Dhampure Speciality Sugars Ltd Management Discussions

GLOBAL ECONOMIC REVIEW

Overview

Global growth is forecast to moderate further to 2.9% in 2024, after slowing from 3.5% in 2022 to 3% in 2023. Asia continues to remain the key driver of global growth, projected to expand by 5.1% in 2024 (compared to 5.2% in 2023), supported by India and emerging ASEAN economies. However, the weaker-than-expected recovery in China, ongoing Russia-Ukraine conflict, energy transition costs in Europe, and persistent global logistic disruptions continue to weigh on growth.

Growth in advanced economies is projected to decline from 1.5% in 2023 to 1.4% in 2024, reflecting the lagged impact of monetary tightening and slowing demand. Emerging market and developing countries are expected to sustain growth at 4.0% in 2024, broadly stable from 2023.

Global inflation is expected to decline further from 6.9% in 2023 to 5.8% in 2024, helped by tighter monetary conditions, easing commodity prices, and softer demand. Core inflation is also projected to gradually ease. The US Federal Reserve, having raised rates to their highest in two decades, is expected to shift towards a more accommodative stance later in 2024, contingent on inflation outcomes.

Global trade remains subdued. While merchandise trade is expected to remain weak due to softer demand and supply chain disruptions, services trade continues to show resilience, particularly in IT, tourism, and financial services. Brent crude oil is projected to average $85 per barrel in 2024, compared to $83 per barrel in 2023, reflecting supply constraints amid OPEC+ output decisions and geopolitical tensions.

Equity markets started 2024 on a cautiously optimistic note, supported by expectations of monetary easing in the US and Europe, along with lower energy prices. However, volatility remains elevated due to global geopolitical risks.

REGIONAL GROWTH (%)

Region	2024 (Proj.)	2023	2022
World Output	2.9	3.0	3.5
Advanced Economies	1.4	1.5	2.6
Emerging & Developing Economies	4.0	4.0	4.1

INDIAN ECONOMIC REVIEW

Indias economy in FY 2024-25 continues to showcase resilience and remains one of the fastest-growing large economies globally. Supported by strong domestic demand, government capital expenditure, and a favorable monsoon outlook, India is projected to grow at 6.5 6.7% in FY 2024-25, building on its robust performance in FY 2023-24.

Retail inflation moderated in FY 2023-24 and is expected to average 4.5% in FY 2024-25, well within the RBIs target band. While risks from geopolitical conflicts, food price volatility, and weather patterns persist, a normal monsoon is expected to keep inflationary pressures in check.

Indias external sector witnessed a narrowing of the merchandise trade deficit in FY 2023-24 due to lower imports and moderated global commodity prices. Services exports continue to support the current account balance. Capital inflows remain strong, led by equity and debt investments, while the rupee has shown relative stability against the US dollar.

GLOBAL SUGAR SECTOR

Global sugar production in 2024-25 is estimated at 180 million tons, largely stable year-on-year, with Brazils strong output offsetting declines in Thailand and India. Consumption is expected to rise further, surpassing 182 million tons, driven by population growth and rising demand in emerging economies such as India, Pakistan, and parts of Africa.

The sugar market is forecast to grow at a CAGR of 1.4% during 2024 2032. White sugar continues to dominate the market, though demand for organic and specialty sugars is rising. Producers are increasingly investing in automation, efficiency improvements, and product diversification to meet evolving consumer preferences and reduce production costs.

INDIAN SUGAR SECTOR

Indias sugar production in marketing year (MY) 2024-25 (October September) is projected at 31.5 32 million tons, marginally lower than 2023-24 due to adverse climatic conditions in some regions. Sugar consumption is estimated at 29.2 million tons, maintaining its upward trajectory, supported by population growth and demand from the ethanol and potable alcohol industries.

Sugar exports are expected to remain highly restricted in 2024-25, as the government continues its policy of prioritizing domestic availability and price stability. Given the tight supply-demand balance and inflationary pressures, exports may remain negligible for a second consecutive year.

