Zuari Industries Ltd Management Discussions

Economy Overview

Global Economy

Overview

The global economy in FY25 faced renewed headwinds, with growth remaining subdued amid persistent geopolitical tensions and policy uncertainty. Ongoing conflicts in Ukraine and the Middle East, coupled with rising friction between major economies, contributed to volatility across financial and commodity markets and disrupted global trade flows. While inflation moderated in several advanced economies, some regions continued to face price pressures driven by trade adjustments and supply chain realignments. Oil and other commodity prices remained sensitive to geopolitical developments. On a positive note, global tourism demonstrated strong resilience, exceeding pre-pandemic levels and offering support to the broader recovery. Despite tighter financial conditions and widening disparities in regional growth, improving demand in travel and services sectors provided cautious optimism as economies adjusted to an evolving global landscape.

Economic Growth

The global economy in calendar year 2024 continued to navigate a challenging environment marked by structural imbalances, policy tightening, and persistent geopolitical risks. Despite these headwinds, global output expanded by 3.3%, supported largely by stronger momentum in Emerging Market and Developing Economies (EMDEs), which registered growth of 4.3%. In comparison, advanced economies recorded modest growth of 1.8%, reaffirming the increasing contribution of EMDEs to global economic expansion.

The U.S. economy demonstrated resilience, growing by 2.8%, underpinned by firm consumer demand and a stable labour market. In contrast, growth in the European Union remained uneven due to weak domestic demand and ongoing structural constraints. Chinas economy faced continued headwinds from its property sector, resulting in a slower growth trajectory relative to its historical performance.

Global trade volumes registered moderate growth, despite rising trade frictions stemming from increased tariffs by the United States on select imports. While these measures introduced some pressure on global trade flows, major economies demonstrated adaptability, supporting overall macroeconomic stability.

Inflationary Trends

Global headline inflation is projected to continue its downward trajectory, declining from 5.7% in CY 2024 to 4.3% in CY 2025 and further to 3.6% by CY 2026. Advanced economies are expected to maintain lower inflation levels than Emerging Market and

Developing Economies (EMDEs), reflecting differences in monetary policy frameworks and structural dynamics. Inflation across EMDEs is anticipated to moderate to 5.5% in 2024, with early signs of price stabilisation emerging in several regions.

This easing trend is expected to be supported by stabilising commodity prices and continued improvements in global supply chain efficiencies. As a result, most economies are likely to converge toward their medium-term inflation targets through 2025, with inflation in advanced economies remaining below 3% and many emerging markets approaching pre-pandemic norms. The ongoing disinflationary momentum indicates that global inflation has likely peaked, easing pressure on central banks and contributing to a more stable and predictable macroeconomic environment.

Global Inflation Trends in % (Y-o-Y)

Outlook

Global economic growth is expected to moderate to 2.8% in calendar year 2025, followed by a slight uptick to 3.0% in 2026, reflecting a climate of cautious optimism amid ongoing structural adjustments. Emerging Market and Developing Economies (EMDEs) are anticipated to remain the key contributors to global expansion, with projected growth of 3.7% in 2025 and 3.9% in 2026. This momentum is underpinned by resilient domestic consumption, sustained investment activity, and targeted policy measures aimed at fostering macroeconomic stability. In contrast, advanced economies are projected to witness slower growth at 1.4% in 2025 and 1.5% in 2026, as they continue to contend with the lagged effects of tight monetary conditions and evolving global trade dynamics.

GDP Growth Projections in %

	Projections			Difference from January 2025 WEO Update		Difference from October 2024 WEO
	2024	2025	2026	2025	2026	2025	2026
World Output	3.3	2.8	3.0	-0.5	-0.3	-0.4	-0.3
Advanced Economies	1.8	1.4	1.5	-0.5	-0.3	-0.4	-0.3
United States	2.8	1.8	1.7	-0.9	-0.4	-0.4	-0.3
Euro Area	0.9	0.8	1.2	-0.2	-0.2	-0.4	-0.3
Germany	-0.2	0.0	0.9	-0.3	-0.2	-0.8	-0.5
France	1.1	0.6	1.0	-0.2	-0.1	-0.5	-0.3
Italy	0.7	0.4	0.8	-0.3	-0.1	-0.4	0.1
Spain	3.2	2.5	1.8	0.2	0.0	0.4	0.0
Japan	0.1	0.6	0.6	-0.5	-0.2	-0.5	-0.2
United Kingdom	1.1	1.1	1.4	-0.5	-0.1	-0.4	-0.1
Canada	1.5	1.4	1.6	-0.6	-0.4	-1.0	-0.4
Other Advanced Economies2	2.2	1.8	2.0	-0.3	-0.3	-0.4	-0.3
Emerging Market and Developing Economies	4.3	3.7	3.9	-0.5	-0.4	-0.5	-0.3
Emerging and Developing Asia	5.3	4.5	4.6	-0.6	-0.5	-0.5	-0.3
China	5.0	4.0	4,0	-0.6	-0.5	-0.5	-0.1
India3	6.5	6.2	6.3	-0.3	-0.2	-0.3	-0.2
Emerging and Developing Europe	3.4	2.1	2.1	-0.1	-0.3	-0.1	-0.4
Russia	4.1	1.5	0.9	0.1	-0.3	0.2	-0.3
Latin America and the Caribbean	2.4	2.0	2.4	-0.5	-0.3	-0.5	-0.3
Brazil	3.4	2.0	2.0	-0.2	-0.2	-0.2	-0.3
Mexico	1.5	-0.3	1.4	-1.7	-0.6	-1.6	-0.6
Middle East and Central Asia	2.4	3.0	3.5	-0.6	-0.4	-0.9	-0.7
Saudi Arabia	1.3	3.0	3.7	-0.3	-0.4	-1.6	-0.7
Sub-Saharan Africa	4.0	3.8	4.2	-0.4	0.0	-0.4	-0.2
Nigeria	3.4	3.0	2.7	-0.2	-0.3	-0.2	-0.3
South Africa	0.6	1.0	1.3	-0.5	-0.3	-0.5	-0.2

South Africa 0.6

Source: IMF World Economic Outlook Apr25

Indian Economy

Ongoing geopolitical developments in 2025, including global trade tensions and regional conflicts, have posed challenges for the Indian economy in the form of supply chain disruptions and increased market volatility. Nevertheless, Indias robust domestic demand, strong macroeconomic fundamentals, and proactive policy interventions have enabled it to navigate these uncertainties effectively. Strategic initiatives to diversify trade relationships and accelerate infrastructure development are fostering new growth avenues and enhancing economic resilience. As a result, India remains well-positioned for sustained expansion and continues to strengthen its role as a key contributor to the global economic landscape.

Economic Growth

Indias GDP is estimated to have grown by 6.5% in FY25, moderating from the 8.2% expansion recorded in FY24, which was bolstered by post-pandemic recovery dynamics and a surge in investment activity. The performance in FY25 was underpinned by resilient domestic demand, favourable agrarian conditions, a likely above-normal monsoon, and broad-based recovery in the manufacturing and services sectors. Continued public investment in infrastructure, alongside the stable financial health of banks and corporates, further supported growth.

Retail inflation eased to 4.6% during the year, marking the third consecutive annual decline. This trend reflects the effectiveness of the Reserve Bank of Indias calibrated monetary stance and targeted government interventions such as the release of food stocks, reduction in import duties, imposition of stock limits, and food subsidies. Food inflation, in particular, moderated significantly, with the food index softening to 2.69%, helping manage the cost of living and contributing to overall macroeconomic stability.

