Dhampur Sugar Mills Ltd Management Discussions

Global economic review

Overview

Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably. The growth in advanced economies remained steady at 1.7% from 2023 to 2024 as the emerging cum developing economies witnessed a growth decline at 4.2% in 2024 (4.4% in 2023). On the positive side, global inflation was expected to decline from 6.1% in 2023 to 4.5% in 2024 (projected at 3.5% and 3.2% in 2025 and 2026 respectively).

This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments the world over helped keep inflation in check as well.

The end of the calendar year was marked by the return of Donald Trump as the new US President. The new US government threatened to impose tariffs on countries exporting to the US unless those countries lowered tariffs for the US to export to their countries. This enhanced global trade and markets uncertainty and emerged as the largest singular uncertainty in 2025.

Regional growth (%)	2024	2023
World output	3.2	3.3
Advanced economiest	1.7	1.7
Emerging and developing economies	4.2	4.4

(Source: IMF, KPMG, Press Information Bureau, BBC, India Today)

Performance of the major economies, 2024

United States: Reported GDP growth of 2.8% in 2024 compared to 2.9% in 2023.

China: GDP growth was 5.0% in 2024 compared to 5.2% in 2023. United Kingdom: GDP growth was 0.8% in 2024 compared to 0.4% in 2023. Japan: GDP growth was 0.1% in 2024 compared with 1.9% in 2023.

Germany: GDP contracted by 0.2% in 2024 compared to a 0.3% decline in 2023.

(Source: CNBC, China Briefing, ons.gov.uk, TradingEconomics, Reuters)

Outlook

The global economy has entered a period of uncertainty following the imposition of tariffs of products imported into the USA and some countries announcing reciprocal tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.7% for 2025 and 2026, factoring the various economic uncertainties. (Source: IMF, United Nations)

Indian economic review

Overview

The Indian economy was projected to grow at 6.5% in FY 2024-25, compared to a revised 9.2% in FY 2023-24.

This represented a four-year low due to a moderate slowdown within the Indian economy (marked by slower manufacturing growth and a decline in tionary pressures eased, with CPI Infla net investments). Despite the slowdown, India retained its position as the worlds fifth-largest economy.

Indias nominal GDP (at current prices) was Rs.331 trillion in FY 2024-25 (Rs.301.23 trillion in FY 2023-24). The nominal GDP per capita increased from Rs.2,15,936 in FY 2023-24 to Rs.2,35,108 in FY 2024-25, reflecting expansion.

The Indian rupee weakened 2.12% against the US dollar in FY 2024-25, closing at Rs.85.47 on the last trading day of FY 25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar). inflation averaging 4.63% in FY 2024-25, driven by moderating food inflation and stable global commodity prices.

Retail inflation at 4.6% in FY 2024-25, was the lowest since the pandemic, catalysing savings creation. Indias foreign exchange reserves stood at a high of $676 Billion as of April 4, of 2025. This was the fourth consecutive year when rating upgrades outpaced downgrades on account of strong domestic growth, rural consumption, increased infrastructure investments and low corporate leverage (annualized rating upgrade rate 14.5% exceeded the decade-long average of 11%; downgrade rate was 5.3%, lower than the 10-year average of 6.5%).

Gross foreign direct investment (FDI) into India rose 13.6% to $81 Billion during the last financial year, the fastest pace of expansion since 2019-20.The increase in the year was despite a contraction during the fourth quarter of

2024-25 when inflows on a gross basis declined 6% to $17.9 Billion due to the uncertainty caused by Donald Trumps economic election and his assertions around getting investments back into the US.

Growth of the Indian economy

	FY 22	FY 23	FY 24	FY 25E
Real GDP growth (%)	8.7	7.2	9.2	6.5

E: Estimated

(Source: MoSPI, Financial Express)

Growth of the Indian economy quarter by quarter, FY 2024-25

	Q1 FY 25	Q2 FY 25	Q3 FY 25	Q4 FY 25E
Real GDP growth (%)	6.5	5.6	6.2	7.6

E: Estimated

(Source: The Hindu, National Statistics Office)

The banking sector continued its improvement, with gross non-performing assets (NPA) for scheduled commercial banks (SCBs) declining to 2.6% as of September 2024, down from 2.7% in March 2024. The capital-to-risk-weighted assets ratio for SCBs stood at 16.7% as of September 2024, reflecting a strong capital position.

