DAVANGERE - Davangere Sugar

📊 NSE: DAVANGERE 🏢 Sugar 📅 Last Updated: 12/13/2025 21:22

💰 Financial Performance

Revenue Growth by Segment

Total income for FY 2024-25 was INR 216.76 Cr, a slight decline of 2.8% from INR 222.97 Cr in FY 2023-24. The Distillery segment grew 44% to INR 150.39 Cr, while the Sugar segment moderated to INR 50.87 Cr due to low rainfall. Co-generation contributed INR 6.23 Cr and Aviation INR 7.50 Cr.

Geographic Revenue Split

100% of revenue is derived from India, primarily from operations in Kukkuwada, Davangere, Karnataka.

Profitability Margins

Net Profit After Tax for FY 2024-25 was INR 10.83 Cr (5% margin). For H1 FY 2025-26, Net Profit stood at INR 3.93 Cr. Distillery segment profit was INR 65.14 Cr in FY 2024-25, while the Sugar segment recorded a loss of INR 22.90 Cr.

EBITDA Margin

Operating profit before working capital adjustments for FY 2024-25 was INR 25.56 Cr (11.8% margin). Segment results show distillery as the core profit driver with INR 65.14 Cr profit against a total segment result of INR 40.01 Cr.

Capital Expenditure

The company launched a Rights Issue in August 2025 to raise up to INR 149.22 Cr (INR 14,921.80 lakhs) at INR 3.05 per share to fund debt repayment and general corporate purposes.

Credit Rating & Borrowing

Long-term bank facilities of INR 165.21 Cr are rated CARE BB+; Stable. Short-term facilities of INR 33.84 Cr are rated CARE A4+. Interest costs for FY 2024-25 were INR 27.15 Cr on total debt, implying an average borrowing cost of approximately 13-14%.

⚙️ Operational Drivers

Raw Materials

Sugarcane (primary), B-Heavy Molasses, and Maize (for ethanol production). Sugarcane availability and yield per acre are the most critical cost drivers.

Import Sources

100% sourced domestically from the state of Karnataka, specifically the Davangere region.

Key Suppliers

Sourced from local farmers with whom the company has established relationships over five decades.

Capacity Expansion

Ethanol plant commercial operations commenced in Q1 FY 2022-23. Current focus is on maximizing utilization of the integrated sugar, distillery, and power facilities.

Raw Material Costs

Raw material costs are highly sensitive to climatic conditions; scanty rainfall in FY 2024-25 reduced cane availability and yield, impacting sugar segment revenue which fell to INR 50.87 Cr.

Manufacturing Efficiency

Working capital utilization remained high at 93-95% during 2024, indicating intensive operational requirements.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth is driven by the strategic shift toward ethanol production, which grew 44% YoY. The company is utilizing a Rights Issue of INR 149.22 Cr to deleverage the balance sheet and improve liquidity for operational expansion in the distillery segment.

Products & Services

Sugar, Ethanol, Cogenerated Power, and Aviation services (charter/maintenance).

Brand Portfolio

Davangere Sugar.

New Products/Services

Ethanol production from Maize and B-Heavy molasses to ensure year-round distillery operations.

Market Expansion

Targeting the national 20% ethanol blending goal by 2025 to ensure regular offtake and assured pricing from Oil Marketing Companies (OMCs).

🌍 External Factors

Industry Trends

The industry is transitioning toward green energy; DSCL is positioned as a diversified energy and agro-based enterprise with 69% of revenue now coming from the distillery segment.

Competitive Landscape

Operates in a cyclical and fragmented industry, competing with other integrated sugar mills in Karnataka.

Competitive Moat

Sustainable moat derived from a 50-year track record and established relationships with local farmers, ensuring a steady supply of sugarcane in normal climatic years.

Macro Economic Sensitivity

Highly sensitive to the Government of India's ethanol blending program (20% target) and Minimum Selling Price (MSP) for sugar.

Consumer Behavior

Increasing national demand for green energy and ethanol-blended fuels is shifting the company's focus away from cyclical sugar sales.

Geopolitical Risks

Global crude oil price movements and international trade policies indirectly affect the domestic ethanol blending program and sugar export viability.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Fair and Remunerative Price (FRP) for sugarcane and the Minimum Selling Price (MSP) for sugar.

Environmental Compliance

Subject to increasing regulations regarding effluent treatment, waste management, and air quality; non-compliance poses penalty risks.

Taxation Policy Impact

Effective tax rate was approximately 15% in FY 2024-25, with a tax provision of INR 1.92 Cr on PBT of INR 12.86 Cr.

⚠️ Risk Analysis

Key Uncertainties

Climatic pressure (rainfall) is the primary uncertainty, which can reduce sugar production and impact segment profitability (as seen in the INR 22.90 Cr sugar segment loss).