balrampur chini mills ltd share price Management discussions


The global economy grew at an estimated 3.4% in 2022 as against 6% in 2021. The moderated growth was triggered largely by the Russian war with Ukraine, inflation, pandemic-induced lockdown in China, prohibitive interest rates, global liquidity crunch and quantitative tightening by the US Federal Reserve.

Global inflation was 8.7% in 2022, among the highest in decades. Gross FDI inflows (equity, reinvested earnings and other capital) moderated by 8.4% to $55.3 billion in April-December 2022. Brent crude oil softened from USD 120 per barrel in June 2022 to USD 80 per barrel at the end of the calendar year following the increased availability of low-cost Russian oil.

Regional growth (%) 2022 2021
World output 3.4 6.1
Advanced economies 2.7 5
Emerging and developing economies 4.6 6.3

Performance of major economies

United States China United Kingdom Japan Germany
Reported GDP GDP growth GDP is expected Reported growth Reported GDP
growth of 2.1% is expected to to grow 4.1% in of 1.7% in 2022 growth of 1.8%
compared to 5.9% contract from 8% 2022 compared compared to 1.6% compared to 2.6%
in 2021 in 2021 to 3% in to 7.6% in 2021 in 2021 in 2021


The global economy is expected to grow 2.8% in 2023, global inflation is projected to fall to 7% and interestingly, approximately 70% of the global economy demonstrates resilience. Despite high inflation, the US economy demonstrated robust consumer demand in 2022. Driven by these positive factors, global inflation is likely to be still relatively high at 4.9% in 2024

Indian economy


India reported an economic growth of 7.2% in FY 2022-23, higher than what had been estimated. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation

Growth of the Indian economy

FY 20 FY 21 FY 22 FY23
Real GDP growth (%) 4.2 (7.3) 8.7 7.2

Growth of the Indian economy quarter by quarter, FY 2022-23

Q1FY23 Q2FY23 Q3FY23 Q4FY23
Real GDP growth (%) 13.1 6.3 4.4 6.1

Indias exports (merchandise and services) in April-February 2022-23 grew by ~16% over the same period of the previous year. Steady domestic demand amidst global slowdown resulted in a ~20% growth in imports during April-February 2022-23 over the corresponding period of the previous year.

Till Q3, FY23, Indias current account deficit reduced to $18.2 billion, or 2.2% of GDP from $22.2 billion (2.7% of GDP) a year ago. Indias fiscal deficit was estimated in nominal terms at ~ RS.7.55 lakhs crore and 6.4% of GDP for the year ending March 31, 2023. Indias headline foreign direct investment (FDI) increased from US$81.97 billion in 20-21 to a record $83.6 billion in 21-22, a 1.95% Y-o-Y increase due to 100% FDI approval via automatic route in sectors such as insurance, civil aviation, coal, telecom, pharma, infrastructure.

After three consecutive years of rise, Indias foreign exchange reserves declined by around $ 70 billion in 2022 amid rising inflation and interest rates. The countrys forex reserves, which stood at $606.47 billion on 1 April 2022, declined to $578.44 billion on March 31, 2023. Indias currency weakened from RS.5.91 to a US dollar to RS.2.34 as on 31 March 2023 due to a stronger dollar and weaker current account deficit.

The countrys retail inflation, measured by the consumer price index (CPI), slipped 16-month low to 5.66% in March 2023. Inflation data on the wholesale Price Index (which calculates the overall prices of goods before selling at retail prices) eased to 4.73% during the period. In 2022, CPI hit its highest of 7.79% in April 2022; WPI reached its highest of 15.88% in May 2022.

In 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1% Y-o-Y in RE 2022-23.

For 2022–23, the government collected RS.6.61 lakhs crore in direct taxes, according to data from the Finance Ministry, around 17.6% higher than collections in the previous fiscal.

Per capita income almost doubled in nine years to RS.72,000 during the year under review, a rise of 15.8% over the previous year. Indias GDP per capita was 2,320 USD (March 2023), close to the magic figure of $2500 when consumption spikes across countries.

Outlook: India is expected to grow 6.8% in FY2024, catalysed by 35% capital expenditure growth by the government.

Global sugar scenario

The global sugar market size reached 177.3 million tonnes in 2022 and is anticipated to reach ~196 million tonnes by 2028, exhibiting a growth rate (CAGR) of 1.64% during 2023-2028. Global production of sugar reached 177.3 million tonnes against 173.5 million tonnes in the previous season. Exports are projected higher as the drop in India is more than o_set by higher exports from Brazil and Thailand.

