of Particle Boards and MDF • At a conservative estimate of 8 m3 per 1. sq. m3 * Source – CLSA Report • Mere 5% demand switchover from plywood to Particle Board and MDF will result in additional demand for Particle Board and MDF of around 0. sq. space over next 5 years* • Demand for housing will also be a key growth driver as 48% of India’s population still lives in semi-permanent / temporary structures* Demand Substitution by Particle Board & MDF • Substitution of demand from traditional wood sources such as timber and plywood. ITES & organized retail sector itself would be around 2. space creation over next 5 years* • Organized retail sector expect creation of another 150 mln..5 mln.5 mln. m3 Supply Constraints     No new licenses being given for wood based factories Legislative changes forcing closure of existing saw mills and plywood factories Availability of adequate quantity and appropriate quality raw materials for manufacture of Particle Board and MDF High Capital Investment is also one of the key entry barrier 49 .Demand Supply Dynamics Growing Demand  Demand Substitution  Rising Demand for Panels & Furniture • IT & ITES Sector alone demand 150 mln.000 sq. ft. ft. which are becoming scarce and hence expensive • Environment consciousness mandating use of non wood furniture in all government offices • Increasing preference for modular furniture . ft. additional demand for Panels from IT.

6% 9.000 (580.545 * Dem and for 2005 as per FAO Report.560.765) 25.6% 10.728.277 331.000 (1.000 90.210.9% 11.500 (374.803 8.174 198.1% 13.3% 588.256.100) 53.131.216 2.7% 12.632) 77.132 670.609) 90.545 1.724.8% 8.000 315.4% 705.777) 72.253 8.607.750 (246.050) 17.720 331.800 198.000 8. Addl.000) 4.931.720.256.India’s Demand Supply Equation 2005 Plywood Dem and * Supply Deficit *** % of Demand Particle Board Dem and * Supply ** Deficit *** % of Demand MDF Board Dem and * Supply ** Deficit *** % of Demand Total Demand 2006 2007 2008 2009 2010 2011 m 3 p.500 (515.250) 50. Demand 2011 / 2006 2.600 331.720.000.000 (1.000 (642.000) 46.000.212.760) 82.016.463.000 ( 1.000 (766.4% 1.629 1.000 (400.000) 9.000 243.219.5% 10.312 198.765 8.6% 9.000.210.400.720.064 331.564) 67.a.8% 1.000 (1.000 (820.3% 9.000 (273.261.803) 28.609 198.1% 14.800) 79.8% 1.500 (684.000 (2.436. 5% growth tak en for Plywood & 20% for PB & MDF ** Supply taken at 90% of Installed Capacities of existing manufactur ers & known new entrants *** Met through Im ports 50 .000 8.157.803 8.500 (887.196.000.3% 875.000 804.000 964.220) 60.174) 88.667.000) 86.508.000) 13.389.000.9% 490.312) 85.000) 79.191.000.802.000 (959.400 1.000.530 1.253) 21.9% 10.000 8.000 (1.000.000 (2.0% 846.261.000 162.132 331.000 (3.469.615.609 4.7% 10.4% 11.724.500 (1.050 8.760 198.820.

All tests confirm that the quality of Bagasse based PB & MDF is at par with the quality of PB & MDF made from wood or wood-waste    Bagasse based PB & MDF meets    Euro Board Standard EMB 1995 China National Standard GB/T/117182 1999 and Indian Standard 12406 1998 51 . instead of simply burning Technology for making PB & MDF from Bagasse was developed in Europe long time back and off late to some extent in China as well The quality of PB & MDF made from Bagasse is very good.PB & MDF from Sugarcane Bagasse    India is second largest producer of sugarcane in the world Lot of sugarcane bagasse is generated every year Bagasse is a valuable cellulose and can be utilised better by making PB & MDF Board.

Rs. / MT Rs.500 1 4.Co-generation. Paper or Boards? Value Addition per MT of Bagasse Used for Co-generation.150 79. Co-generation 1.00 2.500 per MT. Manufacturing Paper & Manufacturing Boards Details Bagasse Steam Generated Steam to Power Ratio Power Generated / Paper Produced Saleable @ 80% Rate Revenue Bagasse Used (Fibre for Boards) Revenue per MT of Bagasse Cost of Bagasse Value Addition per MT of Bagasse Unit MT MT Kg.250 3.500 1. is the highest at Rs. 8. when utilised for making Boards.611.960 9.250 6.056 1 1. as compared to that of Rs.200 5.250 210 35.375 Conclusion: Value Addition to Bagasse.350 1. 4. VALUE ADDITION TO BAGASSE IS ABOUT 54 TIMES HIGHER IN BOARDS. MT Rs.00 4.00 440 352 3.056 900 156 Kraft Paper Writing Paper MDF / PB Boards 250 18. THAN IN CO-GENERATION !! 52 .250 8. Kg. / KWH / KG Rs.350 1 7.625 1.100 769. 156 per MT.00 7.00 1. / KWH KWH / KG KWH Rs.375 PMT of Bagasse. if utilised for making Paper.20 2. if utilised for Co-generation or average Rs.

 Assured Raw Material Availability 100 % raw material (bagasse) available from parent company 3.  Project Execution Demonstrated ability to execute projects ahead of time and within costs 53 .BEPL – Competitive Advantage 1. 1 Sugar and Ethanol manufacturing company 2. steam & power Selling price of MDF 50% lower than that of Plywood Bajaj MDF/PB has between 40-45% EBITDA Margins   5.  Cost Competitive Substantially lower production costs cause of 100 % captive raw material.  Captive Generation of Steam and Power 100 % generation of steam and power available from parent company 4.  Location Advantage Proximity to major consuming markets in north & west India where demand is far in excess of supply Significantly lower transport costs of finished products Very few Particle Board and MDF manufacturers in north & west India   6.  Very Strong Parent Promoted by Bajaj .India’s No.

Project Details Plants • Total 3 Plants. on schedule Product Mix • • • • Particle Board MDF HDF (High Density Fibre Board) Laminate Flooring – – All Products available in various thickness & sizes Both Plain & Pre-laminated boards available.P. – – – 1 Particle Board Plant – Capacity 50.000 m3 per annum Production started in Feb 2008. with options of One Side Lamination and Both Sides Lamination 54 . each Total manufacturing capacity – 2. Central and Eastern U.000 m3 per annum.000 m3 per annum 2 MDF Plants – Capacity 80. one each in Western.10.

Ethanol:  The largest producer of Ethanol/Alcohol in India  Taking advantage of Ethanol blending program 3.. Sugar Business:  Capacities in place – India’s largest  Policies on Sugarcane pricing likely to be favourable 3. on-schedule 55 .Summing Up… Going beyond Sugar.. MDF / PB from Bagasse:  Highly profitable line of Business (40-45% EBITDA Margin)  Production started in February’08. 1. Power Co-generation:  About 105 MW of surplus saleable power  To add directly to the profitability 4.

Thank You 56 .

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