Magadh Sugar & Energy Ltd Management Discussions

Global economy Overview

The global economy grew marginally at 3.4% in 2025 compared to 3.3% in the previous year, influenced by the US tariff shock of April 2025. Despite being partially unwound through subsequent trade deals, it left effective tariff rates well above pre-2025 levels and heightened trade policy uncertainty.

Advanced economies witnessed a marginal growth from 1.8% in 2024 to 1.9% in 2025, while emerging market and developing economies demonstrated relative resilience, expanding by 4.4% in 2025 compared to 4.3% in 2024.

Global inflation continued its multi-year downward trend in 2025, declining to an estimated 4.1% from 5.8% in 2024.

Regional growth (%)	2025	2024
World output	3.4	3.3
Advanced economies	1.9	1.8
Emerging and developing economies	4.4	4.3

Outlook

Given the challenge of forming stable, real-time assumptions for projections, the IMF World Economic Outlook report adopted a reference forecast instead of a conventional baseline, assuming the war remains contained in duration, intensity, and reach, with disruptions easing by mid-2026, in line with commodity futures as of March 10, 2026.

Under this reference view, global growth is projected at 3.1% in 2026 and 3.2% in 2027. Global inflation is expected to rise to 4.4% in 2026 before easing to 3.7% in 2027.

(Source: OECD Interim Economic Outlook, IMF, World Economic Forum, Federal Reserve, Bank of England, European Central Bank, Bank of Japan)

Indian economy Overview

The Indian economys real GDP grew at 7.7% in 2025-26 compared to 7.1% in 2024-25. This growth was driven by strong consumption and increasing investments, reaffirming Indias position as the fastest-growing major economy.

Indias Real GDP at constant prices was estimated at H323.12 Lakh Crore in 2025-26, compared with H299.89 Lakh Crore in 2024-25.

Growth of the Indian economy

	FY23	FY24	FY25	FY26
Real GDP growth (%)	7.0*	7.2	7.1	7.7

E: Estimated. Note: FY24 figure restated under new base year 2022-23. (Source: MoSPI)

* The FY23 figure (7.0%) is from the old base year series (2011-12) as the new series back-data for FY23 will only be available after December 2026.

Growth of the Indian economy quarter by quarter, FY 2025-26

	Q1FY26	Q2FY26	Q3FY26	Q4FY26
Real GDP growth (%)	6.7	8.4	7.8	7.8

Note: Q2 revised upward from 8.2% and Q3 from 7.35% under the new base year 2022-23 series released February 27, 2026. Q4 remains an estimate. (Source: MoSPI)

Inflation, policy and currency dynamics

Inflation remained benign through much of 2025-26, with full- year CPI estimated at an ex-ceptionally low 2.1%. This created room for 125 basis points of cumulative rate cuts, supporting consumption and investment.

However, macro stability was accompanied by currency volatility. The Indian rupee de-preciated sharply by 9.88% during 2025-26 — its steepest fall since 2011-12 — touching H94.83 against the US dollar. This reflected global capital flows, a strong dollar environment, and geopolitical uncertainties.

Capital flows and market behaviour

Foreign portfolio investors remained risk-averse, withdrawing a record H1.8 Trillion during 2025-26 - the largest outflow in 36 years. However, strong domestic institutional inflows of H8.50 Trillion provided a crucial counterbalance, highlighting the growing maturity and depth of Indias domestic capital markets.

Indias market capitalisation declined 8% year on year in 2025-26 to USD 4.5 Trillion from USD 4.83 Trillion in 2024-25, marking the sharpest drop since 2022-23. The BSE Sensex declined 7% or 5,467 points in 2025-26, against a gain of 5.1% or 3,763 points, in 2024-25. Similarly, the Nifty 50 fell 5%, or 1,188 points, in 2025-26, compared to a gain of 5.3% or 1,192 points, in 2024-25. against a gain of 5.34% or 1,192 points, in the corresponding period. The downturn was largely driven by the ongoing West Asia conflict and concerns around potential tariff measures under Donald Trump, which weighed on global investor sentiment.

Gold prices surged 64.1% during 2025-26 reflecting global risk aversion and safe-haven de-mand.

Indias net direct tax collections rose 5.12% y-o-y to H23.40 Lakh Crore in 2025-26, though this fell short of the revised estimate of H24.21 Lakh Crore by approximately H80,000 Crore. Corporate tax collections came in at H10.99 Lakh Crore against a target of H11.09 Lakh Crore, while personal income tax (including STT) stood at H 12.41 Lakh Crore against a target of H13.12 Lakh Crore — the larger of the two misses, partly reflecting the income tax relief extended to the middle class in the Union Budget 2025-26.

Banking sector: A pillar of stability

Indias banking sector reflected improving financial health, with the gross non-performing asset ratio declining to a robust 2.1% as of September 2025, indicating stronger asset quality and disciplined lending practices. This stability was mirrored in profitability metrics, as scheduled commercial banks reported a return on assets of 1.3% and a return on equity of 12.5% during the first half of 2025-26, underscoring sustained operational efficiency and a healthier Balance Sheet trajectory.

Indias growth story

Real Gross Value Added (GVA), which measures economic output excluding taxes and subsidies, grew 7.9% in 2025-26, compared with 7.3% in 2024-25. At current prices, nominal GVA rose 9.1% to H314.87 Lakh Crore from H288.54 Lakh Crore a year earlier.

The tertiary services sector remained a key growth driver, expanding by 9.0% in 2025-26 and increasing its share in nominal gross value added to 54.3% from 52.8% in 2024-25, supported by broad-based momentum across segments.

During 2025-26, financial, real estate, IT and professional services grew by 9.9%, while trade, hotels, transport, communication and broadcasting recorded a strong 10.1% growth, and public administration and other services expanded by 5.8%.

