triveni annual re[ort

download triveni annual re[ort

of 136

Transcript of triveni annual re[ort

  • 7/31/2019 triveni annual re[ort

    1/136

    ACHIEVINGMORE

    A N N U A L R E P O R T 2 0 1 0 - 1 1A N N U A L R E P O R T 2 0 1 0 - 1 1

    ACHIEVINGMORE

    TOGETHER

  • 7/31/2019 triveni annual re[ort

    2/136

    CONTENTAchieving More Together 01Message from the Chairman 08Financial Highlights 11Management Discussion & Analysis 12Directors Report 40Corporate Governance 50Financial Section 63

    FORWARD LOOKINGSTATEMENTThis report contains forward-looking statements, which may be identified by their use of words

    like plans, expects, will, anticipates, believes, intends, projects, estimates or otherwords of similar meaning. All statements that address expectations of projections about thefuture, including but not limited to statements about the Companys strategy for growth, productdevelopment, market position, expenditures and financial results, are forward-lookingstatements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations areaccurate or will be realised.The Companys actual results, performance or achievements could thus differ materially fromthose projected in any such forward-looking statements. The Company assumes no responsibilityto publicly amend, modify or revise any forward looking statements, on the basis of anysubsequent developments, information or events.The Company has sourced the industry information from the publicly available sources and hasnot verified those information independently.

  • 7/31/2019 triveni annual re[ort

    3/136

    The foundation of civilization isbased on co-habitation, co-operation,collaboration and co-creation. Fromtime immemorial, togetherness has

    been the success factor for the evolution and dominance of

    mankind.Similarly, the realm of business enterprise is extremelycollaborative. The sustenance and growth of any enterprisedepends on its ability to strike an intricate balance between thevarious constituents of its ecology. The theory of triple bottom lineaptly advocates the interdependence between the Planet,People and Profit and highlights the spirit of togetherness forlong term success of any organisation.

    At Triveni, we have been exemplifying the spirit of togetherness for over seven decades. The respect for andcommitment to symbiotic relationships that we share withour stakeholders - investors, employees, customers, suppliers,partners, government, community and ecology - form the corevalues of our operations. We, therefore, believe that we havebeen achieving more together.

    ACHIEVINGMORE

    TOGETHER

    ANNUAL REPORT 2010-11 I 01

  • 7/31/2019 triveni annual re[ort

    4/136

    WHEN

    VISIONMEETS

    ACTION,LEADERSHIPIS ATTAINED.

    02 ANNUAL REPORT 2010-11I

  • 7/31/2019 triveni annual re[ort

    5/136

    Attaining business leadership is a journey and not a destination.At Triveni, we are governed by our vision to attain a significantleadership position in each of our businesses.

    The fact that we are one of the largest integrated sugarproducers in the country, market leader in high speed gears andgearboxes and emerging as one of the leaders in water &wastewater management business is a true reflection of competence, rigor and passion of our 5000+ employees.

    ANNUAL REPORT 2010-11 I 03

  • 7/31/2019 triveni annual re[ort

    6/136

    WHEN

    CHALLENGEMEETS

    COMPETENCE,SOLUTIONSEMERGE.

    04 ANNUAL REPORT 2010-11I

  • 7/31/2019 triveni annual re[ort

    7/136

    Addressing key priorities facing our generation is a commontheme across our diverse businesses. Food, water, renewablepower, alternative energy, industrial efficiency - all are keyhuman priorities. Our customer group is equally diverse and

    includes state electricity boards, municipal bodies, industrialhouses and mass consumers of sugar.

    We have been helping our customers to meet their challenges byproviding technologically advanced and value engineeredsolutions. We keep enhancing our competencies in order tobring cost efficient products and solutions meeting higheststandards of quality & reliability.

    ANNUAL REPORT 2010-11 I 05

  • 7/31/2019 triveni annual re[ort

    8/136

    WHEN

    TRUSTMEETS

    POTENTIAL,GROWTHHAPPENS.

    06 ANNUAL REPORT 2010-11I

  • 7/31/2019 triveni annual re[ort

    9/136

    The collaborative world of business harbours tremendouspotential and possibilities. To achieve greater success in such ascenario, forging successful alliances and partnerships across awider spectrum of stakeholders is critical.

    At Triveni, we strive to master the art of leveragingpartnerships for long-term growth and prosperity. The growthof our stakeholders is inextricably linked with our growth.Our quintessential diversity gets reflected in the hues of ourpartners - farmers, knowledge partners, technology partners,critical components suppliers, sub-contractors and investors.

    ANNUAL REPORT 2010-11 I 07

  • 7/31/2019 triveni annual re[ort

    10/136

    MESSAGE FROM THECHAIRMAN

    08 ANNUAL REPORT 2010-11I

    A significant increase in the cost of the keyinput sugarcane, and range bound sugarprices during the year had a serious impacton profitability. The availability of bagasseremained low, due to the lower sugarcanecrushed during the year, resulting in lower

    income from co-generation operations. Thelower cane crush also limited molassesproduction. However, with a proper mix of Extra Neutral Alcohol (ENA), Ethanol andRectified Spirit, the distillery recorded betterprofitability compared to the last year.

    Dear Shareholders,

    It is my pleasure to share with you a review of our operations in the past year and mythoughts on the future. I thank you mostsincerely for your confidence and trust in ourCompany and management.

    The fiscal year 2010-11 was another difficult year for the Indian Sugar Industry. Sugarproduction grew by 30% over the previousseason to reach 24.4 million tonnes.

    Sugar Business

  • 7/31/2019 triveni annual re[ort

    11/136

    ANNUAL REPORT 2010-11 I 09

    Engineering Business

    Unlike our pure-play sugar peers, we enjoythe advantage of being a sugar plus company,courtesy of our gear and water treatmentbusinesses. Both businesses witnessed agrowth in profitability and turnover during the

    year. The steam turbine business wasdemerged into Triveni Turbine Ltd. (TTL)pursuant to the Scheme of Arrangement fromthe appointed date on 1st October 2010 andthus, no steam turbine operations have beenincluded in the results for the year underreview. The figures of the current year are

    therefore not comparable with those of theprevious year.

    The Water & Wastewater Treatment Business(WBG) recorded a growth in sales duringthe year which was higher than the average of the industry. It is currently undertaking itslargest project for the Municipality of Agra.WBG secured water management jobs inindustrial segments in new geographicalregions during the year and received anaward from Frost & Sullivan, a leading globalresearch group, for achieving the highestgrowth in the Indian Water & WastewaterTreatment Industry.

    The Gear Business Group (GBG) performedwell and in line with our estimates. Ourstrategy was to aggressively focus on theaftermarket business and this helped inmaintaining high profitability margins.Through strategic tie-up, it has wider access totechnology, product range and geographicalreach. GBG has invested in expansion of capacity, and upgraded its qualityinfrastructure to meet global benchmarks andis aggressively pursuing export sales.

    Regulation of the sugar industry, both at theState and Central Government level, is themain cause for the downward spiral in the

    fortunes of this industry. We are hopeful thatthe recent pronouncement of the Food Minister,will result in the required deregulation of atleast the levy sugar (PDS) system and openmarket releases. For our sugar industry to beable to stand to the global competition, weneed to also deregulate or link cane prices withsugar prices, and do away with cane areareservation. This will be of tremendousbenefit to the farmer, and allow the industry to

    make a reasonable return. At the moment,neither Government nor Industry resources arebeing used to increase the productivity of cane, and this now become crucial for the longterm survival of a healthy, self-sufficientdomestic sugar industry.

    Despi te the increased cane priceannouncement for the season 2011-12,operating performance of the sugar businessgroup is expected to be better than the year

    under review. Healthy and stable sugar priceswith better capacity utilisation of our co-generation and distillery facilities, will improvethe sugar division's results.

    While raw material and sugar pricesare beyond our control, we are stayingfocused on enhancing operational efficiencies,and strengthening our collaborativeengagement with the farmers through asustained cane development programme.

    Our cane development efforts are focusedon educating the farmers, and we act asfacilitators in helping them implementvarious yield enhancing techniques. We alsosupply them with improved cane seedvarieties.

  • 7/31/2019 triveni annual re[ort

    12/136

    10 ANNUAL REPORT 2010-11I

    In this regard, a need has therefore arisen toprovide a single point reference to addresswater related issues. The CII-Triveni Water

    Institute is the first not-for-profit organisation of itskind in the world where Government, industryand civil society come together to address allwater related issues in a holistic manner.

    We at Triveni have come to realise the seriousproblems in the water economy in India throughour efforts in agriculture and capital goods. Theproblems of lack of infrastructure arecompounded by structural inefficiencies andpolicy lethargy. It is with the aim of contributing

    to harmonious and equitable societaldevelopment in India, that Triveni has taken thisinitiative with CII to form the CII-Triveni WaterInstitute as a National Centre of Excellence.

    The Institute will look at Water and WastewaterManagement in India, for all stakeholders of the water economy - from the panchayat levelto industrial users. While dealing with theissues of efficiency, conservation and delivery,the Institute will aim to deliver services to

    further its objectives which include policyreview and recommendations, awareness andconsensus building, education certificationand training, advisory services and events andcapacity building. We hope to createsubstantial employment opportunities withthese programmes and specialised skilldevelopment.

    At Triveni, we remain committed to sustainedvalue creation for all our stakeholders and we

    thank all of them for giving us this opportunity.With best regards,

    Dhruv M. SawhneyChairman and Managing Director

    Concerns about economic growth

    Strengthening Partnership

    Societal Development

    The country is witnessing a challenginginvestment climate, and there is some

    slowdown in the economy. Various industrialenterprises have put on hold their capex plansand this has resulted in some delays in orderfinalisation for our engineering businesses. Anenhanced product and geographic portfolio,along with an increasing focus on exports,spares, servicing & retrofitting in our GearBusiness, should enable us to mitigate thisdownside to a great extent, and maintainmargins. With respect to the Water business,

    the outlook is positive, given that quite a fewlarge projects are under finalisation, and wehope to secure some of them. The overalloutlook for the engineering businesses stillremains encouraging for our range of offerings.

