Rajshree Sugars & Chemicals Ltd Management Discussions

Industry Scenario and Development

Global Sugar Outlook

The estimated Global sugar production as per the International Sugar Organization (ISO) is 181.29 million tons with an increase of 5.23 million tons over the previous season. The consumption is expected to grow by 0.55 million tons over the previous season; it is now estimated at 180.07 million tons. The overall global surplus is anticipated to be 1.22 million tons.

World Sugar Balance (Million Tons)
October to September
	2025 - 26	2024 - 25	Changes	%
Production	181.29	176.06	+5.23	2.97%
Consumption	180.07	179.52	+0.55	0.31%
Surplus / Deficit	1.22	-3.46	4.68	-
End stocks	93.30	93.18	+0.12	-
Stocks to Consumption Ratio	51.81	51.91	-	-

However, USDA forecasts a production of 189.3 million tonnes, which is 8.3 million tonnes over the last year production (181 million tonnes).

Sugar Sector in India

The estimated sugar production for the sugar season 2025-26 is around 292.92 lakh tons, up by 31.92 lakh tons from the previous year. Domestic consumption is estimated at 283 lakh tons compared to 281 lakh tons of the previous year. With the exports of around 7 lakh tons, the closing stock is expected to be around 52.92 lakh tons as compared to the opening stock of 50 lakh tons.

Particulars	2025 - 26	2024 - 25	Changes
Opening Stock	50	79	-29
Production	293	261	+32
Imports	0.0	0.0	-
Total Available	343	340	+3
Consumption :
a) Internal	283	281	+2
b) Exports	7	9	-2
Total Consumption	290	290	0.0
Closing Stock	53	50	+3

Sugar Sector in Tamil Nadu

Though the Rainfall in Tamil Nadu (TN) was higher, the intensity of that rainfall was concentrated for a shorter period which had an adverse effect on the crushing and recovery.

Sugar season	Cane Crushed (in lakh tons)	Sugar Production (in lakh tons)	Capacity Utilisation %
2011-12	254.55	23.79	99
2012-13	214.57	19.07	84
2013-14	157.60	14.13	61
2014-15	140.50	12.18	55
2015-16	155.86	13.61	61
2016-17	119.04	10.65	47
2017-18	81.42	7.00	31
2018-19	108.54	9.55	39
2019-20	92.20	7.89	32
2020-21	97.85	8.78	38
2021-22	139.15	12.39	54
2022-23	160.54	14.80	63
2023-24	123.08	10.73	48
2024-25	83.74	6.83	33

• Cane Crushing of the State in SY 2024-25 was lower by 39.34 Lakh Tonnes and the average recovery was lower by 0.60% compared to SY 2023-24.

• The planting of sugarcane was affected by the unusually intense summer in the first half of 2024, which had reduced the required sugarcane in the first half of 2025-26 (as the gestation period of sugarcane growth is 12 months), and the impact of Cyclone Fengal in November 2024, which again affected the planting in the last quarter of 2024-25 (January 25 to March 25), which in turn reduced the required sugarcane in January 26 to March 26.

• Average Market price for Financial Year (FY) 2025-26 was around Rs. 3961 per quintal at 8.15% average sugar recovery, the RSF value (@ 75% of realization from sugar sales), and works out to Rs. 2970 per ton of cane. But average FRP payable is Rs. 3291 per ton of cane pegged to a minimum 9.50% recovery. The gap between FRP payable and RSF value is Rs. 321 per ton of cane which mills are unable to recover.

• The capacity utilization is around 33% which has resulted in the sub-optimal production of sugar, power and alcohol. Accordingly, the incidence of fixed cost has more than tripled compared to normal times, leaving correspondingly lower amount in the hands of mills for cane payment. TN sugar mills will have to pay FRP at 9.50% irrespective of the actual sugar recovery even if lower than 9.50%.TN sugar mills will have to pay for 95 Kgs of sugar equivalent whereas actually they recover only 81.5 Kgs.

• The loss works out to 535 per ton of cane crushed.

The adverse effect of the climate variations in Tamil Nadu brought down the Cane availability from 123 Lakh tons to 84 Lakh tons, a reduction of 39 Lakh tons and the Recovery from 8.75% to 8.15%.

Our company also recorded a lower crushing of 11.29 Lakh tons in FY 2025-26 as against 12.29 Lakh tons in FY 2024-25 with a recovery of 8.73% as against 8.14% in the previous year.

