bajaj hindusthan sugar ltd Management discussions

I. Global Scenario

Over the years, India has become an efficient and consistent supplier of Sugar to global market. During the year 2021-22, India surprised the global Sugar community by exporting a record 11.1 million MT of Sugar as against last highest export at level of 7.2 million MT during previous year. During Sugar year 2022-23, India is estimated to export a quantity of 6.2 million MT and quantities have dwindled this year because of lower production as against last year.

Initially trade was expecting export of 8.0 – 9.0 million MT from India during 2022-23 and now since quantities have been curtailed to around 6.0 million MT, reflection of same can be seen in International Sugar prices.

International Sugar prices for both raw and white sugar have touched high of last 11 years due to lower than estimated crop not only in India but other major sugar producing countries including Thailand, EU with only silver lining from Brazil CS where Sugar production has increased and estimating further increase this year.

The graph of ICE 11 (Raw Sugar) and LIFFE (White Sugar) exchange prices during last 3 years i.e., April 2020 – April 2023 is given below: -

Chart 1: ICE 11 Price Movement

Chart 2: LIFFE Price Movement

From the above price graph of 3 years, it can be observed Sugar price has continuously firmed up owing to fact that Year 2020-21 and 2021-2022 turned out to be deficit years in global balance sheet. Though, 2022-23 is estimated to be surplus year with median forecast of various surplus estimates at 3.25 million Mt. This surplus sugar is available in Brazil CS from where there are logistics constraints which has capped monthly movement of Sugar from Brazil and surplus will be available to world market during Brazil off-season Dec / Jan onwards.

ICE 11 (Raw Sugar Prices):

Raw Sugar prices started from the level of 10.04 cents/pound as on 1st April 2020, touched the low of 9.2 cents during April 2020, high of 26.99 cents during April 2023 which is closing level of April 2023 as well.

LIFFE (White Sugar Prices):

White Sugar prices started from the level of 342 USD/MT as on 1st April 2020, touched low of 307.5 USD during April 2020, high of 720.1 USD during April 2023 and closing level of 711.6 of April 2023 month.

Table 1: Global Balance Sheet

Unit: 000 Metric tonnes, Raw value

Year (Oct-Sept)	Production	Consumption	Surplus / Deficit	Import	Export
2008-09	142961	151520	-8559	48395	48390
2009-10	148391	151960	-3569	53993	53997
2010-11	156177	153096	3081	53870	53865
2011-12	163597	157962	5635	54325	54321
2012-13	171804	163572	8232	60655	60632
2013-14	174132	165282	8850	58361	57917
2014-15	169373	166888	2485	58259	58270
2015-16	164114	169978	-5864	66195	66322
2016-17	169080	172691	-3611	64730	64989
2017-18	180731	172240	8491	62823	62825
2018-19	176118	174308	1810	57927	58011
2019-20	169127	169180	-53	66193	65926
2020-21	168946	169708	-762	64853	64332
2021-22 (P)	172530	174770	-2240	63970	64370
2022-23 (P)	177370	176510	850	63600	63900

Source : ISMA

Table 2: Major Sugar producing countries:

Unit: 000 Metric tonnes, Raw value

S. No.	Name of Country	2017-18	2018-19	2019-20	2020-21	2021-22 (P)
1	Brazil	31049	29030	39654	38509	32067
2	India	32479	33162	27411	31192	35760
3	China	10633	10503	10415	10663	9560
4	Thailand	14674	14441	8228	6976	10134
5	U.S.A.	7758	7551	6908	7827	7566
6	Mexico	6010	6426	5278	5715	6185
7	Pakistan	5652	5552	4988	5502	7515
8	Australia	4729	4102	3862	4303	3809
9	Germany	4595	3825	3980	3737	4166
10	France	5219	5060	4758	3354	3986
11	Russia	6480	6292	7063	5391	5700
12	Indonesia	2165	2267	2095	2294	2440
13	Philippines	2127	2037	2146	2180	1936
14	Argentina	1562	1617	1861	1627	1550
15	Colombia	2378	2207	2179	2097	2150
16	South Africa	2084	2307	2116	1861	1866
17	Guatemala	2704	2930	2764	2565	2762
18	Poland	2194	2190	2066	1987	2301
19	Turkey	2704	2283	2587	2952	2520
20	Ukraine	2095	1669	1312	1277	1450
21	Egypt	2170	2519	2280	2720	2460
22	Cuba	1086	1193	1200	824	482
23	Peru	1073	1146	1172	1103	1200
24	Vietnam	1646	1174	769	709	873
25	Iran	1805	1520	1377	1463	1300

Source: ISMA. Year (Oct-Sept)

Analysis of International Sugar price, various factors affecting price during the Year April 2022-April 2023 as under: -

Chart 3: ICE 11 Price Movement

Chart 4: LIFFE Price Movement

From the above graphs for the Year April 2022- April 2023 it can be seen; it has been a good year from Sugar price perspective where price has continuously increased.

ICE 11 price started from the level of 19.37 cents as on 1st April 2022, touched low of 17.4 cents during July & Oct 2022, with closing at 11 years high of 26.99 cents as on 28th April 23.

LIFFE price started from the level of 538.5 as on 1st April 2022, touched low of 510 USD during July month, high of 720 during April 23.

Influence factors during the Year India:

Over a period, India has become a big influencer in global balance sheet and shaping international prices. This year, initially it was estimated that India will export a quantity of 8.0 – 9.0 million mt of Sugar but now it seems that country will be able to export around 6.0 million mt.

With fact that there is no more export available from India coupled with lower crop in Thailand, International prices started increasing and reached 11 years high level during the year.

Indian Exporters are also doing a wonderful job in managing port / transit logistics and using the available infrastructure to its optimum capacity and could export record volume of 11.1 million mt during the year 2021-22.

Going ahead, export availability of Sugar from India is key and critical factor for global balance sheet and any such shortfall will distort International Sugar prices.

Brazil CS:

Table 3: Cane Crush / Sugar Production / Ethanol Production – Brazil CS

Year April – March

Particulars	Unit	2018/2019 Actual	2019/2020 Actual	2020/2021 Actual	2021/2022 Estimated	2022/2023 Estimated
Total cane crush	Million MT	573.13	590.36	605.46	524.10	548.28
Sugar Production	Million MT	26.51	26.76	38.46	32.1	33.73
Ethanol Production	Billion Litres	30.95	33.26	30.37	27.6	28.91
Diversion of Cane
Used for sugar	%	35.21	34.33	46.16	45.0	45.9
Used for ethanol	%	64.79	65.67	53.84	55.0	54.1
TRS		137.89	138.57	144.72	142.9	140.80

Source: UNICA

From the above figures, it can be observed that cane crush which has gone to low of 524.1 million mt during 2021/22 has recovered from there and reached level of 548.28 million mt during 2022/23. With increased diversion of cane towards Sugar at 45.9% as against 45% last year, Sugar production also increased to level of 33.73 million MT during the year 2022/23 as against last years level of 32.1 million mt.

Though, the quality of cane i.e., TRS has come down during 2022/23 to 140.8 from last years level of 142.9 kg/mt cane.

For the Year 2023/24, there are various estimates of cane crush / Sugar production by various research agencies.

As per Platts, cane crush in Brazil CS during 2023/24 is estimated at level of 595.92 million mt, diversion of cane towards sugar estimated at level of 47.1% and with TRS of 139.3, Sugar production is estimated at level of 37.2 million mt and Ethanol production at level of 31.3 billion liters. UNICA expect cane crushing at the level of 586 million mt and Sugar production at level of 36.4 million mt for 2023/24.

Datagro, another leading research agency estimates cane crush at level of 590 million mt, Sugar production at level of 38.3 million mt and Ethanol production at level of 30.96 billion liters.

Greenpool estimate of Sugar production in on conservative side at level of 35.80 million mt and Job economia estimate is on aggressive side at 40.3 million mt.

Brazil NNE

It is estimated that during 2022-23, Brazil Northeast zone will crush 57.8 million mt of cane as against 54 million mt last year, Sugar production of 3.1 million mt as against 2.9 million mt last year, Ethanol production of 2.27 billion liters as against 2.15 billion liters last year, TRS of 123.7 as against 124.1 last year and cane diversion of 45.7% towards sugar as against 45.2% last year.

Thailand:

During 2022-23 total cane crush in Thailand is expected at 94 million MT with Sugar production at 11 million MT up 0.9 million MT year on year. This production of 11.0 million MT is lower against initial estimates of 11.5 million MT.

During 2023-24, sugarcane crop is projected at 74 million mt which is 21% less than the cane crush in 2022/23, as farmers switch to more profitable plants like cassava whose price has risen due to strong demand for cassava chips and starch. Further El nino weather pattern is also expected to reduce yields.

China:

China produced 8.7 million MT of Sugar by March end which is 0.65 million MT lower as against last year. During 2022-23, Sugar output in China is estimated at level of 9.0 million MT and domestic deficit is estimated at 6.5 million MT.

Crude Oil:

Crude Oil plays major influencing role for Sugar prices as it is one of the major macro factors and secondly higher crude oil prices indicate higher diversion of cane towards ethanol thus in direct proportion to Sugar prices.

Firming of crude oil prices particularly after Ukraine war has helped Sugar prices and export campaign from India.

During period April 2022- March 2023, Crude oil price (Brent) started at level of 99.27 USD/barrel as on 1st April 2022, touched low of 64.12 USD, high of 123.68 USD with closing level of 74.37 USD/ barrel as on 31st March 2023. Average crude Oil price through the Year worked out to 89.82 USD/barrel.

Currency:

Brazilian Real: During the Year (April – March) 2022-2023, Brazilian real has depreciated from the level of 4.66 in beginning of April 2022 to the level of 5.09 by end of March 2023 which means depreciation of 09.2%. During the year, the weakest level was 5.53, strongest level was 4.58 with average level of 5.15.

