Balrampur Chini Mills Ltd Management Discussions

Global Economic Review Overview

Global economic growth experienced a slight deceleration, declining from 3.3% in 2023 to an estimated 3.2% in 2024. This slowdown was primarily attributed to weakened manufacturing activity in Europe and parts of Asia, ongoing supply chain disruptions, and subdued consumer sentiment. Conversely, the services sector demonstrated resilience and contributed positively to global growth.

Advanced economies maintained a steady growth rate of 1.7% from 2023 to 2024. In contrast, emerging and developing economies saw a marginal decline in growth, registering 4.2% in 2024 compared to 4.4% in 2023.

On a positive note, global inflation is projected to decrease from 6.1% in 2023 to 4.5% in 2024, with further declines anticipated in subsequent years (3.5% in 2025 and 3.2% in 2026). This trend is attributed to the diminishing effects of previous economic shocks and improvements in labour supply. Monetary policies implemented by governments worldwide have also played a role in curbing inflation.

The conclusion of the calendar year was marked by the return of Donald Trump as the U.S. President. The new administration signalled intentions to impose tariffs on countries exporting to the U.S. unless reciprocal tariff reductions were made for U.S. exports. This stance has heightened global trade uncertainties and is considered a significant risk factor for 2025. Accordingly, the World Bank projects global economic growth at 2.7% for both 2025 and 2026, factoring in these uncertainties.

Regional Growth (%)

Particulars	2023	2024
World Output	3.0	3.3
Advanced Economies	1.5	1.7
Emerging and Developing Economies	4.3	4.2

Performance of Major Economies (2024)

Outlook

The global economy faces heightened uncertainty due to the U.S. administrations tariff policies and potential retaliatory measures by other nations. Additional risks include geopolitical tensions, trade restrictions, and climate- related challenges. These factors are expected to moderate global economic growth in the near term.

Indian Economic Review

Overview

Indias economy is projected to grow at 6.5% in FY 24-25, a decline from the revised 9.2% growth in FY 23-24. This slowdown is attributed to moderated manufacturing growth and reduced net investments. Despite this, India retains its position as the worlds fifth-largest economy.

The nominal GDP is estimated at H331 trillion in FY 24-25, up from H301 trillion in the previous fiscal year. Consequently, the nominal GDP per capita increased from H2,15,936 to H2,35,108.

The Indian rupee depreciated by 2.12% against the U.S. dollar, closing at H85.58 on the last trading day of FY 24-25. However, in March 2025, the rupee appreciated by more than 2%, marking its highest monthly gain since November 2018, driven by a weakening U.S. dollar.

Inflationary pressures eased, with the Consumer Price Index (CPI) averaging 4.6% in FY 24-25, the lowest since the pandemic. This was primarily due to moderating food inflation and stable global commodity prices.

Indias foreign exchange reserves reached US$ 686.15 billion as of 18th April, 2025, marking a six-month high and reflecting a cumulative gain of US$ 47.5 billion over seven consecutive weeks.

Policy outlook for India remains optimistic yet vigilant. The governments FY 25-26 Budget emphasises inclusive, investment-led growth, with a further increase in public capex to drive infrastructure development.

Fiscal policy is geared toward resilience and reform, aiming to sustain growth while building buffers to manage global uncertainties.

The RBI is expected to maintain a carefully balanced stance - supporting growth as needed but ready to act to keep inflation on target (the RBI projects CPI inflation easing to ~4.0-4.6% in coming quarter.

In summary, despite external headwinds, India entered FY 2025-26 with steady growth momentum and improving macro fundamentals.

Growth of the Indian Economy
Fiscal Year	FY 21-22	FY 22-23	FY 23-24	FY 24-25E
Real GDP growth (%)	8.7	7.0	8.2 6.5

E Estimated

Quarter-wise Real GDP Growth: FY 24-25

Quarter	Q1 FY 25	Q2 FY 25	Q3 FY 25	Q4 FY 25E
Real GDP growth (%)	6.5	5.6	6.4	7.4
E Estimated

Sectoral performance Manufacturing: The sector experienced subdued growth, with a projected increase of ~4.5% in FY 24-25, down from 12.3% in FY 23-24. However, April 2025 saw the strongest manufacturing growth in 10 months, driven by a surge in export demand and increased production output.

