Magadh Sugar & Energy Ltd Management Discussions

Management Discussion and Analysis

Economic review Global economic review

Overview: Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably.

The growth in advanced economies remained steady at 1.7% from 2023 to 2024 as the emerging cum developing economies witnessed a growth decline at 4.2% in 2024 (4.4% in 2023).

On the positive side, global inflation was expected to decline from 6.1% in 2023 to 4.5% in 2024 (projected at 3.5% and 3.2% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments the world over helped keep inflation in check as well.

The end of the calendar year was marked by the return of Donald Trump as the new US President. The new US government threatened to impose tariffs on countries exporting to the US unless those countries lowered tariffs for the US to export to their countries. This enhanced global trade and markets uncertainty and emerged as the largest singular uncertainty in 2025. In view of this, World Bank projected global economic growth at 2.7 per cent for 2025 and 2026, factoring the various economic uncertainties.

Regional growth (%)	2024	^^2023
World output	3.2	3.3
Advanced economies	1.7	1.7
Emerging and developing economies	4.2	4.4

(Source: IMF, KPMG, Press Information Bureau, BBC, India Today)

Performance of the major economies, 2024

United States: Reported GDP growth of 2.8% in 2024 compared

to 2.9% in 2023.

China: GDP growth was 5.0% in 2024 compared to 5.2% in 2023.

United Kingdom: GDP growth was 0.8% in 2024 compared to 0.4% in 2023.

Japan: GDP growth was 0.1% in 2024 compared with 1.9% in 2023.

Germany: GDP contracted by 0.2% in 2024 compared to a 0.3% decline in 2023.

(Source: CNBC, China Briefing, ons.gov.uk, Trading Economics, Reuters)

Outlook: The global economy has entered a period of uncertainty following the imposition of tariffs of products imported into the USA and some countries announcing reciprocal tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. (Source: IMF, United Nations)

Indian economic review

Overview: The Indian economy was projected to grow at 6.5% in 2024-25, compared to a revised 9.2% in 2023-24. This represented a four-year low due to a moderate slowdown within the Indian economy (marked by slower manufacturing growth and a decline in net investments). Despite the slowdown, India retained its position as the worlds fifth-largest economy.

Indias nominal GDP (at current prices) was Rs.331 trillion in 2024-25 (H301.23 trillion in 2023-24). The nominal GDP per capita increased from Rs.2,15,936 in 2023-24 to Rs.2,35,108 in 2024-25, reflecting the impact of an economic expansion.

The Indian rupee weakened 2.12% against the US dollar in 2024-25, closing at Rs.85.47 on the last trading day of 2024-25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar).

Inflationary pressures eased, with CPI inflation averaging 4.63% in 2024-25, driven by moderating food inflation and stable global commodity prices. Retail inflation at 4.6% in 2024-25, was the lowest since the pandemic, catalysing savings creation.

Indias foreign exchange reserves stood at a high of USD 676 Billion as of April 4, 2025. This was the fourth consecutive year when rating upgrades outpaced downgrades on account of strong domestic growth, rural consumption, increased infrastructure investments and low corporate leverage (annualized rating upgrade rate 14.5% exceeded the decade-long average of 11%; downgrade rate was 5.3%, lower than the 10-year average of 6.5%).

Gross inward foreign direct investment revived in 2024-25, rising 20.6% YoY from USD 51.8 Billion in the first eight months of 2023-24 to USD 62.5 Billion during the same period in 2024-25. However, the net foreign direct investment in India declined from USD 7.84 Billion in the first nine months of 2023-24 to USD 1.18 Billion in the corresponding period in 2024-25, followed increased repatriation and investments by Indian firms across international geographies.

Growth of the Indian economy

Regional growth (%)	FY22	FY23	FY24	FY25
Real GDP growth (%)	8.7	7.2	9.2	6.5

(Source: MoSPI, Financial Express)

Growth of the Indian economy quarter by quarter, 2024-25

Regional growth (%)	Q1 FY25	Q2 FY25	Q3 FY25	Q4 FY25
Real GDP growth (%)	6.5	5.6	6.2	7.4

(Source: The Hindu, National Statistics Office)

The banking sector continued its improvement, with gross nonperforming assets (NPA) for scheduled commercial banks (SCBs) declining to 2.6% as of September 2024, down from 2.7% in March 2024. The capital-to-risk-weighted assets ratio for SCBs stood at 16.7% as of September 2024, reflecting a strong capital position.

