Bajaj Hindusthan Sugar Ltd Management Discussions.

I. Global Scenario:

After 2 consistent years of surplus Sugar Production during the years (Oct - Sept) 2017-18 & 2018-19, Year 2019-2020 is estimated to be a deficit Year, owing to the lower Production in all major Sugar producing countries including India, Brazil and Thailand.

The graph of ICE 11 (Raw Sugar) and LIFFE (White Sugar) prices during last 3 years i.e. April 2017 - March 2020 is given below:-

Chart 1: ICE 11 : Raw Sugar Settlement

From the above price graph of 3 years, it can be observed that Sugar prices has come down quite significantly where ICE 11 price has come by 37% from the level of 16.54 cents/pound to the level of 10.4 cents by end of March 2020. Similarly LIFFE (White Sugar) price has come down by 25% from the level of 473 USD/MT to the level of 353 USD/MT by end of March 2020.

The above price chart can be divided in 2 periods, one is the period of surplus 2017-19 and second is period of deficit 2019-20.

During the period 2017-18, there had been global surplus of 8.5 Million MT and during 2018-19, the surplus had been 1.8 Million MT, effect of which can be clearly seen on Sugar prices.

ICE 11 (Raw Sugar) Price of 16.8 cents/pound at start of April 2017 came down to the level of below 10.0 cents by end of September 2018 under the pressure of big global surplus.

Similarly, LIFFE (White Sugar) price as on April 2017 at level of 484 USD/MT came down to level of 310 USD/MT by end of

Sept 2018. Thereafter, Sugar Prices started improving as surplus Sugar during Year 2018-19 was marginal to level of 1.8 Million MT and year 2019-20 was heading towards deficit.

Year 2019-20 is estimated to have deficit Sugar production of 4.5 Million MT because of which Sugar prices started improving from Oct 2019 month. ICE 11 prices improved from the level of 10.0 cents/pound during Sept 2019 to the level of 15.8 cents during Feb 2020 and LIFFE improved from the level of 310 USD/MT during Sept 2019 to level of 452 USD/MT

From Feb 2020 month onwards, Sugar Prices started coming down because of weak macro factors including weakening currency of major Sugar exporting countries including India & Brazil, weakening crude oil, etc.

It has been observed that over the years, India plays a big swing factor in Global balance sheet and Global surplus/deficit coincides with Indian surplus/deficit. Indian Sugar Production is quite volatile and any increase in Indian Sugar Production gives surplus sugar to Global balance sheet and any dip in Indian Sugar Production turns Global Sugar Production in deficit.

Following table will clearly reflect the coinciding of Global surplus/deficit with Indian Sugar surplus/deficit where in last 12 years, Global surplus/deficit coincided with Indian surplus/deficit 10 times.

Table 1: Global & Indian Scenario

Unit: Million MT


All India

Year Production Consumption Surplus/Deficit Production Consumption Surplus/Deficit
2008-09 142.96 151.52 -8.56 14.54 22.91 -8.37
2009-10 148.39 151.96 -3.57 18.91 21.33 -2.42
2010-11 156.18 153.10 3.08 24.39 20.77 3.63
2011-12 163.60 157.96 5.64 26.34 22.60 3.74
2012-13 171.80 163.57 8.23 25.14 22.77 2.37
2013-14 174.15 165.34 8.80 24.40 24.19 0.20
2014-15 169.39 166.92 2.47 28.31 25.61 2.70
2015-16 164.14 169.99 -5.85 25.13 24.80 0.33
2016-17 169.59 172.44 -2.85 20.30 24.56 -4.26
2017-18 180.73 172.24 8.49 32.48 25.39 7.09
2018-19 (P) 176.12 174.31 1.81 33.16 25.50 7.66
2019-20 (P) 171.98 176.74 -4.76 27.00 24.00 3.00

Source : ISMA

Graphical illustration coinciding of Global surplus/deficit with Indian one as below:-

Chart 3: Global surplus/deficit with Indian one

Global Balance Sheet

Table 2: Global Position

Unit : 000 Metric tonnes, raw value

Year Production Import Consumption Export End Stocks
2008-2009 142961 48395 151520 48390 69490
2009-2010 148391 53993 151960 53997 65917
2010-201 1 156177 53870 153096 53865 69013
2011-2012 163597 54325 157962 54321 74652
2012-2013 171084 60655 163572 60579 82960
2013-2014 174146 58361 165344 57917 92206
2014-2015 169393 58278 166920 58257 94700
2015-2016 164141 66228 169989 66283 88797
2016-2017 169594 65324 172441 65317 85957
2017-2018 180731 62823 172240 62825 93359
2018-2019 (P) 176118 57927 174308 58011 95169
2019-2020 (P) 171980 59657 176743 59644 90335

Source : ISMA

Table 3: Major sugar producing countries during last three years

Unit : 000 Metric tonnes, raw value

Sr. No. Name of Country 2016-2017 2017-2018 2018-2019
1 Brazil 39424 31049 28200
2 India 20270 32479 33140
3 China 10062 10633 10760
4 Thailand 10037 14674 14441
5 U.S.A. 7548 7758 7540
6 Mexico 5957 6010 6426
7 Pakistan 7062 6052 5800
8 Australia 4962 4729 4700
9 Germany 3590 4795 3825
10 France 4375 5111 4750
11 Russia 6427 6480 5900
12 Indonesia 2142 2165 2400
13 Philippines 2491 2127 2075
14 Argentina 2043 1776 1850
15 Colombia 2142 2378 2440
16 South Africa 1595 2084 2170
17 Guatemala 2736 2704 2950
18 Poland 2195 2273 2190
19 Turkey 2625 2704 2700
20 Ukraine 1931 2095 1800
21 Egypt 2402 2170 2500
22 Cuba 1603 1086 1300
23 Peru 1096 1073 1290
24 Vietnam 1230 1646 1350
25 Iran 1680 1805 1500

Sugar Price

The Graphical movement of International Sugar Prices during April 2019 - March 2020 are as under:-

Chart 4: Movement of International Sugar Prices

The above prices are front month daily settlement prices of ICE 11 & LIFFE exchange prices.

From above price graph, it can be observed that ICE 11 (Raw Sugar) price has been hovering around 12 cents level during the period April 2019 - September 2019 and thereafter started increasing and touched the high of 15.8 cents during Feb 2020 which is the highest level in last 30 months.

Similarly, LIFFE (White Sugar) prices has hovered around the level of 325 USD/MT during April 2019 - September 2019 period and thereafter Sugar Prices increased to level of 452 USD/MT during Feb 2020 month.

During the period April 2019 - March 2020, White Sugar premium (Margin over Raw Sugar for White Sugar) has increased steeply from the level of 53 USD/MT in beginning of April 2019 to the level of 123 USD/MT by end of March 2020.