Services: The services sector grew by an estimated 7.3% in FY 24-25, driven by healthy activity in financial, real estate, professional services, public administration, defense, and other services.

Agriculture: The agriculture sectors growth was estimated at 3.8% in FY 24-25, up from 1.4% in the previous year.

Construction and Infrastructure:

The construction sector expanded by ~9.4% in FY 24-25, slowing from 104% in FY 23-24.

Trade and investment

Indias exports of goods and services reached a record US$ 821 billion in FY 24-25, marking a nearly 6% growth over the previous year.

The countrys foreign exchange reserves stood at US$ 686.15 billion as of 18th April, 2025, reflecting a significant increase and indicating strong external sector resilience.

Fiscal Indicators

The Goods and Services Tax regime has continued to demonstrate resilience and buoyancy in revenue collections. During FY 24-25, India recorded its highest-ever gross GST collection of H22.08 lakhs crores, reflecting a year-on-year growth of 9.4%. The highest-ever monthly GST collection was recorded in April 2025, with revenues reaching H2.37 lakhs crores. GST collections have doubled over the last five years, indicating improved tax compliance and formalisation of the economy.

Financial Markets

The Nifty 50 index posted a modest gain of 5.34% in FY 25, despite market volatility in the latter half of the year.

The mutual fund industrys assets under management (AUM) grew to H65.74 trillion as of 31st March, 2025, which has doubled in less than five years.

Outlook

India is expected to remain the fastest-growing major economy.

The Reserve Bank of India (RBI) has room for further interest rate cuts due to falling inflation and ongoing economic uncertainties, though any additional monetary easing should be approached cautiously.

The Union Budget for FY 25-26 emphasises agriculture, MSMEs, investment, and exports as primary growth engines. With a fiscal deficit target of 4.4% of GDP and a capital expenditure allocation of H11.21 lakhs crores, the government aims to drive infrastructure development.

The 8th Pay Commissions recommendations are anticipated to lead to significant salary revisions for central government employees, potentially boosting consumption.

The India Meteorological Department predicts an above normal monsoon in 2025, which is favourable for the agricultural sector and may help moderate food inflation.

RBI reduced the key repo rate by 25 basis points to 6% and changed its stance to accommodative, indicating potential for further monetary easing to support economic growth.

Global sugar sector review

During FY 24-25, the sugar industry experienced significant developments both globally and in India. Sugar markets were marked by shifting supply-demand balances, policy interventions, and the growing impact of ethanol programs.

Global sugar production is estimated to increase by 2.8 million tonnes, reaching 186.6 million tonnes in Sugar Season (SS) 2024-25, driven by higher output in China, and Thailand, offsetting a decline in Brazil and India. Global consumption is projected to touch an all-time high, supported by expanding demand in countries like India. Exports are also expected to rise, led by increased shipments from Brazil, Thailand, and Pakistan. Global stocks are anticipated to increase, as the stock build-up in India.

Performance of major sugar- producing countries

Brazil: Production is projected to fall by ~2.4 million tonnes to ~40.1 million tonnes, due to reduced cane availability and lower yields caused by dry weather. The sugar/ethanol ratio remains at 49:51. Consumption and exports are expected to decline modestly.

China: Production is estimated to increase by ~ 1.0 million tonnes, reaching 11.0 million tonnes, supported by expanded cultivation. Consumption is up marginally; stocks are building up.

Thailand: Production is expected to rise 15% to 10.00 million tonnes, helped by good weather. Exports are set to nearly double; however, stocks will likely drop due to this surge.

European Union: EU production is expected to be flat at ~16.6 million tonnes, supported by sugarbeet expansion. Imports are down, and stocks are increasing as exports slow.

Mexico: Production is expected to grow 8% to 5.4 million tonnes. Higher export volumes are projected, especially to the U.S. under the Suspension Agreements.

Australia, Indonesia, and Turkey:

Australias production is down slightly due to rainfall disruptions. Indonesia and Turkey both report declines due to weather issues and are compensating through increased imports.