Government measures in the Sugar Industry

The Central & State Governments had announced a slew of measures to support the sugar industry last year :

a) Central Government Ethanol Blending Programme

In an effort to support the sugar mills for a sustainable operation, the Government has persisted with its ethanol blending programme.

In EY 2024-25 ended 31^st October 2025, OMCs have blended a total of 1040 Crore Litres of Ethanol achieving a national average of 19.24%.

In the current Ethanol Year 2025-26 (November 25 to October 26), OMCs have blended 328 Crore Litres achieving a National average of 19.98% till 31^st March 2026.

b) Tamil Nadu state sugarcane policy

In FY 2025-26, the TN Government continued the transitional production subsidy introduced in 2020-21 to benefit all registered farmers who had supplied sugarcane during 2025-26 sugar season with the previous year subsidy of 349 per ton of sugarcane,

Opportunities :

The increase in domestic prices due to lower production and firm World sugar prices, continues to be an opportunity for the industry to sustain and increase margins.

Threats

The unpredictable climate variations, rainfall pattern & low recovery are threats to the sustainable operation of the Industry. International weather pattern suggests that this year would be a worst El Nino Year in the last 140 years.

Sugarcane Price

The Central Government has increased the 2025-26 seasons FRP to 355/- per quintal for a basic recovery rate of 10.25% providing a premium of 3.55 per quintal for each 0.1 % increase in recovery over and above 10.25% and reduction in FRP at the same rate for each 0.1% decrease in the recovery rate till 9.50%. However, in case of the mill with a recovery of lower than 9.50%, the price remains pegged to this minimum recovery at 329 per quintal for the 2025-26 season.

Power

The Company continues to export power to third party customers from the power plant at Mundiyampakkam. This has ensured receipt of timely payment and support the working capital requirement.

The Company continues to export power to State Grid from the power plant at Gingee under the power purchase agreement. The applicable power tariff rate is approved by State Regulatory Commission from time to time during the year, the Tamil Nadu Electricity Regulatory Commission (TNERC) has issued its tariff order on 22.09.2025 for the control period from the date of the order to 31.3.2027, according to which the revised rate for the power plant at Gingee is at 6.59 per unit as against the previous rate of Rs. 5.72 per unit.

Outlook

The country is set to produce 29.29 million tons in the current season 2025-26. With an export possibility of 0.7 million tons and a consumption figure at 28.3 million tons, it would leave the industry with a closing stock at 5.29 million tons.

Risk Analysis

The major risks faced by the industry include sugarcane availability, sugar recovery, price realization, regulatory control by Government and financial liquidity amongst others.

For managing such risks emanating from such a volatile environment, the company has put in place a dynamic and robust management process for review at periodic intervals.

Sugar Price Realization Risk

The perceived risk on sugar price realization is lower given the outlook of lower stock available.

Risk mitigation

To de-risk the challenges of cyclicality in the sugar business, the downstream plants installed for producing alcohol and cogeneration of power by using byproducts of sugar production viz., molasses and bagasse continue to complement the profitability of the company. Further the company has also added flexibility to produce Ethanol from Sugar Cane Juice/Syrup.

The Company is also focusing on selling sugar regularly at every price point thereby improving average realization.

In order to stabilize the domestic sugar prices, and to enable the sugar mills across the country to clear the cane price arrears, the government had taken the following measures during the year:

a. The Government of India had continued the monthly sugar release mechanism to control sugar supply to the domestic market for the 2025-26 season.

b. The Government of India has also maintained the Minimum Selling Price (MSP) of 31/- per kg, below which the mills cannot sell sugar.

c. Export of sugar to the extent of 1.5 million tons has been approved by the Central Government.

d. The Central Government has lifted the ban on production of ethanol from cane juice and B heavy molasses.

Sugarcane Availability and Sugar Recovery

Sugarcane is the main raw material in sugar mills which is monsoon dependent and it becomes unpredictable in adverse climatic conditions. Similarly other factors like scarcity of harvest labor, sugarcane price, and availability of attractive competitive/ alternate crops will have a direct impact on cane availability, sugar recovery and our business. The sugar industry continues to be regulated by State Governments by other controls viz., reservation of cane area and fixation of sugarcane price.

Risk Mitigation

The Company has a robust sugarcane extension department to support crop management practices on the field. Further, Research and Development wing ensures new technology and high yielding varieties are made available at the right time to the farmers.