Influence factors during the Year 2019-2020

India :

Indian Sugar production for 2 consistent years had been over 30 Million MT where during the Year 2017-2018, country produced 32.5 Million MT Sugar and during 2018-2019, the Sugar production was even higher at level of 33.2 Million MT.

During the Year 2019-2020, All India Sugar production estimated down to the level of 27 Million MT on account of lower crop in states of Maharashtra and Karnataka.

Though lower Sugar Production in country does not mean lower exports as Government had announced export quota of

6.0 Million MT against which it is expected that overall Sugar export will be 4.5 Million MT.

While, Sugar production during the Year 2019-2020 is lower to level of 27 Million MT, during 2020-2021 Sugar production is estimated to bounce back in range of 31 - 33 Million MT.

With consistent surplus Sugar production, India has become structured exporter and is consistently exporting Sugar now year after year.

Brazil CS :

Table 4: Cane Crush/Sugar Production/Ethanol Production - Brazil CS

2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
Particulars Unit Actual Actual Actual Actual Actual
-Total cane crush Million MT 617.71 607.14 596.31 573.13 590.36
-Sugar Production Million MT 31.22 35.63 36.06 26.51 26.76
Ethanol Production Billion Litres 28.23 25.65 26.09 30.95 33.26
Diversion of Cane
Used for sugar % 40.65 46.29 46.46 35.21 34.33
Used for ethanol % 59.35 53.71 53.54 64.79 65.67
TRS 130.50 133.03 136.60 137.89 138.57

Source : UNICA

From the above figures, it can be observed that Diversion of Cane towards Sugar has steeply come down from the level of 46.46% during the Year 2017-2018 to the level of 34.33% during the Year 2019-2020. This reduced diversion of cane is because of global surplus Sugar production during the Year 2017-2018 and then 2018-2019 thereby adversely affecting Sugar prices and making it unviable as against Ethanol manufacturing.

Because of reduced diversion of Cane towards Sugar, Sugar production has come down from the level of 36.06 Million MT during the year 2017-2018 to the level of 26.76 Million MT during 2019-2020. In line with reduced Sugar production, Ethanol production has increased from the level of 26.09 billion litres during 2017-2018 to level of 33.26 billion litres during 2019-2020.

TRS levels (Sucrose content) has also improved quite handsomely from the level of 130.5 during 2015-2016 to level of 138.57 during 2019-2020.

Now since Sugar prices has improved, crude oil prices are down which means better price parity for Sugar as against Ethanol, next year diversion of cane towards Sugar is estimated to improve which will increase Sugar production.

From above, it can be seen that Brazil Sugar Industry on one hand is working on Cane quality, on the other hand shows flexibility of increasing/decreasing Sugar production depending upon market dynamics and thus plays a major balancing factor.


Thailand has during the Sugar season 2019-2020 recorded lowest Sugar ouput in last 10 years due to prolonged drought. Thailand crushed 74.89 Million Tonnes of sugarcane this season producing only 8.27 Million Tonnes of sugar as against 14.0 Million MT last year. The cane volume was the lowest since Thailand produced 68.4 Million Tonnes in the 2009-10 season.

Thailands lower crop this year 2019-2020 has been a major bullish factor for spike in International Sugar Prices during 2019-2020 after Oct 2019. Thailands cane production in the next season is expected to further decline by around 20%, due to drought conditions.

Crude Oil

Crude oil has crashed during the year where WTI crude came down from the level of 68 USD/ barrel in beginning of April 2019 month to level of 19 USD/ barrel by end of March 2020 means dip of whopping 72%.


Brazilian Real: During the Year 2018-2019, Brazilan real depreciated from the level of 3.5 in beginning of April 2019 to the level of 5.4 by end of March 2020 which means depreciation of 54%.

Indian Rupee: During the Year 2018-2019, INR has depreciated from the level of 69.7 in beginning of April 2020 to level of 75.2 by end of March 2020 which means depreciation of 7.9%. Going ahead while, all major Sugar producers including India and Brazil are looking for a bigger crop next year only with exception of expected dip in Sugar production in Thailand which should potentially help Sugar exports from India. Indonesia is one such destination which traditionally buys sugar from Thailand and now this demand will come to India as recently Indonesia has also relaxed quality norms to suit Indian exports. Iran is another big market regularly buying Sugar from India other than Sugar Exports to Sri Lanka, Bangladesh, Dubai, Afghanistan, African countries, other destinations.

India has become a structured exporter of sugar, a reliable source of Sugar supply for many destinations with continued Government support.

II. Indian Scenario

Indian Sugar Trade has been grappling with the problem of Sugar surplus for quite some time now with the Governments major challenge to work out the ways and means to solve the problem of excess Sugar in system.

Since the Year 2010-201 1 till current Year 2019-2020 i.e. last 10 years, Sugar Production has been outpacing Sugar consumption except the Year 2016-17 when Sugar production dipped to the level of just 20.3 Million MT mainly due to drought conditions. While Year 2019-2020 has taken a major dip of 18.7% in Sugar Production as against the Year 20182019 but it is still higher than consumption.

In fact, this pace of bumper Sugar Production doesnt seem to stop here and next Year 2020-2021 is again estimated to be a high production year with Sugar production currently estimated in the range of 31.0 - 33.0 Million MT. One of the major reasons of continued higher production on All India basis is the state of U.P which is consistently producing record Sugar on account of better variety of cane, better farm practices leading to better yield and recoveries and thus big inclination of farmers towards the Cane crop. State of U.P during current Year is estimated to produce historically record Sugar production of 12.5 Million MT and this is the third consecutive year when U.P state shall be producing Sugar Production of around 12.0 Million MT in continuity. Before that, U.P Sugar Production used to be around 6 - 7 Million MT and highest Sugar Production in U.P state was 8.3 Million MT during 2016-2017.

Since the Year 2017-2018, All India Sugar Production is above 30.0 Million MT except current Year 2019-2020 when Sugar Production is estimated at level of 27.0 Million MT and in future trend of higher sugar production continues.

Earlier, Indian Sugar Production had been cyclical in nature with 3 - 4 years of bumper crop usually followed by 2 - 3 years of shortfall and the shortfall years usually were respite years for Mills and farmers where Mills liquidating excess Sugar stocks and helping the Sugar Prices as well.

We are giving below a cyclical pattern of Sugar Production/Demand since the Year 1980 till the Year 2009-2010 where such kind of cyclical pattern can be observed.