Production & supply

Indias net sugar production for SS 24-25 is estimated at 26.0 million tonnes, down from 32.0 million tonnes in the previous year. Gross output before diversion is estimated at 29.5 million tonnes, compared to 34.0 million tonnes in SS 23-24.

Despite the lower production, carry-forward stocks of 8.0 million tonnes provide a safety cushion. Sugar consumption is expected to remain steady at 28 million tonnes, while exports are capped at 1.0 million tonnes.

Indian sugar sector Balance Sheet (in million tonnes)

Particulars	SS 21-22	SS 22-23	SS 23-24	SS 24-25 (E)
Opening Stock	8.2	7.0	5.5	8.0
Production	35.8	32.8	32.0	26.0
Imports	-	-	-	-
Total Availability	44.0	39.8	37.0	34.0
Domestic Consumption	27.4	27.9	29.0	28.0
Exports	11.1	6.4	0.5	0.8 *
Closing Stock	5.5	5.5	8.0	5.2
Stock-to-Use Ratio	20%	20%	28%	19%

Note Opening Stock of SS 22-23 is post adjustment by Government * Expected exports out of allocated quota of 10 MMT

Sugar exports

India approved sugar exports of 10 lakhs tonnes (1 MT) for SS 24-25, supporting industry liquidity and farmer incomes. However, there is a possibility of ~8 lakhs tones only to be exported during the sugar season 24-25. Although India was a top global exporter from 2018-2023, no exports were permitted in 23-24 due to tight domestic supplies.

Overall, Indian sugar market looks to remain balanced to tight for the remaining part of the 24-25 sugar season on account of slightly lower sugar availability going ahead .This could keep the sugar price steady to strong in the remaining part of the ongoing year.

Sugar season	Exports (MT)
SS 18-19	3.8
SS 19-20	6.0
SS 20-21	7.2
SS 21-22	11.1
SS 22-23	6.1
SS 23-24	0.5
SS 24-25 (Est.)	0.8

Market dynamics

The Fair and Remunerative Price (FRP) for 24-25 was set at H340/ quintal at a 10.25% recovery rate — an 8% hike over the previous year. It reflects the governments commitment to farmer welfare. However, MSP of Sugar price and ethanol price (Juice and BHM route) are still holding its earlier rates. ISMA is coordinating with Govt authorities on these price revisions meanwhile.

For the sugar season 2025-26 FRP has been revised to H355/quintal.

Year	FRP (H/quintal)
2018-19	275
2019-20	275
2020-21	285
2021-22	290
2022-23	305
2023-24	315
2024-25	340

Indian Ethanol Sector Review

Indias ethanol production capacity have witnessed significant growth, contributing to the countrys expanding output.

To promote ethanol use, the government implemented the Ethanol Blended Petrol (EBP) Programme, enabling Oil Marketing Companies (OMCs) to supply petrol blended with ethanol. The government aims to achieve 20% ethanol blending with petrol by 2025-26 and 30% by 2030.

Indias ethanol production capacity reached 1,685 crores litres by 30th November, 2024, with 744 crores litres from grain-based and 941 crores litres from molasses-based sources. The Ethanol Blended Petrol (EBP) Programme targets 20% blending by 25-26.

During ESY 23-24, ethanol blending achieved 14.6%.

For ESY 24-25, OMCs have allocated 999.9 crores litres against tenders of 1,054.4 crores litres till 7th May, 2025.

The government estimates 1,016 crores litres will be required for 20% blending by 2025, and 1,350 crores litres including other uses. A production capacity of ~1,700 crores litres will be required (assuming 80% plant efficiency).

Economic Impact (Last 10 Years):

* Foreign exchange savings: H1,06,072 crores

* CO2 emission reduction: 544 lakhs MT

* Crude oil substitution: 181 lakhs MT

* Payout to distillers: H1,50,097 crores

* Payout to farmers: H90,059 crores

* The National Biofuel Policy 2018 continues to support the ethanol production from sugarcane and grain-based feedstocks, with price support from OMCs.

