Best CEOs: S. Suresh and the successful growth of sugar and sweetener major EID Parry

What does it take to run one of the oldest businesses in the Indian subcontinent? Ask S. Suresh, MD of 235-year-old sugar and nutraceuticals manufacturer EID Parry (India), and he says staying calm in a crisis, maintaining an exercise regimen and keeping your eyes peeled for any change in the market does the trick. His mantra is corroborated by the fact that since he took over as MD in August 2017, the company’s consolidated top- and bottom lines have grown by 10 and nearly 12 per cent, respectively, every year till FY22. So, what has helped him to achieve such double-digit growth in recent years?

Suresh cites the example of shutting down underutilised plants in Tamil Nadu and shifting the assets of another to a factory in Karnataka, to explain that consolidating the company’s capacities and operations has helped them. He also talks about how he is focussed on transforming the sugar and sweetener major into a food, fuels and nutrition company over the next five years. “This strategy, coupled with the organic growth of cane through connections with farmers, has helped us increase cane volumes from 3.7 million tonnes per annum (mtpa), to more than 5 million mtpa over the past five years,” he says, adding that with higher recovery of sugar, the profitability of a company in this industry becomes better.

With over three decades of experience, Suresh—a mechanical engineer, with a postgraduate diploma in industrial engineering and an MBA in finance—has worked across industries and segments such as sales, marketing, manufacturing, industrial relations, supply chain, etc. His wide experience is also reflected in the company’s consolidated return on capital employed (ROCE) (excluding fertilisers company Coromandel International, where it holds more than 56 per cent stake) that has more than doubled to 13 per cent between FY18 and FY22, per data shared by it. No wonder, it has led him to emerge as the winner in the Agriculture & Allied category of the BT-PwC India’s Best CEOs ranking.

On being asked how the company has managed to achieve such robust return ratios, Suresh talks about a four-pronged strategy, that is based on cane volume growth; sugar recovery progression; maximising the value creation of sugar through improved realisation in the B2C and B2B markets; and value addition. “We started our value addition initiative five years ago and have been staying on track by increasing... retail sales. We add a substantial value to end consumers in these channels and thus deliver better value,” he explains.

In the B2C space, EID Parry is rapidly transforming from a sugar producer to a sweetening solutions provider under Suresh’s leadership. He says that with sugar being considered a source of energy in India, the branded sugar market in India is slated to go up from 8 per cent in FY21 to 15 per cent by FY25. “Armed with a 200-plus-year-old brand Parrys denoting trust, the company is at a vantage point to... capitalise on this opportunity,” he says.

Another strategy of growth for EID Parry has been “increasing the biofuel volumes”. He says, “Thanks to the government’s impetus on ethanol blending… We are almost doubling our capacity from 297 kilo litres per day (klpd) as of December 2022 and to 580 klpd by April 2024.” The company is also focussing on controlling fixed costs, with Suresh spearheading various initiatives towards efficiency improvements and cost controls through innovations across the farm-to-fork value chain.

With the narrowing spread between the cost of cane and the price of sugar, Suresh says the mantra for success has been to unlock the value from every stick of cane and look at opportunities to premiumise/fortify every product in the value chain. “In keeping with the shift towards healthy alternatives, we have developed a healthier sugar, ‘Sweet Care’ that helps protect against the onset of diabetes,” he says. EID Parry is also looking at producing different grades of ethanol from by-products such as molasses and bagasse and selling it to oil marketing companies, pharma manufacturers and alcohol manufacturers, among other use cases that are being developed.

In terms of competition, EID Parry is emerging as a food and biofuels firm as compared to just being a sugar producer selling in the commodity markets. “To capture the opportunity in the ethanol space, we should be doing somewhere closer to around Rs 260-270 crore of capex over the next two years,” says Suresh, adding that currently ethanol contribution in consolidated turnover (excluding Coromandel) was 11 per cent in FY22.

But the story doesn’t end there. With a rally of 171 per cent, shares of EID Parry have outpaced the BSE Sensex (up 64 per cent) in the past five years till February 28. And analysts say that its prospects are strong given the government’s focus towards the sector and its stake in the cash-rich Coromandel. “With the entry into the branded sugar space, the company will move to the consumer space from just a commodity business. A consumer-oriented company gets more advantage over a commodity company. The company’s decision to strengthen its ethanol business offers one more avenue of income going ahead,” says, Kranthi Bathini, Equity Strategist at WealthMills Securities.

Further, Girish Sodani, Head of Equity Market at Swastika Investmart, says that with the company expanding the capacities of its Haliyal distillery in Karnataka and the Nellikuppam unit in Tamil Nadu to 120 klpd each, the company’s overall distillery capacity will be at 582 klpd per annum. “This is expected to be commissioned by Q4FY24. And the development seems positive for EID Parry,” he adds.

@iamrahuloberoi