Gayatri Sugars Ltd Management Discussions.




Global growth decelerated markedly in 2020-21, with continued weakness in global trade and investment. This weakness was widespread, affecting both advanced economies - particularly the Euro Area - and Emerging Market and Developing Economies (EMDEs).The global economy is projected to grow 6.0 percent in 2021 and 4.9 percent in 2022.The 2021 global forecast is unchanged from April 2021 as perWorld EconomicOrganisation (WEO), but with offsetting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for Emerging Asia. By contrast, the forecast for advanced economies is revised up. These revisions reflect pandemic developments and changes in policy support. The 0.5 percentage-point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the United States, reflecting the anticipated legislation of additional fiscal support in the second half of 2021 and improved health metrics more broadly across the group.The global economy was expected to grow 5.6% in 2021-22, the World Bank said in June. This is the fastest post-recession pace in 80 years. Among the major economies, the United States growth was projected to be growing at 6.8% while China is expected to report an 8.5% growth.

A double hit to emerging market and developing economies from worsening pandemic dynamics and tighter external financial conditions would severely set back their recovery and drag global growth below. The global economy was expected to grow 5.6% in 2021-22, as per the World Bank


The World Bank in its June8, 2021 report down gradedthe Indian Economy growth for financial year 2021-22 financial year to 8.3% from 10.1% estimated in April 21. The Asian Development Bank lowered Indias economic growth forecast for the financial year 2021-2022 to 10% from its projection of 11% released in April. The World Bank attributed it to the devastating second wave of the coronavirus pandemic that slowed down the economic revival in early 2021."In India, an enormous second Covid-19 wave is undermining the sharper-than-expected rebound in activity seen during the second half of FY2020-21, especially in services," the World Bank said in its latest Global Economic Prospects report. to greater restrictions on mobility."

The government announced health-related spending would more than double and set out a revised medium-term fiscal path intended to address the economic legacy of the pandemic, The renewed outbreak, however, may require further targeted policy support to address the health and economic costs."


The impact of coronavirus pandemic on India has been largely disruptive in terms of economic activity as well as a loss of human lives. Almost all the sectors have been adversely affected as domestic demand and exports sharply plummeted with some notable exceptions where high growth was observed. An attempt is made to analyse the impact and possible solutions for some key sectors.

Indias growth in the fourth quarter of the Fiscal Year 2020 went down to 3.1% according to the Ministry of Statistics. During the lockdown Unemployment rose from 6.7% in March 2020 to 26% in April, 2021, an estimated 140 million people lost employment while salaries were cut for many others. Individual Income dropped compared to Pre covid period. Major companies in India temporarily suspended or significantly reduced operations. Young startups have been impacted as funding has been fallen. Fast- moving consumer goods companies in the country have significantly reduced operations and are focusing on essentials. Stock markets in India posted their worst losses in history on 23 March 2020.

The Government announced a variety of measures to tackle the situation, from food security and extra funds for healthcare and for the states, to sector related incentives and tax deadline extensions. On 26 March, 2020 a number of economic relief measures for the poor were announced totaling over Rs 170,000 crore. The next day RBI also announced a number of measures which would make available Rs 374,000 crore to the countrys financial system. The World Bank and Asian Development Bank, approved support to India to tackle the coronavirus pandemic.


In the last 3 months, the world starts to recover from the COVID pandemic and, subsequently, global sugar consumption begins to increase. The last2 sugar years 2017-18 and 2018-19(October to September) of Sugar surplus, the year 2019-20 witnessed deficit of sugar productionin all major producing countries. The Global sugar Production for the is estimated to 186 Million Tons during the year 2020-21. The Year 2021-22 is also estimated as deficit year in Sugars production. The International Sugar Organisation estimated the sugar production deficit will increase to 3.5 MillionTones for the Year 2021-22, because of lower sugar production estimates in Brazil, EU and Thailand.


Sugar refers to a sweet crystalline substance which is prepared from sugar cane and sugar beet. It is used across the globe for innumerable food and non-food applications. In addition to offering a sweet taste, sugar performs a variety of other functions in the food industry. It is used as a preservative and prevents the development of microorganisms. It is also used for preventing formation of large ice crystals in frozen products like ice cream. Apart from this, sugar encourages fermentation in products which contain yeast. Moreover, it is used in baked goods for retaining moisture and preventing staleness.

