Dhampur Bio Management Discussions

Global economic review

The global economy has been showing signs of recovery despite facing challenges such as recessions in Europe and Japan, and supply chain disruptions caused by the prolonged conflicts between Russia and Ukraine, and between Israel and Hamas. The economic growth in the US and major emerging markets and developing economies have been stronger than expected offsetting the weaker than expected growth in Euro area during the second half of 2023. However, global GDP still declined from 3.5% in 2022 to an estimated 3.1% in 2023, with projections stabilizing at 3.1% in 2024 and expected to slightly increase to 3.2% in 2025.

Emerging markets and developing economies grew by 4.1% in 2023 and are expected to continue this consistent growth rate at 4.1% in 2024 and 4.2% in 2025. Meanwhile, the growth in advanced economies slowed down from 2.6% in 2022 to 1.6% in 2023. It is anticipated to stabilize at around 1.5% in 2024 and increase to 1.8% in 2025.

As global economies navigate through recession, they face volatility and uncertainty in addressing energy and food security, inclusive growth, and climate emergencies, which necessitate multilateral cooperation among nations. The cooling measures implemented by major central banks to keep inflation at controlled levels have been effective, reducing the likelihood of a severe economic slowdown while managing low underlying productivity growth. Consequently, global headline inflation is projected to decrease from 8.7% in 2022 to an estimated 6.8% in 2023. With the resolution of supply-side issues and continued restrictive monetary policy, global headline inflation is expected to decline to 5.8% in 2024 and 4.4% in 2025.

Indian economic review

India?s strategic investments in infrastructure and connectivity are poised to reshape the landscape and play a pivotal role in the economic development. According to the Government of India (Ministry of Statistics data), Real GDP at constant prices saw growth rates of 8.2% in Q1, 8.1% in Q2, and 8.4% in Q3, with an anticipated growth of 8% in Q4 for FY 2023-24. With rising consumer confidence and positive business sentiments, the first advance estimates by the National Statistical Office predict that India?s Real

GDP will grow by a projected 7.3% in FY 2023-24, up from 7.0% in FY 2022-23. India is on track to become the third largest economy globally within the next five years and aims to achieve the status of a developed nation by 2047.

The manufacturing and services sectors have driven the gross value added growth by a projected 6.9% in FY 2023-24. According to the Government of India, Ministry of Statistics data, the Consumer Price Index (CPI) inflation, which peaked at 7.4% in July 2023, stabilized at 5.1% by February 2024. Monetary policy measures have moderated inflation, which is projected at 5.4% for FY 2023-24P. The domestic private capex cycle is on the rise, supported by the government?s initiatives and robust balance sheets of corporates and banks. The streamlining and digitisation of the tax system, increased spending on infrastructure capital, and asset-building strategies are poised to enhance growth multipliers. Indicators such as rising auto sales, double-digit credit growth, and strong GST collections suggest that urban consumption will remain robust.

Global sugar sector

The global sugar sector represents the cornerstone of the agricultural sector, with significant economic, social, and environmental propositions. Dominated by major producers such as Brazil, India, and Thailand, the industry plays a pivotal role in food production, employment, and trade. As per USDA November 2023 data, global sugar production in FY 2023-24 (April to March) is expected to close at 183.5 Million Tonnes of sugar, from 175.3 Million Tonnes in FY 2022-23. The increase in production is primarily driven by the higher production in Brazil and India, two of the largest producers of sugar in the world. O_setting the impact of dry weather conditions during the period, the sugar production level is second highest till date, second only to FY 2017-18 season which recorded 188.5 Million Tonnes of produce.

The top five sugar producing regions - Brazil, India, European Union, China and Thailand – accounted for about 60% of the global production. The largest by area and production, the Centre-South Brazil?s (CS Brazil) sugar production reported a significant 25.7% increase to reach 42.2 Million Tonnes over the previous year, whereas the cane crushing volume rose by 19.1% during the same period to reach 647.2 Million Tonnes. On the other hand, Thailand?s mills crushed a total of 81.2 Million Tonnes of cane with an anticipation of concluding the season with a sugar production of 8.7 Million Tonnes, a decline of 21.0% from previous season. The European Union sugar production is expected to increase by 5.6% from 14.7 Million Tonnes in FY 2022-23 to 15.5 Million Tonnes in FY 2023-24, while China?s sugar output is estimated to increase by 11.6% to reach 10.0 Million Tonnes in FY 2023-24.

The global sugar consumption in the FY 2022-23 season increased by 1.6% YoY from 174.1 Million Tonnes to 175.9 Million Tonnes and is further expected to expand by 1.2% YoY to 177.8 Million Tonnes during the FY 2023-24 season. The second highest production this season has resulted in the production surplus of 3.5 Million Tonnes.

