Bannari Amman Sugars Ltd Management Discussions

India is second largest producer and largest consumer of sugar in the world accounting for nearly 20% of global sugar production and 17% of consumption in the Triennium Ending (TE) 2023-24. S ugar sector is one of the

most important sectors in Indian economy. It plays a crucial role in rural development and supporting over 50 million farmers and workers. It plays vital role in the rural economy and contributes to national GDP through agriculture, manufacturing and energy. The industry is

comprising of co-operative sugar mills (35% - 40%), Private Sugar Mills (55% - 60%) a nd small number of mills owned by state governments. Uttar Pradesh, Maharashtra and Karnataka are the major producers.

The sugar industry in India, which was subjected to cyclical fluctuations due to natural and socio-economic factors, has emerged as a robust and dynamic sector in recent years due to various initiatives taken by the Government.

The Government of India has taken several initiatives to diversity sugar industry by promoting production of bioethanol, cogeneration, Bio-Compressed Natural Gas (Bio- CNG), Compressed Bio-Gas (CBG), potash- based

fertilizers etc., The most significant initiative, which has resulted in diversification of Indian Sugar Sector has been

the National Policy on Biofuels, 2018 which promotes blending of ethanol with petrol. Although the ethanol

program was initiated in the year 2003, the policy

announced in the year 2018 was a game changer leading to significant increase in ethanol production and blending percentage.

Sugarcane production in the country, which was increased for three consecutive years from 2020-21 to

2022-23 , declined by (-) 7.6% in 2023-24 du e to adverse

climatic conditions. Consequently, net sugar production

also fell by (-) 3.1 percent in 2023-24 despite lower diversion (2.4 million tonnes) for ethanol compared with

2022- 23 (4.3 million tonnes). As per the first advance estimates for 2024-25, sugarcane production is estimated to decline by (-) 2.9 percent due to 6.5 percent reduction in area under sugarcane. Net Sugar production is also

estimated to be lower in 2024-25 season than 2023-24

due to lower cane production and higher diversion for

ethanol production in 2024-25. D omestic sugar consumption has been estimated at 29.7 million tonnes in

2023- 24 and expected to remain at the same lever in

2024- 25. However comfortable stock position will ensure

sufficient availability of sugar in the country. (Source.

CACP Re port Nov. 2024)

Domestic Sugar Statistics

Particulars	2020-21	2021-22	2022-23	2023-24	2024-25 (P)
Opening Stock as on 1st Oct.	107.40	81.86	70.00(**)	55.65	80.00(**)
Gross production during the Season	331.92	389.60	366.15	341.14	299.00
Diversion for Ethanol	20.00	32.00	38.00	21.50	35.00
Net production during the Season	311.92	357.60	328.15	319.64	264.00
Imports (*)	--	--	--	--	--
Total Availability	419.32	439.46	398.15	375.29	344.00
Off-take
i) Internal Consumption	265.55	273.30	278.50	290.00	280.00
ii) Exports (*)	71.91	110.70	64.00	0.50	10.00
Total off-take	337.46	384.00	342.50	290.50	290.00
Closing Stock as on 30th Sep	81.86	55.46	55.65	84.79	54.00

(Source. Indian Sugar Mills Association (ISMA)

Imports and Exports are under O.G.L a nd as reported by sugar mills to GOI through Proforma (1) and (ii)

** Opening stock of 2022-23 and 2024-2025 reconciled with Government data

Operational Performance of the Company

Particulars	Year Ended 31.03.2025	Year Ended 31.03.2024
Sugar
Installed Capacity (TCD)	23700	23700
Sugarcane Crushed (Lakh Tonnes)	32.04	48.52
Recovery (%)	8.67	9.03
Sugar bagged (Lakh ^Quintals)	27.78	44.21
Power
Installed Capacity
Co-gen Power (MW)	129.80	129.80
Wind Mills (MW)	8.75	8.75
Units Generated (Million Units)	413.89	603.46
Distillery
Installed Capacity (KLPD)	217.50	217.50
Alcohol Produced (Million B. Ltrs)	48.23	38.61
Polished Granite Products (Sq mtrs)	38629	111478

Financial Performance of the Company

Particulars	Year Ended 31.03.2025	Year Ended 31.03.2024
Revenue from operations
Sugar	130238.51	173922.65
Power	13983.64	21922.91
Distillery	32368.32	24003.14
Granite Products	2706.93	2183.11
Total Expenses (Excluding Finance Cost)
Sugar	125459.87	165342.75
Power	7328.01	=RIGHT>10123.12
Distillery	25860.83	17375.36
Granite Products	2844.72	3639.87
Profit Before Interest and Tax (PBIT)
Sugar	4778.64	8579.90
Power	6655.63	11799.79
Distillery	6507.49	6627.75
Granite Products	(137.79)	(1456.76)
Profit After Tax (PAT)	10466.81	15230.22
Earnings per Share (Basic and Diluted)	83.47	121.46

V Competition from Alternative Sweeteners. The growing popularity of lowcalorie and natural sweeteners (like stevia and monk fruit) poses a long-term threat to traditional sugar demand.

V Policy and Regulatory Risks. Frequent changes in export policies, ethanol pricing, and sugarcane procurement regulations can create uncertainty for stakeholders.

Risks and Concerns

The Indian sugar industry faces several structural and operational risks that could impact its longterm sustainability and profitability:

V Global Price Volatility: The industry is highly sensitive to fluctuations in international sugar prices, ^hich can influence domestic pricing and mill margins, especially during surplus years.

