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

Dear Shareholders,

The past year has been at best a mixture of random good news
consistently overshadowed by a host of disturbing news on the global
economic front. When normalcy was limping back in the markets of the
western hemisphere the threat of nations like Greece, Portugal and
Spain defaulting on their sovereign debt loomed large in triggering
another domino effect of economic downturn. Sailing amidst the choppy
waters of economic upheaval is not remotely easy. Back home, in India
we were witness to the trickling effects of the robust growth we saw in
the early years of the present century. We have just completed the
first decade of the twenty first century and it has been definitely a
formidable growth period. From a nation that has been a toddler in
reforms during the nineties to a nation that is robustly shaping up as
a global economic player at present, the journey to put it humbly has
just begun.

Amidst the cacophony of liberalisation, policy norms being rewritten,
business rules looked at, sectors being opened up for global players,
we have just completed the second decade of reforms. The learning
experience has been manifold compared to what we have witnessed in the
first decade. Kudos to the Indian economy where we have managed to not
only integrate with global best practices of running an economy but
have also simultaneously kept ourselves insulated enough to prevent
catastrophic consequences of unregulated reforms like those faced by
the extremely liberal western economies in the past two years. On
hindsight, our regulators have done a great job in walking the
tightrope of cautious reforming and growth. The most visible evidence
has been of the financial meltdown of the US and European markets that
have hardly had much effect on our domestic finance sector in the past
three years. Though I must add there has been a weakening of our
domestic stock markets in the same period given the dominant role of
international investors over these years.

The Indian agrarian sector in the past decade has witnessed a positive
change in terms of consumption where we see a purposeful increase in
consumption levels of food, clothes and services over these years. For
example, the telecom revolution has penetrated the last mile of the
most remote of villages. In addition, giant government projects like
the National Employment Guarantee Program are gradually playing a "game
changer" in terms of alternating the social and economic fabric of our
villages. In a similar manner, we all are also looking forward to the
"food security" bill, another first of its kind in the world that if
executed in a right manner would pave the way for a new rural India.

On the macro economic front, the domestic economy however had some
concerns in terms of growth and inflation. The high level of prices
would definitely throw open a new debate in terms of whether a growing
economy should settle and accept a high level of inflation. Moreover,
for the millions of poor this definitely is not an economic argument
they would be satisfied with. With jobs to cater and mouths to feed,
for a government it''s a twin edged sword of balancing between growth or
inflation. Besides, with a slow but sure global meltdown taking place
all economic policies should be skewed towards creation of domestic
demand rather than banking on foreign investments or international
markets.

In the present fiscal of 2011-12, India would miss its growth and other
fiscal deficit targets as has been accepted by the government. The
growth target has now been revised at around 7.5 percent levels from
the budgeted estimates of 9 percent. Despite India''s vulnerability to
global recession being limited, any recession in Europe may further
hamper domestic markets as well as production. With high rates of
borrowing existing with high prices, it is definitely a major hindrance
for industries across the Diaspora to keep up a momentum in terms of
revenues and earnings. The sugar industry also would have a direct
impact in terms of managing costs with rising interest rates.

For years we have strongly advocated the idea of complete decontrol of
the sugar industry that would enable not only a healthy environment of
productivity but also lead to a win-win situation for the sugarcane
farmers, the sugar consumers and the sugar producers. India is no
stranger to the benefits of complete decontrol in other sectors, and
the same would be replicated in the sugar industry as well.

Globally, there has been an upsurge in terms of sugar stock and present
trends are expected to persist even in the next year also. Given such
a scenario there is not much increase expected in the global prices of
sugar, a decisive shift from the extreme volatility witnessed a few
months ago. On the domestic front, a jump in sugar production from 19
million tonnes in 2009-10 to 24.5 million tonnes in 2010-11 has led to
easing of prices. Such a trend would remain for the next fiscal also in
terms of domestic production. Given the thorough regulation of the
sugar industry,

sugar producers with abundant stock and facing a weakening of domestic
prices are keenly looking forward for permission from the government
for allowing a sizeable volume of exports. This would help them in
taking advantage of the price differential and also generate better
margins due to a weakening of the rupee against the dollar. Once again
this brings to the fore a strong case for decontrol of sugar which if
existed would have benefited the sugar producers in leveraging and
distributing their revenue margins based on global and domestic price
dynamics, simultaneously fulfilling the need of the domestic market.

Being the leader in the sugar industry, for us it is not just a
position of numbers but an opportunity for fulfilling a responsibility
towards both the industry at large as well as our key partners, the
extensive farming community. Our firm intent in supporting reforms and
decontrol will remain of paramount importance. As a corporate citizen,
it has always been our endeavour to be a contributory partner to
India''s growth story. We will continue to strive to grow in a manner
that would effectively and convincingly reflect the true determination
and spirit of our large family of employees, shareholders and other
stakeholders including our millions of farmers who toil effortlessly to
produce the sugarcane that finally sweetens our taste buds. I proudly
look forward in sharing and participating in this process of India''s
march into the third decade of reforms.

