SUKHJIT STARCH &
CHEMICALS LTD
Investor
Presentation 2015
CONTENTS
1. Business Overview
2. Product overview
3. Management Vision and Ethics
4. Industry Dynamics
5. Financial Highlights
6. Strategic Outlook
BUSINESS OVERVIEW
First entry mover advantages: One of oldest producer of Starch in India
and third largest in India as per production
Long lasting relationship with biggest brands and end users
Consistent expansion results in huge jump in capacity from 1800 TPA in
1943 to over 4 Lacs TPA in 2014-15
Diversification across customers and end-markets
Strong management team with proven track record
Consistent & uninterrupted dividend track record for the last four
decades
MANUFACTURING PROCESS OF STARCH
INDUSTRY
MANUFACTURING PROCESS OF STARCH
INDUSTRY
First the incoming corn is inspected and
cleaned. Then it is steeped for around 40
hours to begin breaking the starch and
protein bonds.
The next step in the process involves a
coarse grind to separate the germ from
the rest of the kernel.
The remaining slurry consisting of fiber,
starch, and protein is finely ground and
screened to separate the fiber from the
starch and protein.
The starch is separated from the
remaining slurry in hydrocyclones. The
starch then can be converted to syrup or it
can be made into several other products
through a fermentation process.
MANUFACTURING PROCESS OF STARCH
INDUSTRY
PRODUCT OVERVIEW
Growth of Maize Starch industry has
doubled in the last 5 years in terms of
grinding capacity of Maize.
North America is expected to lead the
global modified starch market with share
of 39 percent followed by Asia-Pacific (29
percent) and Europe (27 percent) in terms
of consumption.
Due to opening up of the FDI in Retail
sector, more international players likely to
penetrate the Indian Market.
PRODUCT DEMAND OVERVIEW
India with its huge population base and low
consumption levels offers a massive opportunity to
capture
Change in Consumer behavior with respect to
habits & patterns of food consumption
Packaged ready-to-eat food is the order of the
day due to ready OTC availability: Increase in
requirements of modified and value-added starch
products i.e. its derivatives, in the packaged food
industry
PRODUCT DEMAND OVERVIEW
High-fructose corn syrup, also high-fructose maize syrup in other countries
comprises any of a group of corn syrups that has undergone enzymatic processing to
convert some of its glucose into fructose to produce a desired sweetness.
Beer industry substituted sugar with High Maltose Corn Syrup (HMCS) and Dextrose,
both derivates of Maize Starch.
Manufacturers of Aerated Drinks yet to substitute sugar with an alternative. Enquiry
made by manufacturers of Aerated Drinks and Beer, as to an alternative of sugar has
increased in last few years.
PRODUCTS: INDUSTRY WISE
PRODUCT USAGE
PRODUCT USER INDUSTRY
STARCH TEXTILE, PAPER
DEXTRINE/PRE GEL/MODIFIED FOOD, PAPER, PAINT
STARCH
GLUCOSE FOOD, FMCG, PHARMA
SORBITOL PHARMA, PAINT, FMCG
MAIZE GLUTEN/FIBRE/ GERM ANIMAL, POULTRY FEED, EDIBLE
OIL
MANIPULATED CORN STARCH USAGE
Extrusion, the same process used to make snack foods, can alter the
physical structure of corn starch to make totally biodegradable
packaging peanuts. Starch granules can be broken down into nano
particles to form adhesives that can replace petroleum-based acetates
and alcohols used to help laminate graphics onto cardboard and latexes
used as binders in paper coatings.
Corn starch combined with polymers creates a super absorbent used in
disposable diapers, sanitary napkins, bandages, and baby powders, and
can be used to remove water from fuels and to clean up pesticide spills.
Corn starches is as raw material for the production of industrial
chemicals and plastics which are today made from petroleum feed
stocks. As petroleum supplies dwindle or become less reliable, the
importance of an abundant source of basic industrial chemicals takes on
new proportions. Corn industry scientists are at work on new systems
for producing industrial necessities from the versatile corn plant.
FINANCIAL HIGHLIGHTS
Net Profit (In Cr)
45
40 38.78
35
30
25 22.1 23.2
21.58
20
14.67 16.04
15 11.61
10
5
0
2009 2010 2011 2012 2013 2014 2015
FINANCIAL HIGHLIGHTS
IN
Revenue CR.
600
534.17
508.91
500
420.1
400
339.41 354.95
300 259.31
203.7
200
100
0
2009 2010 2011 2012 2013 2014 2015
FINANCIAL HIGHLIGHTS
20 IN %
18.6
18
16
14 12.98
12.25 12.36 12.23 12.31
12 11.47
10.14
10 NPM
OPM
8
6.25
6 5.74 5.59 5.14
4.35
4 3.15
2
0
2009 2010 2011 2012 2013 2014 2015
INDUSTRY OUTLOOK
India currently has installed starch capacity of 13,000 TPD ( 3 MTPA of
starch production): Per capita consumption still very low: More than 1000
application in developed countries
Industry is witnessing a burst in activity, leading to several projects to
enhance / set up capacity and higher M&A
Larger size plants are preferable to benefit from consolidated procurement
and economies of scale in manufacturing. Surplus land and good location
with access to key raw materials, water and power will allow for scale up
Raw material is subject to price fluctuations as well as production
uncertainty
Analysts anticipate this consumption rate to continue in the near future
and maize consumption will rise to 25.2 million ton by 2016-17E.
