INSTITUTIONAL EQUITY RESEARCH

Sugar
Turning into white gold?
27 February 2021
INDIA | SECTOR UPDATE

The sugar sector is known for its cyclical nature. However, it has seen structural changes
with: (1) rational alterations in the government’s policies, and (2) flexibility provided, as Vikram Suryavanshi, Research Analyst
diversion of surplus cane and B-heavy molasses is now allowed to produce ethanol that (022 6246 4111) vsuryavanshi@philipcapital.in
can be used for blending with petrol. In addition, differentiated pricing for ethanol (based
on raw material) is quite attractive and has the potential to significantly reduce the
cyclical nature of the sector because of the sustainable business model it provides for
sugar mills.

Sugar remains a supply-side story

For the past few years, the sugar sector has consistently faced twin issues of surplus
production and higher sugar inventory. At the start of the sugar year SS2020-21 (October -
September 2021) in which India is expected to produce c.30mn tonnes of sugar, it already
has a sugar inventory of c.10.9mn tonnes; to put this in perspective, annual consumption is
lower at c.25.6mn tonne. Closing inventory of sugar is expected to remain high at c.10mn
tonnes at end-of-season, in September 2021, despite considering sugar exports of c.5mn
tonnes, and diversion of c.2mn tonnes of sugar equivalents for ethanol production.
Historically, the sector has seen significant variation on the supply side, while demand is
quite stable with marginal growth. However, attractive sugarcane FRP (Fair and
Remunerative Price) is resulting in higher production of sugar cane, which has (in part) led to
the surplus sugar situation.

MSP for sugar has curbed losses during periods of surplus

In the earlier sugar surplus cycle of 2015, domestic sugar prices corrected sharply – to a low
of Rs 22 per kg from c.Rs 32 per kg – with an increase in sugar inventory to 9.1mn tonnes in
September 2015 from 6.7mn tonnes in the previous season. However, sugar prices in the
current surplus scenario have remained stable at higher levels due to the government’s
support of MSP for the domestic market at Rs 31 per kg. From June 2018, the government
has fixed an MSP for mills to sell sugar in the domestic markets, which acts as a benchmark.
Due to attractive MSP, sugar mills are now able to realize significantly higher prices for sugar
in the domestic market, despite the country having one of the highest sugar inventories.

Dealing with surplus = Export vs. ethanol

While the exports subsidy announced by the government has helped the sugar mills to
export at relatively lower losses and improve liquidity and supply imbalance, the subsidy is
significantly lower than the last season – at Rs 6 per kg compared to Rs 10.5; total
approved subsidy is Rs 35bn, targeting 6mn tonnes of sugar exports. The government has
also indicated that going ahead, this subsidy will be discontinued. Sugar mills would need to
manage the surplus themselves and for this, ethanol production is becoming an attractive
solution. Mills will benefit from raw material flexibility given to produce ethanol form B-
heavy molasses and cane juice; this is expected to improve profitability as well as reduce the
production imbalance in the sector.

Ethanol supply from sugar mills can meet c.15-18% of the blending target
The government has fast-forwarded its 20% ethanol blending target to 2025 from 2030
earlier; this will require additional distillery capacity addition of c.5bn-7bn litre per annum
(capital expenditure of c.Rs 150-210bn needed from sugar mills) and diversion of c.10-12%
of cane juice directly into ethanol. Conversion of B-heavy molasses into ethanol will
generate c.6bn litre distillery output, which is sufficient for 12-14% blending. We believe
sugar mills will shift to flexible business model with higher production of ethanol due to
secure demand, attractive pricing, and a balancing out of the sugar cycles.