    Leveraging meaningful partnerships for mutualgrowth has always been a key to our success.During the fiscal year 2010-11, our licenceagreement with Lufkin Inc. for high speed gears

    was renewed for a period of 12 years andcovered additional products and geographies.

    We also signed a new technology licenceagreement with Lufkin Inc. for the nichelow speed segment of gearboxes in the Rubberand Plastics industry, Steel, Metals and Marineindustries and for the Coal Pulverizers.

    One of the greatest challenges facing India'shuman development is the conservation andequitable distribution of our limited freshwater resources. There are serious concernson the availability of fresh water in India as ithas 16% of the world's population and 4% of the world's fresh water resources.

  • 7/31/2019 triveni annual re[ort

    13/136

    ANNUAL REPORT 2010-11 1 I 1

    FINANCIALHIGHLIGHTSParticulars Unit FY11 FY10 FY 09 FY 08 FY 07

    ending ending ending ending (18 months)ending

    30.9.2011 30.9.2010 30.9.2009 30.9.2008 30.9.2007

    Net Turnover R Million 17071.53 22595.34 18948.41 15930.14 19079.53

    EBITDA R Million 1799.80 2479.48 4527.11 3167.12 2397.83

    Cash Profits R Million 893.44 1950.84 2840.21 2168.21 1576.97Profits before Tax (PBT) R Million 82.47 1173.16 2429.47 1345.61 785.20

    Profit after Tax (PAT) R Million 130.58 908.41 1697.78 1115.18 754.29

    Share Capital R Million 257.88 257.88 257.88 257.88 257.88

    Reserves & Surplus(Less Revaluation reserve) R Million 9899.59 9489.52 8806.64 7410.57 6490.64

    Net worth* R Million 10157.47 9747.40 9051.52 7649.28 6726.11

    Loan Funds R Million 8258.74 9341.57 8337.95 11686.96 9993.94

    Net Fixed Assets R Million 10862.89 12505.33 12738.78 12972.13 13025.34

    Net Current Assets R Million 8530.28 7629.98 5379.49 6986.82 4128.08Operating Profit Margin % 11% 11% 24% 20% 13%

    Net Profit Margin % 1% 4% 9% 7% 4%

    Return on AverageNet Worth % 1% 10% 20% 16% 13%

    Return on AverageCapital Employed % 5% 8% 13% 10% 11%

    EPS (fully diluted) R 0.51 3.52 6.58 4.32 2.92

    Cash EPS (fully diluted) R 3.46 7.56 11.01 8.41 6.12

    Debt Equity Ratio Times 0.81 0.96 0.92 1.53 1.49

    Interest coverage Times 1.90 2.92 3.91 3.19 3.29

    Dividend Rate % 20% 75% 100% 60% 60%

    # Excluding the financial results of the Steam Turbine Business which was demerged from the appointed date of st1 October, 2010 as per the Scheme of Arrangement.

    * After adjustment of miscellaneous expenditure not written off

    #

  • 7/31/2019 triveni annual re[ort

    14/136

    MANAGEMENTDISCUSSION

    AND ANALYSIS

    12 ANNUAL REPORT 2010-11I

  • 7/31/2019 triveni annual re[ort

    15/136

    ANNUAL REPORT 2010-11 I 13

    production is considerably low at 24% despiteits area under cane cultivation accounting forover 40% nationally whereas Maharashtra

    accounts for about 37% of sugar productionwith just 20% share in area under cane cultivation.

    Increased sugar production in 2010-11turned India into a sugar exporter from animporter in the previous season. Accordingly,the Government allowed exports of 2.7 milliontonnes of sugar, comprising of 1.2 million tonnesagainst the Advance Licence Scheme (ALS) andthe further three tranches of 0.5 million tonneeach under the Open General Licence (OGL).

    The sugar inventory in India has moved range

    bound between 4-6 million tonnes in the last

    INDIAN SUGAR INDUSTRY

    Sugar season 2010-11 was a year of reboundfor cane cultivation as well as sugar productionin India. Estimated at 49.62 lakh hectares,area under cane cultivation recorded anincrease of 18% over the previous season.At a marginally higher yield of 69 tonnesper hectare, total sugarcane production isestimated to have increased by 22% to reach340 million tonnes.

    Sugar recovery from cane, however, declinedmarginally to 10.1% from 10.2% achieved in

    the previous year. Consequently, the industryrecorded sugar production of 24.4 milliontonnes, an increase of 30% over the previous

    year. Maharashtra, Karnataka, Tamil Naduand Andhra Pradesh contributed the mostin this increase, together accounting for anincrease of 35% year on year. At 14%,Uttar Pradesh (U.P.) recorded a lower increaseoverall with Eastern U.P. recording 26% increasefollowed by Central U.P. at 17% while Western

    U.P. remaining flat. U.P.s share in sugar

    (Figures in million tonne)2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

    (Prov) (Est.)Opening Stock as on 1st Oct. 4.3 11.0 10.4 4.4 5.0@ 6.0Production during the Season 28.3 26.3 14.5 18.9 24.4 25.0Imports - - 2.5 4.0 0 0Total Availability 32.6 37.3 27.4 27.3 29.4 31.0Off-takei) Internal Consumption 19.9 21.9 23.0 21.0 20.8 22.5ii) Exports 1.7 5.0 0.02 0.2 2.6 3.0Total off-take 21.6 26.9 23.0 21.2 23.4 25.5Closing Stock as on 30th Sept. 11.0 10.4 4.4 6.1 6.0 5.5Stock as % of Off-take 55.3% 47.7% 19.1% 29.0% 28.6% 24.4%

    Source: ISMA upto 2010-11 and 2011-12 Company Estimates@ As per Govt. data

    COMPARATIVE SUPPLY & DEMAND POSITION OF SUGAR

    SUGAR PRODUCTION INMAJOR SUGAR PRODUCING STATES

    0%

    20%

    40%

    60%

    80%

    100%

    120%

    0

    2

    4

    6

    8

    10 (2009-10)(2010-11)(2008-09) %age change

    MaharashtraUttarPradesh

    Karnataka Tamil Nadu/ Pondicherry

    Gujarat AndhraPradesh

    Source: ISMA

    (in million tonne)

  • 7/31/2019 triveni annual re[ort

    16/136

    14 ANNUAL REPORT 2010-11I

    three years in contrast to very high levelswitnessed during 2006-08 period. However,the consumption levels during 2009-11 have

    remained static - owing partly to the increase infree sugar price and largely on account of almost zero trade pipeline inventories as aresult of various interventions by theGovernment to curb increase in sugar prices.Thus, the impact of rise in per capita incomeand change in consumption pattern of highsugared confectionaries, bakery products etc.remained masked. With the dispensation of governmental controls, it is expected that

    the consumption will increase to about 22.5-23.0 million tonnes. The stock to consumptionratio, which is one of the indicators of sugarprice movement, is currently favorable at28.6%, which in some ways indicate a healthysugar pricing scenario going forward. Further,the building of sugar pipeline inventory willalso help sugar prices to remain buoyant.

    During FY 11, the sugar prices in the countryfluctuated in a narrow range of 8-9% withper quintal maximum price of R 3082 andminimum price of R 2842 (including duties).On the contrary, the international sugar priceswitnessed high volatility. The year saw theglobal sugar contract price for white sugartouching an all time high of USD 822 in endDecember 2010 and remained buoyant in

    Sugar Prices

    comparison to the domestic prices for mostof the period. With the beginning of Brazilian sugar season, and on account of

    estimates of higher production, theinternational prices declined. However, as theBrazilian sugar season progressed, theestimates for sugar production were reviseddownwards progressively due to lowersugarcane yields and this resulted in a sharpincrease in global sugar prices whichremained at high levels afterwards.

    MOVEMENT OF SUGAR PRICESDURING OCT 2010-SEPT 2011

    Sugar Cane Pricing

    The Sugar cane price for the country, asannounced by the Central Government for2010-11, was higher by about 7% over theprevious year. However, in Uttar Pradesh,where all our sugar operations are located,State Advised Price (SAP) was fixed atR 2050per tonne for general variety sugarcane, whichwas an increase of 28% year-on-year andhigher by about 49% in comparison to theequivalent Fair and Remunerative Price (FRP).

    Source: Monthly average sugar prices (NCDEX sugar prices for domestic market and LIFFE prices for Global market)

    R /Qtl Domestic$c/pound Global

    26

    29

    32

    35

    38

    2800285029002950300030503100

    Oct10 Nov10Dec10Jan11Feb11 Mar11 Apr 11May11Jun11 Jul11Aug11Sep11

  • 7/31/2019 triveni annual re[ort

    17/136

    COMPARISON BETWEEN U.P. SAP AND FRP/SMP

    10%20%30%40%50%

    5075

    100125150175200

    2000-01

    2001-02

    2002-03

    2003-04

    2004-05

    2005-06

    2006-07

    2007-08

    2008-09

    2009-10

    2010-11

    2011-12

    225250

    60%70%80%SMP/FRPU.P. SAP

    change in SAP v/s SMP/FRP

    Source: Industry Reports

    GAPSugar

    5%

    15%

    25%

    35%

    45%

    55%

    2000

    2200

    2400

    2600

    2800

    3000

    3200

    3600

    3400

    3800

    4000

    4200

    Oct09

    Dec09

    Feb10

    Apr10

    Jun10

    Aug10

    Oct10

    Dec10

    Feb11

    Apr11

    Jun11

    Aug11

    Nov09

    Jan10

    Mar10

    May10

    Jul10

    Sep10

    Nov10

    Mar11

    Jan11

    May11

    Jul11

    Sep11

    Gur

    ANNUAL REPORT 2010-11 I 15

    Historically, the sugar cane price for UttarPradesh has been higher than that of the priceannounced by the Central Government which

    are applicable to other major sugar producingstates like Maharashtra and Karnataka. Onaccount of the higher sugarcane price, the costof sugar production in Uttar Pradesh was higher.

