Godavari Biorefineries Ltd Management Discussions

The following discussion is intended to convey the managements perspective on our financial condition and results of operations for Fiscal 2021, Fiscal 2020 and Fiscal 2019. We have included in this section a discussion of our financial statements on a restated consolidated basis.

The Restated Consolidated Financial Statements included in this Draft Red Herring Prospectus are prepared and presented in accordance with Ind AS, in each case restated in accordance with the requirements of Section 26 of the Companies Act, 2013, the SEBI ICDR Regulations and the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the ICAI. Ind AS differs in certain respects from Indian GAAP, IFRS and US GAAP and other accounting principles with which prospective investors may be familiar. Unless otherwise indicated or the context otherwise requires, the financial information for Fiscal 2019, Fiscal 2020 and Fiscal 2021 included herein is derived from the Restated Consolidated Financial Statements, included in this Draft Red Herring Prospectus, which have been derived from our audited consolidated financial statements.

This discussion contains certain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as the risks set forth in the chapters entitled "Risk Factors" and "Forward-Looking Statements" on pages 29 and 20, respectively

Overview

We have the largest integrated bio-refinery in India and are one of the largest producers of ethanol and a pioneer in manufacturing ethanol-based chemicals in India (source: Frost & Sullivan Report). We are also the largest manufacturer of MPO worldwide, one of only two manufacturers of natural 1,3 butylene glycol globally, the fourth largest manufacturer of ethyl acetate in India and the only company in India to produces bio ethyl acetate (source: Frost & Sullivan Report). Our diversified product portfolio comprising of bio-based chemicals, sugar, rectified spirits, ethanol, other grades of alcohol and power, finds application in a range of industries. According to the Frost & Sullivan Report, our Company is the only company in India to have such a vast portfolio of bio-based products. We are a part of the Somaiya group of companies, which has an experience of over 80 years in the sugar industry and almost 60 years of experience in the bio-based chemicals industry.

We utilise sugarcane as a feedstock to manufacture a wide range of products, including sugar, ethanol, bio-based chemicals and power and were among the first few companies in India to utilise sugarcane juice and syrup for the production of ethanol (source: Frost & Sullivan Report). We continuously strive to improve the valorisation of sugarcane through development of down-stream products and increasing the diversion of sugarcane towards value added products. We believe that through our long history of purchasing sugarcane and continued support provided to the farmers, we have established strong relationships and goodwill among the farmers.

Our Sameerwadi Manufacturing Facility is among the top ten sugar complexes in India and we are one of the largest producers of ethanol in India (source: Frost & Sullivan Report) with an installed capacity of 380 KLPD as at June 30, 2021. The rectified spirits manufactured by us are converted into various grades of ethanol including fuel ethanol, pharma grade ethanol and extra neutral alcohol (the "Rectified Spirits and Ethanol"). In order to improve the valorisation of sugarcane and in light of the government initiatives for increasing fuel ethanol blending, we intend to expand our capacity for manufacturing ethanol from 380 KLPD (as at June 30, 2021) to 570 KLPD and have obtained environmental clearance for such expansion. Further, our Company is evaluating the prospect of manufacturing of 2^nd generation ethanol and energy cane to further improve the availability of feedstock for our distillery segment.

The chemicals manufactured by us comprise of ethanol-based chemicals such as ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycol, crotonaldehyde, acetaldehyde, acetic acid, bio- acetic acid and paraldehyde (collectively, the "Bio-based Chemicals"). The Bio-based Chemicals manufactured by us find application in various industries, including the agrochemical, cosmetics, flavour and fragrance, food, fuel, paints and coatings and pharmaceutical industries, while the ethanol manufactured are sold to oil marketing companies and also find application in the beverages, pharmaceutical and chemical industries. We have also received environmental clearance to expand our existing capacities and to manufacture a wider range of speciality chemicals including cellulose, MCC, xylitol, EVE, furfural, lignosulphonate and bio-composite.

We have consistently invested in R&D and technology, have successfully implemented some of them based on market/customer demand at our Manufacturing Facilities over the years and as on the date of this Draft Red Herring Prospectus, we have patented 13 products/processes and received 41 registrations in relation thereto across different countries. We have three research and development facilities (the "R&D Facilities") which are registered, with the Department of Scientific and Industrial Research, Government of India ("DSIR"), with one R&D Facility located at each Manufacturing Facility and one located in Navi Mumbai, Maharashtra. During Fiscals 2021, 2020 and 2019, we have incurred research and development expenditure aggregating to 149.89 million, 148.40 million and 131.65 million respectively. We have in the past collaborated with various third parties in connection with our research and development activities. For instance, we have entered into the memorandum of understanding dated April 9, 2021 (read with the addendum dated September 9, 2021) with Dr. Sendurai Mani in connection with the development of small molecule inhibitors for cancer and obtained approval in March 2021 to undertake clinical trials in relation to a proposed drug for a period of two years. As at June 30, 2021, we have engaged 38 research scientists at our R&D Facilities, who seek to identify and develop new potential marketable products after carrying out a thorough study including product specifications, potential products costs and production timeline, based on the leads brought in by our business development and marketing teams. We also actively support the agricultural research conducted by the K.J. Somaiya Institute for Applied Agriculture Research ("KIAAR") and have entered into a memorandum of understanding dated September 9, 2021 with KIAAR to carry out joint research activities in various fields including soil testing, production of tissue culture settlings, production and supply of bio-fertilizers, transfer of technology to farmers, organic farming and energy cane.