Indias exports of goods and services are projected to reach USD 800 Billion in 2024-25, up from USD 778 Billion in the previous fiscal year. The Red Sea crisis impacted shipping costs, affecting price-sensitive exports. Merchandise exports were expected to grow 2.2% YoY, reaching USD 446.5 Billion.

Indias net GST collections increased 8.6%, totalling Rs.19.56 Lakh Crore in 2024-25. Gross GST collections in 2024-25 stood at Rs.22.08 Lakh Crore, a 9.4% increase YoY.

On the supply side, real gross value added (GVA) was estimated to expand 6.4% in 2024-25. The industrial sector was expected to grow 6.2%, supported by growth in construction activities, electricity, gas, water supply and other utility services.

Indias services sector grew an estimated 7.3% in 2024-25 (9.0% in 2023-24), driven by public administration, defence and other services (expanded at 8.8% as in the previous year). In the infrastructure and utilities sector, electricity, gas, water supply and other utility services grew a projected 6.0% in 2024-25, compared to 8.6% in 2023-24. Meanwhile, the construction sector expanded at ~8.6% in 2024-25, slowing from 10.4% in the previous year.

Manufacturing activity was subdued in 2024-25, with growth projected at 4.3%, which was lower than 12.3% in 2023-24. Moreover, due to lower public spending in the early part of the year, government final consumption expenditure (GFCE) is anticipated to have slowed to 3.8% in 2024-25, compared to 8.1% in 2023-24.

The agriculture sector growth was estimated at 3.8% in 2024-25 (1.4% in 2023-24). Trade, hotel, transport, communication and services related to broadcasting segment were estimated to grow at 6.4% in 2024- 25 (6.3% in 2023-24).

From a demand perspective, private final consumption expenditure at constant prices was expected to grow 7.3%, indicating a rebound in rural demand and stronger consumer confidence.

The Nifty 50 and SENSEX recorded their weakest annual performances in 2024-25 in two years, rising 5.3% and 7.5% during the year under review respectively. Gold rose 37.7% to a peak of USD 3,070 per ounce, the highest increase since FY 2007-08, indicating global uncertainties.

Total assets managed by the mutual fund (MF) industry jumped 23% or Rs.12.3 Lakh Crore in fiscal 2025 to settle at Rs.65.7 Lakh Crore. At close of 2024-25, the total number of folios had jumped to nearly 23.5 Crore, an all-time peak. During last fiscal, average monthly systematic investment plan (SIP) contribution jumped 45% to Rs.24,113 Crore.

Foreign portfolio investments (FPIs) in India experienced high volatility throughout 2024, with total inflows into capital markets reaching approximately USD 20 Billion by year-end. However, there was significant selling pressure in the last quarter, influenced by new tariffs announced by the new US government on most countries (including India).

Outlook: India is expected to remain the fastest-growing major economy. Initial Reserve Bank of India estimates have forecast Indias GDP growth downwards from 6.7% to 6.5% based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in 2025-26.

Tariff-based competitiveness: India identified at least 10 sectors such as apparel and clothing accessories, chemicals, plastics and rubber where the US high tariffs give New Delhi a competitive advantage in the American market over other suppliers. While India faced a 10% tariff after the US suspended the 26% additional duties for 90 days, the levy remained at 145% on China, the biggest exporter to the US. Chinas share of apparel imports into the US was 25%, compared with Indias 3.8%, a large opportunity to address differential (Source: Niti Aayog).

The Union Budget 2025-26, anchored in the vision of Viksit Bharat, outlines a strategic growth agenda with a focus on agriculture, MSMEs, investments, and exports as key growth drivers. It underscores the governments commitment to longterm development and economic resilience. While geopolitical tensions, global trade uncertainties, and commodity price volatility continue to pose risks to the global and domestic outlook, Indias economic fundamentals remain sound. In 2025-26, private sector capital formation, along with supportive fiscal policy, an accommodative monetary stance, and a reform-oriented policy framework, is expected to drive continued growth and stability.

The global sugar market outlook for the 2024/25 season indicates a widening deficit, with production expected to decline significantly from the previous year. Global sugar production is expected to fall by 5.844 Million tonnes, reaching 175.540 Million tonnes, while consumption is revised downward to 180.421 Million tonnes, reflecting slower growth. Key production regions such as Brazil, India, and the southern hemisphere have experienced disappointing seasons, contributing to the overall deficit. Despite lower prices, stock levels are projected to decrease, leading to a reduction in global sugar inventories. This shift, combined with modest trade deficits and challenges in production costs, suggests a tightening of the market.

