Dwarikesh Sugar Industries Ltd Directors Report

Your Directors are pleased to present their 30^th (Thirtieth) Annual Report along with the Audited Financial Statements for the year ended on March 31, 2024.

FINANCIAL RESULTS (Rs. in Lakhs)

Particulars	Year Ended	Year Ended
	31.03.2024	31.03.2023
Gross profit before depreciation, interest & tax	21,661.76	22,856.96
Less: Depreciation	5,250.23	5,021.64
Finance Costs	2,012.93	2,584.74
Profit / (Loss) before tax and exceptional items	14,398.60	15,250.58
Profit / (Loss) before tax	14,398.60	15,250.58
Tax expenses	6,046.86	4,776.02
Profit /(Loss) after tax	8,351.74	10.474.56
Total comprehensive income / (loss)	8,260.08	10,410.21

YEAR IN RETROSPECT

Operations : Distinguishing features of the crushing operations in your company are given in the following paragraphs : Metrics of sugarcane crushed, sugar produced and recovery achieved during the year is given hereunder :

Sugarcane crushed and sugar produced across three units (FY 2023-24)

Particulars	2023-24	2022-23	Change
Crushing (Lakh Quintal)	366.59	382.13	(4.07%)
Recovery % (Gross - adjusted)	11.63	11.83	(1.69%)
Recovery % (Net)	9.55	8.63	10.66%
Production (Lakh Quintal)	35.22	32.98	6.79%

 

Sugarcane crushed and sugar produced across three units (FY 2023-24)
Particulars	2023-24	2022-23
Crushing (lakh quintal)	268.08	302.71
Recovery % (Gross – adjusted)	11.56	11.62
Recovery % (Net)	9.79	8.00
Production (lakh quintal)	26.25	24.02

The figures presented for SS 2023-24 encompass the entire season, as all units concluded operations before March 31, 2024. The early cessation of the season at all three units led to a decrease in crushing activities. In contrast, for SS 2022-23, the figures represent only a portion of the season due to its spill-over beyond March 31, 2023.

During SS 2023-24 while crushing culminated on March 11, 2024 at the DD unit, it concluded on the March 23, 2024 at the DP unit, and on March 30, 2024 at DN unit.

HIGHLIGHTS FY 2023-24

? Sugarcane crushing declined by 4.07% y-o-y.

? Our net recovery for the fiscal year stood at 9.55%, exhibiting an increase compared to the previous fiscal years net recovery of 8.63%. This represents an improvement of 10.66%. The enhanced net recovery can be attributed to the cessation of diverting juice/syrup for ethanol production following the Central Government order. Additionally, restrictions on the supply of ethanol from B heavy molasses led to the generation of C heavy molasses at our DP unit to fulfil country liquor obligations. These factors collectively contributed to the higher net recovery achieved during the fiscal year.

? Gross-Adjusted Recovery: Despite the improvement in net recovery, our gross-adjusted recovery decreased to 11.63% from 11.83% in the previous fiscal year. This decline is primarily attributable to the extended crushing operations of SS 2022-23 into the hot and humid months of May and June 2023 at our DN and DP plants. Furthermore, the early conclusion of SS 2023-24 across all units resulted in missing out on crushing operations during the period when recovery is typically at its peak. Lower gross - adjusted recovery is also attributable to inclement weather conditions, excessive rainfall & resultant water-logging in fields over prolonged period and devastation caused by red rot in the command area of all units ? Higher sugar production is also on account of factors mentioned herein above and notwithstanding the lower gross - adjusted recovery. During FY 2023-24 sugar production of 7.62 lakh quintals was sacrificed on account of diversion of sugarcane juice for ethanol and on account of generation of B heavy molasses. This was as against sugar sacrifice of 12.23 lakh quintals on account diversion of sugarcane juice for ethanol and generation of B heavy molasses during FY 2022-23.

Performance of cogeneration division: Metrics of power sold :

Unit	FY 2023-24		FY 2022-23
	Power Sold in Lakhs Units	Amount in Rs. Lakhs	Power Sold in Lakhs Units	Amount in Rs. Lakhs
DN	143.69	489	258.94	844
DP	641.06	2,216	578.60	1,918
DD	595.41	2,043	632.50	2,099
Total	1,380.16	4,748	1,470.04	4,861

Performance of distillery : During the financial year, 992.31 lakh litres of industrial alcohol (previous FY 849.61 lakh litres) was produced and 944.07 lakh litres (previous year 841.75 lakh litres) of industrial alcohol was sold. A revenue of Rs. 589.11 crores (previous year Rs. 535.50 crores) was generated which included, Rs. 5.56 crores from sale of by-products (Previous year Rs. 4.17 crores).

