KOTARISUG - Kothari Sugars
📢 Recent Corporate Announcements
Kothari Sugars and Chemicals has announced the reversal of two major liabilities totaling ₹19.78 crores following a board review of pending litigations. The company reversed a ₹5.40 crore liability related to an electricity tax dispute and a ₹14.38 crore liability concerning sugarcane State Advised Price (SAP) for the 2016-2019 seasons. These reversals are recognized as exceptional items in the Profit and Loss statement for the quarter ended December 31, 2025. This move significantly boosts the net profit for the period due to the resolution of these long-standing legal uncertainties.
- Reversal of ₹5.40 crore liability related to electricity tax on power sales to TNEB.
- Reversal of ₹14.38 crore liability regarding sugarcane State Advised Price (SAP) disputes.
- Total exceptional gain of ₹19.78 crores recognized in Q3 FY2025-26 results.
- Decisions based on Madras High Court orders and lack of further appeals by authorities.
- Management confirms no adverse financial impact remains from these specific litigations.
Kothari Sugars and Chemicals Limited has announced the reversal of two major liabilities totaling Rs 19.78 crores during the quarter ended December 31, 2025. The company reversed a Rs 5.40 crore provision related to an electricity tax dispute and a Rs 14.38 crore provision concerning sugarcane State Advised Price (SAP) litigation. These reversals follow favorable court orders and management assessments, and will be recorded as exceptional items in the Profit and Loss statement. This move is expected to significantly boost the reported net profit for the third quarter of FY26.
- Reversal of Rs 5.40 crore liability related to electricity tax on power sales to TNEB
- Reversal of Rs 14.38 crore liability regarding sugarcane SAP disputes for the 2016-2019 seasons
- Total exceptional gain of Rs 19.78 crores to be recognized in Q3 FY26 financial results
- Management confirms no further appeals have been filed in the SAP litigation following Madras High Court orders
- The reversals represent a significant one-time boost to the company's bottom line and reserves
Kothari Sugars reported a revenue of ₹70.09 crore for Q3 FY26, a decline of 15.3% YoY from ₹82.75 crore. The company posted a net profit of ₹11.96 crore, significantly higher than the ₹5.40 crore in the same quarter last year, primarily due to a one-time exceptional gain of ₹19.78 crore from the reversal of old liabilities. Operationally, the company faced a loss before tax and exceptional items of ₹7.66 crore, compared to a profit of ₹2.54 crore in the previous year. Management cited lower sugarcane availability due to deficit rainfall and pest attacks as the primary reason for the operational decline.
- Revenue from operations decreased 15.3% YoY to ₹70.09 crore in Q3 FY26.
- Reported PAT of ₹11.96 crore was supported by an exceptional gain of ₹19.78 crore from liability reversals.
- Sugar segment revenue dropped significantly to ₹24.18 crore from ₹48.95 crore YoY.
- Distillery segment showed growth with revenue rising to ₹45.87 crore from ₹35.06 crore YoY.
- Operational performance resulted in a loss before tax (excluding exceptional items) of ₹7.66 crore.
Kothari Sugars and Chemicals Limited has filed its quarterly compliance certificate under Regulation 74(5) of SEBI (Depositories and Participants) Regulations, 2018. The certificate, provided by Cameo Corporate Services Limited, confirms that all dematerialization requests for the quarter ended December 31, 2025, were processed correctly. It verifies that share certificates were mutilated, cancelled, and the depository's name was updated in the register of members within the required 15-day timeframe. This is a standard administrative filing with no impact on the company's financial operations.
- Compliance certificate submitted for the quarter ended December 31, 2025.
- Confirmation that securities received for dematerialization were processed and listed on stock exchanges.
- Physical security certificates were mutilated and cancelled after due verification.
- Register of Members updated with depository names as registered owners within 15 days of receipt.