GDP Growth

Indias real GDP growth is projected to advance to 6.5% in FY26, with a further improvement to 6.7% anticipated in FY27. This positive outlook is underpinned by sustained rural demand, strengthening urban consumption, and a steady increase in investment across key sectors. Financing activity is expected to remain resilient, supported by elevated capacity utilisation, the strong financial position of the banking sector, and continued momentum in public infrastructure expenditure.

Inflation

In early 2025, inflation in India—as measured by both the Wholesale Price Index (WPI) and Consumer Price Index (CPI)—exhibited clear signs of easing. WPI inflation declined to 2.1% in March from 2.4% in January, reflecting a slowdown in the rise of primary article prices and signalling reduced input cost pressures for producers. Concurrently, CPI inflation fell to a near six-year low of 3.3% in March, down from 3.6% in January, primarily due to a marked moderation in food and beverage prices. This downward trend underscores improving price stability for consumers and businesses alike, supported by favourable supply-side conditions and targeted policy measures.

Wholesale Price Index (WPI)

WPI inflation slowed down in Mar25 driven by a slower rise in prices of primary articles

RBIs Policy Rates

Amid a backdrop of moderating inflation, the Reserve Bank of India (RBI) maintained a stable monetary policy stance through early 2025. The repo rate remained steady at 6.3% in March, unchanged from February, while the base rate saw a marginal uptick to 9.8%, and the reverse repo rate was maintained at 3.4%. This measured approach reflects the RBIs intent to support growth without compromising its inflation-targeting mandate.

At its August 2025 MPC meeting (August 4–6), the RBI unanimously decided to keep the repo rate unchanged at 5.50%, maintaining a ‘neutral policy stance This decision came in a context of subdued inflation and global uncertainty, allowing earlier policy easing to take effect and lending further stability to the outlook

RBIs policy rates (%)

Repo rate stayed consistent with Feb25 levels in Mar25

Trade Dynamics

Indias total exports touched a record high of USD 824.9 billion in FY 2024–25, as per the Reserve Bank of Indias latest data on services trade for March 2025. This reflects a 6% year-on-year increase over the previous years exports of USD 778.1 billion, underscoring a notable achievement in the countrys overall trade performance.

Indias imports declined by 4.62% to USD 856.52 billion in FY 2023–24 compared to the previous year. However, the April–December 2024 period witnessed a rebound, with imports increasing by 6.91% to USD 682.15 billion, up from USD 638.03 billion in the corresponding period of the previous year. This trend suggests a recovery in import activity following the contraction observed in the prior fiscal year.

Industry Overview

Global Sugar Market

The International Sugar Organization (ISO) projects a global sugar deficit of 4.88 million tonnes in 2024/25 which is the largest in nine years, up from 2.51 million tonnes estimated in November. World sugar production for 2024/25 has been revised to 175.54 million tonnes, down 5.84 million tonnes from the previous season, driven by reduced post-October output in key southern hemisphere regions, lower-than-expected production in India and Pakistan, and a smaller cane harvest in Thailand. Consumption is expected to reach a record 180.42 million tonnes, slightly above last year, while trade volumes are set to decline, with imports at 63.32 million tonnes and exports at 62.66 million tonnes. The resulting trade deficit of 0.66 million tonnes points to a significant drawdown in global stocks.

A summary of world balance projected for 2024/25 and estimated for 2023/24 is provided below.

World Sugar Balance (October/September, in min tonnes)

	2024/25	2023/24	Change/s in min tonnes	in %
Production	175.540	181.384	-5.844	-3.22
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
Stocks/	51.88	54.35
Consumption ratio in %

Global Sugar Prices

Compared to SY2023 and SY2024, sugar prices in SY2025 have remained significantly lower. International raw sugar prices eased to USD 401/MT in April 2025 from USD 420/MT in March 2025, while white sugar prices moderated to USD 509/ MT from USD 539/MT over the same period.

Source: USDA, ICRA Research

Future Estimates

The global sugar market in 2024–25 is projected to remain largely balanced, supported by stable pricing trends. World sugar production is projected at 189.3 million tonnes, driven by higher output in Brazil and India, which more than offsets the decline in the European Union (EU). Global consumption is estimated at 175.44 million tonnes, while international trade volumes are projected to reach 67.95 million tonnes.

Looking ahead, the global sugar market in 2025/26 is expected to improve and remain largely balanced, supported by stable pricing trends.

India and Brazil Drive Global Sugar Production Higher

200

Source: USDA FAS May 2025

Major Sugar Producers:

Producers:

Brazil: Production is forecast to reach a record 44.7 million tonnes, supported by favourable weather and higher yields. The production mix is expected to shift slightly towards ethanol, with sugars share falling from 51% to 49%. Consumption is expected to ease marginally, while exports rise in line with higher availability.

India: Output is projected to surge over 25% to 35.3 million tonnes, aided by favourable weather and increased acreage. Consumption is anticipated to rise, supported by growth in the food service sector, while exports and closing stocks are both expected to increase.

United States: Production is forecast marginally lower at 8.4 million tonnes. Imports are projected to decline under minimum WTO and free-trade agreement quota levels, with reduced shipments from Mexico. Consumption is stable, while stocks are set to fall on lower imports.

European Union: Production is expected to decline by 9% to 15.0 million tonnes due to a 10% reduction in sugar beet area, particularly in France and Germany. Imports are projected higher to offset lower domestic output, while exports decline.

Thailand: Output is forecast to rise by 2% to 10.3 million tonnes, driven by higher sugarcane production and yields. Consumption growth is expected to slow, while exports are projected lower amid stronger competition from Brazil.

Australia: Production is projected to fall by 50,000 tonnes to 3.8 million tonnes, the lowest level in over a decade, as unfavourable weather affected crop development. Consumption is expected to rise with population growth, while exports increase through stock drawdowns.

China: Output is forecast to increase by 500,000 tonnes to 11.5 million tonnes, supported by expanded sugarcane area and favourable weather for sugarbeets. Imports are expected to rise to bridge the supply-demand gap, with stocks increasing as consumption gradually recovers.

Mexico: Production is expected to grow by 300,000 tonnes to 5.4 million tonnes due to favourable weather and higher acreage. Imports are projected lower, while exports to the U.S. will continue under amended Suspension Agreements. Overall exports are forecast down due to reduced shipments to other markets.

Indonesia: Production is projected to increase by 200,000 tonnes to 2.6 million tonnes on higher harvested area and improved yields. Consumption is expected to rise with population growth and food industry demand, while imports decline.

Overall, the 2025-26 season is characterised by higher global production concentrated in a few major producers, changing trade flows, and stable consumption growth. Strategic export opportunities and regional weather patterns will remain key determinants of price stability and inventory trends in the coming year.

Outlook

Global sugar production is projected to expand, with sugarcane expected to account for more than 85% of total output. Brazil is set to strengthen its position as the worlds leading producer, supported by the expansion and replanting of sugarcane plantations. In India and Thailand, varietal improvements and higher extraction rates are anticipated to drive production growth. The European Union will continue to be the largest sugar beet–producing region; however, land-use competition from other crops and reduced access to plant-protection products—heightening the risk of disease outbreaks—are likely to constrain output.

Sugar prices are expected to ease slightly over the period, though they remain susceptible to multiple uncertainties, including extreme weather conditions, Brazils market dominance, and shifts in the relative profitability of sugar versus ethanol.

