BAJAJ HIND Chairmans Speech

Dear Shareholders,

Every business is witness to a cyclical trend that is synonymous with
government policy, overall economic environment and the organic
strength of a company. Bajaj Hindusthan has been witness to many such
challenges. It has quite formidably and successfully created
opportunities and executed management dexterity in overcoming the same
over the years. With your continuous support and the devoted efforts of
all employees, we have retained our leadership position in the Indian
sugar sector and have actively fulfilled our responsibility of a
positive participation in nation building.

The global economy at present is in a situation which is testing even
the strongest of nations in their mettle of handling the complex
economic situation. For the first time in decades, we are witnessing
sovereign defaults risk happening in the Euro Zone. The economic
catastrophes some experts say may be even worse than what World War II
did to ttie European Union nations like Greece, Spain and Portugal
which have already been reeling under surmounting debts mired with
joblessness, negative growth and a growingly impatient populace that is
becoming intolerant with their elected governments. The very
conglomeration of the European Union is being threatened to the hilt.

In such a backdrop as mentioned above, a further gloom awaits if the
major forecasts are followed closely. The Organisation of Economic
Co-operation and Development which consists of 34 nations has halved
its growth forecast from 2.2% to just 1.2%. To make matters worse,
unemployment rate is at 8% and is still growing. Traditional mettiods
of tackling recession through reduced interest rates have not yielded
much result. As a residual state of affairs, there is a concoction of
confusion in terms of economic policies the nations should test,
justifying and debating a common growth path adopted by nations under
the Euro Zone, and the extent of spending the rich nations should
commit for rescuing the poorer nations. To make matters worse, the
issues of political rivalry have had an overriding effect in bringing
around a defining patti of recovery. Despite the huge bailouts
witnessed in public banks in the European Union, the Bank of England
has estimated a capital shortfall of $60 billion among the top lenders
of Britain. The collateral effects of such a situation surely would be
a dampener in the following year.

Further West, across the Atlantic, the US economy has withstood the
financial crisis with critical signals of recovery appearing gradually
but surely. Recent data reveals of how the housing sector after a
prolonged five-year period of deep recession is limping back. In
addition, unemployment at moderately high levels of around 7% has
definitely softened from its peak levels of 10%. When small pockets of
good news spreads across a broader horizon of sectors in the economy,
it would accelerate the growth scenario. To top the sustenance of
growth, consumer spending which is almost 70% of the total GDP of the
US has increased with some positive figures on the charts. This would
provide further impetus to the manufacturing sector.

On another front, Brazil has recorded some slowdown along with India.
The silver lining is some positive figures from China in terms of
manufacturing growth, though a double digit growth figure is surely not
to be seen for some time now. Hence, the period 2013-14 could be one of
the worst in terms of economic performance for the world economy. The
looming threat always would be whether the few nations showing some
signs of growth be able to sustain their performance. On the other
hand, it would be critical for the rest of the nations, especially
those in Europe to work their way out to at least arrest the continuous
slump.

The spillover effects are being felt severely in India too. So much so,
the fears of the Indian GDP growth in 2012-13 reporting its worst
performance in the past decade could be a reality. Most forecasts
expect the GDP for 2012-13 to record at 6% levels and possibly dropping
to even 5.5%. There has been a downturn in the pace of reforms in an
environment of political challenges. The absence of policy impetus has
also been supplemented with rising inflation and high interest rates.
There has been a slowdown in terms of new projects being implemented as
a result of high borrowing costs. With mounting fiscal concerns in the
face of a contracting GDP, the government needs to bring in some big
ticket reform measures that would signal a positive mood swing and help
generate economic activity.

The sugar industry has had a long wait on issues relating to complete
decontrol as a policy move on behalf of the government. The formation
of ttie Rangarajan Committee and its proposals in general are extremely
encouraging that would lay down a roadmap for bringing in tectonic
reforms in the sugar sector. I am very confident that the government
would not delay this opportunity to bring about the required
modifications as proposed by the committee. The gains to the sugar
industry, from the farmers on the supply side to the end consumers on
the consumption side, would be immense. Moreover, the ailing sugar
industry would have a huge breather to finally be in a similar playing
field as compared to other sectors in India. We are at the start of our
third decade of reforms. A decontrol in the sugar sector would flag off
an initiation into this decade with a correct signal by the government
that has taken another giant step towards reforms.

I have a strong sense that the present year would be one of the most
challenging in terms of business environment and overall sluggish
sentiments. However, I strongly feel this would be a defining year in
terms of consolidation and sustenance of corporates who want to strive
hard. Bajaj Hindusthan has always been at the forefront in executing
the corporate objectives of growth and profitability. The synergies of
operation and functions are best achieved in such trying times. A
policy push as I mentioned above in terms of decontrol would open flood
gates of opportunities for the overall sector. Your company is ready to
take that giant step towards a more open, less restrictive environment
of business in the sugar sector.

Warm regards,

Shishir Bajaj

Chairman & Managing Director

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