Indian Rupee: INR has depreciated during 2021-22 (April – March), from the level of 75.97 as on 1st April 2022 to 82.08 as on 31st March 2023 i.e., depreciation of 8.04%. During the year, the strongest level has been 75.27, weakest level has been 83.27 with average of 80.31.

2021/22 (Oct – Sept) Global sugar surplus: World Sugar Balance – Year (Oct-Sept)

International Sugar Organization (ISO) has estimated global sugar deficit for 2021/22 at -2.27 Million MT from a prior estimate of -1.67 Million MT.

For 2022/23, ISO has cut its global sugar surplus estimate to 0.85 million MT from a November estimate of 6.19 million MT.

Table 4: World Sugar Balance

Particulars	2022-23 (Estimate)		2021-22 (Estimate)
	Current	Earlier	Current	Earlier
Production	177.37	182.14	172.50	172.66
Consumption	176.51	175.96	174.77	174.33
Surplus / Deficit	0.85	6.19	-2.27	-1.66

 

Particulars	2022-23 (Estimate)		2021-22 (Estimate)
	Current	Earlier	Current	Earlier
Import demand	63.60	61.50	63.97	62.19
Export availability	63.90	64.49	64.00	62.51
End stocks	100.78	99.73	100.27	96.85
Stock / Consumption ratio in %	57.10	56.68	57.37	55.56

Other forecasts for global surplus / deficit in 2022-23 are as under: -

Platts	:	0.08 million MT
Tropical Research	:	1.6 million MT
Czarnikow	:	2.5 million MT

As per reuters poll of traders and analysts earlier in Feb suggested a median forecast for 2022/23 season of a global surplus of 3.25 million MT.

II. Indian Scenario

Indian Sugar Industry has come off the ages and is now no more just a Sugar producing Industry but has also become a major hub of biofuel. On lines of Brazil, every year diversion of Cane / Sugar towards Ethanol is increasing which is providing bioethanol for Government of Indias ambitious target of 20% Ethanol blending by the year 2025.

Ethanol production, which till 5-6 years back was considered a by-product of Sugar Industry is now becoming an important product of Industry and time not far when is going to become the major / main product for the sector.

Diversion of Sugar towards Ethanol which was Nil till the Year 2017-18, reached level of 0.5 million mt during 2018-19 then 0.8 million mt next year, then 2.0 million mt during 2020-21 with estimated level of 4.0 million MT during Sugar year 2022-23 and 5.5 million MT during 2023-24. This diversion of Sugar towards Ethanol on one hand is providing much needed raw material for Governments blending program on other hand is helping in regulating excess Sugar production in country.

In fact, the country had been grappling with the problem of surplus Sugar production leading to dip in Sugar prices, storage issues with Sugar mills, cash flow issues, quality deterioration issues, etc. Government of Indias active support to Ethanol campaign in not only in line with countrys bio-fuel policy but also has solved the issues of excess Sugar production.

Country has been creating new records for export of Sugar as well by exporting record volume of 11.1 million MT during Sugar Year 2021-22 and becoming the second largest Sugar exporter in World after Brazil and surpassing Thailand. India as a country has strong influence on Global Sugar prices and any deviation in Sugar production here has strong repercussions for global sugar prices.

For instance, during Sugar year 2022-23, since Sugar exports from country will be restricted to just 6.0 million MT as against initial estimate of 8.0 – 9.0 million MT and 11.1 million MT during 2021-22, International Sugar prices skyrocketed to last 11 years high levels.

Today, all the stakeholders of Sugar Industry are in win-win situation starting with farmers benefiting in form of better yields / Sugar recovery, fast payments, good cane price, Sugar Mills benefiting from good Sugar recovery, availability of sufficient cane for better capacity utilization, good market for Sugar in domestic and international market and diversion of excess sugar towards ethanol with better cash flow position, Trade benefiting from less price volatility and increased volumes for domestic / international market and domestic consumer benefitting from easy availability of Sugar at much affordable prices as compared to other commodities and for economy by new investments in sector, increased collection of taxes / creation of new jobs, etc.

Sugar Industry in India is not only in win-win situation as above but has also become a case study for many other countries as how to effectively utilize the resources available and how to turn a crisis of Surplus Sugar production into opportunity of 20% ethanol blending with everybody in the chain benefiting from the policy.

Indian Sugar Industry is in process of creating new records on all fronts, be it Sugar production, Sugar exports, diversion of Sugar towards Ethanol, Ethanol production and increasing Sugar consumption despite in between COVID related jerks.

During 2021-22, India became the Worlds largest producer of Sugar surpassing Brazil, and second largest exporter of Sugar after Brazil. Sugar production in excess of 30 million MT is new normal for Indian Sugar Industry. In last 6 years (since Year 2017-18), it is 5 times that All India Sugar production has crossed the level of 30 million MT.

During the Sugar Year 2022-23 (Oct-Sept), All India Sugar production is slated to take a dip to the level of approx. 32.8 million MT as against record Sugar production of 35.8 million MT during the year 2021-22 which is due to lower yield/ Sugar production in Maharashtra and Karnataka.

On export front, during year 2021-22, India has shaken the world market by exporting record 11.1 million MT of Sugar. International Trade has started recognizing India as efficient and consistent Sugar exporter and many countries are becoming dependent for their regular Sugar import requirements from India. Sugar consumption continues to grow at CAGR of 1.8% in last 10 years and touched level of 27.3 million MT during 2021-22 and is estimated at level of 27.5 million MT during 2022-23.

Ethanol Supplies and blending percentages are increasing every year in line with Government targets. During the year 2013-14, Ethanol blending percentage was just 1.53% with Ethanol supply of 38.0 Crore Liters which is now estimated at level of 12% during the Sugar year 2022-23 with estimated Ethanol supply of 550 Crore Liters.

Surplus Production

Indian Sugar production had always been cyclical in nature but with better cane variety / farming practices, cyclical Sugar production has become a talk of history. The Year 2022-23 will be the 13th year in row (except Year 2016-17), when Sugar production will be more than the consumption. While, continued increased Sugar production helped farmers on account of better yield, Sugar Mills with better recovery and capacity utilization, it had its own challenges as to how to tackle surplus Sugar production.

It had been quite a crisis for Industry as it led to increasing Sugar inventories, decreasing Sugar price levels, mounting cane arrears, etc. But with Government intervention and support, Industry has been able to turnaround this crisis into opportunity by becoming leading Sugar exporter and diverting excess Sugar towards Ethanol thus increasing Ethanol production for the much ambitious Government of Indias Ethanol bio-fuel campaign.

Chart 5: The graphical representation of Sugar Production and Sugar consumption for last 13 years, as below: -

Year Sugar Year (Oct – Sept)

From the above graph, it can clearly be observed that Sugar production is always in excess & higher than consumption. It is only during the Year 2016-17 that Sugar production has come down below consumption due to very poor crop in State of Maharashtra.

Sugar diversion towards Ethanol is in addition to the above displayed production & consumption data.

Cyclical pattern of Sugar Production / Demand since 1980

For better understanding of cyclical pattern of Sugar production which use to exist, displayed below is the graphical representation of Indian Sugar Production since the Year 1980-81 till 2009-10 where after every 2-3 years of surplus there is a period of deficit Sugar production which use to act as balancing factor for surplus Sugar production.

Chart 6: Cyclical pattern of Sugar Production / Demand since 1980

Year Sugar Year (Oct – Sept)

Table 5: State-wise Sugar Production

State-wise Sugar Production on All India basis since the Year 2017-18 given below in Table:-

Unit: million MT

S. No.	State	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
		Actual					Projected
1	Uttar Pradesh	12.05	11.82	12.64	11.06	10.25	10.50
2	Maharashtra	10.72	10.72	6.17	10.65	13.74	10.50
3	Karnataka	3.75	4.43	3.49	4.47	6.15	5.66
4	Gujarat	1.11	1.12	0.93	1.05	1.21	1.00
5	Andhra Pradesh	0.52	0.56	0.43	0.30	0.43	0.46
6	Punjab	0.82	0.79	0.54	0.55	0.59	0.67
7	Haryana	0.84	0.70	0.74	0.76	0.70	0.76
8	Bihar	0.72	0.84	0.73	0.48	0.46	0.64
9	Tamil Nadu	0.71	0.96	0.79	0.88	1.15	1.60
10	Madhya Pradesh & Chattisgarh	0.55	0.56	0.46	0.54	0.63	0.50
11	Uttarakhand	0.42	0.40	0.46	0.41	0.44	0.48
12	Others	0.05	0.05	0.04	0.04	0.04	0.04
	Total	32.48	33.16	27.41	31.19	35.79	32.81

Year Sugar Year (Oct – Sept)

Diversion of Sugar towards Ethanol is in addition to Sugar Production as above.

During the year 2021-22, Country has achieved record sugar production of 35.8 million MT and became the largest sugar producer in World surpassing Brazil. During the Year 2022-23, the countrys Sugar production has taken a dip of almost 8.3% due to a 24% dip in Sugar production in State of Maharashtra and 8% in state of Karnataka.

Sugar Production in the State of U.P., which has crossed 12 million MT during 2017-18 till 2019-20 has come down to nearly 10 million MT due to increased diversion of Sugar towards Ethanol and end of cycle of performing cane varieties.

U.P. continued to be leading Sugar producer in the country and it was during 2021-22 that Maharashtra became the largest sugar producing state in country. During Sugar Year 2022-23, both U.P. / Maharashtra are estimated to tie at level of 10.5 million MT.

Maharashtra Sugar production is always a surprise element and very strongly influences the Indian Sugar balance sheet. During 2021-22 when initially Sugar production was estimated between 10 – 11 million MT in Maharashtra, Sugar production turned out to be 13.7 million MT. Very next year during 2022-23, when Sugar production was initially estimated at around 13.0 million MT, it again turned out to be otherwise and actual Sugar production is around 10.5 million MT.

