Uttam Sugar Mills Ltd Management Discussions

Your Directors are pleased to present its Management Discussion and Analysis Report as per Regulation 34(2) (e) of SEBI (listing obligation of disclosure requirements) Regulations, 2015.

A. GLOBAL ECONOMIC OUTLOOK

Global trade growth is expected to slow down in 2025 to 1.7 percentage point, a downward revision of 1.5 percentage point since the January 2025 WEO Update. This forecast reflects increased tariff restrictions affecting trade flows and, to a lesser extent, the waning effects of cyclical factors that have underpinned the recent rise in goods trade. The journey has been eventful, starting with supply chain disruption in the aftermath of the Pandemic, a Russian initiated war on Ukraine, The Israel & Iran war for short period besides Indo-Pak tension that trigged a global energy & food crisis and considerable surge in inflation founded by a globally synchronized monetary policy tightning.

Yet, despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops. Moreover, the inflation surge despite its severity and the associated cost of living crisis did not trigger uncontrolled wage price spirals. Instead, almost as quickly as global inflation went up, it has been coming down.

The baseline forecast is for the world economy to continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025 will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. The forecast for global growth five years from now at 3.1 percent is at its lowest in decades. Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. Core inflation is generally projected to decline more gradually.

B. STATE OF THE INDIAN ECONOMY

At a time when the global economy is facing what the United Nations calls a "precarious moment," India has emerged as a rare bright spot. The midyear update of the World Economic Situation and

Prospects projects Indias growth at 6.3 per cent in the current fscal year, the highest among large economies. This momentum is expected to continue into 2026, with growth estimated at 6.4 per cent. In contrast, the global outlook remains subdued amid rising trade tensions, policy uncertainty, and a decline in cross-border investments.

Indias growth is being driven by strong domestic demand and consistent government spending. These factors have supported stable employment and helped contain inflation, which is expected to fall to 4.3 per cent in 2025, staying within the Reserve Bank of Indias target range. Financial markets are also reflecting this optimism. Stock indices have shown solid gains, backed by sustained investor confidence. Manufacturing activity is picking up, helped by favourable policies and resilient external demand. Exports, especially in strategic areas like defence production, are expanding steadily. Together, these indicators show that Indias economy is not only holding firm but also making headway in an uncertain global environment.

Indias manufacturing sector has seen impressive growth over the past decade. According to the National Accounts Statistics from the Ministry of Statistics and Programme Implementation, the Gross Value Added (GVA) of manufacturing at constant prices nearly doubled, rising from 15.6 lakh crore in 2013-14 to an estimated 27.5 lakh crore in 2023-24. The sectors share in the overall economy remained steady, moving slightly from 17.2 per cent to 17.3 per cent over the same period. This steady growth highlights the sectors increasing role in Indias economic landscape.

Indias total exports reached a record USD 824.9 billion in 2024-25, up 6.01% from USD 778.1 billion in 2023-24. This marks a significant leap from USD 466.22 billion in 2013-14, reflecting sustained growth over the past decade.

Indias economic journey, as highlighted in the UNs mid-year update, reflects a compelling story of resilience, reform and renewed global relevance. Amid global headwinds, India stands out not just for its headline growth figures but for the depth and breadth of its progress, from buoyant capital markets and robust manufacturing to record-breaking exports and a fast-expanding defence sector. These gains are rooted in sound policy choices, strong domestic demand and growing global confidence in Indias economic trajectory. As the world navigates a complex economic landscape, India is not merely weathering the storm; it is helping to reshape the global growth narrative.

C. SUGAR INDUSTRY STRUCTURE & DEVELOPMENTS

Sugar, a politically sensitive commodity, is heavily regulated by the government. It is regarded as an essential item of consumption in the country.

> India9s net sugar production to drop 18% in Sugar Season (SS) 2024-25 as compared to previous season at 26 million tonnes against 31.80 million tonnes.

> Sugarcane crushing decreased around 11% as compare to previous season mainly due to significance decline in Maharashtra and Tamil Nadu.

> Sugar prices in India are currently trending above last year levels. The price change in Maharashtra in more acute and higher than UP.

> Government allowed 1 MT sugar exports for SS 2024-25 which to be completed by 30th Sep, 2025.

> Ethanol blending reached around 20% in Ethanol Supply Year (ESY) 2024-25.

> Ministry of Consumer affairs, Food and Public Distribution the decades Old sugar (Control) Order 1966 has reviewed and New Sugar (Control) Order 2025 introduced w.e.f. 1^st May, 2025. These updated regulations are designed to align with current industry practices incorporate technological advancements and meet global standards.

> A particularly noteworthy aspects of the New Sugar (Control) Order 2025 is the inclusion of large Khandsari Units in its preview. This will ensure better regulation of these units which is a positive step towards safeguarding fair and remunerative price for Sugar-Cane farmers.