The secondary sector grew 9.1%, accelerating from 8.0% in the previous year, driven by manufacturing alongside construction growth of 7.1%. This combination of services-led scale and manufacturing acceleration is shaping a more balanced and resilient economic structure.

Consumption and investment balance

During 2025-26, Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) maintained above 7% growth, reflecting a well-balanced demand composition across household spending and investment activity.

Growth catalysts

Policy-led consumption boost: The Union Budget 2026-27s tax relief measures—particularly income tax exemptions up to H12 Lakh—are expected to stimulate discretionary spending and reinforce consumption-led growth.

Anticipatory Pay Commission impact: The 8th Pay

Commission, though expected to be implemented from 2027-28, is already shaping consumer sentiment, creating a forward consumption impulse.

Monetary stability: The Reserve Bank of Indias calibrated stance, with the repo rate at 5.25%, balances inflation risks with growth support, ensuring macroeconomic stability.

Credit expansion: Improved banking health and liquidity conditions are expected to sustain strong credit growth across MSMEs, housing, and retail segments.

Fiscal prudence with growth focus: The Union Budget maintains fiscal discipline while prioritising infrastructure, MSME support, skilling, and innovation—key levers for long-term productivity.

Outlook

The year under review underscores a defining divergence: a world grappling with uncertainty, and an India navigating it with confidence.

In a global environment marked by fragmentation and caution, India stands out as a rare convergence of stability, scale and structural opportunity. The World Bank has revised its 2026-27 growth estimate upward to approximately 6.6%, reflecting

resilient domestic momentum even as growth moderates from the previous year. India is expected to retain its position as the fastest-growing major economy.

Growth will be shaped by a combination of strong domestic demand and resilient private consumption, supported by low inflation and GST rationalisation, alongside stable export performance with improved access to key markets. This momentum is further reinforced by sustained policy support, ongoing economic reforms, and a favourable demographic advantage.

While risks persist, particularly from elevated energy prices, subsidy pressures on government spending, and uncertainty in global demand, Indias macroeconomic fundamentals remain strong.

Over the medium term, sustained consumption, gradual investment recovery, and expanding global trade linkages are expected to reinforce Indias position as a key driver of global economic growth.

(Source: Upstox, Economic Times, India Today, 5paisa, Livemint, The Logical Indian)

Global sugar industry

The global sugar market outlook for the 2025/26 season reflects a clear shift from the supply tightness witnessed in the previous year. Global sugar production is projected to reach 181.287 Million Tonnes, marking an increase of 5.231 Million Tonnes over

Overview the 2024/25 output of approximately 176.1 Million Tonnes. This recovery signals the end of a phase of subdued harvests that had constrained global availability.

World sugar consumption for 2025/26 is estimated at 180.1 Million Tonnes, registering a modest increase of 0.5 Million Tonnes over the previous seasons 179.5 Million Tonnes. The consumption remains below the peak level of 181.2 Million Tonnes recorded in 2023/24, indicating a period of relatively moderate demand growth.

Following two years of pronounced volatility, global sugar markets have begun to stabilise. Improved crop conditions, supported by favourable rainfall across key Asian regions, along with higher output from major producers such as India, Thailand, Pakistan, and Brazil, have contributed to restoring balance in a market that remained in deficit through 2023/24.

Sugar prices continue to be closely influenced by crude oil trends and ethanol economics. Higher crude oil prices typically incentivise mills to divert more sugarcane towards ethanol production, while softer oil prices encourage greater allocation towards sugar. With crude oil prices easing through 2025 and ethanol demand continuing to expand at a measured pace, a larger proportion of cane has been directed towards sugar production. This shift has supported overall supply and contributed to a broadly surplus global trade environment.

Particulars	2025-26	2024-25	Change in Million Tonne	Change in %
Production	181.287	176.056	5.231	2.97
Consumption	180.069	179.520	0.549	0.31
Surplus/Deficit	1.218	-3.464
Import demand	6 5.222	64.731	-1.509	-2.33
Export availability	64.524	64.796	-0.472	-0.73
End stocks	9 3.300	93.184	0.116	0.12
Stocks/Consumption ration in %	51.81	51.91

Production: Global sugar production is estimated to increase in the 2025-26 season, supported by higher output in India and Brazil amid favourable weather conditions. This growth is expected to offset production declines in the European Union.

The global sugar production is expected to rise by 5.231 Million Tonnes to reach 180.069 Million Tonnes. Increased production in Brazil and India is anticipated to more than compensate for the decline in EU output.

Brazils sugar production is projected to increase by 0.7 Million Tonnes over 2024/25, reaching 44.4 Million Tonnes, supported by improved yields driven by favourable weather conditions. The production mix is expected to tilt slightly towards sugar, with 51% allocated to sugar and 49% to ethanol. While domestic consumption is likely to remain stable, exports are expected to rise in line with higher production.

Indias net sugar production is estimated to register a sharp year- on-year increase of 6.50% , reaching 37.9 Million Tonnes. The growth is attributed to favourable weather conditions, expanded planting area, and improved yields following recovery from earlier adverse conditions. Domestic consumption is anticipated to grow, supported by increased demand from the food service sector, while higher output is expected to boost exports and closing stocks.

Chinas sugar production is forecast to rise by 0.34 Million Tonnes to 11.5 Million Tonnes, driven by an expansion in sugarcane cultivation and improved sugar beet yields due to favourable weather. As production growth outpaces consumption, ending stocks are expected to increase significantly, rising by nearly 50% to 2.4 Million Tonnes.

Thailands sugar production is projected to grow by 2% to 10.3 Million Tonnes, supported by higher sugarcane output and improved cane yields. With domestic consumption expected to remain largely stable, exports are anticipated to continue their recovery, reaching around 7.0 Million Tonnes. This increase in exports is expected to draw down stocks to approximately 10.0 Million Tonnes.