Maharashtra Sugar production is volatile and in between there are large swings in Sugar production. For instance, during the Year 2016-2017, there has been a dip of 50% in Sugar production. During 2017-2018, normalcy returned to Sugar production with an increase of 155% in Sugar production. Again after 2 years during 2019-2020, dip in production by 42% and during 2020-21 increase in Sugar production by 72.6% and further increase of 29% during 2021-22.

And again, a downturn started and during 2022-23, Sugar production came down by 24% to level of 10.5 million MT.

In Maharashtra this fluctuating Sugar production is not new feature which is illustrated through a graphical representation since Year 1976-77 as below: -

Chart 7: Production of Sugar - Maharashtra

Karnataka state is the 3rd largest Sugar producer in country and being the neighboring state of Maharashtra working in similar conditions, is having fluctuating Sugar production as can be seen from the above Table of State-wise production.

On similar lines as of Maharashtra, Karnataka Sugar production is estimated to come down during 2022-23 due to poor yield.

It is important to highlight Tamil Nadu which has improved on Sugar production quite significantly in last 2 years. During 2021-22, Sugar production increased by 31% to level of 1.15 million MT and during 2022-23, it is estimated to increase by another 39% to level of 1.60 million MT.

Table 6: State wise Yield of Sugarcane (Tonnes/Hectare)

The details of yields and recovery of various states are given below from where it can be seen how the productivity in terms of yield and recovery has changed.

S. No.	State	2014-15	2015-16	2016-17	2017-18	2018-19	2019-20	2020-21	2021-22
1	Andhra Pradesh & Telangana	66.0	66.0	51.0	65.0	65.0	51.0	45.2	54.1
2	Bihar	50.0	50.0	50.0	62.0	66.0	61.0	49.0	49.6
3	Gujarat	71.0	75.0	60.0	72.0	69.0	59.0	65.8	69.5
4	Haryana	69.0	65.0	71.0	83.0	72.0	76.0	79.4	80.7
5	Karnataka	94.0	78.0	60.0	94.5	91.0	92.0	99.5	116.5
6	Kerala & Goa	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
7	Madhya Pradesh	60.0	51.0	54.0	71.0	74.0	66.0	68.6	78.5
8	Maharashtra	93.0	76.0	60.0	108.0	85.0	77.0	97.1	107.6
9	Punjab	67.0	74.0	74.0	84.0	86.0	69.0	78.0	82.1
10	Rajasthan	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
11	Tamil Nadu & Pondicherry	88.0	98.0	81.0	66.0	73.0	70.0	72.2	88.4
12	Uttar Pradesh	55.0	53.0	62.0	77.0	71.0	70.0	67.9	67.2
13	Uttarakhand	53.0	51.0	57.0	65.0	60.0	67.0	68.0	69.9
14	Others	50.0	50.0	38.0	40.0	42.0	40.0	34.5	35.5
	All India	69.1	63.7	61.3	81.7	75.3	71.1	76.0	82.7

Year Sugar Year (Oct – Sept)

From above, it can be observed that Yield of all states across the country has significantly increased during the Year 2020-21 and during 2021-22 with Bihar and U.P. as exception. Maharashtra & Karnataka yield going above 100 tonnes / hectare during 2021-22, which is also visible in overall record cane crushing and Sugar production in these 2 states.

Table 7: Statewise Recovery of Sugar in % of Cane

S. No.	State	2014- 15	2015- 16	2016- 17	2017- 18	2018-19		2019-20		2020-21		2021-22 (P)
						Before Sugar diversion towards Ethanol	After Sugar diversion towards Ethanol	Before Sugar diversion towards Ethanol	After Sugar diversion towards Ethanol	Before Sugar diversion towards Ethanol	After Sugar diversion towards Ethanol	Before Sugar diversion towards Ethanol	After Sugar diversion towards Ethanol
1	Andhra Pradesh	9.38	9.35	9.37	9.53	9.46	9.40	9.27	8.96	9.21	8.85	9.47	8.88
2	Bihar	9.18	9.77	9.21	9.58	10.39	10.39	10.81	10.79	10.91	10.36	10.83	9.66
3	Gujarat	10.34	10.38	10.58	10.55	10.82	10.82	10.75	10.75	10.25	10.22	10.64	10.52
4	Haryana	9.94	10.52	10.34	10.39	10.40	10.36	10.58	10.58	8.26	10.26	9.86	9.47
5	Karnataka	11.06	10.74	10.19	10.60	10.99	10.73	10.55	9.94	10.90	9.80	10.76	9.65
6	Kerala & Goa	9.19	9.60	8.38	7.92	7.58	7.58	-	-	-	-	-	-
7	Maharashtra	11.29	11.33	11.25	11.24	11.40	11.27	11.54	11.28	11.20	10.50	11.18	10.38
8	Punjab	9.42	10.06	9.78	9.78	10.17	10.14	9.62	9.59	9.52	9.02	10.18	9.29
9	Rajasthan	8.31	5.88	8.55	9.02	9.18	9.18	8.03	8.03	7.42	7.42	8.43	8.43
10	Telangana	10.51	10.85	10.38	10.84	10.79	10.65	10.63	10.22	10.50	10.33	11.17	10.77
11	Tamil Nadu & Pondicherry	8.67	8.74	8.92	8.64	8.80	8.80	8.68	8.54	9.04	8.97	9.15	9.02
12	Uttar Pradesh	9.54	10.61	10.61	10.84	11.48	11.46	11.63	11.29	11.45	10.78	11.19	10.04
13	Uttarakhand	9.24	9.61	9.85	10.24	10.97	10.97	11.20	11.20	11.07	10.99	10.94	10.38
14	Assam, Nagaland, West Bengal	9.26	9.24	9.36	9.24	9.75	9.75	8.97	8.97	9.11	9.11	9.20	9.20
	All India	10.37	10.62	10.44	10.74	11.10	11.01	11.15	10.84	11.03	10.36	10.93	10.03

Year Sugar Year (Oct – Sept)

From above table it can be seen, since year 2018-19, U.P. state has surpassed Maharashtra and is number one state in Sugar recovery now, though overall Sugar recovery in state of U.P., Maharashtra and country has come down in last 2 years since Year 2020-21.

All India Sugar Balance Sheet

Table 8: Domestic Production and Consumption

Unit: Million MT

Particulars	2011- 12	2012- 13	2013- 14	2014- 15	2015- 16	2016- 17	2017- 18	2018- 19	2019- 20	2020- 21	2021- 22	2022-23
	Sugar Year (Oct-Sep) (Actual) – Million MT											Projected
A. Total availability – All India
a) Opening Stock as on Oct 01	5.9	6.6	9.3	7.5	9.1	7.8	3.9	10.7	14.6	10.7	8.2	5.6
b) Production during season	26.3	25.1	24.4	28.3	25.1	20.3	32.5	33.2	27.4	31.2	35.8	32.8
c) Imports	0.0	0.7	0.1	0.0	0.0	0.4	0.2	0.0	0.0	0.0	0.0	0.0
Total supply availability	32.2	32.4	33.8	35.8	34.2	28.5	36.6	43.9	42.0	41.9	44.0	38.4
B. Total Sugar Offtake : All India
a) Internal consumption	22.6	22.8	24.2	25.6	24.8	24.6	25.4	25.5	25.3	26.6	27.3	27.5
b) Exports	2.99	0.35	2.13	1.09	1.66	0.05	0.46	3.80	5.95	7.19	11.1	6.2
Total Offtake	25.6	23.1	26.3	26.7	26.5	24.6	25.9	29.3	31.3	33.7	38.4	33.7
C. Closing Stock as on Sept 30 – All India	6.6	9.3	7.5	9.1	7.8	3.9	10.7	14.6	10.7	8.2	5.6	4.7
D. Stock as % of Internal Consumption (%)	29.2	40.8	30.9	35.5	31.3	15.8	42.2	57.2	42.4	30.8	20.5	17.0
E. Additional diversion of Sugar towards Ethanol in form of B heavy / Sugar Syrup	-	-	-	-	-	-	-	5.0	8.0	20.0	34.0	40.0

From the above table, following can be observed: -

- During 2022-23, while Sugar production continues to be higher than consumption, it is projected to take a dip of around 8% as against record Sugar production of 35.8 million MT achieved during the Year 2021-22. -Despite Sugar production being higher than consumption during 2022-23, Sugar stocks are projected to decline to level of 17% of consumption as against the level of 20.5% seen last year and high of 57% seen during 2018-19.

- Due to Sugar production lower during 2022-23 than last year, Sugar exports are slated to come down to level of 6.2 million MT as against records sugar exports of 11.1 million MT last year.

- Sugar consumption growth since Year 2011-12 is around 1.8% CAGR. It was continuing at around 2% but since during 2022-23 consumption growth is projected at 0.7%, overall average has come down to 1.8% since 2011-12.

Pattern of All India Sugar Exports / Imports

Chart 8: The pattern of All India Sugar Exports & Imports in graphical pattern since the Year 2001-02 is illustrated below.

Till the Year 2010-2011, Sugar production was cyclical in nature and this cyclicality in Sugar Production led to cyclicality of Sugar Exports & Imports. During the years of surplus, country Exported Sugar and during the years of deficit country imported Sugar and thus it became a big swing factor for Global Sugar demand supply balance sheet as well.

From the above graph it can be seen, till the Year 2010-2011, Sugar import and export has been cyclical means after every 2-3 years either country is exporting Sugar or importing Sugar in a big way.

However, from the year 2010-2011 onwards due to consistent higher Sugar Production much more than the demand, country had been exporting Sugar on regular basis with very little imports in between and Nil imports in last 5 years.

Policy initiatives by the Government: -Sugar

Policies of Government in last 5 years of promoting Sugar exports, giving exports quotas, export assistance, promotion of Ethanol blending, Sugar MSP, giving monthly domestic release, etc. has helped the Sugar sector a lot and has totally solved the problem of Sugar surplus in system, lowered down Sugar stocks, cane arrears, cash flow issues with the industry.

