“We are not a group that is diversified for the sake of being diversified”

During a Q&A session with the media, Medine’s Chief Executive Officer, Dhiren Ponnusamy, provided clarifications on the group’s financial situation, land development, debt reduction, stance on diversification, and sustainable standards in real estate projects and smart cities. We present the highlights of this session, which took place last Thursday, during the presentation of Medine’s ambitions for 2024.

According to the latest figures, it appears that profits have decreased…

There has been a slight decrease in overall profitability for the first semester, attributed to cycles and movements related to the real estate market. If we look at operational profitability, we can note a significant growth in this area. From the perspective of revenue or operational profit level, namely EBITDA, there has been a significant increase compared to the previous year.

In terms of real estate, is your percentage of development compared to land assets and agricultural activities high or reasonable?

Land development in Medine is carried out within the framework of the Master Plan established in 2005. There is already an approach to land management that has been the basis of deep reflection and is balanced overall. We follow the guidelines of this Master Plan, and I recently took the time to reread the Master Plan, and I was surprised at how visionary it was when written some twenty years ago. We have broadly followed this Master Plan. So, if we consider the proportion of land development relative to land assets, it is minimal. We are talking about a very low single-digit percentage. Today, the vast majority of the territory consists either of agricultural land or nature reserves.

So, less than 10 percent?

Definitely. Much less.

You referred to your level of indebtedness. Could you explain the debt reduction and how the future looks for this fiscal year, ending on June 30? Does this give you sufficient stability to finance other projects in all the sectors you just mentioned?

Robust financial health is crucial for continuous and sustainable long-term investment. When I took the helm in 2020, Medine’s debt stood at 8 billion rupees. This level of debt was too high for a group of our size, and was suffocating operations. Hence came the restructuring plan announced in 2020, with very clear objectives to be achieved by 2023. It may have been ambitious when I announced it in 2020, especially since I did not know that the pandemic would last so long. We set ourselves the goal of reducing this debt from 8 billion rupees to 4 billion, which would allow us to breathe at that time, and also to consider the future with much more serenity regarding what we want to do. How to do it? It’s two sides of the same coin. We need to have activities that are performing well and can generate enough returns to reinvest in these activities, rather than constantly resorting to debt. So, the improvement in our operations, reflected in the financial performance of these operations, has led to a reduction in debt. The real estate project has also certainly contributed significantly in this direction. It was a material reduction in debt that we needed. These two elements have thus enabled us to achieve our objectives.

Today, looking to the future, it is important to have a good balance between the level of investment we have in the project and, on the other hand, to have this good discipline in terms of sources to finance these investments. It’s about disciplined management of our operations to maintain the same performance pace. It’s a virtuous circle. The surplus we generate in terms of performance allows us to reinvest in these sectors. We are diversified group, certainly.

Four years after you took the helm in 2020, can we say that Medine has shifted from an agricultural group to one of the diversified groups we have in the country?

That’s the objective. We acknowledge that every sector inevitably goes through cycles. The goal of diversification is precisely to mitigate these cycles somewhat. Today, we have chosen to be in four sectors of activity: agriculture, education, property, and leisure. So, we have four driving forces. These four driving forces will not necessarily move at the same speed. This is somewhat the concept of diversification. At each stage, through the cycles, some wheels will not move at the same speed, and others will compensate accordingly.

Today, we have these sectors of activity, all of which are linked to our objectives at Medine, whether it’s agriculture in terms of internal development, because agriculture is part of land development, or all the other activities.

I would like to emphasize here that we are not a group that is diversified for the sake of being diversified. Our four business segments have a direct connection with our strategy, and allow us to diversify due to their parameters.

Is it accurate to say that among sugar groups, you are the least involved in the energy transition? And if so, why?

It may be less known, but Medine has invested in the largest solar plant in Mauritius, located in Henrietta. It was inaugurated in 2019, and provides electricity to approximately 12,000 households. So, we are already present in the sector. It is certainly a sector in which we would have liked to play a larger role. And we will explore opportunities.

What has been the stakeholders’ response to your presentation of ‘The West’ project?

The initiative has been very well received, as the approach aims to be inclusive. It wasn’t just Medine’s project that was highlighted, but the entire Western region. The feedback has been generally positive. The project showcased many things. We discovered many places in the West that were little known. There is still a lot of work to be done. As I said, this is not an initiative for a year or 18 months, but one that is ongoing. The more people we attract to the West, the more this brand will gain momentum in terms of the promise it represents. So, for me, it’s ongoing work. It’s a big task we’re undertaking, but it’s an investment in this long-term initiative. Then we also need to have more and more partners from the region who join this initiative to bring this brand to life.

The more people we attract to the West, the more this brand will gain momentum in terms of the promise it represents.

Could you situate your real estate projects, including the smart city, in regards to the responsibility related to climate change?

Real estate development, today, is done with very high parameters and standards. We not only have the standards imposed by the authorities regarding climate change, but also our own. We have quite high standards in terms of what we want to achieve in terms of parameters. If you look, for example, at the different developments we are doing, we have made the very bold decision to integrate natural drainage, which allows for a water absorption capacity that is superior to conventional drains. These are principles that we incorporate into the project to have parameters that go beyond the minimum required, which are already very high due to climate change. We take this responsibility very seriously and have also been proactive in integrating a lot of green space into our projects.