Dwarikesh Sugar Industries Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

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 economies	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

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 grew at 6.5% in 2024-25, compared to a revised 9.2% in 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 net investments). Despite the slowdown, India retained its position as the worlds fifth-largest economy.

Indias nominal GDP (at current prices) was Rs.330.68 trillion in 2024-25 (H301.23 trillion in 2023-24). The nominal GDP per capita increased from Rs.2,15,936 in 2023-24 to Rs.2,35,108 in 2024-25, reflecting the impact of an economic expansion.

The Indian rupee weakened 2.12% against the US dollar in 2024-25, closing at Rs.85.47 on the last trading day of 2024-25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar).

Inflationary pressures eased, with CPI inflation averaging 4.63% in 2024-25, driven by moderating food inflation and stable global commodity prices. Retail inflation at 4.6% in 2024-25, was the lowest since the pandemic, catalysing savings creation.

Indias foreign exchange reserves stood at a high of US$ 676 billion as of April 4, 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 (annualised 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 US$ 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 US$ 17.9 billion due to the uncertainty caused by Donald Trumps election and his assertions around getting investments back into the US.

Growth of the Indian economy

	FY22	FY23	FY24	FY25
Real GDP growth (%)	8.7	7.2	8.2	6.5

(Source: MoSPI, Financial Express)

Growth of the Indian economy quarter by quarter, FY 25

	Q1FY25	Q2 FY25	Q3 FY25	Q4 FY25
Real GDP growth (%)	6.5	5.6	6.2	7.4

(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 reached US$ 824.9 billion in 2024-25, up from US$ 778 billion in the previous fiscal year. The Red Sea crisis impacted shipping costs, affecting price-sensitive exports. Merchandise exports grew 6% YoY, reaching US$ 374.1 billion.

Indias net GST collections increased 8.6%, totaling Rs.19.56 lakh crore in 2024-25. Gross GST collections in 2024-25 stood at Rs.22.08 lakh crore, a 9.4% increase YoY.

On the supply side, real gross value added (GVA) was estimated to expand 6.4% in 2024-25. The industrial sector grew by 6.5%, supported by growth in construction activities, electricity, gas, water supply and other utility services.

Indias services sector grew at 8.9% in 2024-25 (9.0% in 2023-24), 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 2024-25, compared to 8.6% in 2023-24. Meanwhile, the construction sector expanded at 9.4% in 2024-25, slowing from 10.4% in the previous year.

Manufacturing activity was subdued in 2024-25, with growth at 4.5%, which was lower than 12.3% in 2023-24. 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 2024-25, compared to 8.1% in 2023-24.

The agriculture sector grew at 4.6% 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, the private final consumption expenditure (PFCE) exhibited robust growth, achieving 7.2% in 2024-25, surpassing the previous financial years rate of 5.6%.

The Nifty 50 and SENSEX recorded their weakest annual performances in 2024-25 in two years, rising 5.3% and 7.5% during the year under review respectively. Gold rose 37.7% to a peak of US$ 3,070 per ounce, the highest increase since 2007-08, indicating global uncertainties.

Total assets managed by the mutual fund (MF) industry jumped 23% or Rs.12.3 lakh crore in fiscal 2025 to settle at Rs.65.7 lakh crore. At close of FY25, the total number of folios had jumped to nearly 23.5 crore, an alltime peak. During last fiscal, average monthly systematic investment plan (SIP) contribution jumped 45% to Rs.24,113 crore.

Foreign portfolio investments (FPIs) in India experienced high volatility throughout 2024, with total inflows into capital markets reaching approximately US$ 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 FY26.

Tariff-based competitiveness: India identified at least 10 sectors such

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 2024-25: The Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasising agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating Rs.11.21 lakh crore 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 crore in tax savings could boost consumption by Rs.3-3.5 lakh crore, potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current Rs.200 lakh crore.

Free trade agreement: In a postBalance 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. 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 inflation: 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 202526. 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 prioritised 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 sector overview

The global sugar production is expected to grow to 174.8 million tonnes in SS 24-25; global sugar consumption is expected to increase from 179.2 million tonnes in SS 23-24 to about 180.3 million tonnes in SS 24-25.

