Ponni Sugars (Erode) Limited delivered impressive financial performance for the third quarter of FY26, demonstrating strong operational efficiency across its sugar and co-generation segments. The company's results highlight significant year-on-year improvements in profitability and revenue generation.

Financial Performance Overview

The company's financial metrics showed substantial improvement across key parameters during Q3FY26:

Earnings per share increased significantly to ₹11.01 from ₹2.80 in the corresponding quarter of the previous year, reflecting the strong profit growth.

Nine-Month Performance

For the nine-month period ended December 31, 2025, the company maintained its growth trajectory:

Segment-wise Analysis

The company operates through two primary business segments - sugar manufacturing and co-generation of power:

Sugar Segment

• Generated revenue of ₹14,084 lakhs in Q3FY26 compared to ₹11,053 lakhs in Q3FY25
• Segment profit before tax and interest was ₹8 lakhs versus a loss of ₹97 lakhs in the previous year
• Nine-month sugar revenue reached ₹29,363 lakhs against ₹24,303 lakhs in the corresponding period

Co-generation Segment

• Recorded revenue of ₹3,605 lakhs in Q3FY26 compared to ₹2,746 lakhs in Q3FY25
• Segment profit increased to ₹816 lakhs from ₹442 lakhs year-on-year
• Nine-month co-generation revenue stood at ₹9,453 lakhs versus ₹8,695 lakhs previously

Corporate Governance Updates

The Board of Directors, meeting on January 30, 2026, approved several important matters:

• Policy Amendment: Based on Audit Committee recommendations, the Board amended the Related Party Transactions policy, effective from the meeting date
• Financial Results Approval: The unaudited financial results for Q3FY26 and nine months were reviewed by the Audit Committee and approved by the Board
• Statutory Compliance: The results underwent limited review by statutory auditors S. Viswanathan LLP

Key Financial Highlights

The company's balance sheet position remained stable with total assets of ₹58,707 lakhs as of December 31, 2025. The paid-up equity share capital remained unchanged at ₹860 lakhs with a face value of ₹10 per share. Total comprehensive income for the quarter was ₹61 lakhs after accounting for other comprehensive income adjustments.

Outlook Considerations

Management noted that sugar production being seasonal means quarterly performance may not indicate full-year trends. The company is eligible for tariff revision on power exports from 2012 following an Appellate Tribunal for Electricity judgment dated September 3, 2025, though recognition awaits regulatory redetermination. Additionally, the company received a Transfer Pricing Officer order on January 28, 2026, with material impact on transfer pricing for bagasse and power, which may affect tax relief eligibility under Section 80-IA of the Income Tax Act.

Ponni Sugars Erode Limited shareholders have approved a comprehensive Memorandum of Understanding (MoU) with Seshasayee Paper and Boards Limited (SPB) for material related party transactions. The approval was obtained through a postal ballot e-voting conducted from November 5 to December 4, 2025.

Voting Results

• The resolution passed with 99.97% votes in favor.
• 106 members voted for the proposal, while 4 members voted against it.

Key Details of the Approved MoU

The new MoU will supersede all existing agreements between the two companies and cover a range of transactions for a five-year period from January 2026 to December 2030:

1. Purchase, sale, supply, exchange, or transfer of:

   • Bagasse
   • Sugar
   • Fuel
   • Power
   • Water
   • Other products

2. Availing and rendering services

3. Sharing of common expenses

Financial Implications

• The aggregate value of all Related Party Transactions (RPTs) with SPB is capped at Rs 60.00 crore per financial year during the MoU's tenure.
• This amount represents approximately 16.80% of Ponni Sugars' annual consolidated turnover for the immediately preceding financial year (2024-25).
• For SPB, the transactions would account for about 3.40% of its annual consolidated turnover.

Strategic Importance

The bagasse supply arrangement forms the foundation of Ponni Sugars' establishment and its promotion by SPB. Key points include:

• Ponni Sugars commits to supplying a fixed percentage of its bagasse production to SPB.
• Pricing is based on the cost equivalent of alternative fuel used, plus an incentive component.
• The arrangement aims to secure continuous raw material supply for SPB's pulp and paper production.

Corporate Governance Aspects

• The Audit Committee, consisting of only independent directors, had reviewed and approved the proposed RPTs.
• The company sought fresh shareholder approval, adhering to the revised SEBI guidelines on minimum information disclosure for RPTs.
• SPB holds a 32.35% stake in Ponni Sugars, making it a related party under the Companies Act, 2013 and SEBI-LODR regulations.

This approval by Ponni Sugars' shareholders demonstrates the company's commitment to transparency and compliance with regulatory requirements while maintaining its strategic partnership with Seshasayee Paper and Boards Limited.