    Sugar & Alternate Sweetners

    In Uttar Pradesh, the diversion of sugarcaneto alternate sweetners (Gur & Khandsar) hastraditionally been high and the sugar season2010-11 was no different. Out of 118 milliontonnes of sugarcane produced in the state,almost 34% has been used for manufacture

    of alternate sweetners, as against the allIndia usage of 17%. As per estimates, UttarPradesh produced approx. 4.6 million tonnes

    of alternate sweetners which is 70% of country's total estimated production of 6.5million tonnes. During 2010-11, the production

    of alternate sweetners for the country as awhole was lower by 4%, whereas the productionin the state of U.P. was higher by 11%.

    While the sugar prices in Uttar Pradesh duringthe year moved in a narrow range, the gurprices showed significant volatility. The gurprices surged from April 2011 onwards, whilethe sugar prices remained muted during thesame period. As can be seen from the graphbelow, the gap between sugar prices and gurprices during the period of sugar canecrushing were consistently rising and the gapbetween the two even went upto 37% in themonth of February 2011 and March 2011because of diversion. However, after thecrushing period was completed, the gap waslargely bridged. This is on account of storageof gur during the crushing season by theintermediaries for sale during the off-season athigher prices.

    The sugar production in 2011-12 season is

    India Sugar Outlook 2011-12

    MOVEMENT OF GUR & SUGAR PRICES DURING OCT 2009 - SEPT 2011(R/quintal)

    Source: Monthly average prices (NCDEX prices for Muzaffarnagar Mandi)

    (R/quintal)

  • 7/31/2019 triveni annual re[ort

    18/136

    16 ANNUAL REPORT 2010-11I

    estimated to go up to around 25-26 milliontonnes due to estimated increase in area undersugar cane cultivation. Government of India, in

    November 2011, has announced export of one million tonne. The Sugar cane pricingannounced by the Central Government (FRP)for 2011-12 season is R 145 per quintal, anincrease of 4%, while the Uttar PradeshGovernment has announced the SAP of R 240per quintal for general variety of cane andR 250 per quintal for early maturing variety of cane, which is an increase of about 18%. Thisincrease in cane price is expected to impact

    the sugar manufacturers of Uttar Pradeshadversely unless the prevailing sugar pricessustain or register marginal increase in thebalance part of the year. The industryassociation has approached the Court againstthe unrealistic increase in cane price and isawaiting the outcome.

    The global sugar production for 2010-11 wasestimated at 166 million tonnes, an increase of about 12 million tonnes from the previous year.The increased production was mainlycontributed by India, Brazil and Thailand.While India and Thailand recorded a year-on-

    year increase of 30% and 40% respectively,Brazil managed an increase of only 16%.Brazil witnessed lower sugar content in caneover the previous year. Increased usage

    Global Sugar Scenario

    of cane for sugar production, however,compensated for the decline in production onaccount of lower yields. The usage mix of cane

    between sugar and ethanol in Brazil has goneup to 48:52 as compared to 45:55 during theprevious year.

    The global sugar production for 2011-12 isestimated to record an increase of about9 million tonnes to reach 175 million tonnes.This increase is expected to come primarilyfrom beet sugar, which is pegged to go up

    by about 6 million tonnes, while increase incane sugar is expected to be only 3 milliontonnes. This estimate is quite in contrastto the trends of 2010-11 season, wherecane sugar was estimated to have achievedan increase of about 14 million tonneswhile beet sugar production showeda decline of about 2 million tonnes over theprevious year. Early estimates for 2011-12project Brazil to produce about 2.5 milliontonnes less than 2010-11, India to produceabout 1 million tonne more and Thailand toremain flat at about 10 million tonnes. Brazil'smain cane growing region, the SouthCentre is estimated to have lower canecoupled with lower sugar recovery whilethe North/North-East is expected to producemore sugar.

    Global Sugar Outlook 2011-12

  • 7/31/2019 triveni annual re[ort

    19/136

  • 7/31/2019 triveni annual re[ort

    20/136

    18 ANNUAL REPORT 2010-11I

    OGL, profits of R166.3 million were earned.The sugar business incurred a net profit beforeinterest of R 74 million while its net sales stood

    at R 13,434 million during the year.Recognising that the raw material andoutput prices are rather beyond thecontrol of the Company, Triveni focuses onimproving manufacturing efficiencies, logisticsrationalisation, cost controls and undilutedattention on cane development.

    The Company continued its efforts to improve

    the quality and availability of cane through itsCane Development Programme. During springplanting, the Company took special effortsin introducing some improved and earlymaturing varieties with reasonable success.Existing high sugared varieties were alsotargeted for multiplication and on an average15-20% fresh planting has been covered bythese varieties.

    Yield enhancement has been a key focusof our Cane Development Activities. Trivenihas entered into an agreement withM/s Agsri Services for carrying forward thisinitiative. Farmers' participation is importantfor scaling up this technique. Keeping thisin view, Triveni together with Agsri havelaunched the nursery programme involvingthe farmers. A large number of farmers have

    Cane Development

    taken up this initiative with reasonable successand this programme will be further replicated.

    These initiatives require only minor adjustmentswith prevailing farming practices and do notinvolve much cost. Our cane developmentefforts revolve around educating the farmersand we act as facilitators in the whole process.We expect these initiatives to have a positiveimpact on cane yields in near future.

    Area under cane cultivation is estimated tohave increased by about 5% across all our

    units aggregating to approx. 1.50 lac hectare.This increase in area is in line with the Stateaverage. As per the preliminary estimates, the

    yields are expected to be marginally betterthis year mainly on account of better Ratooncrop in the current year. However, plant canewhich has been planted after harvest of wheatdoes not appear to be promising due to earlyrains in the month of May-June. Plant yieldsare expected to be more or less similar to

    that of last year. Maturity trend is slightlybetter than the previous year. On account of above and considering normal diversion,it is estimated that an increase in crush andsugar production by about 10% may beachieved.

    With the Government's pro-active initiatives of allowing one million tonne of export and also

    Outlook

  • 7/31/2019 triveni annual re[ort

    21/136

  • 7/31/2019 triveni annual re[ort

    22/136

    20 ANNUAL REPORT 2010-11I

    of captive raw material. The Unit extractsbio-gas from the effluent and uses it as mainfuel in the boiler.

    The distillery currently produces Extra NeutralAlcohol (ENA), Rectified Spirit (RS), SpecialDenatured Spirit (SDS), and Ethanol and isrenowned for the high quality of its products.It had, for the first time since commissioning,started despatches of ethanol to oilmarketing companies from December 2010.The quality of ethanol was well accepted byoil companies.

    Distillery continued to achieve high fermentationand distillation efficiencies. Major customersof the distillery business are United SpiritsLimited and Oil Marketing Companies (OMCs)and commands premium for its excellentproduct quality.

    Estimated increase in sugarcane crushing inFY12 would lead to higher production of molasses and thus alcohol. The oil marketingcompanies have already completed tenderingprocess for supplies of ethanol for the periodOctober 2011 to September 2012, againstwhich Triveni has received contracts forsupplies of ethanol. Currently, the interimprices are set at R 27 per litre which are

    Performance highlights

    Outlook

    increased bagasse availability, the operationalperiod and capacity utilisation of co-generation plants is also expected to be

    higher, thereby improving the revenue andprofitability.

    In respect of the operation of the KhatauliCDM project for April 2008 to May 2010period, request for issuances would be filedwith UNFCCC. Revenue from the sale of RECs

    12would also be available from FY in respectof both Khatauli & Deoband plants.

    The Company continues to align its operationstowards maximising utilisation and operationalefficiencies. The revenue generated from thesale of power and carbon credits generatedfrom the UNFCCC registered CDM plants aswell as revenues from RECs will continue toprovide good returns from the co-generationbusiness.

    With an aim to integrate its sugar operationsand to reduce the impact of its cyclicality,Triveni entered the distillery business in 2007with the commissioning of a distillery atMuzaffarnagar. The distillery has a capacityof 160 Kilo Litres per Day (KLPD) and isone of the largest single stream molassesbased distilleries in India. Strategically locatedin close proximity to two of its largest sugarunits, the distillery procures consistent supply

    DISTILLERY BUSINESS

  • 7/31/2019 triveni annual re[ort

    23/136

    ANNUAL REPORT 2010-11 I 21

    expected to be revised in line with the petrolprices. It should also strengthen the pricingfor other variants of alcohol, such as, ENA

    and RS in FY12. Distillery group continuesto have strong focus on efficiencies, productquality and maintaining excellent relationswith its main customers to have premium forits products.

    In order to support the basic civic needsof its 1.2 billion plus populace and its

    economic growth aspirations, India needsquick and serious multi-pronged intervention insystematic management of its water resources.As per an industry report, the total demandfor water will go upto 900 Billion CubicMetre (BCM) in 2050 from 680 BCM in 2000.While the total water availability exceedsthe requirement by almost 50%, accessibilityto clean usable water is only a fraction of theavailability.

    Consequently, water and wastewater treatmentdomain will continue to offer huge businesspotential in India over the coming decades.Consistently growing population and rapidurbanisation is already putting significantpressure of meeting growing demand forwater on major cities. The need for improvingcrop yields to ensure food security for the

    ENGINEERING BUSINESS

    WATER INDUSTRY

    growing population is bound to pushwater demand in agriculture sector. Country'sgrowing industrialisation coupled with stringent

    environmental norms is opening up newerpossibilities in water treatment as well aswastewater treatment.