Kothari Sugars and Chemicals Limited has announced the closure of its trading window starting January 01, 2026. This action is in compliance with SEBI (Prohibition of Insider Trading) Regulations, 2015, ahead of the company's upcoming financial results. The window will remain closed for all designated persons and their immediate relatives until 48 hours after the declaration of the unaudited financial results for the quarter ended December 31, 2025. This is a standard regulatory procedure for listed companies in India.
- Trading window closure effective from January 01, 2026
- Applies to all Designated Persons and their immediate relatives as per SEBI regulations
- Closure pertains to the unaudited financial results for the quarter ended December 31, 2025
- Trading window will reopen 48 hours after the official announcement of the results
Kothari Sugars and Chemicals has commenced its sugarcane crushing operations for the 2025-2026 season at the Kattur unit effective December 22, 2025. However, the company has decided to keep its Sathamangalam unit non-operational for the second consecutive year due to a continued shortage of sugarcane in that region. This operational update highlights persistent raw material supply challenges in specific command areas of Tamil Nadu. Investors should monitor how the Kattur unit's performance compensates for the idle capacity at Sathamangalam.
- Kattur Sugar Unit commenced crushing operations for the 2025-2026 season on December 22, 2025
- Sathamangalam Unit will remain closed for the 2025-2026 season due to inadequate sugarcane availability
- This marks the second consecutive year that the Sathamangalam facility has failed to operate
- Operations are being conducted under Regulation 30 of SEBI Listing Obligations
Financial Performance
Revenue Growth by Segment
Total revenue from operations declined 29.5% YoY to INR 134.73 Cr for the half-year ended September 30, 2025, from INR 191.21 Cr. Annual revenue fell 17.6% from INR 609.61 Cr in FY23 to INR 502.23 Cr in FY24. In the distillery segment, sales volume decreased by 14% and production fell by 15% due to raw material shortages. The power segment saw an 85% decline in grid exports due to lower crushing volumes.
Geographic Revenue Split
Operations are concentrated in Tamil Nadu, India, with manufacturing plants located in Kattur and Sathamangalam villages. Specific percentage split by region is not disclosed, but revenue is heavily influenced by the Government of India's domestic quota mechanism implemented in February 2024.
Profitability Margins
Net Profit Margin declined from 5.87% in FY24 to 3.36% in FY25. Operating Profit Margin turned negative at -0.78% in FY25 compared to 5.98% in FY24, driven by higher sugarcane costs and lower yields. Profit before tax for H1 FY26 was a loss of INR 9.15 Cr compared to a profit of INR 8.90 Cr in H1 FY25.
EBITDA Margin
Operating profit before working capital changes for H1 FY26 was negative INR 5.28 Cr, a sharp decline from positive INR 12.51 Cr in H1 FY25. This deterioration is linked to a 29.5% drop in revenue and increased cost of materials consumed relative to sales.
Capital Expenditure
Capital expenditure for the half-year ended September 30, 2025, was INR 11.49 Cr, significantly higher than the INR 0.27 Cr spent in the corresponding period of 2024, indicating ongoing investment in fixed assets despite subdued performance.
Credit Rating & Borrowing
CRISIL has assigned a 'Negative' outlook with a short-term rating of CRISIL A2. Bank limit utilization averaged 41% for the 12 months ended May 2025. Finance costs for H1 FY26 were INR 3.13 Cr, a marginal increase from INR 3.01 Cr YoY.
Operational Drivers
Raw Materials
Sugarcane (primary input), Molasses (distillery feedstock), and Bagasse (fuel for co-generation). Sugarcane costs increased in FY25, contributing to a negative operating margin of -0.78%.
Import Sources
Sourced locally from farmers in Tamil Nadu, specifically around the Kattur and Sathamangalam plant regions. The company maintains relationships with a diverse base of sugarcane farmers.
Key Suppliers
Primary suppliers are local sugarcane farmers in the catchment areas of the Tamil Nadu plants. No specific corporate supplier names are disclosed.
Capacity Expansion
Current installed capacity includes 6,400 tonnes crushed per day (TCD) for sugar, 60 kilolitres per day (KLPD) for the distillery, and 33 megawatts (MW) for co-generation. No specific expansion timeline for these units is provided.
