New Delhi
ICRA forecasts a 10% increase in the revenue of sugar mills for the financial year 2025. This growth is anticipated due to higher sales volumes, stable domestic sugar prices, and increased distillery volumes following the operationalization of new capacities. The rating agency also predicts that the operating profit margins of sugar mills will remain robust, similar to FY2024, supported by strong sugar realizations and higher cane prices for SY2025.
The outlook for the sugar sector in India is deemed stable, underpinned by improved revenues, steady profitability, and favorable debt coverage metrics. Government initiatives such as the ethanol blending programme (EBP) further bolster this outlook.
India holds the top global position in sugar production, having produced approximately 34 million metric tons in 2023-2024. Sugar cultivation not only contributes significantly to income and livelihoods across various Indian states but also employs about 500 thousand workers in sugar mills.
Key sugar-producing states like Maharashtra, Uttar Pradesh, and Karnataka play pivotal roles in the country’s sugar industry, with Maharashtra leading in milled sugar production.
Girishkumar Kadam, Senior Vice President & Group Head – Corporate Ratings, ICRA, commented on domestic sugar production and prices, stating that ICRA projects a decline in net sugar production to 30.0 million MT in SY2025 from 32.0 million MT in SY2024. This projection considers potential higher diversion towards ethanol production amidst elevated sugar stock levels. The clarity on policies regarding diversion and exports beyond specified limits remains critical for the sector. Current domestic sugar prices, averaging Rs. 38-39/kg, are expected to remain stable, supporting mill profitability until the next season begins.
