Dharani Sugars & Chemicals is an integrated sugar manufacturer in Tamil Nadu that has been idle for years - its three plants haven’t crushed cane since at least 2020 - and is now attempting a precarious restart after emerging from a full-blown insolvency process that nearly ended in liquidation. The company was founded in 1987 as part of the PGP Group, and its recurring approach is a circular production model: crush sugarcane for sugar, burn the leftover bagasse to generate power, and ferment the molasses into alcohol - so that each by-product becomes feedstock for the next stage, a hedge against the brutal cycles of any single commodity. That model has been frozen since the CIRP (Corporate Insolvency Resolution Process) began in mid-2021, and the company’s entire story now is whether it can restart the cycle before its assets deteriorate further. # Business segments Three engines built on the same cane - sugar, power and alcohol - each feeding the next, all currently silent while the company races to overhaul machinery and settle old debts. ## 1. Sugar: the core that everything else depends on **If the cane isn’t crushed, the other two engines get no fuel - and the company hasn’t crushed cane in over five years.** - **Three mills, 10,000 tonnes a day** - the company’s combined crushing capacity across its units in Tirunelveli, Thiruvannamalai and Villupuram districts is 10,000 TPD (tonnes per day), but these plants have been idle since at least FY20 because cane arrears from the 2018-19 season were never cleared. - **A crop you can’t control** - sugarcane is seasonal, rain-dependent and competes with other crops for acreage, so the company has historically worked with the Sugarcane Breeding Institute in Coimbatore to introduce higher-yielding varieties and pushed drip irrigation to stabilise supply. - **Price set by the government** - the Minimum Selling Price for sugar is fixed by the Government of India, which means the company cannot pass on cost increases freely, and it must hold large inventories through the off-season, racking up working-capital interest. - **The last real harvest** - in FY22, the most recent period with any meaningful activity, the company crushed 1.12 lakh tonnes of cane and produced 1.02 lakh quintals of sugar, selling at an average of Rs. 3,251 per quintal. ## 2. Power: selling electricity from burnt cane waste **Bagasse-fired cogeneration turns a disposal problem into a revenue stream - but only when the sugar mill is running.** - **22 MW, plus more** - the main cogeneration plant at the Kalayanallur complex (Unit III) has 22 MW of capacity, with additional generation at Units I and II, all designed to burn bagasse from the sugar process. - **Sold to the state grid** - in FY20, the last operational year, the company generated 61.47 lakh units of power and exported roughly half - 31.36 lakh units - to the Tamil Nadu Electricity Board. - **Paid, eventually** - the state utility TANGEDCO is a slow payer: trade receivables included Rs. 28 crore outstanding for more than three years as of FY23, and the company has been chasing these dues through industry associations. - **No cane, no power** - because crushing never restarted at Units II and III after FY20, no bagasse was available and the power segment produced nothing in subsequent years. ## 3. Distillery: turning molasses into alcohol and ethanol **The third link in the chain takes the sticky by-product of sugar-making and converts it into industrial alcohol and fuel ethanol - a business the government has been aggressively promoting.** - **100 kilolitres a day** - the multi-product distillery at Kalayanallur can produce 100 KLPD, with additional ethanol capacity at the other two units. - **A policy tailwind, if it can restart** - India’s ethanol blending programme has raced from about 7% in FY20 to roughly 14% by FY24, with the government raising ethanol prices and permitting the use of B-heavy molasses and cane juice as feedstock, which would let the company divert sugar directly into ethanol. - **Last call in FY20** - the distillery produced 74.16 lakh litres of industrial alcohol that year and sold 86.85 lakh litres at an average of Rs. 52.45 per litre, but has been silent ever since because the sugar mills that supply its molasses never restarted. - **Regulated at every step** - alcohol pricing and inter-state movement are controlled by state governments, and molasses transfers between the sugar and distillery segments are priced at average market rates, so margins depend heavily on government policy. # Group structure and partners **The company is a standalone PGP Group entity with no subsidiaries, a single hotel investment, and a lender consortium that now reports to a government-backed asset reconstruction company.** - **Promoters hold 61.55%** - key promoter entities include Dharani Developers (19.83%), Dharani Credit and Finance (11.31%) and Executive Chairman Dr. Palani G Periasamy (8.25%), with no subsidiary companies beneath the firm. - **A five-star hotel on the books** - the company holds an investment in Appu Hotels Limited (Le Royal Meridian, Chennai), carried at Rs. 14.55 crore as of March 2025, though those shares are pledged to lenders; management believes the hotel’s real estate value far exceeds its liabilities. - **Lenders handed the debt to NARCL** - a consortium of ten banks assigned their loans to the National Asset Reconstruction Company Limited in September 2023, and a Master Restructuring Agreement signed in May 2024 provides for remission of Rs. 334.65 crore of unsustainable debt upon completion of payment. - **Restructured, not yet free** - as part of the deal, NARCL received 83,74,328 equity shares and Rs. 17.08 crore in secured NCDs at 12% interest; the company also settled its IREDA loan via a one-time settlement and is working through an OTS on its Sugar Development Fund loan with a Rs. 5 crore deposit placed in July 2025.