In the 2024/25 season, sugarcane production in Brazils Centre-South region is forecast at 42.5 million metric tonnes, driven by favorable weather and an expanded cultivation area. From 2026 to 2031, the global price of sugar is projected to rise from approximately 680 U.S. dollars per tonne to around 720 U.S. dollars per tonne. However, this increase would still be lower than the price of sugar in 2022. As a result, sugar could become even more accessible and affordable.

(Source: Statista, USFDA, Reuters)

United States of America:

U.S. production is projected to decrease slightly to 8.4 million tonnes, driven by lower sugarbeet and sugarcane yields. Consumption is expected to remain stable, while stocks are reduced due to the lower imports.

Brazil: For the 2024/25 season, sugarcane production in Brazils Centre-South region is projected to reach 42.5 million metric tonnes, supported by favorable weather conditions and an expanded cultivation area.

India: Estimates suggest output could decline to approximately 27 million metric tonnes, while annual consumption is expected to exceed 29 million tonnes.

Australia: Australias production is estimated to drop by 100,000 tonnes to 4.0 million tonnes, owing to unfavourable rainfall, which led to some sugarcane being held for next season instead of being harvested this year. Consumption is expected to grow slightly.

Indonesia: Indonesias production is projected to decrease by 300,000 tonnes to 2.0 million tonnes, primarily due to adverse weather conditions. Consumption is expected to grow with the population and a rising demand from the food and beverage industry.

Turkey: Turkeys production is forecasted to decrease by 300,000 tonnes to 3.1 million tonnes due to hot and dry weather conditions. Consumption and stocks are expected to remain unchanged.

World Sugar Balance (October/September, in mln tonnes, tel quel)

Regional growth (%)	2024/25	2023/24		Change/s
			In mln tonnes	In %
Production	174.795	181.264	- 6.469	-3.57
Consumption	180.261	179.225	1.036	0.58
Surplus/Deficit	- 5.466	2.039
Import demand	63.133	69.342	- 6.209	- 8.95
Export availability	63.323	68.713	- 5.390	- 7.84
End Stocks	93.931	99.587	- 5.656	- 5.68
Stocks/ Consumption ration in %	52.11	55.57

Global sugar price realisations

During the 2024-25 sugar season, global sugar prices remained range-bound between 17 and 20 cents per pound on the New York exchange, largely due to tight supply conditions—particularly from key exporters such as India and Thailand. However, prices have recently softened in response to expectations of a bumper sugarcane harvest during SS 2025-26 across all major producing regions.

Center-South Brazil, the worlds largest sugar-producing region, is projected to produce over 45 million tonnes of sugar, which would significantly boost global supply. Additionally, forecasts of above average monsoon rainfall in both India and Thailand are expected to support healthy sugarcane yields, further strengthening global production prospects. Another key factor influencing global sugar prices is Indias domestic policy, particularly in regard to ethanol blending mandates and sugar export restrictions. Any changes to these policies could either tighten or ease global supply, making India a major determinant in the price trajectory going forward.

Indian sugar industry overview

Indias sugar production for the 2024/25 season is projected to fall below consumption levels for the first time in eight years due to adverse weather conditions affecting key sugarcane-growing states, including Maharashtra, Karnataka, and Uttar Pradesh. Sugar output could decline to approximately 26.4 million metric tonnes, while annual consumption is expected to exceed 28 million metric tonnes.

The production shortfall, coupled with increased ethanol manufacturing that diverted sugarcane from sugar production, has reduced Indias export potential. Most sugar mills in Maharashtra and Karnataka have completed their crushing operations. During the 2024-25 sugar season, Uttar Pradesh has surpassed Maharashtra in sugar output, reclaiming its position as the countrys leading sugar producer

Between 2018 and 2023, India was the worlds second-largest sugar exporter, averaging 6.8 million metric tonnes in annual shipments. However, in the 2023-24 marketing year, India restricted exports due to domestic supply concerns.

In January 2025, the government approved the export of 1 million metric tonnes of sugar to help mills manage surplus stocks, stabilise domestic prices, and support an industry facing pressure from lower production and rising costs. This decision accelerated cane payments to farmers, with Rs.21,000 crore disbursed within a month, covering 77% of outstanding arrears, an improvement from 69% previously.

Meanwhile, domestic sugar prices increased.

