Ponni Sugars (Erode) Ltd Management Discussions

Industry structure and development

World Sugar

Industry Structure

Sugar is produced dominantly from sugarcane, while about a fifth is from beet. Though beet has recorded robust rise in yield, crop area has steeply risen for sugarcane essentially from tropical countries. Ethanol production consumes about 15% of the world sugarcane harvest but consistently constitutes over one-half in Brazil. India is fast catching up in its bid to absorb surplus sugarcane into ethanol production that helps in concomitant cut in sugar production to achieve sustainable demand-supply parity and sugar price stability.

Brazil barring occasional blip has been the top world sugar producer and exporter while Thailand is normally the second largest exporter. India occasionally challenges this pecking order to emerge as top producer and second largest exporter. World trade volume represents about one-third of production, the rest being used for captive consumption in the country of origin. Import demand is well geographically distributed as opposed to exports essentially coming from concentrated pockets. China is the worlds largest importer followed by Indonesia.

India remains unchallenged as the top consumer of sugar despite low and near static per capita consumption. It has become a structurally surplus sugar producer in the past decade and a regular exporter in the world market, albeit interfered with periodical export quota fixation by the Government.

Consumption growth has decelerated from the average of 2.4% since 1960s to around 1.8% in the last decade. Consumption has steadily shifted from the western hemisphere towards east. Demand growth is decidedly driven by increasing population and improved per capita income of such growing population. However, direct demand has dampened of late due to heightening

health concerns and sterner State intervention through sin-tax levies and red-labelling mandate. Institutional consumption, on the other hand, has been growing in emerging economies almost in tandem with the growth in national income. Specialty sugars are evolving to meet end-user specific dictates but in snails pace.

World sugar prices are highly volatile wherein the price volatility for raw sugar is generally higher compared to white sugar. World prices for white and raw sugar are strongly co-related. There is clear statistical inverse relationship between prices and stocks, expressed by the ratio of stock to consumption. There exists a small positive co-relation between the price of sugar and oil.

Status update

World production in 2024/25 is set to decline to 175.5 MMT after recording a continual rise over the past four years. Global sugar production trend over the past decade and more is in the mid 12% range of 160-180 MMT. World consumption shows steady rise crossing 180 MMT, marking a new peak. The current season is staring at a deficit close to 5 MMT, the highest in six years. Year- end stock/ consumption ratio at 51.88% would be a new low in eight years.

Sugar production has staged smart recovery in Thailand, EU and China but slipped in Brazil and India, the top two sugar producers. While Brazil marginally increased the share of sugarcane allocation for ethanol, India resumed sugar diversion for ethanol.

NY-11 futures for raw sugar witnessed monthly average price range of 18.42 to 19.06 c/lb, touching a peak of 22.36 c/lb in Oct during FY 2024/25. Prices ruled above 20 c/lb mark only for brief but were beaten down by Indias re-entry into world market (albeit for a marginal volume) and improved outlook for Brazil crop. Despite forecast of a global supply deficit, market prices are yet to reflect this outlook. Forward contracts are currently

trading below 18 c/lb, a level below production costs for all major producers barring Brazil.

Indian sugar

Industry structure

Indian sugar industry is characterized by the coexistence of pr?vate, cooperative and public sector. It is inherently inclusive, supports over 50 million farmers and their families and finely fits into the Aatma Nirbhar Bharat mission of the Govt. It is rural centric and hence a key driver and emphatic enabler for village level wealth creation. Sugar is Indias second largest agro-based industry after Textiles. It has tremendous transformational opportunities to meet the countrys food, fuel and power needs in an eco-friendly manner and on a sustainable basis.

Sugarcane and sugar production are seasonal with more than 90% happening in the winter months of November to March. Share of sugarcane use in the production of sugar has steadily increased over time in preference to alternative sweeteners. UP Maharashtra and Karnataka are the dominant sugar producing States accounting for about 85% of countrys production, suffice to meet entire domestic consumption. SW monsoon plays a stellar role impacting area, productivity and quality of cane crop in Maharashtra and Karnataka but the State of UP is largely insular thanks to perennial river sources for irrigation. Household sugar consumption is about 35% with per capita consumption below 20 kg that is far lower than Brazil, US and Europe.