Government has very efficiently manoeuvred the countrys balance sheet and has very timely allowed the usage of sugar including allowing exports, restricting exports so that Sugar is first available for domestic market, followed by blending in form of Ethanol and lastly for exports.

Both Central & State Government had also been working on improvement in performance parameters of Industry like Sugar recovery, yield, development of new variety, sorting out logistics bottlenecks, trade efficiency, better relations between Sugar Mills & trade, working on all issues for supply of Ethanol to oil companies i.e., for wholesome improvement of Industry.

Given below is the Gist of policy initiatives by the Government in last few years: -

I. SUGAR a) Promoting Exports of Sugar: -

It was a challenge for Government to increase Export of Sugar from the country in line with requirement of excess Sugar because of highly fragmented Industry, each state having its own problems, coastal and non-coastal states working under different conditions, logistics bottlenecks and lastly price mismatch between International and domestic price.

Furnished below is a snapshot since the Year 2018-2019 on Sugar exports where Government motivated the industry by giving export quotas to Industry and related assistance in different forms as under: -

Sugar Year 2018-2019

On 28th Sept 2018, Government announced Mandatory Export Quota of 5.0 million MT on All India basis to be exported during Oct 2018 – Sept 2019. The mandatory export quota of 5.0 million MT was split amongst all Sugar Mills in country basis Sugar Production of last 3 years.

On 26th Sept 2018, to boost Sugar Exports and for the purpose of offsetting cost of cane, Government announced following financial assistance: -

Government announced to pay defraying expenses towards Internal transport, freight, handling, etc. to Sugar Mills on Export of Sugar as under: -

- 1.0 per Kg for Sugar mills within 100 kms from Port

- 2.5 per Kg for Sugar mills beyond 100 kms from port in coastal states

- 3.0 per Kg for Sugar Mills in Non-coastal states.

Financial assistance of 13.88 per quintal of cane on cane crushed during the Sugar Year 2018-2019 subject to Sugar Mills complying with all the directives of Department of Food including exports quota and monthly release. The incidence of this financial assistance worked out to approx. 8.3 per kg on Sugar exported.

To facilitate and motivate Sugar exports, Department also decided to give additional Sale quota in domestic market to the ones exporting Sugar and reduce the domestic quota of the Sugar Mills not exporting Sugar.

Sugar Year 2019-2020

For the year 2019-2020, Government announced quota of 6.0 million MT Sugar exports on All India basis with export subsidy details as under: -

The Central Government agreed to provide an assistance @ 10448 per Metric Tonne assistance for expenses on export of sugar to the sugar mills in the following manner: -

For marketing including handling, quality up-gradation, de-bagging & re-bagging and other processing costs etc @ 4400 per MT.

For internal transport and freight charges including loading, unloading and fobbing etc. @ 3428.0 per MT.

For ocean freight against shipment from Indian Ports to the ports of destination countries etc @ 2620 per MT.

Total estimated assistance worked out to the tune of 6268.0 Crores by the Central Government for export of 6.0 million Tonne sugar.

Year 2020-2021:

During the Year 2020-2021, Government announced Maximum Admissible Export Quantities (MAEQ) of 6.0 million MT and assistance of 6000 per MT as under: -• For marketing including handling, quality up-gradation, debagging & re-bagging and other processing costs etc. @ 1600 per MT.

• For internal transport and freight charges including loading, unloading & fobbing, etc. @ 2400 per MT.

• For ocean freight against shipment from Indian ports to the port of destination countries etc @ 2000 per MT.

Later during the Year in the month of May 2021, the said assistance was reduced to 4000 per MT due to improved International Sugar Prices.

b) Maintaining Sugar Price in market MSP (Minimum Selling Price of Sugar)

Due to high Sugar production resulting into excess Sugar supply in market, Sugar prices across the country started coming down and had come down below the cost of Production. To arrest falling Sugar prices, Government fixed Minimum uniform selling price of Sugar at Mill level, across the country as under: -

On 6th June 2018, Government approved fixing of Minimum Price of 29.0 per Kg for Sugar below which no Sugar Mill can sell in domestic market.

On 14th Feb 2019, Government increased MSP of Sugar from the level of 29 per Kg to 31 per Kg.

There has been no increase in MSP since Feb 2019 (more than 4 years now) and it is high time that Government should increase MSP in line with increasing cost in terms of cane price / other inputs to level of 40.0 per Kg which is also being pursued by Industry bodies.

) Monthly Sales release mechanism

On one hand Government fixed Minimum Selling Price of Sugar, on other hand Government imposed Reverse stock limit on Sugar Mills to restrict supply of Sugar in market so that Sugar Mills can realize MSP / viable prices. On 7th June 2018, Government imposed reverse Stock limit on Sugar Mills stating that all producers of Sugar by vacuum pan process shall hold such quantity of Sugar (White or refined) at the end of each month as may be specified by the Central Government for each month.

To arrive at the figure of stocks which Sugar Mills were required to carry at the end of each month, Sugar Mills were given Monthly Sales Release Quantity above which Sugar Mills cannot sell in domestic market. The purpose of above order was to regulate supply of Sugar in market which is in excess due to consistent surplus production and thus to maintain the Prices.

d) Buffer Stock / subsidy

Government had allowed buffer stock of 4.0 million MT starting from 1st August 2019 till 31st July 2020. Government allowed buffer subsidy of 13.5 % per annum which included Interest of max 12% per annum or actual as charged by bank (whichever is less) and Insurance including storage charges of 1.5% per annum. Government had not allowed extension of buffer subsidy after expiry of same in month of July 2020 because of depletion of Sugar stocks in line with Industrys requirement and Government policies.

e) Restricting Sugar Exports

To ensure sufficient availability of Sugar in domestic market, Government restricted Sugar exports and now allowing against specific export quotas. On 24th May 2022, DGFT amended export policy of Sugar and put Sugar from "Free" category to "Restricted" category which is currently valid till 31st October 2023. It means that Sugar Export can be done against specific permission / quotas allowed by Department of Food & Public Distribution, Ministry of Consumer Affairs, Food & Public Distribution.

On 5th Nov 2022, Department of Food & Public Distribution allowed export quota of 6.0 million MT proportionately spread amongst all Sugar mills of country basis their average Sugar production during last 3 Sugar seasons.

Since Sugar production in country is projected to be lower that initial estimates, it seems that Government will not allow further exports. As per media, Government also considering imposing ban on Sugar exports from country to ensure no shortfall in domestic availability of Sugar.

f) Cane Price State Advised Price (SAP): -

U.P. State Government always showed rationale in fixing cane price in line with the cost.

Sugar year 2020-21 had been 3rd consecutive year in a row when the Cane SAP in state of U.P. remained unchanged at level of 315 per quintal for common variety of Cane, 325 per quintal for early variety of cane and 310 per quintal for rejected variety of cane.

It was during 2021-22 that U.P. State Government increased Cane price by 25 per quintal as under: -

Early Variety	:	From 325 per quintal to 350 per quintal
General Variety	:	From 315 per quintal to 340 per quintal
Rejected Variety	:	From 310 per quintal to 335 per quintal

During 2022-23, U.P. State Government maintained the same price (SAP) of 2021-22 with no increase. Fixed & Remunerative Price (FRP): For the Sugar Year 2021-22, Central Government had increased the Cane FRP by 5 per quintal from the level of 285 per quintal to 290 per quintal linked with 10% Sugar recovery.

For every 0.1 percent increase in Sugar recovery above 10 percent, a premium of 2.90 per quintal will be paid by Sugar Mills. Also, the government has made a provision for reduction in FRP by

2.90 per quintal for every 0.1 percentage point decrease in recovery, in respect of those mills whose recovery is below 10 percent but above 9.5 percent. However, for mills having a recovery of 9.5 per cent or below, the FRP is fixed at 275.5 per quintal.

For Sugar Year 2022-23, Central Government further increased FRP to 305 per Quintal linked with 10.25% recovery. Premium of 3.05 per quintal will be provided for each 0.1% increase in recovery over and above 10.25%. For every 0.1% decrease in recovery, FRP will be reduced by 3.05 per quintal. However, no deduction in FRP for recovery below 9.5%, means that farmer will get 282.125 per quintal for cane with recovery of up to 9.5%. Further as per media, CACP has recommended for FRP increase of 10 per quintal for the Sugar year 2023-24 i.e., FRP of 315 per quintal linked with 10.25% sugar recovery.

II. ETHANOL

a) Benefits by various State Governments:

States like Bihar, M.P., Jharkhand, West Bengal have given various promotional schemes for creation of Ethanol capacity primarily from grains. i) State: Bihar

S. No.	Type of incentive	Quantum of incentive	Policy
1	Stamp duty and registration fees	100% exemption (100% reimbursement in case of priority sectors)
2	Land conversion fees	100% exemption (100% reimbursement in case of priority sectors)
3	Interest subvention incentive	Interest subvention incentive at 10% of term loan for a period of 5 years, upper limit being 50% of project cost, max. 20.0 Crores. In case of priority sectors, upper limit being 30% of project cost, maximum 10 Crores.
4	Tax related incentives	Tax related incentives (100% SGST reimbursement and 100% Electricity duty reimbursement for a period of 5 years, upper limit being 100% of project cost. (In case of priority sectors, 80% SGST reimbursement and 100% electricity duty reimbursement, upper limit being 100% of project cost)	Bihar Industrial Investment Promotion Policy, 2016
5	Employment cost subsidy	50% reimbursement (in case of male workers) and 100% reimbursement (in case of female workers) of expenditure towards ESI and EPF scheme for a period of 5 years for new units for those employees who are domicile of Bihar. Max. limit for reimbursement of 1000 per month for SC/ST and women employee and 500 per month for General employee.
6	Skill development subsidy	Skill development subsidy of 20,000 per employee / Bihar skill development mission (BSDM) rates whichever is lower. This incentive will be applicable for training of employees / staffs who are domicile of Bihar.
7	Capital subsidy	Capital subsidy at 15% of the cost of plant and machinery, maximum of 5 Crore.	Bihar Ethanol Promotion Policy, 2021

ii) State: M.P.