Indian Sugar Market

Indias sugar industry is poised for a softer production year in SY2025, with output impacted by lower cane yields across major producing states and an increased diversion of cane towards ethanol production. While overall availability is expected to comfortably meet domestic requirements, closing stock levels are likely to moderate compared to the previous season, reflecting tighter supply conditions.

ISMA projects gross sugar production in SY2025 at 29.6 million MT, compared to 34 million MT in the previous year, primarily due to lower cane yields in three of the countrys major sugar-producing states. After accounting for an estimated diversion of 3.4 million MT of sugar for ethanol production, net output is expected to decline to 26.2 million MT from 32.2 million MT a year earlier. With domestic consumption estimated at 28 million MT and exports projected at 1 million MT, the closing stock for SY2025 is expected to reduce to around 5.2 million MT, down from 8.0 million MT in the previous year, reflecting tighter year-end inventories that will serve as the opening stock for the next sugar season.

State-wise, Maharashtra, the largest producer, is expected to register a sharp decline to 8 million MT as compared to the previous year 11 million MT, while Uttar Pradesh is likely to maintain steady production at 9 million MT. Karnatakas output is estimated at 4.10 million MT, marginally higher than earlier projections. Across the country, 460 sugar mills operated during the season.

Yearly trends in sugar production, consumption and closing stock

40 8.0

Source: ISMA, ICRA Research; SY: Sugar Year (from October 01 to September 30)

As of 15 May 2025, sugar production for SY2025 stood at 25.7 million MT, lower than the previous year, primarily due to reduced output in Maharashtra and Karnataka. Uttar Pradesh currently leads in operational sugar mills, followed by Maharashtra and Karnataka. By mid-May, only two sugar factories remained operational nationwide.

State-wise net sugar production yearly trend in Million MT

Source: ISMA, ICRA Research; SY: Sugar Year (from October 01 to September 30)

Domestic sugar prices in Uttar Pradesh remained firm at H 40/kg in April 2025, broadly in line with March levels of H 40.2/kg, reflecting expectations of lower production in the current season. For the first seven months of SY2025, average prices stood at H 38.8/kg, marginally higher than the corresponding period last year.

It is anticipated the prices will remain firm until the commencement of the next crushing season. Going forward, domestic sugar prices will remain sensitive to both domestic and global demand–supply dynamics.

The Indian sugar industry witnessed significant developments during the year, shaped by shifts in production, policy measures, ethanol blending progress, and evolving market dynamics.

Higher Cane Output and Recovery

As per the estimates taken during the year total sugarcane output is expected to rise by 7% to 465 million tonnes, in SS2024-2025 with the average sugar recovery rate improving from 8% to 9.5%. This is expected to translate into an overall recovery improvement of nearly 19% compared to the previous season.

Increase in Fair and Remunerative Price (FRP)

The Government revised the FRP for sugarcane to I 355 per quintal for SS 2025-2026, a 4.4% increase, aimed at bolstering farmer confidence and incentivising higher cane planting.

Ethanol Blending and Sugar Diversion

Ethanol blending ratios ranged between 18% and 19.7%, with sugar diversion to ethanol production estimated at 3.5 million tonnes. This supports the biofuel programme while impacting net sugar availability.

Regulatory Modernisation

The Sugar (Control) Order 2025 introduced mandatory digital integration of sugar mills with government monitoring systems, unified pricing regulations, and enhanced transparency measures, marking a significant step towards modernising the sectors regulatory framework.

Market Stability and Price Trends

Domestic sugar prices averaged close to I 40/kg in February 2025, reflecting moderate increases amid production concerns. Supply conditions remain stable, with closing stocks projected at around 5.4 million tonnes as on September 2025, ensuring adequate domestic availability.

Exports and Global Market Dynamics

Indias sugar exports in 2024–25 are estimated at around 0.8 million tonnes, below the quota ceiling, influenced by global price volatility and tariff impacts on competitiveness. The Government permitted exports of up to 1 million tonnes to manage surplus without disrupting domestic supply.

Outlook

The outlook for the Indian sugar industry in the SS 2025–26 is positive, with production projected to rebound and exceed 35 million tonnes. This anticipated growth is underpinned by a favourable southwest monsoon in 2025 across key sugarcane-growing states and a likely recovery in planted area. In Maharashtra and Karnataka, timely rainfall has driven a sharp increase in sugarcane sowing, positioning these states for a strong and timely crushing season commencing October 2025. In Uttar Pradesh and other northern regions, the ongoing varietal replacement programme is progressing well, supporting expectations of higher cane yields and improved sugar recovery rates.

Ethanol Industry and Ethanol Blending Program

Global Outlook

Global ethanol production reached a record 31.2 billion gallons in 2024, with the United States retaining its position as the largest producer, contributing over half of global output through its extensive corn-based ethanol industry. Brazil ranked second, driven by robust sugarcane-based production, while India secured third place, leveraging a mix of molasses- and grain-based feedstocks. The global ethanol market, valued at USD 109.11 billion in 2024, is projected to grow at a CAGR of 5.3% to reach USD 182.88 billion by 2034. This growth will be underpinned by expanding biofuel blending mandates, rising demand for low-carbon transport fuels, and technological advancements in feedstock processing.

Annual World Fuel Ethanol Production (Mil. Gal.)

Region	2020	2021	2022	2023	2024	% of World Production
United States	13,941	15,016	15,361	15,580	16,219	52%
Brazil	8,100	7,320	7,400	8,470	8,780	28%
India	530	950	1,220	1,510	1,630	5%
European Union	1,310	1,380	1,420	1,390	1,440	5%
China	940	900	960	1,070	1,200	4%
Canada	429	434	447	454	464	1%
Thailand	390	350	380	340	360	1%
Argentina	210	270	310	310	310	1%
Rest of World	630	690	722	806	807	3%
Total	26,480	27,310	28,220	29,930	31,210

Source: RFA analysis of public and private data sources

Policy support for decarbonisation and energy security in mature markets is expected to sustain demand, while ethanols cost advantage over petroleum-based fuels continues to drive adoption. Recent measures, such as Brazils increase in petroleum fuel taxes, are further incentivising biofuel usage. Despite strong demand in Brazil, corn prices have remained steady at USD 4.54 per bushel, reflecting stable market sentiment. Although lower global sugar production and trade disruptions may impact supply, new opportunities are emerging in areas such as sustainable aviation fuel and vehicle emission reduction. Stricter environmental regulations worldwide are expected to reinforce capacity expansion and spur innovation, positioning ethanol as a key enabler in the global energy transition.

Indian Ethanol Market

India is the worlds third-largest producer and consumer of ethanol, with production capacity expanding significantly over the past decade. As of May 2025, the countrys annual installed capacity stands at 1,810 crore litres—more than quadruple its level 11 years ago. This includes 816 crore litres from molasses-based distilleries, 136 crore litres from dual-feed facilities, and 858 crore litres from grain-based units. Supportive government policies, including interest subvention schemes for setting up new capacity, have been a key driver of this growth and continue to underpin the industrys expansion.

Ethanol capacities (molasses and grain based) in crore liters

Source: ISMA, MoPNG, ICRA Research

For ESY 2025, the Government revised the procurement price of ethanol derived from C-heavy molasses to I 57.97 per litre, up from I 56.28 per litre in the previous year, while prices for other feedstocks remained unchanged. In ESY 2024, Indias ethanol production capacity rose to 1,648 crore litres, compared to 1,380 crore litres in ESY 2023.