Global sugar industry scenario & outlook

? According to S&P Globals latest report, the projected surplus for the 2023-24 sugar season is a substantial 6.01 million metric tons, the highest since the 2017-18 season. This surplus is attributed to increased production levels and decreased consumption. Brazil has played a significant role in this surplus, with factors such as favourable weather conditions, higher sugar mix in crops, and increased crystallization capacity contributing to elevated production levels. The 2023-24 sugarcane crop in Brazil is highlighted as a year of record-breaking achievements, with production increasing by almost 10 million tons. This substantial increase in production prevented a sugar shortage worldwide and allowed India to step back from the exporter arena without significant disruption. With Brazils increased contribution, the global production outlook for the year is adjusted to 195 million tons, with Brazil poised to achieve a record-breaking sugar production of over 42 million tons. Despite the promising production forecast, logistical challenges in Brazil are noted to impede trade flows from the country, which provides support to global sugar prices.

? While S&P Global predicts a surplus, the International Sugar Organization (ISO) provided a different perspective in its February report, estimating a small deficit for the same season. However, going forward, ISO may revise its production number, upwards

? While the conditions for poor crops in the Northern Hemisphere appear to be repeating in 2024/25, the situation in Brazil CS presents a stark contrast with the previous crop year. Compared to last year, when December/January/February rains were approximately 25% above average, this year they are about 30% lower during the same period. This significant difference in rainfall might lead to a major shift of the cane yield for Brazil. The tightness is expected during the 2024/25 crop, leading to an inadequate supply. Production estimate from India also indicates tightness.

? Presently, raw sugar is quoted at around 22 cents per pound, and whites are traded at approximately US$ 650 per metric ton, reflecting non-pessimistic sentiment in the market.

? The global sugar market is currently navigating a complex landscape influenced by various factors, including surplus during SS 2023/24 and potential lower production during 2024/25 due to adverse weather conditions. However, the challenges extend beyond the realm of sugar production alone. Geopolitical events, such as the ongoing Russia-Ukraine conflict and the recent escalation in tensions between Israel and Hamas, have the capacity to trigger a surge in crude oil prices. This increase in oil prices, in turn, can have a cascading effect on the economics of global sugar production and trade. The interconnectedness makes the sugar trade dynamics uncertain.

? Sugar production estimate from India remain pegged at 32 million tons. Tail end production in Maharashtra & Karnataka progressed at stronger than expected pace while the production Uttar Pradesh is talked at being lower. In Thailand sugar harvest & production is in line with estimates with sugar output expected at 8.66 million tons.

The Indian sugar industry – fresh challenges

? The Sugar Season (SS) for 2022-23 concluded with a total production of 32.8 million tons. Around 4 million tons were diverted towards ethanol production. The season ended with a closing stock of approximately 6 million tons, providing a consumption buffer of around three months.

? The Sugar Season (SS) for 2023-24 began with an initial estimate of sugar production at 32 million tons, with over 4 million tons allocated for ethanol production. However, the rapid onset of the El Ni?o phenomenon had significant effects, particularly in Maharashtra and Karnataka, indicating that actual production would be considerably lower than initial estimates.

? Production estimates in the sugar industry have been volatile, resemblingarollercoasterride.Accordingtothelatestprojections from ISMA, India is expected to reach a sugar production figure of 32 million tons, accounting for approximately 2 million tons diverted for ethanol production. Maharashtra has seen an impressive rebound in production estimates, reaching 10.9 million tons. Conversely, Uttar Pradesh is anticipated to experience a decline in production, with estimates now at 10.5 million tons, notably lower than earlier projections. Karnataka is expected to produce around 5 million tons of sugar, showcasing the prowess of these states in the Indian sugar sector.

? Ahead of the SS 2023-24, the sugar industry experienced a notable increase in sugar prices due to anticipated production declines nationwide. In response, the government took measures to address the situation, including issuing orders to cease the use of cane juice for ethanol production. Simultaneously the Government also banned export of sugar.

? Additionally, limitations were imposed on the quantity of ethanol produced using B heavy molasses, with sugar mills and distilleries directed to maintain the original quantity offered to Oil Marketing Companies (OMCs). However, there was an increase in the price of ethanol derived from C heavy molasses, alongside a similar adjustment for ethanol produced from grains. This strategic manoeuvre aimed to restrict the sacrifice of sugar production to less than 2 million tons while simultaneously boosting overall sugar production.

? Government policies and incentives are crucial in motivating the sugar industry to divert its production towards ethanol. During the Ethanol Supply Year (ESY) 2022-23, buoyed by supportive policies, the industry achieved significant success in this regard. Despite encountering obstacles and challenges, the blending target of close to 12% was successfully achieved. However, due to government-imposed restrictions, the ethanol blending program has been paused, limiting sugar sacrifice to only around 2 million tons.