Indias exports of goods and services are projected to reach $800 Billion in FY 2024-25, up from $778 Billion in the previous fiscal year. The Red Sea crisis impacted shipping costs, affecting price-sensitive exports. Merchandise exports were expected to grow 2.2% YoY, reaching $446.5 Billion.

Indias net GST collections increased 8.6%, totalling Rs.19.56 Lakh Crores in FY 2024-25. Gross GST collections in FY 2024-25 stood atRs.22.08 Lakh Crores, a 9.4% increase YoY.On the supply side, real gross value added (GVA) was estimated to expand 6.4% in FY 2024-25. The industrial sector was expected to grow 6.2%, supported by growth in construction activities, electricity, gas, water supply and other utility services. Indias services sector grew an estimated 7.3% in FY 25 (9.0% in FY 24), driven by public administration, defence and other services (expanded at 8.8% as in the previous year). In the infrastructure and utilities sector, electricity, gas, water supply and other utility services grew a projected 6.0% in FY 25, compared to 8.6% in FY 24.

Meanwhile, the construction sector expanded at ~8.6% in FY 25, slowing from 10.4% in the previous year.

Manufacturing activity was subdued in FY 25, with growth projected at 4.3%, which was lower than 12.3% in FY 24.

Moreover, due to lower public spending in the early part of the year, government final consumption expenditure (GFCE) is anticipated to have slowed to 3.8% in FY 25, compared to 8.1% in FY 24.

The agriculture sector growth was estimated at 3.8% in 2024-25 (1.4% in 2023-24). Trade, hotel, transport, communication and services related to broadcasting segment were estimated to grow at 6.4% in 2024- 25 (6.3% in 2023-24).

From a demand perspective, private final consumption expenditure at constant prices was forecast to grow 7.3%, indicating a rebound in rural demand and stronger consumer confidence.

The Nifty 50 and SENSEX recorded their weakest annual performances in FY 25 in two years, rising 5.3% and 7.5% during the year under review respectively. Gold rose 37.7% to a peak of $3,070 per ounce, the highest increase since FY 2007-08, indicating global uncertainties.

Total assets managed by the mutual fund (MF) industry jumped 23% or Rs.12.3 Lakh Crores in fiscal 2025 to settle at Rs.65.7 Lakh Crores. At close of FY 25, the total number of folios had jumped to nearly 23.5 Crores, an all-time peak. During last fiscal, average monthly systematic investment plan (SIP) contribution jumped 45% to Rs.24,113 Crores.

Foreign portfolio investments (FPIs) in India experienced high volatility throughout 2024, with total inflows into capital markets reaching approximately $20 Billion by year-end. However, there was significant selling pressure in the last quarter, influenced by new tariffs announced by the new US government on most countries (including India).

Outlook

India is expected to remain the fastest-growing major economy. Initial Reserve Bank of India estimates have forecast Indias GDP growth downwards from 6.7% to 6.5% based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in FY 26.

Tariff-based competitiveness: India identified as apparel and clothing accessories, chemicals, plastics and rubber where the US high tariffs give New Delhi a competitive advantage in the American market over other suppliers. While India faced a 10% tariff after the US suspended the 26% additional duties for 90 days, the levy remained at 145% on China, the biggest exporter to the US. Chinas share of apparel imports into the US was 25%, compared with Indias 3.8%, a large opportunity to address differential (Source: Niti Aayog).

Union Budget FY 2024-25: The

Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, government reinforced fiscal prudence while allocating Rs.11.21 Lakh Crores for capital expenditure (3.1% of GDP) to drive infrastructure development.

The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts. Effective April 1, 2025, individuals earning up to Rs.12 Lakh annually will be fully exempt from income tax. Economists estimate that the resulting

Rs.1 Lakh Crores in tax savings could boost consumption by Rs.3-3.5 Lakh Crores, potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current Rs.200 Lakh Crores.

Free trade agreement: In a post-Balance Sheet development,India and the United Kingdom announced a free trade agreement to boost strategic and economic ties. This could lead to a significant increase in the export competitiveness of Indian shipments in the UK across the textiles, toys, leather, marine products, footwear, and gems & jewellery sectors. About 99% of Indian exports to UK will enjoy zero-duty access tariff cuts; India will cut tariffs on 90% of tariff lines and 85% could become fully duty-free within 10 years.

