Kesar Enterprises Ltd Management Discussions

GLOBAL SUGAR OVERVIEW:

Bifurcation of global sugar production by top 5 sugar production countries is as follows:

Market	% of Global Production	Total Production (2024/2025, Metric Tons)
Brazil	23%	43 Million
India	19%	35.5 Million
European Union	8%	15.58 Million
China	6%	11 Million
Thailand	5%	10.24 Million

(Source: https://www.fas.usda.gov/data/production/commodity/0612000 )

Brazil takes the crown as the top sugar producer. The favorable climate and vast agricultural lands in Brazil make it a powerhouse in sugar production. India follows closely behind Brazil. Indias large population and extensive sugarcane cultivation contribute significantly to its sugar production numbers.

The European Union collectively produces significantly, making it a significant player in the global sugar market. The regions advanced agriculture technology and subsidies for sugar farmers contribute to its high production levels.

China has been steadily increasing its sugar production. With the growing demand for sugar in the Chinese market, the country plays a crucial role in the sugar industry.

Thailand is another prominent sugar producer. The countrys tropical climate and fertile soil create ideal conditions for sugarcane cultivation.

Apart from the above-mentioned top 5 contributors, United States produces 8.42 million metric tons of sugar. Russia also has seen a growth in sugar production, reaching 6.5 million metric tons in 2024, contributing 3% to the global sugar production. Russias efforts to boost its agricultural sector have resulted in higher sugar output.

(Source: https://www.tradeimex.in/blogs/top-10-sugar-producing-countries )

INDIAN SUGAR INDUSTRY (SUGAR SEASON 2024-25):

Sugar production in India has reached 247.61 lakh tonnes as of March 31, 2025, for the ongoing 2024-25 sugar season (SS). According to the Indian Sugar & Bio-Energy Manufacturers Association (ISMA), 95 mills are currently operational across the country, with production continuing in key sugar-producing states.

Uttar Pradesh has produced 87.50 lakh tonnes of sugar so far, with 48 mills still operational. Due to the improved yield of plant cane, cane availability has increased, and these mills are expected to remain operational until mid- to late April 2025. Additionally, sugar recovery has shown improvement in the second half of the season, resulting in better sugar output, according to ISMA.

In Maharashtra, out of 200 mills, only six remain operational, contributing 80.06 lakh tonnes to the total production to date. With two mills still operating, Karnataka has recorded 39.55 lakh tonnes of sugar production.

Sugar Production Data as of March 31, 2025

ZONE	Number of Mills	Number of Mills.	Number of Mills	Sugar Production
	Started	Closed	Operating	(Lakh Tonnes)
U.P.	122	74	48	87.50
Maharashtra	200	194	6	80.06
Karnataka	80	78	2	39.55
Gujarat	15	9	6	8.21
Tamil Nadu	30	14	16	4.16
Others	87	70	17	28.13
ALL INDIA	534	439	95	247.61

(Note: Above sugar production figures are after diversion of sugar into ethanol)

(Source: https://www.chinimandi.com/indias-sugar-production-reaches-247-61-lakh-tonnes-95-mills-currently-operational/ )

The Indian Sugar Bio-Energy and Manufacturers Association (ISMA) has significantly reduced its final forecast for sugar production in the sugar year 2024-25, compared to previous projections.

ISMA estimates that total sugar production will be 254.97 lakh metric tonnes (LMT), which is a decrease of almost 10 LMT from last months projection. At the start of the sugar crushing season, the industry body had initially predicted around 280 LMT of sugar production. This higher estimate led the government to permit exports of 10 LMT.

The earlier estimation of reduced production, along with the governments decision to allow sugar exports, has caused some concerns among policymakers. Additionally, the imposition of tariffs by the United States has resulted in turmoil in the global market and a crash in crude oil prices. This has reduced demand in the ethanol blending market, where sugar syrup is a key component.

Meanwhile, ISMA gave optimistic outlook for the 2025-26 Sugar season due to positive forecast of southwest monsoon by both Indian Meteorological Department and private weather agency Skymet.

Favourable monsoon forecast would encourage better sugarcane planting for the 2025 26 states like Maharashtra and

Karnataka.