    Currently estimated at US $1.2 billion, theIndian water treatment industry is growingby about 15-20% year-on-year. Industrial andmunicipal segments account for almost 90%of the water treatment market in India.The Planning Commission has estimatedan investment of USD 26.5 billion in the

    th12 Five Year Plan (2012-2017) for providingsafe water to all urban and rural Indians.To tackle its emanating water challenge,India will require consulting and engineeringservices across water technology includingdesalination and environment protection fortreatment of wastewater, sewage and solid,liquid & chemical waste.

    The water industry can be classified intofour categories- Municipal (water supply andsanitation), Industrial, Building/Institutional(hotels, hospitals, shopping malls, apartmentcomplexes) and Residential (home purifiers).The sector also includes treatment andpurification, pumping and water transportation,process water treatment and wastewatertreatment/recycling. Water scarcity has ledmany industries to adopt water-recycling

  • 7/31/2019 triveni annual re[ort

    24/136

    22 ANNUAL REPORT 2010-11I

    systems. Only 60% of industrial water and26% of domestic water is treated in India.The release of untreated wastewater has

    resulted in increased pollution and depletionof clean water resources. The most pollutingof them are the city sewage and industrialwaste discharged into the rivers. Presently,only about 10% of the wastewater generatedis treated; the rest is discharged as it isinto water bodies. India has a long coastlineof 7,600 kilometers and is most likely towitness high growth in desalinating water inthe future. Unequal water distribution exists

    within India and therefore, treatment of available water becomes very important.

    Water availability is critical for powergeneration as power plants need significantvolume of water for steam generation andcooling. Seasonal anomalies in wateravailability and electricity generation areinextricably linked. Conventional wisdom

    indicates that in a developing economy therate of growth in demand for power is about50% more than the rate of economic growth.As water availability and quality declines,companies may need to invest in waterinfrastructure projects to secure supplies, watertreatment systems, and/or more advancedcooling systems.

    Water and Power are interlinked

    JNNURM

    The Eleventh Five Year Plan identified a totalrequirement of R 537 billion to provide 100per cent water supply coverage to the urbanpopulation. Out of total allocation of R 500billion under Jawaharlal Nehru NationalUrban Renewal Mission (JNNURM), about40% is envisaged to be used for water supply

    thprojects. JNNURM, as on 30 June, 2011has approved R 447 billion for waterrelated projects including supply, sanitationand drainage.

    Since water supply sector in urban areasrequires huge investment in urban infrastructureand management models that promoteefficient, effective and good quality basicurban services on a sustainable basis,there is a role for well conceived, structuredand transparently executed public-privatepartnerships (PPP).

    Triveni's Water Business Group (WBG) isfocused on providing world-class solutions inwater and wastewater treatment to customersin industry as well as the municipal segment.

    WBG is gaining recognition in a high potentialmarket as a supplier of superior qualityproducts and services at competitive costs.During the year, there were major changes

    WATER BUSINESS

  • 7/31/2019 triveni annual re[ort

    25/136

    ANNUAL REPORT 2010-11 I 23

    in the addressable market scenario - both inMunicipal and Industrial segments - from theviewpoint of competition as well as customer

    demands. To meet the emerging situation,WBG initiated major restructuring of internalbusiness processes across business functions.

    During FY 11, growth in sales for WBGwas higher than the market average. As on

    th30 September 2011, outstanding order bookstood at R 4.5 billion. WBG expanded itsbusiness in new geographical region duringthe year by securing water management jobsin Industrial segments in Southern & NorthernIndia. It maintained its focus on Recycle &Reuse applications.

    Triveni continued to successfully leverage itsexisting relationships with industrial sectorcustomers. The Company started executinglarger projects involving execution periodof more than twelve months and the samecould stagger the recognition of revenuesand profitability over its fiscal years. The projectsunder execution are at various stages of completion and therefore, the billing of the samewill take place in the coming financial year.

    Few projects which we were aiming at inthe municipal segment were not finalisedduring the year and this slowed our order in-take during the year. The bulk of the orders

    Performance Overview

    which the business secured during the year were from industrial segment andequipment supplies.

    During the year, WBG's Phase-I manufacturingfacility commenced assembly of high valuecritical equipment in addition to skidmounted systems and these included SludgeDewatering units and Water Intake equipmentfor Municipal & Industrial applications-necessitating commencing expansion toPhase-II of WBG's manufacturing facility.

    The business received an award from Frost &

    Sullivan, a leading global research group, forachieving highest growth in the Indian Water& Wastewater Treatment Industry.

    Commissioned Delhi's first SewageRecycling Plant for NDPL's 106 MWGas-based Power Plant. The Plant sourcessecondary sewage from adjoining sewagetreatment plant. The plant combinedstate-of-the-art technological processconsisting MBBR-UF-RO-MB route producingBoiler Feed quality water. This plant wasearlier adjudged as Best Water TreatmentProject - Industrial and secured an awardsponsored by UNESCO/PHDCC etc.

    Technology demonstration of MBBR-UF was3successfully done for 144,000 M /day

    Key Achievements

    n

    n

  • 7/31/2019 triveni annual re[ort

    26/136

    24 ANNUAL REPORT 2010-11I

    Water Treatment Plant (WTP) at Agrathrough pilot studies and substantiatingthe same, a technical paper was presented

    at an International Conference at IDAPerth 2011. This was an award winningpresentation by the user client and waswidely acclaimed for technologicalapplication. Notably during the year, thesame project was earlier awarded as BestWater Treatment Project Domestic for itsdesign features by Water Digest Foundation.

    An order received for a Water ManagementSystem including Boiler Feed waterproduction for 2x600 MW Thermal Plantfor Moser Baer at Anuppur, MadhyaPradesh. This was WBGs third job fromLanco group for 2x600 MW size ThermalPower Plant segment.

    An order received for Zero LiquidDischarge (ZLD) system for 2x600 MWThermal Plant of Haryana PowerGeneration Corporation Ltd. (HPGCL),Hissar. The scope involves treating andrecycling of plant's wastewater for processwater needs of the power plant.

    Triveni has partnered with CII for setting up of CII-Triveni Water Institute. This initiative is firstof its kind in the world where the Government,Industry and society would collectively set up

    n

    n

    CII-Triveni Water Institute

    a Centre of Excellence to transform waterconservation and management practicesinvolving all stakeholders. The Institute

    will be focusing on water and wastewatermanagement in municipal, industry, agricultureand domestic segments. The activities of Institute amongst others would primarily focuson education, creation & development of technical manpower, performance rating of companies on water management andalso facilitate policy formulation both atCentral and State Government levels. Thisinitiative is not a commercial venture, but

    more towards its commitment for developmentof this sector.

    Treated water is increasingly becoming acritical resource in large-sized industries andstringent environmental regulations are alsomandating industries to treat wastewater.At the same time, rising health consciousnessis creating a demand for water treatmentequipment in public water utilities. Indian Watersector will continue to be a high growth area,actively supported by government and multi-lateral funding. Increased reliance on life cyclecost by users is raising technology barrierswhich suits technology rich companies likeours which has multiple options, enabling it tooffer the most optimal technology applicationto meet specific requirement.

    Outlook

  • 7/31/2019 triveni annual re[ort

    27/136

    ANNUAL REPORT 2010-11 I 25

    These developments offer an attractiveopportunity for the Company's water businesswhich already has the necessary technological

    capability and know-how. The Company hasbeen working in association with world'sleading technology providers. It has access tosophisticated technologies for high technologymembrane filtration solutions and equipmentfor drinking water, process water and reuseapplications.

    Thermal Power sector has been one of thelargest clients of the Industrial Water Market.Though there were signs of slow-down in jobsfinalisation during the year primarily due tofuel and environmental issues with ongoingpower plants, the initiatives by the CentralGovernment are likely to remove these hurdlessoon. In addition, learning from our successin current focus areas, WBG is planning toexpand in other market segments. WBG'sfocus on technology assimilation in the pastfew years will drive its future business growthgiving us unique advantage in covering themarket opportunities comprehensively in theIndian Water sector in both Municipal &Industrial segments.

    Triveni's Gear Business Group (GBG)manufactures high-speed gears and gearboxesupto 70MW capacity and speed of 70,000 rpm

    GEAR BUSINESS

    across all applications and market sectors andlow-speed gears for Hydel, Marine, Steel &Metals, Rubber & Plastics and Thermal sectors.

    Triveni is the country's largest one-stopsolutions provider in the high speed sector,with over 70% overall market share. Trivenihas a licence agreement with Lufkin Inc, USAfor a majority of its products.

    GBG has two broad product categoriesnamely High-speed Gears and Low-speedGears.

    a) Supplies to all major OEMs for SteamTurbines (ST), Compressors, pumps, GasTurbines (GT), hydraulic couplings, test rigsetc. Triveni uses its own technology under7.5 MW range

    b) Replacement Solutions for all applicationsand industry segments

    a) Hydel gears upto 7 MW using owntechnology

    b) New builds for Marine, Steel/Metals,Rubber/Plastics, Thermal - Coal pulverizers

    c) Replacement Solutions for all industriesincluding Hydel Power Plants and completeindustrial spectrum

    Product Range

    High Speed Gears

    Low Speed Gears

  • 7/31/2019 triveni annual re[ort

    28/136

    26 ANNUAL REPORT 2010-11I

    Market Segments

    a) Original Equipment Segment (OEM)

    b) Mini Hydel Segment

    c) Refurbishment/retrofitting, sparesdevelopment and troubleshooting support for

    n

    n

    n

    GBG has more than 85% market share inlow power and overall about 70% acrossall OEMs in India. Over the last 3-4 years,the business has been able to improve itsmarket share in the South East Asian regionfrom ST packagers especially in Indonesiaand Malaysia.

    GBG has been a selective player in this marketcatering to all major OEMs. Based on theexperience gained over the years, GBG's owndesigns of hybrid bearing configurations hashelped it to establish as a leading supplier of high power gearboxes in this segment.

