shree renuka sugars ltd Management discussions

Global economic overview

Persistent inflation and uneven recovery cloud the worlds economic future. The year under review has been turbulent and unpredictable, Looking ahead and recognising potential future dangers and opportunities is critical as corporates across the world attempt to recover from the pandemic and adjust to a world more focused on the climate crisis.

Global growth is expected to moderate from 5.9% in FY21 to 4.4% in FY22, indicating a recovery that has been uneven so far. Most emerging market and developing economies (EMDEs) are still lagging behind, whereas sharp rebounds in major economies can be seen. With the pandemic-inspired digitisation (and pre-pandemic momentum towards digitisation), the expected annual growth of digital revenue between FY20 and FY24 is set to reach around 13% in developing countries as compared to 11% in emerging markets and 6% in developed markets.1 Economic reforms in developing countries would drive productivity and therefore, could lead to better economic growth.

The Russia Ukraine war is still disrupting global supply lines, particularly those for food and fuel, which is adding to inflationary pressures and placing more strain on developing countries. It is challenging to have a clear economic forecast as the Russia-Ukraine crisis shows no signs of ending, leaving the world economy in uncertainty.


In FY22 and FY23, global growth is projected to slow sharply, as the initial rebound in consumption and investment fades and macroeconomic support is withdrawn. EMDEs are expected to experience substantial scarring from the pandemic and register a weaker recovery than advanced economies. Global inflation is expected to remain elevated due to supply disruptions and high food and energy prices in wake of the Ukraine war. Global growth is predicted to slow from 5.9% in FY21 to 4.4% in FY22, down half a percentage point from the October World Economic Outlook (WEO), owing to estimate revisions in the worlds two largest economies.2

World US UK Saudi Arabia China India
GDP 2020 -3.30% -3.40% -9.70% -4.10% 2.30% -7.30%
GDP 2021 5.80% 5.50% 6.80% 2.40% 8.20% 9.30%
GDP 2022 4.50% 4.40% 4.40% 4.90% 5.50% 7.90%
In flation 2020 2% 1% 0.90% 3.40% 2.50% 6.20%
In flation 2021 3.60% 4.70% 2.50% 3.10% 0.90% 5.50%
In flation 2022 3.70% 4.30% 4.80% 2.20% 2.30% 4.90%

Indian economic overview

The Indian economy staged a strong rebound in 2021-22 with a GDP growth of 8.7% which was bolstered by massive vaccine coverage and buoyant demand. Despite a number of headwinds throughout the year, the economy registered the highest GDP growth rate among major economies. Most of the sectors recovered to pre pandemic levels. While the first quarter posed a grievous toll on the healthcare infrastructure of the country, the economy bounced back in the second quarter growing by 1.3% over pre pandemic levels (FY2019-20) and continued the pace in quarter

3. However in the fourth quarter, the third wave of the pandemic and Russia Ukraine war impacted the recovery to some extent.

In December, Indias Consumer Price Index (CPI) inflation stood at 5.6% YoY, which was within the intended tolerance limit. Wholesale price inflation, on the other hand, has been in the double digits. Overall, macroeconomic stability indicators indicate that Indias economy is well positioned to meet the challenges of FY23.3 The Indian governments careful mix of emergency support and economic policy actions is one of the reasons for its success. Rather than commit to a rigorous reaction in advance, the Indian government chose to employ safety nets for vulnerable groups on the one hand, while responding strategically to global shocks on the other.


The Indian economy is anticipated to grow by 7.3 percent in 2022–2023, maintaining its position as the fastest–growing economy in the world. However, the pandemic coupled with Russia Ukraine war induced supply chain disruptions continue to produce inflationary pressures and pose a risk of rising commodity and fuel prices, thereby affecting the outlook for inflation.