In contrast, sugar production in the European Union is forecast to decline by 5% year-on-year to 15.5 Million Tonnes, primarily due to an 8% reduction in sugar beet acreage across key producing countries such as France and Germany. While domestic consumption and ending stocks are expected to remain broadly stable, lower production is likely to drive higher imports, while exports are projected to decline.

(Source: Chini Mandi, USDA)

Consumption: Global sugar consumption for the 2025/26 season is expected to reach 180.069 Million Tonnes, marking a modest growth of 0.31%. Global sugar consumption is expected to grow steadily at around 1.2% annually in the 2026/27 season, largely driven by rising demand in developing economies across Asia and Africa. In contrast, per capita sugar consumption in developed countries is projected to decline as changing dietary preferences and the increasing use of alternative sweeteners gradually reduce sugar intake.

Global sugar demand growth over the next decade will be driven mainly by Asia and Africa, contributing about 64% and 29% of incremental demand, supported by population growth, urbanisation, and rising incomes. India, Indonesia, and Pakistan are expected to lead demand growth in Asia, while consumption in China will expand primarily in smaller cities as health awareness slows growth in larger urban centres. In Africa, rising disposable incomes—particularly in Sub-Saharan economies—are likely to increase consumption, though per-capita intake will remain below the global average.

In contrast, developed regions including Europe, the Americas, and Oceania are expected to see declining or stabilising per-capita sugar consumption due to health awareness, sugar taxes, product reformulation, and regulatory measures. Meanwhile, the High-Fructose Corn Syrup (HFCS) market will remain concentrated in a few countries, with the United States continuing as the largest consumer despite a gradual long-term decline, while China is expected to record modest growth to meet domestic demand.

Exports: In 2025/26, global sugar exports are expected to total 64.324 Million Tonnes, down 0.73% from the previous season. Global sugar exports are expected to remain highly concentrated, with Brazil, Thailand, and India together accounting for roughly three- quarters of global trade by 2034. Brazil will continue to dominate the market - particularly in raw sugar - while Thailand and India will maintain a stronger share in white sugar exports due to the premium it commands.

Brazils exports are projected to rise to about 38 Million Tonnes by 2034, despite ongoing port and logistics constraints, though the country will continue to prioritise raw sugar shipments. Thailands exports are expected to grow to 10.4 Million Tonnes, while Indias exports are forecast to increase to around 6 Million Tonnes over the same period subjected to domestic policy and production conditions.

Domestic sugar industry Overview

The Indian sugar industry is navigating a period of transformation shaped by evolving domestic policies, fluctuating global markets, and a strong pivot toward green energy and ethanol integration. While earlier concerns around lower sugarcane yields have eased with improving crop conditions and greater cane availability in key growing regions, the sector still faces challenges such as competitive gur and jaggery markets, logistical disruptions, and policy shifts in ethanol procurement that are influencing mills profitability and capacity utilisation. Recent policy realignments, proactive government support measures, and favourable monsoon conditions have strengthened the foundation for long-term structural changes expected to reshape the industrys trajectory.

For the 2025-26 crushing season, Indias sugar production is estimated to increase significantly compared with the 2024-25 season, supported by improved sugarcane availability, and better field conditions. Industry estimates indicate net sugar output could reach roughly 27.90 Million Tonnes, up from about 26.20 Million Tonnes in 2024-25, reflecting an expansion of 6 - 7% -18% year-on-year as farmers planted more cane and operations progressed smoothly.

Including opening stocks of about 4.7 Million Tonnes, total sugar availability is estimated at 32.60 Million Tonnes, comfortably exceeding domestic consumption of around 27.20 Million Tonnes. Exports are projected at 8,00,000 tonnes, with closing stocks expected to reach 4.60 Million Tonnes.

The total area under sugarcane expanded from about 4.85 Million hectares in 2020-21 to a peak of nearly 5.89 Million hectares in 2022-23, and has since stabilised at around 5.70 - 5.75 Million hectares in 2025-26 (industry estimates). Uttar Pradesh remains the largest sugarcane-growing state by area, followed by Maharashtra and Karnataka.

While Bihar may not rank among Indias top three sugar-producing states, it continues to hold strategic importance and gradually strengthening in both the sugar and ethanol sectors. Currently, sugarcane cultivation in the state covers an estimated around 2.4 to 2.6 Lakh hectares, with local policy pushes aimed at increasing acreage further under recent industrial development programs. The State remains committed to expanding sugarcane cultivation and strengthening agro-industrial linkages, with government initiatives encouraging broader cultivation and mill expansion. For the ethanol supply year (ESY) 2025-26, oil marketing companies (OMCs) have allocated around 1,048 Crore Litres of ethanol against offers of roughly 1,776 Crore Litres from producers nationwide, of which only about 15.82% came from sugarcane juice and 10.54% from B-heavy molasses, indicating a shift toward grain-based feedstocks and lower relative allocation for sugarcane-based ethanol production. As per recent data from the Sugarcane Industries Department, government of Bihar, 9 sugar mills are currently operational in the State primarily concentrated in districts such as West Champaran, East Champaran, Gopalganj and Samastipur, with select units undertaking capacity expansion and modernisation.. Bihars sugarcane sector remains vital for rural incomes and rural livelihoods even as evolving biofuel opportunities shape its industrial future.

A key challenge for the sugar industry, both locally in Bihar and nationwide, remains the changing landscape of ethanol procurement and pricing, which affects how sugarcane feedstock is utilized. For ESY 2025-26, Oil Marketing Companies (OMCs) have allocated ethanol contracts where maize-based ethanol accounts for the largest share, followed by other feedstocks (including sugarcane juice and molasses), highlighting the shift away from sugar-based ethanol dominance seen earlier. Sugarcane-based ethanol allocations (from juice and B-heavy molasses) remain comparatively modest, which can create uncertainty for sugar mills regarding ethanol diversion decisions and financial viability. Many producers and industry bodies have raised concerns about lower allocations and competitive pressures in ethanol supply contracts, especially as government allocation priorities evolve.

