simbhaoli sugars ltd share price Management discussions


The global economy experienced slower growth at 3.2% in 2022-23 compared to 6.2% in 2021-22. Several factors contributed to this, including the Russia - Ukraine conflict, a return of inflation, a pandemic upsurge in China, global liquidity squeeze, and quantitative tightening by the US Federal Reserve. These challenges led to moderated global capital and consumer spending, disrupted trade, increased energy costs, and cautious consumer behavior. Global inflation elevated to 8.9%. This prompted central banks to aggressively tighten their monetary policy, which further impacted economic activity.


In 2023-24, analysts predict that the ongoing issues will continue to impact the global economy, leading to a further slowdown in economic growth. The UK may face a mild recession due to increased cost-of-living, which affects household purchasing power and consumption. Additionally, tighter fiscal and monetary policies are contributing to the economic challenges.

Estimates suggest that the global recovery may begin in the second half of 2023-24, with inflation moderating and the reopening of the Chinese economy. Some positive signs are already visible, such as cooling-off of fuel and commodity prices, along with global container freight rates.

However, the outlook remains uncertain due to several risks. Stress has been observed in banking systems in the US and Europe in recent months, which could worsen with prolonged high inflation levels. This might result in further rate hikes and negatively impact the business environment. The unresolved Russia-Ukraine conflict also adds uncertainty, affecting energy markets and disrupting the supply-demand balance. These uncertainties pose challenges to the global economic recovery in 2023-24.


Despite global volatility, the Indian economy demonstrated resilience and achieved a growth rate of 6.8% in 2022, positioning it as the fifth-largest economy globally in terms of nominal GDP. This growth was facilitated by several factors, including the reduction in Covid-19 cases, the expansion of manufacturing through government policies like the Production Linked Incentive (PLI) Scheme and corporate tax cuts, capex recovery, and cyclical upturn in sectors such as banking and auto. Additionally, the countrys strengthened digital infrastructure and widespread adoption of realtime digital payments contributed to unlocking 0.56% of GDP.

However, the economy faced inflationary pressures due to rising crude oil prices, prompting the Reserve Bank of India to implement interest rate hikes. The Indian rupees depreciation against the US dollar also added to inflation challenges.

Amid the growing global focus on sustainability and clean energy, India is steadily moving towards a clean and sustainable economy growth model. As part of this transformative journey, the country has recognized the importance of ethanol as a key pillar of its clean energy strategy and commitment to climate and carbon emissions reduction. With a vision to reduce its dependence on fossil fuels and mitigate greenhouse gas emissions, India has implemented supportive policies and initiatives on clean energy and bio-ethanol fronts.

The emphasis on ethanol production and usage in Indias energy mix has opened new avenues for renewable energy sources, leading to increased investments in biofuel technologies and infrastructure. The governments supportive policy framework includes measures such as blending mandates, financial incentives, and investment facilitation, promoting the adoption of bio-ethanol and biofuel technologies across various sectors. These efforts not only contribute to Indias climate change mitigation goals but also foster sustainable development, create green jobs, and enhance energy security.

By embracing ethanol as a cleaner alternative to traditional fossil fuels, India demonstrates its commitment to a cleaner and greener future, aligning with global efforts to combat climate change and transition towards a sustainable economy.


Looking ahead, the International Monetary Fund projects robust growth of 5.9% for the Indian economy in 2023, the highest among emerging economies. This growth will be driven by strong domestic demand, healthy consumption growth, improvements in the labor market, increased consumer confidence, recovery in rural demand, and higher purchasing power with moderating inflation. The governments efforts to boost private investments through increased capex allocation and targeted reduction of fiscal deficit also contribute to the positive outlook.

However, there are risks to the outlook, such as weakness in the global economy impacting exports, volatility in food and crude oil prices, slowdown in private consumption, and aggressive monetary tightening by global central banks to control inflation. These factors could pose challenges to Indias economic growth in the coming year.

SECTORAL REVIEW Global Sugar Sector Review

The sugar business plays a significant role in national economies worldwide, requiring substantial capital investments for large-scale operations to stay competitive. Global sugar production is estimated to reach 180.43 million tonnes in 2022-23, compared to 173.5 million tonnes in the previous year. Despite a decline in India, increased exports from Brazil and Thailand are expected to offset the decrease.

The global sugar market size is projected to grow from 189.0 million tons in 2022 to 217.2 million tons by 2028, with a compound annual growth rate (CAGR) of 1.64% between 2023-2028. Emerging regions like India, China, and the Middle East show promising growth in sugar-based product demand, driven by rising disposable incomes, urbanization, and changing food habits.