Our customers include marquee players such as Biocon Limited, Cipla Limited, Deccan Fine Chemicals (India) Private Limited, Dr. Reddys Laboratories Limited, Hershey India Private Limited, Hindustan Coca-Cola Beverages Private Limited, International Flavors & Fragrances, OG Corporation, Privi Speciality Chemicals Limited, Sun Pharmaceutical Industries Limited, United Spirits Limited and Varun Beverages Limited as well as major oil marketing companies. Over the years, we have significantly expanded our scale of operations and global footprint, and have customers from over 20 countries including Australia, China, France, Germany, Italy, Japan, Kenya, Netherlands, Nigeria, Singapore, Switzerland, United Kingdom, United Arab Emirates and United States of America. We have also established offices in Hoofddorp (Netherlands) and Princeton, New Jersey (United States of America), which enables us to assess international demand and increase our customer outreach thereby bolstering our product development initiatives. For Fiscals 2021, 2020 and 2019, our consolidated revenue from operations from outside India contributed 18.62%, 16.94% and 22.53%, respectively, of our consolidated revenue from operations.

We currently have two manufacturing facilities (the "Manufacturing Facilities"), with one manufacturing facility located in the Bagalkot district in Karnataka (the "Sameerwadi Manufacturing Facility") and another manufacturing facility located in the Ahmednagar district in Maharashtra (the "Sakarwadi Manufacturing Facility"). The Sameerwadi Manufacturing Facility is an integrated facility dedicated to the manufacturing of Rectified Spirits and Ethanol, sugar and power, while the Sakarwadi Manufacturing Facility is currently dedicated to the manufacturing of Bio-based Chemicals. As at June 30, 2021, the Sameerwadi Manufacturing Facility had inter alia a sugarcane crushing capacity of 15,000 TCD, an installed capacity of 400 KLPD for rectified spirits, 380 KLPD for ethanol and power plants with an aggregated installed capacity of 49.56 MWH as at June 30, 2021, while at the Sakarwadi Manufacturing Facility the aggregate installed capacity was 101,197.40 MTPA comprising of capacities for ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycol, crotonaldehyde, acetaldehyde, acetic acid, bio-acetic acid and paraldehyde. For additional details in relation to our Manufacturing Facilities, see "Our Business - Our Manufacturing Facilities" on page 159. Our Manufacturing Facilities are equipped with technology relevant for the products manufactured by us. We are Responsible Care certified and our Registered and Corporate Office and the Sakarwadi Manufacturing Facility are ISO 9001:2015, RC 14001:2015 and ISO 14001:2015 certified. We have obtained certification confirming compliance with the requirements of

BONSUCRO in the "production of white refined sugar and molasses from sugarcane". We have also been permitted by the United States Department of Agriculture to use the "USDA Certified Biobased Product" label for some of our products such as 1,3 butylene glycol and bio-based ethyl acetate.

As a part of our expansion, we propose to expand our manufacturing capabilities at the Sameerwadi Manufacturing Facility by augmenting our sugarcane crushing capacity by 3,000 TCD from 15,000 TCD to 18,000 TCD to support our proposed expansion in production of ethanol and by establishing a unit for the extraction of potash from fly ash generated at the Sameerwadi Manufacturing Facility with an estimated capacity of 10 MT per day.

For further details, see "Objects of the Offer" on page 89.

We seek to implement sustainable practices in our manufacturing process and seek to purchase sugarcane from farmers who implement sustainable practices and implement and produce products which have a lower environmental impact. We seek to utilise all of our by-products and minimise waste as part of our operations. We have installed an incineration boiler at the Sameerwadi Manufacturing Facility, which uses spent wash (which is waste produced while producing rectified spirits) to generate steam for our distillery operations. We have in the past received awards including the "Water Resource Management in Chemical Industry" Award from the Indian Chemical Council in 2015, the "Efficiency in Water Usage-Chemicals" award from FICCI in 2016 and the "Outstanding Renewable Energy Generation-Biofuel" award from the Indian Federation of Green Energy in 2019.

A summary of our financial performance during the last three Fiscals is as follows:

			(in million)
Particulars	Fiscal 2021	Fiscal 2020	Fiscal 2019
Consolidated revenue from operations	15,381.73	14,591.49	15,522.29
EBITDA	1,658.29	1,169.75	1,461.59
Consolidated profit after tax	271.55	40.63	55.33
Consolidated net worth	2,134.87	1,866.97	1,173.65
Revenue from ethanol (as a % of consolidated revenue from operations)	21.28%	16.83%	11.94%
Revenue from Bio-based Chemicals (as a % of consolidated revenue from operations)	34.96%	31.22%	39.26%

We are the flagship company of the diversified Somaiya group, which has interests in inter alia the education, agricultural research, renewable energy and healthcare industries. We are able to leverage the experience, capabilities and reputation of the Somaiya group in our business operations. Further, we have strong and well experienced Board and key managerial personnel who actively contribute to our operations and participate in our strategy. Our Promoter, Samir Shantilal Somaiya, who is also our Chairman and Managing Director, has played a significant role in our development and growth. For further, details in relation to Samir Shantilal Somaiya and our other Directors and key managerial personnel, see "Our Management" on page 187.

Principal Factors Affecting Our Financial Condition and Results of Operations

Our financial condition and results of operations are affected by numerous factors and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 29. The following is a discussion of certain factors that have had, and we expect will continue to have, a significant effect on our financial condition and results of operations.

