India’s Sugar Mills Revenue to Rise by 10% in 2025: ICRA
New Delhi, India – The revenue of sugar mills in India is expected to increase by 10% in the financial year 2025. This growth is supported by higher sales volumes, firm domestic sugar prices, and increased distillery volumes due to new capacities, according to ICRA, a rating agency.
ICRA also mentioned that the operating profit margins of sugar mills are projected to remain comfortable in FY2025, similar to FY2024. This is due to firm sugar prices and higher cane prices for the sugar year 2025. The outlook for the sugar sector in India is stable, with anticipated improvements in revenues, stable profitability, and comfortable debt coverage metrics. Government policies, including the ethanol blending program (EBP), also support this stability.
India is the world’s largest producer of sugar, with about 34 million metric tons produced in 2023-2024. Sugar farming is a major source of income and employment in various states, providing jobs to around 500,000 workers in sugar mills. Maharashtra, Uttar Pradesh, and Karnataka are key sugar-growing states, with Maharashtra leading in milled sugar production.
Girishkumar Kadam, Senior Vice President & Group Head – Corporate Ratings at ICRA, commented on the expected domestic sugar production and prices. He said, “ICRA projects the net sugar production to decline to 30.0 million MT in SY2025 from 32.0 million MT in SY2024 due to higher diversion towards ethanol production amid high sugar stock levels. Even with increased diversion to 4 million MT in SY2025, the closing sugar stock level is likely to remain moderately high.”
ICRA expects the closing sugar stock to be around 9.1 million MT as of September 30, 2024, higher than the 5.6 million MT as of September 30, 2023. This would be equivalent to 3.8 months of consumption.
Regarding ethanol blending, Kadam noted, “The ethanol blending trend has been encouraging till Ethanol Supply Year (ESY) 2024, with higher contributions from grain-based distilleries. For ESY2025, the increase in diversion towards ethanol production over the cap is critical to meet the 20% blending target set by the Government of India. Key challenges include sufficient feedstock availability for grain-based distilleries and infrastructure ramp-up to support higher blending levels. The timely launch of E-20 compliant vehicles and public adoption are also crucial to achieving the blending targets.”
Doubts Revealed
ICRA -: ICRA is a company that gives ratings to businesses and industries to help people understand how well they are doing. It stands for Investment Information and Credit Rating Agency.
Revenue -: Revenue is the money that a company makes from selling its products or services. For sugar mills, it means the money they earn from selling sugar and other products.
FY2025 -: FY2025 means the financial year 2025. A financial year is a period used for calculating annual financial statements in businesses and other organizations.
Operating profit margins -: Operating profit margins show how much money a company makes from its regular business activities after paying for things like materials and wages. It helps to understand how well the company is managing its costs.
Ethanol production -: Ethanol is a type of alcohol that can be used as fuel. Sugar mills can make ethanol from sugarcane. It helps reduce pollution and can be mixed with petrol to run vehicles.
Blending levels -: Blending levels refer to the amount of ethanol mixed with petrol. Higher blending levels mean more ethanol is mixed with petrol, which can help reduce pollution and save on petrol costs.
Maharashtra -: Maharashtra is a state in western India. It is one of the largest producers of sugar in the country.
Uttar Pradesh -: Uttar Pradesh is a state in northern India. It is also a major producer of sugar in India.
Karnataka -: Karnataka is a state in southern India. It is another important state for sugar production in India.