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH

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 SUGAR SECTOR UPDATE

Sugarcane: Fulfilling many dreams

Sugar Cane
=
Sugar
+
Power and Ethanol
+
Biogas and Fertilizer

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 SUGAR SECTOR UPDATE

Sugar remains a supply-side story

Consistent surplus production and higher sugar inventory for years
 Historically, the sector has seen significant variation in supply side while demand
is more stable with marginal growth (see chart below).
 The sector has been depending on the government policies and support to FRP is the minimum price that sugar
sustain through challenging times. mills have to pay to sugarcane farmers.
 Consistent increase in sugarcane MSP by the government has resulted in higher MSP, on the other hand, is the price
above which sugar mills sell sugar in
production of sugarcane, resulting in a surplus situation for the past four years.
the domestic market. Both prices are
The Cabinet Committee on Economic affairs (CCEA) has increased the Fair and fixed by the government
Remunerative price (FRP) of sugarcane for the year starting October 2020-
September 2021 by Rs 100 per tonne – to Rs 2,850 per tonne. This price is
c.155% higher than cost of cultivation.
 Sugar surplus is aggravated due to lower and volatile international sugar prices,
increasing the cyclical nature of the sector. This makes balancing demand-supply
quite challenging.
 India is expected to produce c. 30mn tonnes of sugar in SS20-21 compared to
annual consumption of c.25.6mn tonne.
 India has sugar inventory of c. 10.9mn tonnes at start of sugar year SS2020-21
(October 20 -September 21). Closing inventory of sugar is expected to remain
high at c.10mn tonne at end of season on September 2021, despite considering
sugar exports of c.5mn tonne and diversion of c.2mn tonne equivalent of sugar
for ethanol production.
 Sugar production in India is mainly from three states: Utter Pradesh (35%),
Maharashtra (33%) and Karnataka (15%).
 Sugar production largely depends on: (1) rain availability, (2) weather conditions,
and (3) cane price announced by the government.

Sugar production and consumption in India (mn tonnes)

Surplus /Deficit (mn tonne) Suar Production (mn tonne) Sugar Consumption
40
35
30
25
20
15
10
5
0
-5
-10
-15
2009

2022
2000
2001
2002
2003
2004
2005
2006
2007
2008

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

Source: PhillipCapital India Research, Industry, ISMA

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 SUGAR SECTOR UPDATE

Sugar cane price (Rs per 100kg) is controlled by the government

300

250

200

150

100

50

0
2005

2016
2000
2001
2002
2003
2004

2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

2017
2018
2019
2020
2021
Source: PhillipCapital India Research, Industry, ISMA

MSP has created a disconnect with demand-supply and international

prices
Sugar prices in the earlier surplus cycle of 2015 corrected sharply to a low of Rs 22
per kg (from c.Rs 32 per kg) with an increase in sugar inventory to 9.1mn tonne in
September 2015 from 6.7mn tonnes the previous year. However, sugar prices in the
current surplus scenario have remained stable at higher levels due to the
government’s support via MSP for the domestic market at Rs 31 per kg. This MSP is
the minimum price at which sugar mills sells sugar in the domestic market. From June
2018, the government has fixed the minimum price for selling sugar in domestic
market by mills which act as benchmark for sugar price. Due to attractive MSP, sugar
mills are able to realize significantly higher prices for sugar in the domestic market,
despite being saddled with one of the highest sugar inventories.

MSP since 2018 has restricted downside to the price even in a surplus scenario
Closing inventory Domestic sugar price
45 25
Price drop 18% with Stable prices dispite highest
40 higher inventory inventory in history

35 20

30
15
25

20
10
15

10 5
5

0 0
SS2014 SS2015 SS2016 SS2017 SS2018 SS2019 SS2020 SS2021

Source: PhillipCapital India Research, Industry, ISMA

The minimum selling price also helps mills to garner better realizations during periods
of lower international prices, protecting the profitability in sugar segment. To reduce
surplus, the government has also provided financial incentives, which help mills to
export sugar.

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 SUGAR SECTOR UPDATE

Trend: Domestic sugar prices (Rs /kg) vs. international (cent/lb)-RHS

Domestic price (Rs /kg)
International Raw sugar price (c/lb)
35 20
18
30
16
25 14
20 12
10
15 8
10 6
4
5
2
0 0
Feb-20