The COVID-19 pandemic

The global impact of the COVID-19 pandemic has been rapidly evolving and public health officials and governmental authorities have reacted by taking measures, including in the regions in which we operate, such as prohibiting people from assembling in heavily populated areas, instituting quarantines, restricting travel, issuing lockdown orders and restricting the types of businesses that may continue to operate, ‘stay-at-home orders, and enforcing remote working regulations. These measures have led to a significant decline in economic activities. The scope, duration, and frequency of such measures and the adverse effects of COVID-19 remain uncertain and could be severe. Resurgence of the virus or a variant of the virus that causes a rapid increase in cases and deaths, if measures taken by governments fail or if vaccinations are not administered as planned, may cause significant economic disruption in India and in the rest of the world. No prediction can be made of when any of the restrictions currently in place will be relaxed or when further restrictions will be announced.

Since certain of our products are categorised as "essential goods", our Sameerwadi Facility operated at 50% employee capacity until May 31, 2020 and resumed normal functions from June 1, 2020, while our Sakarwadi Facility was shut down for a period of 7 days and was fully operational post April 1, 2020. We have implemented safety procedures and requirements at our Manufacturing Facilities to meet the governments requirement on sanitisation, staggered shifts and social distancing. On account of the lockdown imposed by the State Government of Karnataka owing to the second wave of COVID-19, the operations at the sugar division were temporarily suspended from May 10, 2021 to May 31, 2021. In addition, due to the lockdown imposed by the Government of India, demand for our products, specifically from the food, beverage and FMCG sectors was severely impacted between May June 2021. Further, there is a likelihood of continuation of disruption in supply chain, increased raw material costs, transport and service costs which may adversely affect our production and profits.

Depending on the extent to which the local and global community has been impacted by the pandemic, our quarterly and annual revenue growth rates and expenses as a percentage of our revenues, may differ significantly from our historical rates, and our future operating results may fall below expectations. For further details see,

"Risk Factors - The continuing impact of the outbreak of the novel coronavirus could have a significant effect on our operations, and could negatively impact our business, revenues, financial condition and results of operations"

Availability of sugarcane, molasses, and feedstock for the manufacturing of our sugar, distillery and cogeneration segments

Sugarcane is the principal raw material used for our products in sugar, distillery and cogeneration segments. The residue generated from the crushing process such as bagasse and molasses are used for power generation and distillery functions. Most of our sugarcane requirement is met through direct purchase from independent farmers cultivating sugarcane around our Sameerwadi Manufacturing Facility. Whilst, we have entered into agreements with farmers for procurement of sugarcane, these agreements are not exclusive in nature and our existing relationships with the farmers plays a critical role in obtaining raw materials for our operations. Our business and results of operations are dependent on our ability to maintain such relationships with the farmers for our ongoing sugarcane requirements. In addition, sugarcane production is dependent on several fluctuating factors such as duration of crushing season, availability of water and condition of soil and monsoons. Uncertainty of the time and duration of crushing season and inability to ascertain the availability of sugarcane during the crushing season in advance may affect our operating results in one or more periods and which in turn may impact our cash flows. Further, the quality of our products is highly dependent on our ability to source quality raw materials. Adverse weather conditions, crop disease and pest attacks may adversely affect sugarcane crop yields and the quality of produce thereby affecting sugar recovery rates.

Sugarcane and ethanol pricing

Our profitability depends significantly on the cost of sugarcane, our principal raw material, and the selling price of sugar. The price to be paid to the farmers for sugarcane is determined by the fair and remunerative price, premium and recovery levels fixed by the Government of India. Further, the market price of our sugar products and by-products are variable and dependent on prevailing market prices, competition, demand and supply patterns and cyclical nature of the industry. The market in India has experienced periods of limited supply, causing sugar prices and industry profit margins to increase, followed by periods of excess production that result in oversupply, causing declines in sugar prices and industry profit margins. Rising procurement prices for sugarcane, particularly in the event of a decrease in the price of sugar may cause our margins to fluctuate and adversely affect our results of operations and financial condition. Further, although the price of sugar is market driven, a minimum selling price is fixed and regulated by the Government of India for sale of white or refined sugar for domestic consumption. Similarly, the pricing of ethanol to be supplied to oil marketing companies under the Ethanol

Blended Petrol Programme ("EBP Program") are dependent on government mandated price and blending targets set by the Government. Changes in governmental policies for procurement or pricing for sugarcane, ethanol or sugar will impact our business, financial condition and results of operations.

Procurement of raw materials (other than sugarcane)

We source certain of our raw materials namely, special denatured spirit ("SDS"), acetic acid, methyl ethyl ketone

("MEK") and molasses from a limited number of third-party suppliers from geographies which include India, USA, China and UAE. Our dependence on foreign suppliers subjects us to certain risks which include political and economic instability in the countries in which such suppliers are located, disruptions in transportation, currency exchange rates, transport costs amongst others. We may not be able to find alternate sources for the procurement of raw materials in a timely manner if we fail to receive the quality of raw materials that we require; negotiate appropriate financial terms or obtain adequate supply of raw materials. Further, in the event that either our demand increases, or our suppliers experience a scarcity of resources, our suppliers may be unable to meet our demand for raw materials. Any such reductions or interruptions in the supply of raw materials, and any inability on our part to find alternate sources in a timely manner for the procurement of such raw materials will impact our business, financial condition and results of operations.

Significant portion of our revenue is derived from few customers and products

Revenues generated from sales to our top five customers represented 30.89%, 31.36% and 27.81% of our consolidated revenue from operations in Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively. While we have developed long-term relationships with certain of our customers, there is no commitment on the part of our key customers to continue to place new purchase orders with us. Further, we may not find any other customers for the surplus or excess capacity. The loss of one or more of these significant customers or a significant decrease in business from any such key may impact our business, financial condition and results of operations. A significant portion of our revenues is derived from the sale of a few products, namely, sugar, ethyl acetate, ethanol and MPO. Revenue from sugar, ethyl acetate, ethanol and MPO accounted for 31.94%, 21.62%, 21.28% and 6.50%, respectively of our consolidated revenue in Fiscal 2021, 42.83%, 18.89%, 16.83% and 3.71%, respectively of our consolidated revenue in Fiscal 2020 and 41.09%, 23.91%, 11.94% and 7.86%, respectively of our consolidated revenue in Fiscal 2019. In case revenues from these products decline as a result of increased competition, pricing pressures, fluctuations in demand for or supply it will impact our business, financial condition and results of operations.