Global sugar prices witnessed volatility, reaching a 13-year high in 2023. The mean London Sugar Future prices were USD 681.9 per Tonne during FY 2023-24 that grew 23.1% from 2022-23 at an average price of USD 553.9 per Tonne. Prices peaked at USD 763.4 per Tonne during November 2023, roughly 2.5x of the low of USD 307.5 per Tonne during April 2020 as it hovered at USD 647.7 per Tonne in March 2024. (Source: Investing.com)

Indian sugar sector

The sugar industry in India holds a vital position in the country?s economy, contributing significantly to the agricultural output, rural employment, and GDP growth. India ranks among the world?s top producers of sugar, with a vast network of sugar mills, particularly in Uttar Pradesh, Maharashtra, and Karnataka. The two largest sugar producing states - Uttar Pradesh and Maharashtra - account for two-thirds of the country?s total sugar output. The reduced rainfall and increased water consumption in India led to water reservoirs? storage position lagging the 10-year average by roughly 4.8 Billion cubic metres. The sugarcane production was 4,470 Lakh Tonnes during 2023-24 season, which is estimated to reduce by 136 Lakh Tonnes during 2023-24 season. This affected the sugar production level in the world?s second biggest sugar producing nation at 320 Lakh Tonnes during the season falling short by 8 Lakh Tonnes YoY. However, the higher-than-expected cane yields in Maharashtra and Karnataka led to upward revision of sugar production projection of 320 Lakh Tonnes for the season ending September 2024 (SS2023-24), which is marginally lower than the production of 328 Lakh Tonnes for SS2022-23. Having nearly 84% of the cane dues of farmers for SS2023-24 been cleared and 99.9% of the dues for previous seasons been paid off, it is expected to result in farmers getting involved in ploughing of sugarcane instead of diverting to other

India is the largest consumer of sugar in the world, urging the Government of India to ensure optimal availability of sugar at reasonable prices along with the sufficient closing stock at end of the season. Furthermore, the surplus sugar is diverted for ethanol and only remaining for exports

Indian Sugar Sector Balance Sheet

(in Lakh Tonnes)

FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24(P)

Opening stock as on October 1

107 82 70* 56

Net production during season

312 358 328 320
Imports 0 0 0 0

Total Availability Ofitake

419 439 398 376
i) Internal Consumption 266 273 278 285
ii) Exports 72 111 64 0
Total ofitake 338 384 342 285
Diversion for Ethanol (E) 20 32 38 20

Closing stock as on September 30

82 55 56 91
Stock as % of ofitake 31% 20% 20% 32%

Source: ISMA, We can take it from Latest ISMA report if available *reconciliated with Governement data


Patchy monsoons affected the cane yields downwards leading to significant rise in sugar prices, which resulted in the Government of India to restrict sugar exports from India for the first time in seven years during SS2023-24 and have extended the ban for another sugar season. SS2021-22 was the highest export season post-pandemic clocking 110.7 Lakh Tonnes.

Market dynamics

The Commission for Agricultural Costs and Prices, has been recommending and fixing the fair and remunerative price (FRP) of sugarcane for every sugar season. FRP is the minimum price the sugar mills shall pay to the sugar cane farmers within 14 days of procurement, failing which attracts penalty. The Government of India has upwardly revised SS2024-25 FRP to H3,400 per Tonne from H3,150 per Tonne fixed for SS2023-24. The FRP is fixed for a base recovery of 10.25%, with a premium/discount of H33.2 per Tonne for every 0.1% increase/decrease.

While the committee has been revising FRP of cane, there has been no change in the minimum support price (MSP), which is fixed at H3,100 per Tonne. The State Advised Price (SAP) for Uttar Pradesh for SS2023-24 have also been revised upwards by H200 per Tonne to H3,700 per Tonne for early variety. As per the Molasses Policy FY 2023-24, levy obligation has been changed to 19.0% of B-heavy and 26.2% of C-heavy molasses.


On account of ban on sugar exports, raised fair and remunerative prices, and temporary capping of sugar feedstock towards ethanol production, the industry is induced to supply more sugar than envisaged in the beginning of the SS2023-24, burdening the mill?s financials. The gross sugar production is estimated to reach 320 Lakh Tonnes at the close of the season with an ending inventory of 91 Lakh Tonnes. As sugar is an essential commodity, the government is required to check on inventory levels before changing its stance on the diversion of cane to ethanol. We may expect favourable modifications in the policy based on high sugar production during the SS2023-24.

