According to the company, the huge gap between the actual and projected net profit is because of the government's decision to cut down the amount of sugar to be released for free sale. Added to that was the lower price realisation of free-sale sugar in the open market due to depressed market conditions.

For fiscal 1998, Simbaoli Sugar reported a 30 per cent rise in total income to Rs 155.03 crore from Rs 118.54 crore the previous year. While net sales rose 39 per cent to Rs 157.12 crore (Rs 112.74 crore), other income dipped more than 50 per cent to Rs 2.09 crore (Rs 5.79 crore) during theperiod under review. The government's decision to cut down the amount of sugar to be released for free sale during the year and also the decision to import sugar at subsidised prices had also placed a burden on the company's inventory positions.

These had prompted into carry over of inventories by the sugar division of the company and, in turn, resulted into higher interest on working capital. During the year to September 199, Simbaoli Sugar's interest outgo went up by 32 per cent to Rs 15 crore from Rs 11.37 crore paid the previous year.Given the 32 per cent rise in total expenditure to Rs 137.7 crore, the company saw a 141 per cent rise in gross profit to Rs 6.50 crore against Rs 2.69 crore during the year to September 1997.

There was marginal rise in the depreciation provisions by 8 per cent for the year - from the previous year's Rs 3.82 crore to Rs 4.12 crore. The company's taxation outgo for the period was Rs 15 lakh against nil taxes paid the previous year.

Simbaoli Sugar's net profit duringfiscal 1998 went up by more than nine times to Rs 2.91 crore against the previous fiscal's Rs 30.51 lakh. However, due to the government's decision on free-sale sugar and the company's decision to hive off Chilwaria sugar division contracted its bottomline to fall far short of its Rs 19.74 crore projected net profit for the year to September 1998.

On an equity base of Rs 10.44 crore, Simbaoli Sugar's earnings per share works out Rs 2.78, up from 30 paise a year earlier. Given a Rs 31.49 crore reserves, the current book value for the scrip works out to Rs 41.12.