Sep-20

Feb-21
Jun-20

Nov-20

Dec-20
Jul-20

Oct-20
Apr-20

Aug-20
Mar-20

May-20

Jan-21
Source: PhillipCapital India Research, Industry

Dealing with surplus: Export vs. ethanol

 Sugar exports subsidy amount for SS20-21 is significantly lower at Rs 6 per kg
compared to Rs 10.5 in the last season. The government has also indicated that
going ahead, sugar export subsidy will be discontinued and surplus sugar should
be diverted to ethanol. India being a developing country can export sugar by
extending financial assistance for marketing and transport only up to year 2023
as per WTO arrangements.
 For SS20-21, the government has approved Rs 35bn subsidy targeting 6mn
tonnes of sugar export and this assistance is directly credited into farmers’
accounts on behalf of sugar mills against cane-price dues. Any subsequent
balance is credited to mills’ accounts. In the past, exports subsidy has helped
sugar mills to export sugar at relatively lower losses and improve their liquidity
and mitigate supply imbalance to an extent.
 Going ahead, sugar mills are going to have to manage the surplus issue
themselves, and ethanol production is becoming an attractive solution for them.
These mills will benefit from the new flexibility given by the government in using
raw material to produce ethanol (can now use B-heavy molasses and cane juice),
which is likely to improve the profitability of sugar mills and reduce the
imbalance in the sector in terms of sugar production.

Surplus sugar exports vs. diversion to ethanol (mn tonne)

8.00 Sugar Export Diversion to Ethanol

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
SS2016

SS2021
SS2014

SS2015

SS2017

SS2018

SS2019

SS2020

SS2022

SS2023E

Source: PhillipCapital India Research, Industry

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 SUGAR SECTOR UPDATE

Mills adopting flexible models to reduce cyclicality; ethanol model is sustainable

Considering the benefits of ethanol production, most sugar companies are investing
in the distillery segment as the ‘need of the hour’. The government has increased the
price for ethanol consistently in the past. Additionally, to incentivise and increase Around 5mn tonnes of sugar surplus
ethanol supply from sugar mills, different ethanol prices are fixed based on the raw needs to be diverted to balance out the
material used to produce it. Ethanol price for blending with petrol was set at Rs 45.69 supply side; this could result in
per litre from C-Molasses, Rs 57.61 per litre from B-Heavy, and Rs 62.65 per litre from additional ethanol production of
juice. Average ethanol blending in India touched 6%; ethanol blending tenders for c.4.5bn litres
2021 at 3.62bn litres are sufficient for 8.5% blending. Importantly, the government
has fast-tracked its plan to achieve 20% ethanol blending to 2025 from 2030 earlier.
Balarampur has recently announce ethanol production directly from cane Juice at
one factory with A capital expenditure of Rs 3.2bn for A 320KLPD distillery, capable of
producing c.100mn litres of ethanol annually.

Ethanol prices are now associated with domestic prices, and de-linked from crude
50.0 Domestic ethanol price (Rs/ltr) Crude Price ($/bbl)-RHS 100
45.0 90
40.0 80
35.0 70
30.0 60
25.0 50
20.0 40
15.0 30
10.0 20
5.0 10
0.0 0
2014 2015 2016 2017 2018 2019 2020 2021

Source: PhillipCapital India Research, Industry

Sugar cane is fast becoming an energy crop Sugar cane is now regarded as an
Sugar cane is now regarded as an energy crop, with a renewed focus on ethanol energy crop with a renewed focus on
blending and power generation from bagasse, as well as waste from distilleries. Some ethanol blending and power generation
sugar mills are using distillery waste and press mud for biogas generation. from bagasse, as well as waste from the
distillery

Revenue generation from a tonne of cane crush increases if sugar mills shift to an
integrated business model and higher ethanol production. Revenue per tonne of cane
crush is higher by c.10% with integrated model using C-molasses for ethanol and

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 SUGAR SECTOR UPDATE

power generation form bagasse. The per tonne realization increase even more with
increased production of ethanol – 15% higher in case of diversion of B-heavy
molasses to ethanol and c.20% higher in case of direct conversion of juice to ethanol
due to the attractive ethanol prices that the government has fixed.

Different sugar business models are now available (Revenue - Rs / tonne of cane)
Sugar Power Press mud Ethanol
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Conventional Integrated B-Heavy Juice to Ethanol

Source: PhillipCapital India Research, Industry

Revenue analysis for different business models (Rs/tonne of cane crush)

Sugar business model Sugar Power Press mud Ethanol Total
Conventional 3,680 112 12 158 3,962
Integrated 3,680 200 12 452 4,344
B-Heavy 3,200 200 12 1143 4,555
Juice to Ethanol 0 200 12 4511 4,723
Source: PhillipCapital India Research, Industry

Economics of ethanol blending

Differentiated pricing for ethanol bringing flexibility for sugar mills
Attractive ethanol price with flexibility of using raw materials is positive for sugar
mills; we expect increased ethanol production from B molasses with capacity
expansion in distilleries. The government has increased ethanol prices for bending
with petrol by 4-6% for the period December 2020 to November 2021, which should
increase additional capital expenditure for ethanol distilleries by sugar companies.
 C-heavy: The price for ethanol produced from C-heavy molasses (the normal
route; see definitions of molasses in the appendix) have been increased to Rs
45.69 per litre (from Rs 43.75 last sugar season)
 B-heavy: Price of ethanol from B-heavy molasses have been increased by 6% to
Rs 57.61 per litre.
 Cane juice: For ethanol produced directly from sugar cane juice (allowed from
July 2018), prices have been raised 5.3% to Rs 62.65 per litre.