Overview

Particulars	2024/25	2023/24	Change in Million Tonne	Change in %
Production	175.540 \	181.384	-5.844	-3.22
Consumption	180.421 T	179.972	0.449	0.25
Surplus/ Deficit	-4.881 \	1.412
Import demand	63.324 \	69.119	-5.795	-8.38
Export availability	62.661 \	69.635	-6.974	-10.02
End stocks	93.597 \	97.815	-4.218	-4.31
Stocks/ Consumption ratio in %	51.88 \	54.35

Source: ISO - Quarterly Market Outlook, February 2024

• Production: Global sugar production in 2024/25 is projected to reach 175.54 Million tonnes, a decrease of 5.84 Million tonnes from the previous season. The revision is mainly due to poor harvests in southern hemisphere countries like Brazil, Australia, and South Africa, and a significant decline in Indias production due to disease and poor yields. Indias output is now expected to fall by 5.82 Million tonnes compared to 2023/24, partly due to a larger diversion of sucrose to ethanol production, early closure of mills due to low yields and delay in crushing season. Other key revisions include a lower-than-expected sugar output in Brazil and Pakistan, with a small increase in Thailands production. Despite the drop in global production, sugar prices remain strong in domestic markets worldwide.

Production rises and falls in 2024/25 (October/September)

Rises	Changes from 2023/24	Falls	Changes from 2023/24
	in Milliontonnes, tel		in Milliontonnes, tel
	quel		quel
Thailand	+ 1.675	India	-5.82
EU	+ 1.021	Brazil	-3.979
China	+0.950	Pakistan	-0.686

• Consumption: Global sugar consumption for the 2024/25 season is expected to reach 180.421 Million Tonnes, marking a modest growth of 0.25%, a significant slowdown from the previous years 1.46% increase. Several regions are experiencing declines in consumption, particularly in Western Europe and North America, where health concerns, obesity issues, and product reformulations are driving down sugar demand. The rise of sugar alternatives like high-intensity sweeteners and fructose syrups further contributes to this trend. In contrast, regions such as Equatorial & Southern Africa and South America are seeing higher growth rates, with Equatorial & Southern Africa leading at 1.6%. However, Far East & Oceania is projected to experience a decline of 0.4%, primarily due to reduced sugar imports in China and market access restrictions in countries like Indonesia and the Philippines. While overall global growth is slower, regions in Africa, South America, and parts of Asia are still driving moderate increases in consumption.

• Exports: In 2024/25, global sugar exports are projected to total 62.661 Million tonnes, down 10% from the previous season. Brazils exports are expected to decline by 6.568 Million tonnes to 32.140 Million tonnes, while Thailands exports are set to rise by 1.675 Million tonnes to 7.600 Million tonnes, reaching a four-season high. Despite Brazils increasing dominance in the global sugar market, challenges such as supply-chain considerations and freight costs may affect its future market share. Exports from Thailand and Central America are expected to help fill the supply gap. Indias export program for 2024/25, mainly driven by SEZ-based refining, faces slow progress, with only 40% of the planned volume being traded so far.

Domestic sugar industry Overview

The Indian sugar industry is navigating a dynamic and transformative period, shaped by evolving domestic policies, volatile global markets, and a significant shift toward green energy. Despite headwinds such as declining sugarcane yields and subdued domestic prices, recent policy realignments and proactive government support have laid the foundation for longterm structural changes that are expected to redefine the sectors future trajectory.

Indias sugar production for the 2024-25 crushing season is projected to decline to approximately 26 Million metric Tonnes, down sharply from 32 Million metric Tonnes in the previous year. This reduction is attributed to lower cane yields in major producing states like Maharashtra, Karnataka, and Uttar Pradesh, which collectively account for over 80% of the countrys sugar output. Delays in crushing operations—particularly in Maharashtra—have further dampened seasonal output. As of March 2025, production stood at 24.85 Million metric Tonnes, marking a 17.85% decrease compared to the same period in the previous year.

While not among the top three producing states, Bihar remains a strategically important and rapidly emerging player in Indias sugar and ethanol sectors. The state cultivates sugarcane across approximately 230,000 hectares, generating close to 13 Million metric Tonnes of cane annually. Of the 28 sugar mills in Bihar, 11 are operational, producing nearly 277,000 metric Tonnes of sugar per year. Districts such as West Champaran, Gopalganj, and East Champaran dominate sugarcane cultivation and contribute significantly to state output.

