Gayatri Sugars Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

GLOBAL ECONOMIC OUTLOOK

The growth of Global Economy is expected to continue grow at 3.0% for 2026 and 3.4% in 2027. As of July 2026, the global economy looks resilient but unusually exposed to energy shocks, geopolitical conflict, trade fragmentation, high public debt, and financial-market re-pricing. At the same time, the AI investment boom is providing an important counterweight. For the Fiscal year 2026, IMF forecasts Growth is being restrained by the energy shock, geopolitical uncertainty and still-high interest rates. For the year 2027, IMF expects growth to accelerate to 3.4%, helped by normalization of energy conditions and continued technology investment. Growth will be highly uneven: economies integrated into AI/technology supply chains are doing considerably better than energy-dependent economies with little technology exposure.

INDIAN ECONOMY OUTLOOK

World Economic Forum of IMF estimates Indias growth at 6.4% in the Year 2026 and 7.4% for the year 2027. The IMF highlights strong private consumption, which has been a major growth driver, Resilient services activity, Continued domestic investment and public infrastructure spending and highlights that Indias position as an important engine of global growth

FICCI, the Federation of Indian Chambers of Commerce and Industrys survey attributed the relatively resilient outlook to strong domestic fundamentals, improving rural demand, consumer sentiment, and continued services-sector momentum. FICCIs latest available Economic Outlook Survey had projected Indias GDP growth at 6.3% for FY2025–26. FICCIs Economic Outlook Survey, which includes responses from leading economists, indicates this growth is expected to be driven by a combination of factors including increased consumer spending, government-led infrastructure investments, and modest growth in the industrial and services

The Reserve Bank of India (RBI) Monetary Policy Committee, by considering all factors into account, the projection for real GDP growth of India for FY 2026–27 to 6.7%, from 6.6% in its June 2026 projection. The RBIs assessment is supported by resilient domestic economic activity, strengthening industrial production, and continued services-sector momentum. Recent RBI data also show strong merchandise export growth and robust non-food bank credit economies despite significant global uncertainties. The domestic growth remains resilient and is broadly progressing in line with the RBIs assessment. Private consumption, aided by strong rural demand, and fixed investment, supported by buoyant government capital expenditure, continue to drive economic activity.

GLOBAL SUGAR SCENARIO

Currently, about 110 countries produce sugar from either cane or beet, and eight countries produce sugar from both cane and beet. Sugar Production from sugarcane, on average, accounts for nearly 80% of global sugar production. The global sugar market is experiencing a dynamic interplay of factors, including production levels, weather patterns, policy decisions, and evolving consumer trends. The Global Sugar Market influences economies worldwide, with production occurring in 108 countries through both cane and beet cultivation. Sugar consumption is universal, spanning food manufacturing and retail (table-top) use, with per capita consumption varying significantly based on cultural practices and product accessibility.

For the Sugar Year 2026-27, Global sugar production is forecast 192 million Tons with higher production in Brazil and India expected to more than offset lower European Union production. Exports are down with lower shipments expected from the European Union and Thailand. The global consumption is estimated at 182 million Tons with a surplus of 10million Tons. This increase in production for this season is mainly due to weather conditions in Centre-South Brazil, allowing mills to continue crushing cane.

INDIAN SUGAR INDUSTRY SCENARIO

Sugar Production and Consumption :

India is the second largest sugar producer next to Brazil. In India Uttar Pradesh is the major producer of Sugar followed by Maharashtra, Karnataka and Telangana. Sugar industry is the most important Agro based industry and impact on the lively hood of Rural India.

Indias 2026 sugar market has recently seen a dramatic price rally, but the industry says it is largely speculation rather than an actual physical shortage. India produced about 27.9 MT in the current marketing year, with roughly 3 MT diverted to ethanol and around 0.8 MT exported so far. Opening stocks for the next season are estimated around 0.5 MT, versus about 5 MT previously.

The outlook for the Indian sugar industry is cautiously optimistic, supported by strong policy backing, technological advancements, and evolving market dynamics. The governments continued emphasis on ethanol blending, with a target of 20% blending is expected to provide a stable revenue stream and reduce the industrys dependence on sugar alone.

Price –Sugarcane:

For the Sugar Crushing Season 2026-27, the Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution, increased the FRP for sugarcane at Rs.365/- per quintal with higher of 2.81% from Rs 355/- of previous year, for a basic recovery of 10.25% and a premium of Rs.3.56 Ps for every 0.1% increase in the recovery rate, as recommended by the Commission of Agricultural Costs and Prices (CACP).