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

Situation from the Year 2010-2011

This cyclical pattern has been broken since 2010-201 1 where country is consistently producing surplus Sugar production as illustrated below in form of a graph:-

State-wise Sugar Production

Table 5: State-wise Sugar Production on All India basis since the Year 2013-14 given below:

Unit : Million MT

Sr.No. STATE 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-2020
1 Uttar Pradesh 6.50 7.10 6.84 8.77 12.05 11.82 15.20
2 Maharashtra 7.71 10.51 8.42 4.20 10.72 10.72 6.10
3 Karnataka 4.18 4.94 4.05 2.17 3.75 4.43 3.40
4 Gujarat 1.18 1.15 1.17 0.89 1.11 1.12 0.90
5 Andhra Pradesh 0.68 0.56 0.55 0.39 0.47 0.51 0.40
6 Punjab 0.47 0.54 0.67 0.69 0.82 0.79 0.50
7 Haryana 0.54 0.58 0.54 0.67 0.84 0.70 0.70
8 Bihar 0.59 0.53 0.50 0.53 0.72 0.84 0.73
9 Tamil Nadu 1.47 1.25 1.37 1.07 0.71 0.96 0.67
10 Madhya Pradesh 0.39 0.45 0.40 0.41 0.55 0.56 0.40
11 Uttarakhand 0.29 0.33 0.27 0.35 0.42 0.40 0.40
12 Telangana 0.33 0.32 0.28 0.12 0.27 0.264 0.26
13 Others 07 0.05 0.05 0.4 0.4 0.0 0.04
Total 24.38 28.29 25.11 20.27 32.47 33.14 27.00

*2019-2020 are estimated figures

From above table, it can be seen that earlier Maharashtra state used to take the lead in terms of highest Sugar Production but last 4 years U.P. state has taken the lead and has emerged as the consistent largest producer of Sugar in the country due to better yields and improved Sugar recovery.

U.P Sugar Production which earlier used to be in range of 6 -7 Million MT has started producing Sugar to the level of 12.0 Million MT and that too consistently for third year in a row now. Next Year 2020-2021 is also estimated to be a high production year for U.P state estimated at 12.0 Million MT plus levels.

It can be observed that Sugar Production in state of Maharashtra has been quite volatile where Sugar production figure of 10.5 Million MT during the Year 2014-2015 dipped to the low of 4.2 Million MT during 2016-17 and again bounced back to 10.7 Million MT very next year i.e. 2017-2018. Again from the level of 10.7 million MT during the Year 20182019, production estimated to drop to 6.1 Million MT during 2019-2020 and then bounce back to 10.0 - 11.0 Million MT during 2020-2021.

In state of Tamil Nadu, Sugar production has come down quite significantly in last 4 years since the Year 2016-2017 and it has severely affected the capacity utilisation of Sugar Mills and also the financial health of Mills. Sugar production which used to be 2.0 - 2.5 Million MT is estimated to come down to level of 0.67 Million MT during 2019-2020 and going ahead there seems no improvement.

3 states i.e. U.P, Maharashtra and Karnataka forms almost 80% of Sugar production on All India basis. The improved Production levels are on account of improved yields in number of states and improved Sugar recovery mainly in state of U.P

The details of yields and recovery of various states from where it can be seen that how the productivity in terms of yield and recovery has improved:-

Table 6: State-wise Yield of Sugarcane

State 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Maharashtra 80 93 76 60 108 85
U.P. 53 55 53 62 77 71
Karnataka 88 94 78 60 94.5 91
Gujarat 71 71 75 60 72 69
Tamil Nadu 90 88 98 81 60 73
Andhra Pradesh & Telangana 72 66 66 51 65 65
Punjab 66 67 74 74 84 86
Haryana 69 69 65 71 83 72
Bihar 50 50 50 50 62 66
M.P. & Chhattisgarh 57 60 51 54 71 74
Uttarakhand 54 53 51 57 65 60
Odisha 50 50 50 38 40 42

From above, it can be observed that Yield of all states across the country has significantly increased during the Year 20172018 (except Tamil Nadu where it has dropped). However, during the year 2018-2019, there has been a drop in yield of cane in major Sugar producing states except in small sugar producing regions of Tamil Nadu, AP, Punjab, Bihar, M.P. & Odisha.

Table 7 : State-wise Recovery of Sugar in % of Cane

State 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Maharashtra 11.4 11.29 11.33 11.25 11.24 11.27
U.P. 9.26 9.54 10.61 10.61 10.84 11.46
Karnataka 10.95 11.06 10.74 10.19 10.6 10.73
Gujarat 11.09 10.34 10.38 10.58 10.55 10.82
Tamil Nadu & Pondicherry 8.95 8.67 8.74 8.92 8.64 00 bo
Andhra Pradesh 9.74 9.38 9.35 9.37 9.53 9.4
Punjab 9.43 9.42 10.06 9.78 9.78 10.14
Haryana 9.44 9.94 10.52 10.34 10.39 10.36
Bihar 8.97 9.18 9.77 9.21 9.58 10.39
M.P. & Chhattisgarh 9.71 9.48 9.78 9.7 9.63 9.87
Uttarakhand 8.9 9.24 9.61 9.85 10.24 10.97

From above table, it can be observed that Sugar recovery of U.P. state, Punjab, Haryana, Bihar & Uttarakhand has significantly improved in last 5 years.

All India Sugar Balance Sheet

Table 8: Domestic Production and Consumption

Unit : Million MT
Particulars 2013-14 (Actual) 2014-15 (Actual) 2015-16 (Actual) 2016-17 (Actual) 2017-18 (Actual) 2018-19 (Actual) 2019-20 (Estimated)
A. Total availability - All India - Sugar Season
a) Opening Stock as on Oct 01 9.3 7.5 9.1 7.8 3.9 10.7 14.6
b) Production during season 24.4 28.3 25.1 20.3 32.5 33.2 27.0
c) Imports 0.1 0.0 0.0 0.4 0.2 0.0 0.0
Total supply availability 33.8 35.8 34.2 28.5 36.6 43.9 41.6
B. Total Sugar Offtake : All India - Sugar Season
a) Internal consumption 24.2 25.6 24.8 24.6 25.4 26.0 24.0
b) Exports 2.1 1.1 1.7 0.05 0.5 3.5 4.5
Total Offtake 26.3 26.7 26.5 24.6 25.9 29.5 28.5
C. Closing Stock as on Sept 30 - All India 7.5 9.1 7.8 3.9 10.7 14.2 13.1
D. Stock as % of Internal Consumption (%) 30.9 35.5 31.3 15.8 42.2 54.6 54.4

From the above table, following can be observed:-

Sugar Production is consistently higher than the consumption all these Years except the Year 2016-2017 when Sugar Production dipped to alarming low level of 20.3 Million MT because of drought conditions.