    High speed/small to high power gearboxesfor diverse Industry applications such asSteam & Gas Turbines, Compressors,

    Pumps, Blowers and Test RigsNiche low speed Gearboxes in Industrysegments such as cement, steel andthermal industries

    Hydel gearboxes

    GBG has indigenised more than 700Gearboxes so far, offering solutions to most

    of the European makes, thus creatingmile stones of highest power of 54 MWfor gas turbine application and highest

    speed of 70,000 rpm, so far, for a testrig application.

    Markets covered under refurbishmentsegment are India, South Asia and SouthEast Asia. GBG caters to industries likeSugar, Paper and other process industries,Fertilizers, Refineries and Petro-chemicals,Independent Power Producers(IPPs) &Captive Power Plants(CPPs), Cement, Steel& Thermal Power.

    GBG provides fastest response in the Gearindustry for breakdowns including diagnostics/condition monitoring of gearboxes with chronicproblems and providing technical solutions.Services also include dimensioning of othermakes of gearboxes at customer sites duringtheir regular shut downs.

    The business provides special services such asmaintenance support for Gearboxes of otherthan Triveni make, diagnostic study/conditionmonitoring services, for any gearbox &installations/commissioning. Essential sparesfor two year normal running of gearboxesare offered/advised on regular basis to theclients and spares for other makes are alsobeing offered.

    Spares & Services

  • 7/31/2019 triveni annual re[ort

    29/136

    ANNUAL REPORT 2010-11 I 27

    Exports

    Key Business Highlights

    With the renewal of licence agreementwith Lufkin, geographical areas have beenexpanded to cover South East Asian countries.This will bring growth in both OEMs& replacement segments. With this, GBG'smarket share in South East Asia and South Asiais also expected to increase.

    GBG's formidable experience of retrofitting indomestic market, world class infrastructure,cost leadership and market acceptance shouldconsiderably help in building a large export

    market in future.

    Gear Business has an impressive list of around25 high power gearboxes which weredesigned, manufactured and tested duringthe year. Out of these and for the first time,two API gearboxes of 30 MW were designed,manufactured locally and successfully testedin India. GBG also developed and successfully

    tested two high RPM, 70000 rpm and25000 rpm gearboxes, meeting completeAPI standards.

    Along with above developments, GBG alsodeveloped in-house competency for offsetbearings designs which were successfullytested. Overall about 30 API high speedgearboxes were designed, manufactured and

    tested - meeting latest standards movingGBG to world's few gear companies havingcompetency to do so.

    GBG has also successfully developed twohigh power (>25MW) complete replacementsolutions for European manufactured gearboxeshaving operational problems, thus adding toan impressive list of import substitutions of more than 700 so far.

    In the field of high power Hydel gear boxes,GBG continued its supremacy by developingdesigns for the new orders received

    during the year. On retrofitting front,GBG solved complex performance issuesin 10 European make of high powerHydel gearboxes successfully. In addition to

  • 7/31/2019 triveni annual re[ort

    30/136

    28 ANNUAL REPORT 2010-11I

    During the year Gear Business signed twolandmark long term agreements with LufkinInc, USA, which will enable it to enhance

    its product portfolio and geographiesconsiderably. The Gear Business is poised toregister accelerated growth both in turnoverand profitability in future as a result of theselicence agreements.

    Highlights of these two agreements are:

    In the high speed segment, localmanufacturing of gearboxes from 25 to 62MW for steam turbine, gas turbine and

    compressor gearboxes for local OEMsIncreased geographies to cover South Asiaand South East Asia

    New licence for low speed products forMarine, Thermal, Steel/Metals and Rubber/plastics market segments for Indiansubcontinent, parts of East Africa.

    The business continued to perform as per

    our estimates. The increase in turnover andprofitability for the year remains strong at18% and 31% respectively. The businesscontinues to maintain high PBIT margins,which it could achieve on account of its after-market business.

    In spite of the market slow down, GBG hasbeen able to maintain EBIDTA margin of 39%

    n

    n

    n

    Performance during the year

    as focus on retrofit and spare businesscontinues. GBGs diversified and balancedproduct mix reduces the impact of an adverse

    performance of any market segments. Howeverits consistent market share in core highspeed product line indicates its healthyperformance vis--vis the competition.Further, with the expanded product andgeographies, the downside if any, on accountof economic slow-down, will be mitigated toa great extent.

    The order book position of this businessremains encouraging at R 688 million as on

    th30 September 2011 which is an increase of 10% when compared with the order bookposition during the same period last year.

    GBG bagged orders for 4 nos. locallymanufactured 30 MW API and 38 MWfrom BHEL thus kick starting the new licencerange orders in the very first year.

    GBG bagged R 8 Crore worth of orders forretrofitting of 5.5 MW Hydel gearboxes inreplacement to a European make.

    GBG growth in high profitable segments of retrofitting and spares continued withdiverse applications orders received duringthe year including the first of Leveler gearbox for a steel mill.

    Key Orders-

    n

    n

    n

  • 7/31/2019 triveni annual re[ort

    31/136

    ANNUAL REPORT 2010-11 I 29

    Outlook

    The market territories as defined in the licencewith Lufkin consist of growing economieswith high power deficit thus creating

    demand for core infrastructural/industrial andpower equipment growth. GBG has maximumexposure to power generation segments,including CPPs, IPPs for both conventional andnon-conventional energy. The business expectsto grow by enhancing its market share in > 25MW range as well as in the new productsadded. GBG's cost leadership combinedwith experience as well as expertise in highspeed products should enhance its share in

    new markets.The growth in replacement solutions will comeon account of leveraging of expertise insupplying to major OEMs, approach tosupport the indigenising drive, provision of quick and robust locally made solutions forbreakdown cases and fully integratedinfrastructure to offer quick solutions.

    Replacement solutions business has beengrowing consistently over the years as theproduct portfolio is spread out to cover diverse

    applications, power ranges, and geographies.The increase in installation base of gearboxesover the years will fuel demand for spareseither through its own supplies or throughreplacement opportunities.

    The industrial market for steel, cement andthermal power is expected to attract freshinvestment. Hydel segment, where Triveni hasa dominant position, is also looking buoyant

    and is expected to have more closures of projects in South India. GBGs focus on highmargin refurbishment, spares and servicesbusiness apart from the new products for otherthan power application should enable thebusiness to achieve higher turnover andconsistently high and strong margins in thebusiness going forward.

    Triveni's community development initiativesare focused on five key areas - education,family & community wellness, environment,community enhancement and sports &recreation.

    The Company runs schools at three of its majorsugar units namely Khatauli, Deoband andRamkola. These schools are meant for the

    CORPORATE SOCIAL RESPONSIBILITY

    Segment FY10FY11Sales Sales

    OEM-TTL 336 254 32OEM-Others 493 385 28Retro, Spares &Servicing 373 375 (1)Total 1202 1014 18

    Growth%

    SEGMENT WISE BUSINESS PERFORMANCE(R in million)

  • 7/31/2019 triveni annual re[ort

    32/136

    30 ANNUAL REPORT 2010-11I

    For the children of economically weakersections, Triveni's Gear Business Groupsponsored education of 14 children. It also

    adopted two Balawadis, each consistingof 25 underprivileged children besides makingfinancial support towards salary payment forthe teachers of Vivekananda Education Trust atMugunahundi village, one of the backward &underdeveloped villages near Mysore.

    Triveni also provides financial and managementsupport to one of Delhi's oldest and most reputedhospital, 'Tirath Ram Shah Charitable Hospital'.

    Triveni recognises its responsibility towardsenvironment protection and realises theimportance of awakening and engagingpublic at large to achieve greater impact.All units of the Company regularly organisetree plantation campaigns throughout the

    year and ensure participation of localcommunities into it.

    A massive cloudburst devastated Leh onth6 Aug 2010 which badly affected over

    20 villages. CII in collaboration with majorcorporate houses undertook to providerelief and rehabilitation. In order to rehabilitatehomeless people, houses were constructedin village Saboo in close coordination withthe local administration. Triveni activelyparticipated in this noble program andprovided material support to the Task Force.

    children of employees as well as those fromnearby villages. Around 1900 children areenrolled in these schools.

    The sugar units extend healthcare servicesfrom the charitable dispensaries at respectiveunits for the wellbeing and welfare of thelocal community. On an average, around400 patients are treated everyday at thesedispensaries. Free medical checkup, blooddonation and vaccination camps wereregularly organised at these units inassociation with district health departments.The passionate participation and volunteeringof the employees in these programs worked asimpact multiplier.

    The units organise sports activities for residentsof adjoining villages and support communityfairs and festivities with useful contributionstowards refreshments, drinking water and firstaid facilities. During the year, three sugarunits namely Milak Narayanpur, Ramkola& Chandanpur distributed blankets amongst

    underprivileged people of surroundingvillages. Chandanpur unit celebrated 'Joy of Giving' week on the occasion of Gandhi

    Jayanti and distributed clothes, toys, booksand money to Orphanages and Leper homes.Khatauli unit distributed tricycles to physicallychallenged people through District Magistrateon the eve of Republic Day.

  • 7/31/2019 triveni annual re[ort

    33/136

    ANNUAL REPORT 2010-11 I 31

    FINANCIAL REVIEW

    ( R in million)

    The performance results for the financial year2010-11 does not include that of SteamTurbine Business which, pursuant to theScheme of Arrangement under Section391-394 of the Companies Act, 1956,has been demerged from the appointed date

    stas on 1 October, 2010. Thus, the results of the current year are not comparable with thoseof the previous year.