? As production estimates have become clearer, it is now projected that sugar production will reach around 32 million tons, reflecting an increase of nearly 3 million tons compared to the opening stock of 6 million tons. Consequently, the estimated closing stock is expected to reach about 9 million tons, equivalent to approximately 4 months of consumption. Government in a recent move has allowed further use of available B heavy stock of 6.7 lakh tons for production of ethanol. However, with the sugar season (SS) 2023-24 nearing closure, restarting the ethanol blending program with sugarcane juice or B heavy molasses as feedstock is challenging. This therefore presents a challenge in effectively utilizing the excess sugar stock to alleviate the market imbalance.

? The Indian Sugar & Bio-energy Manufacturers Association (ISMA) has also formally requested the Government to consider a price hike for ethanol derived from sugar cane juice/syrup and B heavy molasses as feedstock.

? Following the Governments imposition of restrictions on ethanol blending, which curtailed sugar sacrifice and facilitated heightened production, sugar prices, once approaching Rs. 4000 per quintal, have now moderated around Rs. 3800 per quintal. Additionally, the anticipated sugar production of around 32 million tons has also influenced this moderation in sugar prices. The ban on exports has also played a role in moderating sugar prices.

? In a regressive move, the Government has implemented a mandatory requirement for sugar mills to utilize a minimum of 20% of the sugar produced during the SS 2023-24 in jute bags. While this directive poses challenges due to the limited availability of jute bags, it also has the potential to escalate the cost of sugar production by Rs. 24 per quintal. This decision represents a trade-off between supporting the jute industry and potentially impacting the sugar industry.

? As of March 31, 2024, Oil Marketing Companies (OMCs) have procured a total of 224.46 crore litres out of the total requirement of 825 crore litres for the Ethanol Supply Year (ESY) 2023-24, which spans from November to October. Within this procurement, the sugar sector contributed 126.25 crore litres, while the grain sector contributed the remaining 98.21 crore litres. The achieved blending percentage as of March 31, 2024, stands at 11.96%.

? Specifically, the sugar sector has supplied 56% of the total supplied quantity, whereas the grain sector has supplied 44% of the total supplied quantity as of March 31, 2024. Contracts for 320.36 crore litres have been executed by the OMCs until March 31, 2024.

? Out of the total ethanol supply of 120.71 crore litres from the sugar sector, 50.76 crore litres have been sourced from sugarcane juice, while 61.24 crore litres have been sourced from B-Heavy Molasses. This represents an estimated diversion of approximately 12.51 lakh tons of sugar from conventional production to ethanol production.

? The sugar industry is regulated globally, and India is no exception. The Central Government continues to play a significant role in regulating various aspects of the industry. One key area of regulation is the minimum selling price of sugar, which is fixed at Rs. 3,100 per quintal, although the industry has been advocating for an upward revision.

? Additionally, the Central Government operates a monthly release mechanism to ensure adequate and affordable sugar availability in the open market. This mechanism helps regulate the flow of sugar into the market to maintain stability.

? Furthermore, the Central Government announces timely sugar export quotas to enhance sectoral liquidity and ensure better domestic realizations. However presently Central Government has banned sugar exports.

? Moreover, the Central Government determines the annual Fixed & Remunerative price (F&RP), which is the minimum price that sugar mills must pay for the sugarcane they procure. Some States go a step further and announce a State Administered Price (SAP) that is higher than the F&RP, providing additional support to sugarcane farmers.

? The Central Government also plays a crucial role in determining the ethanol procurement price for Oil Marketing Companies (OMCs). During the Ethanol Supply Year (ESY) 2023-24, there was an unconventional approach where no increase was given in the ethanol procurement price for ethanol made from B heavy molasses and cane juice as feedstock. This decision aimed to moderate sugar prices while bolstering sugar production. ? Breaking away from convention, no increase in price was awarded in respect of ethanol made from B heavy molasses and sugarcane juice / syrup. Ethanol made from B heavy molasses continued to be procured at Rs. 60.73 per litre, while ethanol made from sugarcane juice remained unchanged at Rs. 65.61 per litre. Notably, ethanol from C heavy molasses has seen a significant increase of Rs. 6.87 per litre and is now priced at Rs. 56.28 per litre. Moreover, there has been a noteworthy increase for ethanol made from maize, now priced at Rs. 71.86 per litre, indicating a deliberate move to stimulate ethanol production from grains, particularly maize.