Sugar is mostly sold as a commodity with branded sugar at its nascent stage in India, though growing at a CAGR of 8%. It is a niche market with a small but growing number of consumers embracing it on grounds of hygiene and better quality. Out of the household sugar consumption of 11-12 mln tonnes a year, hardly 3% is branded as compared to the share of branded product in edible oil segment at 50-55%. Also there are just few players in every geographical area with no single brand being able to penetrate pan India market yet. Variants of white sugar are also slowly emerging to capture select market segments.

Sugar is a tightly controlled and rigorously regulated business, both by the Centre & State. Sugar industry reforms remain overdue despite growing consensus on the economic imperative for same. In particular, the detestable disconnect between sugar and sugarcane price demands at once a decisive and lasting solution. NITI Aayog too came out with a report of its Task Force on Sugarcane and Sugar in April 2020 besides CACP religiously reinforcing its recommendations on this in its annual cane pricing policy reports. Food Ministry in turn constituted a working committee in Apr ‘21 to engage with stakeholders and evolve a mechanism for implementation of these recommendations. It remains regretfully a work in progress ad infinitum.

Paradigm shift to ethanol

India has since become a structurally surplus sugar producer. Sugar exports to de-clog the supply overhang is however impeded by our skewed cost structure on account of high cost of cane. Exports are hence feasible only when world prices are bullish or buttressed through Government sops, the latter facing the wrath of WTO norms.

Realizing this, the Government firing all cylinders has painstakingly promoted the ethanol blending programme that amidst altruistic advantages helps subsume the surplus sugar in the system. This paradigm shift in ethanol focus has propelled the industry to a higher trajectory, commanding concomitant re-rating in its valuation. During periods of drought and consequent dip in sugarcane production, Govt prioritizes domestic need first, followed by ethanol over sugar exports.

Travails of Tamil Nadu

Tamil Nadu produced below 10 lakh tonnes of sugar for 4 years in a row till SS 2020-21, a frenetic fall from the peak of 26 lakh tonnes in SS 2006-07. Successive years of drought stoically sucked the staying power of several private sector players. Egregious losses and consequent enervated finances mowed down most private sector mills to a moribund state, while the cooperative mills linger on with liberal Govt funding support. There was a

welcome recovery from the low of 7 lakh tonnes in 201718 in later years but yet its pace was below par.

The State has been fast losing on its competitive edge in terms of size, season duration and sugar recovery juxtaposed to other major sugar producing regions. Further, TN sugar mills are mandated to bear in full the transport cost for sugarcane, while in all the other States the statutory cane price is inclusive of transport cost. Still worse, TN Government has discontinued its partial subsidy support for this from SS 2020-21. With TN sugar mills already reeling under high cost pressures due to despicable sugar recovery and dismal capacity utilization, this add on burden has become outright onerous and undeniably beyond their bearing.

TN sugar industry in collaboration with the renowned ICAR-SBI launched in Oct ‘16 a Sweet Bloom project to identify and develop viable cane varieties relevant to the State. The new cane variety Co 11015 so spotted showed early promise during trials and its planting was progressively scaled up. Alas, its yield performance for the ratoon crop proved below par, dissuading farmers from embracing this variety. A couple of other varieties tried too fared poorly compared to the long established cane variety Co86032. Thus TN sugar industry is grappling yet to spot a sustainable cane variety, despite 9-long years of laudatory efforts. Sweet Bloom project Version-2 is now being pursued in continuity that remains the industrys best bet for now. Further, the scope and efficacy of AI technology is being evaluated for suitable adoption to improve cane quality and viability.

Status update

Sugar production that peaked in SS 2021-22 to 358 lakh tonnes has witnessed annual decline in next three years. Production in SS 2024-25, after accounting for diversion of 35 lakh tonnes for ethanol, would plummet to 264 lakh tonnes, the lowest in eight years. It would also mark the first deficit year after 2016-17. As a corollary, year-end stocks would also be the lowest in eight years.