Raw Material Costs
Cost of materials consumed for H1 FY26 was INR 77.83 Cr, representing 57.8% of revenue from operations. This is an increase in cost intensity compared to H1 FY25 when material costs were INR 62.34 Cr (32.6% of revenue).
Manufacturing Efficiency
Manufacturing efficiency was adversely impacted by lower crushing volumes and lower yields in FY25. Distillery production efficiency fell by 15% due to feedstock (molasses) shortages.
Logistics & Distribution
Most sales (excluding Electricity Board dues) are conducted on a 'cash and carry' basis, which minimizes distribution credit risk. Specific logistics costs as a % of revenue are not disclosed.
Strategic Growth
Expected Growth Rate
6%
Growth Strategy
The company is shifting focus toward distillery operations to reduce vulnerability to sugar price volatility. It aims to achieve growth through enhanced sugarcane crushing and improved yields via satellite irrigation monitoring, targeting an operating margin recovery to above 6%.
Products & Services
Sugar, Ethanol (Alcohol), and Cogenerated Power.
Brand Portfolio
Kothari Sugars and Chemicals Limited (part of the H.C. Kothari Group).
New Products/Services
Increased focus on ethanol production within the distillery segment to capitalize on government blending mandates, though specific new product revenue % is not disclosed.
Market Expansion
The company is focusing on stabilizing its Tamil Nadu operations and improving sugarcane availability in its command area to restore crushing to optimal levels.
Strategic Alliances
The company operates as part of the H.C. Kothari Group; no specific external JVs or alliances are mentioned in the provided documents.
External Factors
Industry Trends
The industry is shifting from pure sugar production to integrated 'sugar-ethanol-power' models. The government is using quotas and export bans to manage domestic supply, while promoting ethanol blending to support distillery margins.
Competitive Landscape
KSCL is a significant player in the Tamil Nadu sugar industry, competing with other regional integrated sugar mills.
Competitive Moat
Moat is based on integrated operations (sugar, distillery, co-gen) and long-standing (70+ years) relationships with farmers. Sustainability is challenged by heavy government regulation of both input (cane) and output (sugar) prices.
Macro Economic Sensitivity
Highly sensitive to agricultural output and monsoon patterns. A 20% decline in revenue is cited as a downward rating sensitivity factor.
Consumer Behavior
Demand for sugar remains stable as a commodity, but there is increasing industrial demand for ethanol for fuel blending.
Geopolitical Risks
Minimal direct impact due to domestic focus, but global sugar price trends influence government export/import policies.
Regulatory & Governance
Industry Regulations
Subject to the Essential Commodities Act, government-fixed Fair and Remunerative Price (FRP) for cane, and monthly domestic sugar release quotas. Ethanol pricing is also government-regulated.
Environmental Compliance
The company operates distilleries and co-generation plants which are subject to environmental norms; however, specific ESG compliance costs in INR are not disclosed.
Taxation Policy Impact
The company noted a higher tax provision in FY25 which contributed to lower net profit margins. Specific tax rate % is not disclosed.
Legal Contingencies
No instances of non-compliance or penalties from SEBI or Stock Exchanges were reported. Specific pending court case values for labor or tax disputes are not disclosed.
Risk Analysis
Key Uncertainties
Regulatory changes in sugar quotas and ethanol pricing pose significant risks. A decline in revenue by 20% or more is identified as a key risk to the credit profile.
Geographic Concentration Risk
100% of manufacturing operations are concentrated in Tamil Nadu, making the company highly vulnerable to regional monsoon variations and state-specific sugarcane pricing (SAP).
Third Party Dependencies
High dependency on local farmers for sugarcane supply; shortages in cane lead to underutilization of distillery and power capacities.
Technology Obsolescence Risk
Low risk for core commodity production, but the company is adopting digital tools like satellite monitoring to prevent agricultural yield obsolescence.
Credit & Counterparty Risk
Exposure to the state Electricity Board for power sales; other sales are primarily on a cash-and-carry basis, mitigating general trade receivable risk.