Research and Development

The growth of our business depends upon our ability to anticipate and identify changes in the preferences of our customers and offer them products that they require, on a timely basis. In order to remain competitive, we develop, test and manufacture new products, which must meet our customers standards including any applicable regulatory standards. We have established a dedicated research and development facility in Navi Mumbai, Maharashtra and a research and development facility at each of our Manufacturing Facilities. Our ability to successfully introduce new and innovative products also depends on our ability to adapt and invest in new technologies. Any failure on our part to successfully identify and commercialise new products or to predict and respond effectively to competition will have an impact on our business, financial condition and results of operations.

Significant Accounting Policies

The discussion and analysis of our financial condition and results of operations is based on the Restated Consolidated Financial Statements. The preparation of the Restated Consolidated Financial Statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and accompanying disclosure of contingent liabilities and other attributes of our income, expenditure and cash flow. For details of significant accounting policies followed by us while preparing our financial statements, see "Restated Consolidated Financial Statements" on page 215.

Our results of operations and financial condition are sensitive to accounting methods, assumptions and estimates that underlie the preparation of our financial statements. We evaluate these estimates on an on-going basis. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount values of assets and liabilities that are not readily apparent from other sources.

Principal Components of Statement of Profit and Loss

Total Revenue

Our total revenue comprises revenue from operations and other income.

Revenue from operations

Our revenue from operations comprises of the following:

(a) Revenue from sale of products: we generate majority of our revenue from the sale of products which comprise of sugar, co-generation, Bio-based Chemicals, distillery-based products such as rectified spirits, alcohol and other products; and

(b) Other operating revenue comprising of sugar washout charges towards cancellation of export related sugar purchase orders.

Other income

Other income comprises of interest received from bank deposits and others, fair value gain on financial instruments at fair value through profit and loss, net gain on disposal of property, plant and equipment, government grants, write back of sundry balances, gains from foreign exchange fluctuations and other miscellaneous income, which primarily includes recovery of harvest and transport related expenses, export quota, insurance, sundry balances written back and others.

Expenses

Our expenses comprise of cost of materials consumed, purchase of stock-in-trade and changes to inventories of finished goods, work-in-process and stock-in trade, employee benefit expense, finance cost, depreciation and amortization expenses and other expenses.

Cost of materials consumed, purchase of stock-in-trade and changes to inventories of finished goods, work-in-progress and stock-in trade

Cost of materials consumed primarily includes the cost of raw materials such as sugar cane, feedstock for chemicals and distillery operations. Details of cost of materials consumed is for Fiscal 2021, Fiscal 2020 and Fiscal 2019 is set forth below:

			(in million)
Particulars	Fiscal 2021	Fiscal 2020	Fiscal 2019
Sugarcane	6,598.03	5,071.71	5,597.09
Feedstock for Chemicals business	3,611.67	3,292.08	4,447.45
Others including feedstock for distillery business, agricultural inputs and others	624.55	436.70	463.32
Total	10,834.25	8,800.49	10,507.87

Purchase of stock-in trade primarily includes the cost of chemicals, fertilizer and other agricultural inputs which we purchase from third parties.

Changes in inventories of finished goods, work-in-progress and stock-in trade denotes increase/decrease in inventories of finished goods, work-in-progress and stock-in trade between opening and closing dates of a reporting period.

Employee benefit expenses

Employee benefit expenses comprises of salaries, wages and bonuses paid, contribution to provident and other funds, directors remuneration and staff welfare expenses.

Finance cost

Finance cost comprises of interest on term loans, cash credit, public deposits, unsecured loans, lease liabilities and bank charges.

			(in million)
Particulars	Fiscal 2021	Fiscal 2020	Fiscal 2019
Term Loan	254.57	81.17	148.79
Cash Credit	143.45	222.05	268.88
Others	325.74	384.12	481.32
Total	723.76	687.34	898.99

For further details, see "Financial Indebtedness" on page 283.

Depreciation and Amortisation Expense

Depreciation and amortisation expenses comprises of depreciation of tangible assets, right of use assets and amortization of intangible assets.

Other expenses

Other expenses predominantly comprise of manufacturing expenses, selling and distribution expenses and administration and other expenses.

Manufacturing expenses primarily comprise of expenses in relation to power and fuel, repairs and maintenance, stores, consumables, packing materials, labour charges, go-down rent and other charges.

Selling and distribution expenses primarily comprise of freight, clearing and forwarding charges and consumption of packing material.

Administration and other expenses primarily comprise of legal and professional fee, insurance, auditor fee, contribution to scientific research institution, rates and taxes, travelling and conveyance expenses, provisions on receivables and advances to vendors and general expenses.

Tax expense

Our tax expense or credit for the period represents the tax payable on the current periods taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities and taxes related to earlier periods.

Profit/(loss) for the period

Profit for the period represents profit after tax before other comprehensive income.