(Source: https://www.newindianexpress.com/nation/2025/Apr/18/isma-lowers-sugar-production-forecast-for-2024-25-amid-upheaval-caused-by-us-tariff )

OPERATIONAL HIGHLIGHTS (2024-25): Sugar Division

During Season 2024-25, the plant has crushed 59.46 lakh quintals of sugarcane as against 94.24 lakh quintals in the previous season.

The overall sugar recovery was 9.55% as against 10.81%, in the previous season.

During Season 2024-25, Molasses produced was 2.99 lakh quintals as against 4.20 lakh quintals in the previous season.

Power Division

The Plant consumed 1.70 Lakh MT of bagasse and 0.13 Lakh MT of alternate fuel to generate 0.74 Lakh MW power as against 2.44 lakh MT of bagasse and 0.16 lakh MT of alternate fuel to generate 1.17 Lakh MW power in the previous Season.

The total power exported to Uttar Pradesh Power Corporation Limited (UPPCL) was 0.49 lakh MW amounting to Rs.17.09 Crores as against 0.76 lakh MW amounting to Rs. 26.50 Crores in the previous Season.

Spirits Division

During the financial year 2024-25, the Company has not operated its Distillery plant due to the higher cost of molasses and low realization of RS / SDS / Ethanol.

FINANCIAL REVIEW (F.Y. 2024-25):

For the Financial Year 2024-25, Revenue from operations is Rs. 33,389.97 lakhs against revenue from operations of Rs. 53,105.61 lakhs in the previous year. Reduction in revenue from operations is on account of comparatively less availability of sugarcane, less sugar sale and reduction in sale of the other by-products.

For the Financial Year 2024-25, there is a loss of Rs. 7262.40 lakhs as against a profit of Rs. 8358.81 lakhs in the previous year. After taking into account the effect of other Comprehensive Income based on Ind-AS norms, there is a loss of Rs. 7308.51 lakhs for the Financial Year 2024-25 as against a profit of Rs. 8768.05 lakhs in the previous year.

The Company generated EBIDTA of Rs. (3892.47) lakhs as against Rs. 11570.70 lakhs last year.

During the Financial year 2024-25, the Company did not raise any funds by issue of equity shares or any debt securities. There was no change in Paid-up Share Capital of the Company during the year.

During the Financial Year 2024-25, no fresh credit facilities were obtained by the Company from any bank.

SEGMENT-WISE FINANCIAL PERFORMANCE:

Segment-wise reporting of performance of the Companys primary business segments (Sugar, Power and Spirits) is provided in Note No. 37 to Financial Statements forming part of this annual report.

OPPORTUNITIES & THREATS: Sugar

Untimely change in government policy and upward pricing in terms of Fair Remunerative Price (FRP) and State Advised Price (SAP) can prove a threat to the Company. Excess production also can affect the sugar prices to a great extent.

Power

The Company has set up a state of the art cogeneration plant operating at high pressure of 115 kg/cm2. Therefore, it is very efficient when compared to majority of the cogeneration plants having power cycle at pressures of 45, 67 and 87 kg/cm 2. This will, therefore, translate into producing more power from same bagasse.

Spirits

Present State and Central Government policies are quite favourable for the Spirits Division. The Government is promoting Ethanol by giving better rates, allowing to produce from ‘B" heavy molasses and cane juice directly. The Company also plans to restart Country Liquor and IMFL contract bottling.

RISKS AND CONCERNS: Raw Material Risk

Sugarcane is the principal raw material for manufacture of Sugar, Spirits and Power and its shortages could be on account of pest attacks, crop diseases, diversion of land by farmers. Shortage of the basic raw materials would severely impact the working of the divisions of the Company. To mitigate these risks, the Company has adopted sound agronomic practice and improvement in basic infrastructure facilities.

Price Risk

Sugar price is susceptible to fluctuations on account of international demand and supply, government pricing for cane as well as sugar, variance in production capacities of peers. Any change may affect the margins of the Company.

Regulatory Risk

The policies of the Central and State Governments in terms of Fair Remunerative Price (FRP) and State Advised Price (SAP) for sugarcane have an impact on the operations of the Company.

INTERNAL CONTROL SYSTEM:

The Companys internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with corporate policies. The Company has a well-defined delegation of power with authority limits for approving contracts as well as expenditure.

The Company has appointed independent internal auditors to oversee and carry out internal audit of its activities on a half yearly basis. The audit is based on an internal audit plan, which is reviewed and approved by the audit committee. The audit committee reviews audit reports submitted by internal auditors. The audit committee also discusses with the Companys statutory auditors, their views on the adequacy of internal control systems.