    Sugar business (including Co-generation andDistillery operations) performed much betterthan the previous year and registeredsegment profitability (PBIT) of R 528.6 millionas against a loss of R 222.2 million in theprevious year. The improvement in theprofitability of the Sugar business is owing to

    profits on export of sugar against the AdvanceLicence and under against quota allocated tothe Company under OGL Scheme as well asdue to reduction of levy obligation from 20% to10% in the current financial year. However, atnet level Sugar business continues to be in loss

    2010-11 2009-10 Change %Net Turnover 17071.5 22595.3 (24)EBITDA 1799.8 2479.4 (27)Depreciation &Amortization 812.3 907.5 (10)Finance Cost 946.6 849.6 11Profit BeforeExceptional/Nonrecurring items& Tax 40.9 722.3 (94)Exceptional/Nonrecurring items(Net income) 41.6 450.8 (91)Tax (48.1) 264.7Profit After Tax 130.6 908.4 (86)

    due to mismatch in input and output prices.Both Co-generation and Distillery haveachieved improvement in profits over the

    previous year.Engineering business (comprising Gear andWater) has achieved 17% increase in turnoverand 15% increase in segment profitability.The previous year figures included profitabilityfrom the operations of demerged SteamTurbine Business - there is no contribution fromsuch business during the current financial year.Even after demerger, the diversified nature of Company's business is still intact as theremaining engineering businesses contributesubstantial profitability to the Company. Bothengineering business have enormous scope of growth in future and these would ensureadequate insulation from the cyclicality of theSugar business.

    RAW MATERIAL AND MANUFACTURING EXPENSES

    Description 2010-11 2009-10 Change %Raw material 11917.6 18221.6 (35)

    Percentage to sales 69.8% 80.6%Manufacturingexpenses 1346.8 1388.5 (3)Percentage to sales 7.9% 6.1%

    The decrease in raw materials, despiteincrease in engineering business due toincreased activities, has been due to demergerof Steam Turbine Business, the financials of which are not included in the current year, and

    due to lower raw material consumption in thesugar operations owing to lower cane priceapplicable in the current year. Further, in theprevious year, raw sugar of R 1703.1 millionwas purchased and processed and no suchactivity took place in the current year.

    ( R in million)

  • 7/31/2019 triveni annual re[ort

    34/136

    32 ANNUAL REPORT 2010-11I

    Sugar is normally sold through various agentsand the quantum of commission is dependanton the value of sugar sold. Further it includesforwarding expenses relating to dispatch of sugar and the component of freight whereversugar is sold on FOR basis. During the current

    year, selling expenses of sugar business arealmost at the same level as in the previous yearas sales volumes are also almost similar to the

    previous year.In respect of engineering business, sellingexpenses include packing and forwardingexpenses, rebates & discounts, exhibitionparticipation expenses, royalty expenses etc.The selling expenses relating to engineeringbusinesses have increased by 81%, primarilyin the Gears business on account of rebatesoffered on select orders procured for itthrough the Steam Turbine Business, which in

    the earlier years were accounted as anintra-company service charge. However, onan overall basis there is a decline of 40%in the selling expenses of engineering businessfrom the previous year on account of demergerof the Steam Turbine Business.

    The manufacturing expenses in existingbusinesses have increased by 9% mainly dueto increase in power & fuel expenses in

    distillery resulting from lower bio gasgeneration in respect of Sugar Business, theincrease in cane development expenses,repair expenses relating to plant & machineryand cost of certain consumables havebeen partially offset by lower packingexpenses. However, on overall basis, thetotal manufacturing expenses of the Companyhave decreased by 3% due to demerger of Steam Turbine Business.

    PERSONNEL COST, ADMINISTRATIONEXPENSES AND DEPRECIATION

    Description 2010-112009-10 Change %Personnel cost 1278.4 1657.8 (23)Percentage to sales 7.5% 7.3%Administration 638.8 642.7 (1)Percentage to sales 3.7% 2.8%Depreciation& Amortisation 812.3 907.5 (10)Percentage to sales 4.8% 4.0%

    PERSONNEL COST

    ADMINISTRATION EXPENSES

    The personnel cost have decreased as thepersonnel expenses attributable to demergedSteam Turbine Business are not included in thecurrent year. Further, the personnel cost includesVRS expenses of R 38.2 million as againstR 45 million in the previous year.

    The administration expenses in the current yearinclude non-recurring expenses of R111.2million towards loss on mark-to-market (MTM)of foreign exposures and provisions towardsdoubtful debts/advances/slow and nonmoving inventory as against write back of

    Description 2010-11 2009-10 Change %Selling expenses 215.1 259.7 (17)Percentage to sale 1.3% 1.1%

    SELLING EXPENSES

    R 19.0 million towards liquidated damages inthe previous year. Apart from the savings onaccount of demerged Steam Turbine Business,

    there have also been savings due to stringentcost control.

    The decrease in depreciation is due to thedemerger of Steam Turbine Business.

    DEPRECIATION

    ( R in million)

    ( R in million)

  • 7/31/2019 triveni annual re[ort

    35/136

    ANNUAL REPORT 2010-11 I 33

    Crush for the sugar season commences inOctober-November and it continues tillMarch-May of the succeeding year. Thisperiod is termed as season and the periodbetween March-May to October-November istermed as off-season. As per accounting policyfollowed by the company, all expensesincurred in the off-season relating to theproduction are deferred and these expensesare then charged over the ensuing season.Actual expenses deferred depend on thelength of the off season. During the year, suchexpenses have declined byR 45.5 million fromthe level at the beginning of the year.

    FINANCE COST

    During the current year, RBI has progressivelyincreased the interest rates to control inflationand this has resulted into increased cost of

    loans to the Company as majority of theloans are on floating interest rate basis.Consequently, the cost of funds during the yearhas increased by 208 basis points to 10% perannum and accordingly, the finance cost hasincreased by 11%.

    During the year, long term loans of R 1.76billion were repaid and additional loansaggregating to R 1.6 billion were availedincludingR 1.5 billion received towards the

    end of the year, the major part of its proceedswas parked in the Cash Credit Account.

    The Company has two major businessessegments: Sugar Business and EngineeringBusiness. Sugar Business comprises of sugarmanufacturing operations across sevensugar mills in the State of U.P., threeCo-generation plants located at two of itssugar mills and a stand alone distillery.Co-generation plants and the Distillery sourcecaptive raw materials, namely, bagasse andmolasses from the sugar mills. Engineeringbusiness comprises of Gear manufacturing atMysore and Water and Wastewater treatment

    SEGMENT ANALYSIS

    Revenue PBIT2010-11 2009-10 % 2010-11 2009-10 %

    Business Segments-Sugar 15366.3 16411.1 (6) 528.6 (222.2)-Engineering 3067.7 2624.7 17 650.5 564.7 15-Turbine Business 5640.1 1304.3-Others 179.1 110.3 62 0.6 2.2Unallocated/inter unit adjustment (1541.6) (2190.9) (192.1) (77.1)Total 17071.5 22595.3 (24) 987.6 1571.9 (37)

    SEGMENT ANALYSIS

    Description 2010-11 2009-10 Change %Interest onterm loans 522.0 574.1 (9)Interest onworking capitalfunds 394.8 253.9 55Others 29.8 21.6 38Net finance cost 946.6 849.6 11

    ( R in million)

    ( R in million)

    Description 2010-112009-10 Change %Off-season

    expensesdeferred (net) (45.5) (20.2) 125

    ( R in million)OFF SEASON DEFERRED EXPENSES

  • 7/31/2019 triveni annual re[ort

    36/136

    34 ANNUAL REPORT 2010-11I

    The revenue of the sugar operations includesale of sugar and by-products, such as,molasses and bagasse, which are sold

    after meeting captive requirements of theco-generation plants and the distillery.Cane crush during the season 2010-11 waslower by 1% as compared to the previousseason but recovery was higher by 11basis points at 9.21%. Consequently, theproduction from sugar cane was higher by 1%.During the previous year, the Companyhad purchased & processed raw sugar andaccordingly produced 86,695 MT of sugar

    whereas no such activity was carried out inthe current year.

    Due to change in the climatic pattern and soilconditions, the recovery being attained inthe State of U.P. is considerably lower thanthe recoveries attained 3-4 years back. TheCompany is focusing on cane developmentactivities in a big way with a view to increasethe yield of the sugar cane as well asrecoveries by bringing about an appropriate

    varietal mix.Though the cane price announced for the sugarseason 2009-10 by the Government wasR 1650/MT but in view of the high sugarprices then prevailing and due to paucity of adequate sugarcane and resultant intensecompetition in respect thereof, much higherprice was paid to the farmers. Consequentlythe cane price paid during the previous yearwas 14% higher than the cane price paid inthe current year. The average realisation priceof sugar was 6% lower as compared to theprevious year.

    The improvement in the profitability of sugar operations has also been due to

    business operated from Noida, U.P. Turbinebusiness, which was a significant constituent of the Engineering business, has been demerged

    stfrom 1 October, 2010 and thus its financialsare not included in the current year financials.

    During the year, sugar business contributed82.6% of the total segmental revenue asagainst 66.2% in the previous year. This ismainly due to demerger of Steam TurbineBusiness, as a result of which total revenueof the company has declined. In terms of segment profitability, the Sugar Business hascontributed 44.8% as against loss of 13.5%in the previous year. The contribution fromthe Engineering Business has substantiallydeclined on account of demerger of SteamTurbine Business. However, the remainingEngineering businesses have achieved 15.2%higher profitability and has contributed 55%of the total segmental profitability.