Sugar internal consumption increasing from the level of 24.2 Million MT during 2013-2014 to estimated level of 25.5 Million MT during 2018-2019. During the Year 2019-2020, there is estimated to be dip in Sugar consumption to level of 24 Million MT on account of demand contraction due to COVID pandemic.

Due to consistent high Sugar Production, Import of Sugar in last 7 years has been quite negligible also supported by higher import duty.

Export of Sugar has been continuing on consistent basis and it is estimated that during current Year 2019-2020, Sugar export will be to the tune of 4.5 Million MT. Though due to good demand of Sugar from Iran and Indonesia, some in the trade feel that Sugar Export during current Sugar Year could reach a figure of 5.0 Million MT.

Sugar closing stocks increasing from the level of 3.9 Million MT during the Year 2016-2017 to the estimated level of 13.1 Million MT during the Year 2019-2020.

Estimated stocks of 13.1 Million MT at the end of Year 2019-2020 is 54.4% of Internal consumption means sufficient to take care of almost 7 months of consumption.

During the Year 2019-2020, Sugar stocks has come down from the level of 14.6 Million MT during 2018-2019 to the level of 13.1 Million MT during 2019-2020.

Pattern of All India Sugar Exports/Imports

Chart 7: The pattern of All India Sugar Exports & Imports in graphical pattern since the Year 2001-02 is illustrated below:

Till the Year 2010-201 1, 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 that till the Year 2010-201 1, 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 2010-201 1 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.

Policy initiatives by the Government

Government had been proactively tackling the problem of surplus by on one side developing the measures to solve the problem of excess Sugar in system, maintaining liquidity and on other hand ensuring that Sugar Price dont go down below certain viable levels.

Government focussed mainly on following to take care of glut of Sugar in country:-

Promoting Exports of Sugar

It was a challenge to Export Sugar from country because of big price mismatch between domestic and International Sugar prices with International prices considerably lower.

We are giving below the details of Government policy on exports since the Year 2017-2018 where Government motivated the Industry by giving export quotas to Industry and also related subsidy as under Sugar Year 2017-2018

During March 2018, Government scrapped Export duty of 20% on Sugar to promote Sugar exports.

Further during March 2018, Government gave mandatory Export quotas to Sugar Mills totalling 2.0 Million MT on All India basis. As per the Order, Indian Sugar Mills were required to export a quantity of 2.0 Million MT by Sept 30, 2018.

Sugar Mills can get the Sugar exported against their Quota from other Sugar Mills (like in coastal region) to save on freight through Merchant exporters.

To boost exports, Government allowed Production subsidy of Rs 5.5 per Qtl of cane crushed, eligibility criteria of which was that Sugar Mills should have complied all orders/directives of Department of Food & Public Distribution during the Year 2017-2018. This included Government order of Reverse Stock limit and fulfilling mandatory export quotas. Further, Sugar Mills supplying Ethanol should have also supplied 80% of the Order placed so as to be eligible for availing the said Production subsidy.

Sugar Year 2018-2019

On September 28, 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 September 26, 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:- Rs 1.0 per Kg for Sugar mills within 100 kms from Port

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

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

Financial assistance of Rs 13.88 per Qtl. 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 shall work out to approx. Rs 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

During the Year 2019-2020, Government simplified the process of Exporting Sugar and claiming export benefits/subsidy and further this year Government announced the yearly quota and subsidy much before start of Sugar Year 2019-2020.

Early announcement of Export quota and subsidy enabled the Industry to timely contract Sugar Export and Production planning such that Exports could have started from the 1st day of the Year.

Earlier, during 2017-2018, Sugar export quota was announced quite late during month of March 2018, during 20182019 it was announced at last of September 2018 month whereas during 2019-2020, it was announced in the month of August 2019.

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 will provided a lump sum export subsidy @ Rs 10,448 per Metric Tonne assistance for expenses on export of sugar to the sugar mills in the following manner:-

For marketing including handling, quality upgradation, de-bagging & re-bagging and other processing costs etc @ Rs 4,400 per MT.

For internal transport and freight charges including loading, unloading and fobbing etc. @ Rs 3,428.0 per MT.

For ocean freight against shipment from Indian Ports to the ports of destination countries etc. @ Rs 2,620 per MT.

Total estimated subsidy of Rs 6,268.0 crore will be incurred by the Central Government for export of 6.0 Million Tonne sugar.

Government simplified the process as earlier Sugar Mills were to complete 100% of their Export Quota and obtain BRC for claiming subsidy. However, during 2019-2020, Government allowed Sugar Mills to claim subsidy after completing 50% of the quota allotted and were allowed to submit BRC later.

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

• On February 14, 2019, Government increased MSP of Sugar from the level of Rs 29 per Kg to Rs 31 per Kg.

As per media reports, there are Government mulling increasing MSP from existing level of Rs 31.0 per Kg.

d) Restrict Sugar supply in market

On one hand Government fixed Minimum Selling Price of Sugar, on the other hand Government imposed Reverse stock limit on Sugar Mills to restrict supply of Sugar in market so that Sugar Mills are able to realise MSP/viable prices.

Sugar Year 2017-2018

Government imposed Stock limit (Reverse) on Sugar Mills for the month of Feb 2018 and March 2018, with details of the limit as under:-

Feb 2018 : At the end of Feb 2018, Mills will be required to keep minimum stock as below :-

83% of the closing stock on the last day of Jan 2018 month + Sugar produced during Feb 2018 month - Sugar Exported during Feb 2018 month.

(It means that during Feb 2018 month, Mills can sell only 17% of the closing stock as on January 2018 month).

March 2018 : At the end of March 2018, Mills will be required to keep minimum stock as below:-

86% of the closing stock on the last day of Feb 2018 month + Sugar produced during March 2018 month - Sugar Exported during March 2018 month.

(It means that during March 2018 month, Mills can sell only 14% of the closing stock as on Feb 2018 month).

Stock limit on Traders: During the Sugar Year 2017-2018, Government removed Stock limit which earlier was imposed on Sugar Traders to restrict illegal stocking of Sugar at their end.

Removal of such stock limit on Traders enabled them for Free trade of sugar with no restriction of quantity which a trader can buy and store at any point of time.

Sugar Year 2018-2019 & 2019-2020

On 7th June, 2018, Government re-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 Quota above which Sugar Mills cannot sell in domestic market.

The purpose of above order was to restrict supply of Sugar in market which was in excess due to consistent surplus production and thus to support the Prices.

e) Discouraging Sugar Imports

Since International Sugar Prices are lower than domestic prices and to avoid any Sugar Imports which the country dont need, Government increased import duty on Sugar with details as under:-

During July 2017, Government increased import duty on Sugar from existing rate of 40% to 50%.

During Feb 2018, Government increased import duty on Sugar from 50% to 100% to completely rule out any import of Sugar.