With realistic policy support and commitment for ethanol blending from the
government, the success story of ethanol blending in Brazil can be replicated in India.
The production of bio-ethanol from sugarcane is most efficient and economical and
both countries are among the larger producers of sugarcane worldwide.

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 SUGAR SECTOR UPDATE

Attractive ethanol pricing (Rs/litre) for different raw materials

62.65
Cane 59.48
59.10
57.61
B-Heavy 54.27
52.43
45.69
C- molasses 43.75
43.46

SS2021 SS 2020 SS 2019

Sugar season 2017-18

C- molasses
40.85

Source: PhillipCapital India Research, Industry

Additionally, sugar mills are getting better realizations per tonne of cane crushed
with conversion of B-heavy molasses into ethanol instead of extracting additional
sugar. This conversion will also help to reduce sugar production and reduce demand-
supply imbalance in the country.

As per our analysis, break-even ethanol price from B-heavy molasses is around 1.4-
1.6x of sugar price, based on process efficiency. For direct conversion of juice into
ethanol, price breakeven is at 1.8-1.9x of sugar realizations. At current domestic
sugar price of Rs 31 per kg and ethanol realization from B-heavy molasses at Rs 57.61,
sugar mills garner additional revenues of Rs 85-100 per tonne of cane crushed (see
chart below).

Breakeven analysis for sugar and ethanol production Additional benefit from B-heavy; ethanol @ Rs 57.61/litre
5500 Revenue (sugar + ethanol) with normal crushing 250 Additional benefit to sugar companies
B-Heavy to molasses
200
5000
150
4500
100

4000 B heavy route gives higer 50

income at current sugar
0
3500 realization of Rs 31/ kg.
would be brakeven @ Rs -50
3000 36 per kg
-100

2500 -150
24 26 28 30 32 34 36 38 40 42 44 24 26 28 30 32 34 36 38 40 42 44
Sugar Price (Rs /Kg) Sugar Price
(Rs /Kg)
Source: Industry, PhillipCapital India Research

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 SUGAR SECTOR UPDATE

Ethanol supply from sugar mills

 Ethanol blending tenders for SS2021 at c.3.62bn litres are sufficient for c.8.5%
blending.
 The government has fast forwarded its 20% ethanol blending target to 2025 from
2030 earlier; current target is 10%. For 20% blending, c.5bn litres per annum
additional distillery would be needed. For all-India 10%/15% blending, 3.4/5.1bn
litres of ethanol would be needed.
 India produces c. 400mn tonnes of cane annually, of which sugar mills crush c.
300mn tonnes.
o C-molasses (by-product) generated is around 13.5mn tonnes – which give a
distillery output of c.3mn litre.
o Demand from liquor and chemicals industries is c.2bn litre.
o This leaves c.1bn litre for ethanol blending.
o Conversion of B-heavy molasses into ethanol will generate c.6bn litre
distillery output, which is sufficient for 12-14% blending.

Capacity addition in distilleries

To support capacity addition in distillery, the government has announced interest
rate subsidy of up to 6% for five years and faster environment clearance. Out of total
368 proposals for financial assistance, so for 76 have been sanctioned and only 31 are
completed. The distillery capacity required for the B-heavy route is twice that of the
C-Heavy molasses route and it is 7-8x higher in case of direct cane juice to ethanol –
for the same amount of sugarcane crushed. We expect incremental production of
ethanol from B-heavy molasses and directly from juice.