Indian bio-fuel sector

The launch of ethanol blending programme has widely promoted its blending and production in India. The ethanol blending of 1.5% in (ethanol supply year (ESY), November – October) ESY2013-14 in petrol has reached 12% in ESY2022-23. The Government of India has targeted a blending percentage of 15% for this ESY2023-24 and 20% for this ESY2024-25 which is not too far from high ethanol blending of 27% in gasoline in Brazil. The Oil Marketing Companies (OMCs) have envisaged a total requirement of 825 Crore litres for the ESY2023-24 and have procured 224.5 Crore litres by March 31, 2024.

The sugar sector contributed 126.3 Crore litres to this initiative, whereas the grain-based feedstock contributed 98.2 Crore litres thereby achieving the blending at 12%. Ethanol being sourced by way of sugar cane Juice, B-heavy molasses and C-heavy molasses contributed 51.9 Crore litres, 63.6 Crore litres and 10.8 Crore litres, respectively, indicating an approximate diversion of 12.9 Lakh Tonnes of sugar during the season. The sugar diversion towards ethanol was 3.4 Lakh Tonnes during SS2018-19, 38 Lakh Tonnes in FY 2022-23 and 20 Lakh Tonnes in FY 2023-24.

High realisations of ethanol have provided impetus to the sugar manufacturers towards more sugar production. Following the stagnancy in domestic sugar production in SS2023-24, the Government of India capped the usage of sugarcane juice/syrup and B-heavy molasses for ethanol production in the ESY2023-24. However, the central body permitted the usage of C-heavy molasses and foodgrains subject to a monthly review. Thus, to compensate for the losses, the Indian Sugar Mills Associations (ISMA) suggested an increase in prices of molasses-based ethanol. The sugar juice-based ethanol prices have been on a rise from H59.2 per litre in ESY2018-19 to H65.6 per litre. The prices for B-heavy molasses and C-heavy molasses witnessed a rise from H52.4 per litre and H43.5 per litre, respectively, in ESY2018-19, respectively to H60.7 per litre and H56.3 per litre, respectively in ESY2023-24. Furthermore, the government has imposed 50% export duty on the export of molasses.


As of November 2023, India?s ethanol production capacity is about 1,380 Crore litres, with molasses accounting for 875 Crore litres and roughly 505 Crore litres being grain-based. To achieve the 20% blending target by 2025, nearly 1,700 Crore litres of ethanol producing capacity will be required to achieve 80% utilisation. The sudden policy changes by the government on ethanol feedstock mix has caused a slight dip in the ethanol volumes, however, higher realisations are expected to partly offset the volume loss.

Indian renewable energy sector

As on February 2024, India?s total installed renewable energy capacity (including hydro power) stands at 183.49 GW, out of which, wind power is capable to produce 45.15 GW, Solar power 75.57 GW and

Biomass/co-generation 10.2GW. While large hydro has an installed capacity of 46.92GW, small hydro power has 4.99GW. India ranking third in renewable energy attractive index, aims for 500GW installed capacity of renewable and has set a target to reduce the carbon intensity by ~45% by 2030 and cumulative electric power installed capacity from non-fossil sources to reach 50%. As of now, 50 solar parks with an aggregate capacity of 37.49GW been approved, whereas potential sites have been identified to achieve an off-shore target of 30GW by 2030, which aids in achieving net-zero carbon emissions by 2070. With sustainable energy initiatives taken, India stands at the forefront of global efforts to mitigate climate change.

Company overview

Dhampur Bio Organics (DBO) operates on a rich legacy and extensive experience in the sugar sector. Utilising its advanced and integrated sugarcane manufacturing setups, the Company capitalises on the favourable trends in the sugar and broader agricultural economy. DBO is a leading integrated sugar company, with a growing presence in agri-business and bioenergy. Our three manufacturing units located at Asmoli, Mansurpur and Meerganj, in Uttar Pradesh, are all in proximity to each other and to the road networks. The Company?s facilities are equipped with the latest machinery and equipment, as they play a crucial role in its success over the years. The Company operates in three distinct business verticals: sugar, biofuels and spirits, and country liquor. Our sugarcane crushing and biofuels production capacity for FY 2023-24 stands at 29,500 Tonnes of crushing per day (TCD) and 3,12,500 litres per day (LPD) in B-heavy terms respectively. During FY 2023-24, the Company commissioned additional capacities at the Asmoli and Meerganj Unit, from 9,000 TCD to 12,500 TCD in Asmoli and 5,000 TCD to 9,000 TCD in Meerganj. These additional capacities were commissioned and operational in November 2023, in time for the sugar season.