Ethanol prices excluding taxes and transportation cost

Feedstock	ESY2023	ESY2023*	ESY2024	ESY2025
Sugarcane Juice	65.61	65.61	65.61	65.61
B-Heavy Molasses	60.73	60.73	60.73	60.73
C-Heavy Molasses	49.41	49.41	56.28	57.97
Damaged Food	55.54	64.00	64.00	64.00
Grain
Maize	56.35	66.07	71.86	71.86
Surplus Rice	58.50	58.50	58.50	58.50

*Including relief amount and additional incentive for DFG and maize (effective during Aug 1, 2023-Oct 31, 2023) Source: ISMA, MoPNG, ICRA Research

Ethanol Blending Programme

Indias ethanol market remains on a strong growth trajectory, driven by the nationwide Ethanol Blended with Petrol (EBP) Programme, supportive policies, and capacity expansion. Market value reached an estimated USD 3 billion in 2024, supported by higher blending mandates, robust sugarcane output, and expanding biofuel infrastructure.

Blending has risen steadily from 10.0% in ESY 2021–22 to a record of 19.7% in April 2025. Government measures—such as stable procurement pricing and the re-allowance of cane juice/ syrup and B-heavy molasses—have enhanced supply flexibility.

Source: ISMA, MoPNG, ICRA Research

Over the past decade, the programme has saved over I 1 lakh crore in foreign exchange, reduced CO2 emissions by 544 lakh metric tonnes, substituted 181 lakh metric tonnes of crude oil, and delivered significant income benefits to farmers and distillers. With diversified feedstocks, rising capacity, and policy continuity, India is well-positioned to sustain high blending levels and achieve its E20 target within the planned timeline. Additionally, OMCs have disbursed I 1,45,930 crore to distillers and I 87,558 crore to farmers, generating a positive economic impact across the value chain.

Outlook

The industry outlook remains highly favourable, supported by the Governments accelerated target of achieving 20% ethanol blending in petrol (E20) by 2025–26, advanced from the earlier 2030 goal. Blending levels have grown from 10% in 2022 to nearly 19% in 2025, underpinned by policy measures promoting feedstock diversification, assured pricing, and subsidies for ethanol production from molasses, grains, and agricultural residues.

The market value reached an estimated USD 3 billion in 2024, underpinned by higher blending mandates, robust sugarcane output, and expanding biofuel infrastructure. Indias ethanol production capacity has more than tripled in recent years, with substantial regional contributions, particularly from Uttar Pradesh. Following the early achievement of 20% ethanol blending in petrol - six years ahead of the original target, the Government is now pursuing a 30% blending goal by 2030 as part of its strategy to reduce fossil fuel imports and address environmental challenges. Policy measures continue to incentivise new distillery investments and the rollout of flex-fuel vehicles compatible with E20, alongside plans to expand capacity for higher blends.

Real Estate

Global Outlook

As we progress through 2025, the global real estate sector appearspoisedforagradualtransition,underpinnedbycautious optimism. The global real estate capital flows witnessed a sharp correction in 2023, with capital allocations declining across all major regions—Americas, EMEA, and Asia Pacific.

After peaking in 2021, capital flows experienced a notable pullback in 2023, reflecting cautious investor sentiment driven by monetary tightening, geopolitical tensions, and inflationary concerns. The Americas region, which historically commands the largest share of global capital flows, led the overall decline, followed by EMEA and Asia Pacific.

Global real estate capital flows 2007-2024 in USD Billions

Source: Emerging trends in real estate market 2025 - PWC

Sentiment indicators have shown their most encouraging levels in recent years, with a growing belief among stakeholders that a measured recovery may be underway. However, macroeconomic volatility, evolving interest rate expectations, and persistent geopolitical uncertainties continue to weigh on the pace and shape of this recovery.

Financing Environment

The global financing landscape is showing signs of revival as central banks-initiated rate cuts in 2024, stimulating increased investment activity. With inflation risks moderating, further monetary easing is anticipated through 2025 and into 2026. These developments are expected to support refinancing efforts, encourage mergers and acquisitions, and drive higher debt origination volumes, as lenders widen their focus. However, uncertainties persist, particularly around domestic policy shifts and geopolitical risks. As such, sustained vigilance on regulatory developments will be critical for navigating an increasingly complex policy environment.

Policy Rate Forecasts

6.00

US Fed Funds mid-rate US Fed Forecast Bank of Canada policy rate BoC Forecast ECB Deposit rate ECB Forecast BoE Rate BoE Forecast RBA cash rate RBA Forecast

Source: Refinitiv, JLL; based on OlS rates, Data from 16.01.2025

Core fund allocations by sector

Key growth segments include the living sector, which is projected to attract substantial global investment over the next five years, alongside industrial and logistics assets benefitting from accelerating nearshoring strategies. Data centres also remain a high-priority asset class, driven by surging digital infrastructure demand. Office investments are expected to rebound selectively, with investor focus shifting towards premium, future-ready assets in core markets that meet evolving standards of sustainability and workplace flexibility.

Real estate capital allocation by sector 2024 (%)

Industrial & logistics Living/multi-housing Office Retail Hotels Other

Source: JLL Research, 2024

In 2025, the global real estate sector is undergoing a multidimensional transformation—characterised by constrained supply, renewed investment appetite, rising occupier confidence, and growing risks of asset obsolescence. A key strategic shift is the integration of sustainability and energy efficiency into core investment and operational decisions. With energy consumption becoming a critical cost and risk factor-especially amid the sharpest projected rise in electricity demand in two decades—investments in decarbonisation, retrofitting, and AI-enabled building systems are gaining urgency. Success in this evolving landscape will hinge on asset-level precision, forward-looking planning, and the ability to leverage structural trends while remaining resilient to macroeconomic shocks.

Indian Real Estate Market

Indias real estate sector continues to play a vital role in the countrys economic growth, contributing approximately 7% to the national GDP and standing as the second-largest employer after agriculture.

In FY2025–26, the sector is expected to benefit from the governments capital expenditure outlay of I 11.21 lakh crore (3.1% of GDP), aimed at strengthening infrastructure and accelerating economic development. The Ministry of Housing and Urban Affairs (MoHUA) also increased its capital allocation to I 25,000 crore in FY2024–25, with a focus on enhancing suburban infrastructure. Additional supportive measures—including GST concessions, tax benefits, Priority Sector Lending (PSL) status, and stronger public-private partnerships—are anticipated to further stimulate sectoral growth.

The residential real estate segment witnessed its strongest performance in over a decade in 2024, marking a 12-year high. This surge was driven by a premiumisation trend, with luxury and high-end homes commanding a significant share of sales—fueled by higher disposable incomes and evolving lifestyle aspirations. Concurrently, affordable housing remains a cornerstone of the sector, with an estimated demand of 22.2 million units in urban areas over the next decade—of which 95.2% (21.1 million units) are expected to be in the affordable category.

On the commercial front, the market was valued at USD 40.7 billion in 2024, supported by robust demand across key verticals. Office spaces accounted for approximately 40–45% of the segment, underpinned by strong activity from the IT/ BPO sector and the expansion of Global Capability Centres (GCCs), with India emerging as a global hub hosting over 1,700 such centres. Retail real estate contributed 20–25%, driven by the growth of organised retail and rising urban incomes. Healthcare infrastructure formed 10–15% of the space, while emerging categories like data centres and specialised healthcare facilities comprised 5–10%, reflecting rising digitisation and increasing demand for healthcare services.

