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 2019-20 turned out to be deficit year owing to the lower Production in all major Sugar producing countries including India, Brazil and Thailand. Year 2020-21 is also shaping out as deficit year though marginal one.

The graph of ICE 11 (Raw Sugar) and LIFFE (White Sugar) exchange prices during last 3 years i.e. April 2018 – March 2021 is given below:-

Chart 1: ICE 11 : Raw Sugar Settlement

From the above price graph of 3 years, it can be observed that till September 2019, Sugar prices remained depressed due to Year 2017-18 and then 2018-219 being surplus production years.

From Oct 19, Sugar prices started improving because of various factors including the fact that Year 2019-20 and 2020-2021 are estimated deficit years.

ICE 11 (Raw Sugar Prices)

Raw Sugar prices started from the level of 12.5 cents/pound as on 1st April, 2018 attended the high of 18.8 cents / pound during February 2021 and low of 9.2 cents / pound during April 2020. (Though lowering of prices to as low as 9.2 cents during April 2020 was more because of reasons related to COVID, lockdown in number of countries and was short lived). Closing level of ICE 11 price on 31st March, 2021, is 14.77 cents/pound.

LIFFE (White Sugar Prices)

Similarly White Sugar prices started from the level of 355 cents / pound as on 1st April, 2018 and continued range bound till Oct/Nov 2019 month touching low of 300 USD/mt in between.

From thereafter LIFE prices increased and touched the peak of 488 USD/mt during Feb 2021 month with price as on 31st March, 2021 at level of 420 USD/mt.

Table 1: Global Balance Sheet

Unit : 000 Metric tonnes, Raw value

Year(Oct-Sept) Production Import Consumption Export End Stocks
2008-09 142961 48395 151520 48390 69490
2009-10 148391 53993 151960 53997 65917
2010-11 156177 53870 153096 53865 69013
2011-12 163597 54325 157962 54321 74652
2012-13 171804 60655 163572 60632 82956
2013-14 174132 58361 165282 57917 92257
2014-15 169373 58259 166888 58270 94731
2015-16 164114 66195 169978 66322 88740
2016-17 169080 64730 172691 64989 84870
2017-18 180731 62823 172240 62825 93359
2018-19 176118 57927 174308 58011 95169
2019-20 171980 59657 176743 59644 90335
2020-2021 (P) 173462 60301 174186 60218 95654

Source : ISMA

Table 2: Major Sugar Producing Countries during last three years

Unit : 000 Metric tonnes, Raw value

S.No Name of Country 2017-18 2018-19 2019-20
1 Brazil 31049 29030 37394
2 India 32479 33160 27410
3 China 10633 10503 10400
4 Thailand 14674 14441 8284
5 U.S.A. 7758 7551 6668
6 Mexico 6010 6426 5278
7 Pakistan 5652 5552 5190
8 Australia 4729 4102 4102
9 Germany 4595 3825 3977
10 France 5219 5060 4699
11 Russia 6480 6292 7900
12 Indonesia 2165 2267 2100
13 Philippines 2127 2037 2146
14 Argentina 1562 1617 1600
15 Colombia 2378 2207 2259
16 South Africa 2084 2307 2200
17 Guatemala 2704 2930 2764
18 Poland 2194 2190 2065
19 Turkey 2704 2283 2496
20 Ukraine 2095 1669 1480
21 Egypt 2170 2519 2900
22 Cuba 1086 1193 1210
S.No Name of Country 2017-18 2018-19 2019-20
23 Peru 1073 1146 1340
24 Vietnam 1646 1174 986
25 Iran 1805 1520 1550

Source : ISMA . Year (Oct-Sept)

We are analyzing International Sugar price, various factors affecting price during the Year 2020-2021 ( April – March) as under:-

Chart 3: Sugar Price April 2020-March 2021

From the above graphs for the Year 2020-21 (April – March), it can be seen that it has been a good year from Sugar price perspective where price has continuously increased.

ICE 11 price started from the level of 10 cents as on 1st April, 2020, touched the low of 9.2 cents in April 20 month, high of 18.8 cents in Feb month with price of 14.77 cents/pound as on 31st March, 2021.

LIFE price started from the level of 342 as on 1st April, 2020, low of 307 USD in April month then reaching to high of 488 USD/mt during Feb month. Closing price as on 31st March, 2021 remained at level of 420 USD/mt.

Influence factors during the Year 2020-2021 (Oct – Sept)

India :

During the year 2020-21 (Oct-Sept), there had been a delay in announcement of Export quota / export assistance. This year, it was announced at the end of December 2020 whereas last year it was announced in II week of September month. Delay in announcement of Export assistance helped International Sugar prices to firm up so as to pull Indian Sugar for exports as World needed it.

It was because of improved International Sugar prices that Government could manage with export assistance of Rs 6.0 per Kg this year (2020-21) whereas last year assistance was to be given of Rs 10.448 per Kg to push exports.

Due to lower production in Thailand, overall deficit in World balance sheet during 2019-20 and now 2020-21, good demand, India have contracted almost 90% of overall quota of 6.0 Million MT for the year 2020-21 out of which 2.5 Million MT is estimated to have been exported during Jan – March 2021 and entire quota is estimated to be exported by June / July 2020-2021.

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

During the Year 2019-2020, India exported a quantity of 5.95 Million MT which had been all time high figure and during 2020-21 country is estimated to surpass it and create another record of 6.5 Million MT of Sugar exports.