With reduced output and limited export allowances, Indias role in the global sugar market is shifting. The country is advancing its ethanol blending programme, aiming to soon reach a 20% ethanol blend. Increased ethanol production from sugarcane and other agricultural sources are central to Indias commitment to reduce its dependence on crude oil imports.

Indias dual approach—balancing sugar production, ethanol expansion, and controlled exports—reflects its efforts to stabilise domestic supply while maintaining a presence in the global sugar market and supporting renewable energy goals.

(Source: Financial Express, ISMA, Business Standard)

India Sugar Balance Sheet (Provisional)

1 (I) DOMESTIC SUGAR BALANCE SHEET

			(In lakh tonnes)
S. No. Particulars	2022-23	2023-24 (P)	2024-25 (E)
a Opening Stock as on 1st October**	70.00	55.65	80.00
b Gross production during Season (Without diversion for ethanol)	366.15	341.14	299.00
c Diversion for ethanol ( E )	38.00	21.50	35.00
d Net Production during the Season	328.15	319.64	264.00
e Imports *	0.00	0.00	0.00
f Total Availability	398.15	375.29	344.00
Off-take
i) Internal Consumption	278.50	290.00	280.00
ii) Exports *	64.00	0.50	10.00
Total offtake	342.50	290.50	290.00
g Closing Stock as on 30th Sept.	55.65	84.79	54.00

* Imports and exports are under O.G.L. and as reported by sugar mills to GoI "Opening stock of 2022-23 and 2024-25 reconciled with Government data. (Source: ISMA)

Dwarikeshs value chain

Our value chain is anchored in sustainable agricultural practices that enhance operational efficiency while minimising environmental impact. The by-products of sugar production—bagasse, molasses, and press mud—are not treated as waste but transformed into valuable resources. Bagasse powers our advanced co-generation facilities, generating steam and electricity for our operations, with surplus energy fed into the national grid. Molasses is converted into ethanol, supporting the production of renewable biofuels.

Through a robust circular economy model, we maximise resource utilisation and significantly reduce greenhouse gas emissions, reinforcing our commitment to low-carbon, sustainable operations. Every stage of our process is interconnected—driven by principles of environmental responsibility, resource efficiency, and economic resilience. This integrated approach not only ensures responsible growth but also contributes to the nations clean energy future, demonstrating how industrial advancement and ecological stewardship can thrive together.

Growth catalysts

Rising domestic consumption: India has been the largest consumer and second largest producer of sugar in the world, with about 15% share in global sugar consumption and about 20% production of sugar.

This demand is expected to increase following urbanisation and evolving dietary habits.

Export demand: India was the worlds second-largest sugar exporter during the five years leading to 2022-23, averaging 6.8 million tonnes of annual exports. The growing demand for sugar in key markets like Indonesia, Bangladesh and the Middle East provides export opportunities coupled with the governments export subsidies and quota allocations. This is expected to boost sugar exports.

Ethanol Blending Programme:

The Indian governments push for ethanol blending with automotive fuel has been a game-changer for the sugar sector. The target of 20% ethanol blending (E20) by 2025-26 boosted ethanol demand, encouraging sugar mills to divert excess sugarcane towards ethanol production. This diversification helped stabilise sugar prices and enhance mill profitability.

Conducive government policies:

With sugar being an essential commodity, the government implemented policies to incentivise production. This included Fair & Remunerative Price (FRP), which ensured a guaranteed return for farmers and a Minimum Selling Price (MSP) of sugar to prevents price erosion.

Alternative sweeteners and specialty sugars demand:

A rising health consciousness is driving the demand for alternative sugars, including organic sugar, jaggery, low- GI sugar, and sugar-free alternatives. A premiumisation in the form of specialty sugars for bakery and confectionery applications is opening revenue streams.

Technological advancements:

The adoption of modern sugarcane farming techniques, including the introduction of high-yield varieties, improved irrigation techniques and mechanised harvesting has enhanced production efficiency. Moreover, digitalisation and automation in sugar mills have enhanced productivity and optimised costs. (Source: Chinimandi.com, Financial Express, Economic Times)

SWOT Analysis

• India is the worlds largest sugar producer, enabling it to address domestic and export market demand.

• The sugar industry is a key employer in Indias agricultural sector.

• Bagasse, a byproduct of sugarcane, is utilised to co-generate power, serving internal needs and external sales.