    The Company continues to have substantialEngineering business with enormous growth

    potential.SUGAR BUSINESS SEGMENTS

    SUGAR OPERATIONS

    Description 2010-112009-10 Change %Turnover 13433.6 14054.8 (4)PBIT 73.5 (573.3)PBIT/Turnover (%) 1% (4%)Cane cost (landed)-R/ MT 2180 2538 (14)

    Production of sugar (MT) 419285 505126 (17)Volume of sugar sold (MT) 437088 437145Average realisationprice (R/MT) 26605 28310 (6)

    ( R in million)

  • 7/31/2019 triveni annual re[ort

    37/136

    ANNUAL REPORT 2010-11 I 35

    Despite lower turnover by 14%, the segmentprofitability has increased by 11%, primarilybecause of lower transfer price of molasses,which is a market related price. The operationalperiod of distillery during the current yearis almost at the same level as in the previous

    year. It is expected that with the increasedcrush by sugar units, the availability of molasses will improve leading to higheroperational period and better profitability.The average output price has increased by8% over the previous year. The distillery

    produced ethanol to the extent of 29% of itsproduction and it has been sold to oilmarketing companies at a provisional priceof R 27 per litre. The Expert CommitteeReport, has recommended fixation of price of ethanol linked to the crude/oil price and

    The profitability of the Co-generationoperations increased significantly by 35%,mainly owing to low transfer price of bagasse,which is generally transferred at market price.The period for which Co-generation plantoperated on bagasse remained more or lessthe same as in the previous year. During theprevious year, one of the plants was operatedwith coal during the off season. However, inview of unviable coal price, the operation of

    the plant on coal was not feasible in the current year. The availability of adequate sugar caneand the resultant bagasse savings increasethe operational period of the Co-generationplant which in turn leads to better profitability.It is expected that as a result of Company'scontinual focus on cane development,adequate sugar cane would be available tothe sugar units in future which will also lead tobetter performance of the Co-generation plants.

    There was no income from carbon creditsduring the year as against an income of R 99.9million in the previous year. Carbon creditincome pertaining to Deoband plant uptoMay, 2010 was received subsequent to the

    year and that of Khatauli plant for the

    Description 2010-112009-10 Change %Turnover 1170.6 1367.5 (14)Income fromcarbon credit 99.9Total turnover 1170.6 1467.4 (20)PBIT 365.5 270.1 35PBIT/TotalTurnover (%) 31% 18%

    ( R in million)CO-GENERATION

    same period is in an advanced stage of verification and is expected shortly. Theverification plans for the subsequent periods

    have been drawn up to ensure substantialaccrual in the FY 12. The Co-generation plantsof the Company are also entitled to receiveRenewable Energy Certificates (REC) for thecurrent sugar season in accordance with thepolicy announced by the Government. It isexpected that the process and mechanism of issuance of REC may be clarified andstabilized shortly and thereafter, such RECswould be available for trading purposes.

    DISTILLERYDescription 2010-112009-10 Change %Turnover 762.1 888.9 (14)PBIT 89.6 81.0 11PBIT/Turnover (%) 12% 9%Avg. realisation priceof alcoholR/litre(net of excise duty) 28.7 26.6 8

    ( R in million)

    reduction in levy obligation, which declinedfrom 20% in the previous season to 10% in thecurrent season.

  • 7/31/2019 triveni annual re[ort

    38/136

    36 ANNUAL REPORT 2010-11I

    project is also dependant on the financialclosure of the project, timely completion of incidental work by the customer and ensuring

    that the execution and delivery of the turnkeywater treatment plant takes place in line withthe general progress of the overall project.

    The revenue during the current year hasincreased by 16% and segment profitabilityby 6%. 43% of the turnover has beenderived from the industrial projects, 44%from the municipal projects, 11% from theequipment sales and 2% from others. The

    thorders in hand as on 30 September, 2011

    are at R 2.79 billion excluding O&Mcontracts of R1.70 billion.

    There is an enormous potential for this sector inIndia and the business is equipped withappropriate technologies to offer cost-effectivetechnological-advanced solutions as per therequirements of the customers.

    The figures of the previous year are notcomparable as the previous year figuresinclude those of Steam Turbine Business which

    sthas been demerged from 1 October, 2010.

    The share capital has remained unchanged atR 257.9 million.

    The reserves of the Company have increasedby 4% toR10.06 billion during the year. This is

    on account of consequential adjustmentsrequired to be carried out in accordancewith the Scheme of Arrangement upon thedemerger of the Steam Turbine business aswell as on account of plough back of theprofits earned during the year.

    REVIEW OF BALANCE SHEET

    SHARE CAPITAL

    RESERVES

    at the current level of crude/oil price, the pricefor ethanol works out to aboveR 30 per litre.The Expert Committee Report, if implemented,

    will result in better margins on ethanol and theprices of other forms of alcohol are alsoexpected to increase correspondingly.

    ENGINEERING BUSINESS SEGMENT

    GEARS

    Apart from the equipment business, Waterbusiness has been undertaking turnkeyprojects with the Municipality as well aswith the Industrial Sector. The execution of the

    Despite difficult market conditions in thesecond half of the current year, the Gearsbusiness has achieved 18% increase inturnover and 21% increase in segmentprofitability. The margins have alsoimproved by 100 basis points to 35%. The

    thtotal orders in hand as on 30 September,2011 are at R 688 million. During the

    year, the Gear business has signed new

    agreements with Lufkin Industries Inc., USAas a result of which it has an access tonew technologies which would enable it tobroad-base its product range as well asgeographical reach.

    WATER AND WASTE WATER TREATMENT

    Description 2010-112009-10 Change %Turnover 1201.7 1014.4 18PBIT 418.5 345.3 21PBIT/Turnover (%) 35% 34%

    ( R in million)

    Description 2010-112009-10 Change %Turnover 1866.0 1610.3 16PBIT 232.0 219.4 6

    PBIT/Turnover (%) 12% 14%

    ( R in million)

  • 7/31/2019 triveni annual re[ort

    39/136

    ANNUAL REPORT 2010-11 I 37

    loans and advances of the Company (withoutconsidering the respective assets of the SteamTurbine Business included in the previous year)

    have increased by 4% during the year. Thecomments on the major amounts/changes areas hereunder:

    Other current assets include the workperformed by Water business pendingbilling to the customer. This is on accountof increased activities as well as due toterms of the contracts pursuant to whichthe amounts can only be billed to thecustomer upon reaching the specified

    milestones.Balance with Central Excise/Customs etc. The amount includes R 247.3 millionof unutilised Cenvat credit at the Distilleryin view of inverted duty structure. TheCompany is exploring to opt forLarge Taxpaying Unit (LTU) jurisdiction sothat the unutilised balance could betransferred to other units for the paymentof excise duty.

    MAT credit entitlement: An amount of R 385 million has been paid by theCompany as Minimum Alternate Taxeswhich will be available to the Companyfor meeting the normal tax liability in thesubsequent years.

    Advance payment of Tax: It represents theamount paid by the Company pendingrelief/refunds due to the Company.

    Current liabilities and provisions havedeclined fromR 4.74 billion toR 2.52 billion.The decline is mainly attributable to thedemerged Steam Turbine Business.

    n

    n

    n

    n

    CURRENT LIABILITIES & PROVISIONS

    LOANS

    FIXED ASSETS

    INVESTMENTS

    CURRENT ASSETS, LOANS & ADVANCES

    Total loans of the Company have decreasedby 12% to R 8.26 billion. As a result of demerger of Steam Turbine Business, loansof R 776.5 million were transferred to theresulting Company, Triveni Turbine Ltd. inwhich the Steam Turbine business has beenvested into. During the year, repayments of term loans were made to the extent of R 1.76billion. The term loans also include fresh loanof R 1.5 billion availed towards the end of the

    year and a large part of its proceeds wasparked in the Cash Credit account at the

    year end.

    During the year, there have been additions tothe fixed assets to the extent of R 374 millionmainly for additional/upgrading/balancingmanufacturing facilities for the Gear businessand towards creation of additional molassesstorage capacity and other equipments forenhancing the steam efficiency in the Sugarbusiness.

    Investments have reduced byR 1.4 millionto R 110.2 million due to transfer of stakein GE Triveni Ltd. to Triveni Turbine Ltd.pursuant to the Scheme of Arrangementand due to provision for diminution inthe value of investments in two subsidiarycompanies.

    Current Assets, Loans & Advances havedecreased by 11% to R11.05 billion, which isattributable to non-inclusion of such assets,pertaining to the demerged Steam TurbineBusiness in the current year. The current assets,

  • 7/31/2019 triveni annual re[ort

    40/136

    38 ANNUAL REPORT 2010-11I

    farmers from alternate crops and the extentof diversion of sugarcane to the producersof alternate sweeteners.

    Output price risk: It is dependent on thedemand and supply position in the country,quantum of sugar inventory held,economics of international sugar trade andtheir price trends as well as governmentregulations on international trade in thecommodity.

    There are several factors of the industry which

    are not within the control of the Company and,therefore, for all controllable factors, theCompany strives to achieve best possibleefficiencies to improve the profitability of itsoperations.

    Cane development involves increasingintensity of cane and recovery of sugar.While the former ensures better supplyof cane even under adverse conditions,the latter ensures lower cost of production

    which in turn improves the contributionon sugar sold. The Company believes incarrying out cane development activitieswith full involvement and in partnershipwith the farmers so that apart fromthe benefits to the Company, the farmersalso stand to gain by enhancing theirincome. Currently, the Company hasundertaken big cane developmentinitiatives in partnership with externalagriculture consultants of proven trackrecord and set up medium term targetsfor yield and recovery maximizationalong with propagation of new sowingtechniques which will help the farmersto achieve low cost of cultivation.

    n

    Risk Mitigation

    n

    RISKS REVIEW

    SUGAR BUSINESS GROUP

    n

    n

    The Sugar Business of the Company is subjectto several risks, both external and internal.The company has been in sugar businessfor several decades and has laid down

    a comprehensive risk management frameworkto get early warning of the risks anda documented system of mitigation. Most of the major risks are from external sourcesand these are enumerated as here under:

    Government Regulation: The sugar industryis highly regulated and the Governmentregulates pricing of sugarcane, allocation of cane areas, levy obligations, monthlyreleases of free-sale sugar, sugar stock

    limits for bulk consumers and dealers/agents/intermediaries.