Results of Operations

The following table sets forth select financial data from our statement of restated consolidated profit and loss for Fiscal 2021, Fiscal 2020 and Fiscal 2019, the components of which are also expressed as a percentage of total income for such periods:

	Fiscal
	2021		2020		2019
Particulars	(in million)	Percentage of total income (in %)	(in million)	Percentage of total income (in %)	(in million)	Percentage of total income (in %)
Income:
Revenue from operations	15,381.73	99.47	14,591.49	99.07	15,522.29	99.10
Other Income	82.11	0.53	136.47	0.93	140.98	0.90
Total income	15,463.84	100.00	14,727.96	100.00	15,663.28	100.00
Expenses:
Cost of materials consumed	10,834.25	70.06	8,800.49	59.75	10,507.87	67.09
Purchase of stock-in trade	115.05	0.74	96.27	0.65	126.97	0.81
Changes in inventories of finished goods, work-in-progress, and stock-in trade	(376.94)	(2.44)	1,821.58	12.37	602.71	3.85
Employee benefit expense	854.91	5.53	842.82	5.72	813.97	5.20
Finance costs	723.76	4.68	687.35	4.67	898.99	5.74
Depreciation and amortization expense	471.30	3.05	449.49	3.05	498.93	3.19
Other Expenses	2,378.27	15.38	1,997.05	13.56	2,150.16	13.73
Total expenses	15,000.60	97.00	14,695.05	99.78	15,599.60	99.59
Restated profit before tax	463.24	3.00	32.91	0.22	63.67	0.41
Tax expense:
Current tax	3.34	0.02	1.04	0.01	1.39	0.01
Adjustments of tax relating to earlier periods	21.68	0.14	-	-	-	-
Deferred tax	166.67	1.08	(8.75)	(0.06)	6.95	0.04
Total tax expenses	191.69	1.24	(7.72)	(0.05)	8.34	0.05
Restated profit for the year	271.55	1.76	40.63	0.28	55.33	0.35
Other comprehensive income Items not to be reclassified to profit or loss in subsequent periods/years:
Remeasurement of gains (losses) on defined benefit plans	(6.84)	(0.04)	1.92	0.01	(4.94)	(0.03)
Income tax effect	2.13	0.01	(0.60)	(0.00)	1.54	0.01
Exchange differences in translating the financial statements of a foreign operation	1.06	0.01	(1.05)	(0.01)	(3.59)	(0.02)

	Fiscal
	2021		2020		2019
Particulars	(in million)	Percentage of total income (in %)	(in million)	Percentage of total income (in %)	(in million)	Percentage of total income (in %)
Restated total other comprehensive income for period/year, net of tax	(3.65)	(0.02)	0.27	0.00	(6.98)	(0.04)
Restated total comprehensive income for the period/year, net of tax	267.89	1.73	40.90	0.28	48.35	0.31

Fiscal 2021 compared to Fiscal 2020

Total revenue

Revenue from operations

Our revenue from operations increased by 5.42% to 15,381.73 million in Fiscal 2021 from 14,591.49 million in Fiscal 2020. This was primarily led by an increase in revenues from chemicals and distillery segments (pre-adjustment for unallocated revenue) which was partially offset by decrease in revenues from sugar and cogeneration segments. The increase in chemicals segment was driven by increase in volume of MPO and Ethyl Acetate as well as increase in prices of various chemicals. During the year, we also diverted higher percentage of cane syrup towards distillery segment which lead to higher revenues in distillery segment and lower revenues in sugar segment.

The following table sets forth the external revenue contributed by each of our business segments and as a percentage of our total revenue from operations for Fiscal 2021 and Fiscal 2020:

	Fiscal 2021		Fiscal 2020
Particulars	External revenue ( million)	As % of Total Revenue from Operations (in %)	External Revenues ( million)	As % of Total Revenue from Operations (in %)
Sugar	4,912.39	31.94	6,250.09	42.83
Chemicals	5,376.79	34.95	4,555.62	31.22
Distillery	4,561.62	29.66	3,264.94	22.38
Cogeneration	405.18	2.63	414.72	2.84
Unallocated	125.75	0.82	106.12	0.73
Total	15,381.73	100.00	14,591.49	100.00

Other income

Other income decreased by 39.83% to 82.11 million in Fiscal 2021 from 136.47 million in Fiscal 2020. The decrease was predominantly due to decrease in interest income earned from bank deposits and others to 32.76 million in Fiscal 2021 from 38.20 million in Fiscal 2020, reduction in net gain on disposal of property, plant and equipment to 11.81 million in Fiscal 2021 from 38.65 million in Fiscal 2020 and decrease in sundry balances written back to nil in Fiscal 2021 from 39.00 million in Fiscal 2020 which was partially offset by an increase in miscellaneous income to 31.87 million in Fiscal 2021 from 18.27 million in Fiscal 2020 and an increase in fair value gain on financial instruments at fair value through profit and loss.

Total expenses

Cost of Materials Consumed

Our cost of materials consumed increased by 23.11% to 10,834.25 million in Fiscal 2021 from 8,800.49 million in Fiscal 2020 and purchase of stock-in trade increased by 19.50% to 115.05 million in Fiscal 2021 from

96.27 million in Fiscal 2020 primarily due to increased cane crushing from approximately 1.5 million MT in Fiscal 2020 to approximately 2.0 million MT in Fiscal 2021. In addition, there was an increase in inventories of finished goods, work in progress and stock-in trade in Fiscal 2021 to 3,142.10 million from 2,765.16 million in Fiscal 2020 which led to a net decrease/ (increase) in inventories of (376.94) million in Fiscal 2021 as compared to net decrease/ (increase) in inventories of 1,821.58 million in Fiscal 2020. This increase in our cost of materials consumed and increase in inventories of finished goods, work in process and stock-in trade was primarily attributable to an increase in inventory of finished goods.