• India is endowed with fertile arable land, ideal for large-scale sugarcane cultivation.

• The country is recognised as one of the most cost-efficient global sugar producers.

• The sugar industry is integral in supporting rural communities, providing employment and economic stability.

• Many sugar companies use outdated manufacturing technologies.

• Global demand for Indias plantation white sugar remains low.

• The sugarcane industry is reliant on monsoon rains, making it vulnerable to climatic variations.

• Indias rising population is driving increased domestic sugar demand.

• There is significant potential to meet the growing demand for ethanol, particularly as the government pushes for renewable energy initiatives.

• The sugar industry has ample room for product diversification, opening avenues for new revenue streams.

THREATS

• Domestic sugar producers may face competition from low- priced imports, which could affect profitability.

• Over-reliance on monsoon rainfall and rising transportation costs pose risks to sugarcane cultivation.

• Excessive production without sufficient exports could lead to lower sugar prices and decreased revenue.

• The industry is susceptible to shifts in government policies, which can impact operations.

Cane Optimisation

Sugarcane, primarily grown in tropical and subtropical regions, is utilised for producing sugar and ethanol. Sugarcane offers significant potential for product diversification through underutilised byproducts, including:

• Sugarcane trash or straw left on fields. After harvesting, instead of discarding this material, farmers can use it to improve soil fertility, generate biofuel, or supplement livestock feed

• Ash produced from bagasse combustion in co-generation plants offers applications in construction, soil amendment, and pollution control

• Filter cake resulting from sugarcane juice clarification. It can be used in biogas production or processed into a natural fertiliser, enhancing agricultural sustainability

• Vinasse, the liquid residue left after ethanol distillation, contains essential nutrients that make it suitable for soil enrichment, biogas production, and irrigation support

• Biogenic CO₂ emitted during bagasse combustion and ethanol fermentation which, if captured effectively, can be used in beverage carbonation, algae cultivation, or synthetic fuel production. Furthermore, sugar mills generate green electricity, which can facilitate hydrogen production, reducing dependence on fossil fuels

• Green power generated by sugar mills, which can be used to produce green hydrogen

• With growing restrictions on single-use plastics, the global shift towards biodegradable and renewable materials is gaining momentum. Bagasse presents a promising alternative to PVC-based products in lightweight industries, contributing to waste reduction, environmental conservation, and a circular economy.

By adopting innovative cascading methods to process these biomass fractions, sugarcane mills can reduce final disposal costs, increase energy yield, lower greenhouse gas emissions, and expand their product range. As technologies continue to evolve, these opportunities are likely to translate into tangible benefits in the near future.

Uttar Pradesh Sugar Industry Overview nnn m

As Indias leading sugarcane- producing state, Uttar Pradesh ranks ahead of Maharashtra and Karnataka and comprises the highest number of private sugar mills in the country.

Uttar Pradesh (UP) maintained the State Advised Price (SAP) of sugarcane for the 2024-25 season at Rs.370 per quintal for early varieties.

The SAP for general sugarcane varieties remained Rs.360 per quintal, with no revisions for the season. The states production was 10.5 million tonnes last year, with projections around 9.5 million tonnes in SS 2024-25, owing to unfavourable weather conditions and red-rot disease. As of April 30, 2025, sugar production in Uttar Pradesh had surpassed 9.25 million tonnes (nett of sugar diverted for ethanol)

Sugarcane farming in UP directly supported around 5 million farming households, while by-products such as sugar, ethanol, and molasses contributed to an industry valued at over Rs.50,000 crore annually in the State. (Source: Business Standard)

Indian Ethanol Sector Overview

Indias ethanol market was valued at US$ 6.51 billion in 2023 and is projected to reach US$ 10.45 billion by 2029, growing at a compound annual rate of 8.84%. As the third- largest ethanol producer globally, after the USA and Brazil, India reinforced its commitment to green energy by converting surplus sugar into ethanol, reducing fossil fuel imports, and advancing on its COP 26 target.

As per the latest reports from the Government of India, as of March 31, 2025, Oil Marketing Companies (OMCs) have secured around 369.54 crore Liters of ethanol. The sugar sector contributed around 181.03 crore Liters, with the grain sector supplying the remaining 188.51 crore Liters. Overall, the percentage-wise contribution of Sugar Sector and Grain Sector stands at 48.98% & 51.02% respectively.

