Message from the chairman

Q&A with Vice Chairman and MD

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Performance Highlights


Q&A With
Vice Chairman & MD

Sugar and Alcohol businesses have been the biggest drivers of our largely positive performance amid an extremely challenging environment.

I am happy to share that we have performed fairly well, given the circumstances. Gross revenue for the year stood at ₹ 4,703.35 crore and Profit after Tax at ₹ 294.61 crore (on consolidated basis). This is quite an achievement, which was made possible due to a highly judicious and prudent approach, which the Company has been following for the past several years. Amidst the new challenges, we were able to both, devise new ways of working for all our businesses and also rise to the opportunity to contribute, to the greater national cause through production of sanitizers and using our existing facilities and expertise to sensitize, educate and protect the hundreds of thousands of people we interact with on a daily basis. In a tough year like this, having a strong balance sheet like ours has also contributed to the overall performance.

Sugar and Alcohol businesses have been the biggest drivers of our largely positive performance amid an extremely challenging environment. We have reported a high sugarcane crush and sugar production in SS 2020-21 in terms of the state average – an endorsement of our deep-rooted strengths in this business, as well as our robust sugarcane development programme. Our recovery, however, declined by 11 basis points on a comparable basis, excluding the impact of B-heavy molasses, as compared to the previous sugar season due to heavy water-logging and red rot disease. Our sustained focus on Ethanol also continued to steer growth in the Alcohol business during the year, with strong growth of 14% and 23%, respectively, in distillery performance on production and sales.

Our gains in the Sugar business somewhat negated the lower revenues in the Power Transmission business, which reported over 15.65% decline in turnover and 15.7% in Segment Profit. However, even in the tough environment, we secured several orders for supply of compressor gears and gearboxes from India and overseas customers, which we believe will translate into good growth going forward. In the Water business, the Company has participated in several bids during the year and we feel positive about securing more orders when the order finalisation starts.

Ensuring the safety and security of our employees and our supply chain partners (the sugarcane farmers) was a big challenge. We put strict safety protocols in place at the mills, the plants and the cane outlets, which our people as well as the farmers and other visitors had to strictly adhere to. Wearing masks, temperature scanning, maintaining social distancing, installation of touchless dispensers was some of the key measures undertaken at all facilities and offices. We also distributed masks and sanitizers to the communities around our plants as part of our CSR outreach.

We went touchless in 72 hours post the announcement of lockdown. As far as managing customer relations was concerned, digital tools were employed in a major way to respond to customer needs in a timely manner, given the travel restrictions worldwide. We also introduced remote testing and monitoring techniques to enable customers to see their products undergo precision testing of gearboxes without having to visit the site. While introduced during pandemic times, given that many of these measures have garnered a positive response, we are now incorporating them into the normal course of business, which will help us deliver a seamless customer experience.

Our diversified portfolio across business segments, coupled with our focussed efforts to continuously improve operational and cost efficiencies, has been a key driver of our performance consistency. Innovation has been at the heart of our growth strategy across businesses over the years, and we have continually enhanced our systems and processes by embracing the latest technological and digital advancements.

In the Sugar business, this thrust has helped us strengthen our sugarcane development programme year-on-year, thus ensuring high yielding and high-sucrose sugarcane varieties to augment the volumes of sugarcane crush and improve sugar recoveries. In our distilleries business, backed by a favourable Government programme, our innovative efforts are enabling optimal capacity utilisation and performance, with our judiciously balanced production mix of B-heavy and C-heavy molasses and its utilisation in our distilleries which is helping us maximise our revenues in this business. During the year, the production increased 14% y-o-y to 107,027 KL, 56% of which came from B-heavy molasses v/s 34% in the previous year.

We are continuously sharpening our technological expertise in our Power Transmission and Water businesses too, making us a preferred choice for a growing clientele across regions.

Another major propeller of our growth strategy is our strong customer-centric approach, which we are focussed on continually enhancing through our deep understanding of their evolving aspirations and mapping of the marketing trends. Product quality is ensured in line with customer expectations, while our efforts to power sustainable growth through environmentally responsible operations also continues to steer the positivity of our performance. During FY 21, we further pushed the bar of our expertise to meet the unparalleled challenges of an extremely tough environment.

I believe it is our concerted thrust on managing efficiencies through continuous improvement in reducing the product cost that helped deliver a good performance during the year. There was a trend of widespread decline in crush and recovery in U.P. for the SS 2020-21, mainly due to climatic factors, but the Company has experienced marginal decline, much less than that of the average of the State. We crushed 8.54 million tonnes of sugarcane, with a recovery of 10.98% (gross recovery: 11.86% after adjustment towards B-heavy molasses).