Pay Commission impact: The 8^th Pay Commissions awards could lead to a significant salary revision for nearly ten Million central government employees. such Historically, Pay Commissions have granted substantial pay hikes along with generous arrears. For instance, the 7^th Pay Commission more than tripled its monthly salaries, raising the range from Rs.7,000 to Rs.90,000 to Rs.18,000 to Rs.12.5 Lakh, triggering a widespread ripple effect.

Monsoons: The India Meteorological Department predicted an ‘above normal monsoon in 2025. This augurs well for the countrys farm sector and a moderated food inflation outlook.

Easing Indias consumer price index-based retail inflation in March 2025 eased to 3.34%, the lowest since August 2019, raising hopes of further repo rate cuts by the Reserve Bank of India.

Deeper rate cuts: In its February 2025 meeting, the Monetary Policy Committee (MPC) reduced policy rates by 25 basis points, reducing it to 6% in its first meeting of FY 2025-26. Besides, Indias CPI inflation is forecasted at 4% for the fiscal year 2025-26.

Lifting credit restrictions: In November 2023, the RBI increased risk weights on bank loans to retail borrowers and NBFCs, significantly tightening credit availability. This led to a sharp slowdown in retail credit growth from 20-30% to 9-13% between September 2023 and 2024. However, under its new leadership, the RBI has prioritized restoring credit flow. Recent policy shifts have removed restrictions on consumer credit, postponed higher liquidity requirements for banks, and are expected to rejuvenate retail lending.(Source: CNBC, Press Information Bureau, Business Standard, Economic Times, World Gold Council, Indian Express, Ministry of External Affairs, Times of India, Business Today, Hindustan Times, Statistics Times)

Global sugar industry overview

Increasing urbanization, shifting consumer preferences towards convenient food options, and the rapid growth of the food service sector are collectively driving higher demand for sugar, especially due to the popularity of sweet and indulgent treats. The chemical segment of the sugar industry is expanding, propelled by the rising need for bio-based products, the redirection of surplus sugar towards ethanol production, supportive government policies, and the emergence of sustainable alternatives such as bio-plastics and specialty chemicals. The growing incorporation of sugar in cosmetic products for its natural exfoliating and moisturizing properties is becoming an important factor contributing to the industrys growth.

In 2024, global sugar production stood at 194.9 Million Tonnes, with forecasts projecting an increase to 223.1 Million Tonnes by 2033. This growth reflects a compound annual growth rate of 1.36% during the period from 2025 to 2033. Brazil continued to dominate the market, holding a notable 25% share in 2024. The sectors expansion was primarily fueled by rising consumer consumption of processed foods, broader pharmaceutical uses, and extensive distribution network coverage.

Performance of major sugar growing countries

United States: Sugar production is projected to decline slightly to 8.4 Million Tonnes due to lower yields of sugarbeet and sugarcane in SS 2024-25. Imports are also expected to decrease, reflecting quota programs aligned with minimum requirements under World Trade

Organization and free-trade agreement obligations. Additional factors include reduced imports from Mexico, re-exports and high-tier tariff imports. While consumption remains largely unchanged, stocks are anticipated to decline due to reduced import volumes.

India: Indias sugar production is projected to stand at 27 Million Metric Tonnes, while domestic consumption is anticipated to surpass 29 Million Tonnes over the year.

Brazil: For the 2024/25 season, the Centre-South region of Brazil is expected to produce 42.5 Million Metric Tonnes of sugarcane, driven by optimal weather and an increase in cultivated land.

China: Sugar production is estimated to rise by 1.0 Million Tonnes to reach 11.0 Million Tonnes in SS 2024-25, driven by an expansion in the area cultivated for both sugarcane and sugarbeets. Consumption is expected to increase slightly, supported by higher consumer spending driven by lower sugar prices. Imports are forecasted to remain steady, while stocks are anticipated to grow due to the increased production.

Thailand: Sugar production is projected to increase by 16% to 10.2 Million Tonnes in SS 2024-25, driven by favourable weather conditions that have boosted sugarcane output and sugar yields. While consumption continues to grow, the rate of increase is slower due to lower anticipated disposable income. Exports are expected to nearly double, supported by the higher production, while stock levels are forecast to drop by one-third due to the surge in exports.