The area under sugarcane cultivation is expected to remain steady at around 5.6 million hectares. Despite weather uncertainties, government pricing support and higher ethanol blending targets continue to incentivize farmers towards sugarcane cultivation.

EXPORTS

Particulars	Amount (Rs. In Lakhs)
2024-25	150.90
2023-24	56.80
2022-23	34.50

MARKET DYNAMICS

The Government of India approved a Fair and Remunerative Price (FRP) of 340 per quintal for the sugar season 2024-25 (October 2024 onwards), up from 315 in 2023-24, based on a recovery rate of

10.25%. This is 116% higher than the cost of production ( 157 per quintal).

Farmers with lower recoveries will still be protected, with no deductions below 9.5% recovery rate. This ensures sugarcane remains among the most remunerative crops.

Particulars	Amounts (Rs.)
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 sector continues to expand, though supply challenges from sugarcane diversion may limit production growth in 2024-25. Grain-based distillery capacity has risen sharply, with production expected to cross 450 crore liters in 2024-25.

The governments blending target of 20% ethanol in petrol by 2025-26 remains in focus. However, production from sugarcane juice and B-heavy molasses may remain constrained due to tight sugar availability and government restrictions on diversion.

For MY 2024-25, sugar diversion towards ethanol is expected to remain capped at ~18 19 lakh tons. Ethanol supply from grains and C-heavy molasses is expected to bridge part of the gap.

In 2022-23, ethanol production mix was:

25% from cane juice

46% from B-heavy molasses

Remaining from C-heavy molasses & grains

Going forward, greater emphasis will be placed on grain-based ethanol and second-generation biofuel projects to meet long-term blending targets.

SWOT ANALYSIS OF THE INDIAN SUGAR INDUSTRY

Strength	Weakness	Opportunities	Threats
Sugar cane is among the most profitable cash crops in India.	Cane prices in India are high compared to international standards.	Indias per capita sugar consumption is approximately 20 kg per person, compared to the global average of 23 kg.	Climate change has affected crop patterns and yields.
India stands as the second largest producer and largest consumer of sugar worldwide.	Many companies in the sector use outdated technology.	Implementing advanced farming techniques could significantly increase cane yield and recovery	Political agendas have consistently influenced the sector.
The sugar industry supports downstream sectors and enhances the countrys extensive rural economy.	Many mills face economic instability.	The governments mandatory ethanol blending program is boosting ethanol production.	The sector relies on monsoon rains.
The government views the Indian sugar industry as a key contributor to the local economy.			A lack of necessary infrastructure makes cane farming susceptible to climatic variations.
The Indian sugar sector provides livelihood to approximately 50 million sugarcane farmers and directly employs 5 lakh workers.		Technological upgrades could enhance the utilization of by- products.

FINANCIAL RATIOS AND ELEMENTS

Particulars	Units	31.03.2025	31.03.2024	Variance (%)	Reason for Variance were change is more than 25%
Current Ratio	Times	3.08	2.38	69.69%	Due to Decrease in other current Liabilities
Debt-Equity Ratio	Times	Not applicable since company has no Debt
Debt Service Coverage Ratio	Times	Not applicable since company has no Debt
Inventory Turnover Ratio	Times	7.10	5.29	181 %	Increase in Revenue from operation
Trade Receivable Turnover Ratio	Times	11.43	11.61	(18.00 %)	NA
Trade Payable Turnover Ratio	Times	10.85	8.79	(206.00 %)	Decrease in trade Payables
Net Capital Turnover Ratio	Times	9.70	3.58	1166.14 %	Due to increase in Total Income
Net Profit Margin	Percentage	7.00 %	0.28 %	(664.78 %)	Due to increase in Total Income
Return on Equity	Percentage	8.25 %	0.27 %	(798.00%)	Due to increase in Total Income
Return on Capital Employed	Percentage	11.00 %	1.39 %	(961.00 %)	Due to increase in Total Income