S. No.	Type of Incentive	Quantum of Incentive
1	Production linked Fiscal Assistance	1.50 per Litre of Ethanol supplied to OMCs in 7 years upto max of 100% investment in Plant & Machinery.
2	Stamp duty & Registration charges	100% reimbursement of stamp duty and registration charges.
3	Electricity Duty	100% exemption for 5 years from date of commencement of commercial operation.
4	Quality certification	Reimbursement of 50% of Quality certification cost or 1 Lac whichever is less.
5	Patent charges	Reimbursement @ 100% upto 5 Lac.
6	Zero Liquid Discharge	50% capital subsidy on equipment for zero liquid discharge facility subject to maximum 1 Crore.
7	Infrastructure development subsidy	50% assistance subject to maximum of 1 crore each shall be provided for the job.
8	Incentive to provide employment to differently abled persons	1. 100% reimbursement of skill development expenses upto INR 5000 per employee for 3 months from joining date. 2. Employee PF/ESI assistance: Reimbursement of employees contribution – maximum 6000 per month for 5 years. 3. Medical insurance premium reimbursement for 5 years.
9	Mandi Tax	100% Mandi tax will be reimbursed for 5 years on procurement of grains for ethanol production.

iii) State: Jharkhand

Under the Ethanol production promotion policy 2022, a provision has been made to give capital subsidy of 25 percent or maximum of 30 crore to the investor.

New MSME units will be given interest subsidy at rate of 6 percent per annum to maximum of 3.0 crore. Benefits of exemption of stamp duty, registration charges, lease premium also granted.

iv) State: West Bengal

Waiver of land record mutation fees, land use conversion fees, exemption of stamp duty and registration fees and waiver of electricity duty for 5 years. 24x7 water and electricity supply and funding for skill training under Utkarsh Bangla scheme.

b) Soft Loans for Ethanol – Central Government:

For the purpose of creating new capacities, expansion of existing capacities, installation of incineration boilers, conversion to dual feed, etc. to reach blending target of 20%, Central Government has been allowing soft loans since June 2018 with interest subvention @ 6% or 50% of bank rate whichever is lower for a period of 5 years with one year moratorium period.

For stressed assets where a bank has issues in giving loans, there is a provision for a tri-partite agreement between Distillery, Oil company and the bank to motivate / push banks to give loans to such assets.

c) Basic price of Ethanol fixed by Government linked with the cost:

Earlier, the Government had system of procuring Ethanol through tender route with no basic price fixed by Government except brief period (Ethanol Year 2010-11 & 2011-12) where Government procured Ethanol at fixed interim basic price of 27.0 per Liter.

Since Dec 2014, to promote Ethanol, Government started giving fixed price of Ethanol linked with cost of Ethanol for Sugar Industry / Grain with details as under: -

Table 9: Ethanol Price

Year (Dec-Nov)	Basic Ethanol Price (/Litre)
	C Molasses	B Heavy Molasses	Cane juice / Syrup	Damaged Food grains	Surplus Rice – FCI	Maize
2014-15	48.50 – 49.50 #	N/A	N/A	N/A	N/A	N/A
2015-16	48.50 – 49.50 #	N/A	N/A	N/A	N/A	N/A
2016-17	39.00	N/A	N/A	N/A	N/A	N/A
2017-18	40.85	N/A	N/A	N/A	N/A	N/A
2018-19	43.46	52.43	59.19	47.13	N/A	N/A
2019-20	43.75	54.27	59.48	50.36	N/A	N/A
2020-21	45.69	57.61	62.65	51.55	56.87	51.55
2021-22	46.66	59.08	63.45	52.92	56.87	52.92
2022-23 $	49.41	60.73	65.61	55.54	58.50	56.35

# Delivered Price to Oil Company depot, price range basis distance. $ Year is (Dec – Oct)

Giving fixed price linked with cost has helped increasing Ethanol supplies, with details as under: -

Table 10: Ethanol Supply

		Ethanol Supply (Crore Litres)								Blending %
Year		C Molasses	B Mol.	Syrup	Sub Total	DFG	SR	Sub Total	Total
					Sugar			Grain
13-14		38.00			38.00			0.00	38.00	1.53
14-15		67.40			67.40			0.00	67.40	2.33
15-16		111.40			111.40			0.00	111.40	3.51
16-17		66.50			66.50			0.00	66.50	2.07
17-18	Actual	150.50			150.50			0.00	150.50	4.22
18-19		145.80	32.60	0.70	179.10	9.50	0.00	9.50	188.60	5.00
19-20		74.12	68.14	14.83	157.09	15.94		15.94	173.03	5.00
20-21		38.07	178.67	38.16	254.90	38.46	2.19	40.65	295.55	8.10
21-22		10.06	249.43	80.26	339.75	22.59	45.75	68.34	408.09	10.02
22-23	Allocation – so far	5.61	231.10	137.43	374.14	18.87	121.10	139.97	514.11	12.00

During May 2016, there had been an amendment in IDR act, 1951 as per which State Government can control, levy taxes / duties on liquor meant for human consumption only and not Ethanol, Denatured Alcohol, Industrial Alcohol for Industrial use.

It means Ethanol and denatured spirit has come out of the purview of State Govt. with no power left to regulate or impose any fees / taxes / duties on Ethanol by State Government.

Many states have relaxed state excise process like Karnataka, Gujarat, Punjab, Haryana, Maharashtra, M.P., Chattisgarh, Bihar, etc.

Industry had to take legal recourse also to get waiver of State Excise import fees of various states like in state of Haryana, Punjab and Delhi, export permit fees in state of U.P.

While the U.P. state has stayed Export permit fees of 1.0 per Liter as matter is sub judice in Supreme court, it is still charging license fees / denaturation fees. In fact, UP state has recently increased license fees from 0.15 per Liter to 0.30 per Liter and denaturation fees from 0.15 per Liter to 0.50 per Liter, w.e.f. 1st April 23.

Government and Industry Associations continue to take up with State Governments / Excise department of states like U.P., Rajasthan, Delhi & West Bengal which are still imposing state excise documentation / processes / fees and U.P. state is one of them. e) Exemption of central excise duty on ethanol:

On April 29, 2015, Cabinet has allowed exemption of Central excise duty on ethanol from sugar season 2015-2016, which was applicable @ 18%. This benefit continued till 30th June 2017.

f) Reduction in GST:

On July 21, 2018, Government reduced GST on Ethanol from earlier level of 18% to 5% in order to boost Ethanol sector. Other grades of Alcohol, for Industrial use / for making liquor still carrying GST @ 18%.

g) Linking various subsidies with Ethanol supplies:

Since year 2015, Government has linked cane subsidy / sugar export subsidy with Ethanol supplies as well to encourage Industry to supply Ethanol. One of the eligibility conditions had been that Sugar mills should have completed 80% of their Ethanol supply order to be eligible for such subsidy. (Currently, no such subsidy is available on cane / exports from Government of India).

h) Incentive in monthly Sugar domestic quota in lieu of diversion of Sugar towards Ethanol in form of B heavy / Syrup:

Government has been giving incentive in domestic quota of Sugar in lieu of diversion of Sugar towards Ethanol in form of B heavy / Syrup with current policy as under: -

Ethanol produced	Incentive Given
1 KL from B – Heavy	Sugar sacrificed - 1 MT, therefore incentive would be 1 MT (100% incentive on sugar sacrificed)
1 KL from Sugarcane juice / Syrup	Sugar sacrificed - 1/0.6 MT, therefore incentive would be 1.67 MT (100% incentive on sugar sacrificed)

i) Exemption of custom duty on Industrial Alcohol:

In financial year 23-24 budget, Government has exempted custom duty earlier applicable @ 5% plus cess of 10% on duty, on Denatured Ethyl Alcohol used in chemical Industry which is in support of the Ethanol Blending Program and facilitate Governments endeavor for energy transition.

j) Ban on import of Alcohol for blending purpose:

Government has been allowing import of Alcohol for making chemicals and for blending has allowed the procurement of indigenous Alcohol / Alcohol made from indigenous sources only.

In fact, import of hydrous Alcohol / molasses is also restricted for further processing to Anhydrous Ethanol for blending purpose.

k) Additional Basic Excise Duty @ 2 per Liter levied on sale of unblended petrol:

Since 1st November 2022, there has been applicability of additional excise duty @ 2.0 per Liter on Oil companies on sale of unblended petrol which has been introduced to promote Ethanol blending with petrol.

l) Priority of Syrup Ethanol followed by B heavy Molasses:

Priority of Oil companies is to procure Ethanol available within the state and then if still left with the requirement, they procure it from other states.

For procurement within the state / other states (to promote manufacturing of Ethanol from Syrup and B heavy), Oil companies gives priority to Syrup Ethanol followed by B heavy Molasses Ethanol and then C Molasses/Grain Ethanol.

m) Increase in Ethanol storage capacity:

Oil companies have significantly increased Ethanol storage capacity at their depot levels from 5.39 crore Liters in November 2017 to current level of 33.0 crore Liters. Oil companies further in process of expanding storage capacity and as per sources making efforts to increase it to 60 crore Liters by end of Ethanol year 22-23.

Increased storage capacity helps in fast decantation of lorries with lower detention and buffer for continuous blending during off-season when ethanol supplies slows down.

n) Fast payments:

Now, with automation of systems / online software support at Oil companies end, since last 3-4 years, Oil companies are releasing fast payments where payments are released on an average in 30 days time as against earlier release of payments in 35 – 40 days time.