    Raw material availability risk: Availabilityof sugarcane is largely dependent onclimatic factors, comparative returns to the

    Ratios 30.9.2011 30.9.2010Profitability Ratio(PAT/Net Sales) 0.8% 4.0%Return on Capital employed(excluding exceptional/non-recurring items) 5.4% 8.1%Long Term Debt/Net Worth 0.52 0.62Total Debt/Net Worth 0.81 0.96Fixed AssetsCoverage Ratio 2.04 2.03

    Earning Per Share(Basic and Diluted) 0.51 3.52

    KEY RATIOS

    The key ratios for the current year dulycompared with the last year are given below:

  • 7/31/2019 triveni annual re[ort

    41/136

    ANNUAL REPORT 2010-11 I 39

    sentiments may have a temporary impact onthe economy and growth in India. Both theengineering businesses have healthy order

    books to tide over such difficult periods. Inorder to enhance geographical reach, theCompany is focusing on exports in a very bigway for Gears, with the signing of new LicenceAgreements, which will enhance its productrange and geographical reach. These wouldenable the Gear business to access newmarkets and enhance the proportion of exports.

    The Gears Business has been continually

    investing in a state-of-the-art equipmentsand machines to provide qualitativelysuperior products with focus on valueengineering, reduction in cost as well asdelivery periods thereby ensuring bettercustomer satisfaction.

    Both the Engineering Businesses havestrong supply-chain management systemand efficient sub-contracting network toprocure its raw material reliably at

    competitive prices.In Water Business, the turnkey projectsare carefully picked up after ensuringsatisfactory arrangements of fundingof the projects and after stringent creditcheck of the customers. This to a greatextent mitigates the issue of timely receiptof receivables and thereby enables thebusiness to manage its working capitaleffectively.

    n

    n

    n

    n

    n

    n

    ENGINEERING BUSINESS

    n

    n

    n

    RISK MITIGATION

    The Company focuses on best efficienciesin the procurement of cane and inmanufacturing. These in turn help the

    Company to lower the cost of productionand enhance the contribution.

    The Company gives due importance to thequality of sugar so that it is able to commanda premium to the prevailing market price.

    Various policies of the Government are dulydiscussed in the industry association andaccordingly views of the industry are conveyedto the Government for consideration. Inunavoidable circumstances, recourse tolitigation is also taken to protect the interestof the industry/Company.

    Risk of economic slowdown: In the event of a slowdown in the economy, capital goodsindustry/infrastructure sector, which theengineering business of the Company caterto, will have low demand affecting thegrowth of the Engineering business.

    Technology risk: It is necessary for theEngineering Business to continually upgradetheir products and services and be alignedwith the prevailing technology in theirrespective sectors. Failure to do so maylead to obsolescence of the productofferings and loss of market share tothe competitors.

    Competition risk: The Company facescompetition from both domestic andinternational players.

    While the growth trajectory of India appears tobe positive on long term basis, the global

  • 7/31/2019 triveni annual re[ort

    42/136

    DIRECTORS

    REPORT

    40 ANNUAL REPORT 2010-11I

  • 7/31/2019 triveni annual re[ort

    43/136

    DIRECTORS REPORT

    thYour Directors have pleasure in presenting the 76 Annual Report and audited accounts for the Financial Year enSeptember 30, 2011

    (R in Million)

    2009-10Sales (Net) 17071.53 22595.34Operating Profit (EBITDA) 1799.80 2479.48Finance cost 946.56 849.64Depreciation & amortization 812.34 907.54Profit before tax (before exceptional items) 40.90 722.30Exceptional items/Non-Recurring items (Net income) 41.57 450.86Profit before Tax (PBT) 82.47 1173.16Tax Add/ (less) 48.11 (264.75)Profit After Tax (PAT) 130.58 908.41Surplus Brought Forward 175.28 220.12

    Available for appropriation 305.86 1128.53

    APPROPRIATIONSEquity dividend (incl. proposed dividend & dividend distribution tax) 59.95 225.53Transfer to Debenture Redemption Reserve 50.00 75.00Transfer to Molasses Reserves 3.87 2.72Transfer to General Reserves 9.80 650.00Surplus Carried forward 182.24 175.28Earning per equity share of R 1 each (in R) 0.51 3.52

    2010-11

    SCHEME OF ARRANGEMENT (Scheme)During the year under review, the Honble Allahabad High

    thCourt vide its Order dated 19 April, 2011 sanctioned the

    Scheme of Arrangement (Scheme) under Section 391- 394 of the Companies Act 1956 between Triveni Engineering &Industries Limited (the Company), its wholly owned subsidiarycompany, Triveni Turbine Ltd. (TTL), and their respectiveshareholders and creditors. The said order became effective on

    st21 April, 2011 being the date of filing of the Order with theRegistrar of Companies.

    In accordance with the Scheme, the Steam Turbine Business of the Company, including all assets and liabilities, stoodtransferred and vested in TTL, with effect from the appointed

    stdate 1 October, 2010. Accordingly, the accounts of theth

    Company for the year ended 30 September, 2011 do notinclude the financials of the Steam Turbine Business of theCompany and are not comparable with the previous year.

    The demerger of the Steam Turbine Business into Triveni TurbineLtd. has paved the way for the shareholders of the Company toparticipate directly in the focused entity engaged in the SteamTurbine Business.Sugar BusinessThe profitability of the Sugar Business (including Co-generationand Distillery operations) during the year improved

    substantially. At the PBIT level, there is a profit of R 528.6 millionas against a loss of R 222.2 million in the previous year.However, after providing for interest, the operations continue

    be in a loss. Apart from the mismatch in input and output priceour capacity utilization in terms of cane crush has been muclower due to paucity of sugarcane. While the recovery haimproved by 11 basis points over last year but it is still muclower than the recoveries attained 3-4 years ago. The decline irecovery is attributable to major changes in climatic pattern ansoil conditions. The Company is focusing with all its resourceincrease the intensity of cane cultivation to ensure optimucapacity utilization, and is effecting a varietal change timprove recoveries. We hope to achieve all the desired goals ithe next 3 years in a phased manner. Adequate cane crushresults in a better supply of raw material to the Co-generatio

    and Distillery units, thereby improving their profitability aviability.

    The industry and your company have been continually strivifor decontrol of the sugar sector. We believe this would be win-win situation for the farmer and the industry, and would away with the boom/bust cycle that the industry has beenthrough for the past 25 years. We are the most regulated sugarindustry in the world today, and this is the only industry in Indwhich is made to subsidize the Governments programme fosupplying to the Public Distribution System. Given the curr

    ANNUAL REPORT 2010-11 I 41

  • 7/31/2019 triveni annual re[ort

    44/136

    political climate, we feel it may be practical to undertake thisliberalization in two phases. In the fist phase, the Governmentshould do away with 10% levy sugar and their control of

    monthly releases of free sale sugar. In the second phase, caneprice should be linked to sugar price. The current practice of announcing arbitrary extremely high State Advised cane prices,without any relevance to the sustainable market price of thesugar, has forced factories into losses, and affected their caneprice payment capabilities and their cane development efforts.This has been against both the long and short term interest of thefarmers (and the industry). We sincerely hope that with a goodproduction forecast in the current year, Government will take thisopportunity of decontrolling the sugar sector immediately.Engineering Business

    Our Engineering Business, now comprising of the Gears andWater Businesses, has done well considering the difficultconditions that existed in the 2nd half of the accounting year.Total revenues increased by 17% and segment profitability by15% over the previous year. In the previous year, theengineering business segment profitability included thedemerged Steam Turbine Business. Our businesses are alsoexperiencing the effect of a slow-down in the domestic economybut we do have good orders in hand. The new LicenseAgreements signed with Lufkin Industries, USA will enable us tohave enhanced product and geographies in the high speed

    gear segment and enter into the niche low speed gearapplications for major industrial segments. These two initiativeswill help us to sustain good growth in the coming years.DIVIDENDYour directors have pleasure in recommending a dividend of 20% (R 0.20 per equity share) on 257880150 equity shares of R 1 each for the financial year 2010-2011 ended on September30, 2011, subject to the approval of members at the ensuingAnnual General Meeting. The total outgo on account of dividend (including Dividend Distribution Tax) for the FinancialYear 2010-2011 will be R 59.9 million (R 225.5 million in theFinancial Year 2009-2010).HUMAN RESOURCESYour Company believes and considers its human resources asthe most valuable asset. The Management is committed toproviding an empowered, performance oriented andstimulating work environment to its employees to enable themrealize their full potential. With the view to enhance employeesskills, the company had provided Functional and Behavioraltraining of 4.6 mandays per officer, during the year. LearningCentres were introduced across the units to facilitate training

    and in-house knowledge sharing. Industrial Relations remainedcordial and harmonious during the year.CONSOLIDATED FINANCIAL STATEMENT

    In accordance with Accounting Standard 21 on theConsolidated Financial Statement read with AccountingStandard AS-23 on Accounting for Investment Associates, yourDirectors have pleasure in attaching the Consolidated FinancialStatement which forms a part of the Annual Report andAccounts.SUBSIDIARIESPursuant to, and in terms of the Scheme, with the allotment of equity shares by TTL to the shareholders of the Company andconversion of 28,000,000 equity shares of R 1/- each held bythe Company in the share capital of TTL into 2,800,000 8%

    Redeemable Cumulative Preference Shares of R10/- each, TTLceased to be a subsidiary of the Company.

    In accordance with the Scheme approved by the HonbleAllahabad High Court, the investment held by the Company inthe equity share capital of GE Triveni Ltd. (GETL) stoodtransferred to and vested in TTL. Accordingly, GETL ceased to bea subsidiary of the Company.

    The Ministry of Corporate Affairs (MCA), General Circular No.2/2011 dated 8th February, 2011, has granted generalexemption to companies from annexing the individual accountsof all the subsidiaries along with the audited financial statementsof the Company, subject to fulfillment of conditions stipulated inthe said circular. Your Company meets these conditions and,therefore, the financial statements of the subsidiaries are notann