Chairman's Speech

Chairman’s Speech

Ladies and Gentlemen,

I am truly delighted and deeply gratified to be here with you today, addressing the 31st annual General Meeting of your Company.

The financial year 2024–25 was one of the most challenging periods in our three-decade history—
arguably the toughest sugar season we have faced in over a decade. It tested our resilience, adaptability, and operational strength in unprecedented ways.

During the year, our total income stood at ₹1,365 crore, compared to ₹1,721 crore in the previous
financial year. EBITDA declined to ₹120 crore from ₹217 crore in FY 2023–24. This downturn was
primarily driven by the complete suspension of sugarcane crushing operations in the first quarter of 2025, coupled with disruptions in our distillery operations. These factors led to under-absorption of fixed overheads and consequently increased our cost of production.

Despite these headwinds, we remained focused and agile, closing the year with a profit after tax of ₹23 crore—a testament to our disciplined approach and long-term operational resilience.

A Difficult Year, Handled with Resilience

Over the past two successive seasons, our sugarcane command areas were severely impacted by red rot disease—a crisis that significantly curtailed our cane crushing volumes and, consequently, our revenue. From a peak of over 38 lakh tons crushed in FY23, volumes fell to 26 lakh tons this year—a sharp 31% decline from our best performance. For most sugar companies, such a downturn would pose a serious threat to financial stability. Despite these formidable challenges, your Company remained firmly profitable. We generated cash accruals of ₹92 crore, reduced long-term debt by ₹67 crore, and successfully completed a ₹39 crore share buyback. All of this was achieved while maintaining a
remarkably low long-term debt-equity ratio of just 0.18—an indicator of our strong financial discipline and prudent capital management.

How We Withstood the Storm

Our ability to weather the storm is a reflection of the unique DNA of Dwarikesh—a culture built on financial discipline, operational integration, and a farmer-first approach. When the red rot crisis emerged, we responded with urgency and clarity of purpose. We swiftly launched an accelerated varietal transition program, phasing out the once-dominant but now vulnerable Co 0238 variety and replacing it with more resilient alternatives. This progress was made possible by the deep trust we’ve nurtured with our farming community over the decades—built through timely payments, continuous support with seeds and agri-inputs, and our unwavering commitment to stand by them in both good times and bad.

ESG & sustainability

Over the past two years, Dwarikesh Sugar Industries has strengthened its ESG strategy with structured, measurable actions. Beyond BRSR disclosures, we have adopted the IFRS Foundation’s Integrated Reporting Framework and, in FY25, published our first Integrated Report—underscoring our commitment to integrated thinking and transparent value creation. A Board-level ESG Committee oversees progress, following a FY24 materiality assessment that defined our key ESG priorities.

We have embedded circular economy principles across operations. Bagasse powers our co-generation plants, enabling 99.93% renewable energy use in FY25 and generation of 787,000+ GJ of green energy, with 46% supplied to the state grid. Our distilleries operate with Zero Liquid Discharge, sugar units with STPs, and 100% wastewater is treated and reused. We captured 9,783 MT of CO₂ for industrial use and disclosed Scope 3 emissions for the first time. On the social front, we sustained a high employee retention rate, provided extensive training, paid nearly ₹1,000 crore to farmers, and positively impacted over 23,500 people through our CSR initiatives. Embedding ESG into our strategy strengthens resilience, meets stakeholder expectations, and drives sustainable long-term value.

Overview of Sugar Industry Developments: Global, National, and Uttar Pradesh

Global Scenario:

The global sugar market is projected to post surpluses of 3.04 million tons in 2025–26 and 2.22 million tons in 2026–27, following a deficit in 2024–25. Asia remains central, with regional output expected to rise 12% YoY to nearly 80 million tons. Improved rainfall in India (+7% above average) has supported a strong crop outlook.

International sugar prices have declined, with raw sugar now below 16.5 cents/pound and white sugar around $470/MT. The two consecutive surplus years are expected to keep global prices subdued.

India’s Sugar Sector:

For SS 2024–25, India’s net domestic sugar production is estimated at 26.1 million MT, down from the previous year. Closing stocks as of September 30, 2025, are estimated at 5.5 million MT—lower than 8 million MT last year. ISMA’s preliminary estimate for SS 2025–26 projects gross sugar production at 34.9 million MT, with 3.4 million MT likely to be diverted for ethanol. Higher estimated production is on account of estimate of robust crop in Maharashtra & Karnataka. These projections hinge on monsoon distribution and rainfall intensity.

The prices for ethanol derived from sugarcane juice and B-Heavy molasses haven’t been revised since November 2022. A long-pending price revision is expected this year. Decisions on sugar exports is also pending.

Domestic sugar prices have recovered from early FY26 lows (~₹4,000/quintal) and are now nearing ₹4,100/quintal, with a firm outlook ahead.

As of June 30, 2025, 661 crore liters of ethanol have been blended with fuel (18.93% blend rate). Of the 637 crore liters contracted by OMCs, the sugar sector contributed 256 crore liters (40%), with the grain sector supplying the remaining 60%.

Uttar Pradesh Focus:

Uttar Pradesh’s sugar production for SS 2024–25 declined to ~9.3 million MT due to lower cane availability, reduced recovery rates, and increased ethanol diversion. For SS 2025–26, gross output is projected at 10.3 million MT

The high-yielding Co 0238 variety, once pivotal to UP’s sugar sector revival, is being phased out due to vulnerability to red rot, with newer early-maturing varieties taking its place.

Your company – way forward

In response to the challenges of SS 2023–24, the Company phased out the Co 0238 variety, promoted resilient alternatives, and advanced agronomic and operational improvements. Despite headwinds in SS 2024–25, progress has been satisfactory, and with continued R&D, new cane varieties, and digital farmer engagement through the e-Kisan app, we expect a strong recovery by SS 2025–26.

The revival of the ethanol blending program, higher ethanol procurement prices, potential early export quotas, better sugar realizations, and ongoing cane development are expected to strengthen the Company’s growth prospects.

I extend my heartfelt gratitude to all who form the backbone of our journey—our dedicated farmers, committed employees, loyal customers, supportive lenders, and the various Government agencies whose guidance and cooperation have been invaluable. Above all, I thank you—our esteemed shareholders—for your unwavering trust and confidence. It is your faith in our vision and resilience that continues to inspire and propel us forward.

I assure you that Dwarikesh will remain steadfast in its pursuit of excellence—guided by humility, strengthened by resilience, and driven by an unwavering commitment to our goals.

Gautam R. Morarka
Executive Chairman
Dwarikesh Sugar Industries Ltd.
Date: August 19, 2025