EU: Sugar production is forecast to rise by 6,90,000 Tonnes, reaching 15.6 Million Tonnes in SS 2024-25, as an expansion in sugarbeet cultivation aims to meet higher demand. Consumption remains stable, while imports are expected to decline due to the increased domestic production. Despite the production growth, exports are projected to decrease compared to the elevated levels seen in recent marketing years. Stocks are anticipated to increase as a result of reduced export volumes.

Mexico: Sugar production is estimated to rise by 8% to 5.4 Million Tonnes, supported by favourable weather alleviating some drought impacts. Consumption and stock levels are expected to decline, driven by higher export volumes. Exports are projected to increase due to greater supply availability, with shipments to the United States determined by the terms of the amended suspension agreements.

Australia: Sugar production is projected to decline by 1,00,000 Tonnes to 4.0 Million Tonnes due to unfavourable rains in SS 2024-25, which left some sugarcane unharvested and deferred to the next season. Consumption is expected to increase slightly, driven by population growth, while exports are forecasted to rise despite reduced supplies, supported by strong global demand.

Indonesia: Sugar production is estimated to decrease by 3,00,000 Tonnes, reaching 2.0 Million Tonnes in SS 2024-25, due to adverse weather conditions. Consumption is projected to grow in line with population increases and higher demand from the food and beverage industry. To meet this rising demand amid lower domestic production, imports are expected to increase, resulting in a decline in stock levels.

Turkey: Sugar production is forecasted to decline by 3,00,000 Tonnes to 3.1 Million Tonnes due to hot and dry weather in SS 2024-25. Imports are projected to more than double to compensate for the reduced production, while exports are expected to decrease. Consumption and stock levels are anticipated to remain unchanged. (Source: USDA)

Indian sugar industry overview

India holds the distinction of being the largest consumer of sugar in the world, making the sugar industry one of the most significant agro-based sectors in the country. The industry not only supports Millions of farmers but also contributes meaningfully to the rural economy and national GDP. The major by-products of sugar production are molasses, bagasse fibre, and cane wax.

Cane is the syrups that remain after the sugar has been crystallized out.

India achieved a sugar production of

25.49 Million Tonnes by April in the ongoing 2024-25 sugar season, an 18% dip from last year. Indias sugar availability is expected to remain comfortable due to a carry forward stock of about 8.5 Million Tonnes from the previous sugar season (2023-24).

Sugar consumption is expected to reach approximately 28 Million Tonnes, a decrease from the 29 Million Tonnes consumed in the previous year. This decline is attributed to the absence of significant events, such as the 2024 General Elections, which had previously boosted sugar demand with an estimated 4 Million Tonnes of sugar (sucrose) diverted towards ethanol production and closing stocks of 8.78 Million Tonnes as of September 2025.

Despite a slight reduction in acreage from 5.74 Million hectares to 5.37 Million hectares, cane yields are expected to improve, supporting a strong output of 439.93 Million Tonnes in 2024-25.

Indian sugar producers and traders are anticipating a substantial 19% decline in sugar production for the 2024 25 season. Indias net sugar production for the 2024 25 season is projected to be approximately 26.4 Million Tonnes (264 Lakh Tonnes).This estimate accounts for the diversion of about 3.5 Million Tonnes of sugar towards ethanol production. The reduction from earlier forecasts is primarily due to lower sugarcane yields in key producing states like Maharashtra and Karnataka. I SMA projected a closing stock of around 5.4 Million Tonnes by the end of the season, which exceeds the normative requirement and should help stabilize prices.

The sharpest decline is expected in Maharashtra, with a projected fall of approximately 27%, while Uttar Pradesh is likely to see a decrease of about 13%.

The Indian sugar and bioenergy manufacturers association (ISMA) provided a slightly more optimistic estimate, forecasting sugar production at around 26.4 MT, after accounting for the diversion of 3.50 Million Tonnes toward ethanol production.