Overall, Bihar still positions ethanol production as a priority within its broader biofuel, employment, and agricultural value-addition strategy even as the balance between sugar and ethanol markets evolves nationally.

(Source: PIB, Chini Mandi, Informist Media, Bioenergy Times, Patna Press, Investing. Com, Economic Times)

Production overview

Indias net sugar production is projected to increase by nearly 6.50% to around 27.90 Million Tonnes in the 2025-26 season, marking a recovery from the supply tightness witnessed in the previous year. The anticipated rise is expected to ease domestic availability constraints and support export opportunities, subject to favourable policy support. This growth is primarily driven by an above-normal monsoon, which has improved sugarcane acreage and yields across key producing states such as Maharashtra and Karnataka.

As of 31st March,2026 (SS 2025-26), sugar production stood at 271.20 Lakh Tonnes, compared to 248.65 Lakh Tonnes during the corresponding period last year, reflecting a growth of approximately 9% . A total of 74 sugar mills were operational

at this stage, lower than 113 mills in operation during the same period in the previous season, indicating relatively faster completion of crushing in certain regions.

Uttar Pradesh continued to maintain stable production momentum, with output reaching 87.45 Lakh Tonnes by end- March, down by 0.25 Lakh Tonnes, broadly in line with last year level. The number of operational mills in the state stood at 38 compared to 57 last year.

Maharashtra and Karnataka reported strong year-on-year growth, with production reaching 98.95 Lakh Tonnes and 46.75 Lakh Tonnes, respectively, compared to 80.10 Lakh Tonnes and 39.90 Lakh Tonnes during the same period last year. Around 9 mills were operational across both States almost same as like last year.. Notably, select mills in South Karnataka are expected to resume operations during the special crushing season scheduled between June/July and September 2026.

Bihar, although smaller in scale, is witnessing renewed momentum in the sugar sector. Initiatives to revive closed mills, including units at Sakri (Madhubani) and Raiyam (Darbhanga), are expected to enhance processing capacity and provide improved market access for cane farmers. Additionally, the State has outlined plans to promote new investments in sugar manufacturing, aimed at strengthening the overall sugar ecosystem, generating employment, and increasing its contribution to the national industry over the medium term.

Ethanol production is also expected to expand in the 2025-26 season, with output likely to reach around 380-420 Crore Litres , up from approximately 350 Crore Litres in the previous year. Increased diversion towards ethanol, along with improved sugar realisations, is projected to support a recovery in operating margins of sugar mills to about 9-9.5% in 2025-26, thereby strengthening the overall financial and credit profile of the sector.

Position as on 31st March, 2026

Sl. Particulars no	No. of working factories		Actual sugar production (after diversion into ethanol)
	2025-26	2024-25	2025-26	2024-25
1 Uttar Pradesh	38	57	87.45	87.70
2 Maharashtra	8	6	98.95	80.10
3 Karnataka	1	4	46.75	39.90
4 Others	27	46	38.05	40.95
Total	74	113	271.20	248.65

Indian sugar Balance Sheet

Particulars	Sugar season 2024-25	Sugar season 2025-26
Opening balance as on October 1 (LMT*)	80	47
Sugar Production (LMT)	262	279
Total Availability	142	326
Domestic consumption (LMT)	287	272
Sugar exports (LMT)	8	8
Closing balance as on September 30 (LMT)	47	46

Exports: Indias sugar exports have witnessed a measured recovery in the 2025-26 marketing year (October-September), with cumulative shipments crossing 5.0 Lakh Tonnes by February end , as per industry estimates.Within this, white sugar constituted the dominant share, while refined sugar accounted for a comparatively smaller portion, indicating a gradual pickup in export activity in line with the governments approved quota.

India continues to rank among the worlds top three sugar producers, alongside Brazil and Thailand, both of which play a significant role in shaping global trade dynamics. During the current marketing year, the United Arab Emirates emerged as a prominent destination for Indian sugar exports. Other important export markets included Afghanistan, Djibouti and Bhutan reflecting a diversified export footprint across neighbouring and reginal markets.

For the 2025-26 season, the Food Ministry initially allowed 1.5 Million Tonnes in exports, then opened an additional 5,00,000 Tonnes pool, of which only 87,587 Tonnes were approved. Sugar exports continue to be regulated through a quota-based mechanism, under which export limits are proportionately allocated to mills. This framework is designed to balance export opportunities with domestic supply requirements, prevent excessive outbound shipments, stabilise prices, and safeguard consumer interests.

In Bihar, the strategic focus remains centred on improving sugar recovery rates, enhancing overall productivity, and expanding ethanol production under the Ethanol Blending Programme. As a result, the states emphasis continues to be on strengthening its domestic value chain rather than actively pursuing export opportunities.

(Source: Usthadian)

Policy and market developments

Indias net sugar output for the 2025-26 season is projected to rise year-on-year to around 27.90 Million Tonnes, supporting domestic supply and targeted exports. Strengthened production, coupled with supportive policies such as export quotas and flexible trade norms, aims to balance supply while boosting foreign exchange earnings.

For the 2025-26 sugar season, the Government of Bihar has continued its supportive stance towards farmers by maintaining an upward revision in sugarcane pricing, building on the increase implemented in the previous season. The State Advised Price (SAP) has been further increased by H10 per quintal across all varieties, with the revised rates as follows:

Early (best) variety: H375 per quintal

Common variety: H355 per quintal

Lower variety: H320 per quintal

This incremental increase reflects the states continued focus on improving farmer realisations, encouraging cane cultivation, and supporting the revival of the sugar sector.

