Sir Shadi Lal Enterprises Ltd Management Discussions

INDIA SUGAR: OVERVIEW

India is the largest consumer and the second-largest producer of sugar globally, playing a vital role in the sugar industry. Sugarcane is not only economically important but also ecologically sustainable. It generates valuable by-products like bagasse, molasses, and filter cake, which can be used to produce biofuels and bioenergy, including bioethanol and biogas.

The industry has enhanced sugarcane quality, improved operations, and diversified products, leading to increased sustainability and profitability. As a result, it contributes significantly to the nations economic growth.

Under the Essential Commodities Act, the sugar sector is heavily regulated by the government, focusing on sugarcane pricing, procurement, and sales in both domestic and global markets. Regulatory oversight also extends to the diversion of sugarcane for other uses, such as alcohol and bioethanol production.

INDIA SUGAR: BALANCE SHEET

Indias estimated net sugar production for the 2023-24 season to be 31.9 million tonnes after accounting for a 2 million tonne diversion to ethanol, leading to a gross estimate of 33.9 million tonnes.

As of May 15, 2025, net sugar production for the 2024-25 season stands at 25.7 million tonnes, with two factories in Tamil Nadu still operational. Additional factories in South Karnataka and Tamil Nadu are expected to resume operations during the special crushing season from June to September, bringing total production close to 26.4 million tonnes. By April 30, 2025, 2.7 million tonnes had been diverted for ethanol, with another 0.6 to 0.7 million tonnes anticipated, resulting in a gross production of 29.9 million tonnes—a decline of about 12% from the previous season.

Comfortable closing stock

Closing stocks for 2024-25 are projected at a comfortable 5.8 million tonnes, following an opening stock of 8.4 million tonnes on October 1, 2024. With estimated domestic sales of 28 million tonnes and 1 million tonnes in exports, the net production calculation includes a diversion of 3.5 million tonnes for ethanol.

Note: Opening stock for SS 2022-23 revised as per GOI numbers Healthy monsoon and crop outlook for SS 2025-26

In the southern states, especially Maharashtra and Karnataka, sugarcane planting has improved due to a favorable southwest monsoon in 2024, paving the way for a timely start to the crushing season in October 2025.

In the north, particularly Uttar Pradesh, varietal replacement initiatives are expected to enhance sugarcane yields and recovery rates.

Moreover, forecasts from the India Meteorological Department (IMD) and Skymet indicate a normal southwest monsoon in 2025, which is encouraging for crop health and production, boosting confidence in the upcoming sugar season.

INDIA SUGAR: MARKET UPDATES

• Hike in Fair and Remunerative Price (FRP): The Central Government fixed the FRP of sugarcane for SS 2025-26 at Rs 355 per quintal. This was linked to a basic recovery of 10.25% and subject to a premium of Rs 3.46 per quintal for every 0.1% increase of recovery, over and above 10.25%, and also linked to reduction in FRP at the same rate for each 0.1% decrease in the recovery rate till 9.5%. With a view to protecting the interests of farmers, the Government has decided that there shall be no deduction where recovery is below 9.5%; such farmers will get Rs 329.05 per quintal for sugarcane. The FRP for SS 2025-26 was 4% higher than the previous sugar season.

• UP State Advised Price (SAP) remains unchanged: There was no change in the Uttar Pradesh State Advised Price (SAP) of sugarcane for Sugar Season 2024-25. Rates applicable were as below:

- Sugarcane price for Early Variety at Rs 370 per quintal.

- Sugarcane price for General Variety at Rs 360 per quintal.

- Sugarcane price for Rejected Variety at Rs 355 per quintal.

• Minimum Selling Price (MSP) remains unchanged: Despite increase in sugarcane procurement costs, i.e. SAP in the case of Triveni, the MSP fixed by the Government in February 2019 at Rs 31/kg remains unchanged. It is imperative that the MSP of sugar and ethanol prices undergoes enhancement in a coordinated manner, along with input costs.

DOMESTIC SUGAR REALIZATION (DOMESTIC) (Rs/QTL)

International Sugar: Balance Sheet

Recent estimates from Datagro indicate that the global sugar market is projected to achieve a surplus of approximately 1.53 million tonnes in the 2025-26 season, following a deficit of around 4.67 million tonnes in the 2024-25 season. This anticipated surplus is largely driven by improved supplies from key producing countries, including Brazil and Thailand, along with sufficient production levels in India.

Datagro forecasts that Brazils sugar production will reach 42.04 million tonnes in the 2025-26 season, an increase from 40.17 million tonnes in the previous season. Additionally, Indias sugar output is expected to rise to 31.6 million tonnes, up from 26 million tonnes, while Thailands production is projected to grow to 11.18 million tonnes, compared to 10.05 million tonnes in the prior season.