Residential Sales and Launches

In 2024, Indias residential real estate sector demonstrated strong fundamentals, underpinned by healthy demand-supply dynamics. New launches across the top seven cities reached approximately 4.12 lakh units (7% up from 2023), while housing sales exceeded 4.59 lakh units (4% from 2023). Though new supply saw a marginal dip from the previous year, it remains 74% higher than 2019 levels—reflecting developers calibrated approach to balance inventory while meeting sustained demand.

Launches Vs Sales - Pan India

Compared to 20:23

Note: Pan-India refers to top 7 cities of India only. Rounding may result in minor variations between the stated and calculated values.

Source: Anarock Research, Indian Residential Market Annual Update

Sales volume, while slightly below the record-breaking performance of 2023, was still 76% higher than pre-pandemic levels in 2019. This underscores the markets resilience amid rising interest rates and property prices. Metro cities such as Mumbai, Hyderabad, Pune, and Bengaluru continued to lead, accounting for nearly 79% of new supply and 92% of total sales among the top urban centres.

The combination of measured inventory additions and robust buyer sentiment highlights a well-grounded market outlook, with residential real estate continuing to be viewed as a favourable and reliable investment avenue

Net Absorption in the Warehousing Market

Indias warehousing sector achieved a record-high net absorption of 50.4 million sq. ft. in 2024, reflecting a strong 25% y-o-y increase from 40.6 million sq. ft. in 2023. This growth was largely fuelled by sustained demand from third-party logistics (3PL), logistics, and manufacturing industries, which collectively accounted for over 65% of the total absorption. The surge underscores the sectors resilience and the rising demand for high-quality, compliant warehouse spaces—driven by expanding e-commerce and supply chain needs. As a result, institutional investors and developers are increasingly prioritising Grade A, technology-enabled facilities.

Demand / Y-o-Y Net Absorption: Top 8 cities (mn sq ft)

Net Absorption in the Office Market

Indias office market sustained its strong momentum in H12025, defying global economic headwinds. Net absorption reached 11.31 million sq. ft. in Q2 2025, marking a 7.0% year-on-year increase and the strongest Q2 performance since 2011. This growth underscores the continued headcount and footprint expansion across sectors, led by the tech ecosystem and GCCs (Global Capability Centers). Bengaluru remained the top-performing city, contributing the highest share to net absorption, followed by Delhi NCR.

Business Performance

Overview of ZILs Financial Performance

Zuari Industries Limited (ZIL) is an apex holding company with an operational fully integerated sugar plant and huge land banks in Goa. The Company continued to demonstrate resilience in FY25, recording a consolidated revenue of 1,082.5 crore, reflecting a steady performance compared to 1,067.2 crore in FY24.

While the Company reported a consolidated loss after tax of H 94.4 crore in FY25, this was primarily attributable to the impact of exceptional items. Excluding these one-time effects, the underlying business operations remained stable, supported by consistent revenue generation and progress across key strategic initiatives.

On a standalone basis, the key financial parameters of the company is reflected through the following table:

Parameter (J Cr)	FY25	FY24
Revenue from Operations	870.7	714.6
Other Income	109.3	186.2
Total Income	979.9	900.8
EBITDA	179.3	235.4
Operating EBITDA	70.0	49.2

The Company remains focused on long-term value creation, with ongoing efforts to strengthen operational efficiency, unlock portfolio synergies, and pursue new growth avenues across its businesses.

Segment Wise Performance

Performance of SPE Division

Our Sugar, Power & Ethanol (SPE) Division operates a modern, fully integrated facility at Gobind Sugar Mills, Aira, at Lakhimpur Kheri in UP. The sugar plant has a crushing capacity of 10,000 TCD, with a 500 TPD sugar refinery supported by 40 MW co-generation plant and a 125 KLPD distillery. Over the past decade, the SPE division has undergone a significant transformation. Evolving from a standalone sugar manufacturing unit into a fully integrated operation comprising cogeneration, distillery, and sugar refining facilities, the division has strategically repositioned itself to maximize value and resilience. This integrated model has not only enhanced the divisions ability to respond effectively to dynamic market conditions but has also enabled it to capitalize on value-added by-products, thereby strengthening its overall profitability.

With a strong and diversified asset base now firmly established, the division has entered a new phase of strategic focus—centred on optimizing asset utilization and driving operational efficiency. These initiatives are aligned with the companys long-term vision to improve productivity, ensure sustainability, and enhance stakeholder value across the value chain.

During FY25, the SPE division delivered strong operational performance, reflecting the results of strategic initiatives and focused execution. The division crushed 157.25 lakh quintals of sugarcane, marking a notable increase from 141.3 lakh quintals in FY24. This growth was driven primarily by the early commencement of crushing operations and improved capacity utilization, which reached 94% during the year. Sugar recovery improved to 10.61%, up from 10.41% in the previous year, resulting in higher sugar production of 14.8 lakh quintals, compared to 14.4 lakh quintals in FY24. The division also achieved a significant operational milestone in FY25 with its highest-ever annual ethanol production, reaching 33,869 KL—a substantial increase from 27,362 KL in the previous year. This growth was primarily driven by an extended number of operating days and marked improvements in plant efficiency. In tandem with this achievement, power generation rose to 1,652 lakh units, up from 1,291.3 lakh units in FY24. This increase reflects more effective asset utilization and continued enhancements in operational performance across the divisions integrated value chain.

The following section outlines the key operational parameters reflecting this improved performance.

Key Operational Parameters (SPE Division):

Particulars	FY25	FY24	% age Change
Total Cane Crushed (LQ)	157.25	141.3	11.28%
Sugar Recovery %	10.62	10.41	2%
Sugar Production (LQ)	14.8	14.4	2.8%
Ethanol Production (KL)	33,869	27,362	23.8%
Power Generation (LU)	1652	1291.3	27.9%

While these improvements represent meaningful progress, the management recognizes that further potential remains untapped. The initiatives undertaken during FY25 have laid a strong foundation, and their continued implementation is expected to drive sustained improvements in key operational metrics in the coming financial year.

In FY25, the SPE division reported a robust 45% year-on-year growth in revenue from operations, reaching I 865.5 crore, compared to I 598 crore in FY24. This strong performance was largely driven by a higher average sugar realization price of I 3,894 per quintal, up from I 3,751 per quintal in the previous year. Additionally, improved operational efficiency and higher sugarcane crushing volumes contributed to stronger cash flows. This, in turn, enabled the division to enhance its financial discipline and ensure more timely payment cycles to cane growers—reinforcing trust and stability across the value chain.

In the value-added segment, the division continues to expand its retail presence. It markets a diverse refined sugar portfolio—including 1 kg, 5 kg, Super Fine 1 kg, Sachet (White/Brown) 5 gm, Bura 1 kg, Icing 1 kg, and 25 kg packs—through Zuari International Ltd., utilizing retail outlets and digital platforms to reach a wider consumer base.

Over the last few years, the management has initiated a comprehensive digitalization drive within the SPE division, focused on enhancing end-to-end operational visibility and efficiency. These efforts are aimed at reducing manual interventions, enabling data-driven decision-making, and optimizing overall resource utilization. Some of the Key technological Initiatives include:

SPE BI Cockpit: A near real-time business intelligence dashboard that provides integrated operational analytics to aid decision-making across the division.

Saksham App: A digital platform that facilitates direct communication between farmers and mills, promoting transparency and enabling timely grievance redressal.

Soil Testing and Analysis: Region-specific soil assessments to guide optimal nutrient application and planting strategies.