There has been no import of Sugar in last 2 Sugar years i.e. 2018-2019 and 2019-2020 and no possibility in near future because of high import duty and rightfully also as country dont need import of Sugar in current period of surplus.

f) Soft loans/subsidy to Sugar sectors

To improve liquidty and enable Sugar Mills pay their dues Soft loans/subsidies announced by the both Central and State Government as under:-

• During March 2019 month, CCEA had approved soft loan to the extent of about Rs 7,900 - 10,540 crore to Sugar Mills to enable pay their cane dues.

• Government will bear the interest subvention @ 7 - 10% to the extent of Rs 553 crore to Rs 1,054 crore for one year. The said soft loan will be provided to only those units which have already cleared at least 25% of their outstanding cane dues in the Sugar season 2018-19.

Earlier during June 2018 month, Government had announced loan of Rs 4,440 crore.

During November 2019 month, Government extended moratorium period by 6 months on above soft loans increasing it from one year to one and half year.

During the Year 2018-2019, UP State Government allowed soft loans to the tune of Rs 4,000 crore to Sugar Mills in U.P state for a period of 5 years at interest cost of 5% p.a.

UP State Government allowed Cane price subsidy @ Rs 4.5 per Qtl. of total cane crushed during the Sugar Year 20172018, total incidence of which works out to apprx Rs 500 crore for UP state as a whole.

g) Buffer stock/subsidy

Since, Industry has been struggling with the problem of high stocks and excess Sugar supply in market, Government decided to continue with buffer stock scheme and give buffer subsidy scheme during Sugar Year 2019-2020 which on one hand will provide liquidity to Sugar Mills in terms of subsidy, on the other hand will reduce supply of Sugar in market to the extent of buffer stock, with details as under:-

• During the month of July 2019, Government notified the scheme for creation and maintenance of buffer stock of 4.0 Lac MT of Sugar by Sugar Mills for a period of one year starting from August 1, 2019. (Earlier level of buffer stock was 30 Lac MT).

• Government allowed buffer subsidy of 13.50% per annum with breakup as under:-

• Interest of max. 12.0% per annum or actual as charged by the bank whichever is less on advance given to the Sugar Mill against the buffer stock or on value of stock.

• Insurance including storage charges at flat 1.50% per annum on the value of stock.

• The value of stock shall be calculated basis price of Rs 31.0 per Kg of Sugar.

• The buffer subsidy will be used for payment of Cane arrears only and will be credited directly in No lien accounts to be opened by Sugar mills for the said purpose.

The total buffer subsidy amount allocated has been Rs 1,674 crore.

h) Rationale in fixing Cane Price

Government showed rationale in fixing Cane price looking into the excess Sugar supply/depressed Sugar prices and thus no increase in Cane Price for the Year 2019-2020.

During 2019-2020, Central Government had not increased the FRP (Fair & remunerative price) and kept it at the same level as that of Year 2018-2019 at Rs 275 per Qtl. of Cane with 10.0 Sugar recovery.

During 2019-2020, for the second consecutive year in row, U.P State Government continued with the same SAP (State advised price) by fixing Rs 315 per Qtl. for common variety of Cane, Rs 325 per Qtl. for Early variety of cane and Rs 310 per Qtl for rejected variety of cane. During the Year 2017-2018, Government had increased the SAP by Rs 10 per Qtl.

i) Ethanol-Pricing/Feed stocks

Government is continuing to aggressively promote Ethanol as a fuel as it is non-fossil biofuel, a big curb on vehicular pollution and also saves foreign exchange required for import of crude oil as country is net importer of crude.

Further due to surplus Sugar Production, Government is targeting Ethanol as alternate of Sugar which can be made from Cane like in Brazil which on one hand will provide adequate supply of Ethanol under Governments ambitious bio-fuel policy on the other hand will be used to regulate Sugar Production and thus take care of excess Sugar in system.

Summary Ethanol Price fixed by the Government

Unit : Rs./Litre
Year C Molasses B heavy Molasses Cane Juice Grain damaged
2016-2017 39.00 Not allowed Not allowed Not allowed
2017-2018 40.85 Not allowed Not allowed Not allowed
2018-2019 43.46 52.43 59.19 47.13
2019-2020 43.75 54.27 59.48 50.36

Year : Dec - Nov

From above table, following can be observed:-

Governments focus is on increasing Ethanol supplies for which on one hand Ethanol price has been increased so as to make it viable for Sugar Mills, on the other hand Government allowing other raw materials usage for Ethanol supplies.

Taking cognisance of cost of Ethanol from different Raw materials, Government has allowed different prices of same product "ETHANOL" basis the Raw material used as above.

This on one hand will boost the availability of Ethanol which is Green bio-fuel and part of Governments ambitious biofuel policy on other hand usage of raw material like B heavy Molasses and Cane Juice will help in reducing Sugar surplus.

For promoting Ethanol supplies from B heavy and Cane Juice, Government is not only giving higher price for Ethanol but has also prioritised Ethanol made from Cane Juice and B heavy Molasses over C Molasses Ethanol.

For any Oil company depot at the time of allotting order, first priority is for Cane Juice Ethanol, followed by B heavy Molasses Ethanol then C Molasses and ultimately damaged Grain Ethanol.

During the Year 2018-2019, as per estimates, 0.5 Million MT Sugar has been diverted towards Ethanol in the form of B heavy Molasses and during 2019-2020 this figure is estimated to reach 0.8 Million MT.

As per analysts during 2020-2021, manufacturing of Ethanol from B heavy/cane juice route will reduce Sugar production by 1.5 Million MT which means every year there is exponential growth in manufacturing of Ethanol from B heavy route.

Government is continuing with the policy of restriction on Imported alcohol for blending purpose.

Ethanol manufacturing capacity:

During the Year 2019-2020, while Government floated the tender for a quantity of 5.1 billion Litres, as per records Ethanol manufacturing capacity is available to the tune of 3.5 billion Litres.

During the Year 2018-2019, Ethanol supplied for blending was 1.9 billion Litres which during the Year 2019-2020 is estimated to remain at same level.

Further, new Ethanol manufacturing capacities are added every year for which Government is also disbursing soft loans.

In order to boost Ethanol supplies from alternate feed stocks, Government is also pushing 2G Ethanol which will be manufactured from cellulosic waste. Public Sector Oil companies are in the process of setting up their own 2G Ethanol plants for generation of Ethanol for their requirement of blending with Petrol.

While, GST of all Alcohol Products is 18%, on Ethanol meant for blending with Petrol, GST has been reduced to 5% which was done during July 2018.

j) Soft Loans for Ethanol

In June 2018, Government had sanctioned soft loan to the tune of Rs 6,139 crore to Sugar Mills for Ethanol capacity on which interest subvention amount is Rs 1,332 crore.

