Balrampur Chini

The sugar sector anticipates a production rise to 34.5 million tonnes (pre-diversion) for the 2025-26 season, with net production at 31 million tonnes after diverting 3.5 million tonnes for ethanol. Domestic consumption is projected at 28.5 million tonnes, leading to an estimated closing stock of 6 million tonnes. The Government has allowed 1.5 million tonnes of sugar exports for the season. A key concern is the U.P. Government's INR 30 per quintal increase in SAP, raising it to INR 400 per quintal, which necessitates improved domestic sugar realizations to maintain industry profitability. The company is in dialogue with the UP Government for a relief package, including potential increases in country liquor prices and other concessions.

For the 2025-26 Ethanol Supply Year, approvals from sugar sources stand at 289 crore litres, representing only 28% of the total requirement, with the balance expected from grain-based feedstocks. This shift could lead to underutilized sugar-based ethanol capacity. Balrampur Chini expects to produce around 28 crore liters of ethanol, comprising 9 crore liters from Juice, 12 crore liters from B-heavy, 3+ crore liters from maize, 3.5 crore liters from country liquor, and 1 crore liter from C-Heavy. The management emphasizes the critical need for timely upward revision of ethanol prices for Juice and B-heavy routes to offset rising cane costs and ensure the viability of sugar mills, advocating for a larger share of the ethanol pie for the sugar sector.

Balrampur Chini is making steady progress on its Polylactic Acid (PLA) project, a key forward integration and value addition strategy. As of October 31, 2025, investments of INR 1,093 crore have been made, with INR 570 crore funded through debt and the remainder from internal accruals. Commercial production is expected to commence in October 2025, and the company is not anticipating any loss in the first year of operation. Market development is underway, including trading of imported PLA, with strong customer interest and efforts focused on securing mandates and direct customer engagement. The company aims to achieve 100% capacity utilization within a few months post-commissioning.

The company reported a healthy performance in a seasonally weak quarter, characterized by improved volumes and realizations, further supported by upward revisions in power tariffs. The Board of Directors declared an interim dividend of INR 3.50 per equity share, totaling INR 70.7 crore. For the upcoming season, Balrampur Chini anticipates a 7%-8% increase in cane crushing, which is expected to improve fixed cost absorption and recovery. The company's capital allocation for the PLA project highlights a mix of debt and internal accruals, demonstrating a disciplined approach to investment.

The sugar industry faces challenges from rising sugarcane prices (e.g., UP SAP increase) and the competitive landscape of ethanol production. Management is actively engaging with both the UP and Central Governments to secure a relief package and advocate for ethanol price revisions. The company believes that a comprehensive policy for the bioplastic sector, including a level playing field for PLA, is essential. Despite the challenges, Balrampur Chini remains confident in its operational improvements, strategic diversification through PLA, and ability to create long-term shareholder value.