Sugar consumption for the first time in recent years is pegged lower for 2024-25 at 280 lakh tonnes compared

to last year. Piggybacking on the sizeable opening stock, demand-supply parity got fairly well maintained, stabilizing sugar prices in the bargain. Indeed, domestic sugar prices rebounded to viable levels only during last quarter owing to reopening of export window for 10 lakh tonnes and declining trend in seasons production. Industrys persistent plea for periodic increase in MSP for sugar and long term linkage between the price of sugarcane and sugar remains in limbo for too long.

Cogen

Cogeneration of power was conceived three decades ago to diversify the revenue stream and counter the cyclicality in sugar business. After the advent of Electricity Act, 2003, the promotional measures pursued under Government initiative by way of preferential tariff, assured off-take and long term power purchase agreement helped attract huge investment in bagasse based cogeneration of power.

Cogen however has lamentably lost much steam in recent years. Returns are hit by surplus power situation, falling tariff and improved connectivity that are doubtless welcome from a macro perspective. This has however turned high cost investments since FY 17 in cogen projects unviable by dint of declining power tariff and steadily rising maintenance cost, parlously pulling down power margins. Availability and price of alternative fuels remains a daunting challenge.

Bagasse pricing is a critical cost constituent in the final determination of power tariff. Lack of timely and adequate revision to fuel cost has come to detestably deprive power producers the benefit of higher tariff legitimately due to them. The CERC (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulations, 2024 clearly admitted and conceded the need for review of bagasse price based on study that however remains un-commissioned for more than a year. TNERC has also repeatedly dragged its feet on promulgating revised power tariff in time. Its suo motu extension of old tariff sine die militates against the basic tenets of tariff principles that promise definitive recovery of costs within a defined time frame. As for now, TNERC

has yet again postponed the tariff revisi?n due from 1st April 2025; more regrettably, its revised tariff is invariably given only prospective effect.

Renewable Energy Certif?cate (REC) mechanism was conceived to promote green energy and our company benefited by this from March 2015. However, this got short circuited in December 2022 by abruptly altering the ongoing scheme and forfeiting REC with sale entitlement for captive generation. Further, the lowering of forbearance price alongside of removing floor price, besides ineffective enforcement of RPO, led to crash in REC prices. This strikes a lethal blow to renewable energy projects like that of our company that came to be established on the strength of stated policy incentives to promote renewable energy capacity in the country.

Bagasse based cogeneration brings to bear multitude of benefits to the economy and environment. Power production and supply is closer to the destination rural markets, while fuel efficiency gets optimized in the factory. Above all, the incremental revenue from power supports sugarcane price payment particularly during times of stressed sugar price. It hence calls for renewed policy thrust to revitalize renewable energy production from bagasse.

Company update

The power tariff for the long term supply commitment by our company to the distribution licensee is determined by TNERC, the State regulator. The company in June 2014 had won in its earlier fight for higher tariff before the appellate authority, namely, APTEL. This at once brought in a directional change in the financial viability of our cogen operations - from loss suffering to profit making. Aggrieved yet on the inadequacy of the tariff in accordance with extant tariff principles, further appeals were filed before APTEL. After considerable lag, APTEL has since concluded the hearings and reserved its judgement. The outcome would impact tariff since August 2012 in our case that could be neutral to positive, expectedly more of latter.

Parallel Operation Charge (POC) has been a bone of contention between power producers and the distribution licensee, leading to litany of litigations. APTEL has since

completed the hearing in respect of our POC appeal and reserved its judgement.

The company has been producing power in excess of normative 60% PLF since FY 2022-23. While such an excess is fixed a low tariff, TNERC on a petition filed through SISMA-TN had ruled that normative PLF for this purpose shall be reckoned on a cumulative basis, implying that past shortfall in PLF could be carried over and adjusted. This has helped our company secure an additional revenue of 5.98 cr till March 2025. TNPDCL has challenged this before APTEL and the issue is currently subjudice.