One of the notable challenges confronting the industry is the increasing diversion of sugarcane towards ethanol production under the Ethanol Blending Programme (EBP). For Ethanol Supply Year (ESY) 2024-25, the sugar industry initially offered to divert 50 LMT of equivalent sugar. Oil Marketing Companies (OMCs) have allocated 40 LMT, though actual diversion is now expected to be around 32 LMT. By March 2025, approximately 29 LMT of sugar had already been diverted. However, the absence of a price increase for ethanol derived from sugarcane juice and B-heavy molasses has made sugar production relatively more economical. As a result, an additional 3 LMT of sugar production is anticipated in place of diversion.

On the ethanol front, Bihar has taken a proactive lead. As of early 2025, the state has 9 operational ethanol units with a combined daily capacity of around 1,500 kilolitres (KLPD). These units use diverse feedstocks, including sugarcane juice, B-heavy molasses, maize, and broken rice, showcasing Bihars multi-feedstock flexibility. The Ethanol Production Promotion Policy, 2021, and consistent state support have accelerated investments and output, helping Bihar emerge as a key contributor to Indias biofuel targets.

Production overview:

As of March 31, 2025, Indias sugar production stood at 248.50 Lakh tonnes, as reported by the National Federation of Cooperative Sugar Factories Ltd (NFCSF). The crushing season, spanning October to September, saw 113 mills still operational across the country.

Uttar Pradesh led the nation, producing 87.7 Lakh tonnes from 57 operational factories. Production is projected to reach 92.5 LMT by the end of the season, supported by strong plant cane yields and improved recovery rates.

Maharashtra ranked second with 80.20 Lakh tonnes, despite just six mills running at the time. The total output for the state is expected to reach 80.95 LMT.

Karnataka followed with 39.90 Lakh tonnes, with four mills currently active. A special crushing season (June to September) in South Karnataka is likely to increase total production to 42 LMT.

Bihar produced 6.20 Lakh tonnes of sugar as of March 31, 2025, compared to 6.85 Lakh tonnes during the same period last year, reflecting a modest decline. The state crushed approximately 63.92 Lakh tonnes of sugarcane, with an expected recovery rate of 9.70%. As of the reporting date, no mills are currently operational, and the total sugar production for the 2024-25 season is estimated to remain at 6.20 LMT. Despite the limited scale compared to leading sugar-producing states, Bihar continues to strengthen its position in the eastern sugar belt through improvements in cane availability and government-supported modernization initiatives.

Taking into account the diversion of 32 lakh tonnes of sugar for ethanol production, it is estimated the gross sugar production for the 2024-25 season to be 260.85 lakh tonnes.

Sl. No. Particulars	No. of working factories		Actual sugar production (after diversion into ethanol)
	2024-25	2023-24	2024-25	2023-24
1 Uttar Pradesh	57	74	87.70	97.20
2 Maharashtra	6	67	80.10	107.30
3 Karnataka	4	4	39.90	50.10
4 Others*	46	59	40.80	47.90
Total	113	204	248.50	302.50

Source: ISMA (as of 31/3/25)

Indian sugar Balance Sheet

Particulars	2024-25 (E)
Opening balance as on October 1 (LMT)	85.15
Sugar Production (LMT)	260.85
Domestic consumption (LMT)	290.0
Sugar exports (LMT)	10
Closing balance as on September 30 (LMT)	46

Exports: India has received government approval to export 1 Million metric Tonnes of sugar for the 2024-25 season, aimed at alleviating surplus stocks and supporting domestic prices, which are at their lowest in 18 months. The limited export quota this year is expected to put pressure on global sugar prices but provide much-needed relief to local mills. However, it is projected that India will export upto 8 Lakh Tonnes of sugar in 2024-25 season, falling short of 10 Lakh ton Quota. As of now, 3 Lakh Tonnes have been shipped with another 60000 Tonnes in port. With stronger production anticipated next year, this move is seen as a temporary but positive measure for the sugar sector. As of the 2024-25 crushing season, Bihar has not been a significant contributor to Indias sugar exports. The states total sugar production—estimated at 6.20 Lakh metric tonnes—is primarily utilized for domestic consumption and for supporting local ethanol production units. Given the modest production volume, high internal demand, and limited export-grade infrastructure, no notable sugar exports from Bihar have been reported during this season except some quantity for Nepal. The focus in Bihar remains on maximizing recovery, improving productivity, and expanding ethanol output under the Ethanol Blending Programme rather than on entering export markets.