Global sugar consumption is estimated at 176 million tonnes, up from 172.4 million tonnes in FY 2021-22, primarily due to population growth in China, India, and Russia. As a result of the increased global consumption surpassing production growth, sugar stocks are expected to decrease.

Global Ethanol Sector Review

The global ethanol market is experiencing a rise in interest as a biofuel worldwide, with the sectors market size estimated at US$ 109 billion in 2022. It is projected to grow at a CAGR of 4.6% and reach US$ 170 billion by 2032. The industrial ethanol market is driven by increased usage in the food and beverage sector, particularly in the production of alcoholic beverages like vodka, beer, and gin. Industrial ethanol is also used as a food additive for even food coloring distribution and in common extracts like vanilla extract.

Government initiatives to boost ethanol production further contribute to market growth. North America holds the largest market share at 18.6%, led by the United States, followed by Europe at 16.3%. The Asia Pacific region is expected to witness faster market growth due to developing countries renewable energy programs aiming to reduce crude oil and petrochemical imports.

Indian Sugar Sector Review

The Indian sugar sector is expected to produce between 328 to 330 lakh tonnes in 2022-23, taking into account the diversion of 40 lakh tonnes for ethanol production. Domestic sugar consumption in India is estimated to be 275 lakh tonnes in the same season.

Indian sugar exporters have received favourable prices, with export realizations ranging from Rs. 36-38 per kg compared to domestic prices of Rs. 33-35 per kg. The country has estimated export contracts of 45-50 lakh tonnes, out of the 60 lakh tonnes export quota announced. As the second- largest global sugar exporter, India is expected to report 90 lakh tonnes of sugar in the 2022-23 season.

The Indian Sugar Mills Association (ISMA) has reported that around 35 lakh tonnes of sugar export contracts were initiated for the 2022-23 season before the governments announcement of the export policy. The export policy, announced in November 2022, permits the export of 60 lakh tonnes of sugar on a quota basis until May 31,2023.

Indian Ethanol Sector Review

India has achieved the target of supplying petrol blended with 10% ethanol ahead of schedule, which resulted in significant benefits. The forex impact amounted to over Rs. 41,500 crore, reduced greenhouse gas emissions by 27 lakh tonnes, and farmers received overs. 40,000 crore. The country has advanced its target to produce petrol blended with 20% ethanol by 2025, leading to an estimated annual saving of $4 billion. This move will enhance the use of renewable energy in India, the worlds third-largest oil importer and consumer.

Sugar factories are transforming their manufacturing units into "Green Energy Hubs" to increase ethanol consumption and create an additional revenue stream. These hubs will serve as access points to renewable energy for local farmers. Oil marketing companies have proposed the allocation of around 400 crore liters of ethanol across various locations in the country. Sugar mills are expected to divert about 50 lakh tons of sugar for ethanol production.

To support this initiative, the government is expected to increase the purchase price of ethanol across all categories by up to Rs.2 per liter for the 2022-23 sugar season. Ethanol manufacturers are optimistic about a significant increase in the price at which oil marketing companies will purchase ethanol in the same period.


Simbhaoli Sugars is known for its extensive involvement in Indias sugar sector for over nine decades. The company operates as an integrated player in the sugar industry, engaging in the production of sugar, ethanol, spirits, and other valuable by-products. With three sugar mills located in Uttar Pradesh, Simbhaoli Sugars has a collective crushing capacity of 19,500 TCD (tonnes crushed per day). Additionally, it possesses two distilleries with a combined ethanol production capacity of 180 KLPD (kilo-liters per day).

Further, the Company has a Subsidiary Simbhaoli Power Private Limited, a Joint Venture with Sindicatum Bagasse India Pte. Ltd, Singapore, which houses the Integrated Co-generation Power Plants located within the Simbhaoli and Chilwaria complexes and are capable to generate biomass based power aggregating 100 mwh for supplying the power for the captive consumption of the sugar plants and sale of surplus power to the UP-State grid under the power purchase agreements.

FINANCIAL REVIEW Consolidated Performance

Company recorded a Consolidated turnover of Rs.1,41,743.15 Lakhs in the current year against Rs. 1,42,631.28 Lakhs in the previous year. The Company registered a consolidated Loss before tax and exceptional income (including Other Comprehensive Income) of Rs. (3,067.46) Lakhs for the year ended March 31,2023 against a Loss before tax (including the Comprehensive Income) of Rs. (3,270.00) Lakhs in the previous year.

Standalone Performance

Company recorded a Standalone turnover of Rs. 1,39,591.11 Lakhs in the current year against Rs. 1,39,865.18 Lakhs in the previous year. The Company registered a consolidated Loss before tax and exceptional income (including Other Comprehensive Income) of Rs.(3138.36) Lakhs for the year ended March 31,2023 against a Loss before tax (including the Comprehensive Income) of Rs. (922.44) Lakhs in the previous year.