Overall, Bihars policy framework for the 2025-26 season reflects a balanced approach, combining moderate price support for farmers with continuity in logistical cost structures, thereby aiding both cane growers and mill operators.

At the national level, the Central government removed the 50% export duty on molasses, a key by product of the sugar industry used as feedstock for ethanol for the 2025-26 sugar season. This move was announced as part of broader trade policy measures to support sugarcane farmers and manage surplus stocks, allowing sugar exports of up to 1.5 Million Tonnes while eliminating the duty that had applied previously. The press notes issued by the Government of Bihar indicate that transportation charges for lifting sugarcane from outside procurement centres continue to be fixed at H7.50 per quintal, with no revision announced as of the 2025-26 sugar season.

Indias recent LPG shortage, triggered by disruptions in West Asia affecting the Hormuz Strait, through which 85-90% of Indias LPG imports pass, has exposed the countrys heavy dependence on imported cooking fuel. With 62% of LPG demand met through imports, supply shocks have led to rising prices and shortages, forcing restaurant closures and pushing many low-income households back to biomass fuels despite LPG expansion under the PM Ujjwala Yojana.

Bioethanol could complement LPG as a domestic clean cooking fuel. India already has ethanol production capacity of 1,822 Crore Litres, far exceeding the 1,016 Crore Litres required for E20 fuel blending, leaving surplus capacity. Diverting around 250 Crore Litres to cooking could serve roughly 20 million households, while ethanol stoves produce minimal pollution and reduce emissions compared with biomass.

Recognising ethanol as an approved cooking fuel under PMUY and launching state-level pilot programmes using existing distillery capacity and oil marketing company distribution networks. Expanding ethanol-based cooking could reduce import dependence, lower fiscal subsidy burdens, and improve health outcomes while strengthening Indias domestic biofuel ecosystem.

(Source: Economic Times, Agriinsite, Reuters, Aista)

Ethanol industry

The India ethanol market size reached USD 3.4 Billion in 2025 and is expected to reach USD 11.8 Billion by 2034, exhibiting a growth rate (CAGR) of 13.95% during 2026-2034. Indias ethanol industry has experienced substantial growth and transformation, fuelled by government policy initiatives and a strategic focus on energy security, rural development, and environmental sustainability. A cornerstone of this effort is the national policy on biofuels, 2018 (amended in 2022), which established ambitious targets to curb dependence on crude oil imports and expand domestic renewable fuel production.

Ethanol Blending Program (EBP)

By early 2026, Indias ethanol blending programme has achieved a significant milestone, with petrol blending levels reaching around 20% (E20) under the Ethanol Blended Petrol (EBP) Programme, meeting the governments target ahead of schedule for the 2025-26 ethanol year. This progress reflects the effective implementation of the blending mandate and the rapid expansion of the countrys ethanol supply ecosystem.

The advancement reinforces Indias broader objectives of reducing dependence on crude oil imports, lowering transport-related emissions through cleaner fuels, and supporting agricultural and rural economies by creating additional value streams for feedstock crops. Building on this momentum, policy discussions are increasingly focused on further increasing blending levels, with potential targets of up to ~30% by 2030 as production capacity continues to expand.

Indias high reliance on crude oil imports - estimated at nearly 85% - continues to expose the economy to global price volatility.

It is estimated that every USD 1 increase in crude oil prices raises the countrys import bill by approximately USD 2 Billion, with implications for inflation, logistics costs, and fiscal stability. Recent geopolitical tensions and disruptions in global shipping routes have further highlighted these vulnerabilities.

At the same time, ethanol production capacity in India has expanded significantly to around 20 Billion litres, including approximately 9 Billion litres contributed by the sugar sector. With the E20 programme requiring about 11 Billion litres annually, current utilisation levels remain near 55%, indicating adequate headroom to support higher blending targets in the coming years.

Ethanol supply and feedstock utilization

To maintain a stable ethanol supply, the government permits a flexible feedstock policy. Approved sources include:

Sugarcane-based materials: Juice, syrup, B heavy and C heavy molasses

Grains: Surplus broken rice, maize, and other cereals

Biomass residues: Bagasse, cotton stalks, cassava, and similar residues like straw and husks.

To meet rising ethanol demand, India has shifted from being a net exporter to a net importer of corn, mainly from Myanmar and Ukraine. This multi-feedstock approach strengthens supply reliability and mitigates risks from crop or market fluctuations.

In Bihar, the policy has fostered the growth of grain- and molasses-based ethanol plants, leveraging both sugarcane and surplus grain production. The industry is further supported by the Bihar Ethanol Production Promotion Policy, 2021, and overseen nationally by the National Biofuel Coordination Committee (NBCC) to ensure that ethanol production aligns with food security and fuel supply priorities.

(Source: New Indian Express, Informist Media, PPAC, IMARC )

Impact on vehicle performance

The ethanol blending roadmap (2020-25) indicates that increasing blending to E20 results in only a marginal reduction in fuel efficiency - typically around 2-4% for vehicles designed for E10. This impact can be mitigated through engine optimisation and improved vehicle design.

Industry and regulatory assessments show that E20-compliant engines maintain comparable performance, with potential gains in acceleration due to ethanols higher octane rating. Importantly, no significant adverse effects on engine durability, wear, or oil quality have been observed, as concerns around corrosion have been addressed through improved fuel standards and material compatibility.

Co-generation

The sugarcane industrys by-product, bagasse, continues to offer significant potential for power cogeneration, supporting energy efficiency and contributing to a cleaner energy mix. Bagasse- based cogeneration provides multiple advantages, including lower carbon intensity, reduced dependence on fossil fuels, cost efficiency, and improved energy security for sugar mills. With rising consumer preference for high-quality refined sugar, manufacturers remain optimistic about sustained growth in the domestic market.