Policy and market developments

In recent years, the government has implemented various policies aimed at supporting the sugar industry, with a specific focus on benefiting farmers. This ongoing support, coupled with a growing emphasis on diverting resources towards ethanol production to bolster the Ethanol Blending Program in India, indicates promising prospects for the sugar sector in the future.

For the 2024-25 sugar season, the Bihar government increased the SAP by Rs.10 per quintal across all sugarcane varieties to support farmers amid declining production. The revised SAP rates are:

Early (best) variety: Rs.365 per quintal

Common variety: Rs.345 per quintal

Lower variety: Rs.310 per quintal

The press note issued by the Government of Bihar also specified that transportation charges for lifting of sugarcane from outside centres have been fixed at Rs.7.50 per quintal, with no revision announced for the 2023-24 sugar season. This rate continues to apply uniformly across mills to compensate for the logistical costs incurred during inter-village and inter-zone cane movement

The Government of India imposed 50% export duty on molasses- by-product of sugar industry used in alcohol production, with effect from January 18, 2024.

Ethanol industry

The ethanol industry in India has undergone significant transformation, driven by government policy initiatives and a strategic push towards energy security, rural development and environmental sustainability. . Central to these efforts is the National Policy on Biofuels, 2018, as amended in 2022, which set ambitious targets to reduce Indias dependence on crude oil imports and enhance domestic renewable fuel production..

Ethanol Blending Program (EBP)

As of February 28, 2025, the blending rate is 17.98% and it is estimated that India will achieve 20% ethanol blending rate in petrol by March 2025, five years ahead of the original 2030 deadline. The Government is now considering to increase the Ethanol blending target to 30% by 2030, reflecting the rapid progress and success of the current program. As of January 2025, Monthly blending rate was 19.6% and as of February 2025, it was 19.68%. .

The governments accelerated timeline and commitment to the ethanol blending program have placed India on track to meet the target of 20% ethanol blending in petrol by 2025-26, contributing to reduced fuel import bills, cleaner-burning fuels and also to support for sugarcane/grain based rural economies.

Ethanol supply and feedstock utilization

To ensure stable ethanol production, the government allows a flexible feedstock policy. Approved materials include:

Sugarcane-based sources: Juice, syrup, B-heavy and

C-heavy molasses

Grains: Surplus broken rice, maize, and others

Biomass residues: Bagasse, cotton stalks, cassava, etc.

To meet increasing demand for ethanol, India has shifted from being a net exporter to anet importer of corn, primarily sourcing from Myanmar and Ukraine. This multi-feedstock approach enhances supply reliability and buffers against agricultural or market fluctuations. In Bihar, this flexible policy has enabled the growth of grain- and molasses-based ethanol plants, leveraging both sugarcane and surplus grain availability in the state. The ethanol industry here is supported by the Bihar Ethanol Production Promotion Policy, 2021, and regulated at the national level by the National Biofuel Coordination Committee (NBCC) to ensure alignment with food security and fuel supply priorities.

Impact on vehicle performance

The roadmap for Ethanol Blending in India, 2020-25, prepared by an inter-ministerial committee, indicates that the blending of ethanol up to 20% (E20) will result in only a marginal reduction in fuel efficiency for vehicles originally designed for E10. The Society of Indian Automobile Manufacturers (SIAM) has reported that, with modifications in engine hardware and tuning, any potential efficiency losses can be minimized. Furthermore, no major issues have been observed in terms of vehicle performance, engine wear, or deterioration of engine oils with the use of E20 fuel. This ensures that the transition to higher ethanol blending levels is both technically feasible and commercially viable.

Co-generation

The sugarcane industrys by-product, bagasse, presents a valuable opportunity for power cogeneration, promoting energy efficiency and contributing to a cleaner energy landscape. This process offers numerous benefits, including zero carbon emissions, reduced fuel costs, fuel diversity, and enhanced energy security. As consumers increasingly prioritize quality, sugar manufacturers are optimistic about significant growth in the domestic market for refined sugar.

In November 2022, the Ministry of New and Renewable Energy (MNRE) launched the National Bioenergy Program, allocating H 1,715 Crore for the period from April 1, 2021, to March 31, 2026. This initiative aims to promote the establishment of bioenergy plants and enhance the utilization of biomass resources.