In March 2019, CCEA cleared soft loans of Rs 15,500 crore to Sugar Mills/standalone Distilleries for setting up new Distilleries, setting up Incineration boiler, augmentation of existing capacity. The interest subvention amount on above soft loan for a period of 5 years with one year moratorium period is Rs 3,355 crore. Out of this figure of Rs 15,500 crore, Rs 12,900 crore is for Sugar Mills and Rs 2,600 crore is for standalone Distilleries without attached Sugar units.

The above soft loan has been allowed for the purpose of:

a. Improving liquidity of sugar mills by way of revenue from Ethanol

b. Achieve 10% blending target of EBP

c. Reduce sugar inventory by usage of B heavy/cane juice for ethanol manufacturing

k) IDR Act/State Excise Fees & Procedures on Ethanol

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.

Denatured Alcohol, Industrial Alcohol not meant for human consumption will be controlled/legislated only by Central Government.

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

With active efforts of the Government, Oil Marketing companies and Industry Associations from the Year 2017-2018, number of states started scrapping State Excise fees on Ethanol and relaxing their control on distribution, storage of Ethanol.

Karnataka has been the first state to surrender their control on Denatured Ethanol and free it from State Excise Fees and permissions.

Other states having followed the Karnataka are States of Gujarat, Chhattisgarh, Punjab, Haryana, Goa, Maharashtra and U.P. In state of Delhi, Industry is seeking relief on the State Excise Fees through legal means available.

Industry is taking up the matter with various State Governments to give up control on denatured Ethanol and other spirits in line with the IDR amendment/new GST rules and reasonably good progress is continuing on the subject.

III. Bajaj Hindusthan Sugars (BHSL) Position

BHSL has 14 sugar plants having an aggregate crushing capacity of 1,36,000 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. Since last 6 years, year 2014-2015 (Oct - Sept), 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.

Groups average Sugar recovery during last 6 Sugar Seasons has considerably improved with results as under :-

Sugar Season (Oct - Sept)

2014-2015 09.41%
2015-2016 10.37%
2016-2017 10.26%
2017-2018 10.72%
2018-2019 11.52%
2019-2020 11.61%

In the above table, the efforts of the Group are clearly visible towards Cane development and quality promotion and in last 6 years Sugar recovery has improved by almost 23.4% from the level of 9.41 to estimated level of 11.61% during current year.

BHSL sees cane development as major thrust area to improve the revenue generation and is continuously striving towards it.

The major area of concern is the ability to make timely cane price payment to farmers given the unremunerative sugar realisations in the domestic market and further exacerbated by the irrationally high cane price fixed by the state government.

2. Sugar price risk

While cane price is fixed by the state government, sugar realisations are totally market driven and are dependent on demand-supply dynamics. This has often led to complete mismatch between the cane price and sugar realisations.

During years of high production leading to excess supply, there will be risk of Sugar Price sliding down.

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

Industry is pushing hard to further increase the said MSP to the level of Rs 35 - 36 per Kg and as per media reports Government is considering increasing the MSP further.

So, while, there is a Sugar Price risk, during surplus years when such risk becomes acute, there is Government intervention 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 irrational 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.

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. Further, sustained ethanol supplies to oil companies has provided some element of risk mitigation.

Table 9: Market share of BHSL in U.P. and on All India basis for Sugar basis Production:-

Year (Oct - Sept)

Particulars Unit 2019-2020 (Estimated) 2018-2019 2017-2018 2016-2017 2015-2016
BHSL Production Million MT 1.94 1.83 1.82 1.33 1.05
UP Production Million MT 12.50 11.82 12.05 8.80 6.84
All India Production Million MT 27.00 33.16 32.48 20.30 25.13
BHSL % of UP % 15.52 15.48 15.10 15.11 15.35
BHSL % of All India % 7.19 5.52 5.60 6.55 4.18

From the above figures, it can be seen that in state of U.P., BHSL is maintaining its share of 15% plus, on All India basis BHSL share estimated to increase from 4.18% during the Year 2015-2016 to 7.19% during 2019-2020.

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 10: Zone-wise details of crushing capacity

WEST 5 48,000
CENTRAL 5 48,000
EAST 4 40,000
TOTAL 14 1,36,000


West U.P.: Sugar produced by our West UP mills is sold in the region of West UP and neighbouring States in Northern India like Punjab, Haryana, Rajasthan and Delhi etc. This year due to higher Sugar production in state, 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 Central U.P and also in nearby states i.e. Rajasthan, M.P., Gujarat, North East states and at times to Haryana, Odisha. 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.


Other than the mills in state of UP, we have to face competition mainly from mills in the state of Maharashtra, Karnataka, Gujarat, A.P, Tamil Nadu. For movement of sugar to neighbouring states like Punjab, Haryana, Bihar, UP mills face competition from mills in these states, as well. Sugar sales outside of UP is purely on the basis of the price parity with competing mills.

No competition from Sugar imports

Due to continued surplus sugar production and high stocks, depressed and all-time low International Sugar Prices, Govt. has imposed import duty of 100% restricting Sugar Imports and no major imports has taken place under OGL in last 3 years.

Table 11: High & Low Price (Realisation) of Sugar - BHSL

Unit : Rs./ Qtl.

April 2019 - March 2020

Month Low Price High Price
April 3100 3345
May 3100 3450
June 3195 3430
July 3100 3320
August 3148 3467
September 3285 3499
October 3170 3500
November 3130 3512
December 3100 3401
January 3193 3399
February 3128 3373
March 3100 3355

a) Refined sugar is not taken in consideration.

b) Only M-31 50 Kg rate is taken.

d) Sugar despatches through rake is also not considered as the sale confirmed in a month is despatched next month.