Cogeneration (Bagasse-Based Power)

The cogeneration segment leverages bagasse, a by-product of sugarcane crushing, to produce renewable energy. Bagasse-based power generation offers a dual benefit of:

* Reducing carbon emissions

* Lowering grid dependency

Co-generation plants not only improve internal energy efficiency but also contribute to sustainable energy supply in rural areas. This also aligns with the governments focus on clean and green energy sources.

Company review

Balrampur Chini Mills Limited is one of Indias leading sugar producers, operating as a fully integrated company with a strong presence in sugar, ethanol and power cogeneration. Over the years, its nonsugar revenue streams have played a crucial role in diversifying income, enhancing financial stability and mitigating market risks.

With ten manufacturing units across East and Central Uttar Pradesh, the Company has established itself as an industry leader in efficiency and resource optimisation. Its expertise in high recovery rates, operational efficiency, cost management, financial leverage, cash flow generation and strong operating margins reinforces its position as a

key value driver in the agricultural sector. Committed to Purpose, People, and Planet, Balrampur Chini Mills continues to drive sustainable growth and innovation in the industry.

SWOT analysis of the Indian sugar sector

Strengths

* Sugarcane is one of the most profitable cash crops in India.

* India is the worlds largest consumer of sugar.

* The sugar industry plays a vital role in supporting downstream sectors and strengthening the countrys rural economy.

* The government recognises the sugar industry as a key driver of economic growth.

* The Indian sugar sector provides livelihood to approximately 50 million sugarcane farmers and directly employs 5,00,000 workers. /

Opportunities

* Indias per capita sugar consumption is approximately 20.0 kg per person, below the global average of 23.5 kg.

* Adopting advanced farming techniques can significantly improve cane yield and sugar recovery.

* The governments mandatory ethanol blending program is driving increased ethanol production.

* Technological advancements can enhance the efficient utilisation of by-products.

Weaknesses

* Cane prices in India are relatively high compared to global standards.

* Several companies in the sector continue to operate with outdated technology / sub-optimal capacity.

* Many sugar mills struggle with economic instability.

Threats

* Climate change can alter crop patterns and impact yields.

* The sector has long been shaped by political agendas.

* Monsoon rainfall plays a crucial role in the sectors performance.

* Insufficient infrastructure increases the vulnerability of cane farming to climatic variations.

Financial overview

Analysis of the profit and loss statement

Revenues: Revenues from operations stood at H5,415.38 crores in FY 24-25 as compared to H5,593.74 crores in FY 23-24 reflecting a decrease of 3.19%. Revenue from sugar has improved by 4.26% whereas revenues from distillery has declined by 15.33% on account of decrease in volumes owing to lower availability of feedstock a result of lower sugar diversion towards Ethanol on account of restricted Government policy in ESY 2023-24. Increase in revenues in sugar was on account of increase in realisations by ~2.8%. Other Income of the Company reported a 56.54% decline and accounted for a 0.59% share of the Companys total income (compared to 1.31% in previous year), reflecting the Companys dependence on its core business operations.

Expenses: Total expenses decreased by 1.59% from H5,057.56 crores in FY 23-24 to H4,977.14 crores in FY 24-25. Raw materiai costs account for an 75.92% share of the Companys revenue from operations as compared to 81.87% in FY 23-24. Empioyee expenses accounted for a 7.48% share of the Companys revenues from operations and increased by 1.59% from H398.56 crores in FY 23-24 to H404.91 crores in FY 24-25. The increase in empioyee cost was due to a normal increase in salaries and ~H16.05 crores on account of equity settled share-based payments to employees

Analysis of the Balance Sheet

Sources of funds

The capital employed in the Company increased 12.17% to H4,349.37 crores as on 31st March, 2025 from H3,877.63 crores as on 31st March, 2024 owing to ongoing PLA project. Return on capital employed, a measurement of returns derived from every rupee invested in the business, decreased by 539 basis points from 17.22% in FY 23-24 to 11.83% in FY 24-25.

The net worth of the Company increased by 9.35% from H3,226.51 crores as on 31st March, 2024 to H3,528.07 crores as on 31st March, 2025 owing to ploughing back of profits. The Companys equity share capital comprised 201902371 equity shares of Re. 1 each.