With a view to protect the interest of Sugar Cane farmers, with sugar mills having recoveries lower than 9.5%, the Government decided that there shall not be any deduction in case where recovery is below 9.5%; such farmers will get Rs.338.30 per quintal for sugarcane in the current sugar Season.

Fair and Remunerative Pricing (FRP) fixed by Central Government over the last four years and for the ensuing 2026-27 season as under:

Basic details of Cane Price	Crushing Year
	2022-23	2023-24	2024-25	2025-26	2026-27
Basic Price Linked to Recovery	10%	10.25%	10.25%	10.25%	10.25%
Cane Price per Quintal	305	Rs 315	Rs 340/-	Rs 355/-	Rs 365/-
Premium: for every 0.1 percentage point increase in recovery above 10/10.25%	Rs 3.05 Quintal	Rs 3.05 Quintal	Rs. 3.07 Quintal	Rs. 3.32 Quintal	Rs 3.46 Quintal

Price – Sugar:

For the first time, the Ministry of Consumer Affairs, Food and Public Distribution, Govt of India, fixed the Minimum Selling Price (MSP) of Sugar at Rs 2900/- per quintal in June, 2018 and increased to Rs 3100/- per quintal in Feb 2019. However, since the MSP is not matching with cost of production, the Indian Sugar Mills & Bio-Energy Manufacturers Association represented the Ministry of Consumer Affairs, Food and Public Distribution for increase of MSP. The Central Government yet to take a decision.

Government Policies towards Sugar Industry:

1. Increase of FRP of Sugar Cane.

2. Increase of Ethanol price produced from C Heavy Molasses

3. Encourage Sugar Mills to establish integrated Potash Derived from Molasses granulation Units

4. Compulsory use of jute bags for packing of Sugar under the Jute Packaging Act 1987

5. Amendment to Energy Conservation Act, 2001, designating Sugar as an Energy Intensive Industry

6. Central Procurement of Sugar by Army Purchase Organisation from 2025-26

Indian Bio Fuel Sector Overview:

Molasses is one of the by-product obtained from raw sugar during the manufacturing process. The ethanol can be produced in three different ways i.e. from Juice/ Syrup, B- heavy Molasses and C- Heavy Molasses.

The Government of India is keen on encouraging low carbon and environment friendly vehicles and imposed compulsory blending of Ethanol. Ethanol which is a bio fuel and blending with petrol will curb on vehicular pollution and on other hand also saves foreign exchange required for import of crude oil by reducing country dependence on import of crude oil.

The Central Government targeted for blending of Ethanol with Petrol by advancing the targets from from 10% to 20% by 2025-26 (which was earlier targeted by 2030), along with improved pricing for Ethanol Supply to Oil Marketing Companies (OMCs). To achieve the targets, Government of India encouraging by giving directions to Commercial Banks to advance Term Loans and Soft loans on interest subvention for establishment of new ethanol produce units and for expansion of capacity of existing units.

The OMCs fixed the price of Ethanol from C Molasses fixed at Rs 57.97 per Lt with an increase of Rs 1.69 paisa per litre from previous price of 56.28 Per Lt, from B heavy Molasses Rs 60.73 ps per Litre and Rs 65.61 ps from Sugar Cane Juice and a price of ?71.86 a litre for maize and ?64/- per litre for ethanol made from damaged foodgrains.

The OMCs have invited bids for the supply of approximately 50 crore liters of ethanol for the fourth quarter (August to October) of the Ethanol Supply Year 2026-27. This tender is part of the ongoing effort to increase ethanol blending in petrol. The ethanol will be procured at the prevailing rates for ESY 2026-27.

COMPANY FUTURE OUTLOOK

The Sustainability of Sugar Industry depends upon availability of quality cane, which is a major concern. To overcome this, your Company constantly encourages the farmers by giving subsidy per acre and supplying quality seed, technical assistance, expert opinion and scientific methods of cultivation, ratoon management and other resources like facilitating harvesting labour, mechanised harvesting and transport facility of harvested cane to mill.

Availability of Cane:

Availability of Cane is the main concern of the Company. For the Crushing season 2026-27, the company targeted to crush 7.5 lakh tons of Cane.

Ethanol Production:

The company estimates production of 80 lakh litres of Ethanol from C-Heavy Molasses.