As of January 2025, India boasts an installed capacity of 10,232 MW for biomass power generation, encompassing both bagasse cogeneration and non-bagasse cogeneration plants. Maharashtra and Uttar Pradesh account for nearly 45% of this total capacity. Recent data indicates that biomass energy contributes approximately 10.72 GW to Indias renewable energy mix, with 9.80 GW coming specifically from bagasse-based cogeneration.

The growth in biomass power is supported by various government initiatives aimed at enhancing renewable energy capacity. Between April and December 2024, India added 18.83 GW of renewable energy capacity, further aligning with its goal of achieving 500 GW of non-fossil fuel-based capacity by 2030. The government continues to encourage the establishment of new and efficient biomass energy plants through financial assistance and policy support.

(Source: Chin mandi, PIB, Mnre.gov, PwC, Nredcap)

Government policies

Initiatives in the sugar sector: The sugar industry is undergoing significant transformations, driven by various initiatives. One notable example is AgriStack, which is revolutionizing agristatistics and data management. This initiative is essential for formulating suitable policies and ensuring timely government intervention. Moreover, the use of Artificial Intelligence (AI), Machine Learning (ML), and remote sensing technologies is crucial for enhancing crop quality and productivity. (Source: RIB)

Antyodaya Anna Yojana Program: The government has revised the sugar subsidy scheme to provide subsidized sugar to beneficiaries of the Antyodaya Anna Yojana program. Under this scheme, one kilogram of sugar will be distributed to each family per month at a subsidized rate of Rs.18.50 per kilogram. The States and union territories can charge extra expenses, such as shipping and handling fees, which will be borne by the beneficiary. (Source: Wright research)

National Biofuel policy: The National Biofuel Policy aims to achieve a national average ethanol blend rate of 20% in gasoline by 2025. To reduce dependence on fossil fuels, the government

promotes ethanol blending with gasoline, which may lead to competition for sugarcane between the sugar and ethanol industries. The program focuses on increasing ethanol production from sugarcane, broken grains, and other feedstock. (Source: Wright research, Economic Times)

Demand drivers in the sector

Availability of sugarcane: The increased FRP of Rs.3400 per tonne is expected to incentivize farmers to cultivate more sugarcane, potentially increasing its availability .

Domestic sugar consumption: Domestic sugar consumption has reached 290 Lakh metric tonnes, driven by rising demand. To meet this demand, efficient production and distribution systems are essential.

Minimum support price and ethanol prices: Proposals to increase the MSP of sugar are underway, aiming to stabilize the market and ensure fair returns for producers. The ethanol price hikes are being considered to boost the ethanol blending program and provide an alternative revenue stream for sugar mills.

Export of sugar: Favourable global sugar prices create opportunities for exporting sugar, helping balance domestic supply and demand and improving the financial health of sugar mills.

Ethanol blending: The government is considering blending 5% ethanol in diesel, in addition to the existing 20% blending in petrol. This initiative aims to reduce fossil fuel dependence and promote cleaner energy sources.

Environmental considerations: Emphasis on sustainable agricultural practices and efficient water usage is crucial to mitigate environmental impacts and ensure the long-term viability of sugarcane farming.

Rising demand for sweets and chocolates boosts sugar consumption: The increasing popularity of sweets and chocolates is significantly driving up sugar demand, providing a substantial growth impetus to the sugar industry. As consumers develop a sweeter tooth, the sugar industry is poised to benefit from this trend, with rising demand for sugar as a key ingredient in the production of sweets and chocolates.

Market dynamics: The combination of increased domestic consumption, potential MSP hikes, and strong export opportunities is likely to stabilize sugar prices. Government policies on ethanol blending and support prices will significantly influence market dynamics.

SWOT analysis Strengths

Significant global position: India holds a notable position in the global sugar market, influencing world sugar prices.

High sugarcane production: India has high sugarcane production, providing a robust raw material base.

Traditional knowledge: The country has traditional knowledge in jaggery and khandsari sugar production.

Raw material availability: India has an abundance of raw materials, ensuring a steady supply for sugar production.

Weaknesses

Low sugarcane yield: Indias sugarcane yield is lower compared to other countries, affecting productivity.

High cost of production: Labour-intensive harvesting, poor infrastructure, and high energy expenses contribute to high production costs.

Small and uneconomic size of mills: Many sugar mills in India are small and uneconomic, hindering efficiency and competitiveness.