Looking forward, we are highly placed to take advantage of opportunities in sugar and biofuels based on our three strategic pillars: innovation, integration, and value addition. Innovation includes focus on cane development activities, cost and process efficiencies, and exploring new cane varieties with increased diversion towards biofuels. The integration pillar aims to optimise the resources and by-product utilisation, thereby, driving the profit margins. The value addition pillar focuses on premiumisation of the commodities business through retail sugar sales and domestic spirit sales.

As a participant in India?s agriculture sector, DBO champions eco-friendly farming and production, and is a leading sponsor of rural education, upskilling, health and sports initiatives. We recognise our responsibilities towards the environment and communities, and our commitment to sustainability and balance underscores the focus on environmental stewardship and community development.

Key strengths

Rich legacy: DBO boasts a remarkable legacy of innovation that spans across several decades. It has been a trailblazer in generating renewable energy from sugar by-products and has solidi_ed its position as a leading producer of ethanol and sugarcane-derived products in India. Our leadership team have held prominent position in the sugar industry and associations for several decades, pioneering breakthroughs such as sulphur-free sugar and electricity exports to grids.

Synergies in production and management: Our sugar refineries are strategically located in close proximity to each other, which enables better asset utilisation such as centralising distillery and refining capability and more efficient and scalable management of plants. We have consistently increased the proportion of value-added products in our product mix, showcasing our commitment to innovation and quality.

Continuous efforts on cane development and debottlenecking: DBO is continuously maintaining its focus on increasing sugarcane yield by introducing high recovery cane varieties with shorter recovery times, to increase recovery. This is well supported by the favourite agro-climatic factors in India. The efforts of the management have improved recovery, which will aid in reducing the production costs and mitigating the impact of increasing prices.

Strong tailwinds: In response to the government?s thrust on green fuel and promotion of an ethanol-based economy, the Company maintained a strong business mix of sugar and biofuels, positioning it at the forefront of the industry.

Leadership?s ability to crafting dynamic strategies by keeping abreast with potential industry developments: The rich experience and the know-how of the industry has enabled the Company to modify its strategies by keeping abreast with the potential industry developments and predicting changes in policies, among others.

With abundant sugarcane areas at our disposal in three locations, DBO is well-prepared for future growth and expansion, ensuring its continued success in the dynamic market landscape.

Business verticals

Sugar Business (Refined, raw sugar and renewable energy)

As of March 31, 2024, DBO maintains a total cane crushing capacity of 29,500 TCD, strategically located across its manufacturing facilities in Asmoli, Mansurpur, and Meerganj. Our diverse product range includes refined sugar, available in both packed and branded variants, as well as white sugar, retail sugar and pharma-grade sugar, which is approved by the Food Safety and Standards Authority of India.

To strengthen our sugar business, we have consistently implemented debottlenecking initiatives and focused on enhancing cost and operating efficiency. Our proactive engagement with farmers and strong emphasis on cane development activities have further strengthened our position in the market.

Moreover, DBO maximizes its resources by leveraging the by-products from the sugar manufacturing process. This includes the production of biofuels and co-generation power, aligning with its commitment to sustainable practices and environmental stewardship. These efforts not only contribute to its bottomline but also underline its commitment to innovation and responsible business practices.


DBO?s foremost objective is to improve operational efficiencies and streamline cost structures. The Company is committed to advancing its cane development program by introducing new sugar cane varieties in control areas across its two locations to boost yields. Furthermore, the Company will continue to contribute renewable energy to the state electricity grid through its co-generated renewable energy projects. This not only aligns with its sustainability goals but also underscores its commitment to environmental governance.

To optimise all resources and by-products usage, the Company will continue to sell surplus bagasse in open markets, thus, maximising the value of its operations and contribution to a more sustainable and efficient business model.

Biofuels & Spirits Business (Ethanol, Country Liquor)

Situated in Asmoli, our distillery is dedicated to the production of ethanol, utilizing syrup, B-Heavy and C-Heavy molasses as key feedstocks. The Government?s increasing focus on the biofuels sector has intensi_ed our commitment to this segment. This heightened focus is driven by both the sector?s substantial growth prospects and its inherently high-margin nature.


Looking ahead, the Company?s strategic direction involves optimising the capacity of its biofuels and spirits segment. This optimization will be achieved through a meticulous balance of feedstock selection and finished goods output. Moreover, DBO is committed to exploring the production of ethanol from alternative feedstocks, a move aimed at diversifying its product range and enhancing the overall ethanol production capacity. This proactive approach is designed to not only maximise margins from the segment but also ensure the Company?s sustained growth and competitiveness in the market.