The Uttar Pradesh Sugar Industry

? During the Sugar Season (SS) 2022-23, Uttar Pradesh (U.P.) State produced 10.5 million tons of sugar. It is estimated that during SS 2023-24, the sugar industry in U.P. is likely to produce around the same quantity of sugar, taking into account a significantly lesser quantity of sugar diversion in favour of ethanol. This indicates a drop in gross sugar production. ? Projections indicate a nuanced picture of sugar production across different regions of Uttar Pradesh (U.P.). Anticipations suggest a rise in sugar production in Eastern Uttar Pradesh, while in Central U.P., sugar production is expected to remain relatively flat. However, in Western U.P., a decline in sugar production is projected. Bijnor district, which is in the periphery of both Central & Western U.P., stands out as one of the most severely impacted areas, experiencing notable declines in sugar production ranging between 20% to 40%. This significant decrease underscores the acute challenges faced by farmers and the sugar industry in the district.

? Moreover, red rot infestation, which was previously rampant in central U.P. and Eastern U.P., has now spread to West U.P. This has caused unprecedented damage to the crop. Incessant rainfall during August & September has further compounded problems for sugar mills in West U.P., even as they intensify efforts to replace the Co 0238 variety, which is now facing existential fatigue.

? The Uttar Pradesh State Government has unveiled its molasses policy for the molasses year 2023-24, introducing an elevated levy obligation. Sugar mills are now mandated to allocate 26% of their molasses generation for country liquor purposes in the case of C heavy molasses, and 19% for B heavy molasses. Despite the onerous obligation, this is seen as a positive development as the government has equalized the treatment of B and C heavy molasses, acknowledging the crucial distinction in their respective ethanol output.

? Furthermore, the State Government has declared the State Advised Price (SAP) for the sugar season 2023-24, with an increase of Rs. 20 per quintal. The society commission rate remains at Rs. 5.50 per quintal. Additionally, the transportation rebate has been revised to Rs. 9 per quintal, up from the previous Rs. 8.35 per quintal. The slab rate within the transport rebate has also been adjusted to Rs. 0.45 per quintal per KM from the earlier Rs. 0.42 per quintal per KM.

? With the low base of sugar production during the sugar season (SS) 2023-24, the outlook for SS 2024-25 should be promising, barring any adverse weather conditions. The challenges faced during the previous season, including lower yields due to red-rot infestation, have served as wake-up calls for farmers. Consequently, they are now redoubling their efforts to safeguard not only the ratoon crop but are also putting concerted effort into replacing the susceptible Co 0238 variety with more resilient alternatives.

? Cane price payments by sugar mills were generally prompt, and arrears were within manageable levels.

Dwarikesh – Financial Scorecard :

Particulars	2023-24		2022-23
	(Rs. lakh)	(%)	(Rs. lakh)	(%)
Revenue from operations	1,70,957	100.00	2,10,296	100.00
EBITDA	21,662	12.67	22,857	10.87
EBDTA	19,649	11.49	20,272	9.64
EBT	14,399	8.42	15,251	7.25
EAT	8,352	4.89	10,481	4.98

? The revenue from operations for FY 2023-24 witnessed a decline of nearly 19% compared to the previous fiscal year, primarily attributed to several factors. Firstly, there was a notable decrease in revenue due to fewer releases under the monthly release mechanism governed by the Central Government. Additionally, the ban on sugar exports further impacted revenue streams, especially considering that in the preceding fiscal year, your company successfully exported 10 lakh quintals of sugar. This fiscal year lacked similar export opportunities, contributing to the revenue decline. Moreover, while revenue from distillery operations experienced an increase, it did not fully offset the overall revenue decline. Despite capacity expansions, the governments embargo on using juice for ethanol production & limiting use of B heavy molasses constrained the potential revenue growth from this segment.

? The EBIDTA for FY 2023-24 stands at Rs.21,662 lakhs, reflecting a decrease compared to the previous fiscal years EBIDTA of Rs. 22,857 lakhs, marking a decline of 5.23%. This reduction in EBIDTA can be attributed to various factors. Firstly, there was an increase in the cost of goods sold, primarily due to the rise in sugarcane prices announced by the State Government. This hike in input costs directly impacted profitability. Furthermore, the suboptimal utilization of sugar plants due to insufficient availability of sugarcane also contributed to the lower EBIDTA. This resulted in underutilized capacity and increased per-unit production costs, thereby affecting profitability. Additionally, adverse regulatory changes in the distillery segment further exacerbated the decline in EBIDTA. However, in % terms the EBIDTA is higher at 12.67% as against 10.87% last FY. The enhanced EBITDA % was bolstered by better realization of sugar sales and increased sales of ethanol produced from B heavy molasses, which is a more remunerative feedstock.