World Sugar Balance

	2024-25		Changes
Particulars	(Estimated)	2023-24	In million tonnes	%
Production	175.540	181.384	-5.844	-3.220
Consumption	180.421	179.972	0.449	0.25
Surplus/Deficit	-4.881	1.412
Import Demand	63.324	69.119	-5.795	-8.38
Export Availability	62.661	69.635	-6.974	-10.02
End Stocks	93.597	97.815	-4.218	-4.31
Stock/Consumption Ratio %	51.88	54.35

(October/September, in mln tonnes, tel quel) *Source: ISO Country wise Scenario:

U.S.: U.S production is forecast down slightly to 8.4 million tons. Imports are forecast lower based on projected quota programs set at minimum levels consistent with World Trade Organization and free- trade agreement obligations, and on projected imports from Mexico, re-exports, and high-tier tariff imports. Consumption is unchanged while stocks are reduced mostly due to lower imports.

Brazil: Brazil production is forecast up 1.0 million tons to a record 44.7 million with expected higher sugar yield due to favorable weather. The sugar/ethanol production mix is expected to favor ethanol relative to the previous season, falling from 51 percent to 49 percent for sugar and rising from 49 percent to 51 percent for ethanol. Consumption is forecast to fall slightly while exports are up with higher production.

China: China production is forecast up 500,000 tons to 11.5 million as sugarcane area is expected to rise and sugarbeets are expected to benefit from favorable weather. Imports are forecast to rise to help fill the gap between supply and demand, despite higher domestic production. Consumption and exports are unchanged. Stocks are forecast up as consumption continues a slow rebound.

European Union: European Union production is forecast to fall 9 percent to 15.0 million tons as sugar beet area is expected to be down 10 percent mainly among top producers such as France and Germany. Consumption and ending stocks are relatively unchanged from the prior year. Imports are up with lower production while exports are forecast down.

Thailand: Thailand production is forecast up 2 percent to 10.3 million tons due to increased sugarcane production and cane sugar yield. Consumption continues to rise but at a slower rate due to lower demand from export-oriented food processors. Exports are forecast to drop due to competition from other large exporters such as Brazil while stocks are expected to be flat.

Australia: Australia production is forecast to decrease 50,000 tons to 3.8 million (the lowest level in over a decade) due to unfavorable weather which hindered sugarcane development and replanting. Consumption is forecast to increase in line with population growth while exports are forecast higher while drawing down stocks.

Mexico: Mexico production is forecast 300,000 tons higher to 5.4 million due to favorable weather and increased sugarcane production and area. Imports are forecast down with increased production.

Consumption and stocks are forecast unchanged with ending stocks now expected to include 159,000 tons of below 99.2 polarity sugar intended for export into the United States in the first quarter of the fiscal year. Exports to the United States are expected to be set by the amended Suspension Agreements while overall exports are forecast lower with less going to other world markets.

Indian Sugar Industry Scenario:

For India, net sugar production in 2024-25 is projected at 26.4 million tons, factoring in the diversion of around 3.5 million tons for ethanol. This implies a gross production of 29.9 million tons— down over 12% from the previous seasons gross output of 34.11 million tons (with 2.15 million tons diverted for ethanol, resulting in a net production of 31.96 million tons). The year-on-year decline is mainly due to a poor sugarcane crop in Maharashtra and Karnataka, impacted by adverse weather, and reduced yields and recovery rates in Uttar Pradesh.

Domestic Sugar Balance Sheet

S.NO	Particulars	2020-21	2021-22	2022-23	2023-24 (P)	2024-25 (E )
a	Opening Stock as on 1st Oct**	107.40	81.86	70.00	55.65	80.00
b	Gross production during Season (without diversion for ethanol)	331.92	389.60	366.15	336.35	299.00
c	Diversion for Ethanol ( E)	20.00	32.00	38.00	21.50	35.00
d	Net Production during the season	311.92	357.60	328.15	314.85	264.00
e	Imports*	0.00	0.00	0.00	0.00	0.00
f	Total Availability	419.32	439.46	398.15	370.50	344.00
	Off-take
	i) Internal Consumption	265.55	273.30	278.50	290.00	280.00
	ii) Exports*	71.91	110.70	64.00	0.50	10.00
	Total offtake	337.46	384.00	342.50	290.50	290.00
g	Closing Stock as on 30th Sep.	81.86	55.46	55.65	80.00	54.00

*Import & export are under O.G.L. and as reported by Sugar mills to Gol. Source: ISMA

In the ongoing 2024-25 Sugar Season (SS), the total sugar production until April 15, 2025 has been recorded as 254.97 Lac Tons. This figure marks a decrease from the 311.25 Lac Tons produced during the same period last year.

Due to the improved yield of plant cane, cane availability has increased, allowing these factories to continue operations until mid to late April 2025. Additionally, sugar recovery has improved in the second half of the season.

Meanwhile, some factories in South Karnataka are expected to resume operations during the special season from June/July to September 2025. Historically, Karnataka and Tamil Nadu together contribute approximately 4 lakh tons of sugar during this period.