The Ministry of New and Renewable Energy (MNRE) continues to drive bioenergy development under the National Bioenergy Programme (2021-26), with an outlay of approximately H1,715 Crore. The programme aims to promote the establishment of biomass-based power projects, including bagasse cogeneration, and to enhance the efficient utilisation of agricultural residues across the country.

As of early 2026, Indias installed capacity for biomass-based power generation is estimated to be in the range of 10.5-11.0 GW, including both bagasse-based and non-bagasse cogeneration. Of this, bagasse-based cogeneration accounts for around 10.0-10.3 GW, continuing to form the dominant share of biomass power capacity. States such as Maharashtra and Uttar Pradesh together contribute a significant proportion, close to 40-45%, of the total installed capacity, reflecting the concentration of sugarcane production in these regions.

Biomass energy remains an important component of Indias renewable energy portfolio, contributing over 10 GW to the overall mix. The sectors growth is supported by ongoing policy measures, including capital subsidies, viability gap funding, and incentives for efficient and high-pressure cogeneration systems.

During 2025-26, India has continued to add renewable energy capacity in line with its long-term targets. While the pace of additions varies across segments, the country remains on track toward its ambition of achieving 500 GW of non-fossil fuel- based capacity by 2030. Within this framework, biomass and bagasse-based cogeneration are expected to play a stable and complementary role, particularly in supporting decentralised power generation and improving the financial sustainability of the sugar industry.

(Source: MNRE, PIB)

Recommendations for strengthening co-generation:

Tariff realignment: Match bagasse tariffs to other biomass (H6.5- H7/kWh) to encourage upgrades

National uniformity: Implement a pan-India reference tariff (> H6/kWh) for consistency and investment confidence

Feedstock security: Enable long-term bagasse purchase agreements and storage to support year-round operations

Hybrid operations: Encourage bagasse + other biomass/coal systems to maintain grid stability during off-season.

(Source: LinkedI n)

Government policies

National Biofuel policy and Ethanol Blending Programme:

Indias ethanol blending programme aims to reduce fossil fuel dependence and support renewable energy by blending ethanol into petrol. The country achieved E10 ahead of schedule and is on track to reach 20% ethanol blending (E20) in 2025-26, using feedstocks such as sugarcane, grains, and agricultural residues. The government continues to explore higher blending targets while supporting the sugar and ethanol industries.

Antyodaya Anna Yojana (AAY) sugar subsidy scheme: The

AAY programme ensures affordable sugar for the poorest families, providing 1 kg per family per month at H18.50/kg through the Public Distribution System. The scheme has been extended through March 2026, benefiting nearly 1.89 Crore families across India and supporting food security for vulnerable populations.

Initiatives in the sugar sector: The sugar industry is witnessing significant transformation through several strategic initiatives. Notably, AgriStack is modernizing agricultural data management, enabling better agristatistics, timely policy formulation, and more effective government interventions. Additionally, the adoption of Artificial Intelligence (AI), Machine Learning (ML), and remote sensing technologies is playing a key role in improving sugarcane productivity and crop quality.

(Source: IBEF , Economic Times , Wright Research )

Demand drivers in the sector

Domestic sugar consumption: Indias large and growing population drives high internal consumption of sugar. Total sugar use was around 28 million tonnes in 2024 25 with per capita use rising as urban lifestyles increase intake of soft drinks, sweets, bakery items and packaged foods. As food processing grows, domestic sugar demand remains broad based across sectors.

Expansion of the food and beverage industry: The booming food processing, beverage and confectionery sectors are major consumers of sugar. These industries account for over 60% of all sugar use in India, especially in soft drinks, dairy products, and ready to eat foods, a trend backed by rapid urbanization and changing diets in cities and towns.

Government support and policy initiatives: Government policies such as fair pricing for sugarcane (FRP) which is now H355 per quintal - sugar season 25-26, October to September, export quotas, incentives, and farmer welfare schemes continue to support supply stability. These actions boost both cultivation and processing, stabilizing prices and encouraging investment throughout the sugar value chain.

Ethanol Blending Program and diversification: Indias push for 20% ethanol blending with petrol by 2025 26 has created large new demand for sugarcane derivatives particularly molasses and B heavy molasses used in ethanol. This reduces surplus sugar stocks, adds alternate revenue for mills, and strengthens overall market demand.

Export opportunities: India regularly allocates export quotas (in 25-26 initial quota was 1.5 M illion MT and additional quota was

0.5 in February of which 0.087Million MT were approved in March 2026) for sugar to help balance supply and support producer prices. Export deals to countries in Africa and Asia further open global markets for Indian sugar and reduce domestic surplus pressure when production is high.

Technological and yield improvements: Adoption of mechanization (increased productivity by about 30%), precision farming, AI (crop monitoring, disease detection have caused) and improved irrigation increases sugarcane yields and reduces cultivation costs. These innovations help farmers produce more cane per hectare and provide a steadier raw material base for sugar mills. Better use of fertilizers and pesticides reduced average input costs by 41%. Accurate irrigation scheduling reduced water use by about 30%, and remote monitoring capabilities allowed farmers to effectively monitor their crops from a distance, reducing farm visits by 75%.

Rising incomes and urbanizationz: Growing incomes and urban lifestyle shifts lead consumers to purchase more processed and convenience foods, many of which contain sugar. Urban households now account for 51% consuming sweets and packaged sugary items. This trend underpins long term domestic demand and supports premium and value added sugar product segments.

Diversified industrial demand (including biofuel and pharma): Apart from traditional food sectors, sugar finds use in biofuel (ethanol), pharmaceuticals, and specialized industrial applications. These diversified end uses provide additional demand cushions that are less dependent on household sugar consumption cycles.