Brazil CS :

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

Year April – March

Particulars Unit 2017-2018 2018-2019 2019-2020 2020-2021
Actual Actual Actual Estimated
Total cane crush Million MT 596.31 573.13 590.36 605.46
Sugar Production Million MT 36.06 26.51 26.76 38.46
Ethanol Production Billion Litres 26.09 30.95 33.26 30.37
Diversion of Cane
Used for sugar % 46.46 35.21 34.33 46.16
Used for ethanol % 53.54 64.79 65.67 53.84
TRS 136.60 137.89 138.57 144.72

Source : UNICA

From the above figures, it can be observed that

Diversion of Cane towards Sugar has significantly increased during the Year 2020-21 because of improved prices of Sugar resulting into better price parity in favor of Sugar as against Ethanol.

Because of higher availability of cane, improved TRS of cane and higher diversion of cane towards Sugar, Sugar production in Brazil CS has increased to 38.46 Million MT from last year level of 26.76 Million means increase by whopping 43.7%. Due to very low level of Sugar prices during the Year 2018-19 and 2019-20, cane diversion towards Sugar remained very low at level of 35.21 % and 34.33% respectively as against 46.46% previous year.

Because of lower diversion of Cane during these 2 years Sugar production came down to record low levels of 26.51 Million MT and 26.76 Million MT during these 2 years.

So, switch of Cane between Sugar & Ethanol plays a very good balancing role to regulate Sugar production not only for Brazil but also global balance sheet.

From above table, it can be seen that TRS levels (Sucrose content) are improving year after year and has increased from the level of 136.6 during 2017-18, 138.57 during 2019-20 to the level of 144.72 during 2020-21.

Going ahead for the Year 2021-22, there are talks of lower Sugar production in Brazil CS due to poor rainfall affecting yields which also seems to be strenthening Sugar prices.

Wilmar Sugar has been the most pessimistic of all and has predicted that during 2021-22, Brazil CS cane crop may reduce to to 530 Million MT down by 12.4%, Sugar production to 31 / 33 Million MT and Ethanol production to 23 / 25 million MT. Another research agency Canaplan predicted that cane crush will reduce to 540 – 553 Million MT, Sugar production to 33.1 – 33.8 million mt amd Ethanol production to 24 – 24.5 billion litres due to dry weather.

There are certin optimistic estimates as well like one from Archer Consulting with cane crush at 575 Million MT, Sugar production at 35 Million MT and 24.7 billion litres.

Datagro estimates Sugar production level at 36.3 Million MT during the Year 2021-22.

Stone X, broker and analyst firm estimates Cane crush of 567 – 578 Million MT with increased diversion of Cane towards Sugar. It is estimated that Mills will maximise cane crush for Sugar for which they extend crushing period by even reducing per day crush so as to produce more sugar and less Ethanol with prediction of Sugar production not less than 36 Million MT. UNICA announced crop performance during current year 2021-22 upto 16th April as per which Sugar production is down by 35.75% as compared to corresponding period last year as under :-

Table 4: Corp Performance by UNICA – during current year 2021-22 up to April 16

Particulars Unit

Cumulative upto 16th April, 2021

2021-2022 2020-21 YoY%
Total cane crush Million MT 15.63 22.51 -30.57
Sugar Production Million MT 0.62 0.97 -35.74
Ethanol Production Billion Litres 0.73 0.99 -25.86
Diversion of Cane
Used for sugar % 38.55 40.15
Used for ethanol % 61.45 59.85
TRS 108.73 112.81 -3.62

(Performance upto 16th April is just initial tend and is not indicative performance for whole year).

So, it is widely believed that during Year 2021-22, Sugar production will be lower with wide estimates between 31 – 36 Million MT as against last year production of 38.46 Million MT.

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


Thailand plays a major role in framing World Sugar market due to its position as major Sugar exporter in the World. Year after year Sugar production in Thailand is coming down which is do with poor rainfall and also depressed sugar prices in last 2-3 years and better return on alternate crop option like cassava.

Sugar Production in Thailand which was in excess of 14 Million MT during 2017-18 has gone to the level of 8.3 million MT during 2019-20 and further to estimated level of 7.4 Million MT during 2020-21.

Next year 2021-22 it is estimated that it will increase to 9.9 Million MT higher by 33.8% with improved price and conditions.

Thailand slippage in Sugar production has thrown open their conventional markets in Asia like Indonesia, Malaysia, Bangladesh to Indian Sugar helping India to export sugar big way.

Crude Oil

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

During the Year 2020-21 (April – March), Crude Oil has also been a big support factor for Sugar prices. Crude oil price (WTI) was at level of 20.48 USD/barrel as on 1st April, 2020 though this was a dismal level because of total demand destruction due to COVID issues. In fact in between Crude oil prices had gone negative as well and WTI touched the level as low as -40.3 USD.

From level of 20.48, price increased upto the level of 59.16 USD/barrel as on 31st March, 2021 and in process also helped strengthening of Sugar prices.


Brazilian Real: During the Year 2020-21, Brazilian real appreciated from the level of 5.63 in beginning of April 2020 to the level of 5.20 by end of March 2021 which means appreciation of 7.6%.

Indian Rupee: Similarly during the Year 2020-21, INR has appreciated from the level of 76.4 in beginning of April 2020 to level of 73.1 by end of March 2021 which means appreciation of 4.3%.

Appreciation of the currency of 2 major Sugar exporting countries i.e. Brazil and India has also helped in firming up Sugar prices.

2021-22 (Oct – Sept) Global sugar surplus:

While 2021-2022 is marginal deficit year, Year 2021-22 is estimated to be surplus year.

For the Year 2021-22, Datagro estimates surplus of 2.74 Million MT owing to production recovery in Thailand, another good crop in India, higher yields in Europe, increase in Russia Sugar production by 18%.