Ministry of Power in June 2022 announced the rules for liquidation of past dues over 48 EMIs free of interest. Notwithstanding the significant loss of interest for such long duration, this has helped our company realise both old and current dues in time, bringing predictability and certainty to our cash flows. We have since realized 32 out of the total 48 EMIs in accordance with this scheme.

Ethanol

The Ethanol Blending Program (EBP) with petrol in the country has had a chequered progress. Introduced first in 2003 and reinforced again in 2007 with a 5% blend target, the actual mix remained tardy. For the first time, ethanol blend reached 5% during Ethanol Supply Year 2019-20, progressively increased in the following years and is well poised to cross 16% in 2024-25. The rollicking rise in blend % is thus both swift and substantive besides being sustainable.

GoI has broad based its efforts to promote ethanol production in the country from multiple feedstocks. Grain based ethanol is rapidly expanding to challenge the dominance of sugar sector. Flex fuel engines that can run on gasoline, ethanol or any variable blend of two, are on the anvil to give customer the choice of fuel. GST on ethanol blended petrol has been lowered from 18% to 5% from 1st January 2023. GoI is thus blazing all guns to bolster ethanol production and consumption.

India is firmly positioned as the third largest biofuel producer globally, leading in its transition to cleaner

and renewable energy. It is on track to reach 20% blend by 2025 - five years ahead of the original 2030 target

- reducing fuel imports and emissions. Over the past decade, ethanol blending initiatives have benevolently boosted farmers income, created rural employment, cut CO2 emissions and saved precious foreign exchange.

NITI Aayog is already working on preparations for ethanol blending beyond 2025 with E20 as base blend and hydrous E100 as standard fuel. Grain based ethanol is fast emerging as a sustainable alternative, that has since come to marginally surpass the share of sugarcane.

ISMA has commissioned a study to assess the potential for the production of Sustainable Aviation Fuel (SAF) from the sugar sector. Its findings would serve as a critical input for framing the National SAF blending roadmap, as India prepares to meet its SAF blending obligations

- with 1% blending by 2027, scaling up to 5% by 2030. It is a significant strategic opportunity for the sugar sector based on the availability of aggregated feedstock, existing bio-refinery infrastructure and the globally recognized Alcohol-to-Jet pathway.

Regulatory Framework

(i) Sugar

• GOI imposed stock holding norms and introduced MSQ for sugar from June 18 that continues to remain in vogue.

• GOI raised the MSP for sugar from 29 to 31/ kg in Feb 19 that remains static despite significant hike in FRP for sugarcane.

• GOI in Jan ‘25 approved export of 10 lt of sugar for SS 2024-25 - Mill wise quota allocated.

• Compulsory jute packing for sugar continues at 20% for Jute Year 2024-25. Monitoring has become stricter. ISMA and SISMA-Main have mounted legal challenge before Karnataka High Court while Jute producers have filed WP before Calcutta High Court.

• Gol in May25 issued Sugar (Control) Order, 2025:

- Sugar (Control) Order, 1966 and Sugar Price (Control) Order, 2018 superseded

- No dilution from existing control mechanism

- All forms of sugar including raw, white, refined, khandasari covered

- By-products too brought under control

- Diversion of sugar for ethanol or other products under control

- Gol has power to regulate Minimum Selling Price for Sugar.

(ii) Cane price

• GOI in Feb 24 announced increase in FRP by 25/ qtl to 340/ qtl for SS 2024/25 that is linked to base recovery of 10.25%.

• GOI in Apr 25 announced increase in FRP by 15/ qtl for SS 2025/26 that is linked to base recovery of 10.25%.

• GOTN discontinued the transport subsidy of 100/ t for the sugar mills since SS 2020-21; industry to bear full transport cost only in Tamil Nadu.

• GOTN hiked the incentive for sugarcane to 349/ t for 2024/25 season from 215/ t in 2023/24.

(iii) Cogeneration

• TNERC order dated 12/12/2023 on PLF issue in favour of industry. PLF ceiling to be reckoned on cumulative and not annual basis - TANGEDCO to purchase power at full price till then - TANGEDCO appeal before APTEL admitted and pending.

