Sakthi Sugars Ltd Management Discussions

A. Industry Structure and Developments

The sugar industry is Indias second-largest agro-based industry after cotton and plays a vital role in the rural economy by supporting the livelihoods of over 5 crore farmers and their dependents across approximately 55–60 lakh hectares under sugarcane cultivation. India is the worlds largest consumer and one of the largest producers of sugar, with average annual sugarcane production of around 450 million tonnes, resulting in sugar production of approximately 32–34 million tonnes and domestic consumption of about 29 million tonnes. During the ongoing sugar season 2025–26, the industry recorded a 9% increase in sugar production, reaching 27.23 million tonnes as of March 31, 2026, compared with 24.88 million tonnes during the corresponding period of the previous year, reflecting the sectors continued resilience and strong production performance.

B. Opportunities and Threats

i. Opportunities

The Government of Indias increasing focus on expanding the ethanol blending programme beyond the E20 roadmap through the proposed adoption of E85 fuel presents significant growth opportunities for the sugar and ethanol industry. As ethanol demand is expected to increase substantially over the long term, the expanded blending programme is likely to create additional demand, strengthen revenue diversification for sugar mills, and support the industrys sustainable growth.

ii. Threats

The industry continues to face risks from weather-related uncertainties, particularly in the south-western sugar belt, where sugarcane cultivation is highly dependent on monsoon rainfall. Declining sugarcane productivity, changing crop patterns, and the possibility of below-normal rainfall may adversely impact sugarcane availability and sugar production in the coming seasons.

C. Segmentwise or Productwise Performance

Segment wise results are given in the Notes on Financial Statements for the financial year ended 31.03.2026. Product wise performance is furnished in the Boards Report.

D. Outlook

The outlook for the Indian sugar industry remains stable, with gross sugar production for the 2026–27 season estimated at around 31 million tonnes. After diversion of sugar for ethanol production, net sugar output is expected to broadly match domestic consumption. However, the industrys performance will continue to depend on monsoon conditions, irrigation availability, and sugarcane productivity, as any significant shortfall in rainfall could impact sugar production in both the 2026–27 and 2027–28 seasons.

E. Risks and Concerns

The Indian sugar industry continues to face risks related to sugarcane availability and acreage. During the ongoing sugar season, sugarcane coverage stood at 54.08 lakh hectares, lower than the previous years 58.84 lakh hectares, although it remains broadly in line with the five-year average. Any further decline in cultivation area, coupled with adverse weather conditions and lower crop yields, could affect sugarcane availability and sugar production in the coming seasons.

F. Internal Control Systems and their adequacy

The Company has an in-house internal audit team to ensure that all activities are monitored and controlled. Adequate internal checks are built-in to cover all monetary and material transactions in the system developed by the Company. The Internal Audit reports are presented to the Audit Committee on a quarterly basis for review and deliberation. The Management has assessed the effectiveness of the Companys internal control over financial reporting as of March 31, 2026 and found the same to be adequate and effective.

G. Financial Performance with respect to Operational Performance

The total revenue from operations for the financial year under review is Rs.89897.02 lakhs (previous year Rs.92854.06 lakhs). The financial year has ended with net profit of Rs.2813.45 lakhs (previous year net profit of Rs.7997.12 lakhs) after providing Rs.9841.53 lakhs (previous year Rs.10524.39 lakhs) for finance cost, Rs.3798.29 lakhs (previous year Rs.3710.11 lakhs) for depreciation and amortisation.

H. Key Financial Ratios

Details of significant changes in key financial ratios (i.e. change of 25% or more as compared to the immediately previous financial year) and in return on net worth and the reasons therefor are as under:

I. Material developments in Human Resource/Industrial Relations front, including number of people employed

The industrial relations at all plants and offices remain cordial. The total number of employees on the rolls of the Company, including temporary employees and apprentice, was 1264 as at the financial year ended on 31st March 2026. Training programmes are conducted depending on the needs for updating the knowledge with respect to the developments in the industry.