Ethanol blending in petrol has increased from 5% in 2019-20 to 12% in 2022-23, with production rising from 173 crore litres to over 500 crore litres in the same period. By end of ESY 2024, ethanol blending in Indias fuel mix had reached 14.6%, and the country remains on track to achieve 20% blending by 2025, five years ahead of the original 2030 target set by the National Policy on Biofuels (NPB), 2018. By blending around 321 crore liters the current blending percentage achieved is 18.36%, as of March 31, 2025. Monthly average ethanol blending of 19.78% was achieved for the month of March-2025

To support ethanol production, the Union Cabinet has increased the price of C-heavy molasses (CHM)- based ethanol by Rs.1.69 per litre to Rs.57.97 per litre, while keeping prices for B-heavy molasses (BHM) and sugarcane juice (SCJ)-based ethanol unchanged at Rs.60.73 and Rs.65.60 per litre, respectively, for the second consecutive year. The price increase for CHM-based ethanol is expected to improve margins for distilleries using this feedstock. However, producers relying on BHM and SCJ-based ethanol may continue to face margin pressure, as their prices remain

unchanged despite a 3-5% increase in sugarcane prices last year. Given the more favorable margins for CHM and grain-based ethanol, distilleries are likely to transition their production away from BHM and SCJ-based ethanol. (Source: Chinimandi, groww. in, pib.gov, ISMA)

Ethanol realisations per litre (Rs.)

Ethanol type	ESY21	ESY22	ESY23	ESY24	ESY25
Direct ethanol	62.65	63.45	65.61	65.61	65.61
C-heavy ethanol	45.69	46.66	49.41	56.28	57.97
B-heavy ethanol	57.61	59.08	60.73	60.73	60.73

(Source: Industry Reports and Ventura Research)

Indian co-generation market overview

In India, biomass contributes to around 32% of Indias total primary energy consumption, serving as a primary energy source for over 70% of the population. Bioenergy has shown remarkable growth, with its installed capacity rising from 10.84 GW in December 2023 to 11.35 GW in December 2024, reflecting a 4.70% increase. The biomass market in India is projected to reach Rs.32,000 crore by the fiscal year 2030-2031, driven by government schemes and investments from international green energy companies.

The Indian government introduced initiatives to support biomass co-generation projects, aiming to enhance the capacities of small biogas plants in remote and rural areas. These efforts attracted investments from global green energy companies, responding to the growing demand for clean and reliable power in India. Biomass is anticipated to play a crucial role in meeting this increasing energy demand.

The Indian government introduced initiatives to promote biomass energy as part of its renewable energy and sustainability efforts. The National Bioenergy Programme, implemented by the Ministry of New and Renewable Energy (MNRE) from 2021 to 2026 with a budget of Rs.858 crore under Phase-I, includes three key sub-schemes. The Waste to Energy Programme supports biogas, bio-CNG, and power generation from urban, industrial, and agricultural waste, aligning with the SATAT schemes goal of establishing 5,000 CBG plants. The Biomass Programme encourages briquette and pellet manufacturing while promoting biomass co-generation to curb stubble burning. Additionally, the Biogas Programme facilitates small to medium-sized biogas plants for clean fuel and decentralised power generation in rural areas. These initiatives collectively aim to reduce reliance on fossil fuels, lower environmental pollution, and support rural economic growth.

According to the International Energy Agency (IEA), with the implementation of supportive government policies, bioenergy could contribute approximately 130 million tonnes of oil equivalent (Mtoe) of useful energy by 2040, accounting for about 15% of Indias total energy demand at that time.

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

Financial Analysis and Operational Perspective

Sugarcane crushed and sugar produced across three units (2024-25)

Particulars	2024-25	2023-24
Crushing (lakh quintal)	262.97	366.59
Recovery % (gross - adjusted)	10.94	11.63
Recovery % (net)	8.00	9.55
Production (lakh quintal)	20.98	35.22

SS 2024-25 vis-a-vis SS 2023-24 across three units

Particulars	2024-25	2023-24
Crushing (lakh quintal)	267.58	268.08
Recovery % (gross - adjusted)	10.96	11.56
Recovery % (net)	8.04	9.79
Production (lakh quintal)	21.52	26.25

Note: In the 2024-25 sugar season, one of our units operated beyond March 31, 2025, while the other two units concluded their operations before this date. In contrast, the 2023-24 sugar season represents a full season, as all units completed operations before March 31, 2024

Operational Highlights mwi

Sugar

• Sugarcane crushing decreased by 28.27%

• Gross-adjusted recovery declined 69bps

• The lower sugar production in 2024-25 is in line with reduced crushing volumes, primarily due to a decline in sugarcane availability. 2023-24 included

a portion of the crushing operations from the 2022-23 sugar season.