It is expected that in times to come this payment time will further come down to 21 days on average basis.

o) Relief scheme for supply during off-season:

During the Year 2021-22(Dec-Nov), Oil companies announced relief scheme for supplies during off-season (June 22 – Nov 22) (II half of year) to encourage Distilleries to increase Ethanol supplies, with details as under: -

Feedstock	Relief Amount ( / Litre)
Sugarcane juice / Sugar / Sugar Syrup based Ethanol	1.604
B-Heavy Molasses based Ethanol	1.493
C-Heavy Molasses Based Ethanol	1.179
Damaged Food Grain based Ethanol	2.337
Surplus Rice based Ethanol	1.437

p) Incentive for supply of Ethanol to deficit states:

To encourage Distilleries to supply Ethanol to Ethanol deficit states i.e., Arunachal Pradesh, Chhattisgarh, J&K, Tamil Nadu, Jharkhand, Odisha, Assam & West Bengal during the period Feb22 to May22, Oil companies announced incentive as under: -

1. Supply of 200 KL & more: 0.50 per liter (Inc. of applicable taxes)

2. Supply of 400 KL & more: 0.75 per liter (Inc. of applicable taxes)

3. Supply of 1000 KL & more: 1.00 per liter (Inc. of applicable taxes)

4. Supply of 2000 KL & more: 2.00 per liter (Inc. of applicable taxes)

The above incentive was payable subject to Distilleries fully supplying Ethanol against their full orders with no shortfall.

q) Dedicated Ethanol plants

During September,21, to promote creation of new capacities in Ethanol deficit states, Oil companies came up with the offer of dedicated Ethanol plants for new potential parties interested in setting up Distilleries.

As per market sources, Oil companies have signed contracts for a quantity of approx. 450 crore Liters Ethanol with 131 dedicated upcoming ethanol plants with option of further increasing it to 750 crore Liters as per their designed capacity.

Contract with dedicated plants is such that these plants must be ready in a time bound manner as agreed with oil companies and for such successful project proponents, Oil companies have assured guaranteed purchase / lifting of their production.

r) Eased Tender conditions:

Eased tender conditions like one time submission of documents, quarterly bank guarantees, multiple transportation rate slabs, transportation rates being linked to retail selling price of Diesel, long term registration of units.

From Ethanol year 2020-21, Security amount was reduced from 5% to 1% of order value and Penalty (Price reduction clause) for non-supply of Ethanol / delayed supply also reduced from 5% to 1% of basic price, to promote ethanol blending.

However, during the Ethanol year 2022-23, security deposit and penalty has been increased from 1% to 3% to prevent defaults against supply orders.

s) Ethanol supply by Rail wagons / pipeline:

Oil companies have started transporting Ethanol blended petrol to far flung states by rail rakes / pipeline to save logistics cost. In northern India such arrangement has been started at Mathura, Panipat and Kanpur depot.

Such movement is of help for distilleries also as it reduces their long-distance movement of ethanol and helps in cost savings.

t) Start of 20% blending:

Oil companies started 20% blending at select retail outlets in 11 states across the country. From 1st April 2023, all new petrol vehicles are E 20 (20 Ethanol blended petrol) material compliant.

III. Policy requirements for Industry a) Viable Price of Ethanol from Syrup / Grains:

There is a need to rationalise Ethanol price from Syrup as current Ethanol prices are not viable. The current Syrup Ethanol basic price is 65.61 per Liter and there are various proposals from the Industry Association to align it in line with the cost.

Similarly, price of Ethanol from Damaged Food grains is not viable as cost of damaged food grains and fuel has considerably increased, which is also reflected in reduced supply of Ethanol from Damaged Food Grains. It should be fixed in line with the cost / price of damaged food grains.

b) Increase in Sugar MSP:

There has been no increase in Sugar MSP since Feb 2019 (more than 4 years now) when it was fixed at 31 per Kg. After that various input costs including Cane price has increased significantly. It is high time that Government should increase MSP in line with increasing cost in terms of cane price / other inputs to level of Min. 40 per Kg which is also being pursued by various Industry bodies.

III. Bajaj Hindusthan Sugars (BHSL) Position

BHSL has 14 sugar plants having an aggregate crushing capacity of 136000 TCD, 6 distilleries with aggregate capacity of 800 KL/day and about 151 MW of surplus power.

Key risks and concerns

1. Raw material:

BHSL has continued its thrust on cane quality promotion and is continually investing in cane variety development. Over the last many years, the results of continued investment in Cane development are visible in the form of increased availability of better variety of cane and better Sugar recovery, results as under: -

Sugar Season (Oct – Sept)	Sugar recovery
2014-2015:	09.41%
2015-2016:	10.37%
2016-2017:	10.26%
2017-2018:	10.72%
2018-2019:	11.52%
2019-2020:	11.61%
2020-2021:	11.01%

In the above table, the efforts of the Group are clearly visible towards Cane development and quality promotion and Sugar recovery has improved by almost 23.4% from the level of 9.41 during 2014-15 to level of 11.61% during 2019-20.

From the year 2020-2021 onwards, BHSL has started producing B heavy Molasses/ Sugar syrup because of which while Sugar recovery has come down, group shall be producing more Ethanol for which price for Syrup Ethanol / B heavy slot is applicable which is higher than C Ethanol in line with the cost.

During Sugar year 2022-23, Cane crushing has also improved to the level of 13.26 million MT from level of 12.72 million MT last year.

BHSL sees cane development as major thrust area to improve the revenue generation and is continuously striving towards it and every possible effort is made to increase availability of good quality cane for crushing.

The major area of concern is the ability to make timely cane price payments to farmers which is affecting the availability of cane to Group.

2. Sugar price risk:

While cane prices are fixed by the state government, sugar realisations are totally market driven and are dependent on demand supply dynamics. This at times led to a complete mismatch between the cane price and sugar realisations.

To mitigate the said Sugar price risk, Government had fixed Minimum Selling Price (MSP) of Sugar earlier at level of 29.0 per Kg and now at the level of 31.0 per Kg below which no Sugar Mill can sell Sugar in market.

Further, Government has implemented monthly release mechanism to regulate Sugar supply in market so that Prices remain firm. Government further taking care of excess sugar in system which might dampen prices by having policies for diversion towards Ethanol / exports out of country. Industry is pushing hard to further increase the said MSP to the level of 38-40 per Kg which the Government should implement now.

Recently ISMA has advocated for an increase in Sugar MSP from the existing level of 31 per Kg to 38 per kg.

National Federation of Co-operative Sugar Factories (NFCSF) has written a letter to Honorable PM for increasing MSP as under: - S-Grade: 37.20 per kg M-Grade: 38.20 per Kg L-Grade: 39.70 per Kg Further, a sizeable portion of cane / sugar is going towards manufacturing of Ethanol for which Government gives fixed price in line with the cost for the industry.

So, while there is a Sugar Price risk there is Government intervention / control to mitigate this risk.

3. Regulatory risk:

Sugar industry is subject to many regulatory risks like environment, raw material pricing, government policies, etc. The biggest risk to the business is the disjointed sugarcane price fixed by the state government.

However, to ensure liquidity and financial health for Industry, both Central & State Government keeps on providing policy and subsidy support to enable Sugar Mills to pay fixed cane price as fixed by the Government.

For Ethanol business, Government has introduced amendment in IDR amendment as per which State Government can no longer regulate Alcohol meant for industrial use. Number of states have given up / relaxed their control on Ethanol supplies.

4. De-risking strategy:

As part of our business strategy, we are rapidly de-risking our business with the investment in power generation capacity. This business is non-cyclical and therefore expected to generate steady cash flows year on year.

From Sugar Year 2020-21, we have started diverting Sugar for manufacturing of Ethanol in form of B heavy Molasses / Sugar syrup which will reduce Sugar production and help in achieving higher production of Ethanol. Sustained Ethanol supplies to Oil companies has provided some element of risk mitigation.

Table 11: Market share of BHSL in U.P. and on All India basis for Sugar basis Production:

Year (Oct – Sept)

Particulars	Unit	2022-23 (estimated)	2021-2022	2020-2021	2019-2020	2018-2019
BHSL Production	Million MT	1.29	1.28	1.53	1.94	1.83
UP Production	Million MT	10.50	10.25	11.06	12.64	11.82
All India Production	Million MT	32.80	35.79	31.19	27.41	33.16
BHSL % of UP	%	12.29	12.49	13.83	15.35	15.48
BHSL % of All India	%	3.93	3.58	4.90	7.08	5.52

Sugar market spread - All units of BHSL:

Bajaj Group (Bajaj Hindusthan Sugar Limited) has 14 units evenly spread throughout the State of Uttar Pradesh with 5 sugar mills in Western UP, 5 in Central UP and 4 in Eastern UP.

The Zone-wise details and the crushing capacity of the mills are as under: -

Table 12: Zone-wise details of crushing capacity

ZONE	NO. OF MILLS	CRUSHING CAPACITY (TCD)
WEST	5	48000
CENTRAL	5	48000
EAST	4	40000
TOTAL	14	136000

Markets

West U.P.: Sugar produced by our West UP mills is sold in the region of West UP and neighboring States in Northern India like Punjab, Haryana, Rajasthan and Delhi etc. Due to consistent higher Sugar production in the state and by the Group, Sugar is sold to North-East States also like West Bengal, Assam etc. where it is going by rail rakes.

Central U.P.: Sugar produced in our Barkhera and Maqsoodapur mills is sold partly in the Central U.P. and in nearby states i.e., Rajasthan, M.P., Gujarat, North-East states and at times to Haryana, Orissa. The sugar produced by Gola, Palia and Khambarkhera mills is sold in Central UP, East UP, Bihar, Bengal, Jharkhand, M.P. and North-East States.

East U.P.: Sugar produced by our East UP Mills is sold in the region of Eastern UP and states like Bihar, Jharkhand, West Bengal, Assam and North-East States.

Institutional buyers: Company is increasing its focus on Sale of Sugar to Institutional buyers and now have Food Safety System Certification (FSSC) 22000 license in 4 Sugar units i.e., Kinauni, Gangnauli, Barkhera and Kundarkhi unit and selling Sugar to Institutional buyers like Pepsi (Varun Beverages), Wrigley, Walmart, ITC, Dabur, Hamdard, Reliance, Udaan etc.