Datagro has estimated Sugar deficit for the Year 2020-21 at 1.51 Million MT.

Czarnikow estimates global Sugar surplus of 2.7 Million MT which is down from earlier estimate of 3.0 Million MT during 2021-22. Rabobank estimate of global sugar surplus for the same period is 1.5 Million MT.

Year 2020-21 is global deficit with varying degree of estimate between 0.7 – 3.5 Million MT of Sugar.

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

II. Indian Scenario

Since the early 2020, COVID had been spearheading across the Globe to which India is also no exception, badly affecting the Industry, leading to weak macros, overwhelming health infrastructure, weakening demand, joblessness, etc.

In India during March 2020, national lockdown had been imposed with tough restrictions all the place. But during the said lockdown, Sugar mills across the country continued with the crushing operation and crushed entire cane available despite all challenges including availability and transportation of Raw material like PP bags, Sulphur, lime, etc., weakened sale of end products, logistics, Cash flow issues.

There had been major demand contraction of Sugar initially in month of March / April due to lockdown and closure of all Institutional units consuming Sugar but during later part of the year, demand recovered and part of loss of demand was also made up. Total domestic consumption during the Sugar year 2019-2020 remained at the level of 25.3 Million MT as against 25.5 Million MT previous year.

Similar kind of demand destruction was seen in Ethanol supplies as well during lock down period. Petrol sale had come down significantly which affected Ethanol demand as well at oil company depots. However, Industry was able to address this issue by supplying Ethanol to far flung depots which initially had not been blending Ethanol.

Surplus Production

Last 11 years, Indian Sugar Industry has continuously been producing Sugar more than what is required in domestic market barring Year 2016-17.

Last 4 years, Sugar Production had been exceeding 30 Million MT except year 2019-2020 when it could reach the level of 27.4 Million MT.

This can be seen from the graphical representation of Sugar Production and Sugar consumption for last 11 years, as below.

Chart 5: Sugar Production and Sugar Consumption for 11 years

Year Sugar Year (Oct – Sept)

During Year 2019-20, Sugar production remained lower because of dip in Sugar production in state of Maharashtra and Karnataka. U.P. state continues to remain consistent with its production and this is 4th year in a row when U.P. estimated to produce more than 11 Million MT of Sugar.

This gives number-one slot of Sugar production to U.P. state 5th year in a row since the Year 2016-17 followed by Maharashtra which has never happened in past. Though during 2021-22, Sugar production of both the states will be very near to 11 Million MT.

While increased Sugar production has given better capacity utilization to Industry and has helped the Industry and Trade in terms of better Sugar recovery and yield, it has also created problem of excess Sugar in system and also its bearing on Sugar prices.

While Indian Sugar trade had been grappling with the problem of Sugar surplus for quite some time now but over a period Industry has been able to evolve itself so as to convert this problem into opportunity.

"Ethanol" has become the buzz word these days and has come as an opportunity for the Industry where on one hand Industry is able to increase its Ethanol production by diverting excess Sugar for highly ambitious bio-fuel program of Government of India, on the other hand Industry is able regulate its Sugar production.

Year after year Ethanol production in country is poised to increase with Government including number of Raw materials including damaged grains, Rice and giving price in line with its cost. Government has shown a road map by floating Ethanol tender for a period of 5 years during the current year where Quantity and price will be finalized every year. India is making new records every year on Sugar Export front as well where last year 2019-20 country exported a highest ever quantity of 5.95 Million MT.

This is not all and this year country is poised to surpass last year record and is estimated to export a quantity of 6.5 Million MT Sugar. India has been able to cope up with challenge of excess Sugar production through continued Sugar export program and diversion of Sugar towards Ethanol. However, all above would not have been possible without the Government support and policy framework. Thanks to the Government policies and support system which has made it happen.

With above support and policies, cyclical pattern of Indian Sugar production has become a trend of past and now is in position to produce Sugar best to its capacity with excellent yields, recovery and efficiency.

We are giving below the graphical representation of cyclical pattern of Indian Sugar Production since the Year 1980-81 till 2009-10 where it can be seen that 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)

State-wise Sugar Production

Table 5: State-wise Sugar Production on All India basis since the Year 2014-15 given below

Unit : Million MT

Sr. No. State 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 (Est.)
1 Uttar Pradesh 7.10 6.84 8.77 12.05 11.82 12.64 11.00
2 Maharashtra 10.51 8.42 4.20 10.72 10.72 6.17 10.80
3 Karnataka 4.94 4.05 2.17 3.75 4.43 3.49 4.25
4 Gujarat 1.15 1.17 0.89 1.11 1.12 0.93 1.02
5 Andhra Pradesh 0.56 0.55 0.39 0.47 0.51 0.29 0.30
6 Punjab 0.54 0.67 0.69 0.82 0.79 0.54 0.60
7 Haryana 0.58 0.54 0.67 0.84 0.70 0.74 0.70
8 Bihar 0.53 0.50 0.53 0.72 0.84 0.73 0.45
9 Tamil Nadu 1.25 1.37 1.07 0.71 0.96 0.79 0.90
10 Madhya Pradesh & Chattisgarh 0.45 0.40 0.41 0.55 0.56 0.46 0.40
11 Uttarakhand 0.33 0.27 0.35 0.42 0.40 0.46 0.45
12 Telangana 0.32 0.28 0.12 0.27 0.26 0.14 0.10
13 Others 0.07 0.06 0.05 0.05 0.05 0.04 0.05
Total 28.31 25.13 20.29 32.48 33.16 27.41 31.02

Year Sugar Year (Oct – Sept)

U.P. state is the consistent performer and has become number one Sugar producer in country since the Year 2016-17 i.e. last 5 years. U.P. State has consistently been producing Sugar in excess of 11.0 Million MT since last 4 years and has touched the high of 12.6 million MT during the year 2019-2020. This performance is despite the fact that every year the state is increasing its diversion of Sugar towards Ethanol and can now boast of largest Ethanol producer and supplier in country. Going ahead, projections are that such excellent performance of U.P. state will continue in years to come as well. Maharashtra has lost the place of number one Sugar producer which was during 2015-16 and before and is now number two Sugar producer in country.

