Detailed Narrative
Record Sugar Crushing Performance
Zuari Industries achieved its highest ever Q3 crush of 67.28 lakh quintal, significantly up from 60.79 lakh quintal last year. The sugar factory operated at over 100% capacity utilization during the quarter, a rare feat in the industry, driven by improved cane development and procurement. This operational efficiency contributed to a robust performance in the Sugar, Power, and Ethanol (SPE) division, with power generation up 6.7% and ethanol production up 4.8%.
Ethanol Business Challenges and Outlook
While ethanol production increased by 4.8% and sales by 17.7% in Q3 FY26, the segment faces headwinds from stagnant ethanol procurement prices. Despite a 16.7% increase in sugarcane SAP, the government has not yet raised ethanol prices, negatively impacting profitability. Management also noted significant overcapacity in the ethanol market, calling for a resolution to ensure the business model's sustainability, and aims to operate its distillery for 300+ days annually.
Real Estate DM Model Expansion
Zuari Infra World, the company's real estate subsidiary, continues to advance its asset-light Development Management (DM) model, achieving a Gross Development Value (GDV) of INR3,100 crores. The company has expanded its presence by entering Bangalore and is actively pursuing DM projects in Hyderabad and Kolkata. Management has an internal target of INR10,000 crores GDV for the current financial year, viewing DM as a key growth area for future revenue generation.
Debt Reduction and Asset Monetization
The company's gross external debt (excluding working capital) reduced slightly to INR1,848 crores from INR1,863 crores in the previous quarter. Significant inflows of INR800-900 crores from the St. Regis Dubai project, expected by April 2026, and INR273 crores from Zuari Agro Chemicals, are anticipated to substantially reduce debt in the next financial year. However, regulatory challenges in Goa, including new laws restricting land use change, are currently preventing the monetization of land holdings there.
EPC and Joint Venture Performance
Simon India, the EPC arm, commissioned a fifth evaporator project for PPL worth INR55.5 crores and secured new orders totaling INR100 crores, focusing on deep expertise in the fertilizer segment. The Oil Tanking joint venture saw its income increase to INR7.4 crores from INR5.5 crores, primarily due to renegotiated rates with OMCs. Zuari Envien Bioenergy, the ethanol JV, commenced operations in January 2026 and has secured 20,000 kilo liters of contracts, contributing to revenues from the current quarter.