Competition

Other than the mills in state of UP, we face competition mainly from mills in the state of Maharashtra, Karnataka, Gujarat, A.P., Tamil Nadu. For movement of sugar to neighboring states like Punjab, Haryana, Bihar, UP mills face competition from mills in these states, as well. Sugar sales market reach / penetration is purely based on the price parity and Quality with competing mills. Sugar Mills are focusing on Quality of Sugar in terms of color (ICUMSA), Grain size, luster, etc., number of mills converting from sulphitation sugar to refined sugar which is giving edge to such good quality sugar in competition.

No competition from Sugar imports

Since Sugar imports are not viable and not happening so no competition from Imported Sugar.

IV. Internal Control System and their Adequacy

An effective Internal Control system in an Organisation provides reasonable assurance to management and stakeholders about effectiveness of its policies, processes, tasks, behaviours etc. It also helps to ensure the quality of Internal and external reporting, compliance with applicable laws and regulations. An effective Internal Control helps in identification and analysis of various associated risks like Process, Regulatory, Market, Financial risks etc. and helps the management to design and implement a suitable action plan to avoid / overcome that risks. It includes formulation & implementation of policies & procedures, safeguarding of its Assets, prevention & timely detection of Frauds & efficient conduct of its business and preparing reliable financial information. BHSL Internal Control system is commensurate with its size of business and nature of its operations. BHSL has in place an adequate system of Internal Controls designed to ensure that all the transactions are authorised, recorded and reported correctly. The Company also has in place a well-defined Delegation of Power (DOP) and various Standard Operating Procedures (SOPs) covering different areas which further strengthen Internal Control. BHSL has a strong and Independent Internal Audit department which reports to the Audit Committee of the Board to maintain its objectivity and independence. The reports of the Internal Audit department are sent to concerned Department Heads who are responsible for taking corrective actions. Significant Audit observations and corrective action thereon are reviewed by management and subsequently placed before the Audit Committee of the Board of Directors along with the action plan recommended by respective Functional Heads. The directions of the Audit Committee are implemented by the respective Head of the Departments and action taken reports are placed before the Audit Committee members in next meeting for their perusal.

V. Human Resources/Industrial Relations

The industrial relations at the Companys Sugar Mills and Head Office were cordial, throughout the year. The Company is committed to create an organization that nurtures the talent and enterprise of its people, helping them grow and find the fulfillment in an open culture, as per our "Group Vision (Think Tomorrow)". The result, that BHSL would be number one. Its growth strategies are based on a strong Human Resource (HR) foundation created through a judicious use of innovative techniques and complementary HR processes and systems. HR policies are reviewed, revised and updated from time to time to make it relevant, more effective and useful to the employees and also to the Company. The basic objective is to facilitate the smooth execution of transparent policies. As of March 31, 2023, BHSL had 7493 employees. The various HR initiatives carried out by the Company, during the year are listed below:

Training Programmes :-

Training & Development - During the year 2022-23, HR dept. had organized various Training programmes through the involvement of internal training faculties. HR department had prepared advance training calendar on six monthly basis scheduling (during off season) various topics after consulting all the departments for the subject and strength of the participants. After preparing, the list of the topics, schedule and name of the participants, is communicated to everyone concerned, by the HR department. On an average 28–30 persons attend, such training programme session. The major topics covered by our internal training faculty, were on Irrigation and Pest Control Techniques, Cane Centre Management, Cane sowing, Safety, Fundamental & General awareness of MEE Plant, ESP & Ash handling system, Awareness on Health & Occupational Diseases, Covid, House-keeping, Fire-fighting, Environment, Health & Occupational Hazards, Energy Conservation, GST, Computer Awareness, Statutory Compliances, etc.

Induction Program for New Employees - Induction programs are regularly being conducted at unit level, as well as, in offices by HR department for all the new employees. This is an interactive program, supplemented by power-point presentation, about the Company.

Activities and Events - As a part of Employees Engagement Programmes, religious, cultural, national integration programmes were conducted, e.g. Annual function of Holi Milan, Shivalya Temple, Janmashtami, Dussehra, Diwali, Teej, Lohri festival, New Year celebrations, Republic Day, Independence Day, Vishwakarma Day, Environment Day, Safety Week (March 4 to 10), Jamnalal Bajaj ji Jayanti (Nov. 4), Labour Day (May 1), various type of children events like Drawing Competition, Annual Picnic & Excursion Tours etc.

Corporate Social Responsibility

1. Bajaj Public School (BPS) – (affiliated to CBSE): In furtherance of the guiding philosophy of the Corporate Social Responsibility (CSR), the group visualised the dire need to impart high standard education at low cost to the wards of the inhabitants. The Bajaj Public School is a non-profit making organization, is an outcome to fulfil the said need. It was incorporated during 2009 and now it has branches in Maqsoodapur, Gola, Palia, Barkhera, Kinauni, Gangnauli, Bilai, Utraula and Lalitpur.

BPS has so far taken responsibility to nurture positively the delicate and tender minds of approx. 1500 students. School is running as a creative centre for learning and development. It has provided employment to more than 140 people, including the spouses of the employees. BPS solely aims to continuously connect, grow, serve and reach new horizons.

2. Other activities

a) General Medical Checkup, Eye Check-up, Dental Check-up, distribution of masks, sanitization in Factory Campus and in neighbouring villages, etc.

b) Woollen clothes & Blanket distribution, among the under-privileged class of surrounding areas.

c) Kanwar Seva Shivir on Mahashivratri Parv.

d) Distributing Organic Manure on subsidized rates to the farmers, safety glasses were also distributed to farmers.

e) In winters, lighting Alao at every Chauraha by distributing bagasses.

f) Fogging and Spray for mosquito and prevention of COVID in nearby villages.

g) Health check-up camps by local hospital were held at offices & units, wherein a team, comprising of specialized Doctors i.e. Medicines & Eye, conducted medical check-up. The employees and their families got themselves checked and benefited from this health camp. Among the other beneficiaries, there were various outsiders, farmers also.

VI. Financial Analysis of Operations of the Company

The financial results for the year under review from April 01, 2022 to March 31, 2023

Table 13 : Operational data

	Unit	Year ended March 31, 2023	Year ended March 31, 2022
Cane Crushing	MMT	13.842	12.589
Sugar Recovery	%	9.74	10.36
Sugar Production – From Cane	MT	13,48,640	12,85,927
Industrial Alcohol Production	KL	1,88,609	1,73,261
Molasses Production – C	MT	1,63,196	2,10,038
Molasses Production – B-Heavy	MT	6,33,387	4,77,183
Power Generation	000 Units	7,16,566	6,43,961

During the year, the production of sugar from sugarcane was at 13,48,640 MT as compared to 12,85,927 MT during the previous year. The production of molasses-C was at 1,63,196 MT and molasses B-heavy was at 6,33,387 MT as compared to 2,10,038 MT molasses-C and 4,77,183 MT molasses B-heavy in the previous year. The industrial alcohol / ethanol production was at 1,88,609 KL as compared to 1,73,261 KL in the previous year. Power generation was at 716.56 Million Units (MUs) as compared to 643.96 MUs in the previous year. Average recovery of sugar from sugarcane 9.74% during the current year as compared to 10.36% in the previous year.

Results of operations

Table 14: Summarised financial results

Crore

Particulars	Year ended March 31, 2023	Year ended March 31, 2022
Revenue	6,319.34	5,590.22
Earnings before interest depreciation and tax (EBIDTA)	271.93	245.82
Finance Costs (Net)	210.10	253.55
Cash profits	61.83	(7.73)
Depreciation & amortisation	213.17	214.63
Profit/(Loss) before tax	(151.34)	(222.36)
Tax expenses	(3.60)	(4.11)
Profit/(Loss) after tax	(147.74)	(218.25)
Basic and Diluted earnings per share ()	(1.19)	(1.82)

Turnover

During the year ended March 31, 2023, the Companys total revenue was 6,319.34 crore as against 5,590.22 crore in the previous year.

Analysis of sales

During the year, the Company sold 14,22,798 MT of sugar as against 13,05,254 MT during the previous year. The Company sold 1,03,776 MT of molasses as against 1,19,034 MT in the previous year. However, alcohol/ethanol sales during the year was at 1,85,366 KL as against 1,75,480 KL during the previous year. The Company exported 170.60 MUs of power during the year as against 145.97 MUs during the previous year. Product-wise sales quantity, value and per unit realisation details are given in Table 14:

Table 15: Sales revenue

Particulars	Year ended March 31, 2023				Year ended March 31, 2022
	Unit	Qty	Value Crore	Realisation* /MT/KL/ 000 Units	Qty	Value Crore	Realisation* /MT/KL/ 000 Units
Sugar	MT	14,22,798	4,951.79	34,803	13,05,254	4,453.62	34,121
Alcohol/ Ethanol	KL	1,85,366	1,055.92	56,964	1,75,480	932.05	53,114
Molasses	MT	1,03,776	17.06	2,100	1,19,034	37.05	3,113
Power	000	1,70,600	55.19	3,230	1,45,967	46.12	3,160
	Units

Industrial alcohol was sold in the local market directly to end users, mainly alcohol-based chemical plants. Ethanol was sold to oil companies, who use it for blending with gasoline.

The other operating revenue includes , sale of pesticides of 34.73 crore, sale of scrap of 7.49 crore, sale of export licenses of 113.08 crore and other miscellaneous operating income of 3.81 crore.

Other income

Other income for the current year was 17.02 crore (including interest income of 1.08 crore, and other miscellaneous income was at 15.94 crore) as against 21.13 crore (including interest income of 0.74 crore, and other miscellaneous income of 20.39 crore).

Other expenses

During the year, other expenses were 489.70 crore as against 601.83 crore in the previous year.

Earnings before interest, depreciation, tax and amortisation (EBIDTA)

The EBIDTA for the current year at 271.93 crore as against 245.82 crore in the previous year.