Co-generation

• During 2024-25, 932 lakh units of power were sold, generating revenue of Rs.3,197 lakh, compared to 1,380 lakh units valued at Rs.4,748 lakh in 2023-24. The decline in power sales was primarily due to reduced power generation, which in turn resulted from lower levels of crushing operations

Distillery

• Sold 605 lakh litres of industrial alcohol valued at Rs.380.66 crore compared to 944.07 lakh litres worth Rs.583.55 crore in 2023-24. The factors that led to lower sugar and power sales similarly impacted the sales of industrial alcohol

Financial Highlights, 2024-25 r

Particulars	2023-24		2024-25
	(Rs. lakh)	(%)	(Rs. lakh)	(%)
Income	1,70,957	100.00	1,35,888	100.00
EBITDA	21,662	12.67	11,991	8.82
EBDTA	19,649	11.49	10,138	7.46
EBT	14,399	8.42	5,246	3.86
EAT	8,352	4.89	2,334	1.72

The EBITDA for 2024-25 stood at Rs.11,991 lakh, reflecting a decline of 44.65% compared to Rs.21,662 lakh in the previous fiscal year. In percentage terms, EBITDA also declined, standing at 8.82% in 2024-25 compared to 12.67% in the previous fiscal year. This reduction was driven by multiple factors, most notably the complete suspension of sugarcane crushing operations during the first quarter of 2024-25 and disruptions in distillery activities. Crushing operations for the 2023-24 sugar season were halted in March 2024, whereas in the corresponding period of 2023-24, approximately 98.51 lakh quintals of sugarcane had been processed (relating to the 2022-23 sugar season).

The lower crushing volume directly impacted molasses generation. After fulfilling levy obligations, the limited availability of molasses further constrained ethanol production. As a result of reduced activity, fixed overhead costs remained under unabsorbed. Although crushing and production levels declined, the corresponding reduction in expenses was less than proportionate.

Earnings after tax (EAT) were Rs.2,334 lakh, significantly lower than Rs.8,352 lakh recorded in the prior year, on account of lower EBIDTA and also due to higher tax provisioning.

Despite these financial challenges, your company continues to maintain strong creditworthiness, with a long-term credit rating of (ICRA) AA- (pronounced as AA minus). Additionally, the Company retained the highest short-term rating of A1+ from ICRA for its Commercial Paper (CP) programme of Rs.300 crore.

BUSINESS SEGMENT REVIEW

OURSUGAR BUSINESS

Overview

Dwarikesh operates three plants with a combined capacity of 21,500 TCD as of FY25, situated in Uttar Pradesh, the countrys largest sugar- producing region.

The Company made strategic investments to boost cane yield, improve recovery, and enhance cost efficiency. These initiatives included an accelerated replacement of the red rot-prone Co 0238 seed variety with alternatives, effective cane inventory management, transitioning from manual to tractor-mounted loading, engaging farmers via the e-Kisan app, and strengthening farmer relationships. The Company automated its manufacturing processes, resulting in higher efficiency, reduced losses, and optimised recovery rates.

Strengths

• All plants are strategically located near major sugar-consuming markets, with the Bareilly plant situated on the National Highway.

• Two plants are in Bijnor district, a region known for its fertile irrigated land dedicated to cane cultivation.

• The Bareilly district plant benefits from expansive, well-defined cane- producing areas in the region.

• All plants are supported by the latest state-of-the-art technologies, enhancing production efficiency.

Highlights, 2024-25

• The Company crushed 262.97 lakh quintals of cane in 2024-25 compared to 366.59 lakh quintal of cane in the previous year.

