Sakthi Sugars Ltd Management Discussions

A. Industry Structure and Developments

Indias sugar industry, the second-largest agro-based sector, is set to become the worlds top producer as Brazil shifts more sugarcane to ethanol. With annual sugarcane production of around 450 million tons and sugar output of 34-36 million tons, India also ranks as the largest consumer and second-largest exporter of sugar. The industry has evolved into a multi-product complex producing sugar, ethanol, bioelectricity, bio-CNG, and other by-products, supporting the governments ethanol blending goals. However, sugar production in the 2024-25 season is expected to decline by 7% to 29.5 million tons due to weak monsoons and crop disease in key states like Uttar Pradesh.

i. Opportunities

Indias growing energy needs present a major opportunity for biofuels, especially ethanol. With the government targeting 20% ethanol blending by 2025, the sugar industry is set to supply over 60% of this demand, while also advancing in bioelectricity and bio-CNG. Improved technology and higher feedstock yields could unlock even more blending potential, making ethanol a key driver of sustainable growth and energy security.

ii. Threats

The price of sugarcane is politically sensitive and has no correlation with the price of final products. Nature plays a vital role in determining the prospects of sugar industry. The industry is highly labour oriented.

Segment wise results are given in the Notes on Financial Statements for the financial year ended 31.03.2025. Product wise performance is furnished in the Boards Report.

The monsoon is expected to be normal to above-normal during the year 2025. With a moderate increase in sugar production, the outlook for the sugar sector is expected to be good.

Availability of sugarcane for crushing, price realisation on sale of sugar, and the controls imposed by the Governments are the major risks faced by the sugar industry. Excess production of sugar with unviable export market causes reduction in selling price of sugar. These factors have direct impact on the financial liquidity and profitability of the Company.

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, 2025 and found the same to be adequate and effective.

The total revenue from operations for the financial year under review is Rs.92854.06 lakhs (previous year Rs.106928.12 lakhs). The financial year has ended with net profit of Rs.7997.12 lakhs (previous year net profit of Rs.12949.21 lakhs) after providing Rs.10524.39 lakhs (previous year Rs.10876.06 lakhs) for finance cost, Rs.3710.11 lakhs (previous year Rs.3707.20 lakhs) for depreciation and amortisation.

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:

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 1182 as at the financial year ended on 31st March 2025. Training programmes are conducted depending on the needs for updating the knowledge with respect to the developments in the industry.