During the year under review, the global sugar consumption was estimated at 175.7 million tonnes, as compared to 173.8 million tonnes in 2021- 22 on account of growth in markets like China, Indonesia and Russia. Stocks are estimated lower as growth in global consumption exceeds the rise in production.

Higher exports from Brazil and Thailand are expected to o_set the decline in India. Stocks are expected to remain at a low level as growth in global consumption surpasses production growth.

This would lead to a global surplus of ~1.6 million tonnes as compared to deficit of ~0.3 million tonnes last year.

India sugar industry overview

Sugar production in India is expected to decline ~10.1% from the initial estimates of 36.5 million tonnes to 32.8 million tonnes, mainly on account of yield impact in Maharashtra and Karnataka. Sugar consumption is expected at 28.0 million tonnes in 2022-23 as compared to 27.4 million tonnes in the previous season. Indias sugar inventory is expected to decrease from 7.0 million tonnes in 21-22 to 5.7 million tonnes in 22-23 after considering the sugar exports of 6.1 million tonnes and diversion of 4.0 million tonnes equivalent of sugar for ethanol production.

The domestic sugar prices remained stable with su_cient availability. Indian sugar millers received attractive realizations (RS.7-41 per Kg for export compared to domestic realisations of RS.3-36 per Kg). The top three states (Uttar Pradesh, Maharashtra and Karnataka) contributed 85% of Indias total sugar production.

Sugar production in Uttar Pradesh was expected to increase slightly to 10.5 million tonnes in the 2022-23 season compared to 10.2 million tonnes in the previous season.

Indian sugar Balance Sheet (million tonnes)

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Opening stock as on 1st October 3.9 10.7 14.6 10.7 8.2 7.0
Production during the season 32.5 33.2 27.4 31.2 35.8 32.8
Imports 0.2 - - - - -
Total availability 36.6 43.9 42.0 41.9 44.0 39.8
Consumption/ sales 25.4 25.5 25.3 26.6 27.4 28.0
Exports 0.5 3.8 6.0 7.2 11.1 6.1
Closing stock as on 30th September 10.7 14.6 10.7 8.2 5.5 5.7
Stock to use ratio 42% 57% 42% 31% 20% 20%

Note: Opening inventory for sugar season 2022-23 has been recently re-stated by Government of India from 5.5 million tonnes to 7.0 million tonnes.

Sugar exports and imports

India is the second largest exporter of sugar in the world. Indian sugar exports touched an all-time high of around 11.1 million tonnes in the 2021-22 sugar season. The country is expected to export around 6.1 million tonnes of sugar in the 2022-23 sugar season. On 5th November, 2022, the sugar export policy of 2022-23 was announced which allowed exports of 60 lakhs tonnes of the sweetener on a quota-basis till 31st May, 2023.

Sugar exports (in million tonnes)

Sugar Season Export
2018-19 3.8
2019-20 6.0
2020-21 7.2
2021-22 11.1
2022-23 (estimated) 6.1

Market dynamics

The government hiked the fair and remunerative price (FRP) of sugarcane for the 2022-23 sugar season by RS.5 per quintal to RS.05. For every 0.1% rise in recovery over 10.25%, a premium of Rs..05

per quintal will have to be paid to the farmer, while for every 0.1% reduction in recovery below 10.25%, fair and remunerative price paid will be reduced by Rs..05 per quintal. The government decided to fix a price of RS.82.12 per quintal in 2022-23 compared to RS.75.50 per quintal in 2021-22 in case of 9.5% recovery for the farmers who dont have very high yielding varieties.

Year Rs. per quintal
2018-19 275
2019-20 275
2020-21 285
2021-22 290
2022-23 305

Indian ethanol sector overview

India is the worlds fifth largest producer of ethanol after the US, Brazil, European Union and China. Ethanol is largely used for blending with petrol. India is expected to save an estimated $ 4 billion annually due to the blending of petrol with 20% ethanol. This increased blending is expected to enhance the use of renewable energy in the worlds third-biggest oil importer and consumer Oil marketing companies announced a proposed allocation of around 512 crore litres at di_erent OMCs location across the country. Sugar mills are expected to divert about 40 lakhs tonnes of sugar towards ethanol production. The government has increased the purchase price of ethanol across all categories by up to Rs.~2 per litre for the 2022-23 Ethanol supply year. The purchase rate for ethanol produced from C-heavy molasses was increased to RS.9.41 per litre from RS.6.66 litre and for B-heavy molasses was increased to RS.0.73 per litre from RS.9.08 per litre.