Power :

Another by product of sugar industry is Bagasse which is used for generation of green power. The company has signed Power Purchase Agreement with the Government of Telangana for supplying power to the grid. The Company has 25mw of power and after using 9 mw for captive consumption, exports the excess power to state Grid,

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE DURING THE FINANCIAL YEAR 2025-26:

Sugar :

During the Financial Year 2025-26 under review, the crushing operations for the crushing season 2025-26 at Kamareddy unit were commenced on 15th November, 2025 and closed operations on 26th February, 2026 and total number of days operated were 104 days (previous year operations commenced on 8th November, 2024 and closed on 1st March, 2025 and total number days operated were 114 days)

The crushing operations for the crushing season 2025-26 at Nizamsagar unit were commenced on 10th November, 2025 and closed operations on 5th March, 2026 and total number of days operated were 116 days (previous year operations were commenced on 6th November, 2024 and closed on 23rd February, 2025 and total number days operated were 110 days).

During the Crushing Season 2025-26, at both the units 7.17 Lakh Tonnes of Sugar Cane was crushed and 7.85 Lakh Quintals of sugar was bagged with an average recovery of 10.96% comparing to the previous season 2024-25 crushing of 6.83 Lakh Tonnes of Sugar Cane and Sugar of 7.44 Lakh Quintals with an average recovery of 10.90%. In detail, at Kamareddy Unit, 3.21 Lakh Tonnes of Sugar Cane was crushed (Previous Season 3.17 Lakh Tonnes) and produced sugar of 3.50 Lakhs Quintals (Previous Season 3.46 Lakh Quintals) with an Average Recovery of 10.90% (Previous Season 10.90%) and at Nizamsagar Unit 3.95 Lakh Tonnes (Previous Season 3.65 Lakh Tonnes) of Sugar Cane crushed and produced sugar of 4.35 Lakh Quintals (Previous Season 3.98 Lakh Quintals) with an Average Recovery of 10.90% (Previous Season 11.10%).

Distillery:

During the Financial Year 2025-26, the Distillery unit produced Ethanol of 67.88 Lakh Litres and Impure Spirit (IS) 0.42 Lakh Litres totalling to 68.33 lakh Litres (compared to the previous year of Ethanol of 81.89 lakh Litres and Impure Spirit (IS) 0.22 Lakhs, totalling to 82.11 lakh Litres).

Power:

The Export of Power during the crushing season 2024-25 was to the extent of 269.10 kh kwh (Kamareddy Unit 39.39 Lakh kwh and Nizamsagar Unit 229.71 lakh kwh) as compared to the previous year season of 277.71 Lakh kwh (Kamareddy Unit 40.94 Lakh kwh and Nizamsagar Unit 236.77lakh kwh).

Manufacturing:

The Company is continuously implementing better manufacturing methods to increase operational efficiencies and to eliminate process losses.

RISK AND CONCERNS

As explained above, the major risk is availability of cane, Company is continuously focusing on implementation of various measures as discussed in company future outlook section. Company is continuously improving on operational efficiency and is best in terms of efficiency in the southern region of India.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has well-established processes and clearly-defined roles and responsibilities for people at various levels. The control mechanism also involves well documented policies, authorisation guidelines commensurate with the level of responsibility and Standard Operating procedures (SOP) specific to the respective businesses. Adherence to these processes is ensured through frequent internal audits and adequate and effective internal audit system that employs periodic checks on on-going process. The internal audits conducted are reviewed by the Audit Committee and requisite guidelines and procedures augment the internal controls. The internal control system is designed to ensure that financial and other records are reliable for preparing financial statements and other information which ensures that all transactions are properly reported and classified in the financial records.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Financial Statements of the Company for the year 2024-25 has been prepared in accordance with the Accounting Principles Generally Accepted in India, including the Indian Accounting Standards prescribed under section 133 of the Companies Act, 2013 read with Companies (Accounting Standards) Rules 2015 (as amended).