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Private consumption (LHS) Government consumption (LHS)

Total fixed investment (LHS) Exports, goods, and services (LHS)


Global sugar industry overview

In CY21, the worldwide sugar market reached a volume of 185 million tonnes. It is expected to reach a volume of 206.6 million tonnes by CY27, with a CAGR of 1.8 percent from CY22 to CY27.4

The second wave of the pandemic affected sugar consumption as global recovery faced a slowdown. Harvests from India and Thailand produced better results than expected and helped moderate inflation in sugar prices.

Growth drivers of sugar industries

Sugar is both economical and easily available compared to sugar substitutes. Economic downturns have little impact on the global food and beverage industry. As a result, throughout the last few years, the growth graph of the industry has been on an upward trajectory. Sugar consumption is currently driven by the food and beverage industry, which is expected to impact the sugar industry positively. Sugar also has high usage in pharmaceutical and cosmetic industries. Sugar is used in the pharmaceutical industry to make antibiotics and cough syrups. On the other hand, sugar is utilised in the beauty industry to make scrubs due to its exfoliating properties. Thus, the rise of the pharmaceutical and beauty industries aided the growth of the sugar sector.

Although the sugar market in developed economies such as North America and Western Europe is saturated, emerging markets are now promising. Sugar-based products are in great demand in developing economies like India, China and the Middle East, owing to rising disposable incomes, urbanisation, and changing food habits.

Cane sugar produces the bulk of the worlds sugar, with beet sugar accounting for the rest. Sugar is grown as a raw material in almost every tropical and subtropical region on the planet. In terms of both geography and economics, Brazil is the worlds greatest sugar producer. Sugar is a substantial part of the Brazilian economy, accounting for over a quarter of the countrys GDP. The Central-South region of Brazil produces a substantial amount of sugar due to favourable climatic conditions. Brazil is followed by India, the US, the European Union (EU), China, Thailand, and other countries in sugar production.

Indian sugar industry overview

India is one of the largest consumers of industrialised sugar and is projected to grow over a period of time in comparison to other regions worldwide.

According to the first estimate issued by the trade association AISTA, sugar production in India, the worlds second largest producer after Brazil, increased to 36 million tonnes in the current fiscal year. Apart from this, 3.4 million tonnes of sugar was diverted to ethanol.5

Following lower output in Brazil due to unfavourable weather conditions, the nations sugar exports are anticipated to rise to approximately 10–11 million tonnes in sugar season 2022.

According to ISMA, the next marketing year would see a 45 lakh tonnes decrease in sugar production due to the conversion of cane juice and B-molasses to ethanol. Approximately 34 lakh tonnes have been diverted in the current marketing year (2021–2022). Consumption of sugar is predicted to increase at a modest rate of 1% to 2%, and the shift of more cane to ethanol production would produce a 6–8 million tonne exportable surplus in the 2023 sugar season, preserving a favourable domestic balance. Consumption of sugar is predicted to increase at a modest rate of 1% to 2%, and the shift of more cane to ethanol production would produce a 6–8 million tonne exportable surplus in the 2023 sugar season, preserving a favourable domestic balance.

Global ethanol industry overview

The US is the leading producer of fuel ethanol in the world. In CY21, the US produced 15 billion gallons of the biofuel. Ethanol is a grain alcohol that can be blended with gasoline and used in regular motor vehicles at a concentration of up to 10%. Brazil is the worlds second-largest ethanol-producing country, with an output of 7.5 billion gallons that same year.6

The most common ethanol fuel production type in Brazil is hydrous ethanol, which is the highest concentration grade of ethanol achieved through distillation. Brazil is one of the largest markets for biofuels worldwide, with specifically designed flexible-fuel vehicles available that run on fuels with a greater ethanol content than regular motor vehicles. As a result, the adoption rate of fuel ethanol has been a lot higher compared to other countries, with flexible-fuel vehicles the most widely produced car in Brazil.