Based on its evaluation (as defined in section 177 of Companies Act 2013 and 18 of SEBI (LODR) Regulations 2015), the audit committee has concluded that, as of 31^st March 2025, the companys internal financial controls were adequate and operating effectively.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS AS REQUIRED TO BE DISCLOSED UNDER SEBI (LISTING OBLIGATIONS & DISCLOSURE REQUIREMENTS) REGULATIONS, 2015:

Particulars	Numerator	Denominator	March 31, 2025	March 31, 2024	Remarks/Reason for significant change
(i) Trade Receivable Turnover Ratio (times)	Sales	Average Debtors	36.89	48.23	There is no significant change and hence, details are not disclosed.
(ii) Inventory Turnover Ratio (times)	Cost of Goodssold	Average Stock	4.67	4.96	There is no significant change and hence, details are not disclosed.
(iii) Interest Coverage Ratio (times)	Earnings before Interestand Tax	Interest Exp	(4.76)	7.01	There has been significant change due to written back on account of One Time Settlement (OTS) entered into by the Company having been included in earnings for the previous year.
(iv) Current Ratio (times)	Current Assets	Current Liabilities	0.17	0.36	There has been significant change in current liabilities on account of One Time Settlement (OTS) entered into by the Company in the previous year.
(v) Debt Equity Ratio	Borrowings	Equity	0.60	0.38	There has been significant change in retained earnings on account of One Time Settlement (OTS) entered into by the Company in the previous year.
(vi) Operating Profit Margin (%)	Gross Profit	Sales	(16.96%)	1.46%	There has been significant change due to lower availability of cane.
(vii) Net Profit Margin (%)	Net Profit	Sales	(21.75%)	15.74%	There has been significant change due to savings in interest due to One Time Settlement entered into by the Company and written back on account of OTS having been included in net profits for the previous year.
(viii) Return on Equity / Net Worth	Net Profit after Tax	Equity	(61.57%)	45.73%	There has been significant change due to savings in interest due to One Time Settlement entered into by the Company and written back on account of OTS included in net profits for the previous year. Also, there has been significant change in other Equity due to Revaluation of the Property, Plant & Equipment in the previous year.

 

Particulars	Numerator	Denominator	March 31, 2025	March 31, 2024	Remarks/Reason for significant change
(ix) Trade payables turnover Ratio (%)	Average Trade payables	Purchases& Other manufacturing expenses	82.91%	52.27%	There has been significant change due to the shortage of cane, cash flow reduced drastically.
(x) Net capital turnover Ratio (%)	Net Sales	Working Capital	(108.00%)	(200.85%)	There has been significant change in Working Capital due to One Time Settlement entered into by the Company and fully paid in previous year.
(xi) Return on capital (%)	Earnings before Interestand Tax	Capital Employed	(50.46%)	50.85%	There has been significant change due to savings in interest due to One Time Settlement entered into by the Company and written back on account of OTS has been included in Earnings for the previous year. Also, there has been significant change in other Equity due to Revaluation of the Property, Plant & Equipments in the previous year.
(xii) Return on Investment (%)	Dividend & Gain on Investments	Average Investments	(2.44%)	47.00%	Market rate of Listed Equity investment is decreased in the current year compared to previous year

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIALYEAR:

Details of change in return on net worth is already provided in table given above and hence, the same is not repeated here.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:

The Company considers human capital as a critical asset and success factor for smooth organizational workflow. Efforts are made to improve skills, knowledge and performance of employees by timely training, job satisfaction and enrichment. The Company has added to its fold, experienced manpower in line with future areas of growth. As on 31^st March 2025, the Company had 229 permanent employees.

CAUTIONARY STATEMENT:

The above Management Discussion and Analysis Report contains "forward looking statements" within the meaning of applicable laws, and regulations and is futuristic in nature. All statements that address expectations or projections about the future, including, but not limited to statements about the Companys strategy for growth, market position, expenditures and financial results are forward-looking statements. The Companys actual results, performance or achievement could thus differ materially from those projected in any such forward-looking statements. Investors are requested to make their own independent judgments before taking any investment decisions and the Company assumes no responsibility.

On behalf of the Board of Directors

Harsh R Kilachand

Chairman & Managing Director

DIN: 00294835

15th May 2025