? The earnings before tax for FY 2023-24 amount to Rs. 14,399 lakhs, in contrast to the previous fiscal years figure of Rs. 15,251 lakhs. This represents a decrease in earnings before tax, despite a notable reduction in finance costs.

? Earnings after tax is at Rs.8,352 lakhs, as compared to the earnings after tax of previous FY of Rs. 10,481 lakhs due to higher provisioning of taxes. Earnings after tax for the year is nearly 20% less than earnings after tax of the previous year.

Salient features :

? During the sugar season (SS) 2022-23, our company crushed 4.01 crore quintals of sugarcane, achieving a gross recovery rate of 11.93%. However, the beginning of crushing for SS 2023-24 at our DN & DP units on October 31, 2023, and at the DD unit on November 5, 2023, was met with unforeseen challenges. ? The Bijnor district, where 2 of our 3 units are located, experienced untimely and persistent rainfall, exacerbating the impact of a widespread red-rot attack. These adverse conditions severely affected sugarcane availability, resulting in the most dismal crushing numbers weve seen in recent times. In total, our company managed to crush only 268 lakh quintals of sugarcane. Due to the challenging circumstances, our DD plant had to cease operations earlier than anticipated, closing on March 11, 2024. Subsequently, crushing operations at the DP plant concluded on March 23, 2024, followed by the DN plant on March 30, 2024 ? The area under the DD command area has witnessed a significant reduction of nearly 4000 hectares due to the pervasive red-rot infection. In response to this crisis, extensive initiatives have been launched to safeguard the ratoon crop and implement varietal replacement measures. However, despite these concerted initiatives, the crushing decline in the unit reached a staggering 19%. However, transformations are anticipated in the forthcoming seasons, both in terms of improved crushing figures and a more diversified varietal mix ? In addition to grappling with the challenges posed by red-rot disease and unseasonal rainfall, our DN and DP units faced setbacks stemming from increased prices offered by Jaggery and Khandsari manufacturers for sugarcane. This resulted in a notable outward diversion of sugarcane, as farmers opted to sell their produce to these alternative buyers rather than the sugar mills. Furthermore, the establishment of a new sugar mill in the region exacerbated the situation, leading to the partial cession of sugarcane area from our units in favor of other sugar mills in the district. This reallocation of resources further strained our operations and exacerbated the decline in crushing numbers. As a result of these combined factors, our DP unit experienced a steep decline of 39% in crushing, while the DN unit saw a decline of over 36%. These significant declines underscore the urgency of addressing the multifaceted challenges facing our operations ? Furthermore, the revised ethanol policy by the Central Government has altered the dynamics of molasses generation and ethanol production. The utilization of sugarcane juice for ethanol production has been discontinued, restricting the process to B heavy molasses. Additionally, C heavy molasses is now generated at the DP unit to fulfill the country liquor obligation. All these factors will result in lower ethanol output. Off-take & decanting of ethanol at depots of OMCs resulted in sluggish sales of ethanol ? Your company enjoys long term rating of (ICRA)AA- (pronounced as AA minus). The outlook assigned is ‘stable. Your company also retained the highest rating of A1+ also from ICRA for its CP program of H 300 crores. The company enjoys the highest internal rating of A1 accorded by PNB.

? Your Company continued to pay for sugarcane ahead of schedule. As on date, your Company had cleared payments in entirety in respect of cane purchased during SS 2023-24. ? The fiscal year under review was marked by underutilization of capacities, observed across both our sugar and distillery units. This underutilization at sugar units stemmed from the reduced availability of sugarcane. Our distillery units experienced underutilization due to the temporary halt in the ethanol blending program mandated by the Central Government.

? Long term debt profile: Out of soft loan of Rs. 134.48 crores availed under SEFASU 2018, funded by the State Government, balance on 31/3/2024 is Rs. 6.72 crores and out of distillery term loan availed of Rs. 116.88 crores for DN distillery unit, balance on the same date is Rs. 40.91 crores and in case of term loan of Rs. 185.60 crores sanctioned for 175 KLPD distillery plant at DD unit balance on date is Rs. 167.04 crores. All term loans availed by the Company were mobilized at subsidized rate of interest. ? Your Company is constantly exploring possibilities of revenue optimization, cost rationalization and profit enhancement. Your Company is respected for competent management.

? The crushing season of 2023-24 was characterized by a reduced availability of sugarcane, primarily attributed to adverse weather conditions. Unseasonal and heavy rainfall led to waterlogging in sugar fields, resulting in the stunted growth of sugarcane. Additionally, the widespread occurrence of red-rot disease across all units further exacerbated the cane scarcity. Notably, DN and DP units, previously unaffected by red-rot, also experienced its detrimental effects, adding to the overall cane shortage.

