**Member of the Umesh Modi Group** SBEC Sugar Limited is a prominent Indian sugar producer headquartered in the high-yield sugarcane belt of Western Uttar Pradesh. The company is currently undergoing a strategic transformation, transitioning from a traditional sugar miller into an integrated bioenergy player. This evolution is marked by aggressive capacity expansion, a pivot toward ethanol production under India’s **National Biofuel Policy**, and a significant corporate restructuring mandated by the **Supreme Court of India**. --- ### 1. Manufacturing Infrastructure & Operational Footprint The company’s core operations are centralized at its modern manufacturing complex in **Village Loyan Malakpur, District Baghpat, Uttar Pradesh**. * **Crushing Capacity Expansion:** The facility has scaled from an initial **3,500 TCD** (Tons of Cane per Day) to **9,000 TCD** as of the **2022-23** season. The company has secured **Consolidated Consent to Operate and Authorisation (CCA)** and **Consent to Establish (CTE)** to further augment this to **10,000 TCD**. * **Raw Material Ecosystem:** SBEC manages a vast catchment area of **26,500 hectares**, yielding approximately **238.50 Lac Qtl** of sugarcane. * **Product Portfolio:** While primarily a producer of **white crystal sugar**, the company has diversified into **pharmaceutical-grade refined sugar** through specialized conversion arrangements. * **Technical Integration:** Effective **March 1, 2025**, the company entered a **Technical and Services Agreement** with **SBEC Systems (India) Limited** to provide engineering consultancy for plant modernization and co-generation optimization. **Operational Performance Trends:** | Particulars | Unit | SS 2023-24 | SS 2022-23 | SS 2021-22 | | :--- | :--- | :--- | :--- | :--- | | **Cane Crushed** | Lac Qtl | **134.31** | **133.44** | **134.08** | | **Recovery Rate** | % | **11.34%** | **10.75%** | **11.19%** | | **Sugar Production** | Lac Qtl | **15.26** | **14.38** | **15.19** | --- ### 2. Strategic Pivot: The Ethanol & Bioenergy Roadmap To mitigate the cyclicality of the sugar market and capitalize on the government's **20% ethanol blending (E20) target by 2025-26**, SBEC is aggressively expanding its distillery and power segments. * **100 KLPD Ethanol Plant:** A new distillery unit is being established at the Malakpur complex to convert molasses and sugar syrup into ethanol. * **Bioenergy Consolidation:** In **FY 2023-24**, the company acquired the remaining **45%** stake in **SBEC Bioenergy Limited** for **₹40.18 Crores**, making it a **100% subsidiary**. This unit operates a **24 MW** power plant and **77 TPH** steam capacity, ensuring energy self-sufficiency and additional revenue from power export. * **Subsidized Funding:** The company has received in-principle approval for interest subvention on **₹97.88 Crores** from the Ministry of Consumer Affairs to support its distillery ambitions. --- ### 3. Corporate Restructuring & The 2025 Open Offer Following a **March 4, 2025**, order from the **Hon’ble Supreme Court of India**, the company is resolving a historical regulatory breach regarding promoter shareholding from FY 2014-15. * **The Offer:** **SBEC Systems (India) Limited** (Acquirer) and six **Persons Acting in Concert (PACs)** have launched an Open Offer for **1,23,90,009 equity shares** (**26.00%** of voting capital). * **Pricing Dynamics:** The offer price is set at **₹21.19 per share**, which includes a base price plus **10% interest per annum** (calculated from September 2014 to November 2025). * **Stability Commitment:** The Acquirers have committed to not disposing of or encumbering material assets for at least **2 years**, ensuring operational continuity during the ownership transition. --- ### 4. Financial Profile & Capital Management While the company maintains a positive **EBITDA** (**₹4,040.74 lacs** in FY 2024-25), it reported a **Net Loss** of **₹1,860.77 lacs** for the same period, largely due to high finance costs and accounting adjustments. **Key Credit Facilities & Liquidity:** * **Debt Resolution:** In **February 2024**, the company fully repaid **₹201 Crores** plus interest to **U.P. Co-operative Bank Limited**, successfully releasing asset mortgages. * **New Funding Lines:** * **₹250 Crore** unsecured inter-corporate loan from **Moderate Capital and Leasing Services Limited** (August 2025). * **₹40 Crore** facility from **Arka Fincap Limited** (June 2025) specifically for clearing raw material supplier dues. * **₹40 Crore** Corporate Term Loan from **SVC Co-Operative Bank Ltd**. **Maturity Profile of Financial Liabilities (as of March 31, 2023):** | Particulars | < 1 Year (₹ Lacs) | 1-5 Years (₹ Lacs) | Total (₹ Lacs) | | :--- | :--- | :--- | :--- | | **Trade Payables** | **51,093.59** | - | **51,093.60** | | **Current Borrowings** | **9,503.64** | - | **9,503.64** | | **Non-Current Borrowings** | - | **695.40** | **695.40** | --- ### 5. Critical Risk Factors & Audit Qualifications Investors should note several material contingencies and accounting departures that impact the company’s reported financial health. * **Cane Dues Interest Dispute:** The company has not provided for interest on late sugarcane payments for the **2012-13 to 2014-15** seasons, citing a pending waiver application. As of **December 31, 2025**, unprovided interest for the current period alone stood at **₹3,704.89 lacs**. * **Inventory Valuation Departure:** Contrary to **Ind AS-2**, the company values closing stock at **Net Realisable Value (NRV)** rather than the lower of cost or NRV. This resulted in an **overstatement of inventories** and an **understatement of loss** by **₹2,312.28 lacs** in FY 2024-25. * **Modi Industries Limited (MIL) Exposure:** SBEC holds a debt assignment of **₹14,685.98 lacs** in MIL (a sick company). A settlement in **January 2026** for **₹14,177.39 lacs** resulted in a realized loss of **₹508.59 lacs**. * **Regulatory Pricing Mismatch:** The industry faces a structural squeeze between the **State Administered Price (SAP)** for cane (fixed at **₹355/qtl** for 2025-26) and the **Minimum Selling Price (MSP)** for sugar, which has been stagnant at **₹31/kg** since **2019**. --- ### 6. Summary of Contingent Liabilities | Nature of Liability | Amount (₹ Crore) | Status | | :--- | :--- | :--- | | **Service Tax Dispute** | **7.24** | Pending at **CESTAT**. | | **Foreign Loan Interest** | **2.41** | Owed to Occident Orient; pending **RBI** approval. | | **Cane Dues Interest** | **Unascertainable** | Sub-judice in **Supreme Court**. | | **Open Offer Interest** | **Unascertainable** | Mandatory **10% p.a.** per SC Order. | | **Legal Claims (Sec 138)** | **1.40** | Pending in Ghaziabad Court. |