Highlights of Companys Financial performance has been provided in the Boards Report.

Key Ratios:



2022-23 2021-22

Debtors Turnover Ratio

30.09 26.23

Inventory Turnover Ratio

2.96 2.90

Interest Coverage Ratio

Debt Service Coverage Ratio

NAA 1.80

Current Ratio


Debt Equity Ratio

NA@ (39.82)

Operating Profit Margin (%)


Net Profit Margin (%)

(2.25)* (0.73)

Return on capital employed (%)

0.64# 1.97

Return on Net Worth


Segment-wise Performance

Sugar Operations: The Companys units located at Simbhaoli, Brijnathpur and Chilwaria were running on B-heavy molasses for a particular period of the season. Sugar recovery has been gradually falling in UP. While in 2018-19 it had hit a record 11.46%, it decreased to 11.30% in 2019-20, 10.76% in 2021-22 and 10.63% in 2022-23 on account of pests infestation like top borer and weather conditions including late rains.

Distillery Operations: The Company produced a total of 336 lakh litres of alcohol, out of which 241 lakh litres of ethanol was produced (171.91 lakh litres through the B-Heavy route and 62.53 lakhs litres through C-Heavy routs respectively).

Further, in recent years, the Company successfully introduced three new whisky brands named Seven Knight Premium Whisky, Brown Eagle Golden Whisky, and Brown Eagle Royal Pack Whisky. These new brands have received a positive and encouraging response from the domestic market.

Branded and Speciality Sugar Operation: As part of our efforts to boost sales and ensure convenient access to our products, we have successfully implemented e-commerce functionality on a diverse range of our FMCG offerings through our Direct-to-consumer e-commerce website.

Additionally, we have remained committed to the development of our sugar brand, Trust, and have enhanced our sales and marketing infrastructure to strengthen distribution through modern retail and wholesale trade channels. Notably, our Trust branded sugar sachets have gained significant acceptance and leadership in the hospitality industry.

Financial Performance with respect to Operational Performance

The companys financial performance in conjunction with its operational achievements during the review period underscores its dynamic growth trajectory. With revenue from operations amounting to Rs. 1,37,832.27 Lakhs, a marginal increase of 0.53% compared to the previous fiscal years Rs. 1,37,112.01 Lakhs, the company exhibited its steady revenue generation capability. Moreover, the commendable progress in operational metrics is evident as the total sugarcane crushed reached 2,44,44,026 Qtl, marking an impressive 9.44% process volume growth in comparison to the previous years 2,23,36,260 Qtl. In terms of sugar production, the company continued its upward trajectory, delivering a total of 24,28,400 Qtl of sugar, signifying a notable 1.40% production volume growth from the preceding years 23,94,805 Qtl. Despite these operational strides, the financial landscape depicted a loss before tax and exceptional income amounting to Rs. 3,138.36 Lakh for the fiscal year ending March 31,2023, in contrast to the loss before tax of Rs. 922.44 Lakh reported in the previous year. The comprehensive financial picture reveals a total comprehensive loss of Rs. 3,292.02 Lakh for the year ending March 31,2023, as compared to the previous years total comprehensive loss of Rs. 935.64 Lakh. These juxtaposed financial and operational results depict a complex interplay of growth and challenges that contribute to the companys evolving trajectory.


The Company has an adequate system of internal control procedures which is commensurate with the size and nature of its business. Detailed procedural manuals are in place to ensure that all the assets are protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board.


Over the past five years, the governments proactive policies have created significant opportunities for the sugar sector. The promotion of sugar exports, provision of export quotas and assistance, encouragement of ethanol blending, and setting a minimum support price (MSP) for sugar have been instrumental in effectively managing the issue of sugar surplus. As a result, sugar stocks have reduced, cane arrears have decreased, and the industrys cash flow has improved.

The governments strategic approach to managing the countrys balance sheet has further opened up opportunities for the sugar industry. By prioritizing domestic supply and ethanol blending before allowing exports, the government ensures that sugar is made available for the domestic market first, contributing to greater stability and sustained growth. Collaborative efforts between the Central and State Governments have led to enhanced performance parameters in the sugar industry, such as improved sugar recovery, yield, and the development of new varieties.

Moreover, the government has set an ambitious target of achieving 20% ethanol blending by 2025. This will require a substantial amount of ethanol, approximately 1,016 crore liters, with an additional 334 crore liters for other purposes. To meet this demand, the industry has the opportunity to create a capacity of 1500 crore liters. While 650 crore liters are expected to be sourced from sugarcane, other alternatives, including grains, will contribute to fulfilling the target. These initiatives present a promising outlook for the sugar sector, driving growth, and fostering economic sustainability.


