Kothari Sugars & Chemicals is a six-decade-old sugar miller from Tamil Nadu that has quietly transformed itself into a bio-refinery where the distillery - not sugar - now drives the profits. It began crushing cane in 1963 as part of the Chennai-based H.C. Kothari Group, and its entire operating logic rests on one recurring idea: squeeze every last rupee from the cane stalk by turning the main product, both by-products and even the waste into something saleable. That philosophy has taken it from a commodity sugar factory to a producer of ethanol, renewable power, bio-fertilisers and, most recently, a fledgling R&D unit chasing low-calorie sweeteners and biosimilars - a pivot now culminating in a proposed merger with group company Kothari Petrochemicals. # Business segments Four engines fed by one crop - a sugar mill that anchors the raw material chain, a distillery that now generates the bulk of the profit, a power unit that monetises the leftover fibre, and an R&D bet on bio-products that is still in the lab. ## 1. Sugar: the anchor that feeds everything else **The sugar mill is the indispensable first step - it crushes the cane that produces the molasses and bagasse the other engines run on, but as a standalone business it is seasonal, regulated and currently loss-making.** - **Two factories, one running** - the company has mills at Kattur and Sathamangalam in Tamil Nadu with a combined crushing capacity of 6,400 tonnes of cane per day, but a collapse in cane supply - volumes fell 68.66% in FY25 - forced it to idle the Sathamangalam unit and run only Kattur for the last two seasons. - **A premium product from an old process** - using the standard double-sulphitation method, in-house R&D has brought sugar colour down to around 45 ICUMSA, which the company says is among the best achieved with that process and lets it command a premium over competitors. - **The government sets the price floor, not the market** - the Centre fixes both the Minimum Selling Price of sugar (stuck at ₹31 per kilo since February 2019) and the Fair and Remunerative Price it must pay farmers for cane (₹3,550 per tonne for the 2025-26 season), while also controlling how much sugar can be sold each month through a release mechanism. - **Cane is the chronic headache** - farmers in its command area around Trichy and Ariyalur districts can switch to paddy, banana or tapioca for better returns, and the resulting scarcity, plus pests and monsoon failures, pushed the mill to crush just 2.62 lakh tonnes of cane in FY25 with an average recovery of 8.94%. ## 2. Distillery: where the profit actually comes from **The distillery turns molasses into industrial alcohol and ethanol sold to oil marketing companies under the government’s blending programme - it was the largest operating profit contributor in FY25.** - **Runs on bought molasses, not just its own** - with its own sugar mill often short of cane, the 60-kilolitre-per-day distillery at Kattur procures molasses from other factories across Tamil Nadu and as far away as Uttar Pradesh and Bihar to keep running for the maximum possible days; in FY25 it bought 28,000 tonnes from outside. - **Ethanol prices are set by the government** - for the 2024-25 marketing year, the rate was ₹57.97 per litre from C-molasses, rising to ₹65.61 per litre if made directly from cane juice, and the company supplied 6 lakh litres against an order of 8 lakh litres by April 2025. - **Waste is wrung out twice** - a bio-digester commissioned in 2020 makes biogas from spent wash to fire a boiler, while a Multi-Effect Evaporator shrinks the effluent volume by 60%, and the concentrated residue becomes raw material for bio-compost. - **Awarded for consistency** - the Kattur distillery has won the Best Distillery-Platinum Award for the Tamil Nadu region from the sugar industry body SISSTA for 2023-24. ## 3. Co-generation of power: selling the leftover fibre **Bagasse - the dry fibre left after crushing - is burned in boilers to generate 33 MW of electricity, some of which runs the factories and the rest is sold to the state grid or private buyers.** - **Two plants, two different sales channels** - the Sathamangalam unit sells power to TANGEDCO, the Tamil Nadu utility, under a long-term agreement where the tariff has climbed from ₹4.519 to ₹5.189 per unit over five years; the Kattur unit, whose state agreement expired in 2020, now sells surplus power to open-access industrial consumers and on the Indian Energy Exchange at market rates. - **Generation depends on the cane crush** - in FY25, with only one sugar mill running, total generation was 18.63 million units and external sales were just 5.4 million units, though the segment still made an operating profit. - **Energy-saving tweaks across the board** - the company has installed variable-frequency drives, replaced conventional drives with planetary drives, and put in a waste heat recovery system to squeeze more electricity from the same bagasse. ## 4. R&D and bio-products: the long bet beyond sugar **A research unit near Chennai, operational since April 2023, is trying to turn the company into a bio-products player - working on low-calorie sweeteners, probiotics and biosimilars - but it is still an investment, not a business.** - **A ₹30-crore lab with government recognition** - the facility near Sriperumpudur started with a ₹10-crore outlay and has since tripled its capital deployed; it is recognised by the Department of Scientific and Industrial Research. - **Bio-fermentation is the core** - the research agenda spans low-calorie sweeteners, probiotic strains and biosimilars, with the company collaborating with outside experts to speed up development. - **Bio-compost is the one product already being sold** - using the concentrated spent wash from the distillery’s evaporator, the company makes and sells bio-compost, closing the loop on its liquid waste. # Sugarcane development and mechanisation **A shared capability that feeds every engine: the company breeds better cane, makes its own bio-fertilisers and deploys machines to plant and harvest - all to keep farmers in its orbit and costs down.** - **New cane varieties developed with research institutes** - working with the Sugarcane Breeding Institute in Coimbatore and Tamil Nadu Agricultural University, it propagates high-yielding, drought-tolerant clones like Co-86032 and Co-11015 across both factory zones. - **Six types of liquid bio-fertiliser made in-house** - a unit at Kattur, built with TNAU’s technical help at a cost of ₹1.09 crore, produces nitrogen-fixing, phosphorus-solubilising and potash-releasing bacteria that are given to farmers. - **Mechanised planting that cuts cost by over 60%** - five custom-built cane planters, operated by local entrepreneurs, perform six field operations in a single pass, while about 25 sugarcane harvesters reduce the need for manual labour. # Group structure and partners **A family-controlled sugar company that is in the process of merging into its petrochemicals sibling, with the same promoter family holding the reins throughout.** - **Promoter family at the helm** - Mrs. Nina B. Kothari is the Non-Executive Chairperson and her son Mr. Arjun B. Kothari is the Managing Director; both sit on the boards of Kothari Petrochemicals and the wholly-owned subsidiary Kothari Safe Deposits. - **Holding company reshuffled, control unchanged** - in May 2023, the entity holding 70.20% of KSCL was amalgamated into NBK Real Estates, which became the new holding company with the same stake and the same ultimate owners. - **Merger with Kothari Petrochemicals approved by the board** - on 19 May 2026, the board agreed to a scheme where KSCL will dissolve into KPL, with shareholders getting one KPL share for every five KSCL shares, subject to regulatory and NCLT approvals.