Magadh Sugar & Energy Ltd

The Indian sugar industry suffered a resource decline during the last financial year, affecting most related companies, of which your company was one.

The industry trough was on account of an extensive national decline in cane crushing, induced by climatic reasons. The decline was on account of adverse climatic reasons and cane disease, which moderated cane output largely in Maharashtra, Karnataka and Uttar Pradesh. By the effective close of the 2024-25 sugar season, pan-India cane output had declined 2.23% compared to the previous sugar season.

This decline affected the performance of sugar companies like Magadh. The Company reported a 7.50% decline in cane crushing during the 2024-25 season. Besides, the Company suffered a 74 bps decline in recovery. The decline in recovery alone led to a notional reduction of 16,000 Tonnes of saleable sugar.

The Company suffered a 13.46% decline in sugar production during the season. This decline was aggravated by an increase in the cane cost by a net Rs.10 per quintal, as announced by the Bihar government, which increased the overall cane cost.

Much of the decline in the Company's production was on account of the red rot disease that affected its Co 0238 cane variety. This variety enjoyed a successfully productive run for more than a decade; it was responsible for enhanced yields that transformed the fortunes of farmers and millers. The disease outbreak highlights that the productive days of this cane variety may be nearing an end. The fact that 55% of the Company's command areas were still under this cane variety evoked a priority to replace it with robust alternatives.

The saving grace was that the national decline in cane crushing moderated the quantum of available sugar in the face of rising demand. The result is that sugar realisations appreciated 2.90% in 2024-25, helping the Company recoup a part of the production decline.

At Magadh Sugar, we remain committed to enhance our exposure in non-sugar businesses. This is expected to strengthen our recall as a series bio-fuel player.

The Company continued to strengthen its business in the face of the industry's weakness. It commissioned an increase in crushing capacity at its Narkatiaganj unit from 7,500 TCD to 10,000 TCD, capitalising on economies of scale. The increased cane crushing will generate a larger throughput for sugar and distillery operations. During the early part of this financial year, the Company graduated its molasses-fed distillery of 80 KLPD to multi-feed; this wider flexibility is expected to extend the distillery's operational days from 270 to 330 in a financial year, strengthening overall throughput and profitability.

The Company's 70 KLPD Sidhwalia distillery was turned into a multi-feed facility before the start of the 2024-25 sugar season, and expected to operate at least 330 days.

At the Narkatiaganj facility, the Company intends to commission a slop boiler, which is intended to increase distillery operations from 270 days a year to 330 days a year, strengthening throughput and capital efficiency. The distillery business is expected to help the Company strengthen cash flows, marked by a shorter payments cycle from oil marketing companies. This is expected to reduce short-term debt and widen revenues.

The Company is broadly de-risked from a debt, cane and liabilities perspective. The Company possessed Rs.229 Crore of longterm debt on its book as on 31^st March, 2025, which is equivalent to nearly two years of surplus. The proceeds generated from the sale of sugar inventory should more than cover the Company's short-term debt.

Even as the Company countered the weakness in the sugar sector in 2024-25, it remained committed to widen its portfolio risk across products and resources in addition to increasing business scale. This business model is expected to enhance revenues, margins and cash flows; it is likely to enhance the Company's brand as serious bio-fuels player.

The combination of enhanced environment responsibility and business profitability represents a robust platform that should deepen our sustainability across the coming years.

Chairperson.