Dhampur Sugar Mills Limited , a prominent player in the sugar industry, has made a significant move in the debt market by issuing commercial paper (CP) worth ₹100 crores. This strategic financial decision showcases the company's ability to leverage short-term financing options effectively.

Key Details of the Commercial Paper Issue

Implications and Analysis

The issuance of this commercial paper demonstrates Dhampur Sugar Mills' strong financial standing and creditworthiness in the market. The IND A1+ credit rating, which is the highest short-term rating, indicates a very strong degree of safety regarding timely payment of financial obligations, reflecting positively on the company's financial health.

The 6.95% interest rate for a 91-day tenure suggests that the company has secured competitive short-term financing. This move could be aimed at managing working capital efficiently or funding short-term operational needs.

Market Impact

The successful placement of the commercial paper, especially with a reputed institution like Kotak Mahindra Bank Limited, may boost investor confidence in Dhampur Sugar Mills. The listing on BSE Limited will provide liquidity to the instrument, potentially attracting more investors to the company's debt securities.

Investor Education Initiative

In a separate but noteworthy development, Dhampur Sugar Mills has also launched a 100 Days Campaign called "Saksham Niveshak". This initiative aims to engage shareholders for KYC updates and other related matters, with a focus on preventing the transfer of unpaid or unclaimed dividends to the Investor Education and Protection Fund (IEPF). This proactive approach demonstrates the company's commitment to shareholder welfare and regulatory compliance.

As Dhampur Sugar Mills continues to navigate the financial markets with such strategic moves, investors and market watchers will likely keep a close eye on the company's performance and future financial decisions.

Dhampur Sugar Mills Limited , a leading player in the Indian sugar industry, has announced its financial results for the first quarter, revealing a mixed performance with revenue growth but declining profitability.

Revenue Growth

The company reported a consolidated revenue from operations of ₹740.68 crore for Q1, marking a 9.2% increase from ₹678.22 crore in the same period last year. This growth was primarily driven by higher sugar sales and improved realizations in the sugar segment, as well as increased ethanol sales.

Profitability Decline

Despite the revenue growth, Dhampur Sugar Mills experienced a significant drop in profitability:

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) decreased to ₹30.70 crore from ₹31.00 crore in the previous year's quarter, with the EBITDA margin compressing to 4.1% from 4.6% year-over-year.
• Net profit fell sharply to ₹0.70 crore compared to ₹1.30 crore in the corresponding quarter last year.
• Earnings per share (EPS) declined to ₹0.10 from ₹0.20 in the previous year's quarter.

Segment Performance

The sugar segment, despite showing revenue growth, reported a negative EBIT of ₹3.10 crore, indicating challenges in this core business area. The ethanol segment demonstrated strong performance with both revenue and EBIT growth.

Operational Highlights

• Sugar sales volume increased marginally to 0.80 lakh tons (previous year's quarter: 0.79 lakh tons).
• Sugar realization improved to ₹39,999 per ton (previous year's quarter: ₹38,967 per ton).
• Ethanol sales volume grew significantly to 182.39 lakh BL (previous year's quarter: 145.12 lakh BL).

Challenges and Outlook

The company faced headwinds due to lower pol in cane, which resulted in higher production costs for sugar. This factor likely contributed to the pressure on profitability despite increased revenues.

Financial Position

As of the end of the quarter, Dhampur Sugar Mills maintained a stable financial position:

• Debt-to-Equity ratio stood at 0.56 times.
• Current ratio improved to 1.66 times from 1.28 times in the previous year.
• Net worth was reported at ₹1,132.57 crore.

Share Buyback

During the quarter, the company completed a share buyback program, repurchasing 10,81,081 equity shares at ₹185 per share, totaling ₹20 crore. This move is likely aimed at enhancing shareholder value.

Dhampur Sugar Mills' Q1 results reflect the complex dynamics of the sugar industry, with revenue growth offset by profitability challenges. The company's diversification into ethanol and other segments appears to be a strategic move to balance the volatility in its core sugar business.