India achieved the target of supplying petrol mixed with 10% ethanol ahead of schedule in June 2022. The country has advanced the target of making petrol with 20% ethanol by five years to 2025. Reduced greenhouse gas emissions of 27 lakhs tonnes and also led to farmers being paid in time.

Ethanol capacity requirement to achieve 20%


Capacity requirement (in million litres)

Grain Molasses Total
2019-20 2580 4260 6840
2020-21 2600 4500 7100
2021-22 3000 5190 8190
2022-23 3500 6250 9750
2023-24 4500 7250 11750
2024-25 7000 7300 14300
2025-26 7400 7600 15000

(Source: Niti Ayog)


Sugar cane crushing generates bagasse, which is used in power co-generation. The prudent use of bagasse marked by reduced transmission and distribution losses, no carbon emissions, low fuel cost, fuel diversity and energy security represents a cleaner alternative energy source.

Government initiatives

The government announced the sugar export policy with the focus to ensure price stability in the sugar sector in the interest of domestic consumers. By restricting sugar exports, domestic prices will remain under control and no major inflationary trends will arise in the domestic market. The policy will also ensure the availability of su_cient sugarcane/ sugar/ molasses for ethanol production. By facilitating the diversion of sugar to ethanol production and export of surplus sugar as per availability, the government has taken care of about 5 crore sugarcane farmer families as well as 5 lakhs sugar mill workers along with a whole ecosystem of sugar sector, including ethanol distilleries, taking them to a new growth trajectory.

More than 3,600 lakhs tonnes of sugarcane is expected to be purchased by sugar mills in 22-23 for which the total remittance to the sugarcane farmers is expected to be more than Rs.,20,000 crore. The Government, through its pro-farmer measures, will ensure that sugarcane farmers get their dues on time. The industry cleared more than 90% cane dues in the 21-22 sugar season, which is higher than the earlier seasons.

Company overview

Balrampur Chini Mills Limited is among leading sugar mills in India. The Company is a comprehensive and integrated sugar producer with substantial interests in sugar, ethanol and power co-generation. Over the years, the contribution of non-sugar revenues in the total revenues of the Company enhanced, expanding the

Companys profile and reinforcing its counter cyclicality.

The Company possesses ten manufacturing facilities across the East and Central Uttar Pradesh. The Companys operational capability resulted in its ability to generate more from less. As a result, the Company utilises optimal resources to generate superior performance, which is evident through improvements in recovery, operating e_ciency, cost management, gearing, cash flows and operating margins, making the Company an eminent value-creator in the countrys agriculture sector, thereby taking care of Purpose, People and Planet.

SWOT analysis of Indian sugar industry

Strengths ? Sugar cane is one of the most profitable cash crops in India ? India is poised as the largest producer and consumer of sugar globally ? The sugar industry reinforces downstream sectors and Indias vast rural economy ? The Indian sugar industry is considered as the driver of local economy by the government ? The Indian sugar sector provides livelihood to around 50 million sugarcane farmers and o_ers direct employment to 5 lakhs workers. Weakness ? Cane prices are relatively high compared to global standards ? Prevalence of outdated technology in many companies across the sector ? Economic instability of many mills Opportunities ? Indias per capita consumption is around 20 Kg of sugar per person against the global average of 23 Kgs ? Advanced farming practices can result in substantial cane yield and recovery growth ? Compulsory ethanol blending program of the government is fueling ethanol production ? Technological upgradations can result in greater by-product use Threats ? Climate change has impacted cropping and yields ? Political agendas have repeatedly a_ected the sector ? The sector is highly dependent on monsoon ? Absence of required infrastructure makes cane farming reliant on climatic fluctuations.

Financial overview

Analysis of the profit and loss statement


Revenues from operations stood at RS.665.86 crore in FY22-23 as compared to RS.846.03 crore in FY21-22, reflecting a decline of 3.7%.The revenue from distillery and other segment improved over the previous year except for the sugar business, wherein revenues declined due to lower sugar volume, which was partially o_set by higher sugar realization. Other Income of the Company reported a 31.1% growth and accounted for a 1.3% share of the Companys total income, reflecting the Companys dependence on core business operations.


Total expenses increased by 1.0% from Rs.,291.06 crore in 21-22 to Rs.,331.68 crore in 22-23. Raw material costs accounted for a 73.3% share of the Companys revenue from operations. Employee expenses accounted for a 7.8% share of the Companys revenues from operations and increased by 18.2% from RS.07.80 crore in 21-22 to RS.63.79 crore in 22-23. The increase in employee cost was due to the normal increase in salaries and towards a retrospective revision of wages by the Government of Uttar Pradesh relating to wage board employees.