• CERC notified on 12/06/2024 the new set of Tariff Regulations for renewable energy - period 01/04/2024 to 31/03/2027.

• TNERC by order dated 22/01/2024 notified the Deviation Settlement Mechanism that came into effect from 01/04/2024. Financial settlement yet to start.

• TNERC settled the contentious issue of start-up power by order dated 29.12.2023 - Appeal before APTEL pending.

• REC sale entitlement for captive generating plants got curbed under CERC (REC) Regulations, 2022. ISMAs challenge pending before High Court of Delhi.

• APTEL concluded hearings on tariff and POC issues

- Judgement reserved.

(iv) Ethanol

• Gol in Aug 24 lifted the ban imposed in Dec 23 on sugar milis and distilleries for producing ethanol from sugarcane juice/ sugar syrup and B-heavy molasses.

• CBIC excluded ENA used in manufacturing alcoholic liquor for human consumption from GST effective 01/11/2024.

• Gol increased the administered ex-mill price of ethanol derived from C-heavy molasses for ESY 2024-25 from 56.58/ Itr to 57.97/ Itr.

(v) Others

• Ministry of MSME Notification dated 07.11.2024 mandated companies with turnover > 250 cr (reduced from 500 cr fixed in 2018) to onboard TReDS platform before 31.03.2025. The company has done it on 13.02.2025.

• The company is a registered ‘Medium Enterprise effective 12.04.2025 under the revised criteria in Ministry of MSME Notification dated 21.03.2025.

Opportunities & Threats

India has a low per capita consumption of sugar with growing income. Its large domestic market provides a strong platform to leverage local production for capturing global market. This however demands cane cost optimization through improved farm productivity and high sucrose cane variety, besides effectively tapping the byproducts for greater value addition.

Ethanol presents an elegant value chain for sugar industry. Government policies are directed towards increasing the ethanol blend in petrol and concurrently cutting sugar surplus through premium pricing for ethanol produced by way of sugar substitution.

Sugar business is intrinsically cyclical, but India has emerged structurally surplus over the last decade. Markets tend to over react to demand-supply disequilibrium, causing volatile change in product pricing. Cogeneration and Ethanol have turned significant value creators to soften the adverse fall out of sugar surplus. Sugar exports

and ethanol production from diverted sucrose now play a stellar role to de-clog the glut and correct closing sugar inventory to desirable level.

Sugarcane is a robust crop but its availability is critically dependent upon nature. Repeated monsoon failure, frail flow in river Cauvery and dead storage level in Mettur reservoir that caters to the companys command area of cane together throw up a tantalizing challenge to agriculture in its neighbourhood, thwarting cane cultivation in the process. Drip irrigation is catching up but the high capital outlay, glitches in Government subsidy schemes and deficiency in water resources not enough to meet even the minimal drip requirement for cultivation during deficit years impede its pace of adoption. Al tech is just evolving that would take time to hit the ground.

Harvest labour shortage increasingly poses an intimidating challenge to both the cane farmers and mills in the State. In particular, harvest charges in TN are twice or thrice compared to other major sugar producing regions. Frequent and excessive absenteeism ineluctably interrupts daily crushing schedule. Mechanization, though not a panacea with several imponderables associated with it, is no longer a matter of choice but is fast emerging as a dire necessity for sugarcane harvest in TN. Proto-types of smaller capacity mechanical harvesters compatible with fragmented land sizes have just taken off that may not fully replace but meaningfully reduce manual labour.

The disconnect between sugar and sugarcane prices in the absence of Price Stabilisation Fund advocated by CACP creates periodical pressures, more particularly during industry downturn. Sugarcane pricing reform is overdue.

Sugar industry is criticized on two counts. While its end product, viz. sugar is sledge-hammered as a health hazard, the raw material i.e., sugarcane is condemned as water guzzler. Much of these are over-blown but the underlying message should merit and meaningfully warrant dispassionate introspection. Accordingly, ISMA has taken the lead to spread right awareness, while simultaneously underpinning the need for a holistic and pragmatic approach.