During Sugar Season (SS) 2023-24, Uttar Pradesh produced approximately 10.41 million tons of sugar. However, for SS 2024-25, net sugar production in the state is estimated to fall below 9.5 million tons, after accounting for higher diversion of cane juice and B-Hy molasses toward ethanol production.

Inventory could Slip Marginally Below Normative Requirement:

Indias gross sugar production (before diversion) to fall 15%yoy to 290-295 lacs tonnes in the sugar season 2024-25 (SS25; October-September, SS24: 340 lacs tones) lowest since SS20. This will be on account of a lower cane yield along with a fall in sugar recovery, exacerbated by Red Rot infestation. Furthermore, the sugar volumes diverted towards ethanol production are likely to increase to 32-34

lacs tones in SS25 (SS24:20 lacs tones) in view of the government lifting the ban on sugar diversion in August 2024. As a result, net sugar production is likely to reduce to 260-262 lacs tones in SS25. As of mid-May 2025, crushing in most of the mills had been closed. Cane crushing is 11% yoy lower to 277 mnt in SS25 (SS24: 312mnt) while average net recovery dipped 80bp yoy to around 9.30% (10.10%).

Given the higher opening stocks and initial estimates of 280 Lacs tones of net sugar production, the government allowed 10 lacs tones of exports in January 2025 to regulate the inventory levels. However, with the sharp fall in production along with exports and domestic consumption of 280 lacs tones (SS24: 290 lacs tones), Industry believes the closing stock is likely to reduce to 53-55 lacs tones (SS24: 78 lacs tones), close to the normative requirement of around 55 Lacs tones. While this could be the first year of production deficit in the past seven to eight years, the high opening inventory will ensure sufficient availability to meet the domestic demand. Initial estimates indicate sugar production may witness a recovery in SS26, driven by the healthy monsoon in 2024. However, a clearer picture will emerge over the next few months depending on the progress of monsoon and acreage data.

Robust Domestic Sugar Prices to Cushion Impact of Increased Cane Cost on Profitability Sugar companies witnessed low single-digit revenue growth in FY25, largely driven by the pick-up in both sugar and ethanol segments in 4Q. The sugar segment accounted for around 73% of the total revenue in FY25 (FY24: 74%) while the distillery segment constituted 18% (19%). However, EBITDA was slightly lower as margins declined to around 10% (FY24: 11%, FY23: 12%)owing to an increase in production costs even as ethanol prices remained unchanged. After increasing 8% yoy to INR370/quintal in SS25 (SS24: INR315/quintal), the government has increased the fair and remunerative price (FRP) of cane by 4.4% to INR355/quintal for SS26 on a base recovery of 10.25%. While FRP is increased every year, the state advised price (SAP) is generally increased twice in five years. SAP, which usually remainsINR40-50/quintal higher than FRP, had not been increased for SS25 (SS24: INR370/ quintal), but is likely to be increased by around 5% in SS26.

With a hike of INR15-20/quintal in SAP of cane, sugar production cost could increase by INR1.5-2/ kg though the impact will be spread over FY26- fY27. Furthermore, Ind-Ra believes given the low production, sugar prices are likely to be healthy over FY26, limiting the impact of the increase in cane cost. Prices were up 5%yoy in 1QFY26 (May 2025:INR40.3/kg).

Ethanol Price Hike Must in ESY26

To incentivise ethanol production, the government had been increasing ethanol prices during ESY18- ESY23. When the restrictions on sugar diversion were put in place for ESY24, the price of ethanol produced from maize and C-heavy molasses (CHM) was increased to INR 71.86/lt (ESY23: INR66/lt) and INR56.6/lt (ESY23:INR49.4/lt), respectively, for ESY24, to incentivise the production. While Ind- Ra expected a 3%-5% hike in the prices forESY25 to somewhat compensate for the increase in cane costs, no price hike has been announced for ESY25 (except forINR1.4/lt increase in CHM), affecting the segments profitability.

While the government lifted the restriction on sugar diversion for ESY25 and ISMA initially forecasted a diversion of 4mntof sugar, around 3mnt of sugar had been diverted till mid-May 2025. The total diversion is likely to be lower than 3.5mntdue to a combination of lower gross production and absence of price hikes in ethanol. While the transfer pricing of molasses has increased due to an increase in cane costs and sugar prices, the unchanged ethanol price has reduced the competitiveness of ethanol vs sugar. However, given that sugar sales are regulated, the choice between sugar and ethanol will be driven by a combination of price dynamics and the impact of inventory carrying cost. Industry believes that an increase in ethanol prices for ESY26 is imperative for the generation of healthy margins in the segment.