Varietal Replacement Strategy: A focused effort to enhance yield and disease resistance by introducing high-performing sugarcane varieties suited to local agro-climatic conditions.

In line with its commitment to continuous improvement, the company undertook several process enhancement initiatives during FY25. A Critical Parameter Application was developed to enable real-time monitoring of factory performance, allowing key operational KPIs to be tracked through a mobile interface. Additionally, a GIS-based mapping system was implemented to provide better visibility into sugarcane cultivation areas.

The company also advanced its Cane Excellence Program, an initiative aimed at addressing key challenges such as low sugarcane yield, fragmented logistics, and limited farmer awareness regarding best practices and government schemes. The program seeks to drive agronomic transformation and is structured around three strategic pillars:

Cane Procurement: Implementation of automated tracking systems, a performance-linked incentive framework, and a digitized indenting model to improve transparency and procurement efficiency.

Cane Development: Emphasis on yield enhancement through modern agronomic practices, expansion of the cultivation base, and promotion of disease-resistant, high-yielding cane varieties.

Cane Logistics: Use of GPS-enabled tracking and real-time fleet monitoring to optimize transport operations, reduce turnaround time, and enhance reliability in cane delivery.

These initiatives are expected to strengthen the divisions operational foundation and support long-term sustainability in the sugar value chain.

Looking ahead, the company is intensifying its focus on innovation and long-term sustainability through a series of strategic, forward-looking initiatives. One such initiative involves acting as a bridge between farmers and suppliers of agricultural machinery by facilitating access to farm equipment. This will be enabled through a

Cane Mechanization Application, currently under development as part of the companys broader digitalization efforts. In parallel, the company is reimagining the traditional sugar sales process. A new digital sales application is being developed to enhance transparency and efficiency, allowing dealers and agents to track their performance in real time via mobile devices. This initiative aims to modernize sales operations and improve stakeholder engagement. Additionally, the company is prioritizing partnerships with academic institutions and expanding its farmer training and capacity-building programs. These efforts are focused on transferring advanced agronomic practices to the field, building climate and market resilience, and creating a digitally empowered, future-ready farming ecosystem that supports sustainable growth across the sugar value chain.

The company remains optimistic about FY26, propelled by ongoing efforts to enhance productivity, control costs, and drive efficiency through digital initiatives and other operational excellence programs. While the company is focused on managing and optimizing factors within its control, it acknowledges that several external macroeconomic variables—such as the Minimum Support Price (MSP) of sugar, climatic conditions, export policies, sugarcane pricing, and other market dynamics—are beyond its influence. Despite these uncertainties, the company is committed to diligently addressing all controllable aspects to strengthen operational resilience. The overarching objective is to build a more agile, efficient, and technology-enabled organization that delivers sustained value to all stakeholders and remains well-equipped to navigate a constantly evolving market landscape.

Risk Management: SPE Division

Risk: Reduced Cane Availability Due to Water Logging and Red Rot Infestation

In FY25, cane availability in select regions continued to face pressure due to challenges such as waterlogging and red rot infestation. The Company remains proactive in monitoring disease spread and assessing the performance of vulnerable varieties. As part of its mitigation strategy, a three-year varietal replacement program is being actively rolled out, with expanded field trials across diverse agro-climatic zones. Insights from these studies are guiding the selection of more resilient and high-yielding sugarcane varieties, aimed at ensuring long-term crop stability and disease resistance.

Risk: Low Yield

Low cane and sugar yields continue to pose an operational risk, particularly impacting the ethanol and power segments. To address this, the Company has strengthened its scientific and data-driven approach to agriculture in FY25.

Demonstration plots have been expanded to showcase best agronomic practices to a wider network of farmers. There is growing adoption of soil health assessments, precision fertilizer application, and digital agri-management tools. These efforts are further supported by regular training and awareness programs, aimed at improving farming practices and enhancing overall yield and efficiency.

Risk: Regulatory Concerns

The sugar industry remains subject to significant regulatory oversight, with evolving government policies impacting cane procurement, pricing structures, and ethanol blending mandates. In FY25, the Company enhanced its strategic sourcing approach by diversifying raw material inputs for ethanol production—securing contracts with alternative suppliers and evaluating innovative feedstock options. Production planning has been aligned to ensure greater flexibility, enabling swift adjustments to policy changes such as export restrictions or revised ethanol norms. Proactive stakeholder engagement and continuous internal process improvements have further strengthened the Companys ability to navigate the dynamic regulatory environment with agility and resilience.

Performance of Real Estate Division

The Company has a real estate divison, primarily focusing on monetizing land parcel at Goa. In FY25, Zuari Industries Limiteds real estate division reported limited activity, primarily within its non-bulk land segment. During the year, the Company sold 2.13 acres of non-bulk land, generating revenue of I 2.58 crore. The non-bulk opening land available in FY25 stood at 11.96 acres. In contrast, there were no transactions in the bulk land category, with the total holding remaining unchanged at 260 acres. This indicates a measured and selective approach to land monetisation, with a focus on smaller, non-bulk parcels during the year.

Risk Management: Real Estate Division

Risk: Fluctuating Demand

In FY25, the real estate sector continued to experience demand-side volatility, primarily driven by fluctuations in consumer disposable income. This variability is influenced by a complex mix of macro and microeconomic factors, including inflation, employment trends, interest rates, household savings, taxation policies, regulatory developments, and property price movements. Additionally, rising and unpredictable raw material costs have exerted pressure on project pricing and overall margins.

To mitigate these challenges, the Company remains focused on ensuring timely and high-quality project delivery by engaging qualified contractors. It continues to source key raw materials from reliable and established suppliers, with an emphasis on localisation to reduce cost volatility. Simultaneously, the Company is actively reinforcing the strength of the Zuari brand, building on its long-standing legacy of trust and credibility since 1967.

Risk: Interest Rate Risks

Interest rate fluctuations continue to influence borrowing costs, property valuations, and overall profitability in FY25. Lower interest rates tend to benefit the real estate sector by improving affordability and reducing financing costs, which in turn supports buyer sentiment. In contrast, rising rates can lead to higher borrowing costs and subdued demand. On the other hand, sharp rate cuts may reflect underlying economic concerns, potentially exerting downward pressure on property prices and rental yields. The Company actively monitors interest rate trends and adjusts its financial and operational strategies accordingly to mitigate associated risks and maintain business stability.

Performance of Subsidiaries

Subs/JV	Income	Income	EBITDA	EBITDA	PBT	PBT
	(FY25)	(FY24)	(FY25)	(FY24)	(FY25)	(FY24)
Zuari Infra	98.4	169.5	77.1	117.8	(8.3)	17.8
ZIntL	200.6	171.3	45.5	51.6	(26.4)	(25.7)
ZMSL	40.5	42.6	8.8	15.2	0.03	(1.0)
Zuari Finserv	19.3	16.4	3.5	4.2	0.5	2.4
Zuari Insurance	8.4	6.9	4.9	4.0	4.9	3.9
Simon India	18.8	7.8	0.9	0.9	0.3	0.4
IFPL	5.6	5.9	3.6	4.6	(11.3)	(10.7)
ZEBPL	1.3	0.4	(0.04)	0.2	(0.3)	(0.1)
ZIAVPL	24.4	21.1	11.9	6.6	5.3	0.01
FFPL	31.8	39.6	8.9	(21.7)	2.3	(33.1)

Zuari Infraworld India Ltd. (ZIIL)

Zuari Infraworld India Ltd. (ZIIL) continued to strengthen its asset-light Development Management (DM) model in FY25, forging key partnerships with developers holding strategic land parcels. The company signed DM agreements/termsheets across residential, commercial, and office segments with partners such as Gangothri Developers, Rubrick Estate, and Texmaco Rail. Steady progress was also achieved at the flagship Mysore Garden City Project, contributing positively to the groups performance.

