Ugar Sugar Works Ltd Management Discussions

Global Development:

The International Sugar Organization (ISO) presented its first revision of the global 2025-26 sugar balance. The ISO estimated that it expects a global sugar surplus of 1.625 million metric tonnes (mln tonnes) for the 2025/26 season, attributing the projected excess to an increase in production.

The global production for SY2025-SY2026 is expected to remain at 189.3 million MT (5% higher than last year), while consumption is likely to remain higher at 178.1 million MT (1% higher than last year). International prices declined substantially with raw sugar prices at $313/MT in February 2026 against $445/MT in February 2025, while the prices of white sugar declined to $408/MT in February 2026 over $532/MT in February 2025. The premium between white and raw sugar stood at $95/MT in February 2026, which is higher than $87/MT in February 2025.

Global ethanol production is projected to reach 122.0 bln litres in 2025 (up 2.3% from 119.2 bln litres in 2024), whilst consumption is expected to reach 121.7 bln litres (up 3.3% from 117.8 bln litres), with upward revisions driven by stronger offtake in India, Canada, and Colombia. US production is forecast at a record 61.45 bln litres supported by new trade agreements with the UK, EU, and others, whilst Brazil?s output is expected to decline to 33.34 bln litres as mills allocate a record-low percentage of cane towards ethanol. India represents the year?s most dramatic development, with production surging to 10.5 bln litres from 7.34 bln litres as the country pivots towards grain-based feedstocks (now over 60% of production) to meet its 20% blending target. European consumption continues expanding to 6.84 bln litres through higher blending targets and increased E10 availability, whilst Vietnam and Indonesia prepare for E10 and E5 mandates in 2026.

India?s sugar sector has continued the 2025-26 season on a confident and encouraging note, supported by ample sugarcane availability, improved on-ground productivity, and enhanced operational efficiency across key producing states.

Indias sugar production has been revised down 5.57 per cent to 30.90 million tonne for the 2025-26 marketing year, due to lower yields in top producers Maharashtra, Uttar Pradesh and Karnataka.

Including 5 million tonne opening stock, the total availability of 33.00 million tonne exceeds domestic consumption of 28.00 million tonne.

In Uttar Pradesh, lower yields stem from a varietal replacement programme, though recovery rates improved. Maharashtra and Karnataka saw reduced yields from early sugarcane flowering due to excess rain and shorter harvest windows from higher crush rates, ISMA said in a statement.

Planting for 2026-27 has improved in Maharashtra and Karnataka, promising ample opening stocks of 4.25 million tonnes.

For SY2026, sugar production stood at 30.90 million MT, marking a YoY increase of 4.39% compared to 29.60 million MT during the same period last year. The increase in sugar production was supported by adequate sugarcane availability and improved yield across key sugar producing regions over the previous year. At present, Maharashtra leads sugar mill operations, followed by Uttar Pradesh and Karnataka.

India achieved a blending ratio of 19.98% in ESY 2026. For ESY2026, 239 crore litres have been blended, with 59.2 crore litres blended in January 2026

Sugar Export

India is likely to ship only 7.5 to 8 lakh tonnes of sugar in the 2025-26 marketing season (October- September), well short of the quota made available, as weak global price parity continues to discourage outbound sales.

Cane pricing - For SY2026, the FRP was increased by Rs. 15 to Rs. 355/quintal for a basic recovery rate of 10.25%, while UP-SAP increased by Rs. 30 to Rs. 400/quintal for the early maturing variety and Rs. 390/quintal for the normal variety. In Karnataka SAP is increased by Rs.250/quintals during this year.

a. Pricing: MSP has not been revised since 2019. Industry is urging the government to revise the MSP to 39 per kg. Further Industry, is also requesting the price of ethanol derived from sugar byproducts to be revised upward.

b. Farm Labour: Human Labour constitutes 52 per cent of the total sugarcane cultivation cost. Any reduction will directly impact the total cost of cultivation. Increased farm mechanization may help reduce the cost of cultivation.

c. Industrial Alcohol: In October 2024, Supreme Court upheld States power to regulate industrial alcohol. This may provide state government the ability to tax industrial alcohol.

During the Current Year the Company has crushed 19.51 Lakh MT of sugar cane from both Ugar and Jewargi unit (as against 19.81 Lakh MT during the previous year) and produced 19.95 Lakh QTLs of sugar (as against 12.84 Lakhs QTLs of sugar during the previous year) at the recovery of 11.65% and 10.68% respectively for Ugar and Jewargi unit.

The company has produced 993.48 Lakh BLS of Industrial and Potable Alcohol during the year (against the last years production of 942.24 Lakh BLS).

We have generated 1968.56 Lakh kW power during the year at Ugar and Jewargi Unit (as against 1471.30 Lakh during the previous year) and have exported 763.96 Lakh KW of power during the year (as against 508.56 Lakh KW during the previous year). We have supplied power to the exchange through PTC India Ltd.

The Company has a proper and adequate system of internal control to ensure that all assets are safeguarded and protected. The Internal Auditor submits a report covering almost all the areas of operations.

The Company provides regular training and all-round exposure to the employees and staff. The Company has a well-equipped township with recreational facilities such as a clubhouse, playground, gymnasium, etc. The Company also operates a Cooperative Society, Hospital, School, and College for the benefit of the workers and the general public.

Workforce related information is available in BRSR Report.