(Source: Vesper Tool , Farming Cosmos, Economic Times, Just Agriculture, Chini Mandi, India Today )

SWOT analysis Strengths

Strong global presence: India is one of the largest producers and exporters of sugar globally, playing a significant role in influencing international sugar prices. Its production scale allows it to impact global supply dynamics, especially during surplus years.

High sugarcane production base: India consistently ranks among the top sugarcane-producing countries. The vast cultivation area ensures a strong raw material base for sugar mills, supporting both domestic consumption and exports.

Traditional expertise in jaggery and khandsari: India has a long-standing tradition of producing jaggery (gur) and khandsari sugar. This indigenous knowledge supports a diversified sweetener market and sustains rural employment.

Abundant raw material availability: The countrys agro-climatic conditions support large-scale sugarcane cultivation, ensuring consistent raw material supply for mills across major producing states such as Uttar Pradesh and Maharashtra.

Weaknesses

Relatively low sugarcane yield: Despite large production volumes, Indias per-hectare yield is lower compared to countries like Brazil. This impacts efficiency and overall productivity.

High cost of production: Labour-intensive harvesting methods, high transportation costs, inadequate infrastructure, and rising energy prices increase the overall cost of sugar production, affecting competitiveness in global markets.

Small and uneconomic mill size: Many sugar mills operate below optimal capacity. Smaller scale operations limit economies of scale, reducing efficiency and profit margins.

Outdated machinery and technology: Several mills continue to use old equipment, which reduces recovery rates, lowers product quality, and increases operational costs.

Opportunities

Rising domestic demand: Growing population, urbanization, and expansion of the processed food and beverage sector are increasing domestic sugar consumption.

Export growth potential: Favourable global price trends and government export support schemes create opportunities for expanding Indias sugar exports.

Sugar beet cultivation prospects: Sugar beet presents an alternative raw material option, especially in water-scarce regions, offering diversification beyond sugarcane.

Growing market for natural sweeteners: Demand for jaggery and minimally processed sugars is rising due to increasing consumer preference for natural and organic products.

Threats

Policy and political uncertainty: Government decisions regarding export quotas, subsidies, ethanol blending, and pricing policies directly impact industry profitability and stability.

Competition from gur and khandsari: Traditional sweeteners compete with refined sugar in rural and semi-urban markets, affecting refined sugar demand.

Regional imbalances: Sugar production is concentrated in certain states, leading to logistical inefficiencies and uneven distribution across regions.

Price volatility: Global sugar price fluctuations due to climate events, trade barriers, and production changes in major producers like Brazil can impact Indian exports and domestic pricing.

(Source: ICAR , DFPD, Indian Budget.gov )

Company performance Overview

Magadh Sugar & Energy Limited is a part of the renowned K. K. Birla Group of sugar companies. The Group, established in 1932, has been engaged in the sugar business for over seven decades.

Following various merger and demerger arrangements, Magadh Sugar & Energy Limited was incorporated in 2015.

Magadh operates as an integrated sugar enterprise with diversified operations spanning sugar manufacturing, spirits and ethanol production, cogeneration of power, and allied by-products. The Company runs 3 sugar mills in Bihar with a combined crushing capacity of 21,500 Tonnes of cane per day (TCD). It also operates distilleries with an aggregate capacity of 155 kilolitres per day (KLPD) and has cogeneration facilities with a total installed capacity of 38 MW.

Financial overview

Analysis of the Profit and Loss Statement

Revenues: Revenues from operations decreased from

H1,32,228.50 Lakhs in 2024-25 to H1,24,453.71 Lakhs in 2025-26.

Expenses: Total expenses decreased by 1.24% from HI, 17,732.65 Lakhs to H 1,16,27.76 Lakhs. Raw material costs, accounting for a 65.85% share of the companys revenues in 2025-26. Employees expenses, accounting for a 5.56% share of the companys revenues from operations in 2025-26 from 5.05% operation in 2024-25.

Analysis of the Balance Sheet

Sources of fund: The Companys capital employed stood at H1,63,078.82 Lakhs as on 31st March, 2026, compared to H1,59,642.67 Lakhs as on 31st March, 2025. The return on capital employed (ROCE), which measures the efficiency of returns generated on invested capital, was 0.07% in 2025-26.

The Companys net worth increased to H88,019.16 Lakhs as on 31st March, 2026, from H83,394.98 Lakhs as on 31st March, 2025, reflecting improved financial strength. The equity share capital remained unchanged during the year at H1409.16 Lakhs, comprising 1,40,91,630 equity shares of H10 each.

As of 31st March, 2026, the Companys long-term debt stood at H19,108,89 Lakhs. The debt-equity ratio remained at 0.79 in 2025-26, consistent with the previous financial year.

Finance costs decreased by 7.65%, from H3,846.39 Lakhs in 2024-25 to H3,551.98 Lakhs in 2025-26. The Company maintained a healthy debt service coverage ratio (DSCR) of 1.34 times as of 31st March, 2026, compared to 2.06x times in the previous year, indicating moderate debt servicing capability.

Application of funds: The Companys gross fixed assets increased to H1,14,854.17 Lakhs as on 31st March, 2026, compared to H1,07,804.35 Lakhs as on 31st March, 2025, reflecting continued capital investment during the year. Depreciation on tangible assets amounted to H2.975.38 Lakhs in 2025-26, up from H2,742.09 Lakhs in 2024-25.

Working capital management: As on 31st March, 2026, the Companys current assets stood at H68,328.99, compared to H74,031.66 Lakhs as on 31st March, 2025. The current ratio improved to 1.25 at the close of 2025-26 from 1.19 in the previous financial year, indicating moderate short-term liquidity.

Inventories, including raw materials, work-in-progress, and finished goods, were H89,181.43 Lakhs as on 31st March, 2026, compared to H89,640.43 Lakhs a year earlier. The inventory turnover ratio improved to 1.43 times in 2025-26 from 1.31 times in 2024-25, reflecting better inventory management.