Use of old and obsolete machinery: Outdated machinery affects productivity, quality, and overall efficiency of sugar production.

Opportunities

Growth in domestic demand: Rising domestic demand for sugar and sugar products presents opportunities for growth.

Increasing exports: Indias sugar exports can increase, driven by favourable global prices and demand.

Increasing prospects for sugar beet production: Sugar beet production offers an alternative source of sugar, diversifying Indias sugar production base.

Good prospect of the product: Jaggery and khandsari sugar have good market prospects, driven by consumer preferences for natural and organic products.

Threats

Political factors: Political decisions, such as export-import policies and subsidies, can impact the sugar industry.

Competition with khandsari and gur: Alternative forms of sugar, like khandsari and gur, compete with refined sugar for market share.

Regional imbalances in distribution: Regional disparities in sugar distribution can lead to supply chain inefficiencies.

Fluctuation of price: Volatile global sugar prices can affect Indias sugar industry, impacting profitability and stability.

(Source: IIDE.co, Ken research, Research gate, The pharma journal)

Company Performance Overview

Magadh Sugar & Energy Limited is a part of the prestigious K. K. Birla Group of Sugar Companies. Established in 1932, the Group is in the sugar business for over 7 decades and consequent upon various schemes of merger and demerger, this Company was formed in 2015. Magadh Sugar & Energy Limited (Magadh) is an integrated sugar player dealing in sugar, spirits & ethanol, cogeneration and other by-products. Magadh has three sugar mills at Bihar with a combined crushing capacity of 21,500

TCD. Magadh has distilleries with a total capacity of 155 KLPD. Cogeneration facilities with capacity of 38 MW.

Financial overview

Analysis of the Profit and Loss Statement

Revenues: Revenues from operations increased from Rs.109658.03 Lakhs in 2023-24 to Rs.132228.50 Lakhs in 2024-25

Expenses: Total expenses increased by [25.04]% from Rs.94,155.80 Lakhs to H[1,17,732.65] Lakhs. Raw material costs, accounting for a [64.13]% share of the companys revenues in 2024-25. Employees expenses, accounting for a 5.05% share of the companys revenues from operations in 2024-25 from 5.71% operation in 2023-24.

Analysis of the Balance Sheet

Sources of funds: The capital employed by the Company were Rs.1,59,642.67 Lakhs as on March 31, 3025 as against Rs.1,43,109.03 Lakhs as on March 31, 2024. Return on capital employed, a measurement of returns derived from every rupee invested in the business, was 11.67% in 2024-25.

The net worth of the Company was Rs.83.394.98 Lakhs as on March 31,2025 as against Rs.74560.76 Lakhs as on March 31,2024. The Companys equity share capital, comprising [1,40,91,630] equity shares of Rs.10 each, remained unchanged during the year under review.

Long-term debt of the Company was Rs.17,477.34 Lakhs as on March 31, 2025. The debt-equity ratio of the Company stood at 0.85 in 2024-25 compared to 0.85 in FY 2023- 24.

Finance costs of the Company increased by 17.92% from Rs.3,261.74 Lakhs in 2023-24 to Rs.3846.39 Lakhs in 2024-25. The Companys debt service coverage ratio stood at a comfortable 2.06x at the close of 2024-25 as against 1.76x at the close of 2023-24.

Applications of funds: Fixed assets (gross) of the Company was Rs.1,07,804.35] Lakhs as on March 31, 2025 as against Rs.95,053.00 Lakhs as on March 31,2024. Depreciation on tangible assets was Rs.2,742.09 Lakhs in 2024-25 as against Rs.2,542.54 Lakhs in 2023-24 during the year under review.

Working capital management: Current assets of the Company were Rs.74,031.66 Lakhs as on March 31,2025 as against Rs.80,029.67 Lakhs as on March 31, 2024. The Current ratio of the Company stood at 1.19 at the close of 2024-25 compared to 1.08 at the close of 2023-24

Inventories, including raw materials, work-in-progress and finished goods, among others, was Rs.70,021.58 Lakhs as on March 31, 2025 as against Rs.74,970.74 Lakhs as on March 31, 2024. The inventory: turnover ratio was 1.31 times as against 1.16 times in 2023-24. Trade receivables were Rs.2234.31 Lakhs as on March 31, 2025 as against Rs.3,514.83 Lakhs as on March 31, 2024. All receivables were secured and considered good.

Margins: The EBIDTA margin of the Company is ?% in 2024-25 while the net profit margin of the Company is ?%.