China consumption grew by 4 times in last decade
GROWTH DRIVERS
Per capita consumption : Low per capita starch consumption in India of 1.5 kg
as compared to global average of 6.1 kg: ¼ of the consumption as comparison
to china.
Abundant availibility of maize and promoting export of value added products:
Maize production is expected to increase with higher yield
Food/Pharma applications: High price of sugar leading to search for its
alternatives in food & beverages industry Steady requirement for glucose.
Rising health consciousness among consumers leading to a higher
appreciation of nutritional superiority of products using corn starch &
derivatives
New industrial applications: Modified starch suited for various specific
applications resulting in higher efficiency and better quality of end products.
E.g. application of cationic starch in paper industry is resulting in lower fiber
loss, better printability, etc. Applications of PGS in drilling *New use for starch
in manufacturing ethanol
STRATEGIC OUTLOOK
Modified starch market will grow to $15.23
billion by 2017 with 3.2 percent CAGR
during the same period.
In some products, the Statutory permissible
limit of usage of starch is still very low in
India compared to the permissible limits in
other American and European countries.
Government may consider and thereby
make necessary amendments in the
permissible limits
Increase in consumption of Maize products
can check on the pricing of Sugar and
Government may give incentives to starch
industry in future
4 industrial sectors ( Pharma, Food and
Beverages, Textile & Paper) which are
demand driver for the industry are doing
extremely well & expected to continue the
uptrend in 2016
CHALLANGES
Consumer industry suffers from fragmented supply: In spite of prices being low,
consumer industry have low margins.
Consistent quality of maize is not available round the year: Cost of cultivation is high
and not competitive to world price
Capacity to dry corn up to the level of 14% is not present which leads to wastage
and loss to farmers.
Post harvest losses are on a rise and quality protein is not available.
Ground water level has gone down substantially
Key challenge in setting up food parks lies in land acquisition
Lack of agriculture sector reforms that many believe should run concurrently even
as infrastructure for food processing is set up in the country
WAY FORWARD
Carbohydrate-based products have the potential to improve the sustainability of
natural resources, environmental quality and national security while competing
economically to expand
INDIA need to build Capacity dry corn and minimize loss to farmers.
India need to find ways to increase Rabi corn and more focus to be given to post
harvest management.
R&D for quality protein is required.
DHM needs to be banned and push for genetic manufacturing is required.
Maize based Intercropping system is the need of the hour.
Productivity needs to be increased through: seed treatment; use of disease
resistant maize composites; growing early maturing hybrids; better provision of
irrigation resources.
WAY FORWARD
Maize Productivity needs to be increased through: seed treatment; use of disease
resistant maize composites; growing early maturing hybrids; better provision of
irrigation resources
Globally, as the economies mature there is deceleration in demand growth for sugar
and acceleration in growth in demand for starch / starch sweeteners. This structural
change is yet to catch up in India, which boasts of a wider gap with per capita sugar
consumption of 20 Kgs, against starch consumption of 1.5 Kgs. As the economy
matures, Industry expect acceleration in the pace of growth in demand for
Starch/Starch sweeteners over the next five to ten years.
Product mix decisions are affected by many factors and economy of scale is a
significant one
From the production phase to industrial applications, starch is a perfect raw
material to act as a substitute for fossil-fuel components in numerous chemical
applications
MANAGEMENT VISION
Quality is the life line of every business and Company committed to satisfy
customers by manufacturing & supplying quality products to their entire
satisfaction.
Sukhjit is an innovation company : Products, technologies, processes, business
models and strategies
Addressing new growth areas: plans to expand strategically
Capable of identifying and using breakthrough innovations
New journey with 2nd generation by exploring fresh possibilities
Increase portfolio of high margin value added products
MANAGEMENT ETHICS
Respect for people and nature.
Deeply committed to the social up-liftment and all round society welfare.
Prevention of environment hazards along with the business/economic growth.
Channelize youth energy for productive use.
SAFE HARBOR
Some of the statements in this document that are not historical facts, are
forward-looking statements. These statements entail risks and
uncertainties that could cause actual events to differ materially from
these forward-looking statements. These risks include, but are not
limited to, the level of market demand for our product, market situation
for our key inputs, market conditions that could cause our customers to
reduce their spending for our products, our ability to create, acquire and
build new businesses and to grow our existing businesses and other risks
not specifically mentioned herein but those that are common to industry.
The Company does not undertake to update these statements publicly to
reflect changed eventualities.
IR contact
Reach us : Mr Rishi K, Senior Director
Reliant Investor Relations
Consultancy
research@[Link]
+91 9582111450
+91 75061 31222
+91 11 2244 4422