Maharashtra Sugar production is volatile and in between there are large swings in Sugar production. For instance during the Year 2016-17 there has been dip of 50% in Sugar production. During 2017-18, normalcy returned to Sugar production with increase of 155% in Sugar production. Again after 2 years during 2019-20, dip in production by 42% and during 2020-21 estimated increase in Sugar production by 75%.

In Maharashtra this fluctuating Sugar production is not new feature which we have 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. Tamil Nadu is the worst hit state in country which has produced Sugar to the tune of 2.5 Million MT earlier is now producing below 1.0 Million MT continuously and has not been able to come out of this dismal performance.

3 states i.e. U.P., Maharashtra and Karnataka are producing majority of Sugar production and their overall share is also increasing. During 2020-21 share of these 3 states is estimated to be 84% which was around 81% in previous year. The improved Sugar 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 are given below from where it can be seen that how the productivity in terms of yield and recovery has changed:-

Table 6: State-wise Yield of Sugarcane


State 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Maharashtra 93 76 60 108 85 77
U.P. 55 53 62 77 71 70
Karnataka 94 78 60 94.5 91 92
Gujarat 71 75 60 72 69 59
Tamil Nadu 88 98 81 60 73 70
Andhra Pradesh & Telangana 66 66 51 65 65 51
Punjab 67 74 74 84 86 69
Haryana 69 65 71 83 72 76
Bihar 50 50 50 62 66 61
M.P. & Chattisgarh 60 51 54 71 74 66
Uttarakhand 53 51 57 65 60 67
Orissa 50 50 38 40 42 40

Year Sugar Year (Oct – Sept)

From above, it can be observed that Yield of all states across the country has significantly increased since the Year 2017-18 (except Tamil Nadu where it has dropped). However during the 2018-19, 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. & Orissa.

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

State 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Maharashtra 11.29 11.33 11.25 11.24 11.27 11.28
U.P. 9.54 10.61 10.61 10.84 11.46 11.29
Karnataka 11.06 10.74 10.19 10.60 10.73 9.94
Gujarat 10.34 10.38 10.58 10.55 10.82 10.75
Tamil Nadu & Pondicherry 8.67 8.74 8.92 8.64 8.80 8.54
Andhra Pradesh 9.38 9.35 9.37 9.53 9.40 8.96
Punjab 9.42 10.06 9.78 9.78 10.14 9.59
Haryana 9.94 10.52 10.34 10.39 10.36 10.58
Bihar 9.18 9.77 9.21 9.58 10.39 10.79
M.P. & Chattisgarh 9.48 9.78 9.70 9.63 9.87 9.85
Uttarakhand 9.24 9.61 9.85 10.24 10.97 11.20

Year Sugar Year (Oct – Sept)

From above table, it can be seen that since the Year 2018-19, U.P. state has surpassed Maharashtra and is number one state in Sugar recovery now. These 2 states are followed by Uttarakhand, Bihar, Gujarat & Haryana in Sugar recovery.

All India Sugar Balance Sheet

Table 8: Domestic Production and Consumption

Unit : Million MT

Particulars 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
(Actual) (Actual) (Actual) (Actual) (Actual) (Actual) (Estimated)
A. Total availability - All India
- Sugar Season
a) Opening Stock as on Oct 01 7.5 9.1 7.8 3.9 10.7 14.6 10.7
b) Production during season 28.3 25.1 20.3 32.5 33.2 27.4 31.0
c) Imports 0.0 0.0 0.4 0.2 0.0 0.0 0.0
Total supply availability 35.8 34.2 28.5 36.6 43.9 42.0 41.7
B. Total Sugar Offtake :
All India - Sugar Season
a) Internal consumption 25.6 24.8 24.6 25.4 25.5 25.3 26.0
b) Exports 1.1 1.7 0.05 0.5 3.8 5.95 6.5
Total Offtake 26.7 26.5 24.6 25.9 29.3 31.3 32.5
C. Closing Stock as on Sept 30 9.1 7.8 3.9 10.7 14.6 10.7 9.2
- All India
D. Stock as % of Internal 35.5 31.3 15.8 42.2 57.2 42.4 35.5
Consumption (%)

Year Sugar Year (Oct – Sept)

From the above table, following can be observed:-

- Country continues to produce Sugar higher than consumption and because of good export campaign, is managing to keep Sugar stocks in control.

- From the high of 14.6 Million MT Sugar opening stock during the year 2018-19, it is estimated that it will come down to the level of 9.2 Million MT by end of 2020-21.

- Sugar exports are estimated to rise upto the level of 6.5 Million MT during 2020-21 because of aggressive policy and assistance of the Government .

- Sugar internal consumption (dispatch from Mill) remained almost static from the level of 25.6 Million MT during 2014-15 to the level of 26.0 Million MT during 2020-21. As per trade, in between there are certain adjustments in trade pipeline stocks and also some demand contraction during 2019-20 on account of COVID issues.

