Incorporated in **1933**, Kesar Enterprises Limited is a long-standing player in the Indian sugar industry. The company operates an integrated production facility in **Baheri, Uttar Pradesh**, leveraging the sugarcane value chain to produce sugar, spirits, ethanol, and bagasse-based power. Despite its established infrastructure, the company is currently navigating a complex period of financial restructuring and operational recovery. --- ### **Core Operations: The Sugarcane Value Chain** The company’s business model is built on an integrated "circular" approach where the primary crop (sugarcane) feeds multiple revenue streams. #### **1. Sugar Division** The sugar division remains the primary business segment, though it has faced significant volatility due to climatic conditions and regional competition. * **Raw Material Sourcing:** The company pays farmers based on the **State Advised Price (SAP)** set by the Uttar Pradesh government, which is historically higher than the Central Government’s Fair and Remunerative Price (FRP). * **Operational Performance:** | Metric | SS 2024-25 | SS 2023-24 | SS 2022-23 | | :--- | :--- | :--- | :--- | | **Sugarcane Crushed** | **59.46 lakh quintals** | **94.24 lakh quintals** | **1.16 crore quintals** | | **Sugar Production** | **5.68 lakh quintals** | **10.18 lakh quintals** | **12.16 lakh quintals** | | **Sugar Recovery %** | **9.55%** | **10.81%** | **10.49%** | | **Crushing Duration** | **108 days** | **144 days** | **177 days** | | **Cane Area (Hectares)**| **27,012** | **28,549** | **30,983** | * **Yield Challenges:** In **SS 2024-25**, crushing volumes fell by **37%**. This was driven by lower yields (**443 quintals/hectare**) caused by excessive rainfall and the diversion of cane to neighboring factories due to delays in clearing farmer dues. #### **2. Spirits & Distillery Division** The company operates a **45 KLPD** (Kilo Litres Per Day) distillery capable of producing Ethanol, Rectified Spirit (RS), and Silent Spirit (SDS). * **Strategic Shutdown:** The plant was **shut down on February 22, 2024**, and remained non-operational through **FY 2024-25**. * **Market Arbitrage:** Management opted to sell **C-molasses** directly in the open market rather than processing it, as molasses realizations were more attractive than the low market rates for spirits (which dropped to **Rs. 45 per BL** from **Rs. 52.90 per BL**). * **Expansion Plans:** The company is targeting an expansion to a total capacity of **96 KLPD** using **B-Heavy molasses** via a new **80 KLPD MPR plant**. A restart is contingent on revised government ethanol rates, expected to be evaluated by **October 2025**. #### **3. Power Division (Co-generation)** Kesar operates a high-pressure (**115 kg/cm²**) bagasse-based cogeneration plant, which is more efficient than standard industry models. * **Revenue Model:** Power is exported to the **Uttar Pradesh Power Corporation Limited (UPPCL)**. * **Tariff Headwinds:** The **UPERC** reduced purchase rates from **Rs. 5.86 per unit** to **Rs. 3.46 per unit** effective **April 1, 2023**. Consequently, off-season operations have been suspended as they are no longer viable. * **FY 2024-25 Performance:** Generated **0.74 lakh MW**, exporting **0.49 lakh MW** for a realization of **Rs. 17.09 Crores** (down from **Rs. 26.50 Crores** the previous year). --- ### **Financial Performance & Solvency Status** The company is currently in a state of financial distress, with its **net worth completely eroded** due to accumulated losses. | Metric (Rs. in Crore) | FY 2024-25 | FY 2023-24 | FY 2022-23 | | :--- | :---: | :---: | :---: | | **Revenue from Operations** | **333.90** | **531.06** | **552.76** | | **EBIDTA** | **(38.92)** | **115.71** | **2.25** | | **Net Profit / (Loss)** | **(73.09)** | **87.68** | **(44.84)** | * **Profitability Analysis:** The **FY 2023-24** profit was primarily non-operational, stemming from a **Rs. 91.14 crore** write-back following a **One Time Settlement (OTS)** with **UCO Bank**. * **Asset Revaluation:** Under **Ind AS 16**, the company recorded a fair value gain of **Rs. 44.25 crore** in **FY 2023-24**, reflected in the revaluation reserve. * **Liquidity Management:** Management is actively **monetizing non-operating immovable assets** to generate cash flow and is pursuing further settlements with lenders to reduce finance costs. --- ### **Capital Restructuring & Corporate Actions** In **August 2025**, the Board approved a major restructuring to improve market liquidity and equity accessibility: * **Stock Split:** Sub-division of **1** Equity Share (Face Value **Rs. 10**) into **10** Equity Shares (Face Value **Rs. 1**). * **Preference Conversion:** Re-classification of **1.00 Crore Preference Shares** into **Equity Shares**. * **Authorized Capital:** Increased from **Rs. 22.00 Crores** to **Rs. 28.00 Crores**, resulting in a total of **28,00,00,000** shares post-restructuring. --- ### **Strategic Outlook & Market Opportunities** * **Ethanol Blending:** The company aims to capitalize on the National Ethanol Blending Program, targeting the **20% blending goal by 2025-26**. * **Operational Recovery:** The **2025-26 Crushing Season** is expected to start in **late 2025**. Management anticipates better margins due to **low opening stocks** and steady sugar prices. * **Contract Bottling:** Plans are in place to resume **Country Liquor** and **IMFL** contract bottling once pricing conditions improve. --- ### **Critical Risk Factors** | Risk Category | Specific Threat | | :--- | :--- | | **Regulatory** | Stagnant **Minimum Support Price (MSP)** for sugar (**Rs. 31/kg** since 2019) vs. rising **SAP** for cane. | | **Supply Chain** | Diversion of cane to competitors (including a new mill within a **15 KM radius**) due to payment delays. | | **Legal** | Active litigation over land titles in **Village Khurpia** and **Village Bandia** (Uttarakhand). | | **Financial** | **Qualified Audit Conclusion** regarding unrecognized gratuity obligations under the **Code on Social Security, 2020**. | | **Operational** | Government caps on diverting sugar for ethanol (e.g., the **0.2 crore tonne** national cap). | Despite the erosion of net worth, Kesar Enterprises maintains its **"Going Concern"** status, betting on a cyclical upturn in the Uttar Pradesh sugar industry and the successful execution of its asset monetization and distillery expansion strategies.