The distillery capacity that sugar mills need (ethanol yield litre/tonne of cane)

80 7-8X

70

60

50

40

30 2X

20

10

0
C-molasses B-Heavy molasses Cane Juice

Source: PhillipCapital India Research, Industry

Analysis of stage-wise cane diversion into ethanol

Current scenario Maharashtra UP Others Total
Sugar production (mn tonne) 10.9 10.5 9.0 30.5
Ethanol production (mn litre) 962 1015 894 2871
Source: PhillipCapital India Research, Industry

The diversion of B-heavy molasses into ethanol and around 10% diversion of cane
directly into ethanol has the potential to balance demand-supply in the domestic
sugar market. Sugar production can be managed at 24-26mn tonne per annum and
ethanol supply can be increased from 2.8bn litre per annum to touch 7.6bn litre per
annum, sufficient for 15-18% blending, assuming 2-3bn litre requirement from the
chemicals and liquor industries.

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 SUGAR SECTOR UPDATE

Expected scenario Maharashtra UP Others Total

Sugar production (mn tonne) 8.7 8.3 7.0 24.0
Ethanol production (mn litre) 2627 2653 2393 7672

As per our analysis, c.65-70% of ethanol supply can come from two states, each
contributing c.35% of total ethanol supply from sugar cane in the country. Ethanol
supply from Maharashtra can be increased to c.2.7bn litre annually (from c.1bn litre
at present) and so also can supply from Utter Pradesh.

Maharashtra ethanol supply analysis

Cane Crushing mn tonne 95
Method Type (a) C-molasses (b) B-Heavy (c) Direct Juice Total (b+c)
Share % 100% 90% 10%
Cane Crushing mn tonne 95.0 85.5 9.5
Sugar Recovery % 11.5 10.2 0.0
Molasses recovery % 4.5 7.1 0
Molasses output mn tonne 4.3 6.1 0.0
Ethanol litre/ tonne 225 320 72
Ethanol mn litre 962 1943 684 2627
Sugar production mn tonne 10.9 8.7 0.0 8.7
Source: PhillipCapital India Research, Industry

Uttar Pradesh ethanol supply analysis

Cane Crushing mn tonne 100
Method Type (a) C-molasses (b) B-Heavy (c) Direct Juice Total (b+c)
Share % 100% 90% 10%
Cane Crushing mn tonne 100 90 10
Sugar Recovery % 10.5 9.2 0.0
Molasses recovery % 4.5 7 0
Molasses output mn tonne 4.5 6.3 0.0
Ethanol litre/ tonne 225 310 68
Ethanol mn litre 1013 1953 680 2633
Sugar production mn tonne 10.5 8.3 0.0 8.3
Source: PhillipCapital India Research, Industry

All-India ethanol supply analysis

Cane Crushing mn tonne 290
Method Type (a) C-molasses (b) B-Heavy (c) Direct Juice Total (b+c)
Share % 100% 90% 10%
Cane Crushing mn tonne 290 261 29
Sugar Recovery % 10.5 9.2 0.0
Molasses recovery % 4.5 7 0
Molasses output mn tonne 13.05 18.3 0
Ethanol litre/ tonne 220 312 68
Ethanol mn litre 2871 5700 1972 7672
Sugar production mn tonne 30.45 24.0 0 24.0
Source: PhillipCapital India Research, Industry

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 SUGAR SECTOR UPDATE

Details of ethanol/distillery projects for financial assistance

No of Sanctioned/Disbursed Approached to bank Rejected no update
projects
Maharashtra No 182 21 11 6 140
KLPD 7280 865 695 195 5355
UP No 60 20 3 0 37
KLPD 4300 890 400 0 2690
Karnataka No 64 5 8 0 51
KLPD na na na na na
Tamil Nadu No 3 0 0 0 3
KLPD 154 0 0 0 154
AP No 8 0 1 0 5
KLPD 595 0 30 0 565
Gujarat No 7 0 1 0 5
KLPD 207 0 30 0 177
Punjab No 6 3 0 0 3
KLPD 330 170 0 0 160
Uttarakhand No 10 3 0 0 7
KLPD 355 115 0 0 240
MP No 7 1 1 0 5
KLPD 310 45 30 0 235
Source: PhillipCapital India Research, Industry

The Government is targeting ethanol supply of c. 12bn ltr by 2025 out of which c.9bn
ltr would be required for 20% blending with petrol and remaining 3bn ltr would be
required for chemical and liquor industry.