Finance costs

Finance cost for the current year was 210.10 crore as against 253.55 crore in the previous year, due to repayments of loans.

Depreciation and amortisation

The depreciation for the current year was at 213.16 crore as against 214.63 crore in the previous year.

Tax expenses

In the absence of profits, no provision for current tax has been made in the current year as well as in the previous year.

Balance sheet

The summarised balance sheet as at March 31, 2023 is given in Table 15.

Table 15 : Summarised balance sheet

Crore

As at	March 31, 2023	March 31, 2022
ASSETS
Non-current assets
Fixed assets
Property, plant and equipment	6,597.60	6,799.28
Right of use assets	2.02	4.21
Capital work-in-progress	1.05	4.29
Intangible assets	0.00	0.00
Non-current investments	3,613.06	862.47
Other non-current financial assets	13.97	13.39
Other non-current assets	154.65	137.98
Sub total	10,382.35	7,821.62
Current assets
Inventories	2,607.71	2,745.56
Financial assets
Trade receivables	138.10	213.87
Cash and cash equivalents	21.31	47.33
Other bank balances	0.00	0.00
Loans	1,643.25	2,088.79
Current tax assets (net)	12.75	7.92
Other current assets	672.67	685.16
Sub total	5,095.79	5,788.63
Total assets	15,478.14	13,610.25
EQUITY AND LIABILITIES
Shareholders Fund
Equity	124.45	124.45
Other equity	4.374.28	2,752.94
Sub total	4,498.73	2,877.39
Non-current liabilities
Financial liabilities
Borrowings	3,809.03	4,243.82
Lease liabilities	0.03	2.46
Provisions	95.79	89.50
Deferred tax liabilities (net)	939.55	505.63
Other non-current liabilities	20.05	22.00
Sub total	4,864.45	4,863.41
Current liabilities
Financial liabilities
Borrowings	434.41	543.01
Lease liabilities	2.42	2.38
Trade payables	4,508.23	4,092.25
Other financial liabilities	0.00	79.29
Other current liabilities	1,146.61	1,131.74
Short-term provisions	23.29	20.78
Sub total	6,114.96	5,869.45
Total equity and liabilities	15,478.14	13,610.25

Share capital

There was no change in share capital during the year.

Other equity

Other equity has increased to 4,374.28 crore as at March 31, 2023 from 2,752.94 crore as at March 31, 2022 mainly due Increase in fair Value of Investments net of Deferred tax 1,770.79 Crore loss for the year (147.74) crore, utilisation of fund for maintenance of molasses tank by (0.34) crore, change in Other Comprehensive Income on actuarial valuation of deemed employee benefit (1.37) Crore

Non-current borrowings

Long-term borrowings was at 3,809.03 crore as at March 31, 2023 as against 4,243.82 crore in the previous year ended March 31, 2022.

Current borrowings

Current maturity of Long-term borrowings was at 434.41 crore as at March 31, 2023 as against 543.01 crore in the previous year ended March 31, 2022.

Property, plant and equipment

Gross Block has increased to 10,683.43 crore from 10,675.19 crore, on account of routine capitalization/ decapitalization during the year. The net block stood at 6,599.62 crore as against 6,803.49 crore.

Investments

Investment was at 3613.06 crore as at March 31, 2023 as against 862.47 crore in the previous year ended March 31, 2022. The changes are mainly due to fair valuation of investment of Phenil Sugar Limited/ Lalitpur Power generation Limited and acquisition of Bajaj Power Venture equity against loans and advances from Other party, Aquistion of investment in settlement of debt.

Inventories

The inventory of sugar at the end of the current year was 5,69,839 MT equivalent to 146 days sales as compared to 160 days sales in the previous year. Alcohol inventory at the end of the current year was 10,341 KL equivalent to 20 days sales as compared to 25 days sales in the previous year.

In view of expected volume growth, the inventory liquidation is monitored very closely and the Company does not foresee any difficulty in selling the products manufactured by it.

Debtors

The debtors at the end of the current year were equivalent to 8 days of sales as compared to 12 days of sales in the previous year ended March 31, 2022. All the debtors are good and realisable.

Significant non-recurring income, expenditure and other items Income

Provision no longer required/credit balance appropriated 0.99 crore and miscellaneous receipts 2.47 crore were of a non-recurring nature.

Expenditure

The Gain on assets sold/discarded 0.19 crore is of a non-recurring nature.

Contingent liabilities

The status of contingent liabilities as at March 31, 2023 has been reviewed by the management. Efforts are being made for speedy settlement of pending cases.

Ratios

Comparative analysis of Important Ratios with variance is tabulated below:

Description	Ratio (Current Year)	Ratio (Previous Year)	Variance (%)	Reasons for significant variance
Debtors Turnover Ratio	34.91	25.36	37.63%	Trade Debtor Realised
Inventory Turnover Ratio	2.38	2.17	9.70%	Better Turnover
Interest Coverage Ratio	1.30	0.97	33.19%	Repayment of Loan
Current Ratio	0.83	0.99	-15.50%	L&A Converted into Investment
Debt Equity Ratio	0.94	1.66	43.30%	Other Equity Increased
Operating Profit Margin Ratio	0.93%	0.56%	66.66%	Better Operational Performance
Net Profit Margin Ratio	-2.46%	-4.05%	39.22%	Better operating Performance
Return on Net Worth	-4.01%	-7.50%	46.60%	Better operating Performance

Operating margin in the current year as compared to previous year improved due to better realization of sugar / Ethanol and Export quota sales.

Control measures for cane procurement

Besides the smooth functioning of plants, timely and regular procurement of sugarcane is the most important activity of the Company. Continuous efforts are being made to ensure systematic indenting, procurement and crushing of sugarcane. Though the current systems are adequate, as a matter of routine, these systems are periodically reviewed by the senior management team from time to time and corrective measures, if and when considered necessary, are taken to ensure the smooth flow of sugarcane.

Unit-wise operations Sugar division

Crushing details of plants during the year ended March 31, 2023, are given in Table 17:

Table 17: Cane crushing, sugar recovery and sugar production

Plant Location	Zone	2022-23			2021-22
		Cane Crushing (MMT)	Sugar Recovery (%)	Sugar Production (Tonnes)	Cane Crushing (MMT)	Sugar Recovery (%)	Sugar Production (Tonnes)
Gola Gokarannath	Central UP	1.547	9.25	1,43,116	1.374	9.22	1,26,759
Palia Kalan	Central UP	1.316	8.41	1,10,617	0.950	9.24	87,767
Khambarkhera	Central UP	1.003	9.54	95,721	0.865	9.61	83,164
Barkhera	Central UP	0.866	9.86	85,418	0.882	10.03	88,499
Maqsoodapur	Central UP	0.642	9.33	59,882	0.583	10.19	59,344
Kinauni	Western UP	1.845	10.48	1,93,361	1.791	11.46	2,05,321
Thanabhawan	Western UP	1.373	9.78	1,34,281	1.294	10.08	1,30,434
Budhana	Western UP	1.342	10.19	1,36,746	1.339	11.59	1,55,210
Bilai	Western UP	1.395	11.54	1,60,912	1.317	12.17	1,60,400
Gangnauli	Western UP	1.142	9.65	1,10,200	0.930	9.78	90,956
Pratappur	Eastern UP	0.170	7.93	13,434	0.113	7.62	8,606
Rudhauli	Eastern UP	0.235	8.35	19,616	0.181	-	-
Utraula	Eastern UP	0.318	8.60	27,296	0.320	9.18	29,349
Kundarkhi	Eastern UP	0.649	8.95	58,040	0.650	9.26	60,118
Total		13.842	9.74	13,48,640	12.589	10.36	12,85,927

Sacrifice of Sugar for B-Heavy Molasses

Out of total cane crushing of 13.84 MMT, the Company crushed 10.20 MMT cane from B-heavy molasses route which amounts to 73.70% of the total cane crushed. Diversion of sugarcane for B-heavy molasses route resulted in reduction of sugar recovery by 1.45%, and approximate sugar loss of 1.48 lakh MT. This has resulted in increased production of ethanol.

Distillery division

The distillery division produced 1,88,609 KL (includes 1,67,649 KL of Ethanol produced from B-heavy molasses) of industrial alcohol/ethanol during the current year against 1,73,261 KL (includes 1,01,439 KL of Ethanol produced from B-heavy molasses) in the previous year. Likewise alcohol/ethanol sales aggregated during the current year at 1,85,366 KL (includes sales of 1,63,370 KL of ethanol produced from B-heavy molasses) against 1,75,480 KL (includes sales of 1,02,311 KL of ethanol produced from B-heavy molasses) in the previous year. In value terms, the sale of industrial alcohol/ethanol during the year is 1055.925 crore (includes sales of 984.21 crore of ethanol produced from B-heavy molasses) as against 932.05 crore (includes sales of 595.77 crore of ethanol produced from B-heavy molasses) in the previous year.

Power division

The sale of power was recorded at 55.19 crore in the current year as against 46.12 crore in the previous year. The Company continued optimal use of co-gen capacities with better planning.

Board division

The operations at all plants of board division were suspended due to non-availability of adequate quantity of sugarcane bagasse at affordable prices and inadequate demand of the products in the market.

Accounting policies

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for: (i) Certain financial assets and liabilities measured at fair value, (ii) Defined benefit plans - plan assets measured at fair value.

With effect from April 01, 2017, the financial statements of the Company have been prepared to comply with the Indian Accounting Standards (‘Ind AS) notified under Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013.

Cautionary/futuristic statements

Statements in the management discussion and analysis report describing the Companys objectives, projections, estimates and expectations may be "forward-looking statements" within the meaning of applicable laws and regulations and futuristic in nature. Actual performance may differ materially from those either expressed or implied. Such statements represent the intentions of the management and the efforts put into realising certain goals. Success in realising these depends on various factors both internal and external. Investors, therefore, are requested to make their own independent judgements before taking any investment decisions.