The Company has an elaborate Risk Management Framework defining the risk management governance model, risk assessment, and prioritization process. Risk Management Framework of the Company integrates leading risk management standards and practices. In developing the Risk Management Framework, the focus has been to design a process that addresses the Companys business needs while remaining simple and pragmatic. Risk Management Framework of the Company outlines the series of activities that the Company would use in identifying, assessing, and managing its risks. Key Risks including the Mitigation Measures have been detailed below

Raw Material Risk: In the past year, there has been a noticeable rise in the presence of specific insect pests, including Top Borer and Early Shoot Borer, in sugar cane crops. The Top Borers impact is particularly significant in the Cane Variety CO-238, which constitutes a substantial portion of the companys cane area. To address this issue, the company is implementing integrated pest management techniques to control the incidence of these pests. Additionally, efforts are already being made to supplement the CO-238 cane variety with other varieties to minimize its impact on the companys command area.

Sugar Price Risk: The pricing dynamics in the sugar industry are complex. While cane prices are determined by the state government, sugar realizations are influenced by market demand and supply. This can lead to discrepancies between cane prices and sugar realizations. To address this risk, the government has established a Minimum Selling Price (MSP) for sugar, initially set at 29.0 per kg and currently at 31.0 per kg. Sugar mills are not allowed to sell sugar below this price. Further, to maintain stable prices, the government has implemented a monthly release mechanism to regulate sugar supply in the market. Additionally, policies are in place to divert excess sugar towards ethanol production or exports, thereby managing potential price dampening caused by oversupply.

The industry is advocating for an increase in the MSP to 38-40 per kg, with ISMA and NFCSF proposing specific price levels for different grades of sugar.

Furthermore, a significant portion of cane and sugar is diverted for ethanol production, for which the government provides a fixed price that aligns with industry costs. The company has taken measures to divert sugar for the production of ethanol using B-heavy molasses and sugar syrup. This strategy aims to reduce sugar production and increase ethanol production. By ensuring consistent ethanol supplies to oil companies.

Regulatory Risk: The sugar industry faces various regulatory risks, including environmental regulations, fluctuating raw material prices, and government policies. The major risk is the disjointed sugarcane price set by state governments. To support the industrys financial health and liquidity, both the Central and State Governments provide policy and subsidy support, enabling sugar mills to meet the fixed cane price mandated by the government.

Regarding the ethanol business, the government has introduced an amendment that prohibits state governments from regulating alcohol meant for industrial use. As a result, several states have relaxed their control on ethanol supplies, offering new opportunities for the ethanol sector. Financial Risk: During the year, pending completion of the debt resolution, the Company has not been able to meet its obligations towards the lenders for repayment of both principal and interest. The Company has approached its lenders to implement debt resolution plan of its outstanding debts in accordance with its available future cash flows, sustainability of the business and nature of the business of industry. The Company has approached its commercial lenders to implement debt resolution plan of its outstanding debts including One Time Settlement Proposal (OTS) wherein resolution of entire outstanding debts of commercial banks are proposed to be settled through payment of One Time Agreed amount. OTS proposal submitted by the Company is under consideration by commercial lenders while debt re-alignment proposal submitted with lenders other than commercial lenders is also under consideration.

Further, the Companys focus on growing and optimizing its ethanol business is expected to help the company generate quicker revenues, strengthening the companys liquidity position.

Business Existence Risk: On account of delays in servicing of loans, certain lenders to the Company have initiated recovery proceedings at various forums, including filing of applications before the Honble National Company Law Tribunal (NCLT) under Section 7 of the Insolvency and Bankruptcy Code, 2016 in addition to approaching Debt Recovery Tribunals in Delhi and Uttar Pradesh as well.

The Company is pursuing these matters in the appropriate forums and alternatively has been engaged with its lenders for Debt Resolution through One Time Settlement Proposal (OTS). OTS proposal submitted by the Company is under consideration by commercial lenders while debt realignment proposal submitted with lenders other than commercial lenders is also being under consideration.


The Company believes that the Competence and Commitment of our employees are the key differentiating factors which enable our organization to create value by offering quality products & services to our customers. We strive to create a harmonious work environment & strengthen our work culture to drive high level of performance orientation. As a part of the culture, we are committed towards scaling up competence level of employees & offering them a long term career to attract & retain talent. As on March 31,2023, the Company had 1450 employees (previous year 1485) on its direct pay roll.


This Management Discussions & Analysis includes forward-looking statements regarding the Companys objectives, projections, estimates, expectations, and predictions. However, actual results may differ from these statements due to various factors such as changes in material costs, technological advancements, and shifts in the political and economic environment, tax laws, and labor relations.