Employee benefit expenses

Employee benefit expenses increased by 1.43% to 854.91 million in Fiscal 2021 from 842.82 million in Fiscal

2020. Such increase is due to increase in salaries, wages and bonus and increase in director remuneration.

Finance costs

Finance costs increased by 5.30% to 723.76 million in Fiscal 2021 from 687.35 million in Fiscal 2020, predominantly due to increase in interest expense on borrowings for capacity expansion which was partially offset by reduction in interest expense from short term loans and cash credit facilities.

Depreciation and amortization expense

Depreciation and amortization expense increased by 4.85% to 471.30 million in Fiscal 2021 from 449.49 million in Fiscal 2020, due to an increase in depreciation on our tangible assets and right of use assets by 4.86% to 470.44 million for Fiscal 2021 from 448.63 million for Fiscal 2020.

Other Expenses

Other expenses increased by 19.09% to 2,378.27 million in Fiscal 2021 from 1,997.05 million in Fiscal 2020, predominantly due to an increase in (i) manufacturing expenses by 10.11% predominantly due to expenses towards power and fuel costs, repairs and maintenance of plant and machinery and on stores, consumables and packing material; (ii) selling and distribution expenses by 87.41%; and (iii) administration and other expenses by 17.02% predominantly due to expenses towards insurance, increase in provisions for doubtful debt, contribution to scientific research institution, legal and professional fees, rates and taxes and general expenses amongst others.

Tax expenses

Our tax expense increased to 191.69 million for Fiscal 2021 from (7.72) million for Fiscal 2020, primarily due to higher profit before tax during Fiscal 2021 as compared to Fiscal 2020.

Profit/(loss) for the period

Due to the reasons stated above, our profit for the year increased to 271.55 million in Fiscal 2021 from 40.63 million in Fiscal 2020.

Fiscal 2020 compared to Fiscal 2019

Total revenue

Revenue from operations

Our revenue from operations decreased by 5.97% to 14,591.49 million in Fiscal 2020 from 15,522.29 million in Fiscal 2019, due to a decrease in sales volume of chemicals.

The following table sets forth the external revenue contributed by each of our business segments and as a percentage of our total revenue from operations for Fiscal 2020 and Fiscal 2019:

	Fiscal 2020		Fiscal 2019
Particulars	External revenue ( million)	As % of Total Revenue from Operations (in %)	External Revenues ( million)	As % of Total Revenue from Operations (in %)
Sugar	6,250.09	42.83	6,378.43	41.09
Chemicals	455.62	31.22	6,093.32	39.26
Distillery	3,264.94	22.38	2,607.06	16.80
Cogeneration	414.72	2.84	335.56	2.16
Unallocated	106.12	0.73	107.92	0.69

	Fiscal 2020		Fiscal 2019
Particulars	External revenue ( million)	As % of Total Revenue from Operations (in %)	External Revenues ( million)	As % of Total Revenue from Operations (in %)
Total	14,591.49	100.00	15,522.29	100.00

Other income

Other income decreased by 3.20% to 136.47 million in Fiscal 2020 from 140.98 million in Fiscal 2019. This decrease was predominantly due to decrease in interest from bank and other deposits, reduced gain on financial instruments at fair value and miscellaneous income which was partially offset by increased sundry balances written back and increase in net gain on disposal of property, plant and equipment.

Total expenses

Cost of Materials Consumed

Our cost of materials consumed decreased by 16.25% to 8,800.49 million in Fiscal 2020 from 10,507.87 million in Fiscal 2019 primarily due to reduction in cane crushed during the period from approximately 1.7 million MT in Fiscal 2019 to approximately 1.5 million MT in Fiscal 2020 and decrease in purchase of stock-in trade by 24.18% to 96.27 million in Fiscal 2020 from 126.97 million in Fiscal 2019. In addition, there was a decrease in inventories of finished goods, work in progress and stock-in trade to 2,765.16 million in Fiscal 2020 from 4,586.73 million in Fiscal 2019 which led to net decrease/ (increase) in inventories of 1,821.58 million in Fiscal 2020 as compared to net decrease/ (increase) in inventories of 602.71 million in Fiscal 2019.

Employee benefit expenses

Employee benefit expenses increased by 3.54% to 842.82 million in Fiscal 2020 from 813.97 million in Fiscal

2020. Such increase was primarily due to an increase in annual salaries, wages and bonus paid to employees, increase in staff welfare expenses and director remuneration in Fiscal 2020.

Finance costs

Finance costs decreased by 23.54% to 687.35 million in Fiscal 2020 from 898.99 million in Fiscal 2019, predominantly due to decrease in fund-based borrowings to 6,041.26 million in Fiscal 2020 from 8,009.01 million in Fiscal 2019.

Depreciation and amortization expense

Depreciation and amortization expense decreased by 9.91% to 449.49 million in Fiscal 2020 from 498.93 million in Fiscal 2019, due to a decrease in depreciation on our tangible assets and right of use assets by 10.02% to 448.63 million for Fiscal 2020 from 498.61 million for Fiscal 2019.

Other Expenses

Other expenses decreased by 7.12% to 1,997.05 million in Fiscal 2020 from 2,150.16 million in Fiscal 2019, predominantly due to (i) decrease in manufacturing expenses by 8.81% primarily due to reduced expenses towards stores, consumables and packing material and power and fuel which were partially offset by increase in labour charges; (ii) an increase in selling and distribution expenses by 8.32%; and (iii) decrease in administration and other expenses by 7.59% primarily due to reduced expenses towards general expenses (including traveling and telephone) and rates and taxes which was partially offset by increase in legal and professional fees and expenses towards insurance amongst others. Such decrease in other expenses is in line with the decrease in our revenue from operations.