During the Financial Year 2024-25, the Overall performance of the Company is as under

Production:

Details	Financial Year 2024-25	Financial Year 2024-25
Total Cane Crushed	7,16,818 Tones	6,82,947 Tones
Sugar Production	7,85,305 Quintals	7,43,610 Quintals
Recovery	10.96 %	10.90%
Molasses production	33,760 Tones	31,957 Tones
Power Exported	289.82 lakh Units	269.10 lakh Units
Distillery Unit: Ethanol Impure Spirit (IS) Production	67.88 lakh Litres 0.42 lakh Litres	81.89 lakh Litres 0.22 lakh Litres

Financial Review:

Capital:

During the year under review, the Company has re-classified the authorise share capital and also increase the authorised share capital of the Company. Due to this the Authorised share capital has been increased from Rs. 145,00,00,000/- (Rupees One Hundred Forty-Five Crores only) Comprising of Rs. 114,00,00,000/- (Rupees One Hundred Fourteen Crores Only) divided into 11,40,00,00,000 (Eleven Crores Forty Lakhs) Equity Shares of Rs. 10/- each and Rs. 31,00,00,000/- (Rupees Thirty One Crores Only) divided into 3,10,00,000 (Three Crores Ten Lakhs Lakhs) Preference Shares of Rs.10 each to Rs. 165,00,00,000 (Rupees One Hundred Sixty Five Crores only) divided into Rs.134,00,00,000 (Rupee One Hundred Thirty Four Crores Only) divided into 13,40,00,000 (Thirteen Crores Forty Lakhs) equity shares of Rs. 10/- each, and Rs. 31,00,00,000 (Rupees Thirty One Crores Only) divided into 3,10,00,000 (Three Crores Ten Lakhs) Preference Shares of Rs.10 each.

Further, during the year there were no changes in the share capital of the Company. The Issued Capital is Rs. 74,30,36,400/- and Subscribed and Paid-Up Capital of the Company is stands at Rs. 74,29,10,900/-.

Net Worth:

The net worth of the Company as on 31.03.2026 was Rs. 8149.01 lakhs.

Long Term Debt:

The long Term Borrowings from Banks including current maturities of the Company decreased from Rs. 111,78.61 lakhs to Rs.85,70.61 lakhs with a decrease of Rs 2608.00 for the Financial Year 2025-26. The decrease was due to repayment of Loans.

Working Capital:

During the current financial year, the working capital facility of Rs 2760.35 lakhs was renewed.

Gross Block of Assets:

During the current financial year, the Company has adopted the revaluation model for land under the class of Property, Plant and Equipment in accordance with Ind AS 16. The revaluation was carried out by an independent registered valuer possessing appropriate qualifications and experience in valuation of properties. Accordingly, land is carried at revalued amount, being its fair value as at the date of revaluation. The resultant revaluation gain amounting to Rs. 24,005.30 Lakhs has been recognised in Other Comprehensive Income and accumulated under Revaluation Surplus in equity. Further, Deferred tax liability has been recognised on the revaluation surplus relating to freehold land in accordance with Ind AS 12.

The gross block of the Company, during the Fin Year 2025-26, was increased from Rs. 30,529.02 lakhs to Rs. 32,8779.42 lakhs because of capital expenditure incurred on sugar plant. During the year, the Company provided depreciation and amortization of Rs. 696.10 lakhs as per the provisions of Schedule II of the Companies Act, 2013.

Inventories:

Value of inventories stood at Rs. 6616.25 lakhs as at 31st March, 2026.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

In a challenging and competitive environment, the Company believes that people are the key to success and continues to focus on people capabilities by leveraging technology and creating a learning environment. The Human Resources function proactively develops innovative and business focused methods to attract, develop, motivate and retain talent. Human resources strategy is closely aligned to key business and stems from the organisation purpose which is – "To build Credible, Reliable & Capable Human Capital to deliver superior Individual and Business performance". This vision is delivered by a high level of policy deployment initiatives and contemporary HR practices focusing key imperatives such as Capability Development, Talent Management, Employee Engagement, Productivity & Cost and HR excellence.

During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Details of Key Financial Ratios:

Sl No	Details	2025-26
1	Debtors Turnover	2.26
2	Inventory Turnover	4.44
3	Interest Coverage Ratio	1.55
4	Current Ratio	0.61
5	Debt Equity Ratio	(1.33)
6	Operating Profit Margin (%)	6.19
7	Net Profit Margin (%)	0.28%

CAUTIONARY STATEMENT

The management discussion and analysis report containing your Companys objectives, projections, estimates and expectation may constitute certain statements, which are forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied in the statement. Your Companys operation may inter-alia be affected by the supply and demand situations, input price and the availability, changes in the government regulations, tax laws and other factors. The Company cannot guarantee the accuracy of the assumptions and perceived performance of the Company in future.

For and on behalf of the Board of Directors

sd/-

(T. SARITA REDDY)

Managing Director

DIN :00017122

sd/-

(T.V. SANDEEP KUMAR REDDY)

Vice Chairman & Director

DIN: 00005573

Place: Hyderabad

Date : August 11, 2026