Warm regards,

Shishir Bajaj

Chairman & Managing Director

Dear Shareholders,

Globally, sugar is facing a huge downturn in terms of prices. From the highs of over 20 cents to a pound around February 2016 the prices have plummeted to below 13 cents level by mid June 2017 the lowest in the last 16 months. With over 180 nations producing sugar Brazil, India, Thailand, Myanmar and China remain the dominant players in the global industry. Till last year, a fair upturn in prices served as a sweet pill for most of the sugar players with most of the sugar producing nations enjoying an upsurge in production.

Brazil still remains one of the most dominant nations to impinge upon both production and prices. Hence, sugar observers will closely watch how Brazil would behave in such a sugar price downslide. However, initial information reveals that though Brazil this year has not had a swift take off in production like last year, despite this the Brazilian Sugarcane Industry Association predicted that sugar production will only decline marginally from the previous year''''s record. It is said that though prices have dropped by around 30 percent since last year, large Brazilian mills have the early advantage of high lock-in prices in futures. On the other side small producers in Brazil would face the brunt of tumbling market driven prices.

Reiterating the above, International Sugar Organization (ISO) cautioned over expectations of price weakness on the back of foreseeing global production surpluses for the next two seasons. Initial forecasts for 2017-18, on an October-to-September basis, states the world returning to a production surplus of about 3 million tonnes with the potential for further surplus the following season. If producers in 2018-19 manage to keep output at the level projected for 2017-18, the surplus phase may continue for one more season.

On the domestic front, higher production is bearish for sugar prices. Production this year dropped to barely 20 million tonnes against an estimation in the range of 24 to 25 million tonnes. Adding an inventory of 7.7 million tonnes we would have 27.7 million tonnes of sugar available. With expected consumption of 24 million tonnes, there would be a sufficient inventory to carry forward for the new season. Production would also get supplemented with good monsoons expected

at 98 percent levels this year, creating a downward pressure on prices. This brings us to revisit the requirement for sugar imports and existing customs duty on sugar. At a 40 percent import duty and the present global weakness in sugar prices, it makes sugar imports further cheaper compared to domestic prices. It is essential to maintain a price parity and raise duty to at least 60 percent levels to protect fair domestic prices, save foreign exchange, save domestic industry, protect jobs and farmers interest. To maintain a fair and remunerative price (FRP) of ''''255 per quintal it is important to maintain a critical price of domestic sugar at least at ''''36 a kg at mill level in local markets. In states where there is a state advised price (SAP) model, the SAP ranges much higher from ''''305 to ''''315 per quintal. Any slippage in prices of sugar from these levels would create a severe pressure on mills to pay the farmers on time, given that cane prices constitute almost 75 percent of the overall cost of production of sugar. As I mentioned in my earlier observations, this has to be perceived through the proposals of Rangarajan Committee on sugar price decontrol and proposal of a shift to revenue sharing model based on domestic sugar prices. Hikes in administered sugarcane prices would make it impossible to be brought down in the future when market price of sugar crashes, creating severe financial distortions for sugar manufacturers.

Your Company continues to be the leading sugar and ethanol manufacturing company in India with its fourteen sugar plants having an aggregate sugarcane crushing capacity of 1,36,000 tonnes crushed per day (TCD), six distilleries having aggregate capacity to produce Industrial Alcohol of 800 kilolitres per day and fourteen co-generation plants having a total power generation capacity of 449 MW. During the year ended March 31, 2017, the Company crushed 12.509 MMT of sugarcane. During the year the Company produced 12,72,424 MT sugar and 5,94,958 MT molasses. During the year Industrial Alcohol / Ethanol production was 1,11,934 KL as against 1,25,310 KL in the previous year. Alcohol / Ethanol sale during the year was at 1,09,820 KL as against 1,42,846 KL during the previous year. The operations of power generation were smooth at all the fourteen plants. While most of the power generated by us continued to be used for captive consumption to run our plants, the surplus power was sold to the Uttar Pradesh state grid. During the year, Power generation was at 7,29,431 MW as against 6,86,685 MW in the previous year. The Company exported 2,67,257 MW of power during the year as against 2,66,106 MW during the previous year.

India would witness a landmark shift to GST on July 01, 2017. The one-tax one-nation theory would take shape in terms of uniform taxes. I firmly believe it''''s a great opportunity where India would set a landmark example to the whole world in terms of its economic intent and execution. Specifically for your industry, GST in sugar has been set at 5 percent, which would lower the existing cumulative taxes under various heads being paid by the industry by around 3 percent.

Your Company and family of employees are committed as always through a prudent management to oversee the slowdown and shortfall in prices expected in the next one year. The inner strength of any organization is tested during economic down cycles. We have resolutely witnessed such economic cycles in the past and are confident of successfully being able to manage the present and future disruptions of sugar prices, banking on our strong learning and experience as a market leader.

I take this opportunity to thank all the stakeholders including Central and State Government authorities, Bankers, Shareholders, Suppliers, Customers and Business Associates for their support in managing the Company.

Warm regards,

Kushagra Bajaj Chairman & Managing Director