Artificial sweeteners were perceived a superior alternative to sugar. This myth was broken by WHO, highlighting long term health effects associated with the consumption of such sweeteners. ISMA is engaging with FSSAI to develop regulations governing artificial sweeteners in food products for the consumers to be well informed.

Segment-wise or product-wise performance

The Company is engaged in two segments, namely Sugar and Cogeneration of power (Cogen).

Segment-wise performance for the year

Particulars	Sugar (tonnes)	Cogen (lakh units)
Production	62729	1101
Sales	57956	804
	( lakhs)
Sales	28067	7879
Operating Profit	1217	1504

Outlook

World sugar production is likely to rebound in SS 2025-26 with sharp recovery in India and higher share of cane for sugar in Brazil. World prices having captured this trend may remain range bound barring unforeseen weather challenges in major producing centers.

Favourable SW monsoon in 2024 boosted sugarcane planting in both Maharashtra and Karnataka, bolstering the prospects for higher sugar production in 2025/26. Both IMD and private agency have come with the forecast for a normal SW monsoon in 2025 as well for the country. As such, cane availability and gross sugar production can be expected to sizeably recover from the low of 2024-25. Government may more likely play it safe and postpone any decision on exports till reasonable certainty is reached on higher production.

In contrast, TN sugar industry continues to suffer in solitude. The SW monsoon forecast for 2025 presents a contrarian picture for the State with a below normal

monsoon. Multitude of problems plaguing TN sugar industry are now well known as these have been persistent for long. It is facing an imminent survival challenge that cries for instant State intervention with imaginative and comprehensive package support measures for resurrection.

Amidst macro-level challenges outlined above, our company is relatively better placed to combat these headwinds on the strength of its strong liquidity and overall financial standing.

Risks and concerns

The management cautions that the risks outlined below are not exhaustive and are for information purposes only. Investors are requested to exercise their own judgment in assessing various risks associated with the industry and the company.

Industry risk

Sugar industry being agro based and in commodity business is fraught with seminal climatic and cyclical risks. It has to source sugarcane from its neighbourhood and out of command area where growth and availability hinges upon monsoon and water table. Despite recent liberalization by Centre, there are continuing controls on cane area, cane pricing and periodic market intervention measures.

Cogeneration of power from renewable sources got a fillip under the Electricity Act, 2003 and regulations thereunder, including preferential tariff and REC mechanism. Tariff disputes, delayed and diminished revision, dilution of REC have since taken much of the sheen off cogen.

Risk mitigation

The Company has built enviable relationship over the years with the local farming community. It has judiciously used surplus cash generated during industry upturn to pare debts and stay lean and financially fit. It has diversified into Cogen. It has of course little control over agro-climatic risks, regulatory interventions and market risks.

Risk specific to the Company

Erode Sugar Mill is squeezed for land in its factory area that impedes scope for major expansi?n or diversification plans. Prospects for cane area expansion is listless. Of late, its command area for cane has become increasingly susceptible to water stress.

GoI policy push to help sugar industry of late is centered on ethanol. The companys plan to set up ethanol unit as an integral part of its sugar complex has failed to receive State environment clearance for producing co-related products such as ENA and RS. No tangible progress on this would seem feasible in the near term.

Risk Management

The Board being responsible for framing, implementing and monitoring the risk management plan for the company has laid down the framework for risk assessment and mitigation procedures. It has set out detailed framework to deal with key areas of risks encompassing raw material risk, product price risk, regulatory risk, finance risk and risk specific to the company. It has put in place adequate system to keep its key operating team aware and beware of the likely risk factors. Internal control systems and internal audit checks help the company continuously monitor emerging risks and take timely corrective action.

The company has implemented a new E-compliance tool covering legislations viz. Labour Laws, Factory Acts, Environment, Health & Safety, Fiscal & Corporate compliances and core industry specific compliances. Periodical task trigger alerts, dashboards to users and Functional Heads via mail has been configured for ensuring effective compliance.

There is no element of risk in the opinion of the Board which may threaten the existence of the company.