? To address these challenges, the company implemented strategic measures to mitigate crop damage and sustain the healthy growth of Co 0238, the predominant variety. Intensified ratoon management practices were adopted to moderate the impact of adverse conditions. Furthermore, proactive steps were taken to introduce new early maturing varieties such as 15023, 14201, and 118, aimed at enhancing resilience and ensuring consistent yields. In low-lying areas, varieties 94184 and 98014 are being promoted. Barring unforeseen weather condition the crushing numbers should witness smart recovery in SS 2024-25.

CANE & SUGAR POLICY

The main policies of the government in relation to the sugar industry during the year were : a. The Fair & Remunerative Price (FRP) until SS 2017-18 was linked to a recovery of 9.50%. Effective SS 2018-19, FRP has been linked to a recovery of 10%. While the FRP for SS 2021-22 was Rs. 290 per quintal for SS 2022-23 the same stands increased to Rs. 305 per quintal again linked to a recovery of 10.25%. b. Chronology of SMP/FRP announced by the Central Government on the basis of recovery is given herein under:

Season	SMP/F&RP H/ Quintal
2000-01(SMP)	59.50*
2001-02	62.05*
2002-03	64.50*
2002-03 (Revised)	69.50*
2003-04	73.00*
2004-05	74.50*
2005-06	79.50&
2006-07	80.25&
2007-08	81.18&

 

Season	SMP/F&RP H/ Quintal
2008-09	81.18&
2009-10 (SMP since replaced by F&RP)	129.84@
2010-11	139.12@
2011-12	145.00@
2012-13	170.00@
2013-14	210.00@
2014-15	220.00@
2015-16	230.00@
2016-17	230.00@
2017-18	255.00@
2018-19	275.00#
2019-20	275.00#
2020-21	285.00#
2021-22	290.00#
2022-23	305.00#
2023-24	315.00$
2024-25	340.00$

* Linked to recovery of 8.50% & Linked to recovery of 9.00% @ Linked to recovery of 9.50% # Linked to recovery of 10.00% $ Linked to recovery of 10.25% c. All sugar mills in Uttar Pradesh are required to pay State Administered Price (SAP). For 4 successive crushing seasons up to the crushing season 2021-22, the State Government of Uttar Pradesh announced SAP, which increased to @ Rs 340 per quintal for general variety of Sugarcane, Rs. 350 per quintal for early variety of sugarcane & Rs 335 per quintal for rejected variety of sugarcane. For crushing season 2022-23, State Government of Uttar Pradesh has announced increase of Rs. 25 per quintal across all varieties.

CHANGE IN NATURE OF BUSINESS

There is no change in nature of business of the company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

During the year, a significant change occurred in the ethanol blending program and policy. The government made the decision to pause ethanol blending in respect of ethanol derived from sugarcane juice/ syrup and imposed quantitative restrictions on ethanol made from B heavy molasses. These measures were implemented to bolster sugar production and prevent any sharp increase in sugar prices.

Sugar companies had invested substantial amounts to build distillery capacities. However, the governments actions have led to these capacities being grossly underutilized. It is anticipated that this move is temporary, and the ethanol blending program aimed at moderating sugar production will resume in due course. Continued suspension of the program will prolong the underutilization of distillery capacities.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

No significant & material orders have been passed impacting the going concern status & Companys operations in future.

INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial controls commensurate with its size, scale and operations. Such controls have been assessed during the year under review taking into consideration the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Based on the results of such assessments carried out by the management, no reportable or significant deficiencies, no material weakness in the design or operation of any control was observed. Nonetheless your Company recognizes that any internal control framework, no matter how well designed, has inherent limitations and accordingly, regular audits and review processes ensure that such systems are re-enforced on an ongoing basis. The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company.

DIVIDEND

Your Directors have not recommended any payment of equity dividend for the FY 2023-24.

BUYBACK OF EQUITY SHARES

The Board of Directors in their meeting held on March 8, 2024 approved a buyback program for 30,00,000 equity shares, which represents approximately 1.593% of the current paid-up equity share capital. The buyback price was set at Rs 105 per equity share, reflecting a premium of 34.81% over the closing share market price just prior to the announcement. This buyback will involve a total expenditure of Rs 31.50 crores, equivalent to 4.49% of the paid-up capital and free reserves, including the Share Premium Account. Additionally, the Company incurred expenses of approximately Rs 716.35 lakhs for buyback tax and approximately Rs 69.75 lakhs for various fees such as those for merchant bankers, secretarial counsel, auditors, RTA, SEBI, advertisement charges, and other miscellaneous expenses. This buyback falls within the permissible limits of the Board of Directors authority.