By easing of COVID-19 pandemic restrictions, the economic activity is normalising and the demand from sugar consuming allied industry is growing. The sugar consumption is expected to increase by 1.9% in the year 2021-22. The growth in sugar price is expected due to increase in demand and lower sugar production in Brazil, EU and Thailand.

INDIAN DOMESTIC SCENARIO Sugar Production and Consumption :

India has of late become the worlds largest sugar producer beating Brazil and is also the largest sugar consumer. Excess sugar production in the last couple of years has resulted in surplus sugar. The primary reason for this rise in sugar production is the introduction of an early maturing cane variety, the Co 0238 (Karan 4). This cane variety gives very high cane yield and sugar recovery. This variety was released in

2009- 10 and currently, in Uttar Pradesh, the plantation of this variety is above 90%, which has increased the sugar production upto 12 to 13 MMT per year. This coupled with increase in Fair & Remunerative Price (FRP) over the years has contributed to the highest ever sugar production in India during the past few seasons. In fact Sugarcane is the most profitable crop for farmers in India as the return is assured and 50-60% higher than the return from any other crop. The increase in the FRP of sugarcane in the last 10 years has outpaced the increase in the MSP of other crops like wheat, paddy, coarse grains, cotton etc., causing a distortion in the farm economics. This, along with the fact that sugarcane has an assured buyer, is a sturdy crop and gets the promised assured price, is the main reason why sugarcane is one of the most preferred crop in the country. Indian Sugar Production has historically been cyclical in nature with 3-4 years of bumper crop usually followed by 2 to 3 years of shortfall. The shortage years helped restore Mills health by liquidating excess stocks and lifting market prices for Sugar thereby benefiting farmers. However, this cyclical pattern has been broken lately, with Sugar production outpacing consumption since the Year 2010-11 except the Year 2016-17 when Sugar production dipped to the level of just 20.3 MMT mainly due to drought conditions.

India is now combating a second wave of the COVID pandemic. Domestic sugar sales have been slow, with the closure of hotels and restaurants meaning the consumption of confectionery and beverages have also been hit hard. As a result, domestic sugar consumption is down 3% at 25.3 million tones, which has led to substantial stock availability. High global sugar prices will see more Indian sugar available on the world market.

The sugar production in India by end of the 2020-21 harvest was much better than expected, producing 30.5 million Tonnes of sugar compared to the previous year 2019-20 production of 28.3 million Tonnes though the sugar syrup was diverted to Ethanol production.

Looking ahead to the crop year 2021-22 crop, reservoirs are full of water to irrigate the cane fields, with estimates for sugar production increasing to 35.9 million Tones, a figure that also considers an increased 2 million Tonesassigned for ethanol production.

Price - Sugarcane :

For the Sugar Season 2020-21, the Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution, increased fixed the FRP for sugarcane at Rs.285 per quintal from Rs 275 of previous year, for a basic recovery of 10.00% and a premium of Rs.2.85 for every 0.1% increase in the recovery rate, as recommended by the Commission of Agricultural Costs and Prices (CACP). Also, for recovery between 9.5% to 10%, the FRP shall be decreased by 2.85 per Quintal for every 0.1% decrease. For mills having recovery of 9.5% or less,FRP fixed at Rs. 270.75 per quintal.

Fair and Remunerative Pricing (FRP) fixed by Central Government:

Basic details of Cane Price Crushing Year
2016-17 2017-18 2018-19 2019-20 2020-21
Basic Price Linked to Recovery 9.5% 9.5% 9.5% 10% 10%
Cane Price per Quintal Rs 230 Rs 255 Rs 275 Rs 275 Rs 285
Premium: for every 0.1 percentage point increase in recovery above 9.5%/10% Rs 2.42/ Quintal Rs 2.68/ Quintal Rs 2.75/ Quintal Rs 2.75/ Quintal Rs 2.85/ Quintal

It is expected, for Crushing Season 2021-22, the Ministry of Consumer Affairs, Food and Public Distribution,likely to increase the Basic Price to Rs 290 to Rs 295 per quintalfromRs 285.

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 Association represented the Ministry of Consumer Affairs, Food and Public Distribution for increase of MSP. The Government yet to take a decision.