India is on its way to meet the 20% blending target set for ESY26 in ESY25 (ethanol supply year: November-October, ESY24: 14.6%) and has reached 18.6% in first six months of the supply year (1HESY24: 12.0%). Demand for ethanol for blending continues to grow at a healthy pace of30%-35% yoy, and around 9.7 billion litres (bnL) of ethanol is estimated to be required in ESY25 (eSy24: 7.1bnL).

Grain, especially maize, has remained a key contributor in achieving the target for ESY24 and ESY25. The share of sugar-based ethanol slumped to below 40% in ESY24 (from levels of over 75% in the past; ESY23: 73%, ESY24: 83%, ESY23:86%) and is likely to fall further in ESY25. As of end-March 2025, around 3.7bnL of ethanol has been supplied to oil manufacturing companies for ESY25, out of which 51 % was supplied by the grain route (largely through maize i.e. 42% of the total supply).

Challenges in the form of adequate feedstock availability and vehicle compatibility beyond 20% blending, given the reduction in fuel efficiency, will also need to be addressed before further increasing the blending target.

INDIAN PERSPECTIVE OF SUGAR & ETHANOL INDUSTRY

• FRP: Fair & Remunerative Price (FRP) of sugarcane for the sugar season 2024-25 has been revised to 340 per quintal from 315 per quintal in the previous season (linked to a basic recovery of 10.25%). FRP for the sugar season 2025-26 has been revised to 355 per quintal (linked to basic recovery of 10.25%).

• SAP: State Advised Price (SAP) of UP & UK states of sugarcane for the sugar season 202425 remained unchanged at 370 & 375 per quintal respectively for early variety of sugarcane. In case of general variety, it is lesser by 10/-qtl.

• MSP: M inimum Selling Price (MSP) of sugar was first fixed at 29 per kg in June 2018 and later increased to 31 per kg in February 2019.

MSP is the ex-factory price (excluding GST and transportation charges) below which no mill can sale sugar in India. However, the prevailing market price of sugar is much above the MSP.

• Stock Holding: Along with MSP, stock holding limits on mills regulates the supply of sugar in domestic market which in turn provides stability to the domestic prices.

• Export: Export of sugar continues to attract zero customs duty. Export quota for sugar season 2024-25 announced at 1.0 million metric ton which is to be exported by 30^th Sep, 2025.

• Duty Structure: The duty structure on export and import of sugar remained unchanged from the previous year.

• Taxes: GST of 5% on ethanol

• Syrup and BHY: Manufacturing/production of ethanol from Syrup and BHY is permitted by Central Government in the current ESY.

• State wise comparison of Current Sugar Season vs Last Sugar Season production has been tabulated as below:

State Wise Operational Data of Pan India Sugar Factories
Sugar Production Data as on 15th April
	In Lakhs Tones
State	SS 2024-25	SS 2023-24
UP	91.10	101.83
Uttarakhand	3.68	3.11
Bihar	6.13	6.78
Punjab	5.60	5.87
Haryana	5.10	5.87
Madhya Pradesh & Chhattisgarh	5.62	6.35
Gujrat	8.86	9.28
Maharashtra	80.76	109.45
Karnataka	40.40	50.60
AP & Telangana	2.60	3.41
Tamilnadu	4.70	8.29
Others	0.42	0.41

Source: ISMA

Sugarcane Production and Pricing Policy:

The Government of India (GOI) supports research, development, training of farmers and transfer of new varieties and improved production technologies to growers in its endeavour to raise cane yields and sugar recovery rates. Following Cane Development activities which improve the productivity, yield & Sugar Recovery Percentage of Sugarcane, are undertaken:

a) Varietal Replacement with proven high recovery varieties.

b) Ratoon management.

c) Development of Agri Research Centres.

d) Integrated Pest Management Programme.

e) Soil testing facilities.

f) Encouraging use of Bio-fertiliser & Biopesticides.

g) Training facilities to the Farmers.

h) Introduction of Latest methods of farming and use of various mechanical equipments for cultivation.

i) Spraying of fertilizer etc.

The Indian Council of Agricultural Research (ICAR) conducts sugarcane research and development at the national level. State agricultural universities, regional research institutions, and state agricultural extension agencies support these efforts at the regional and state levels. The central and state governments also support sugarcane growers by ensuring finances

and input supplies at affordable prices. To increase the area of cultivation and production in India, a centrally sponsored scheme called the Sustainable Development Fund of Sugarcane Based Cropping System Area under the Macro Management Mode of Agriculture is being implemented in various sugarcane growing states.

The GOI establishes a Fair and Remunerative Price system (FRP) for sugarcane on the basis of recommendations given by the Commission for Agricultural Costs and Prices (CACP) and after consulting state governments and associations of the sugar industry and cane growers.

Following factors are considered for fixation of FRP:

- Cost of Production of Sugarcane.

- Recovery of Sugar from Sugar cane

- Inter Crop Price parity.

- Price of Sugar Sold.

- Reasonable margins to Farmers.

- Realisation of By Product.