Long-term debt of the Company stood at H581.50 crores as on 31st March, 2025 from H461.31 crores as on 31st March, 2024 post repaymenl of H274.80 crores and fresh borrowings of H395.00 crores for the ongoing PLA Project. The long-term debt-equity ratio of the Company stood at 0.16 in FY 24-25 compared to 0.14 in FY 23-24. The ratio is at a very comfortable level in the sugar industry.

Finance costs of the Company increased by 11.76% from H83.63 crores in FY 23-24 to H93.46 crores in FY 24-25 owing to higher working capital requirement and higher rate of interest. The Companys gross debt (including working capital) / equity ratio was at 0.73 at the close of FY 24-25 (0.61 at the close of FY 23-24).

Applications of funds

Fixed assets (net block) of the Company increased by 2.47% from H2,684.89 crores as on 31st March, 2024 to H2,751.16 crores as on 31st March, 2025 majorly on account of capex incurred on the ongoing PLA Project. Depreciation on assets increased by 3.72% from H166.36 crores in FY 23-24 to H172.54 crores in FY 24-25 owing to an increase in capex.

Investments

Non-current investments of the Company increased from H181.12 crores to H181.13 crores owing to fair valuation gain.

Working capital management

Current assets of the Company increased by 8.76% from H3,034.91 crores as on 31st March, 2024 to H3,300.83 crores as on 31st March, 2025. Increase was mainly attributable to increase in inventories. The current and quick ratios of the Company stood at 1.29 and 0.07, respectively at the close of FY 24-25 compared to 1.43 and 0.08, respectively at the close of FY 23-24.

Inventories including raw materials, work-in-progress and finished goods among others increased by 8.71% from H2,868.77 crores as on 31st March, 2024 to H3,118.72 crores as on 31st March, 2025. The inventory turnover ratio stood at 1.81 in FY 24-25 as compared to 2.16 in FY 23-24.

Trade receivables increased by 13.85% from H125.57 crores as on 31st March, 2024 to H142.96 crores as on 31st March, 2025. Trade receivable turnover ratio stood at 37.88 as on 31st March, 2025 as compared to 44.55 as on 31st March, 2024.

Margins

Lower level of operations and lower sugar recovery led to lower cost absorption inspite of no increase in cane price in state of Uttar Pradesh during the year. This was also aided by lower volumes of distillery segment owing to lower availability of feedstock as result of lower sugarcane crushing and restriction in diversion of sugar cane juice and BH molasses for ethanol production during ethanol season year 2023-24. This was partly offset by higher realisation in sugar segment. The EBITDA margin of the Company decreased by 105 basis points from 14.05% in FY 23-24 to 13.00% in FY 24-25 while the total comprehensive income margin of the Company decreased by 150 basis points to 6.39% as compared to 7.89% in FY 23-24.

Key ratios
Particulars	FY 23-24	FY 24-25
Operating profit margin (%)	14.05	13.00
Net profit margin (%)	7.74	6.35
Debt-equity ratio	0.14	0.16
Return on equity (%)	14.08	10.02
Return on capital employed (%)	17.22	11.83
Book value per share (H)	162.56	177.37
Basic Earnings per share (H)	2147	17.04
Diluted Earnings per share (H)	2147	16.98
Debtors turnover ratio	44.55	37.88
Inventory turnover ratio	2.16	1.81
Interest coverage ratio	9.40	7.54
Current ratio	1.43	1.29
Debt service coverage ratio	3.13	3.34
Return on networth	14.32	10.18

Internal control systems and their adequacy

The Companys internal audit system are continuously being 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 quarterly basis. The committee makes note of the audit observations and directs corrective actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively.

Human resources

The Company firmly believes that the quality of its employees is central to its success. Recognising that continuous learning is essential in a dynamic business environment, the Company fosters a culture of growth and development at all levels.

During the year, a diverse range of training programmes were conducted across multiple domains, including technical and behavioural skills, business excellence, general and advanced management, leadership skills, safety protocols and the code of conduct. These initiatives are designed not only to enhance functional competencies but also to build future-ready leaders.

The Companys employee strength stood at 6020 as on 31st March, 2025.