Tax expenses

Our tax expense decreased to (7.72) million for Fiscal 2020 from 8.34 million for Fiscal 2019, primarily due to lower profit before tax during Fiscal 2020 as compared to Fiscal 2019 and changes in deferred taxes.

Profit/(loss) for the period

Due to the reasons stated above, our profit for the year decreased by 26.57% for Fiscal 2020 to 40.63 million, as compared to a profit of 55.33 million in Fiscal 2019.

Cash Flows Based on Our Restated Consolidated Financial Statements

The table below summarizes the statement of cash flows, as per our restated consolidated cash flow statements, for the periods indicated:

	Fiscals
Particulars	2021	2020	2019
Net cash inflow from/ (outflow in) operating activities	1,487.26	2,495.69	2,870.75
Net cash inflow from / (outflow in) investing activities	(74.91)	(226.02)	(545.75)
Net cash inflow from/ (outflow in) financing activities	(1,391.11)	(2,264.44)	(2,312.46)
Net increase/ (decrease) in cash and cash equivalents	21.24	5.24	12.54

Operating activities

Fiscal 2021

Our restated profit/ (loss) before income tax for Fiscal 2021 was 463.24 million. Net cash generated from operating activities for Fiscal 2021 was 1,487.26 million and the operating cash flows before change in operating assets and liabilities was 1,703.81 million. The change in operating assets and liabilities was primarily due to increase in inventories by 408.22 million, increase in trade receivables by 455.98 million which was partially offset by increase in trade payables by 206.92 million, increase in other liabilities by 261.63 million and decrease in other assets by 219.72 million.

Fiscal 2020

Our restated profit/ (loss) before income tax for Fiscal 2020 was 32.91 million. Net cash generated from operating activities for Fiscal 2020 was 2,495.69 million and the operating cash flows before change in operating assets and liabilities was 1,058.97 million. The change in operating assets and liabilities was primarily due to decrease in inventories by 1,863.97 million, decrease in trade receivables by 195.70 million and increase in other liabilities by 152.71 million which was partially offset by decrease in trade payables by 687.56 million and increase in other assets by 44.25 million.

Fiscal 2019

Our restated profit/ (loss) before income tax for Fiscal 2019 was 63.67 million, Net cash generated from operating activities for Fiscal 2019 was 2,870.75 million and the operating cash flows before change in operating assets and liabilities was 1,348.59 million. The change in operating assets and liabilities was primarily due to decrease in inventories by 568.75 million, increase in trade payables by 1,420.17 million and increase in provisions which was partially offset by increase in trade receivables by 67.66 million, decrease in other liabilities by 154.69 million and increase in other assets by 254.39 million.

Investing activities

Fiscal 2021

Net cash used in investing activities for Fiscal 2021 was 74.91 million, which primarily included payments made for purchase of property, plant and equipment of 123.41 million which were partially offset by proceeds of 15.31 million from sale of property, plant and equipment. and by interest of 33.19 million received from deposits with banks.

Fiscal 2020

Net cash used in investing activities for Fiscal 2020 was 226.02 million, which primarily included payments made for purchase of property, plant and equipment of 264.73 million which were partially offset by interest received of 38.71 million received from deposits with banks.

Fiscal 2019

Net cash used in investing activities for Fiscal 2019 was 545.75 million, which primarily included payments made for purchase of property, plant and equipment of 686.78 million which were partially offset by proceeds of 103.13 million from sale of property, plant and equipment and interest received of 37.90 million received from deposits with banks.

Financing activities

Fiscal 2021

Net cash outflow in financing activities for Fiscal 2021 was 1,391.11 million, which primarily included repayment of non-current borrowings of 607.45 million and payment of interest and finance charges of 782.20 million.

Fiscal 2020

Net cash outflow in financing activities for Fiscal 2020 was 2,264.44 million, which primarily included cash outflows on account of repayment of non-current borrowings of 2,106.79 million and interest and finance charges payment of 798.54 million. This was partially offset by proceeds from the issuance of equity shares (including share premium) of 642.08 million.

Fiscal 2019

Net cash outflow in financing activities for Fiscal 2019 was 2,312.46 million, which primarily included cash outflows on account of repayment of non-current borrowings of 1,510.52 million and interest and finance charges payment of 967.32 million. This was partially offset by proceeds from the issuance of equity shares

(including share premium) of 166.11 million.

Business Segments

The Company has four operating business units based on the risks and rates of returns of products produced or manufactured by these respective units:

(i) Sugar;

(ii) Bio-based chemicals;

(iii) Distillery; and

(iv) Cogeneration

The operating external revenue from each of our business segments for Fiscal 2021, Fiscal 2020 and Fiscal 2019 as per our restated consolidated financial statements is set forth below:

Sr. Business	External revenue from each business segment for the financial year ended March 31
No. Segment	2021 (in million)	%	2020 (in million)	%	2019 (in million)	%
1. Sugar	4,912.39	31.94	6,250.09	42.83	6,378.43	41.09
2. Bio-based	5,376.79	34.96	4,555.62	31.22	6,093.32	39.26
chemicals
3. Distillery	4,561.62	29.66	3,264.94	22.38	2,607.06	16.80
4. Cogeneration	405.18	2.63	414.72	2.84	335.56	2.16
5. Unallocated	125.75	0.82	106.12	0.73	107.92	0.70
Total	15,381.73	100.00	14,591.49	100.00	15,522.29	100.00

Indebtedness

As at March 31, 2021, we had total fund-based borrowings of 5,633.78 million and had availed total non-fund-based borrowings of 536.46 million.