• Gross and adjusted sugar recovery, after accounting for the diversion of sugarcane juice/syrup and the production of B-heavy molasses, stood at 10.94% in 2024-25, compared to 11.63% in the previous year. The decline in recovery was primarily due to adverse weather conditions and the lower sucrose content in the red-rot-affected sugarcane variety Co 0238.

• Following nearly 14% cane diversion towards ethanol (using cane juice) and generation of B-Heavy molasses across all units, sugar production was 20.98 lakh quintals.

• Sugar realisations during 202425 were higher by 3% on average as compared to 2023-24.

Outlook

Dwarikesh will maintain its crushing capacity, improve efficiencies, and upgrade operations. The Company will accelerate its varietal replacement programme to enhance sugar output. The focus remains on increasing sugarcane availability and optimising crushing operations.

BUSINESS SEGMENT REVIEW

OUR DISTILLERY BUSINESS

Overview

Dwarikesh launched its distillery operations at the Dwarikesh Nagar plant in Bijnor in 2005. Initially focused on producing industrial alcohol and rectified spirit, the facility shifted to ethanol production to supply nearby oil marketing company (OMC) depots.

The Central Governments ethanol blending program is a strategic long-term initiative designed to stabilise the sugar industry and reduce the countrys reliance on imported fuel. In support of this initiative, Dwarikesh expanded its distillery capacity to contribute to Indias green energy goals.

The Company operates two state- of-the-art distillery units: one at Dwarikesh Nagar (162.5 KLPD) and another at Dwarikesh Dham (175 KLPD), which was commissioned in FY23.

Strengths

• State-of-the-art, well-equipped distillery plants

• Proximity to the sugar plant reduces costs related to raw materials, transportation, and fuel.

Highlights, 2024-25

• Both distilleries operated at an efficiency of 92.13%, aligning with industry standards.

• Distillation efficiency peaked at an impressive 98.91%.

• Fermentation efficiency averaged 94.02%.

Outlook

The Company aims to enhance plant utilisation and operational efficiencies

BUSINESS SEGMENT REVIEW

OUR CO-GENERATION POWER SEGMENT

Overview

The Company entered the cogeneration segment in 1995 following the commissioning of a 6 MW power plant utilising bagasse, a byproduct of sugar production.

The Company operates cogeneration facilities across its three units—Dwarikesh Nagar ( 20 MW),

Dwarikesh Puram (33 MW), and Dwarikesh Dham (41 MW)—with a total co-generation capacity of 94 MW.

Highlights

The Company generated a power surplus of 93,219 MW.

Outlook

The Company will continue to supply to the state electricity grid, sustaining reliable source of income.

GOVERNANCE RISK MANAGEMENT AT DWARIKESH

Our business divisions and risk probability

Segments	Risk possibilities	Reason
Sugar	High-moderate	Competitive market
Distillery	Moderate-low	Government support for the sector
Power	Moderate	Sole buyer

Risk Management Framework

Dwarikesh recognises that effective risk management is vital for its long-term sustainability.

In 2024-25, the following key risks and mitigation strategies were identified.

These risks are monitored periodically by the Risk Management Committee and integrated into business continuity planning.

Agronomic

Risk

Risk: Red rot disease affecting cane yields.

Mitigation: The Company undertook accelerated replacement of CO 0238 variety with resistant strains like Co 0118 and CoJ 85 to safeguard crop health and stabilise yield performance.

Climate Risk & Raw Material Sourcing

Risk: Climate impact such as rainfall variability and water stress affecting sugarcane yield

Mitigation: The Company promotes sustainable farming practices, micro-irrigation, and established soil testing labs to improve resource efficiency and climate adaptability.

Farmer relationship Risk

Risk: Disputes with farmers could impact cane procurement volume and quality.

Mitigation: The Company ensures fair and timely payments to farmers and has introduced the e-Kisan app, a digital platform that addresses farmer-related concerns and strengthens engagement.

Working capital Risk

Risk: Maintaining a large sugar inventory requires significant working capital.

Mitigation: Dwarikesh diversified into ethanol and co-generation businesses, reducing working capital requirements while enhancing liquidity.

Demand-supply

Risk

Risk: An oversupply of products could impact price realisations.

Mitigation: Dwarikesh has built a strong reputation for delivering high-quality sugar, which undergoes rigorous laboratory testing before being marketed. The Company also meets the demand of oil marketing companies (OMCs) with ethanol, addressing an existing supply gap. Additionally, it leverages export opportunities whenever they arise.