Disclosure of strategy

SEBI circular dated 10.05.2018 requires listed entities to consider disclosure of medium-term and long-term strategy within the limits set by its competitive position

based on a timeframe as determined by its Board of Directors. It further requires articulation of a clear set of long-term metrics specific to the companys long- term strategy to allow for appropriate measurement of progress.

Pursuant to the above, the Board of Directors in Oct 18 considered and approved the long-term strategy and medium-term strategy for the company. For this, the Board has set 3-5 years tenure for medium-term and more than 5 years for long-term in deciding appropriate strategy. This was reviewed by the Board of Directors in May 22.

The long-term and medium-term strategies are disclosed in the company website - www.ponnisugars.com.

Internal Control Systems and their adequacy

The Company has proper and effective internal control systems commensurate with its nature of business and size of operations to ensure that all controls and procedures function satisfactorily at all times and all policies are duly complied with as required. These are considered adequate to reasonably safeguard its assets against loss or misappropriation through unauthorized or unintended use.

There is adequate and effective internal audit system that employs periodic checks on on-going process. The Audit Committee of the Board of Directors regularly reviews the effectiveness of internal control system in order to ensure due and proper implementation and due compliance with applicable laws, accounting standards and regulatory guidelines.

Human Resources

The Company employs 185 seasonal and 131 non- seasonal employees. Industry-wide wage settlement was reached in May 2023 to be in force for 4-years till 30/09/2026. Industrial relations remained cordial throughout the year.

Discussion on Financial Performance with respect to Operational Performance Operational Performance

Particulars	Year ended
	31.03.2025	31.03.2024
Number of days	276	299
Average Crushing rate (tcd)	2470	2895
Cane Crushed (t)	681706	865640
Recovery (%)	9.17	9.54
Sugar produced (t)	62729	82845
Power production (lakh kwh)	1101	1156

Chronic cane shortage and constricted cane quality had its domino effect that pounded and plummeted our operating efficiencies on all front. Interrupted daily cane supply caused intermittent production stoppage throwing operational norms out of gear. Swift interventions responding to changing market dynamics, continual tweaking of production planning and relentless monitoring helped contain the negative fallout.

Financial performance (crores)

Particulars	Year ended
	31.03.2025	31.03.2024
Total Income	371.41	438.98
Profit Before Finance Costs, Depreciation & Taxes	38.17	60.73
Profit Before Tax	28.04	51.89
Profit After Tax	19.28	46.86

Low capacity use by dint of cane shortage and lower sucrose content in cane seriously dented our operating margins. Cane cost escalation far outweighed the rise in sugar price while higher molasses realization mercifully helped mitigate the downslide. Higher rate of income tax for the current year coupled with the absence of tax reversal that was available last year meant a steeper fall in PAT that nosedived by about 59% compared to last year.

Key Financial Ratios

Description	U/M	2024-25	2023-24	Change %	Explanation
Operating Profit margin (PBIDT / Total Income)	%	10.28	13.83	(25.71)	Note-1
Net profit margin (PAT/ Total Income)	0/ %	5.36	11.12	(51.80)	Note-1
Interest Coverage	Times	-	-	-	-
Return on capital employed	0/ %	8.55	16.60	(48.49)	Note-1
Return on Net worth	%	9.09	17.59	(48.32)	Note-1
Earnings per share		22.42	54.49	(58.85)	Note-1
Debt Equity ratio	Times	-	-	-	No debt at close of both years
Current ratio	Times	6.28	4.89	28.43	Cash accruals on profits plus EMI recoveries of power dues
Net worth per Share		358.68	343.09	4.54	Marginal rise
Debtors Turnover	0/	1.89	1.59	18.87	-do-
Inventory Turnover	0/ %	3.27	4.83	(32.30)	Higher inventory buildup due to sale quota applicability for full year

Note: (1) Lower capacity use, decline in sugar recovery, reduced sugar sale volume due to sale quota applicability for full year together severely eroded operating margin.

Cautionary Statement

Statements made in this Report describing industry outlook as well as Companys plans, projections and expectations may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

	For Board of Directors
	N Gopala Ratnam
Chennai	Chairman
9th May 2025	DIN:00001945