Sugar Industry Faces Setback as Government Maintains Ethanol Prices for 2025-26

1 min read     Updated on 25 Sept 2025, 11:52 AM
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Riya DeyScanX News Team
Overview

The Indian government's decision to keep ethanol prices from sugar-based feedstocks at Rs 65.61 per litre for 2025-26 has disappointed sugar companies. Industry leaders express concern over the lack of price parity with maize-based ethanol (Rs 66.07 per litre). This decision may incentivize mills to shift focus from ethanol to sugar production, potentially leading to a sugar surplus. The industry, which invested Rs 35,000-40,000 crore in ethanol capacity, now faces challenges in profitability and market dynamics.

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*this image is generated using AI for illustrative purposes only.

The sugar industry in India is grappling with a significant setback as the government announced its decision to maintain ethanol prices from sugar-based feedstocks at Rs 65.61 per litre for the Ethanol Supply Year 2025-26. This move has left sugar companies disappointed, particularly as they had been advocating for price parity with maize-based ethanol, which is priced at Rs 66.07 per litre.

Industry Reaction

Atul Chaturvedi, Executive Chairman of Shree Renuka Sugars , expressed his dismay, describing the decision as a "major dampener" for the industry. Chaturvedi highlighted that the sugar sector had made substantial investments in ethanol capacity, amounting to Rs 35,000-40,000 crore, based on government incentives.

Price Disparities and Potential Consequences

While the government increased the price of rice-based ethanol by 3% to Rs 60.32 per litre, sugar mills received no relief despite facing higher Fair and Remunerative Prices (FRP) for sugarcane. The current pricing structure presents a challenging scenario for sugar mills:

Item Price
Ethanol price realization Rs 37.00 per kg
Domestic sugar prices Rs 39.00-41.00 per kg

This disparity in pricing may incentivize mills to shift their production focus towards sugar rather than ethanol. Such a shift could potentially lead to a supply surplus in the sugar market, especially with the expectation of a large harvest in late October.

Impact on Sugar Industry

The unchanged ethanol prices for sugar-based feedstocks could have several implications for the industry:

  1. Reduced Ethanol Production: Mills may opt to produce more sugar instead of ethanol, given the higher price realization for sugar.
  2. Potential Sugar Surplus: Increased sugar production could lead to an oversupply in the market.
  3. Price Pressure: A sugar surplus may exert downward pressure on sugar prices, affecting the industry's profitability.
  4. Investment Concerns: The industry's significant investments in ethanol capacity may face challenges in terms of returns and utilization.

Looking Ahead

As the sugar industry navigates these pricing challenges, it remains to be seen how individual companies will adjust their production strategies. The balance between ethanol and sugar production will be crucial for maintaining profitability and managing market dynamics in the coming years.

The government's decision underscores the complex interplay between agricultural policy, energy needs, and industrial growth in India's sugar sector. Stakeholders will be closely watching for any further policy adjustments that might address the industry's concerns while balancing national priorities.

Historical Stock Returns for Shree Renuka Sugars

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Shree Renuka Sugars Reports 25% Revenue Growth Amid Challenges in FY24

1 min read     Updated on 06 Sept 2025, 11:56 AM
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Reviewed by
Jubin VergheseScanX News Team
Overview

Shree Renuka Sugars Limited announced its FY2024 financial results, showing a 25% increase in total revenue and a 5% rise in consolidated EBITDA to INR 7,560.00 million. The refinery division performed exceptionally well with production up 30%, sales revenue up 48%, and EBITDA growth of 41%. However, ethanol and sugar segments faced challenges due to restrictive government policies. Despite revenue growth, the company's consolidated loss before tax widened by 157% to INR 4,618.00 million. The company issued non-convertible debentures worth INR 2,850.00 million and acquired Anamika Sugar Mills Private Limited for INR 2,355.00 million in October 2023.

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*this image is generated using AI for illustrative purposes only.

Shree Renuka Sugars Limited , a prominent player in the sugar industry, has announced its audited financial results for the quarter and year ended March 31, 2024, revealing a mixed performance across its business segments.

Revenue Growth and EBITDA Performance

The company reported a robust 25% increase in total revenue on both standalone and consolidated basis, demonstrating strong top-line growth. Consolidated EBITDA also saw an improvement, rising 5% to INR 7,560.00 million compared to INR 7,196.00 million in the previous year.

Segment-wise Performance

Refinery Division

The refinery division emerged as a standout performer for Shree Renuka Sugars:

  • Production up by 30%
  • Sales revenue increased by 48%
  • EBITDA grew by 41%

This impressive performance was attributed to firm international sugar prices and high export volumes.

Ethanol and Sugar Segments

Despite the strong showing in the refinery division, the ethanol and sugar segments faced significant challenges. The company cited restrictive government policies on ethanol as a key factor impacting these segments.

Financial Highlights

Metric FY2024 FY2023 Change
Total Revenue - - +25%
Consolidated EBITDA 7,560.00 7,196.00 +5%
Consolidated Loss Before Tax 4,618.00 1,796.00 +157%

Widening Losses

Despite the revenue growth and improved EBITDA, Shree Renuka Sugars reported a significant widening of its consolidated loss before tax. The loss increased to INR 4,618.00 million in FY2024, compared to INR 1,796.00 million in the previous year, representing a substantial 157% increase.

Corporate Actions

Non-Convertible Debentures Issue

The company has taken steps to strengthen its financial position by issuing 28,500 non-convertible debentures:

  • Face value: INR 1,00,000 each
  • Issued to: DBS Bank Ltd
  • Total amount raised: INR 2,850.00 million

Strategic Acquisition

In a move to expand its operations, Shree Renuka Sugars completed the acquisition of Anamika Sugar Mills Private Limited:

  • Acquisition cost: INR 2,355.00 million
  • Completion date: October 2023

This strategic acquisition is expected to enhance the company's production capabilities and market presence in the sugar industry.

In conclusion, while Shree Renuka Sugars has demonstrated strong revenue growth and improvements in its refinery division, the company faces challenges in its ethanol and sugar segments. The widening losses highlight the need for strategic measures to improve overall profitability in the coming years.

Historical Stock Returns for Shree Renuka Sugars

1 Day5 Days1 Month6 Months1 Year5 Years
-0.20%+0.57%-5.06%-0.90%-28.20%+198.10%
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