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 2010-11, 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 2010-11, 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 2010-11 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

The task in hand with Government has been to tackle the problem of Sugar surplus in system, ensure that Sugar prices dont fall below certain viable levels because of excess Sugar, ensure liquidity with Sugar Mills for cane payments. Over the years Government had been aggressively promoting Export of Sugar, Export quota & assistance, promoting Ethanol as a fuel, promoting different raw materials for Ethanol like B heavy Molasses, Cane Juice, Syrup so as to have diversion of Sugar, maintaining price by defining Minimum Sale Price (MSP) and regulating Sugar supply in market by giving Mill-wise domestic monthly release.

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 for wholesome improvement of Industry. 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 also 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:-

- 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 2018-19 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 apprx 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

For the year 2019-20, 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 a assistance @ Rs 10,448 per Metric Tonne 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

@ 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 assistance worked out to the tune of Rs 6,268.0 crore by the Central Government for export of 6.0 Million Tonne sugar.

Year 2020-2021

During the Year 2020-21, Government announced Maximum Admissible Export Quantities (MAEQ) of 6.0 Million MT and assistance of Rs 6,000 per MT as under:-

• For marketing including handling, quality up-gradation, debagging & re-bagging and other processing costs etc.

@ Rs 1,600 per MT.

• For internal transport and freight charges including loading, unloading & fobbing, etc. @ Rs 2,400 per MT.

• For ocean freight against shipment from Indian ports to the port of destination countries etc @ Rs 2,000 per MT.

Flexibility / facility given by Government to Sugar Mills in exports

• Since Sugar Industry is highly fragmented and there are various small size mills, Government has allowed for export of Sugar through Merchant exporter.

• Since there are mills in non-coastal regions like U.P., Punjab, Haryana, etc. Sugar mills can export Sugar sourced from other Sugar mill (say in coastal region with lower logistics cost) either directly or through Merchant exporter and shall be eligible for export assistance.

• Government simpli_ed the process as earlier Sugar Mills were to complete 100% of their Export Quota and obtain BRC for claiming export assistance. However, since 2019-20, Government allowed Sugar Mills to claim assistance after completing 50% of the quota allotted and were allowed to submit BRC later.

• This year Government allowed swapping of Export quota of a Sugar mill with domestic release quantity of other mill. This scheme got good response and a quantity of 1.05 Million MT has been swapped so far till April 21 month.

• Government has allowed supply of Sugar to Sugar refinery either based in (SEZ) Special Economic Zone or other port based refinery as export of sugar and allowing export assistance to Sugar mill.

• Supply of Sugar for export of biscuits, confectionery, any other item containing Sugar is considered as export of Sugar.

• Review of export performance: There is a process where periodically Government reviews export performance of Sugar mills and export quota of Sugar mills not exporting Sugar is transferred in phased manner to those Sugar Mills showing good performance and willing to export more. The overall idea is to ensure that allotted annual quota gets exported.

• Government allowed priority berthing for Sugar vessels to expedite Sugar loading and savings on demurrage.

Timely disbursal of export assistance is a limitation and fast payment of export assistance immediately after submission of documents will further motivate the Industry for exports.

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 Rs 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 Rs 29 per Kg to Rs 31 per Kg.

During 2020-21, there had been various recommendations including Group of Ministers for increase in MSP of Sugar by Rs 2.0 per Kg to Rs 33.0 per kg but final approval of same is yet to come.

Industry body ISMA seeking price increase from existing Rs 31 per kg to Rs 34.5 per Kg.

c) 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 are able to realize MSP / viable prices. On 7th June, 2018, Government imposed reverse Stock limit on Sugar Mills stating that all producers of Sugar by vaccum 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) Discouraging Sugar Imports

Since International Sugar Prices are lower than domestic prices and to avoid any Sugar Imports which 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 3 Sugar years since the Year 2018-2019 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.

e) Buffer Stock / subsidy

Government had allowed buffer stock of 4.0 Million MT starting from 1st Augus, 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.

f) Rationale in fixing Cane Price

State Advised Price (SAP)

Government showed rationale in fixing Cane price looking into the excess Sugar supply / depressed Sugar prices, improved yield, etc. 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 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.

Last increase in SAP was during the year 2017-18 when the SAP was increased by Rs 10 per Qtl.

Fixed & Remunerative Price (FRP) : For the Sugar Year 2020-21, Central Government had increased the Cane FRP by Rs 10 per Qtl from the level of Rs 275 per Qtl. to Rs 285 per Qtl. linked with 10% Sugar recovery.

For every 0.1 percent increase in Sugar recovery above 10 percent, a premium of Rs 2.85 per Qtl will be paid by Sugar Mills.

Also, the government has made a provision for reduction in FRP by Rs 2.85 per quintal for every 0.1 percentage point decrease in recovery, in respect of those mills whose recovery is below 10 per cent but above 9.5 per cent.

However, for mills having recovery of 9.5 per cent or below, the FRP is fixed at Rs 270.75 per quintal.

g) Ethanol-pricing / Feedstocks

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. Government has plans to increase Ethanol blending percentage to 20% by the Year 2025 which means annual supply of 9.0 billion litres as against this year estimated supply of 3.0 billion litres.

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 Government ambitious bio-fuel policy on other hand will be used to regulate Sugar Production and thus take care of excess Sugar in system.

h) 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
2020-2021 45.69 57.61 62.65 51.55
Year : Dec - Nov (Damaged grain)
(Rice – FCI)

From above table, following can be observed:-

Government 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 in line with cost, on other hand Government allowing other raw materials usages for Ethanol supplies.