After Brazil, the European region comes a close third in producing ethanol, for the whole year. The countries in European region produced around 1,300 million gallons of ethanol. Amongst the Asian countries, China, India and Thailand are three largest ethanol producers for current year. Amongst the South American countries, only Argentina produced a significant amount of ethanol in CY21.

Indian ethanol industry overview

The Indian Ethanol Market was valued at USD 2.81 billion in 2021 and is predicted to increase with a CAGR of 12.68% during the forecast period to reach a market value of USD 5.64 Bn by 2027.7 This growth is anticipated to occur as a result of the rising demand for biofuels. The Indian Ethanol Market will develop over the next five years because of government initiatives like the new ethanol blending programme (EBP), which requires oil manufacturing companies (OMCs) to mix 10 percent ethanol in gasoline by the end of 2022 and 20 percent by 2025.

The need for ethanol as a solvent in the production of varnishes and perfumes is also growing significantly. Additionally, the current pandemic scenario has raised the demand for ethanol for use in hand sanitizers and cleaning products to meet the increasing need to maintain hygiene in order to prevent the COVID-19 virus infection.

According to the International Energy Agency, India is anticipated to overtake the US and Brazil as the third-largest ethanol market in the world by 2026. Between 2017 and 2021, Indias demand for ethanol is expected to increase by three times to 3 billion litres. Demand expansion is thought to be primarily caused by government initiatives. Other factors including the total demand for transportation fuel, price, and the design of a specific policy will also be crucial.

Sugar mills and distilleries are expected to earn over H18,000 crore from selling ethanol to oil marketing companies (OMC) for blending with gasoline in FY22. Sugar mills/ distilleries made revenue of H8,079 crore, H7,823 crore, and H13,598 crore from the sale of ethanol to OMCs during the last three ethanol supply years 2018-19, 2019-20, and 2020-21, respectively.8

In the current sugar season SS2021-22, it is estimated that ethanol will earn more over H18,000 crore in revenue.15 In every sugar season, production of sugar stands at around 320-330 lakh tonnes as against the domestic consumption of 260-270 lakh tonnes, resulting in huge carry over stock of sugar with mills.

The ministry stated that diverting extra sugar to ethanol will alleviate the problem of excessive sugar stocks, enhance mill liquidity and therefore assist mills to pay their cane dues on schedule.

According to a report published by ICRA, Indias ethanol production needs to be increased three times its current level in order to meet the aim of 20% ethanol blending by 2025. According to the report, Indias ethanol production in 2021 was roughly 335 crore litres. As a result, ethanol was blended with gasoline at a rate of roughly 9%. In order to reach the E20 objective, India will need to produce 1,014 crore litres of ethanol by 2025.9

Company overview

Shree Renuka Sugars is a major agricultural and biofuels company in India. The company is one of the worlds largest sugar producers, and one of the worlds largest sugar refiners. The companys headquarters are in Mumbai (Maharashtra, India), while its corporate office is in Belgaum (Karnataka, India). Shree Renuka Sugars has six mills with integrated ethanol and power co-generation capacity. In India, the firm operates two huge sugar refineries near ports.

Operational highlights


The refinery business of Renuka Sugars is an exportoriented business. The company imports raw sugar and exports white sugar to different parts of the world. In the year 2021-22, the company relied on procuring raw sugar from the domestic market to substitute its imports. During FY 2021-22, the Kandla refinery continued to perform well. The operational performance of the plants were commendable despite the sluggish business environment and they attained remarkable raw sugar processing capacity and export levels during the year.


The company produces 3 grades of Ethanol - 1) Rectified Spirit (RS) 2) Extra Neutral Alcohol (ENA) &

3) Absolute Alcohol (AA) Or Ethanol (used for fuel blending). With focus on production of fuel ethanol, the company is gradually moving towards becoming an energy company rather than purely being a sugar company. The initiatives taken by the government to increase ethanol blending resulted in more Ethanol production than the previous years. During the year under review it achieved record high production of ethanol, amounting to about 164.84 Mn liters which was 21% more than the previous year.