Ethanol supply and usage for 20% blending target in 2025 (bn ltr)
10
9
8
7
6
5
4
3
2
1
0
Sugar based Grain based Blending Other use
Supply Usage

Source: PhillipCapital India Research, Industry

Sugar mills are expected to supply c.7bn ltr while remaining c.5bn ltr will be supplied
by the grain-based distilleries. The diversion of c.5-6mn tonne sugar would balance
the demand supply for the sugar sector and help in reducing the inventory and
storage cost along with better realization for sugar which will facilitate timely
payment to sugarcane farmers.

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 SUGAR SECTOR UPDATE

Annexures
ABC of molasses
 At the sugar factory, cane juice is heated and is treated with sulphur and lime for
removing colour and impurities.
 During crystallization, with the centrifugal process, non-crystalized sugar waste is
generated – known as molasses.
o A molasses (first molasses) is an intermediate by-product resulting from first
sugar crystal extraction (A sugar), from the initial processing.
o B molasses (second molasses) contains less sugar and does not
spontaneously crystallize. These molasses have c.65% sugar. B-heavy yield
from sugar cane can be 6-8% of cane crushed. One tonne of B-heavy
molasses can give 300-330 litres of ethanol.
o C molasses (final molasses, blackstrap molasses) is the end by-product of
processing. It still contains considerable amounts of sucrose (approximately
32-42%). C heavy has c.40% sugar. C molasses does not crystallize and can
be stored in liquid form. C-molasses yield from sugar cane is 3.5-4.0% of
cane crushed. One tonne of C-molasses gives 230-260 litre of ethanol.

Change in pollution norms

 The government has made it compulsory to set up incineration boiler to treat
distillery waste or set up biogas projects.
 Distillery effluent is called spent wash / slop / vinasse / stillage. Some companies
use spent wash generated in process on press mud to generate fertilizer. It is a
hazardous waste and not suitable for direct disposal.

Colour Dark Brown

Odour Pungent
pH 4- 4.5% (Acidic)
Solid Content 9-12% (Weight)
BOD – Biological Oxygen Demand 45000-60000 PPM
COD-Chemical Oxygen Demand 110000-135000 PPM

Solid Concentration (Brix) % Gross Calorific Value (kcal /kg)

40 850
45 1200
50 1400
60 1800
Source: PhillipCapital India Research, Industry

Now spent wash is heated and concentrated to use as fuel for boiler and used for
seam and power generation with incineration technology. Zero liquid discharge can
be achieved through Eco –friendly which is also energy efficient. Waste potash rich
ash is saleable, generates good revenue and also eliminates disposal problem and
reduction in overall production cost per litre of alcohol.

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 SUGAR SECTOR UPDATE

Incineration boiler with distillery waste as fuel

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 SUGAR SECTOR UPDATE

Rating Methodology
We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one
year. We have different threshold for large market capitalisation stock and Mid/small market capitalisation
stock. The categorisation of stock based on market capitalisation is as per the SEBI requirement.

Large cap stocks

Rating Criteria Definition
BUY >= +10% Target price is equal to or more than 10% of current market price
NEUTRAL -10% > to < +10% Target price is less than +10% but more than -10%
SELL <= -10% Target price is less than or equal to -10%.

Mid cap and Small cap stocks

Rating Criteria Definition
BUY >= +15% Target price is equal to or more than 15% of current market price
NEUTRAL -15% > to < +15% Target price is less than +15% but more than -15%
SELL <= -15% Target price is less than or equal to -15%.

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Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the
research analyst’s personal views about all of the subject issuers and/or securities, that the analyst(s) have no known conflict of interest and no part of the
research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific views or recommendations contained in this research report.
Additional Disclosures of Interest:
Unless specifically mentioned in Point No. 9 below:
1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in
this report.
2. The Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the
company (ies)covered in this report as of the end of the month immediately preceding the distribution of the research report.
3. The Research Analyst, his/her associate, his/her relative, and PCIL, do not have any other material conflict of interest at the time of publication of this
research report.
4. The Research Analyst, PCIL, and its associates have not received compensation for investment banking or merchant banking or brokerage services or for
any other products or services from the company(ies) covered in this report, in the past twelve months.
5. The Research Analyst, PCIL or its associates have not managed or co-managed in the previous twelve months, a private or public offering of securities for
the company (ies) covered in this report.
6. PCIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in
connection with the research report.
7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report.
8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report.
9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report:

Sr. no. Particulars Yes/No

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 SUGAR SECTOR UPDATE

1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for No
investment banking transaction by PCIL
2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of No
the company(ies) covered in the Research report
3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No
4 PCIL or its affiliates have managed or co-managed in the previous twelve months a private or public offering of securities for the No
company(ies) covered in the Research report
5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or No
brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve
months

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment
banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek
compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the
securities mentioned in this research report, although it, or its affiliates/employees, may have positions in, purchase or sell, or be materially interested in any
of the securities covered in the report.
Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or
particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors.
Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and
accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The
value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or
political factors. Past performance is not necessarily indicative of future performance or results.
Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be
reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not
be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material, and are subject to change without notice.
Furthermore, PCIPL is under no obligation to update or keep the information current. Without limiting any of the foregoing, in no event shall PCIL, any of its
affiliates/employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind
including but not limited to any direct or consequential loss or damage, however arising, from the use of this document.
Copyright: The copyright in this research report belongs exclusively to PCIPL. All rights are reserved. Any unauthorised use or disclosure is prohibited. No
reprinting or reproduction, in whole or in part, is permitted without the PCIPL’s prior consent, except that a recipient may reprint it for internal circulation only
and only if it is reprinted in its entirety.
Caution: Risk of loss in trading/investment can be substantial and even more than the amount / margin given by you. Investment in securities market are
subject to market risks, you are requested to read all the related documents carefully before investing. You should carefully consider whether
trading/investment is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. PhillipCapital and any of
its employees, directors, associates, group entities, or affiliates shall not be liable for losses, if any, incurred by you. You are further cautioned that
trading/investments in financial markets are subject to market risks and are advised to seek independent third party trading/investment advice outside
PhillipCapital/group/associates/affiliates/directors/employees before and during your trading/investment. There is no guarantee/assurance as to returns or
profits or capital protection or appreciation. PhillipCapital and any of its employees, directors, associates, and/or employees, directors, associates of
PhillipCapital’s group entities or affiliates is not inducing you for trading/investing in the financial market(s). Trading/Investment decision is your sole
responsibility. You must also read the Risk Disclosure Document and Do’s and Don’ts before investing.
Kindly note that past performance is not necessarily a guide to future performance.
For Detailed Disclaimer: Please visit our website www.phillipcapital.in

IMPORTANT DISCLOSURES FOR U.S. PERSONS

This research report is a product of PhillipCapital (India) Pvt. Ltd. which is the employer of the research analyst(s) who has prepared the research report.
PhillipCapital (India) Pvt Ltd. is authorized to engage in securities activities in India. PHILLIPCAP is not a registered broker-dealer in the United States and,
therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided
for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act
of 1934, as amended (the “Exchange Act”). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this
report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not a
Major Institutional Investor.
Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information
provided in this research report should do so only through Rosenblatt Securities Inc, 40 Wall Street 59th Floor, New York NY 10005, a registered broker dealer
in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial
instruments through PHILLIPCAP. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below,
to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor.
The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority
(“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on
communications with a subject company, public appearances and trading securities held by a research analyst account.

Ownership and Material Conflicts of Interest

Rosenblatt Securities Inc. or its affiliates does not ‘beneficially own,’ as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of
the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have
interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt
Securities Inc. is not aware of any material conflict of interest as of the date of this publication

Compensation and Investment Banking Activities

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 SUGAR SECTOR UPDATE

Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor
received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or
intends to seek compensation for investment banking services from the subject company in the next 3 months.

Additional Disclosures
This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific
investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not
guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither
PHILLIPCAP nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or
opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of
this research report.
PHILLIPCAP may rely on information barriers, such as “Chinese Walls” to control the flow of information within the areas, units, divisions, groups, or affiliates
of PHILLIPCAP.
Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities
of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-U.S.
securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory
requirements comparable to those in effect within the United States.
The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other
than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related
financial instruments.
Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by PHILLIPCAP with respect
to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or
indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a
consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts,
assumptions and valuation methodology used herein.
No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior written consent of
PHILLIPCAP and PHILLIPCAP accepts no liability whatsoever for the actions of third parties in this respect.

PhillipCapital (India) Pvt. Ltd.

Registered office: 18th floor, Urmi Estate, Ganpatrao Kadam Marg, Lower Parel (West), Mumbai – 400013, India.

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