Analysis of the Balance Sheet

Sources of funds

The capital employed in the Company increased 17.4% to RS.561.74 crore as on 31 March, 2023 from Rs.,034.22 crore as on 31 March, 2022 owing to new distillery capacities and also to modernize its legacy sugar units. Return on capital employed, a measurement of returns derived from every rupee invested in the business, declined 817 basis points from 20.72% in

21-22 to 12.55% in 22-23. Full operational benefit of incremental capacity will start accruing from FY 23-24. In addition, profitability from existing operations were on the lower side.

The net worth of the Company increased by 4.3% from Rs.,705.16 crore as on 31 March, 2022 to RS.822.43 crore as on 31 March, 2023 owing to a plough back of profits. The Companys equity share capital comprised 201749245 equity shares of Rs. each.

Long-term debt of the Company increased to RS.17.05 crore as on 31 March, 2023 from RS.56.95 crore as on 31 March, 2022 owing to borrowings for funding the capex. The long-term debt-equity ratio of the Company stood at 0.21 in 22-23 compared to 0.09 in 21-22. The ratio is still at a very comfortable level. Finance costs of the Company increased by 57.6% from RS.0.87 crore in 21-22 to RS.8.65 crore in 22-23 owing to higher borrowings for funding the capex and due to impact of interest rates hike, especially to fund working capital. The Companys gross debt (including working capital) / equity ratio was comfortable 0.65 at the close of 22-23 (0.44 at the close of 21-22).

Applications of funds

Fixed assets (net block) of the Company increased by 42.7% from Rs.,837.95 crore as on 31 March, 2022 to RS.622.88 crore as on 31 March, 2023 owing to an increase in capex during the year. Depreciation on assets increased by 13.7% from RS.13.86 crore in 21-22 to RS.29.50 crore in 22-23 owing to an increase in fixed assets during the year under review.


Non-current investments of the Company increased from RS.57.50 crore as on 31 March, 2022 to

RS.75.00 crore as on 31 March, 2023 owing to investment in an associate of the Company viz. Auxilo Finserve Pvt. Ltd..

Working capital management

Current assets of the Company increased by 8.5% from Rs.,376.52 crore as on 31 March, 2022 to Rs.,577.74 crore as on 31 March, 2023 primarily owing to higher inventory. The current and quick ratios of the Company stood at 1.31 and 0.13, respectively at the close of 22-23 compared to 1.60 and 0.12, respectively at the close of 21-22. Inventories including raw materials, work-in-progress and finished goods among others increased by 5.4% from Rs.,200.51 crore as on 31 March, 2022 to Rs.,318.68 crore as on 31 March, 2023. The inventory turnover ratio stood at 2.06 in 22-23 as compared to 2.12 in 21-22. In line with decline in revenues, trade receivables declined by 8.7% from RS.36.72 crore as on 31 March, 2022 to RS.24.82 crore as on 31 March, 2023. Trade receivables turnover ratio stood at 37.38 as on 31 March, 2023 as compared to 35.44 as on 31 March, 2022.


Cost absorption impact due to lower revenues impacted margins during the year. The EBITDA margin of the Company reduced by 346 basis points from 14.44% in 21-22 to 10.98% while the net profit margin of the Company reduced by 471 basis points to 5.91% compared to 10.62% in 21-22.

Key ratios

Particulars 22-23 21-22
Operating profit margin (%) 10.98 14.44
Net profit margin (%) 5.91 10.62
Debt-equity ratio 0.21 0.09
Return on equity (%) 9.78 19.34
Return on capital employed (%) 12.55 20.72
Book value per share (Rs.) 142.53 135.18
Earnings per share (Rs.) 13.51 24.86
Debtors turnover ratio 37.38 35.44
Inventory turnover ratio 2.06 2.12
Interest coverage ratio 10.53 22.67
Current ratio 1.31 1.60
Debt service coverage ratio 1.93 4.52
Return on networth 9.97 19.73

Internal control systems and their adequacy

The Companys internal audit system is being continuously monitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The audit committee reviews reports presented by the independent internal auditors on a routine basis. The committee makes note of the audit observations and takes corrective actions, if necessary.

It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating e_ectively.

Human resources

The Company believes that the quality of the employees is the key to its success and is committed to equip them with skills, enabling them to seamlessly evolve with ongoing technological advancements.

During the year, the Company organised training programmes in di_erent areas such as technical skills, behavioural skills, business excellence, general management, advanced management, leadership skills, safety, values and code of conduct. The Companys employee strength stood at 6270 as on 31 March, 2023.