During 2020-21, C Ethanol price has been increased from Rs 43.75 per litre to Rs 45.69 per litre means increase of 4.4 %, B Heavy Molasses Ethanol from Rs 54.27 per litre to Rs 57.61 per litre means increase of 6.15% and Cane juice Ethanol price from Rs 59.48 per litre to Rs 62.65 per litre means increase of 5.33 %.

Taking cognizance 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 Government ambitious bio-fuel 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 not only giving higher price for Ethanol but has also prioritized Ethanol made from Cane Juice and B heavy Molasses over C Molasses Ethanol in a particular state. However, first priority is given to suppliers within a state and if suppliers in state are not able to meet the requirement, supplies will be procured from other states.

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

During the Year 2018-19, as per estimates, 0.5 Million MT Sugar has been diverted towards Ethanol in form of B heavy Molasses, 2019-20 this figure has reached reach 0.8 Million MT which during the Year 2020-2021 is estimated at level of 2 Million MT.

Government is continuing with the policy of restriction on Imported alcohol for blending purpose. i) Ethanol supply

For the Year 2020-21 (Dec-Nov), Government floated tender for a quantity of 457.60 crore litres against which LOI has been issued for a quantity of 325.93 Crore Litres and a quantity of 302.53 crore litres has been contracted. It is estimated that total contracts by end of current year will reach 350 crore litres.

Till April this year, country has achieved blending percentage of 7.36% while 11 major states Uttar Pradesh, Maharashtra, Karnataka, Uttarakhand, Bihar, Haryana, Punjab, Delhi, Goa, Gujarat and Himachal Pradesh have achieved even higher blending percentage of upto 10%.

Further new Ethanol manufacturing capacities are added every year for which Government 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 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.

Now, Government need to increase blending percentage from existing level of 10% to 12-15% on immediate basis so as to accommodate increasing supply of Ethanol nearer to source for which understandably Government is working.

j) Soft loans for Ethanol

As per Government note August 2020, Government has allowed soft loan to the tune of Rs 18,600 crore to 362 projects for purpose of establishing new Distilleries, installation of Incineration boiler, dual feed Distillery, etc. Out of 362 projects, 349 are Sugar mills and 13 are standalone distilleries involving interest subvention of Rs 4,045 crore. The interest subvention is allowed @ 6% or 50% of bank rate whichever is lower for a period of 5 years with one year moratorium period.

The above soft loan has served 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.

Government had further opened the window for taking soft loans for Ethanol capacity on 15th September, 2020 and then on 14th January, 2021 where further loan sanctions have been done.

Number of projects were stuck up because banks were not ready to lend money because of weak balance sheets / stressed assets. Government pushing the banks to lend money to such stressed assets as well where they have initiated a process of tri-partite agreement between Distillery, Banks and Oil companies for such purpose.

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

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 number of states scrapped / 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.

Some of the states having followed the Karnataka in scrapping state fees and relaxing / waiving Excise control are state of Gujarat, Chattisgarh, Punjab, Haryana, Goa, Maharashtra, Delhi, M.P., U.P..

Industry is taking up the matter with various State Governments including Rajasthan prominent buyer for U.P. Distilleries 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 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. Since last 6 years, year 2014-15 (Oct – Sept), the results of continued investment in Cane development are visible in 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 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. From the year 2020-21 onwards, BHSL has started producing B heavy Molasses because of which while Sugar recovery will come down, group shall be producing more Ethanol for which price for B heavy slot is applicable which is higher than C Ethanol in line with the cost.

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 which is affecting the availability of cane to Group.

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 at times led to 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 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 34 - 35 per Kg. Group of Ministers had already recommended increase in MSP to Rs 33 per kg last year which is yet to be finally approved.

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 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.

From Sugar Year 2020-21, we have started diverting Sugar for manufacturing of Ethanol in form of B heavy Molasses 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 9: Market share of BHSL in U.P. and on All India basis for Sugar basis Production

Year (Oct – Sept)

Particulars Unit 2019-2020 2018-2019 2017-2018 2016-2017
BHSL Production Million MT 1.94 1.83 1.82 1.33
UP Production Million MT 12.64 11.82 12.05 8.80
All India Production Million MT 27.41 33.16 32.48 20.30
BHSL % of UP % 15.35 15.48 15.10 15.11
BHSL % of All India % 7.08 5.52 5.60 6.55

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 has increased from 6.55% during the Year 2016-17 to 7.08% during 2019-20.

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 Zonewise 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.

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 Central U.P. and also 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.


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 neighboring 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

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

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

Unit : Rs / Qtl.

April 2020 – March 2021
Month Low Price High Price
April 3053 3344
May 3058 3200
June 3078 3490
July 3168 3405
August 3160 3401
September 3143 3403
October 3055 3381
November 3048 3371
December 3054 3355
January 3048 3326
February 3053 3331
March 3068 3303

a) Refined sugar is not taken in consideration. b) Only M-31 50 Kg rate is taken. d) Sugar dispatches through rake is also not considered as the sale confirmed in a month is dispatched next month.

IV. Internal Control System and their Adequacy

An effective Internal Control system provides reasonable assurance about policies, processes, tasks, behaviours and other aspects of an organisation, taken together, to facilitate its effective and efficient operation, help to ensure the quality of Internal and external reporting, and help to ensure compliance with applicable laws and regulations. The Internal Control 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 that risks. This includes implementation of policies & procedures, 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, 2021, BHSL had 7,621 employees. The various HR initiatives carried out by the Company during the year are listed below:

Training Programmes :-

• Training & Development - During the year 2020-21, HR dept. had organised 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, 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, GST, Computer Awareness, Statutory Compliances, etc.