Measures taken by the Company to mitigate the risks

• Testing new improved varieties of cane with the support of Sugarcane Breeding Institute and Tamil Nadu Agricultural University.

• Promoting high sucrose yielding varieties for better sugar recovery.

• Maintaining above 90% of the area with high yield and high sugar varieties for better cane and sugar productivity

• Organizing to supply, to the farmers, the rejuvenated disease free quality seed material from Sugarcane Breeding Institute to improve the sugarcane yield.

• Exploring AI-driven automation, including drip fertigation systems integrated with automatic weather stations and soil moisture sensors at our R&D farms to study its efficacy on cane yield, quality improvement and for further expansion.

• Technology transfer through digital platform was commenced with the creation of an exclusive YouTube channel in the name of Rajshree Sugars. So far 5 videos and 2 short videos up loaded for technology promotion.

• Restarted the technology promotion through Audio Visual Van Programmes after a gap of 6 years.

• The company has initiated a pilot trial entailing soil nutrient based fertility mapping in command areas of Unit-2 at Mundiyampakkam. So far 2200 samples have been collected covering all sugarcane growing villages and the analysis is under progress. This would support the farmers having low fertile lands to improve the soil conditions.

• Promoting the application of water gel in the standing cane crop to conserve the soil moisture and mitigate the drought situation

• Providing micro level support to selective villages whose sugarcane yield is sub-optimal. In the financial year 2025-26, the company has provided the support to 46 villages, resulting in an increase in the average yield by 1.80 to 4.0 tonnes per acre.

• Promoting wider row planting, timely mechanized inter cultural operation and mechanical harvesting which includes entrepreneur development. Through mechanical harvesting the company has covered 15 % of the total cane harvesting. Further development of mechanical harvesters is in progress.

• Aggressively promoting drip irrigation among the farmers to save water and obtain better sugarcane yield.

• Implementing activities like trash shredding, trash mulching and organic manure application to improve soil fertility.

• Close monitoring of nursery development, supply of good quality seeds, fertilizers, micro nutrients and growth promoting inputs, among others as a part of cane development activities.

• More Focus on areas with better ground water availability.

• Implementation of good agronomical and pest management practices.

• Prophylactic spraying across 2,800+ acres and successfully managed diseases namely Pokkah Boeng and Crown Mealybug, particularly in the 2003 V 46 and Co 11015 variety plots.

• Continuous monitoring of cane planting, clean cane management and harvesting schedule.

• Implementation of better Ratoon management practices.

• Developing local and outside cane harvest work force for timely harvest and supply

• Support farmers with timely updated information on technical and entrepreneurial subjects for yield and quality improvement of sugarcane.

• Increasing the quantum of registered cane and the gradual reduction of outside cane

• Focusing on factory efficiency parameters to recover maximum sugar.

Financial liquidity risk

• The sugarcane availability and sugar price risk continue to have significant impact on the financial liquidity of the Company.

• Sugar industry is highly working capital intensive. Raising adequate and rightly-priced working capital to support peak period operation of the company might pose a challenge.

• Since the Company has been under monitoring period after implementing the debt restructuring by lenders with retrospective effect from 30.06.2020, it is operating without working capital facilities from the consortium lenders, and has to continuously sell inventory to maintain cash flows. This situation will continue till the companys account is upgraded as standard with the lenders.

• The Company had challenged the monthly sugar release mechanism, before the court of law and the Madras High Court has dismissed our Writ Petition. Hence, the company has filed a writ appeal before Madras High Court on 24.10.2024 for setting aside the order of single judge. The case is pending disposal.

Risk mitigation:

The continuation of the approved debt restructuring proposal of the company by all the lenders with the beneficial terms which includes reduction in interest rate and the deferred repayment schedule to mitigate the liquidity crunch faced by the company. Further, the company has availed working capital facilities from Kotak Mahindra Bank comprising Dropline Overdraft for 30 crores repayable over 21 months and Cash Credit for 20 crores to be taken over, upon upgradation of loan accounts, by Consortium lenders.

Internal control systems and their adequacy

The Company has well-established internal control systems in the form of well-documented policies, authorization guidelines commensurate with the level of responsibility standard operating procedures and effective internal audit system to ensure smooth functioning of the Company.