The favourable Government policies also provides vast opportunities for the company to expand its footprints in the segment.


During the year. the Companys Power Generation was at 554 Million Kwh. of which the Company exported 231.42 Million Kwh to the Grid.


Launched in 2007, the first leg of its Madhur journey was the years upto 2019, which largely comprised spreading awareness in the west and south markets, where it has grown to be indomitable.

It was from 2019-2021 that two critical factors caused an inflection point in the brand journey - for the first time in its history, Packing operations commenced in the north, which would allow cost-efficient and speedier supplies of Madhur Pure & Hygienic Sugar in the market. The second factor to have catapulted Madhur sugar on the fast track growth was Covid. The consumers became a lot more hygiene conscious and the loose sugar, which is exposed to hands and impurities became a pain point, and consumers started looking favourably towards Madhur sugar - which is untouched by hand from farm to kitchens!

In the last year, building on the growth inspired by the expansion in geographic coverage as well as evolving consumer habits, Madhur opened its gates to the Eastern consumers. Sourcing sugar from its refinery in Haldia, Madhur is now uniquely poised to offer its pure and hygienic sugar to the East consumers as well, bringing hygienic sweetness to their plates.

In addition to this, Madhur sugar is now offering the hygienic advantage to even out-of-home consumption avenues - HoReCa segment, local tea & weet shops as well as bigger companies and sweets brands. On average the out-of-home consumption is significantly higher as compared to in-home consumption and it is Madhur Sugars mission to offer the purest, hygienic, refined sugar made with a sulphur-free process.

Financial Overview

Profit and Loss Statement

The Companys operating revenue stood at H61,259 Mn vis-a-vis H55,434 Mn in FY 2020-21.

This was mainly driven by increased sugar sale of H4,534 Mn with a value growth rate of 10% and increased ethanol sales of H2,480 mn with a value growth of 35% over last year.

Operating expenses for the year stood at H5,924

Mn as against H5,814 Mn in FY 2020-21 majorly due to increase in expenses in line with the increase in volumes.

Our Company generated EBITDA (excluding forex gain/loss) of H4,781 Mn visa- vis H5,606 Mn last year. The increase is largely on accountofimprovedrealisationinsugarandethanol segment.

The Company recorded a positive PAT of H1,131 Mn as compared to H557 Mn for the FY 2020-21, driven mainly by improved operational performance and savings in interest costs.

Balance Sheet

Net worth : Our net worth increased to H5,470 Mn as compared to H2,156 Mn in FY 2020-21

Working Capital Management

Current assets: Current assets as on 31st March 2022 stood at H26,126 Mn as compared to H30,344 Mn. Current ratio is 0.73 as on 31st March 2022.

Inventories: Inventories decreased by 15% from H23,544 Mn in FY 2020-21 to H19,987 Mn in FY 2021-22, mainly due to decrease in refinery sugar stocks.

Risk Management

The Company primarily aims at managing the risks involved in all activities of the Company, minimizing any adversity and assisting in the decision-making processes that will minimize any potential loss.

The Risk Management Policies (RMP) of the Company identify various risks which are inherent to the business of the Company, along with the steps taken by the Company to mitigate these risks.

The RMP is available on the following path www.

The Company conducts periodical risk analysis for timely identification of potential threats and adopts suitable measures to mitigate risks. The Risk Management Committee periodically reviews the Risk Management Policy considering the changing industry dynamics and evolving complexities. It periodically reviews the risk management processes and practices to ensure that the Company is taking appropriate measures to strike a prudent balance between risks and rewards in both ongoing and new business activities.

Internal Controls and Adequacy

The Company has formulated a well-defined and structured internal control systems and processes, commensurate to the size and nature of its business. Stringent procedures ensure high accuracy in recording, as well as provide reliable financial and operational information, while meeting statutory compliances and safeguarding assets from unauthorised use. The Companys internal team and an independent internal auditor monitors business operations and any deviations are immediately brought to the notice of the Management and Audit Committee for timely correction.