• 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. 1900 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, distribution of masks, sanitization 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 subsidized rates to the farme 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 camp by local hospital were held at offices & units, wherein a team comprising specialized Doctors i.e. Medicines & Eye, 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, 2020 to March 31, 2021

Table 12 : Operational data

Unit Year ended March 31, 2021 Year ended March 31, 2020
Cane Crushing MMT 15.603 15.845
Sugar Recovery % 11.06 11.65
Sugar Production - From Cane MT 17,25,981 18,45,270
Industrial Alcohol Production KL 90,903 57,221
Molasses Production – C MT 5,32,403 7,12,011
Molasses Production – B-Heavy MT 2,51,560 -
Power Generation 000 Units 7,51,431 7,80,522

During the year, the production of sugar from sugarcane was at 17,25,981 MT as compared to 18,45,270 MT during the previous year. The production of molasses-C was at 5,32,403 MT and molasses B-heavy was at 2,51,560 MT as compared to 7,12,011 MT molasses-C in the previous year. The industrial alcohol / ethanol production was at 90,903 KL as compared to 57,221 KL in the previous year. Power generation was at 751.43 Million Units (MUs) as compared to 780.52 MUs in the previous year. Average recovery of sugar from sugarcane 11.06 % during the current year as compared to 11.65% in the previous year.

Results of operations

Table 13: Summarised financial results

Rs Crore

Particulars Year ended March 31, 2021 Year ended March 31, 2020
Revenue 6,688.20 6,676.61
Earnings before interest depreciation and tax (EBIDTA) 195.57 408.89
Finance Costs (Net) 263.09 300.75
Cash Profits (67.52) 108.14
Depreciation & amortisation 215.16 215.87
Profit/(Loss) before tax (282.68) (107.73)
Tax expenses (3.08) (2.36)
Profit/(Loss) after tax (279.60) (105.37)
Basic and Diluted earnings per share (Rs) (2.54) (0.96)


During the year ended March 31, 2021, the Companys total revenue was Rs 6,688.20 crore as against Rs 6,676.61 crore in the previous year.

Analysis of sales

During the year, the Company sold 18,52,660 MT of sugar as against 18,70,362 MT during the previous year. The Company sold 4,23,397 MT of molasses as against 4,65,568 MT in the previous year. However, alcohol/ethanol sales during the year was at 84,262 KL as against 62,174 KL during the previous year.

The Company exported 186.66 MUs of power during the year as against 217.94 MUs during the previous year. Product-wise sales quantity, value and per unit realization details are given in Table 14:

Table 14: Sales revenue


Year ended March 31, 2021

Year ended March 31, 2020

Unit Qty Value Rs Crore Realisation* /MT/KL/ 000 Units Qty Value Rs Crore Realisation* /MT/KL/ 000 Units
Sugar MT 18,52,660 5,930.57 32,011 18,70,362 6,100.03 32,614
Alcohol/Ethanol KL 84,262 397.00 47,115 62,174 258.90 41,641
Molasses MT 4,23,397 156.90 3,706 4,65,568 160.06 3,438
Power 000 Units 1,86,664 58.54 3,136 2,17,940 68.51 3,144

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 10.91 crore, sale of pesticide of Rs 44.63 crore, sale of scrap of Rs 5.05 crore, sale of export licenses of Rs 50.48 and other miscellaneous operating income of Rs 5.47 crore.

Other income

Other income for the current year was Rs 16.53 crore (including interest income of Rs 0.89 crore, and other miscellaneous income was at Rs 15.64 crore) as against Rs 11.01 crore (including interest income of Rs 0.91 crore, Gain due to foreign exchange fluctuation (net) was Rs 0.49 crore and other miscellaneous income of Rs 9.61 crore).

Other expenses

During the year, other expenses were Rs 674.01 crore as against Rs 484.39 crore in the previous year.

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

The EBIDTA for the current year at Rs 195.57 crore as against Rs 408.89 crore in the previous year.

Finance costs

Finance cost for the current year was Rs 263.09 crore as against Rs 300.75 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 215.16 crore as against Rs 215.87 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, 2021 is given in Table 15.

Table 15 : Summarised balance sheet

Rs Crore

As at March 31, 2021 March 31, 2020
Non-current assets
Fixed assets
Property, plant and equipment 6,985.26 7,178.15
Right of use assets 6.78 9.44
Capital work-in-progress 25.17 43.07
Intangible assets 0.00 0.00
Non-current investments 140.24 191.68
Other non-current financial assets 3.98 2.07
Other non-current assets 13.55 14.14
Sub total 7,174.98 7,438.55
Current assets
Inventories 2,541.34 2,711.39
Financial assets
Current Investments 770.13 770.13
Trade receivables 218.73 173.18
Cash and cash equivalents 63.00 100.69
Bank balances 8.89 10.49
Loans 2,091.29 2,091.29
Current tax assets (net) 5.38 4.26
Other current assets 805.33 789.32
Sub total 6,504.09 6,650.75
Total assets 13,679.07 14,089.30
Shareholders Fund
Equity 110.07 110.07
Other equity 2,830.84 3,144.21
Sub total 2,940.91 3,254.28
Non-current liabilities
Financial liabilities
Borrowings 4,802.32 5,139.53
Other financial liabilities 4.84 7.28
Provisions 76.58 69.26
Deferred tax liabilities (net) 590.94 610.07
Other non-current liabilities 35.84 25.98
Sub total 5,510.52 5,852.12
As at March 31, 2021 March 31, 2020
Current liabilities
Financial liabilities
Trade payables 4,459.92 4,439.52
Other financial liabilities 596.76 390.16
Other current liabilities 154.77 139.71
Short-term provisions 16.19 13.51
Sub total 5,227.64 4,982.90
Total equity and liabilities 13,679.07 14,089.30

Share capital

There was no change in share capital.

