Detailed Narrative
FY25 Performance Overview
Balrampur Chini Mills concluded FY25 on a stable note, with the sugar segment showing strong performance and healthy margins. However, the distillery segment was impacted by the government's decision not to revise ethanol prices for juice and B-heavy routes, despite FRP revisions. The company's crushing was down only 1.73% season-on-season, and gross recovery dropped by 0.44%, which was the lowest decline among factories in East UP.
Sugar Sector Outlook (2024-25)
India's sugar production for 2024-25 is projected at 26 million tonnes net (after 3.5 million tonnes diversion), a decline from 32 million tonnes net in the previous year. UP's production is estimated at 9.28 million tonnes, down from 10.35 million tonnes. Domestic consumption is estimated at 28 million tonnes, with closing stock on October 1, 2025, expected to be around 5.2 million tonnes. Current sugar prices are firm at approximately Rs. 41/kg.
Ethanol Segment Challenges & Future
The distillery segment faced headwinds due to the government's decision to not revise ethanol prices for juice and B-heavy routes, despite increased FRP. This policy shift makes sugar diversion for ethanol unattractive and could potentially undermine the E30 blending program by 2030. Management believes the government understands the need for FRP linkage to ethanol prices, expecting a display of this understanding by next year or when ethanol prices are fixed.
PLA Project Update
The company is making strong progress on its Polylactic Acid (PLA) project, with an 80,000-tonne capacity plant on track for commissioning by Q3 FY27. The project has a net capex of Rs. 1750 crores (after 50% government subsidy) and is expected to generate around Rs. 2000 crore annual revenue with an EBITDA margin of ~35%. The plant will use sugar as feedstock, requiring about 1.25 lakh tonnes of sugar, and is powered entirely by renewable energy.
Cane Management & Recovery
Balrampur's cane availability reduced by only 1.74% (vs. UP average of 2.5%), and gross recovery dropped by 0.44% (vs. UP average of 0.62%), demonstrating outperformance due to proactive varietal rebalancing and farm engagement. The company's dependence on the red-rot affected 0238 variety is now only 6%, and management expects yield enhancement if weather conditions are favorable.
Inventory and Sales Outlook
As of March 31, the company held about 7.1 lakh tonnes of sugar, increasing to 7.5 lakh tonnes in April, which is expected to be liquidated by November. Historically, annual sugar sales have been around 9.4 lakh tonnes, with a potential to reach 10 lakh tonnes in FY26, indicating a positive outlook for sales volumes.