There are a number of covenants in our financing agreements that we have entered into with our lenders. Further, some of our financing agreements include conditions and covenants that require us to obtain their consent prior to carrying out certain activities and entering into certain transactions. Failure to meet these conditions or obtain these consents could have significant consequences on our business. For further details, see "Risk Factors" on page 29.

Contingent Liabilities and Off-Balance Sheet Arrangements

The following table sets forth certain information relating to our contingent liabilities and commitments as of March 31, 2021, March 31, 2020 and March 31, 2019:

Contingent liabilities
			(in million)
Particulars	As at March 31, 2021	As at March 31, 2020	As at March 31, 2019
Excise duty and service tax (excluding interest and penalty)	79.10	79.10	79.10
Bank guarantees	196.34	291.96	184.49
Letters of credit	316.27	333.47	264.05
Corporate guarantee to Karnataka Bank	76.31	-	-

Capital commitments

Capital expenditure contracted for at the end of the relevant reporting period but not recognised as liabilities is set forth below

			(in million)
Particulars	As at March 31, 2021	As at March 31, 2020	As at March 31, 2019
Property, plant and equipment	493.38	35.52	401.68

For further details, please see "Financial Information" on page 215.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Related Party Transactions

For details of our relation party transactions, please see "Financial Information" on page 215.

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk, such as equity price risk and commodity risk.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Majority of our borrowings, both term and working capital, are floating rate linked borrowings wherein interest rate is reset at different time intervals. Fluctuation in interest rates will therefore have a bearing on our debt service obligations.

Foreign Currency Risk

Foreign currency risk arises from commercial transactions that recognise assets and liabilities denominated in a currency that is not Companys functional currency i.e. Indian Rupees. The Company has natural hedge of exports against import and any excess in import if any, is covered by forward contracts.

Inventory price risk

The Company is exposed to the movement in price of its principal finished product i.e., sugar. Price of sugar cane is fixed by the Government. Typically, sugar production is undertaken during the sugar cane harvesting period which extends from November to April. Sugar is sold throughout the year which exposes the sugar inventory to movements in price. The Company monitors sugar prices on a daily basis and accordingly formulates its sales strategy to achieve maximum realisation.

Liquidity risk

Liquidity risk is the risk that a group may encounter difficulties in meeting its obligations associated with financial liabilities that are settled by delivering cash or other financial assets. The Companys principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The ultimate responsibility for liquidity risk management rests with the Board to appropriately manage the Companys short, medium and long-term funding and liquidity management requirements.

For further information, see, "Financial Information" on page 215.

Unusual or Infrequent Events or Transactions

Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.

Changes in Accounting Policies

Other than as disclosed in the Restated Consolidated Financial Statements, there have been no changes in accounting policies in the last three Fiscals, please see "Financial Information Restated Consolidated Financial Statements" on page 215.

Seasonality of Business

Our business is influenced by the availability of our basic raw material, i.e., sugarcane. Our production schedules are operational only according to such availability. As a result, our business is sensitive to weather conditions such as duration of crushing season, cropping patterns, drought, floods, cyclones and natural disasters, as well as events such as pest infestations. For further details, please see the section on "Risk Factors - Our business in the sugar, distillery and cogeneration segments are subject to seasonal variations that could result in fluctuations in our results of operations." on page 33.

Dependence on Customers and Suppliers

We are dependent on a limited number of customers for a significant portion of our revenues. Revenues generated from sales to our top five customers represented 30.89%, 31.36% and 27.81% of our consolidated revenue from operations in Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively. For further details, please see "Risk Factors

We derive a significant portion of our revenue from a few customers and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for our products may adversely affect our business, results of operations, financial condition and cash flows" on page 34. We source our raw materials namely, special denatured spirit ("SDS"), acetic acid, methyl ethyl ketone ("MEK") and molasses from a limited number of third-party suppliers from geographies including India, USA, China and UAE. Our three largest suppliers of imported raw materials accounted for 50.75%, 61.50% and 54.77% of our consolidated total raw material purchases (excluding sugarcane), for Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively. For further details, please see "Risk Factors - We depend on a few suppliers for supply of a significant portion of raw materials (other than sugarcane). Any failure to procure such raw materials from these suppliers may have an adverse impact on our manufacturing operations and results of operations." on page 30.

Known Trends or Uncertainties

Our business has been subject, and we expect it to continue to be subject, to trends and uncertainties identified above in "Significant Factors Affecting our Results of Operations" and as described in "Risk Factors" beginning on page 29. To our knowledge, except as disclosed in this Draft Red Herring Prospectus, there are no known factors which we expect to have a material adverse effect on our income.

Future Relationship Between Cost and Revenue

Other than as described in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of

Financial Position and Results of Operations" beginning on pages 29, 147 and 268, respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

New Products or Business Segments

Except as set out in this Draft Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segment.

Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or increased sales prices

Changes in revenue in the last three Fiscals are as described in "Managements Discussion and Analysis of Financial Position and Results of Operations Fiscal 2021 compared to Fiscal 2020" and "Managements Discussion and Analysis of Financial Position and Results of Operations Fiscal 2020 compared to Fiscal 2019" above on pages 275 and 276, respectively

Significant economic changes that materially affected or are likely to affect income from continuing operations

Other than as described in the "Risk Factors" and "Industry" on pages 29 and 103, respectively, there are no significant economic change that materially affected or are likely to affect our income from continuing operations.

Significant Developments after March 31, 2021

Except as disclosed in this Draft Red Herring Prospectus, there are no significant developments or circumstances that have occurred post March 31, 2021, which has materially and adversely affected, or are likely to affect within the next twelve months (a) our trading or profitability, (b) the value of our assets, or (c) our ability to pay our liabilities.