Our sugarcane development programme, through which we are partnering 3+ lakh farmers in boosting sugarcane yield and thereby production, remained a major driver of our growth and profitability in an uncertain environment. Our judicious product mix has also enabled us to keep growth on track, with stable sugar prices further contributing to the performance. The Company continues to actively pursue sugarcane variety substitution programme to gradually reduce overdependence on the star variety Co-0238.

Our active engagement in sugar exports under the Government of India’s MAEQ scheme has also helped in keeping our numbers in the green in this business.

Despite a delay in the announcement of the export programme by the Government of India, the industry has responded quite well, with robust international pricing helping the industry in contracting significant quantity of sugar in a short period. The Government announced allocation of export quota of 6.0 million tonnes to all sugar mills on December 31, 2020, with export date till September 30, 2021. Favourable international sugar prices driven by muted production outlook in countries like Brazil, Thailand, etc. have led Indian mills to export sugar even without subsidy, and the country is estimated to export 7 million tonnes of sugar this season, i.e. 1 million tonne higher than the subsidised volume.

It also notified an assistance scheme for the mills to meet their marketing costs, including handling, upgrading and other processing costs, along with costs of international and internal transport and freight charges on export of sugar. Our total sugar quota for exports under SS 2020-21 MAEQ scheme was 1.82 lakh tonnes and the entire quota was contracted, of which 1.03 lakh tonnes was physically despatched in FY 21. The Government of India has given a lot of flexibility on evacuation of the sugar, which is helping us contract our export quota effectively.

We see a substantial demand for sugar in the eastern hemisphere, with India securing relative premiums over New York. This augurs well for the Company, as it will facilitate us in making timely payments to farmers for sugarcane purchased. With the Government allowing supply of sugar to refineries in Special Economic Zones (SEZs) to be considered as exports for availing certain benefits under the MAEQ scheme, we see the Indian sugar industry gaining further in the coming quarters in terms of price stability. Given these opportunities, we aim to focus on enhancing exports with expansion into new geographies.

Unfortunately, Uttar Pradesh witnessed a climatic flux that led to decrease in sugarcane yields and sugar recovery, especially in the eastern part of the state, which was impacted by extreme waterlogging that led to crop destruction. Eastern and Central UP were also impacted by the red rot, which caused damage to crops, causing sugarcane crush to come down marginally as compared with the previous season. Another factor that has impacted recovery is diversion of sugar in B-heavy molasses for ethanol production, which was a strategic decision we took to ensure adequate feedstock availability for our distillery units. This resulted in increase in quantity of sugar diversion over the previous season. Cumulatively, these factors have led to a decrease in recoveries at all our units.

The Government of India’s policy initiatives and positive signals on ethanol blending are contributing significantly to stabilising the country’s sugar industry. While the Government benefits from savings on the import bill on crude imports and environment protection, sugar mills get the advantage of an avenue to divert excess sugar production, opening up an additional revenue stream for them. Sugarcane farmers also benefit owing to the improved profitability of the sugar operations.

The Government is also incentivising mills to set up distilleries, besides increasing ethanol prices – which makes ethanol production an attractive proposition. The Government’s modified scheme for financial assistance by way of interest subvention is expected to boost investment in distilleries, which will enable the country to fast-forward towards the accelerated goal of 10% blending by 2022, and 20% to be achieved by 2025.

At Triveni, we are harnessing these opportunities to continuously scale up our ethanol production to earn more revenue from existing distilleries while also investing in new distilleries. During the year, the production and sale in the Distillery segment recorded strong growth in view of full year impact of the new distillery. The Board of Directors has approved two new distilleries – at Milak Narayanpur (160 KLPD, sugarcane juice, syrup/grain based) and Muzaffarnagar (40 KLPD grain based), to augment our ethanol and ENA production as per market requirements. The Board has approved expansion of distillation capacity of the existing and upcoming distilleries located at Muzaffarnagar (UP), Milak Narayanpur sugar unit at Distt Rampur UP and Sabitgarh Distt Bulandshahar (UP), subject to receipt of necessary statutory clearances, raising total distillation capacity from 520 to 660 KLPD at an aggregate cost of ` 100 crore (approx.) through low capital cost incidental expansion / debottlenecking through internal accruals. Such expansion will be completed before the commencement of the SS 2022-23.

Further, we have forayed into production of IMIL at our existing Muzaffarnagar distillery to enter the IMIL market. This forward integration of our distillery operations will give us the benefit of value addition to ENA, while also helping us reduce our obligation to supply molasses at a lower than market price to other IMIL manufacturing units.

The Company has received an approval to process ENA up to 52.8 lakh litre for manufacture of IMIL, and it has plans to increase the capacity up to 3.0 lakh cases per month in phases.