- Return to the growers from alternative crops and the general trend of prices of agricultural commodities;

Citing differences in cost of Production, productivity levels & also as a result of pressure from Farmers Group, some states declare state specific sugarcane prices called State Advised Prices (SAP), usually higher than FRP.

FRP of sugarcane is fixed to ensure a guaranteed price to sugarcane growers. This would encourage

farmers to cultivate sugarcane and would facilitate continued operation of sugar factories and thus would encourage domestic manufacturing of sugar. The FRP is paid by sugar factories to the sugarcane growers against supply of sugarcane. About 5 crore people, i.e., sugarcane farmers and their families, will be benefited by this proposal. Thousands of farm labours are associated with the cane growers and thus payment of FRP to the growers directly benefits them. Secondly, there are about five lakh workers employed in the sugar factories and ancillary activities and their livelihood depends on regular

supply of sugarcane by the growers. Fixation of FRP of sugarcane facilitates adequate production and thus availability and supply of cane to sugar factories. Sugar Mills are required to pay the "State Advised Price (SAP)" to sugarcane farmers irrespective of the Market Price of Sugar. Softening Sugar Prices, coupled with apprehensions of large cane crop, discouraged the sugar mills to pay higher cane prices. Given below is a chart depicting the difference in the State Advised Cane Price (SAP) during 2022-23 to 2024-25 in the major sugar producing states:

State	2022-23 (SAP)	2023-24 (SAP)	2024-25 (SAP)	2022-23 (FRP)	2023-24 (FRP)	HT>2024-25 (FRP)
Bihar	335	355	365	305	315	340
Uttar Pradesh*	340	360	360	305	315	340
Punjab	380	391	401	305	315	340
Haryana	372	386	400	305	315	340
Maharashtra	-	-	-	305	315	340
Karnataka	-	-	-	305	315	340
Andhra Pradesh	-	-	-	305	315	340
Tamil Nadu	-	-	-	305	315	340
Uttarakhand*	345	365	365	305	315	340

Source: ASTA/ISMA *General variety.

*SAP mentioned are of General variety, in case of early variety it is higher by 10/- Qtl.

1. Fair and Remunerative Price (FRP) for sugar season 2024-25 declared 340/quintal at a recovery of 10.25%. "With each increase of recovery by 0.1%, farmers will get an additional price of 3.32 while the same amount will be deducted on reduction of recovery by 0.1%," However, 315.10/quintal is the minimum price of sugarcane which is at recovery of 9.5%. Even if sugar recovery is lesser, farmers are assured of FRP @ 315.10/quintal.

2. In Maharashtra, Andhra Pradesh, Tamil Nadu & Karnataka the FRP is applicable.

Indian Ethanol Industries:

Ethanol Blended with Petrol (EBP) Programme:

As per National Biofuel Policy 2018, Government of India has been implementing Ethanol Blended with Petrol (EBP) Programme throughout the country wherein Oil Marketing Companies (OMCs) sell blended petrol. Under EBP Programme, Government has fixed the target of 20% blending of ethanol with petrol by 2025.

In order to achieve 20% ethanol blending target by 2025, anticipated requirement of ethanol is 1016 crore litres, while 334 crore litres of ethanol would be required for other industrial uses. Thus, the total ethanol requirement in the country in 2025 for blending and other uses is anticipated to be 1350 crore litres.

Therefore, in order to produce 1350 crore litres of ethanol for blending and other users, about 1700

crore litres capacity should be in place by 2025 (considering plants run at 80% of their installed capacity).

Indias growing ethanol production capacity is fuelling farmed prosperity and a greener future

India is quietly undergoing for an energy revolution, that is not only help the country in reducing its dependence on imported oil but is also opening up more opportunities for farmers and the rural economy. The rapid rise in ethanol production capacity is at the heart of this change, and its benefits are beginning to show across the nation.

More than a decade ago, in 2013, Indias ethanol capacity was only 421 crore litres. Today, that number has soared to 1,810 crore litres. This growth is the result of strong government policies and a clear national commitment to cleaner, greener fuels. Of the current capacity, 816 crore litres come from molasses, 858 crore litres from grains, and 136 crore litres from dual-feed plants.

This expansion is not just about numbers. To meet the governments ambitious target of blending 20% ethanol with petrol by the Ethanol Supply Year 202526, India needs about 1,350 crore litres of ethanol for blending and industrial use. With the current capacity, and assuming plants run at 80% efficiency, we are well on track. Indias ethanol blending achievements have already exceeded expectations, with May 2025 recording 19.8 per cent ethanol blending in petrol. India blended 95.1 crore litres in May 2025 alone, contributing to a total of 572.1 crore litres from November 2024 to May 2025. The average blending rate of 18.8 per cent for this period shows Indias rapid progress toward the 20 per cent target.

This success becomes even more remarkable when considering the programs evolution from just 1.53 per cent blending in 2013-14 to current levels. The trend shows that India is not just meeting its green fuel goals but is taking steps to position itself as one of the global leaders in sustainable energy.