The Board, Audit Committee and the Key Management review the findings and recommendations of the Internal Auditors and take corrective action, wherever necessary. Moreover the Audit Committee periodically interacts with Statutory Auditors and makes continuous assessments of the adequacy and effectiveness of the internal control systems.

Human Resources / Employee Wellbeing

The Management Staff Strength as on 31^st March 2026 is 227 and the Non-Management Staff strength is 771. Industrial Relations have been cordial and there is no significant development. For the year, there has been 100 % retention of Key Management Talent and staff attrition is at 12.19% as against 13.93 % in the previous year. The employees were imparted 1030 man-days of learning through the year.

Financial performance with respect to operational performance

a) Operational Performance

Particulars	Year ended		% Increase (Decrease)
	31.3.2026	31.3.2025
Cane Crushed (MT)	11,29,060	12,28,905	(8.12)
Recovery %*	8.73	8.14	0.59
Sugar Produced (MT)	98,521	1,00,053	(1.53)
Sugar Sold (MT)	88,523	1,17,347	(24.56)
Power Produced (Lakh Kwh)	1,376	1,488	(7.46)
Power Exported to Grid (Lakh Kwh)	831	886	(6.21)
Alcohol Produced (Lakh Litres)	177	187	(5.35)

* Absolute change

b) Financial Performance- Segment Wise

The Company is engaged in three segments, namely Sugar, Cogeneration and Distillery

Particulars	31.3.2026	31.3.2025
Sales / Turnover
Sugar	43,736.02	52,555.82
Co-generation	7,690.61	8,220.25
Distillery	12,835.46	12,995.06
Less: Inter Segment revenue	9,794.35	9,589.45
Net Sales / Income from Operations	54,467.74	64,181.68
Profit / (Loss) before tax
Sugar	(2,709.97)	(3230.74)
Co-generation	3,894.61	4,557.74
Distillery	2,033.40	2,591.66
Less: I. Interest	1,449.50	1,597.12
ii. Other un-allocable expenditure	1,376.01	1,213.97
Add : Exceptional Expenses	200.86	-
Profit /(Loss) before tax	191.67	1,107.57

c) Ratios where there has been significant change for FY 2024 - 25 to FY 2025 - 26 :

S. No. Key Profitability Ratios	FY 2025 - 26	FY 2024 - 25	Remarks
1. EBITDA/Sales % (Operating Profit Margin)	7.30%	7.87%	Operating Profit Margin has marginally decreased due to lower cane crushing and the resultant output caused by adverse climate.
2. Net Profit Margin (%)	0.35%	1.73%	As explained in point no. 1 above
3. Return on Net Worth	0.73%	4.19%	As explained in point no. 1 above

 

S. No. Key Liquidity Ratios	FY 2025 - 26	FY 2024 - 25	Remarks
1. Current Ratio	1.03	1.04	Marginal increase
2. Debtors Turnover Ratio	23.40	26.30	The value of Debtors as on 31st March 2026 has been lower by 14% as compared to the same as on 31st March 2025 while the decrease in sales during the year 2025 - 26 is by 15% as compared to the same during the year 2024 - 25. This has led to a marginal decrease in the Debtors turnover ratio.
3. Inventory Turnover	3.32	5.49	The Inventory Turnover ratio is lower due to stock holding higher by 40% in the year end. This is due to limitation in absorption of the market due to inflow of sugar from other states and higher stocking of alcohol due to Tamil Nadu Government has allowed higher share of import from neighboring states by IMFL manufacturers.

 

S. No. Key Capital Structure Ratios	FY 2025-26	FY 2024-25	Remarks
1. Debt Equity Ratio	0.91	1.03	Reduction in Debt Equity Ratio is due to reduction in debt arising out of repayment of the principal as per repayment schedule of approved debt restructuring scheme.
2. Interest Coverage Ratio	2.74	3.16	The EBITDA has been at 40 crores in FY 2025-26 as against the same at 50 crores in FY 2024-25. The interest charge has been recorded at 14.50 crores in the year 2025-26 as against the same at 15.97 crores in 2024-25. This led to the decrease in interest coverage ratio.

Cautionary statement

Statements in this Report describing the Companys objectives, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

For and on behalf of the Board	R VARADARAJAN	SHEILENDRA BHANSALI
Place : Coimbatore	Wholetime Director	Independent Director
Date : 20th May 2026	DIN 00001738	DIN 00595312