IV. Internal Control System and their Adequacy

The Internal Control system in an organisation should be such that it increases the transparency and accountability in an organisations process of designing and implementing a system of Internal Control by identifying and analysing various risks and preparing Action plan to overcome those risks. This includes implementation of policies & procedures prepared by the management which helps in achieving their objective of ensuring adherence to Companies policies, safeguarding of its Assets, prevention & timely detection of Frauds, orderly & efficient conduct of its business and preparing reliable financial information. BHSL Internal Control system is commensurate to its size of business and nature of its operations. BHSL has in place an adequate system of Internal Controls that has been designed to ensure that all the transactions are authorised, recorded and reported correctly. Accounting procedures and policies are being monitored by a strong and Independent Internal Audit department. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Company has also in place a well-defined Delegation of Power (DOP) and various Standard Operating Procedures (SOPs) covering different areas which further strengthen the Internal Control. The Audit approach is based on random sample selection and takes into account the generally accepted business practices. Based on reports of Internal Audit department, corrective actions are taken by process owners in their respective areas thereby strengthening the Internal Controls. 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 head. The directions of 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 organisation that nurtures the talent and enterprise of its people, helping them grow and find fulfilment in an open culture as per the "HR Vision (Our edge is our people, what we consciously do as management is to encourage such people who dare and provide them room - not square feet - to dream it)" and also 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 31,2020, BHSL had 7,415 employees. The various HR initiatives carried out by the Company during the year are listed below:

Training Programmes :-

• Training & Development-During the year 2019-20, HR dept. had organised various Training programmes through the involvement of various external agencies as well as 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, it is communicated to everyone concerned by the HR department. On an average 28-30 persons attended such training programme session. The major topics covered by our internal training faculty were on Irrigation and Pest Control techniques, Cane Centre Mgmt, Cane sowing, Safety, Awareness on Health & Occupational Diseases, House-keeping, Fire fighting, Environment, Health & Occupational Hazards, Energy Conservation, Attitudinal & Behavioural Management, GST, SAP, Computer Awareness, Statutory Compliances, etc. The HR department also arranged external training to the employees by outside experts with specialist knowledge so that the employees can improve their skill sets with relevant up-to-date information and techniques learned in an environment that is familiar and conducive to advancement of group learning also, encourage interaction from the entire group and some surprising techniques can be developed that are particularly relevant to their field. It also helps to grow the team and provides opportunity to interact on a much more personal basis building strongest bonds between team members and more efficient working environment.

• Induction Programmes for New Employees - Induction programmes are regularly conducted at unit level as well as in offices by HR department for all the new employees. This is an interactive programme supplemented by power-point presentation about the Company.

• Activities and Events - As a part of Employees Engagement Programmes, celebrated religious, cultural, national integration programmes, 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 (4 March to 10 March), Jamnalal Jayanti (4th Nov.), Labour Day (1st May), various type of childrens 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 organisation, is an outcome to fulfil the said need. It was incorporated during 2009 and extended its 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. 2,000 students. School is running as a creative centre for learning and development. It has provided employment to more than 150 people, including spouses of the employees. BPS solely aims to continuously connect, grow, serve and reach the new horizons.

2. Other activities

a) General Medical Checkup, Eye Check-up, Dental Check-up, Hepatitis-B vaccination, sanitisation in Factory Campus and also in neighbouring villages, etc.

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

c) Kanwar Seva Shivir on Mahashivratri Parv.

d) Distributing Organic Manure on subsidised rates to the 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) Blood donation camp.

h) Health check-up camp by local hospital were held at offices & units, wherein a team comprising specialised Doctors i.e. Medicines, Eye, Gynaecologist & Dentist conducted medical check-up of employees and their families got themselves checked and were 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, 2019 to March 31, 2020

Table 12 : Operational data

Unit Year ended March 31, 2020 Year ended March 31, 2019
Cane Crushing MMT 15.845 16.761
Sugar Recovery % 11.65 11.40
Sugar Production - From Cane MT 18,45,270 19,10,112
Industrial Alcohol Production KL 57,221 1,07,724
Molasses Production MT 7,12,011 7,75,934
Power Generation 000 Units 7,80,522 9,49,421

During the year, the production of sugar from sugarcane was at 18,45,270 MT as compared to 19,10,112 MT during the previous year. The production of molasses was at 7,12,011 MT as compared to 7,75,934 MT in the previous year. The industrial alcohol/ethanol production was at 57,221 KL as compared to 1,07,724 KL in the previous year. Power generation was at 780.5 Million Units (MUs) as compared to 949.4 MUs in the previous year. Average recovery of sugar from sugarcane increased to 11.65% during the current year as compared to 11.40% in the previous year.

Results of operations

Table 13 : Summarised financial results

Rs Crore

Particulars Year ended March 31, 2020 Year ended March 31, 2019
Revenue 6,676.61 6,969.43
Earnings before interest depreciation and tax (EBIDTA) 408.89 466.77
Finance Costs (Net) 300.75 321.78
Cash profits 108.14 144.99
Depreciation & amortisation 215.87 211.33
Profit/(Loss) before tax (107.73) (66.34)
Tax expenses (2.36) (2.26)
Profit/(Loss) after tax (105.37) (64.08)
Basic and Diluted earnings per share (Rs) (0.96) (0.58)


During the year ended March 31, 2020, the Companys total revenue was Rs 6,676.61 crore as against Rs 6,969.43 crore in the previous year.

Analysis of sales

During the year, the Company sold 18,70,362 MT of sugar as against 19,53,161 MT during the previous year. The Company sold 4,65,568 MT of molasses as against 3,28,600 MT in the previous year. However, alcohol/ethanol sales during the year was at 62,174 KL as against 1,24,840 KL during the previous year.

The Company exported 217.9 MUs of power during the year as against 338.9 MUs during the previous year. Product-wise sales quantity, value and per unit realisation details are given in Table 14:

Table 14 : Sales revenue


Year ended March 31, 2020

Year ended March 31, 2018

Unit Qty Value Rs Crore Realisation* /MT/KL/ 000 Units Qty Value Rs Crore Realisation* /MT/KL/ 000 Units
Sugar MT 18,70,362 6,100.03 32,614 19,53,161 5,986.52 30,650
Alcohol/Ethanol KL 62,174 258.90 41,641 1,24,840 500.83 40,118
Molasses MT 4,65,568 160.06 3,438 3,28,600 7.81 238
Power 000 Units 2,17,940 68.51 3,144 3,38,899 174.42 5,157

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 lease rent of Rs 10.86 crore, sale of pesticide of Rs 37.35 crore, sale of scrap of Rs 6.54 crore, and other miscellaneous operating income of Rs 7.64 crore.

Other income

Other income for the current year was Rs 11.01 crore (including interest income of Rs 0.91 crore, Gain due to foreign exchange fluctuation (net) was at Rs 0.49 crore and other miscellaneous income was at Rs 9.61 crore as against Rs 166.93 crore (including interest income of Rs 148.08 crore, Gain due to foreign exchange fluctuation (net) was Rs 0.25 crore and other miscellaneous income of Rs 15.28 crore).

Other expenses

During the year, other expenses were Rs 484.39 crore as against Rs 460.84 crore in the previous year.

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

The EBIDTA for the current year at Rs 408.89 crore as against Rs 466.77 crore in the previous year.

Finance costs

Finance cost for the current year was Rs 300.75 crore as against Rs 321.78 crore in the previous year, due to repayments of loans and drop in interest rate.

Depreciation and amortisation

The depreciation for the current year was at Rs 215.87 crore as against Rs 211.33 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, 2020 is given in Table 15.