At the beginning of 2025, ISMA reported total production of 23.3 Million Tonnes, with 228 mills still operational across

India. In Uttar Pradesh, improved plant cane recovery and yields may extend the crushing season into April, although mills in the central and eastern regions are expected to shut by the end of March. Meanwhile, reduced cane yield per hectare has lowered availability in Maharashtra and Karnataka, with some mills in Karnataka expected to resume operations during a special crushing season in June or July 2025. Final output projections stand at 8 Million Tonnes for Maharashtra (down from 11 Million Tonnes), 9 Million Tonnes for Uttar Pradesh (down from 10.4 Million Tonnes), and 4.1 Million Tonnes for Karnataka (lower than last years 5.3 Million Tonnes but slightly above earlier projections).

(Source: ISMA, Chem Analyst, Statista, Mordor intelligence, new Indian express)

Sugar Balance Sheet 2024-25 (in Million Tonnes)

Opening stock	8
Estimated production during sugar season FY 2024-25	26.2
Sugar availability	37.9
Estimated domestic consumption	28
Targeted exports during sugar season FY 2024-25	1
N=LEFT>Closing stock	5

(Source:Gleaf, Business Standard)

Sugar opening stock, production, consumption and closing stock in India over the years

(in Million Tonnes)

Year	Opening balance	Production	Consumption	Closing balance
2014-15	7.47	28.3	25.6	9.08
2015-16	9.08	25.1	24.8	7.75
2016-17	7.75	31.6	24.5	3.88
2017-18	3.38	32.5	25.4	10.72
2018-19	10.72	33.16	26	14.5
2019-20	14.5	27.4	25.3	10.7
2020-21	10.7	30.8	26	8.5
2021-22	8.5	36	27.5	7
2022-23	5.7	35.0	27.5	6.2
2023-24	5.18	34.0	29.50	7.68
2024-25	8	33.3	30.10	5

(Source: Chini Mandi, The Hindu Business Line)

Performance of major sugar growing states

Maharashtra: Sugar production declined to 8.07 Million Tonnes as of mid-April 2025, down from 10.94 Million Tonnes in the previous season. The decrease is attributed to reduced sugarcane yields and early closure of mills due to lower cane availability.

Uttar Pradesh: Production slightly decreased to 9.11 Million Tonnes from 10.18 Million Tonnes in the 2023 24 season. Despite this, Uttar Pradesh experienced the smallest decline among major producing states, owing to improved plant cane recovery and yield.

Karnataka: Sugar output fell to 4.04 Million Tonnes, compared to 5.06 Million Tonnes in the previous season. The decline is due to lower sugarcane yields and early cessation of milling operations.

(Source: Statista, Money Control, ISMA)

Sugar exports and imports

At the beginning of 2025, India approved the export of up to 1 Million Tonnes of sugar for the year 2024-25, offering a boost to local sugar prices and enhancing liquidity. India exported 2,87,204 Tonnes of sugar by early April in the ongoing 2024 25 marketing year. This move is expected to improve realizations, supporting 50 Million farming families and 5,00,000 workers, while ensuring timely payments for sugarcane.

As the worlds second-largest sugar exporter from 2018-19 to 2022-23, India played a crucial role in supplying markets like Indonesia, Bangladesh, and the UAE. Despite no exports in the 2023-24 season, the limited export quota for 2024-25, coupled with strong production prospects, signals positive market conditions.

(Source: Chinimandi, Reuters)

Fair and remunerative prices

The Centre approved a Rs.15/quintal increase in fair and remunerative price (FRP) of sugarcane for the 2025-26 season (October-September). Last year, the FRP was raised by Rs.25/quintal. The FRP of sugarcane for season 2024-25 (October to September) stood at Rs.340/ quintal for a basic recovery rate of 10.25%. Earlier, it was Rs.315/quintal.

There will be a premium of Rs.3.46/quintal for every 0.1% increase in recovery over and above 10.25% and a reduction of Rs.3.46/quintal in FRP for every 0.1% decrease in recovery.

(Source:Chini Mandi, The Hindu Business Line, Pib)

FRP over the years (in Rs. per quintal)

Year	FRP
2012-13	145
2013-14	170
2014-15	210
2015-16	220
2016-17	230
2017-18	255
2018-19	275
2019-20	275
2020-21	285
2021-22	290
2022-23	305
2023-24	315
2024-25	340
2025-26	355
(Source: Business Standard)

Indian ethanol sector overview

Indias ethanol market was valued at $6.51 Billion in 2023 and is expected to reach $10.45 Billion by 2029. This growth trajectory reflects a robust CAGR of 8.84%. Ranking just behind the United States and Brazil, India now holds the position of the worlds third-largest ethanol producer. A key pillar of its renewable energy strategy involves repurposing excess sugar into ethanol, a move that not only curbs dependency on fossil fuel imports but also reinforces the nations commitment to meeting its COP 26 pledges.