Buyback initiative serves to efficiently allocate surplus funds to shareholders while bolstering key financial metrics for the company. By repurchasing its own shares, the company can enhance its return on equity, earnings per share, return on net worth, and return on capital employed.

TRANSFER TO GENERAL RESERVE

As permitted under the provisions of the Companies Act, 2013, the Board does not propose to transfer any amount to general reserve and has decided to retain the entire amount of profit for the Financial Year 2023-24 in the profit and loss account.

SHARE CAPITAL

The paid-up Equity Share Capital as at March 31, 2024 stood at Rs. 18.83 crores. During the year under review, the Company has not issued shares or convertible securities or shares with differential voting rights nor has granted any stock options or sweat equity or warrants.

COPY OF THE ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act, 2013, copy of the Annual Returns of the Company in form MGT-7 is placed on the website of the Company and is accessible at the web-link: https:// www.dwarikesh.com/wp-content/uploads/2024/05/FORM-MGT-7-2023-24.pdf

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors of the Company met five (5) times during the year on April 27, 2023; July 24, 2023; October 27, 2023; January 30, 2024 and March 08, 2024.

SUBSIDIARY COMPANYS REPORT

The Company does not have any subsidiary in terms of provisions of Companies Act, 2013.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions entered during the financial year were in the ordinary course of business and at arms length basis. There were no materially significant Related Party Transactions with the Companys Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as required to be provided under Section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure I.

The Board of Directors of the Company on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the rules thereunder and the Listing Regulations and placed at the below mentioned weblink : https://www.dwarikesh.com/wp-content/ uploads/2023/03/Related-Party-Transactions-Policy.pdf

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not made any loans or investments or given guarantees or provided securities under Section 186 of the Act during the year.

PUBLIC DEPOSITS

The Company did not have any fixed deposits at the beginning of the year nor has it accepted any deposited during the year in terms of Section 74 of the Companies Act, 2013.

MSME RETURN

MCA vide order dated 22^nd January, 2019 directed all companies, who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days during the year. The Company is not required to file MSME Return as all payments have been done within prescribed time.

PARTICULARS OF EMPLOYEES AND RELATED INFORMATION

In terms of the provision of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement containing the disclosures pertaining to remuneration and other details as required under the Act and the above rules are provided in Annexure II.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Changes in Directors and Key Managerial Personnel

Du ring the year, there is no change in Directors and Key Managerial Personnel

B. Declaration by an Independent Director(s), Re- Appointment & Meeting

Pursuant to the requirements of Section 149(7) of the Companies Act, 2013, the company has received the declarations from all the independent directors confirming the fact that they all are meeting the eligibility criteria as stated in Section 149(6) of the Companies Act, 2013.

As required under Schedule IV to the Act(Code for Independent Directors) and Regulation 25 (3) of the SEBI hold at least 1 (one) meeting in a year, without the presence of Non-Independent Directors.

The Independent Directors met once, i.e, on Monday, January 30, 2023. The Meeting was conducted without the presence of the Chairman, Executive Directors and any other Managerial Personnel.

The Independent Directors, inter alia, discussed, and reviewed performance of Non-Independent Directors, the Board as a whole, Chairman of the Company, and assessed the quality, quantity and timeliness of flow of information between the Companies management and the Board that is necessary for the Board to perform its duties effectively and reasonably.

C. Formal Annual Evaluation

Pursuant to the requirements of Section 134(3)(p) of the Companies Act, 2013 read with Regulation 17 of the SEBI Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of its Committees.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors were carried out by the Independent Directors who also reviewed the performance of the Secretarial Department. The Directors expressed their satisfaction with the evaluation process.

D. Policy On Directors Appointment And Remuneration Including Criteria For Determining Qualifications, Positive Attributes, Independence Of A Director, Key Managerial Personnel And Other Employees

In line with the principles of transparency and consistency, your Company has adopted the following policies which, inter alia includes criteria for determining qualifications, positive attributes and independence of a Director.

The policy of the Company on directors appointment and remuneration, as required under sub-section (3) of Section 178 of the Companies Act, 2013, is available on companys website at https://www.dwarikesh.com/wp-content/uploads/2023/03/ Policy-on-Directors-Appointment-and-Remuneration.pdf

E. Statement Of Directors Responsibilities

Pursuant to the requirements under Section 134, sub-section 3(c) and sub-section 5 of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, state and confirm that: As required under the provisions of Section 134(3) (c) of the Companies Act, 2013, your Directors confirm that: a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures. b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that year; c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. d. the directors had prepared the annual accounts on a going concern basis. e. the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively, f. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34 of SEBI (Listing Obligation and Disclosure Requirement), Management Discussion and Analysis Report for the year under review is presented in a separate segment which is forming part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

Dwarikesh has been an early adopter of CSR initiatives. The Company works primarily through CSR trust, viz R R Morarka Charitable Trust, towards supporting projects in eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environmental sustainability, disaster relief and rural development projects.