Other equity

Other equity has decreased to Rs 2,830.84 crore as at March 31, 2021 from Rs 3,144.21 crore as at March 31, 2020 mainly due to loss for the year Rs 279.60 crore and change of other comprehensive income by Rs 33.60 crore and utilisation of fund for maintenance of molasses tank by Rs 0.17 crore.

Non-current borrowings

Long-term borrowings was at Rs 4,802.32 crore as at March 31, 2021 as against Rs 5,139.53 crore in the previous year ended March 31, 2020.

Current borrowings

There was no Short-term borrowing during the year as at March 31, 2021 and March 31, 2020.

Property, plant and equipment

Gross Block has increased to Rs 10,653.99 crore from Rs 10,636.11 crore, on account of routine capitalisation/decapitalisation during the year. The net block stood at Rs 6,992.04 crore as against Rs 7,187.59 crore.


Investment was at Rs 140.24 crore as at March 31, 2021 as against Rs 191.68 crore in the previous year ended March 31, 2020. The changes are mainly due to provision for diminution of value of investment of Phenil Sugar Limited.


The inventory of sugar at the end of the current year was 6,63,723.20 MT equivalent to 165 days sales as compared to 194 days sales in the previous year. Alcohol inventory at the end of the current year was 10,863 KL equivalent to 34 days sales as compared to 15 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 12 days of sales as compared to 9 days of sales in the previous year ended March 31, 2020. The increase in days is due to increased sale of alcohol and some bulk sale of sugar as compared to previous year. All the debtors are good and realizable. Significant non-recurring income, expenditure and other items


Provision no longer required/credit balance appropriated Rs 0.17 crore and miscellaneous receipts Rs 15.46 crore were of a non-recurring nature.


The loss on assets sold/discarded Rs 0.38 crore is of a non-recurring nature.

Contingent liabilities

The status of contingent liabilities as at March 31, 2021 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 33.45 34.82 (4) N.A.
Inventory Turnover Ratio 2.50 2.41 3 N.A.
Interest Coverage Ratio 1.39 1.43 (-3) N.A.
Current Ratio 1.24 1.34 (7) N.A.
Debt Equity Ratio 1.83 1.69 9 N.A.
Operating Profit Margin 3.02% 7.22% (58) N.A.
Net Profit Margin Ratio (4.27)% (1.60)% (167)
Return on Net Worth (9.51)% (3.24)% 194 -do-

Lower operating margin in the current year as compared to previous year due to Lower sugar realization and higher input cost.

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, 2021 are given in Table 17:

Table 17: Cane crushing, sugar recovery and sugar production

Plant Location Zone 2020-21 2019-20
Cane Crushing (MMT) Sugar Recovery (%) Sugar Production (Tonnes) Cane Crushing (MMT) Sugar Recovery (%) Sugar Production (Tonnes)
Gola Gokarannath Central UP 1.943 10.90 2,11,852 1.977 11.93 2,35,818
Palia Kalan Central UP 1.432 11.03 1,57,970 1.473 10.93 1,61,093
Khambarkhera Central UP 1.278 10.18 1,30,157 1.424 11.94 1,69,963
Barkhera Central UP 1.060 11.76 1,24,563 0.983 12.11 1,19,105
Maqsoodapur Central UP 0.731 11.37 83,123 0.879 11.98 1,05,244
Kinauni Western UP 1.875 11.80 2,21,190 1.715 11.92 2,04,549
Thanabhawan Western UP 1.558 10.80 1,68,199 1.380 11.72 1,61,679
Budhana Western UP 1.490 11.65 1,73,679 1.396 11.80 1,64,705
Bilai Western UP 1.514 12.33 1,86,662 1.258 12.36 1,55,596
Gangnauli Western UP 1.104 10.35 1,14,267 0.886 11.27 99,815
Pratappur Eastern UP 0.147 9.68 14,267 0.258 10.26 26,497
Rudhauli Eastern UP 0.199 7.35 14,624 0.495 9.56 47,343
Utraula Eastern UP 0.441 8.93 39,357 0.664 11.17 74,146
Kundarkhi Eastern UP 0.831 10.36 86,071 1.056 11.34 1,19,717
Total 15.603 11.06 17,25,981 15.845 11.65 18,45,270

A Note on sacrifice of Sugar for Heavy B Mollasses

Out of total cane crushing of 15.60 MMT, the company crushed 3.92 MMT cane from B heavy molasses route which amounts to 25.09% of the total cane crushed. Diversion of sugarcane for B heavy molasses route resulted in reduction of sugar recovery by 1.64%, and approximate sugar loss of 0.64 lac MT. This has resulted in increased production of ethanol.

Distillery division

The distillery division produced 90,903 KL (includes 29,335 KL of Ethanol produced from heavy B molasses) of industrial alcohol/ethanol during the current year against 57,221 KL in the previous year. Likewise alcohol/ethanol sales aggregated during the current year at 84,262 KL (includes sales of 24,970 KL of ethanol produced from heavy B molasses) against 62,174 KL in the previous year. In value terms, the sale of industrial alcohol/ethanol during the year is Rs 397.00 crore (includes sales of Rs 143.81 crore of ethanol produced from heavy B molasses) as against Rs 258.90 crore in the previous year.

Power division

The sale of power was recorded at Rs 58.54 crore in the current year as against Rs 68.51 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.