Oil Marketing Companies (OMCs) had finalized approximately 369.54 Crores litres of ethanol. Of this, 181.03 Crores litres originated from sugar-based sources, while 188.51 Crores litres came from grain-based production, marking a nearly even split with grain accounting for 51.02% and sugar for 48.98%.

Indias ethanol-petrol blending rate has seen significant gains from just 5% in 2019-20 to 12% by 2022-23. During this time, ethanol production surged from 173 Crores litres to beyond 500 Crores litres. As of the conclusion of the Ethanol Supply Year (ESY) 2024, the blend ratio had climbed to 14.6%, reflecting steady progress toward the 20% target. Impressively, by the end of March 2025, blending had already hit 18.36%, with a monthly average of 19.78% achieved for March alone positioning India to meet its 20% target by 2025, well ahead of the initial 2030 deadline laid out under the National Policy on Biofuels (NPB) 2018.

To support this growth, the Union Cabinet recently revised the procurement price of ethanol derived from C-heavy molasses (CHM), raising it by Rs.1.69 per litre to Rs.57.97.

The prices for ethanol produced using B-heavy molasses (BHM) and sugarcane juice (SCJ) have been maintained at Rs.60.73 and Rs.65.60 per litre, respectively, for a second consecutive year. This price revision benefits CHM-based producers, helping improve their operating margins. In contrast, distilleries utilizing BHM and SCJ continue to feel the pinch, especially after sugarcane prices rose by 3 5% in the previous year. As a result, production is expected to shift increasingly toward CHM and grain-based ethanol, which currently offer better returns.

(Source:ISMA,Chinimandi, groww.in, pib.gov)

Indian co-generation sector overview

Biomass plays a pivotal role in Indias energy landscape, supplying nearly one-third about 32% of the nations primary energy needs. For more than 70% of the population, it remains a vital energy source. In recent times, the bioenergy sector has demonstrated steady progress, with installed capacity rising from 10.84 GW in December 2023 to 11.35 GW by December 2024 marking a 4.70% growth over the year. Projections suggest that the domestic biomass market could scale up to Rs.32,000 Crores by FY 2030 31, propelled by policy-driven support and growing international interest from clean energy investors.

To expand biomass use, especially in rural and underserved areas, the Indian government has rolled out targeted interventions, particularly focused on co-generation and biogas plant development. These policies have successfully attracted global green energy firms keen to participate in Indias expanding market for sustainable and dependable power sources. As energy demand continues to climb, biomass is expected to be a vital contributor to meeting this demand sustainably.

As part of its broader clean energy roadmap, India has anchored biomass development under the National Bioenergy Programme, which is being executed by the Ministry of New and Renewable Energy (MNRE) from 2021 through 2026. Phase-I of the programme is backed by a budgetary allocation of Rs.858 Crores and is structured around three main components. The first is the Waste to Energy initiative, designed to harness energy from agricultural, municipal, and industrial waste streams—complementing the SATAT schemes vision of commissioning 5,000 compressed biogas (CBG) plants.

The second stream, the Biomass Programme, is focused on fostering pellet and briquette production while also pushing biomass co-generation as a solution to address crop residue burning. The third segment, the Biogas Programme, promotes decentralized energy through biogas plants tailored for small to mid-sized rural applications. Together, these schemes aim to shift the country away from fossil fuels, mitigate pollution, and generate economic opportunities at the grassroots level.

The sustained implementation of these policy measures is expected to deliver for bioenergy, close to 130 Million Tonnes of oil equivalent (Mtoe) by 2040 meeting roughly 15% of Indias total projected energy requirement.

(Source: Economic Times, Ministry of New and Renewable Energy)

Government initiatives

The government capped sugar diversion for ethanol making at 17 Lakh Tonnes for the current 2023-24 season (October- September) in view of likely fall in sugar production due to drought in parts of Maharashtra and Karnataka. The government had recently announced an incentive for ethanol made from maize.