Indian Bio Fuel Sector Overview:

The Government of India is keen on encouraging low carbon and environmentfriendly 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.

For the Fin Year 2020-21, the Oil Marketing Companies (OMCs) floated tenders for supply of 457.60 crore litres of Ethanol for which Letters of Interest were issued for supply of 325.93 crore litres. It is estimated to supply of 350 crore litres of Ethanol by end of the current financial year 2021-22. It is reported that till end April 2021, the OMCs achieved blending of 7.36%.

The Govt. targeted for blending of Ethanol from 5% to 10% by 2022-23 and from 10% to 20% by 202425, along with improved pricing - Ethanol from C Molasses - Rs 45.69 per Lt (previously 43.75 Per Lt). Ethanol from B Molasses - Rs 57.61 per Lt (previously 54.27 Per Lt) and Ethanol from Sugar cane Juice - Rs 62.65 per Lt (previously 59.48 Per Lt). To achieve the targets, Government of India encouragingby giving directions to Commercial Banks to advance Term Loans and Soft loans on interest subvention .

Central Government Measures duringFinancial Year 2020-21:

• Maximum Admissible Export Quantity (MAEQ) of 6.00 million tones.

• Allowing to export of Sugar through Merchant Exporter for easing MSMEs in Sugar Industry

• Swapping of Export quantity of a sugar mill with domestic release of other sugar mill

• Allowing supply of Sugar to Sugar Refining for Export and allowing Export allowance to Sugar Mill.

• Ethanol blending Targets fixed and increase of Ethanol Price.

• Soft loans on interest subvention for establishing Ethanol Plants by Sugar Mills.



The long term outlook for sugar remains positive and promising on account of:

• The above mentioned Government policies will enable the sugar industry to get out of financial crisis to get more Revenue year on Year.

• Mandatory blending of Ethanol with petrol will boost the revenue of sugar mills and profitability.

• Growing energy consumption in India allowing the sugar industry to play a vital role.

• Environmental friendly power generated by Cogeneration Units equipped with high-pressure boilers and turbines that intelligently use the fuel to get optimum energy output.

• Expected flow of funds from Trading of Renewable Energy Certificate (REC).

• More emphasize on Bio-composting process and consequent efforts to convert organic and inorganic matter into bio-manure to ensure zero discharge from the distillery combining with press mud.

• Growing demand for bio manure, which works as the perfect soil conditioner, Bio manure made from distillery and organic matter does not allow leaching of chemicals and hence can offer a solution to the problem of depletion of soil productivity.


Sugar industry is at present confronted by the following threats:

• Dearth in availability of farm labour for harvesting, transportation, loading and unloading of sugar cane and sugar.

• Cyclical nature of industry and local climatic conditions over the crop affecting both the quantity and quality of cane available.

• Short crushing season.

• Shrinkage of sugarcane area under cultivation due to growing urbanisation and availability of many alternate cash crops.


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 supplying quality seed, technical assistance, expert opinionand scientific methods of cultivation, drip irrigation, ratoon management and other resources like facilitating crop loans, 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 2021-22, the company targeted to crush 8 lakh tons of Cane by considering the good monsoon during September and October, 2020 and the newly completed Reservoirs there was good plantation of cane in both factory zone areas. The companys continuous relationship with farmers and efforts have paid off and the farmers commenced plantation from December 2020 till April, 2021, new plantation has been completed in 5000 acres in Kamareddy Factory zone area and 9500 Acres in Nizamsagar Factory Zone Area, totally 15,000 Acres new plantation was completed.Apart from above, there was another 11000 acres of Ratoon Crop in both Factory zones. Both New plantation and Ratoon crop combined 26,000 acres of sugar cane is already available for the crushing season 2021-22 commencing from November, 2021. By considering the average yield of 30 to 35 Tons per Acre, the company estimated Crushing of 8.00 Lakh Tons of Cane for the crushing season 2021-22, corresponding Fin Year 2021-22.

Ethanol Production:

The company estimates production of 93 lakh litres of Ethanol from Molasses and from Sugar Juice/ Syrup. The company will participate in Tenders of OMCs for supply of Ethanol produced from Juice/ Syrup.