Market

Risk

Risk: Commodity price volatility in sugar and ethanol

Mitigation: Dwarikesh pursues forward integration, enhances operational agility, and optimises its product mix to stabilise earnings and capture value across market cycles.

Statutory

Risk

Risk: Unpredictability in ethanol blending mandates and export controls.

Mitigation: The Company adopts a diversification strategy, establishes swing production capacities, and enhances compliance monitoring to ensure regulatory alignment and maintain operational flexibility

Financial

Risk

Risk: Revenue declines due to falling production.

Mitigation: The Company adopts a disciplined financial strategy centered on strong cash flow management, targeted debt reduction, and conservative gearing to enhance financial resilience and reduce exposure to market volatility.

Technology

Risk

Risk: Growing cyber threats could compromise the Companys critical data.

Mitigation: Dwarikesh has a robust IT security system in place, safeguarded by firewalls and third- party software. Access is strictly limited to authorised employees and designated personnel.

Talent management

Dwarikesh employs 775 permanent non-seasonal staff and remains deeply committed to their personal and professional growth. The Company has implemented several strategic initiatives to support talent development and drive organisational excellence.

Talent objectives

Strengthening organisational synergy: Dwarikesh is focused on enhancing productivity, quality, competitiveness, and efficiency by fostering effective collaboration across all functions.

Promoting continuous improvement:

The Company embraces a culture of continuous improvement, aiming to sharpen customer focus and boost overall performance across departments.

Simplified organisational structure: To better address complex challenges, Dwarikesh promotes a lean and agile organisational structure that enables sharper focus and faster decision-making.

Decentralisation and empowerment: By decentralising decision-making, employees are empowered to take ownership of their roles, unlocking their full potential and fostering accountability.

Merit-based recruitment:

Recruitment practices at Dwarikesh are driven by merit and potential, without bias towards caste, religion, or other non-performance-related factors.

Structured induction and orientation: All new hires undergo comprehensive induction and orientation programmes to align them with the Companys vision and integrate them effectively into the organisation.

Building a sense of belonging:

Dwarikesh actively nurtures a work environment that instils pride, fulfilment, and a strong sense of belonging among employees.

Regular performance feedback:

Structured performance reviews are conducted periodically to assess individual strengths and areas for improvement, with constructive feedback provided to support growth.

Recognition of innovation:

The Company values proactive thinking and innovation. Employees contributing innovative ideas toward organisational enhancement are publicly recognised and rewarded, encouraging a vibrant and collaborative culture.

Participative management philosophy: A participative management approach lies at the core of Dwarikeshs ethos. Policies are designed to encourage cooperation, shared responsibility, and initiative at all levels.

Graduate Engineering Trainee (GET) Programme: A well-structured GET programme is in place to develop young engineering professionals, equipping them for leadership roles and long-term contribution to the Companys growth.

Key initiatives

DSIL trainee scheme: Launched to nurture long-term talent, the DSIL Trainee Scheme develops individuals from the outset of their careers, aligning them with the Companys culture, competencies, and expectations.

Regular performance appraisal:

Quarterly and half-yearly appraisals, conducted via HR software, ensure consistent performance tracking and development planning.

Internal talent mobility: Vacancies are frequently filled internally to foster career progression and retain institutional knowledge.

Policy audits:

Regular reviews of audit policies help maintain compliance and ensure operational efficiency.

Off-season training:

Skill development programmes conducted during the off-season enhance employee capabilities and readiness.

Internal control systems and their adequacy

Dwarikesh Sugar Industries Limited believes that safeguarding of assets and business efficiency can be prolonged by exercising adequate internal controls and standardising operational processes. The Company possesses a robust internal control system to review performance, track operations and gauge liquidity.

The system also ensures that all transactions are duly reported and all assets are properly safeguarded. Timely review of operations and recommendations of auditors allow the Company to make corrections whenever and wherever necessary.

Cautionary statement

The statements in the management discussion and analysis section with regard to projections, estimates and expectations have been made in good faith. The achievement of results is subject to risks, uncertainties and even less than accurate assumptions. Market data and information are gathered from various published and unpublished reports. Their accuracy, reliability and completeness cannot be assured.