But since the sugarcane crop is more efficient in terms of water, nutrients, land use or carbon sequestration, as compared to maize, sugarcane also deserves to be supported more by the government. (Source: business-standard.com)

Demand drivers in the sector

Growing population: The population of India is projected at 1.46 Billion as of March 31, 2025, a 0.92% increase from 2023. This steady growth ensures a broader market reach for the Company.

Environmental growing conditions: Sugar cultivation in India is expected to rise, as South Indias milder summers and frost-free, moderate winters create favorable growing conditions.

Beverage market gap: Indias low non-alcoholic beverage consumption offers strong growth potential.

More demand for related products: The tea industry in India was valued at Rs. 1.00 trillion in 2024 and is expected to reach Rs. 1.47 trillion by 2029, expanding at a compound annual growth rate (CAGR) of 6.98% (2025-2030). Sugar, a complementary good to tea, is expected to see parallel growth.

Value-addition importance: The growing consumer interest in enhanced products is fueling expansion in the packaged goods sector.

Rising end-product demand: The growing appetite for sweets and chocolates is directly driving higher sugar consumption.

Pharmaceutical industry: Indias pharmaceutical industry, valued at around US$58 Billion, is projected to reach US$120-130 Billion by 2030 and US$400-450 Billion by 2047. Sugars vital role in pharmaceutical production supports industry expansion. (Sources: India Briefing, Global News Wire, Worldometer)

SWOT analysis

Strengths

? Sugarcane is one of the most lucrative cash crops cultivated in India.

? India ranks first in global sugar consumption and is the worlds second-largest sugar producer.

? The sugar industry promotes the growth of allied sectors and significantly supports the rural economy.

? The Indian government recognizes the sugar sectors vital contribution to the local economic development.

? The Indian sugar sector plays a crucial role in supporting the livelihoods of approximately 50 Million sugarcane farmers and provides direct jobs to 500,000 workers.

Weaknesses

? Cane prices in India remain significantly above the global average.

? Many mills still operate with outdated machinery and technology.

? A widespread lack of funds leads to financial difficulties for numerous sugar mills.

? Environmental concerns, such as water-intensive cultivation, pose sustainability challenges for the industry.

Opportunities

? Overall domestic consumption volume of sugar was expected to be 32 Million Metric Tonnes in India.

? Adopting improved farming methods can significantly increase crop yields and operational

? The governments ethanol blending mandate plays a crucial role in driving ethanol demand.

? Modernizing technology can improve by-product efficien usage,leadingtohigheroverall

Threats

? Climate change affects cropping patterns and reduces yield levels.

? The industry is heavily dependent on the variability of monsoon rains.

? Limited infrastructure makes cane farming vulnerable to uncertain weather conditions.

Financial overview

Analysis of the profit and statement

Revenues: Revenues from operations reported from Rs.2,646.83 Crores in FY 2023-24 to Rs.2,656.38 Crores in FY 2024-25. Other Income of the Company reported a 34.38% decrease and accounted for a 0.66% share of the Companys revenues, reflecting the Companys dependence on its core business operations.

Expenses: Total expenses increased by 4.72% from Rs.2,481.83 Crores in FY 2023-24 to Rs.2,599.04 Crores in FY 2024-25 Crores. Raw material costs, accounting for a 56.58% share of the Companys revenues, decreased by 13.64% from Rs.1,752.06 Crores in FY 2023-24 to Rs.1,513.02 Crores in FY 2024-25. Employees expenses, accounting for a 3.00% share of the Companys revenues, decreased by 6.34% from Rs.85.79 Crores in FY 2023-24 to Rs.Crores in FY 2024-25.

Analysis of the Balance Sheet

Source of funds: The capital employed by the Company were Rs.2,153.90 Crores as on March 31, 2025 as against Rs.2,145.38 Crores as on March 31, 2024. Return on capital employed, a measurement of returns derived from every rupee invested in the business, was 5.82% in FY 2024-25 as against 10.94 % in FY 2023-24.

The net worth of the Company was Rs.1,153.35 Crores as on March 31, 2025 as against Rs.1,101.01 Crores as on March 31, 2024. The Companys equity share capital as on March 31, 2025 comprises of 6,53,87,590 equity shares of Rs.10 each.