The Power Transmission business was hit hard on account of delays, travel restrictions, plant closures/partial operations, migration of labour etc. Revenue of ₹ 130 crore and PBIT of ₹ 40.91 crore marked a decline of 16% and 16%, respectively, on a year-on-year basis. Though business did start picking up towards the second half of the year, the overall numbers for FY 21 were below our expectations. The segment reported contraction in orders from Domestic OEMs by 10%, partially due to the pandemic impact and partly due to the sudden increase in steel prices. However, even amid this negative environment, we reported a somewhat higher total order booking, with our products exports order booking going up by more than 200% over the previous fiscal. This was the outcome of our strategic investments and digital initiatives, which we scaled manifold to maintain business continuity and customer connect during the year. We have secured several orders for supply of compressor gears and gearboxes from India and overseas customers, which will translate into good growth going forward. We also received orders for Flue Gas Desulphurisation (FGD) blower application from domestic OEMs, offering good growth potential in the coming quarters. The outstanding order book as on March 31, 2021 stood at ₹ 166.23 crore, including long duration orders of ₹ 66.63 crore, executable over a couple of years.

Revenue of ₹ 130 crore and PBIT of ₹ 40.91 crore marked a decline of 16% and 16%, respectively, on a year-on-year basis.

A total of six new OEMs were added to our customer portfolio, while in the aftermarket segment, exports grew by 25% during the year, mainly on account of our innovative edge and service orientation, which has enabled us to retain customers and grow business through existing relationships. Our Built-to-Print business contributed significantly to the higher order booking from the overall exports during the year. We are partnering with global OEMs for precision manufacturing of components on Built-to-Print basis, which will contribute to growth in this segment in the coming quarters. We also expect good growth from our new segment of compressor gears in both, the domestic and export markets.

Going forward, we see positivity in the Power Transmission business in the key sectors of steel, power, cement, telecom, coal and mining, where favourable Government policies are driving increased spending.

Despite adverse effect on new order finalisation due to the pandemic, the overall business sentiment in this segment remains positive. There were some vendor supply chain issues and labour problems, while progress on major project sites was also impacted due to movement restrictions. Yet, the segment reported a good performance given the pandemic circumstances. Regular participation in new bids gave us enhanced market visibility during the year, and we expect to secure orders of significant value going forward. The outstanding order book as on March 31, 2021 stood at ₹ 912.02 crore, which includes ₹ 456.87 crore towards Operations and Maintenance contracts for a longer period of time.

Our major achievement for the year was a new landmark overseas EPC order in our Water & Sewerage projects division worth ₹ 156 crore, which was received from Ministry of National Planning, Housing and Infrastructure, Republic of Maldives. We also secured equipment orders worth ₹ 30.50 crore. In addition, we successfully completed a 40 MLD Sewage Treatment Plant (STP) project based on Sequencing Batch Reactors (SBR) technology and another large 210 MLD Intermediate Sewage Pumping Station (ISPS) project for the Bangalore Water Supply & Sewerage Board (BWSSB). We are actively pursuing Public Private Partnership (PPP)/Hybrid Annuity Mode (HAM) opportunities with various Municipal Corporations/Water Boards to catalyse opportunities and to create a unique business niche for our water business. Our experience and learnings from our Mathura project have been instrumental in giving us the necessary experience, confidence and exposure to such projects.

We hope to secure new business opportunities in the second half of FY 22 after the new COVID pandemic surge eases, and as a result of the positive outcomes of the tenders pending finalisation.

Despite the uncertain environment at the start of the year, we are optimistic about the Company’s prospects in FY 22. We feel that our learnings of the previous fiscal, coupled with our strong credentials, our considerable expertise and experience, and efficient management of resources will steer positive growth as the restrictions ease and the situation improves from the second quarter of the year. Equipped with a strong digital and technological edge, we are looking at enhanced innovation to leverage the opportunities across business segments.

In the Sugar business, we are exploring digital and Artificial Intelligence (AI) applications to augment sugarcane production management through more targeted initiatives on crop and soil health protection, predictive analytics etc. This, we believe, will further enhance the Company’s competitive advantage. With increased capacities and enhanced capacity utilisation driving our response to the Government initiatives to promote distilleries, we see significant potential for growth in our Alcohol business, where our new revenue streams will further complement our strength.

The outstanding order book as on March 31, 2021 stood at ₹ 912.02 crore, which includes ₹ 456.87 crore towards Operations and Maintenance contracts for a longer period of time.

As far as the Power Transmission business is concerned, we are actively exploring additional business opportunities from our existing and new customers, leveraging our extensive product portfolio and geographical presence. We are also exploring opportunities through expansion into new product lines and regions. Renewed industrial growth continues to offer emerging opportunities. For example, we expect to see new opportunities for power generation from Waste to Electricity from various states like Kerala, Punjab and Telangana. Waste heat recovery plants are also becoming popular in the Cement and Steel sectors, offering a great potential for increased business in these segments.

In the Defence and Water businesses, too, as mentioned earlier, we see a lot of promise for growth and expansion, going forward. Overall, we expect order booking across the Power Transmission business segments to improve as the COVID second wave subsides and economic activity improves.