Trade receivables declined significantly to H1957.92 Lakhs as on 31st March, 2026, from H2234.31 Lakhs as on 31st March, 2025.

Margins: The Company reported an EBITDA margin of 12.16% in 2025-26, while the net profit margin stood at 5.10%, reflecting its operational efficiency and overall profitability during the year under review.

Key ratios

Particulars	Sugar season FY26	Sugar season FY25	Reason for change of 25% or more
Total debt-equity ratio	0.79	0.85
Return on capital employed (%)	7%	12%	Change in Return on Capital Employed is 36.53% as compared to the preceding year due to lower profitability.
Earnings per share (H)	45.07	77.67
Trade receivable turnover ratio	59.36	45.06	Change in Trade Receivable Turnover Ratio is 31.75% as compared to the preceding year due to decrease in average trade receivable.
Inventory turnover ratio	1.43	1.31
Interest coverage ratio	3.40	4.84
Current ratio (x)	1.25	1.19
Debt service coverage ratio	1.34	2.06
Net profit margin (%)	5.09%	8.28%	C hange in Net Profit Ratio is 39.65% as compared to the preceding year due to lower profitability.

Risk management

Geographical risk: The Companys operational efficiency may be affected by the distance between its sugar mills and sugarcane cultivation areas, potentially leading to logistical challenges and higher transportation costs.

Mitigation: To address this risk, the Company has strategically established its mills within a 30-kilometre radius of key canegrowing regions. Furthermore, all units are well connected through road networks, ensuring seamless transportation, timely cane procurement, and efficient supply chain management.

Procurement risk: The availability of high-quality sugarcane is critical to operations. Any disruption in procurement or decline in cane quality could adversely affect production volumes and profitability.

Mitigation: The Company has built long-term relationships with approximately 88,500 cane farmers. Through farmer engagement initiatives, productivity enhancement programs, and welfare measures, it works toward securing a stable and sustainable supply of sugarcane.

Quality risk: Procurement of substandard sugarcane may impact recovery rates, production efficiency, and final product quality.

Mitigation: The Company has undertaken proactive steps such as promoting early-maturing cane varieties to improve yield and sugar recovery. It also provides subsidized insecticides to reduce pest damage and conducts farmer awareness programs on modern agronomic practices to enhance crop quality and productivity.

Financial risk: Rising debt levels could expose the Company to liquidity pressures and impact profitability and overall financial stability.

Mitigation: The Company follows a prudent financial management approach, maintaining a consistent record of timely debt servicing. This disciplined repayment track record strengthens its liquidity position, enhances creditworthiness, and supports long-term financial sustainability.

Human capital risk: The inability to attract, retain, and nurture skilled professionals may hinder operational efficiency, innovation, and long-term growth.

Mitigation: To mitigate this risk, the Company has implemented a comprehensive human resource framework focused on talent acquisition, retention, and employee development. This structured approach helps build a capable workforce aligned with the Companys strategic objectives and growth ambitions.

Internal control systems and their adequacy Key features of our internal control system include Continuous monitoring and improvement: The Companys internal audit framework is subject to ongoing review and refinement to address emerging risks and evolving business dynamics. This proactive approach ensures that internal controls remain effective, relevant, and resilient in a changing operating environment.

Audit committee oversight: The Audit Committee provides robust oversight of the internal control system. It periodically reviews internal audit findings and collaborates closely with management to ensure timely implementation of recommended improvements. The Committee also monitors the prompt execution of corrective actions to address identified gaps.

Coordination with auditors: The Company maintains transparent and constructive engagement with both statutory and internal auditors. This collaborative approach strengthens audit effectiveness and enhances the overall reliability of internal control processes.

Integration with risk management: Internal control systems are closely aligned with the Companys risk management framework. This integration facilitates early identification, assessment, and mitigation of risks, enabling a structured and proactive response strategy.

Capacity building and skill enhancement: The Company places strong emphasis on the continuous training and professional development of its internal audit team. Regular upskilling initiatives ensure alignment with evolving regulatory requirements, emerging risks, and best-in-class audit practices.

Through adherence to these principles, the Company ensures that its internal control systems are robust, comprehensive, and aligned with industry standards, xthereby supporting strategic objectives, safeguarding assets, and enhancing long-term shareholder value.

Human resources and industrial relations

The Company acknowledges that its employees are central to its sustained growth and operational excellence. It remains committed to empowering its workforce with the skills and capabilities required to succeed in an increasingly dynamic and technology-driven environment.

During the year under review, the Company conducted a comprehensive range of training and development initiatives covering technical competencies, behavioural skills, business acumen, leadership development, customer service excellence, safety standards, and ethical practices.

As of 31st March, 2026, the Companys total workforce stood at 1152 employees, reflecting a strong human capital base supporting its business operations.

Corporate social responsibility

The Company remains firmly committed to environmental stewardship and social responsibility across all aspects of its operations. It strives to create meaningful and lasting value for its stakeholders, including employees, local communities, and the environment.

As part of its community outreach initiatives, the Company regularly organizes medical camps, offering free health checkups, essential medicines, and emergency medical support to underserved populations. It is equally dedicated to advancing education by providing learning opportunities and support to underprivileged children, thereby contributing to the empowerment of future generations.

In addition, the Company actively pursues environmental conservation initiatives aimed at reducing its ecological footprint, promoting sustainable practices, and fostering long-term environmental well-being.

Cautionary statement

Statements contained in this section outlining the Companys objectives, projections, expectations, and estimates may constitute forward-looking statements within the meaning of applicable securities laws and regulations. These statements are based on current assumptions and expectations and are subject to various risks and uncertainties that could cause actual results to differ materially from those expressed or implied.