V Cl i m ate Change and ^W eather Uncertai nty. Increasingly erratic weather patternssuch as unseasonal rains, droughts, and rising temperatures* pose a serious threat to sugarcane cultivation, potentially reducing yields and increasing input costs.

V Policy Dependency. The sector is heavily reliant on government interventions, including subsidies, export quotas, and ethanol pricing. Sudden policy shifts can disrupt planning and financial stability.

V Financial Stress i n Mills. M any sugar mills, particularly in the cooperative sector, are burdened with high debt levels and face challenges in maintaining liquidity. This often leads to delayed payments to farmers, affecting the entire supply chain.

V Low Mechanization in Agriculture. The sugarcane farming sector continues to suffer from poor mechanization, leading to high labor costs, inefficiencies, and delayed harvesting.

VW ater Usage Concerns. Sugarcane is a water* intensive crop, and balancing its irrigation needs with the demands of other sectors (like drinking water and industrial use) is becoming increasingly difficult, especially in water*scarce regions.

V Cyclical Nature of the Industry. The sugar industry experiences boom*and*bust cycles, with alternating periods of surplus and deficit, making it difficult to

maintain consistent profitability and investment momentum.

V Environmental Regulations. Growing environmental scrutiny and potential future regulations on carbon emissions, effluent discharge, and water usage could increase compliance costs for mills.

Outlook

The outlook for the Indian sugar industry is cautiously optimistic, supported by strong pol icy backing, technological advancements, and evolving market dynamics. The government s continued emphasis on

ethanol blending, with a target of 20% blending by 2025,

is expected to provide a stable revenue stream and reduce the industry s dependence on sugar alone.

Key Growth Drivers:

V Biofuel Diversification. Expansion into ethanol production from sugarcane juice and molasses is transforming the industry into a key player in India s energy transition strategy, reducing reliance on fossil fuels and supporting rural economies.

V Sustainable Agricultural Practices. Adoption of drip irrigation, mechanized harvesting, and high* yielding cane varieties is improving productivity and resource efficiency.

V Export Potential. W ith global sugar consumption

growing at approximately 2% annually, India is well* positioned to become a major exporter, especially to deficit regions in Asia and Africa.

V Technology Adoption. Increasing use of digital tools, s a tel l i te m o n i to r i n g , a n d AI * d r i ve n c r o p management is enhancing operational efficiency and decision*making across the value chain.

Challenges to Monitor:

V Climate Vulnerability. The industry remains exposed to climate change risks, including erratic rainfall and rising temperatures, which can impact cane yields and quality.

V Price Volatility. Both domestic and international

sugar prices remain volatile, affecting profitability and investment planning.

V Financial Health of Mills: Many mills, particularly in the cooperative sector, continue to face liquidity issues and high debt burdens, ^hich may hinder modernization efforts.

V Emerging Energy Alternatives: The rise of electric vehicles (EVs) and hydrogen energy could, in the long term, reduce the demand for ethanol as a transport fuel, potentially impacting future revenue streams.

Overall, the Indian sugar industry is at a strategic inflection point. Its ability to adapt to changing energy landscapes, embrace sustainable practices, and leverage global demand will determine its long-term success. W ith the right mix of policy support, innovation, and financial discipline, the industry can evolve into a diversified, resilient, and globally competitive sector.

Internal Control Systems and their adequacy

The company has adequate internal control systems in pl ace and also has reasonable assurance on authorizing, recording and reporting transactions of its operations. Proper and adequate internal controls are being adopted by the company commensurate with its size, scale and complexities of operations.

Details of Adequacy of Internal Financial controls

The Companys internal control system is aimed at proper utilization and safeguarding of the Companys resources and promoting operational efficiency. The internal audit

process reviews the in-system checks, covering significant operational areas regularly.

The Companys Audit Committee is responsible for reviewing the Report submitted by the Internal Auditors. Suggestions for improvements are considered and the Audit Committee follows up on the implementation of corrective actions. The Audit Committee also invites the Statutory and Internal Auditors for regular meetings to ascertain their views on the adequacy of internal control systems and keeps the Board of Directors informed of its observations from time to time

Human Resources and Industrial Relations

The Company employs 1983 permanent employees and

the company maintains excellent relationship with its employees during the year under review. No case was filed under Sexual Harassment of women at workplace

(Prevention Prohibition and Redressal) Act 2013.

The company has created an excellent relationship with the farmers as well as other stakeholders including bankers

CSR Activities

Most of the CSR Activities are carried out directly by the company. We are working tirelessly to enrich the lives of people in the rural community by providing them with a host of amenities that not just make their lives a whole lot easier but also ensures agricultural, educational and economic independence. M ore details are furnished in

the Annual Report on CSR A ctivities.

Cautionary Statement

Statements made in this M anagement Discussion and Analysis Report may contain certain forward-looking statements based on various assumptions on the Companys present and future business strategies and the environment in which it operates. Actual results may differ substantially or materially from those expressed or implied due to risk and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India and abroad, volatility in interest rates and in the securities market, new regulations and Government policies that may impact the Company s businesses as ^ell as the ability to implement its strategies. The information contained herein is as of the date referenced and the Company does not undertake any obligation to update these statements. The Company has obtained all market data and other information from sources believed to be reliable or its internal estimates, although its accuracy or completeness cannot be guaranteed.