Companies CSR initiatives and activities are aligned to the requirements of Section 135 of the Act. The brief outline of the CSR policy of the Company and the initiatives undertaken are available on our website at https://www.dwarikesh.com/wp-content/ uploads/2024/05/Policy-on-Corporate-Social-Responsibility.pdf A detailed Annual Report on CSR Activities undertaken by the Company during the year as prescribed under the Companies (Corporate Social Responsibility) Amendment Rules, 2021 is annexed herewith as Annexure III.

RISK MANAGEMENT POLICY

As per Regulation 21 of the SEBI Listing Regulations, the top 1000 listed entities, determined on the basis of market capitalization has to constitute a Risk Management Committee. Risk Management Committee of the Company is responsible to review and combat the risk on periodical basis. A detailed note on Risk Management policy, elements of risk and its mitigation is comprised in Corporate Governance Report.

VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy, in compliance with the provisions of Section 177 of the Act and Regulation 22 of the Listing Regulations, so as to enable the Directors, Employees and all Stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimization of persons who use such mechanism and make provisions for direct access to the Chairman of Audit Committee. The details of the said policy is explained in the Corporate Governance Report and has been uploaded on the website of the Company at https://www.dwarikesh.com/wp-content/ uploads/2023/03/Whistle-Blower-Policy.pdf

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has put in place a policy on Anti Sexual harassment in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Company is committed to providing a safe and conducive work environment to all of its employees and associates.

No complaints have been received during the year under review.

CORPORATE GOVERNANCE

As per Regulation 34 of SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015, a report on Corporate Governance together with the Auditors Certificate regarding compliance of the conditions of corporate governance is provided under Annexure IV.

BOARD COMMITTEE

The Company has following mandatory Committees, viz,

1. Audit Committee

2. Stakeholders Relationship Committee

3. Nomination and Remuneration Committee

4. Corporate Social Responsibility Committee

5. Risk Management Committee

The details of the Committees along with their composition, number of meetings and attendance at the meetings are provided in the Corporate Governance Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the particulars in respect of conservation of energy, technology absorption and foreign exchange earnings & outgo are furnished in Annexure V and form a part of this report.

AUDITORS

A. STATUTORY AUDITORS & AUDITORS REPORT

M/s. Mittal Gupta & Co., Chartered Accountants having Firm Reg. No. 01874C, Kanpur were appointed as the Statutory Auditors of the Company at the AGM held on June 30, 2022 to hold office until conclusion of the 33^rd AGM. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained written confirmation from M/s. Mittal Gupta & Co., that their appointment is made in conformity with the limits specified in the said Section.

The Auditors Report for the financial year ended March 31, 2024 is unmodified, i.e, it does not contain any qualification, reservation, adverse remark or disclaimer. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the financial year under review

B. COST AUDITORS

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and rules made thereunder, the Board on the recommendation of the Audit Committee has re-appointed M/s. Ramanath Iyer & Co, Cost Accountants (Firm Regn No. 000019), as Cost Auditors to conduct cost audits relating to sugar, electricity and industrial alcohol for the year ended March 31, 2025.

The Cost Accountants have confirmed that their appointment is within the limits of Section 141(3)(g) of the Act and free from any disqualifications specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Companies Act, 2013. The Cost Audit Report for the financial year March 31, 2023 did not contain any qualification, reservation, adverse remark or disclaimer. The Cost Audit Report for the year end March 31, 2024 shall be made available by Cost Auditors on or before September 30, 2024.

C. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. VKM & Associates, a Practicing Company Secretary (Certificate of Practice no. 4279), Secretarial Auditor to undertake the Secretarial Audit of the Company for the year ended March 31, 2024. The Secretarial Audit Report is appended to this Report as Annexure VI.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

SEBI, vide its circular dated May 10, 2021, made BRSR mandatory for the top 1,000 listed companies (by market capitalization) from fiscal 2023, while disclosure was voluntary for fiscal 2022.

DSIL believes that we are accountable not merely to our shareholders from a revenue and profitability perspective but also to the larger society which is also its stakeholder. Hence, to comply with BRSR requirements in professional manner Company has appointed an external agency viz. PricewaterhouseCoopers (PWC). The BRSR disclosures form a part of Annual Report 2023-24. Report is annexed by way of Annexure VII.

ACKNOWLEDGEMENT

Your directors wish to place on record their sincere gratitude and appreciation to its members, sugar cane growers, employees, bankers, financial institutions, Central & State Government Agencies for their valuable contribution in the growth of the organization