For millions of Indian farmers, this ethanol boom is a game-changer. By creating a reliable market for crops like sugarcane and maize, ethanol production helps farmers get better prices and timely payments. Maize farmers in many states are also seeing higher returns, as more of their crop is now being used for ethanol. At the same time, the government should also consider the concerns of ethanol producers, who say their production costs are high. There is a need to review ethanol prices, as an increase could help ensure more prompt payments to farmers and better price.

The ethanol industry is not just about farmers and biofuel producers, it is also creating jobs and boosting rural economies. New distilleries and related infrastructure mean more employment opportunities, from construction to transport and plant operations. The industry has become a significant job generator, creating both direct and indirect opportunities. As per the data, each crore litre of ethanol production generates about 290 direct jobs and 1,280 indirect jobs across the agricultural value chain.

As the industry grows, it brings much-needed development to rural areas, helping slow down migration to cities. Ethanol production facilities, usually located in rural areas, have driven regional development. The industry has created jobs not just in agriculture but also in transportation, storage, processing, and logistics. This multiplier effect strengthens rural economies and helps reduce urban migration.

Ethanol is a cleaner-burning fuel than petrol, which means less air pollution and lower carbon emissions.

Indias ethanol blending programme has already helped reduce carbon emissions and saved the country over 1 lakh crore in foreign exchange by cutting oil imports. These benefits affect every citizen, not just those directly involved in the industry. Despite these positives, there are challenges that need attention. The Union government has made a strong push to promote ethanol production as part of its green fuel mission. However, states like Haryana, Punjab, and Himachal Pradesh have levied fees on ethanol production in their excise policies, which is worrying ethanol producers. Such levies could disrupt the smooth operation of ethanol units and increase overall production costs. Steps need to be taken to align state excise policies with the Ministry of Petroleum and Natural Gas (MoPNG) recommendations and the best practices adopted by other leading ethanol-producing states.

Despite the advancements in ethanol production in country, there is still a need to focus on increasing ethanol consumption, especially in the transport sector. One suggestion from the industry is to align taxes on flex-fuel vehicles with those on electric vehicles, which currently attract a lower tax rate of 5 per cent. Supporters of this idea believe that such a move could encourage more people to adopt flex- fuel vehicles, helping to speed up the use of ethanol- blended petrol. This could further reduce Indias fuel bill and help lower emissions from the transportation sector. There is also need to reduce the GST on crude ethanol from 18 per cent to 5 per cent, which will help to boost the usage of it.

OPPORTUNITIES & THREATS Opportunities:

• Utilization of downstream by-products.

• Huge potential for increasing the High yielding cane crop to increase the cane crushing & sugar recovery rate.

• Potential for new and upgrading Technology for improved utility consumption factors and utilization of by-products.

• Potential for downstream production of Ethanol.

• Utilisation of waste of the distilleries in a productive manner.

• Potential for New Technology for Saving in Energy.

• Introduction of National Bio Fuel Policy.

• Potential for sale of Hand sanitizer

• New avenues like production & sale of Potash drives from molasses (PDM).

• Potential for use of By-products of sugar & distillery.

Threats:

• Vulnerability of sugar sector to inflation & unfavourable regulatory policies relating to fixation of higher cane prices.

• Weather conditions affecting yield and recovery.

• Deteriorating quality of soil due to overuse of fertilizer and pesticides.

• Fluctuations in selling price of finished product in domestic and global markets.

• Government policies regarding fixation of price of ethanol and power

D. RISKS AND CONCERNS

Sugar industry being agro based is vulnerable to commodity cycles and is hence, fraught with several risks. Given below is a discussion on the risks as perceived by the management. The list is not exhaustive and meant for information purpose only for Investors who are requested to rely on their own judgement while assessing the risks associated with the Sugar Industry and your Company.

a) Raw material risk - Sugarcane is the principal raw material used for sugar production. Its availability, quality, growth and cost are affecting factors. These are in turn impacted by uncontrollable factors such as:- the area under sugarcane cultivation;

- availability of water;

- Adverse weather conditions and crop disease;

- Availability of better and higher yielding seeds;

- Shifting of farmers preference to other crops;

- Diversion of sugarcane to other industries like Gur, khandsari etc.;

- Adequacy of harvesting and seasonal unskilled labour;

- Un-remunerative cane procurement price;

- High Local and State level taxes.

- Short crop cycle.

- Fragmented land holding - low yields at farm level.

- Mounting cane arrears.

- Decrease in raw material like red rot etc.