Going forward, the company aims to expand its DM portfolio through low-investment, high-return collaborations, while also exploring Joint Developments and Joint Ventures. This approach is designed to diversify the project base, share risk effectively, and enhance market presence in core geographies such as Bengaluru, Hyderabad, and Pune—ensuring sustained growth and long-term success.

Simon India Ltd. (SIL)

Simon India Ltd. delivered a strong performance in FY25, supported by a growing engineering team and consistent execution across engineering, feasibility, and EPC segments. The company undertook several engineering assignments, primarily in the Chlor-Alkali domain, and advanced feasibility studies in line with strategic priorities.

The EPC division oversaw the execution of key large-scale projects, including an evaporator and scrubber system, both progressing well. Backed by deep technical expertise, efficient project management, and a technology-driven approach, SIL enters the next fiscal with a robust order book and a solid platform for continued growth.

Zuari Finserv Ltd. (ZFL)

Zuari Finserv Ltd. reported a year-on-year increase in revenue for FY25, driven by continued traction in digital adoption and expansion of its customer base. The company recorded a 41% share of online transactions and achieved a 25% growth in net customer additions, reaching 1,466 new clients.

Branch operations were strengthened with new locations launched in Noida, Jaipur, and Udaipur. Additionally, ZFL initiated implantation of a CRM service module and conducted Investor Awareness Programs (IAPs) to deepen customer engagement. While profit before tax declined, the company remains focused on scaling its digital platforms and enhancing operational efficiency to drive sustainable growth.

Zuari Insurance Brokers Ltd. (ZIBL)

Zuari Insurance Brokers Ltd. delivered a strong performance in FY25, with premium collections growing by approximately 7% year-on-year and brokerage income increasing by around 14%. The company also reported a 23% rise in EBITDA, reflecting improved operational efficiency and robust financial momentum.

These gains were underpinned by continued focus on client retention, enhanced service delivery, and deeper penetration across both group and non-group segments.

Zuari International Ltd. (ZIntlL)

Zuari International Ltd. (ZIntlL) reported improved performance in FY25 with revenue exceeding I 200 Cr, driven by continued product diversification.

The companys commitment to customer-centric innovation and high-quality offerings has strengthened its market position. Going forward, ZIntlL will focus on supply chain optimization and strategic partnerships to further scale operations and attract new customer segments.

Zuari Management Services Ltd. (ZMSL)

Zuari Management Services Ltd. reported a strong performance in FY25, with healthy growth in revenue and operating margins. Building on its core offerings in payroll services, compliance consulting, and manpower outsourcing, the company expanded its focus towards business consulting and digital transformation services for both group entities and external clients.

Key initiatives during the year included market entry support for advanced battery technology and the initiation of a collaboration with Givery (Japan) to jointly develop Gen-AI-based solutions, further strengthening ZMSLs position as an engine for business advisory services within the group.

Performance of JVs

Zuari Envien Bio-Energy Pvt Ltd (ZEBPL)

ZEBPL made consistent progress in FY25 toward establishing itself as a key player in the bio-energy sector. The 180 KLPD grain-based ethanol facility at Aira, Lakhimpur Kheri, Uttar Pradesh, reached an advanced stage of development, with 76% of the project completed as of March 2025. The project remains on track, with commercial operations scheduled to commence by 30th September 2025.

During the year, several critical construction milestones were achieved, including significant progress on civil works, distillation systems, and utilities. The projects structured and timely execution is being driven by a robust project management framework and efficient resource mobilization. Strategically aligned with the Government of Indias Ethanol Blended Petrol (EBP) programme, the plant is designed to exclusively supply oil marketing companies under long-term offtake agreements. The sector is poised for growth, supported by the governments plan to increase ethanol blending to 30% by 2030, ensuring strong future demand.

The project continues to benefit from sound financial planning, with funding secured on favourable terms. Looking ahead, ZEBPL plans to scale up capacity to 1,000 KLPD by tapping into feedstock-rich regions. It also aims to expand its presence across the broader biofuels value chain through new projects and special purpose vehicles (SPVs), including initiatives in biodiesel and bio-CNG. These efforts are aligned with ZILs long-term strategy of sustainability and business diversification.

Zuari IAV Pvt. Ltd. (ZIAVPL)

Zuari IAV Private Limited reported revenue of I 24.4 Cr in FY25, alongside a robust 80% year-on-year growth in EBITDA. This performance was driven by increased operational volumes, with both receipts and dispatches showing improvement over the previous year.

Performance of Strategic Investments

Our associate companies predominantly in agro-chemicals , fertilizers, rail & infra segment delivered steady performances in FY25. On consolidated basis, Texmaco Rail & Engineering Ltd delivered a 45% Y-o-Y growth in total income, reaching 5,164 crore, while Texmaco Infrastructure & Holdings Ltd reported an income of 3,302 crore, reflecting a 28% growth.

	Value (J Cr)	Value (J Cr)
Company	31-Mar-24	31-Mar-25	Change (%)
Chambal Fertilizers & Chemicals Ltd.	2,035	3,177	+56%
Zuari Agro Chemicals Ltd.	228	247	+8%
Mangalore Chemicals and Fertilizers Ltd.	3.5	5	+43%
Texmaco Rail & Engineering Ltd.	1,064	871	-18%
Texmaco Infrastructure and Holdings Ltd.	373	401	+8%
Total Value of Quoted Investments	3,704	4,701	+27%

The Company maintained its growth momentum in FY25, driven by the strong performance of its strategic investment portfolio. The combined value of quoted investments held by the company and its wholly owned subsidiaries rose by 27%, increasing from I 3,704 crore in FY24 to I 4,701 crore in FY25.

This growth was primarily led by a 56% surge in the value of Chambal Fertilizers & Chemicals Ltd., ZILs largest strategic holding, which appreciated from I 2,035 crore to I 3,177 crore during the year. Other key contributors included Zuari Agro Chemicals Ltd., which recorded an 8% increase, and Mangalore Chemicals and Fertilizers Ltd., which grew by 43%.

Despite an 18% decline in Texmaco Rail & Engineering Ltd., the portfolio remained resilient and well-diversified. Additionally, Texmaco Infrastructure and Holdings Ltd. posted an 8% increase in value, further reinforcing the stability of ZILs investment base.

ZIL continues to actively manage its strategic investments to enhance financial strength, unlock long-term value, and support the companys broader business and diversification objectives.

Key Financial Ratios

The comparative table showing synopsis of FY25 and FY24 of Key Financial Ratios is given in Note No. 52 of the Financial Statements of the Company.

Other Business Risk Management

Beyond business-specific challenges, the Company remains exposed to a range of overarching risks, including regulatory, cyber security, climate, market, credit, and liquidity risks.

These are regularly assessed by the Audit Committee, with appropriate mitigation strategies in place. A summary of key risks and the Companys approach is outlined below:

Regulatory Risk

The Company operates in a dynamic regulatory environment and maintains strict compliance with applicable laws across all business functions. This includes adherence to the Companies Act, taxation regulations, environmental norms, and foreign exchange laws. With the regulatory landscape continually evolving, the Company remains proactive in monitoring developments and aligning internal processes to ensure uninterrupted operations and compliance.