Co-Gen Power:-

Another byproduct of sugar industry is Bagasse which is used for generation of green power. The company has signed a 25 year 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,



During the Financial Year 2020-21 under review, the crushing operations for the crushing season 2020- 21,at Kamareddy unit were commenced on 26th November, 2020 (previous year on 1st December, 2019) and closed on 1st March, 2021 and total no of days operated were 96 days. The crushing operations at Nizamsagar unit were commenced on 21st November, 2020 and closed on 21. Feb 2021 and total no of days operated were 93 days.

During the Crushing Season 2020-21, at both the units, 5.04 Lakh Tonnes of Sugar Cane was crushed and 5.25 Lakh Quintals of sugar produced with an average recovery of 11.02%. comparing to the previous season 2019-20 figures of 5.10 Lakh Tonnes of Sugar Cane and Sugar of 5.58 Lakh Quintals with an average recovery of 10.95% respectively. In detail, at Kamareddy Unit, 2.80Lakh Tonnes of Sugar Cane was crushed (Previous Season 2.99 Lakh Tonnes) and produced sugar of 2.85 Lakhs Quintals (Previous Season 3.37 Lakh Quintals) with an Average Recovery of 11.30% (Previous Season 11.30%) and at Nizamsagar Unit 2.24 Lakh Tonnes (Previous Season 2.11 Lakh Tonnes) of Sugar Cane crushed and produced sugar of 2.41 Lakhs Quintals (Previous Season 2.21 Lakh Quintals) with an Average Recovery of 10.75% (Previous Season 10.45%). The low quantity of crushing was due to drought conditions prevailed in the Region.


During the Financial Year2020-21, the Distillery unit produced Ethanol of 89.74 Lakh Litresand Impure Spirit (IS) -0.64 Lakh Litres totalling to90.38 lakh Litres (compared to the previous year of Ethanol of 82.45 lakh Litres and Impure Spirit (IS) 1.10Lakhs, totalling to83.55 lakh Litres).


The Export of Power during the crushing season 2020-21 was to the extent of 154.93 Lakh kwh (Kamareddy Unit 33.39Lakh kwh &Nizamsagar Unit 121.54 lakh kwh) as compared to the previous year season of 158.08 Lakh kwh (Kamareddy Unit 38.87 Lakh kwh &Nizamsagar Unit 119.21 lakh kwh).


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


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


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 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.


The Financial Statements of the Company for the year 2020-21 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 2020-21, the Overall performance of the Company is as under:


Details Financial Year 2020-21 Financial Year 2019-20
Total Cane Crushed 5,04,248Tones 5,1 0,094 Tones
Sugar Production 5,25,461Quintals 5,58,481 Quintals
Recovery 11.02 % 10.95 %
Molasses production 21,882Tones 23,311 Tones
Power Exported 154.93 lakh Units 158.08 lakh Units
Distillery Unit:
Ethanol/ Rectified Spirit (RS) 89.74 lakh Bulk Litres 82.45 lakh Bulk Litres
& Impure Spirit (IS) Production 0.64 lakh Bulk Litres 1.10 lakh Bulk Litres

Financial Review:


There was no change in the capital structure of the Company. However, the Preference Share Capital has been reclassified as Borrowings(Financial Liability) as per the Indian Accounting Standards applicable to the Company from the Financial Year 2017-18.

Net Worth:

The net worth of the Company eroded due to losses incurred by the Company duringthe previousfinancialyears and for the current financial year.

Long Term Debt:

The long Term Borrowings from Banks including current maturities of the Company increased from Rs. 10531.46 lakhs to Rs. 1300.36 lakhs. The increase was due to availing of COVID Emergency Line of Credit from Consortium Banks. The Company has repaid the Term Loan to an extent of Rs. 307.86 lakhs to consortium Banks

Working Capital:

There were no additional working capital borrowingsother than sanctioned limits during the year.

Gross Block of Assets:

The gross block of the Company was increased from Rs. 26,823.81 lakhs to Rs. 26,872.29 lakhs because of capital expenditure incurred on sugar plant. During the year, the Company provided depreciation and amortization of Rs. 1026.48 lakhs as per the provisions of Schedule II of the Companies Act, 2013.


Value of inventories stood at Rs. 5760.33 lakhs as at 31st March, 2021 against Rs. 7574.56 lakhs as at 31st March, 2020.


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


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.