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.

Dhampur Sugar Mills Limited , a prominent player in the sugar industry, is currently grappling with a significant financial challenge while also making strategic moves in the debt market.

Government Reinstates Import/Export Fee

The Assistant Excise Commissioner of the Uttar Pradesh government has reinstated an import/export fee of ₹1 per bulk litre on denatured and special denatured spirit. This decision follows a Supreme Court order dated October 23, 2024, which upheld the state's authority to levy such fees on denatured alcohol.

The fee covers an extended period from the financial year 2018-19 to 2024-25, resulting in a substantial financial impact for Dhampur Sugar Mills. The company's Dhampur unit is facing a total demand of ₹37.73 crore.

Company's Response

Dhampur Sugar Mills is not taking this development lightly. The company has stated that it is contesting the decision and is currently evaluating its legal options. It plans to pursue the matter through appropriate forums, indicating a potential legal battle ahead.

Commercial Paper Issuance

In a separate development, Dhampur Sugar Mills has successfully issued Commercial Paper (CP) amounting to ₹100 crore. The details of this financial instrument are as follows:

The Commercial Paper will be listed on the BSE Limited, providing liquidity to the instrument.

Implications and Outlook

The reinstatement of the import/export fee presents a significant financial challenge for Dhampur Sugar Mills, potentially impacting its liquidity and profitability. However, the company's ability to raise funds through Commercial Paper at a competitive interest rate of 6.95% demonstrates its strong credit standing in the market.

As Dhampur Sugar Mills navigates these financial developments, stakeholders will be keenly watching how the company manages the potential ₹37.73 crore liability while maintaining its operational efficiency and financial health.