Long-term debt of the Company was

Rs.142.65 Crores as on March 31, 2025.

The debt-equity ratio of the Company stood at 0.79 in FY 2024- 25 compared to 0.88 in FY 2023-24.

Finance costs of the Company increased by 18.25% from Rs.42.52 Crores in FY 2023-24 to Rs.50.28 Crores in FY 2024-25. The Companys debt service coverage ratio stood at a comfortable 1.57 x at the close of FY 2024-25 as against 2.15x at the close of FY 2023- 24.

Application of funds: Fixed assets (gross) of the Company was Rs.1,861.13 Crores as on March 31, 2025 as against Rs.1,833.37 Crores as on March 31, 2024.

Depreciation on tangible assets was Rs.55.56 Crores in FY 2024-25 as against Rs.53.06 Crores in FY 2023-24 during the year under review.

Investments: Non-current investments of the Company were Rs.1.25 Crores as on March 31, 2025 as against Rs.1.00 Crores as on March 31, 2024.

Working capital management: Current assets of the Company were Rs.1,241.27 Crores as on March 31, 2025 as against Rs.1,181.89 Crores as on March 31, 2024.

The Current and Quick ratios of the Company stood at 1.29 and 0.35 respectively at the close of FY 2024-25 compared to 1.20 and 0.26, respectively at the close of FY 2023-24.

Inventories, including raw materials, work-in-progress, and finished goods, among others, was Rs.898.64 Crores as on March 31, 2025 as against Rs.917.06 Crores as on March 31, 2024.

The inventory turnover ratio was 2.55 times as against 2.77 times in FY 2023-24. Trade receivables were Rs.148.65 Crores as on March 31, 2025 as against Rs.163.39 Crores as on March 31, 2024. All receivables were secured and considered good. The Company contained its debtors turnover ratio at 10.84 times in FY 2024-25 compared to 10.04 times in FY 2023-24.

Margins: The EBIDTA margin of the Company is 7.05% in 2024-25 while the net profit margin of the Company is 1.98%.

Key ratios

Particulars	FY 2024-25	FY 2023-24
EBITDA/Turnover (%)	7.05	11.08
EBITDA/Net interest ratio (x)	3.73	6.90
Debt-equity ratio	0.79	0.87
Return on equity (%)	4.65	12.56
Book value per share (Rs.)	176.27	168.28
Earnings per share (Rs.)	7.98	20.27
Debtors turnover ratio	10.84	10.04
Inventory turnover ratio (times)	2.55	2.77
Current ratio (x)	1.29	1.20
Net profit margin (%)	1.98	5.09

The variance and reasons for the same have been reported in the financial statements and form part of this management and discussion analysis

Risk management

Geographical risk	Procurement risk	Quality risk
The operational efficiency of mills may be impacted by their distance from cane fields.	Challenges in sourcing sugarcane could arise.	The risk of receiving substandard sugarcane remains a concern.
Mitigation: To address this, mills are strategically positioned within a 30 km radius of key cane- growing areas, ensuring smooth access through well-established road networks.	Mitigation: The Company mitigates this by fostering strong, long-term relationships with cane farmers and supporting their welfare and productivity through dedicated programs.	Mitigation: The Company encourages the adoption of early- maturing cane varieties, provides subsidized insecticides, and educates farmers on advanced agricultural practices to improve cane quality.
Financial risk	Human capital risk
Rising debt levels could affect financial stability.	Attracting and retaining skilled talent may present challenges.
Mitigation: Timely repayment of debts ensures the Company maintains a strong financial position.	Mitigation: The Company implements a well-defined human resource policy aimed at attracting, developing, and retaining top talent.

Internal control systems and their adequacy

The Company maintains a strong internal audit system that is consistently monitored and updated to safeguard assets, ensure regulatory compliance, and swiftly resolve any concerns. The audit committee actively reviews internal audit findings, implements corrective measures when necessary, and collaborates closely with both statutory and internal auditors to uphold an efficient

Human resources and industrial relations

The Company places great importance on its employees and is dedicated to equipping them with skills aligned with technological advancements. Over the past year, it has organized a variety of training programs focusing on technical expertise, behavioural development, business acumen, leadership, customer service, safety, and ethical practices.

As of March 31, 2025, the Companys workforce stood at 1,232.