A comprehensive internal audit and control testing plan, spanning all factories and locations of the Company, is drafted, updated, approved and reviewed by the Audit Committee regularly.

This is followed by an audit conducted by Independent Chartered Accountants. These audits also test the effectiveness of mitigation initiatives implemented to defend the Company from various internal and external risks. A wide spectrum of strategies are devised as a follow-up measure to protect the Company from such uncertain events. Special audits are also conducted as directed by the Management. The Companys robust IT architecture safeguards sensitive data and accelerates the audit process.

Human Resources

The company constantly works on making a conducive working environment for its employees and is committed to retaining and attracting efficient employees. HR constantly works on developing employee skills in order to match with business objectives.

HR has taken a front foot in containing the deadly virus by formulating training programs, SOPs, and webinars/ workshops throughout the pandemic so that there was preparedness for employees, employee families and the neighbourhood. Few of the major accomplishments are noted below:

At manufacturing units and offices, all the safety measures were followed by following the HR guidelines, SOPs and circulars displayed at various locations for easy access of employees so as to ensure business continuity.

Nominated essential staff at each workplace who were provided necessary safety training and preparedness to keep the workplace safe.

Accomplished 100% vaccination (02 doses) against COVID-19 for all the employees just to ensure safety and good health.

Major accomplishments in FY 21-22 in various areas:

Technology transformation

Post pandemic, HR made a major comeback by rolling out new processes. One among those was the introduction of new technology in HRMS. The first step toward making the HR process paperless by digitalization.

This has been HRs constant endeavor to bring upgradation in existing people systems and practices and the new HRMS will automate & simplify the process, Build Employee Centric Workplace and Drive Business transformation through technology.

Employees Engagements

In FY 2021-22, HR has designed various programs to keep employees motivated and connected inspite of situational challenges. There were many employee welfare programs and festivals celebrated in manufacturing sites and offices. Further, there were national and international days celebrated across the group to ensure employees are aware of their responsibilities. HR initiated celebrations on National Safety Day, World Environment Day, World Food Safety Day, Wellness month and various other occasions where the celebrations were clubbed with sports, competitions, and group games.

Training & Development

HR has formulated various training and development sessions including the developmental programs throughout the FY 21-22 thus succeeding in completing 14,858 hours of training. These training were carefully designed as per the requirement and were conducted by resourceful faculties from premier agencies and institutions.

Health and safety

During the year, the Company continued its efforts to strengthen the health and safety of its employees. All the sites of Shree Renuka Sugars have also increased visual safety awareness with the help of posters in different parts of the factory and office. The organization actively conducted health and safety training sessions at all its sites. The following programs were :

Implementation of Lock Out Tag Out (LOTO): This training enables employees to protect themselves from injuries caused by machines that are being serviced or repaired.

Self-contained Breathing Apparatus (SCBA) Implementation: This apparatus aids the employees in breathing while performing work in a confined space.

Implementation of Road safety measure: Several safety measures were undertaken for road safety which promoted wearing of crash helmets and car safety belts. Besides, a road safety week was also celebrated at the sites.

Safety week celebration : Employees were encouraged to take a safety oath with a promise to abide by it. Several competitions were also organised during the celebrations to promote awareness. Winners also received awards for their performance in various events.

Fall protection safety: Advanced fall protection systems were implemented in a phased manner at all sites to ensure better safety of employees.

Firefighting system assessment has been carried to comply OHSAS standard. Action plan preparation is under process

We have placed third party safety consultancy for all distilleries to strengthen safety systems at the sites.

We have started digital visual training/awareness program to make our contactors safe.

We have digital platform named Enablon for reporting all incidents with action plan, hazards, nearmiss, campaigns assessment of factory environment matrices, warehouse fire assessment, sustainability assessment, spill prevention containment and control measures etc….

