The complexities and volatility of Sugar manufacturing notwithstanding, we once again delivered outstanding performance in this segment during FY 21. What enabled us to drive sustained growth was our focussed strategic approach of proactively identifying and tapping into the business potential across the value chain. Our sustainable growth in our Sugar business segment has been maintained through: a) the stringent quality controls we exercise across the value chain, b) our seamless logistics and delivery systems, c) and our concerted focus on sustaining operational and cost efficiencies.

With effect from April 1, 2020, we have combined the Co-generation operations with the Sugar operations and the co generation activities are no longer a separate operating segment for the Company.

Sugar potential unlocked in SS 2020-21

The performance of our Sugar segment remained in line with expectations during the year, despite the difficult macro environment. In terms of sugar production, the Company has been ranked second in the country, with the Khatauli Sugar Mill achieving the highest sugar production as a single unit and second highest sugarcane crush. The Sabitgarh and Rani Nangal units recorded their highest ever crush during the year.

Early start of the sugarcane crushing operations and efficient supply-chain management helped us to maintain our crushing volumes. Our deep-rooted relationships with farmers, which we continued to actively nurture through strategic interventions and investments even amid the COVID challenges, proved to be a major factor in boosting our crushing, and resultantly our production. Higher sugar and ethanol despatches during the year led to increased turnover of Sugar business, helping to compensate for the decline in the Engineering business resulting from the lockdown and COVID-related issues. Even though the yields have decreased throughout the state of U.P., and there has been an impact of red rot in eastern as well as central UP, we managed to maintain higher recovery as compared to the U.P. average.

More potential ahead...

As we move forward, we shall adopt a multi-pronged strategy to seize the unfolding opportunities in this business segment. Even as we continue to focus actively on capacity and efficiency enhancement, we aim to ramp-up the diversification of our sugar portfolio, with a varietal substitution programme to reduce our dependence on the miracle variety - Co-0238. Besides helping mitigate the risks of Co-0238.

We strategically forayed into the Potable Liquor market - Indian Made Indian Liquor (IMIL) - towards the end of third quarter during the financial year under review

Seeing opportunity in Alco Beverages

Better working capital management and lowering of our cost of funds remains integral to our growth-led business strategy. In line with this strategic approach, we continued, during the year, to look for potential sources of making the optimal use of our existing assets. One such asset is our 160 KLPD distillery at Muzaffarnagar (Uttar Pradesh), which has the capacity to manufacture quality ENA (potable alcohol).

With research by an external agency, specially hired by the Company, showing potential for growth in the IMIL market in U.P., we decided it was the right time for us to leverage our in-house ENA production facility. We thus strategically forayed into the Potable Liquor market - Indian Made Indian Liquor (IMIL) - towards the end of third quarter during the financial year under review. We are now manufacturing IMIL at the bottling facility of our Muzaffarnagar alco-chemical premises, through our Alcohol vertical, which forms part of our Distillery operating segment.

In addition to the benefit of value addition to our ENA production, this forward integration will help reduce our obligation to supply the Molasses (termed as Levy Molasses) to various other IMIL manufacturing units, at a price much lower than the market rate. The venture is also aligned to our vision of entering Indian Made Foreign Liquor (IMFL) bottling in the near future, as the experience we gain from potable liquor production would help in the IMFL bottling foray. The Company has received an approval to process ENA up to 52.8 lakh litres for manufacture of IMIL, and it has plans to increase the capacity up to 3 lakh cases per month in phases.

We are also planning to launch IMIL under multiple brands with attractive packaging, for enhanced and superior market penetration in this segment.

Performance Highlights - Integrated Sugar Operations

Gross Recoveries (after adjustment on account of B-heavy molasses): # 11.86% for SS 20-21, *11.97% for SS 19-20