Climate Risk

Weather-related uncertainties continue to influence business performance across sectors. In the real estate segment, extreme weather events can delay construction activities, impact infrastructure, and reduce workforce productivity. In the agricultural and sugar businesses, variations in monsoon patterns have a direct bearing on sugarcane yield and quality. The Company takes a proactive stance by incorporating weather forecasts into planning and maintaining close communication with growers to facilitate timely interventions, thereby mitigating climate-related disruptions.

Cyber Security Risk

The risk of cyber threats and data breaches is a growing concern. The Company is committed to maintaining the integrity of its IT systems and protecting sensitive data through robust cyber security protocols. These include regular system audits, secure backup frameworks, and real-time monitoring of network infrastructure. Continuous enhancements are undertaken to ensure the security, reliability, and availability of critical business information.

Market Risk

The Company is subject to market-related risks arising from interest rate movements, foreign currency fluctuations, and commodity price volatility:

Interest Rate Risk: Exposure to both short and long-term borrowings, particularly those with floating rates, creates sensitivity to interest rate fluctuations. The Company actively manages this through prudent debt structuring and instruments such as interest rate swaps to reduce impact on cash flows and valuations.

Foreign Currency Risk: With no foreign currency borrowings currently on the books, the Company is insulated from direct foreign exchange volatility.

Inventory Price Risk: Key commodities such as sugar and ethanol are subject to pricing volatility. While ethanol pricing is largely regulated, sugar prices are influenced by government-set cane pricing and broader market dynamics. The Company closely monitors price trends and aligns its sales strategy accordingly to mitigate valuation risks.

Credit Risk

The Companys credit risk primarily relates to trade receivables, loans, bank deposits, and unbilled revenues. The Sugar, Power, and Ethanol (SPE) division minimizes this risk by operating largely on a "cash and carry" basis for sugar sales. Power is sold under long-term agreements with state utilities, offering stable receivables despite occasional delays. Similarly, ethanol is supplied to financially strong Oil Marketing Companies, presenting minimal default risk.

Liquidity Risk

Ensuring sufficient liquidity to meet operational and financial obligations remains a key focus. The Company employs detailed cash flow forecasting to monitor and manage liquidity needs. A combination of maintaining healthy cash reserves and ensuring timely collections from customers enables continued operational stability and financial flexibility.

Human Resource

The Company regards its human capital as a key strategic asset and continues to invest in building a high-performance, future-ready workforce. During FY 2024–25, several structured initiatives were implemented to strengthen an inclusive, employee-centric culture anchored in transparency, collaboration, and meritocracy.

Proactive talent management practices have enabled the Company to attract, engage, and retain skilled professionals, while maintaining industrial harmony across all operational locations. The adoption of digital HR solutions has further enhanced employee experience, streamlined key processes, and supported flexible and secure working arrangements in alignment with evolving workforce expectations.

Empowerment at all levels remains a strategic priority, with employees encouraged to exercise ownership and accountability within their defined roles. A performance-driven culture is reinforced through continuous feedback mechanisms, targeted learning and development programmes, and formal recognition frameworks that reward excellence and initiative. As of 31 March 2025, the Company has 374 permanent employees on its rolls.

Internal Control System and Their Adequacy

The Company has an adequate internal control system to ensure the smooth functioning of every department of the organisation. The internal control system is totally in alignment with the business nature and the size of the Company. It tracks various financial transactions effectively and certifies compliance with statutory rules and regulations, thus contributing to the operational efficiency of the Company. The internal audit of the Company is conducted by a firm of chartered accountants. The findings of the internal audit and consequent corrective actions initiated and implemented from time to time are placed before the Audit Committee of the Board of Directors. The Audit Committee reviews such audit findings and the adequacy and reasonableness of the internal control system.

Cautionary Statement

The statements in the Management Discussions and Analysis Report detailing the Companys objectives, projections, estimates, expectations or predictions may be forward looking withinthemeaningofapplicablesecuritieslawsandregulations. As these statements are based on certain assumptions and expectations of future events, actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting global or domestic demand and supplies, political and economic developments in India or other countries, government regulations and taxation policies, prices and availability of raw materials, prices of finished goods, abnormal climatic and geographical conditions, etc. The Company assumes no responsibility in respect of forward-looking statements contained in this Report as the same may be revised or modified in the future based on subsequent developments, information or events.

References:

Global Economy

https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025

Indian Economy

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2106921

https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/0BULL22042025F03F83AE118C4B3B84E662D980C8DE33.PDF https://web-assets.bcg.com/c9/fc/6ce90b2c4248bf000920061b18aa/india-economic-monitor-april25.pdf https://www.pib.gov.in/PressReleasePage.aspx?PRID=2126119 https://www.commerce.gov.in/wp-content/uploads/2025/08/Commerce_AR-2024-25-English-1.pdf

Global Sugar Market

https://apps.fas.usda.gov/psdonline/circulars/sugar.pdf

https://www.fas.usda.gov/data/production/commodity/0612000

Indian Sugar Market

https://www.chinimandi.com/wp-content/uploads/2025/02/Indian-Sugar-Balance-Sheet-by-Rahil-Shaikh-MEIR_31_ Jan_2025_Chinimandi_31102025_SEIC25.pdf

https://ddnews.gov.in/en/indias-current-sugar-season-to-end-with-52-lakh-tonnes-of-buffer-stock-isma/

ICRA Indian Sugar Sector May 2025 Report

https://dfpd.gov.in/WriteReadData/AnnualRecordUploadDocuments/b9c640b8-5889-4ffd-a62d-5b56c5d4f029_ Food%20AR%202024-25%20English%20small%20size.pdf

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2125471

https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Sugar%20Annual_New%20 Delhi_India_IN2025-0027.pdf

Global Ethanol Market

https://ethanolrfa.org/markets-and-statistics/annual-ethanol-production

https://www.precedenceresearch.com/ethanol-market

https://www.tradingview.com/news/reuters.com,2025:newsml_L2N3PM0T9:0-cbot-corn-ends-down-nearly-3-on-trade-jitters-s-american-crops/

Indian Ethanol Market

https://www.chinimandi.com/ethanol-boost-sugar-mills-distilleries-including-grain-based-units-generate-rs-2-lakh-crore-revenue-in-11-years/

https://www.imarcgroup.com/india-ethanol-market

https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=153363&ModuleId=3

https://www.crisilratings.com/en/home/newsroom/press-releases/2024/08/20-percent-ethanol-blending-goal-means-more-sugarcane-utilisation.html

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2113234

https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=153363&ModuleId=3

Global Real Estate Market

https://www.jll.com/en-in/insights/global-real-estate-outlook

Indian Real Estate Market

https://content.knightfrank.com/research/2940/documents/en/affordable-housing-in-india-2024-11745.pdf https://kpmg.com/in/en/blogs/2025/01/what-indias-real-estate-sector-hopes-to-see-in-budget-2025.html https://www.niti.gov.in/sites/default/files/2021-09/UrbanPlanningCapacity-in-India-16092021.pdf https://www.india.gov.in/spotlight/union-budget-2025-2026 https://nasscom.in/knowledge-center/publications/india-gcc-landscape-report-5-year-journey https://www.brickworkratings.com/Research/Commercial%20Real%20Estate_Final.pdf https://www.jll.com/en-in/newsroom/indias-logistics-absorption-hits-504m-sq-ft-record-in-2024