KEY RATIOS

Particulars	2024-25	2023-24
Total debt-equity ratio	0.85	0.85
Return on capital employed (%)	12%	13%
Earnings per share (H)	77.67	82.61
Trade receivable turnover ratio	45.06	31.45
Inventory turnover ratio	1.31	1.16
Interest coverage ratio	5.55	5.80
Current ratio (x)	1.19	1.08
Debt service coverage ratio	2.06	1.76
Net profit margin (%)	8.28	10.62

Change in Trade Receivable Turnover Ratio is 43.28% as compared to the preceding year due to decrease in average trade receivable.

Risk management

Geographical risk: The companys operational efficiency may be negatively impacted by the distance between its mills and cane fields.

Mitigation: To minimize this risk, the company has strategically located its mills within a 30-kilometer radius of major canegrowing regions. All mills are interconnected by road, ensuring convenient accessibility and efficient logistics.

Procurement risk: The company faces potential challenges in procuring high-quality sugarcane, which could impact its operations and profitability.

Mitigation: To address this risk, the company has fostered longterm partnerships with approximately 88,500 cane farmers. By implementing various initiatives that promote farmers wellbeing and productivity, the company aims to ensure a stable and sustainable sugarcane supply chain.

Quality risk: The company is exposed to the risk of procuring low-quality sugarcane, which could compromise its production processes and product quality.

Mitigation: To mitigate this risk, the company has taken proactive measures, which includes introducing early-maturing cane varieties to enhance crop quality and resilience, providing subsidized insecticides to farmers to minimize pest-related damage and educating farmers on modern farming techniques to promote best practices and optimize crop yields.

Financial risk: The company is susceptible to financial risk associated with increasing debt levels, which could potentially impact its liquidity, profitability, and overall financial health.

Mitigation: To manage this risk, the company has maintained a strong track record of timely debt repayment, ensuring consistent fulfilment of its debt obligations. This prudent approach has significantly enhanced the companys financial stability and creditworthiness.

Human capital risk: The company faces the risk of being unable to attract and retain top talent, which could negatively impact its ability to drive growth, innovation, and success.

Mitigation: To address this risk, the company has established a robust and well-defined human resource policy. This policy enables the company to effectively attract, retain, and develop skilled professionals, ensuring a talented and dedicated workforce that drives business excellence.

Internal control systems and their adequacy Key features of our internal control system include Regular monitoring and updates:

Our internal audit framework undergoes continuous evaluation to adapt to new challenges and opportunities. This dynamic approach ensures that our controls stay relevant and robust against evolving risks.

Audit committee oversight:

The Audit Committee plays a critical role in overseeing the effectiveness of internal controls. It regularly reviews internal audit reports and works closely with management to implement necessary improvements. The committee also ensures that corrective actions are taken promptly to address any identified issues.

Collaboration with auditors:

We maintain open and transparent communication with both our statutory and internal auditors. This collaboration helps in enhancing the effectiveness of our internal controls and audit processes.

Risk management integration:

Our internal controls are integrated with our risk management framework, which allows for a proactive approach to risk identification, assessment, and response.

Training and development: We invest in continuous training and development of our internal audit team to keep them updated on the latest audit techniques and compliance requirements. This investment in our people supports the overall effectiveness of our internal controls.

By adhering to these principles, we ensure that our internal control systems are not only adequate but also aligned with best practices and industry standards, thereby supporting our business objectives and enhancing shareholder value.

Human resources and industrial relations

The Company recognizes the vital contribution of its employees to its success and is dedicated to equipping them with the necessary skills to thrive in a rapidly evolving technological landscape. To achieve this, the company implemented a comprehensive range of training programs during the past year, focusing on technical, behavioural, business, leadership, customer service, safety, and ethical skills. As of March 31, 2025, the companys workforce numbered 1331.

Corporate social responsibility

We are deeply committed to environmental stewardship and social responsibility at every stage of our operations. Our goal is to make a positive impact on the communities we serve, encompassing our workforce, the broader public, and the environment. To this end, we regularly organize medical camps, providing complimentary medications and emergency medical equipment to those in need. We are dedicated to empowering the future generations of our nation by offering educational opportunities to underprivileged children. We actively engage in environmental conservation efforts, striving to minimize our ecological footprint and promote sustainability.

Cautionary statement

This statement made in this section describes the companys objectives, projections, expectation and estimations which may be forward-looking statements within the meaning of applicable securities laws and regulations.