We have started Contractors EHS evaluation which is going to help in reducing frequency rate of injury.

Wellness Month

HR initiated & celebrated SRSL Wellness Month from June 19 to July 17, 2021, and planned to introduce a few wellness programs for all employees so that together we adopt proactive strategies for improved physical, mental, and emotional wellbeing at our home and workplace. These programs were framed to employ virtual engagement practices for employees for their better mental and physical health.

Few of the very important programmes are outlined below:

Inner Peace through Yoga-Meditation on account of International Yoga Day Staying Resilient & Happy amidst in the pandemic. Ergonomics- Posture Correction.

Acupressure practices to boost Immunity/Building immunity Pranayama and Full body meditation


The company received the "Award for Best Talent Management Strategy." On account of various strategies, HR had structured to retain and hire talent.

Environment, Social and Governance (ESG)

The Company strives to be a responsible corporate entity. The Company, therefore, recognizes the impact of its operations and hence is committed to strictly adhere to the Environment, Health and Safety (EHS) norms and compliance standards set by the Government of India.


Sugar manufacturing is a water intensive industry and has a high dependence on energy. Sugar manufacturing also produces effluents that must be treated before its release into the environment. To reduce its environmental footprint, the Company undertook the following initiatives in FY 2021-22:

For captive consumption, the company uses a large proportion of energy generated by its cogeneration units. Around 77% of its co-generation process is renewable energy that results in a significant reduction in GHG emissions.

Formed an inter-unit committee with the objective of minimising freshwater consumption. It is done by enhancing the use of recycled water, which automatically reduces the use of water.

The Company is treating environmental effluents and all its facilities are equipped with zero liquid discharge to enhance its sustainability measures.

Set up a standard operating procedure (SOP) for managing hazardous waste at all units

Installed incineration boilers at all distilleries as a step towards achieving better utilisation of spent wash. After extracting energy from spent wash, the potash rich fly ash generated from these incineration boilers can be used as a source of potash nutrition for agricultural green belt development.

The Company fully utilises raw materials and thus there is no waste generation.

The company continues to abide by all applicable environmental regulations for all its operations in India. From energy generation to energy consumption, water consumption to wastewater generation and its disposal, product manufacturing to waste generation and fuel consumption is reported on a monthly basis to the management. SPCC tank assessments, Stormwater management, Job safety environment analysis for all critical High-Risk Works have also been initiated at all sites to identify the gaps in the system and prepare plans to take necessary steps for its implementation.

To reduce air pollution levels, the Company has planted a total of 6528 trees during the year, across all its units. Besides, environmental awareness posters and banners have been put up at prominent locations, across units, to enhance awareness among employees. The Company also observes World Environment Day every year and plants trees to further the green cover in and around its operating areas.


The Company is undertaking various activities to uplift the communities in its operational areas. To ensure health and safety of its communities, it has distributed sanitisers and oxygen concentrators during the pandemic. It has also ensured safety by setting up a fire-fighting vehicle near the farms. The Company is also focussing its efforts towards improving access to clean water and consequently has ensured the supply of potable water by installing RO plants and borewell hand pumps as well as carried out refurbishment of ponds. The Company believes in the importance of education and has distributed primary school supplies and educational kits among students.

The Company has partnered with Solidaridad, a Dutch non-profit organisation that assists sugarcane farmers in adopting sustainable practices and imparts training to them. The trainings are designed in a way that the adoption of these methods raises productivity levels, contributing towards economic development of the farmers. These methods contribute towards the progress of the farming community.


At Renuka Sugars, the Board functions as the centre of sound corporate governance. The Board strives to make sure that everything the Company does is governed effectively, with integrity, transparency and in accordance with sound corporate governance practices. The companys governance structures as well as processes are regularly reviewed to take into account new developments and facilitate effective leadership.