Table 15 : Summarised balance sheet

Rs Crore
As at March 31, 2020 March 31, 2019
Non-current assets
Fixed assets
Property, plant and equipment 7,178.15 7,390.08
Right of use assets 9.44 -
Capital work-in-progress 43.07 16.56
Intangible assets 0.00 0.00
Non-current investments 191.68 251.27
Other non-current financial assets 2.07 3.99
Other non-current assets 14.14 12.97
Sub total 7,438.55 7,674.87
Current assets
Inventories 2,711.39 2,764.98
Financial assets
Current Investments 770.13 770.13
Trade receivables 173.18 206.05
Cash and cash equivalents 100.69 48.10
Bank balances 10.49 11.42
Loans 2,091.29 2,146.58
Current tax assets (net) 4.26 3.76
Other current assets 789.32 779.81
Sub total 6,650.75 6,730.83
Total assets 14,089.30 14,405.70
Shareholders Fund
Equity 110.07 110.07
Other equity 3,144.21 3,294.98
Sub total 3,254.28 3,405.05
Non-current liabilities
Financial liabilities
Borrowings 5,139.53 5,382.09
Lease liabilities 9.54 -
Provisions 69.26 53.75
Deferred tax liabilities (net) 610.07 629.46
Other non-current liabilities 25.98 21.74
Sub total 5,854.38 6,087.04
Current liabilities
Financial liabilities
Trade payables 4,439.52 4,161.92
Other financial liabilities 387.90 663.91
Other current liabilities 139.71 76.20
Short-term provisions 13.51 11.58
Sub total 4,980.64 4,913.61
Total equity and liabilities 14,089.30 14,405.70

Share capital

There was no change in share capital.

Other equity

Other equity has decreased to Rs. 3,144.21 crore as at March 31,2020 from Rs 3,294.98 crore as at March 31,2019 mainly due to loss for the year Rs 105.37 crore and change of other comprehensive income by Rs 43.83 crore and utilisation of fund for maintenance of molasses tank by Rs 1.57 crore.

Non-current borrowings

Long-term borrowings was at Rs 5,139.53 crore as at March 31, 2020 as against Rs 5,382.09 crore in the previous year ended March 31, 2019.

Current borrowings

There was no Short-term borrowing during the year as at March 31,2020 and March 31, 2019.

Property, plant and equipment

Gross Block has increased to Rs.10,636.11 crore from Rs 10,624.77 crore, on account of routine capitalisation/decapitalisation during the year. The net block stood at Rs 7,178.15 crore as against Rs 7,390.08 crore.


Investment was at Rs 191.68 crore as at March 31, 2020 as against Rs 251.27 crore in the previous year ended March 31, 2019. The changes are mainly due to provision for diminution of value of investment of Phenil Sugar Limited and Bajaj Aviation Private Limited.


The inventory of sugar at the end of the current year was 7,78,755 MT equivalent to 194 days sales as compared to 201 days sales in the previous year. Alcohol inventory at the end of the current year was 4,764 KL equivalent to 15 days sales as compared to 31 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.


The debtors at the end of the current year were equivalent to 9 days of sales as compared to 11 days of sales in the previous year ended March 31, 2019. The decrease was due to change in outstanding of power sale with UPPCL. Significant non-recurring income, expenditure and other items.


Gain on sale of assets Rs 0.07 crore, provision no longer required/credit balance appropriated Rs 1.95 crore and miscellaneous receipts Rs 7.59 crore were of a non-recurring nature.


The loss on assets sold/discarded Rs 0.74 crore is of a non-recurring nature.

Contingent liabilities

The status of contingent liabilities as at March 31, 2020 has been reviewed by the management. Efforts are being made for speedy settlement of pending cases.


Comparative analysis of Important Ratios with variance is tabulated below:

Table 16 : Ratio Analysis

Description Ratio (Current Year) Ratio (Previous Year) Variance (%) Reasons for significant variance
Debtors Turnover ratio 34.82 33.54 4 N.A.
Inventory Turnover Ratio 2.41 2.38 1 N.A.
Interest Coverage Ratio 1.43 1.50 (5) N.A.
Current Ratio 1.34 1.37 (3) N.A.
Debt Equity Ratio 1.69 1.77 (5) N.A.
Operating Profit Margin Ratio 7.22% 4.91% 47 N.A.
Net Profit Margin Ratio (1.60)% (0.96)% 66
Return on Net Worth (3.24)% (1.88)% 72% -do-

Control measures for cane procurement

Besides 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, 2020 are given in Table 17:

Table 17 : Cane crushing, sugar recovery and sugar production

Plant Location Zone



Cane Crushing (MMT) Sugar Recovery (%) Sugar Production (Tonnes) Cane Crushing (MMT) Sugar Recovery (%) Sugar Production (Tonnes)
Gola Gokarannath Central UP 1.977 11.93 2,35,818 2.447 11.75 2,87,722
Palia Kalan Central UP 1.473 10.93 1,61,093 1.494 10.69 1,59,441
Khambarkhera Central UP 1.424 11.94 1,69,963 1.434 11.90 1,71,043
Barkhera Central UP 0.983 12.11 1,19,105 1.052 11.92 1,25,177
Maqsoodapur Central UP 0.879 11.98 1,05,244 1.121 11.21 1,25,953
Kinauni Western UP 1.715 11.92 2,04,549 1.748 11.40 1,99,300
Thanabhawan Western UP 1.380 11.72 1,61,679 1.425 11.42 1,62,663
Budhana Western UP 1.396 11.80 1,64,705 1.385 11.63 1,61,086
Bilai Western UP 1.258 12.36 1,55,596 1.246 12.21 1,52,187
Gangnauli Western UP 0.886 11.27 99,815 0.870 10.80 94,030
Pratappur Eastern UP 0.258 10.26 26,497 0.246 10.04 24,747
Rudauli Eastern UP 0.495 9.56 47,343 0.559 10.19 55,977
Utraula Eastern UP 0.664 11.17 74,146 0.678 10.93 73,167
Kundarkhi Eastern UP 1.056 11.34 1,19,717 1.056 10.99 1,17,620
Total 15.845 11.65 18,45,270 16.761 11.40 19,10,113

Distillery division

The distillery division produced 57,221 KL of industrial alcohol/ethanol during the current year against 1,07,724 KL in the previous year. Likewise alcohol/ethanol sales aggregated during the current year at 62,174 KL against 1,24,840 KL in the previous year. In value terms, the sale of industrial alcohol/ethanol during the year is Rs 258.90 crore as against Rs 500.83 crore in the previous year.

Power division

The sale of power was recorded at Rs 68.51 crore in the current year as against Rs 174.42 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 intentions of the management and the efforts put into realising certain goals. The 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.