Risk mitigation

This risk can be mitigated by steps taken by the company through its Cane Development Programme which has yielded results in terms of high yields and recoveries including of varietal replacement and technology adoption. Government programme of Improved Infrastructure for roads and communication; Provision of better quality and higher yielding seeds as well as fertilizers and pesticides; Prompt clearance of the cane dues of farmers and steps to improve their goodwill by adoption of social development measures such as establishing schools and dispensaries in the command areas etc.; Diversifying into multiple locations etc.

b) Regulatory Risks-

i. Environmental Risks

The Industry and Company is subject to environmental regulations and may be exposed to liability as a result of our handling of hazardous materials and potential costs for environmental compliance.

ii. Government policy related Risks

The Industry is regulated and your Company operates in a regulated environment. Central and State Government policies and factors such as:- State Advised Price (SAP) and Fair and Remunerative Price (FRP) for sugarcane;

- Control on sale of Molasses; affect the agricultural sector and related industries and in turn our operations and profitability. Risk mitigation

The regulatory risks listed above are Government policy driven and beyond Companys control and cannot be alleviated unless the industry is completely decontrolled. Every effort is made to conform to regulatory requirements while judicial recourse is made when warranted. Various representations through the body of the industry like ISMA, UPSMA, and UPDA submitted to the government to come out with the solutions regarding above risks.

All measures taken by the company for zero ground water extraction in sugar plant & zero liquid discharge in distillery.

c) Sugar Price Risk

Sugar prices in the Domestic and International markets depend primarily on the supply and demand situation. Global prices influence and affect the domestic prices directly and sale of Molasses controlled by the respective States. Fluctuations in demand and supply arise on account of the changes in the availability and price of sugarcane, variances in the production capacities of our competitors, availability of substitutes for the sugar products and international demand and supply position.

Risk mitigation

Your Company is unable to mitigate this risk since one does not have any control on the market forces and the regulatory prices. The wholesale price of sugar has a significant impact on our profits. Like other agricultural commodities, sugar is subject to price fluctuations resulting from weather, natural disasters, domestic and foreign trade policies, shifts in supply and demand and other factors beyond our control. Additionally,

15% to 30% of the total Global sugar production is traded on commodity exchanges which are speculative in nature and can adversely affect the global sugar prices and in turn the operations of your Company.

However, your Company is trying to reduce the impact of this risk by foraying into newer markets, balancing between sugar and ethanol etc, more value addition by concentrating on downstream projects, increasing the quality etc.

Branded Sugar

Uttam Sugar Mills Limited produces one of the finest quality sugars in India. The Sugar that we are currently packing is from our sugar plant situated at Libberheri & Khaikheri plant. The quality/purity of sugar is one of the best in the country as we are packing the quality of sugar accepted by European Union Standard. From last ten year onwards your company has entered into a very speciality products of Sugar in the aforesaid plant, these speciality product includes Bura, Brown Sugar, canter, Sachets (Both in institutional and retail trade), icing sugar, superfine, pharma sugar, cube sugar, invert syrup etc and sugar in the different packaging i.e. 80 gm /500gm/1Kg /2 kg/ 5Kg / 10Kg.

Our packaged sugar is already selling in J&K, Himachal Pradesh, Punjab, Haryana, Delhi, Uttarakhand, Uttar Pradesh, Gujarat, Chandigarh, Rajasthan, Bihar, North East states and Madhya Pradesh through our distributors in the respective areas. We have already covered Modern Retails like Blinkit, Amazon, Flipkart, Zepto, Milk Basket, Leeford, Lots, Mother Dairy, More, Bikanerwala, IRCTC, CCD, Rsana, Dabur, Patanjali, Walmart, Swiggy, DMART, etc.

Uttam Sugar is a very quality centric company and the same will be reflected in our products to come. Our future plans are very ambitious and we want to push Packaged Sugar in Market very aggressively. We would like to inform you that very soon we will be introducing other products along with our existing products.

d) Cyclical Risk

The industry is dependent on monsoons for both production and price realisation. Moreover, switching to other crops by cane growers on account of better returns affect the industry.

Risk mitigation

Your Company is unable to mitigate this risk since one does not have any control on the cyclical nature of the industry. However, Governmental initiatives to improve the irrigation by introducing various schemes as well as improvement in the distribution system by augmentation of the Canal Irrigation and tapping of the available surpluses of water are expected to mitigate this risk significantly.

e) Finance Risk

The Industry is dependent on the availability of timely working capital at competitive interest rates and Long-Term Finance for capacity enhancements / economic size of mills as well as for the manufacture of by-products.

Risk mitigation

Your Company is mostly come out with the financial constraints.

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Broadly, the areas of operation have been classified as Procurement, Manufacture, Marketing and Finance, in the functioning of which, various checks and control systems have been incorporated as Standard Operating Procedures. Even though they are considered adequate to reasonable safeguard its interests, a continuous review is undertaken for further improvement since the management gives lot of emphasis on continuous up gradation of business processes and adherence to the designed system and processes.

Moreover, there is an adequate and effective internal audit system in place in your Company that employs periodic checks on the various systems and on-going process. The Audit Committee of the Board of Directors of your Company comprising of reputed professionals, regularly reviews the effectiveness of internal control system and suggests changes wherever necessary, to ensure due and proper compliance with applicable laws, accounting standards and regulatory guidelines presently in vogue.

F. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE (OPERATIONS)

The comparative operational figures of the Company are given below:

a) Figures for operational performance other than power export for last three Seasons.

(In Lakh Quintals)

Particulars	SEASON 2024-25				SEASON 2023-24					SEASON 2022-23
	Libberheri	Barkatpur	Khaikheri	Shermau	TOTAL	Libberheri	Barkatpur	Khaikheri	Shermau	TOTAL	Libberheri	Barkatpur	Khaikheri	Shermau	TOTAL
Capacity (TCD)	7000	8500	5500	6000	27000	7000	8500	4700	6000	26200	6250	7000	4500	6000	23750
Cane Crushing	96.06	146.50	73.15	85.97	401.68	64.74	123.03	54.37	83.22	325.36	94.48	162.13	77.12	98.31	432.04
Recovery (%)	9.70%	7.44%	9.78%	9.92%	8.94%	10.03	10.62	11.20	10.35	10.53	10.42	10.36	10.48	10.20	10.36
Production
Sugar	9.32	10.90	7.15	8.53	35.90	6.49	13.04	6.09	8.61	34.23	9.84	16.79	8.08	10.02	44.74
Molasses	5.59	6.06	4.48	5.03	21.16	3.41	6.53	2.64	4.36	16.94	5.20	8.67	4.28	5.46	23.61
Working Days	158	178	156	144		147	162	151	144		172	226	193	165

b) Figures for Power Export for last three Financial Years (In Lakh Kwh)

	F.Y. 2024-25 (12 Months)					F.Y. 2023-24 (12 Months)					F.Y. 2022-23 (12 Months)
	Libberheri	Barkatpur	Khaikheri	Shermau	TOTAL	Libberheri	Barkatpur	Khaikheri	Shermau	TOTAL	Libberheri	Barkatpur	Khaikheri	Shermau	TOTAL
Power Export	361.04	299.85	196.64	188.27	1045.80	429.49	435.81	252.33	256.51	1374.14	400.99	507.23	302.38	293.41	1504.02

G. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT

Industrial relations in your Company have remained cordial throughout the year under review. As a result of huge gap between the cane price and the selling price of sugar, which to be mitigate through better utilization of B Hy molasses. This has resulted into cost reduction measures but that has not affected harmonious human development relations.

Your Company has overcome all this by upgrading the process and the systems that help harmonize culture of the varied manpower arising out of diverse sources and backgrounds. The organization values and human development as one of the cardinal principle in the growth of the Company. The organization has steadfastly stuck to its vision to enhance knowledge, skills and competencies of the human resources pool- helping them develop individually and collectively thereby improving productivity. To achieve all this, the Company is providing compensation by way of salary and wages which is at par with the prevailing standards in the industry. The Company is also in the midst of providing regular training to the employees for up-gradation of skills at various levels.

With these progressive steps, your Company has been able to maintain cordial relations with its employees even in this crucial time.

H. THE KEY FINANCIAL RATIOS ARE GIVEN BELOW WITH COMPARATIVE FIGURES FOR THE PREVIOUS YEAR:

Sl. No.	Particulars	Method of Calculations	2024-25	2023-24	Explanation for Significant Changes
	Debtors Turnover ratio (In Times)	Revenue from Operations / (Opening Debtors + Closing Debtors) /2 = Average Debtors	32.75	44.16	Due to decrease in Revenue from operations.
2	Inventory Turnover ratio (In Times)	Revenue from Operations / (Opening Inventory + Closing Inventory) /2 = Average Inventory	1.74	2.30	Due to Increase in inventory.
3	Interest Coverage ratio (In Times)	EBIDTA / Finance Cost	4.13	4.90	No significant change.
4	Current Ratio (In Times)	Current Assets / Current Liabilities	1.13	1.11	No significant change.
5	Debt Equity Ratio (In Times)	(Long Term Debts + Current Maturity of Term Loans + Cash Credit Limit + Leased Liabilities+ Preference Share Capital) / Shareholders Equity	1.02	1.12	No significant change.
6	Operating profit margin (%)	EBIDTA / Revenue	12.35%	13.35%	Due to mainly on account of lower sugar sales besides less cane crush in FY 2024-25.
7	Net Profit margin (%)	Net Profit / Total Income	5.07	6.43	Due to lower sugar sale.
8	Return on Net worth (%)	Net Profit after Taxes / (opening Shareholders equity + closing Shareholders equity) / 2 =Average Shareholders Equity	12.41%	20.78%	Due to Lower profits.

CAUTIONARY / FUTURISTIC STATEMENTS

Statements in this report detailing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable laws and regulations and are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate and can be realised. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements in future on the basis of subsequent developments, information or events. Investors, are, therefore, requested to make their own independent judgments before taking any investment decisions.

(Data and figures relating to industry and future expected developments in the industry have been taken from industry and industry-related publications and web-sites)