Dalmia Bharat Sugar & Industries Ltd

Dear Stakeholders,

It is my privilege to present my review for the financial year ended 31^st March, 2025. This year has been defined by our strategic focus on " igital Transformation: Sweetening the Future," the central theme of our Integrated Annual Report. This theme reflects our intent to leverage technology as a driver of efficiency, sustainability, and long-term value across our operations.

FY 2025 presented external challenges, including reduced cane availability in Uttar Pradesh and regulatory restrictions on sugar diversion for ethanol production. Despite these pressures, our focus on digital transformation played a key role in helping us navigate this evolving environment. We concentrated on optimising operations, integrating recent investments, and strengthening our strategic position by translating past investments into measurable outcomes.

Reflecting on FY2025, we navigated a dynamic external environment with resilience and strategic effectiveness. We achieved a Total Income of Rs.5,820 crore in FY2025, representing a significant increase of approximately 26% over the Rs.5,028 crore reported in FY2024. This top-line expansion was accompanied by a substantial improvement in profitability, with Profit After Tax rising to Rs.387 crore, an increase of over 42% compared to Rs.272 crore in FY2024. As a result, our Basic Earnings Per Share improved to approximately Rs.47.78 up from Rs.33.66 in the previous year. Crucially, we strengthened our financial position considerably by achieving the gearing ratio of 0.18x recorded at the end of FY2025.

In FY2025, we also made decisive strides in strengthening the foundational capitals that underpin our long-term value creation. Our Intellectual Capital was enhanced through targeted R&D, such as the Sugarcane Seed Varietal Enhancement programme, and the deployment of digital tools—satellite imaging, geo-sensing, and SAP Ariba—that deepened data-driven decision-making across operations. These initiatives were complemented by structured digital upskilling, aligning Human Capital with our innovation agenda. We advanced workforce capabilities through customised learning modules, while embedding inclusivity, safety, and ethics via robust engagement and redressal mechanisms. On the

Natural Capital front, we adopted a regenerative approach—evidenced by a 15% year-on- year reduction in emissions intensity and zero environmental non-compliances. Our operations sustained 100% Zero Liquid Discharge (ZLD) status and delivered significant water conservation outcomes, supported by a Rs.575 lakh investment. Concurrently, our Social and Relationship Capital efforts centred on trust-building through continuous stakeholder engagement. Structured community feedback loops, alignment with national welfare schemes, and proactive CSR execution reinforced our identity as a responsive, responsible, and future- ready organisation—one that integrates technology, sustainability, and inclusion into its core business ethos.

As a result, FY2025 was a pivotal year for your Company, defined by the integration of digital intelligence, disciplined capital deployment, and operational resilience. We translated longterm strategies into measurable outcomes across core value levers - from manufacturing and agriculture to sustainability, finance, and people capability.

Digitalisation is not merely a project, but a company-wide agenda embedded in every layer of our operations, we prepared our enterprise-wide digital transformation roadmap. Now in the phase of implementation and once it is fully implemented will deliver real-time responsiveness, energy optimisation, predictive maintenance, and systemic transparency. We are in the process of putting predictive loT platforms, enabling visibility, reliability, and improved decision-making. Smart manufacturing systems and Al-driven forecasting tools enhanced throughput, uptime, and returns on invested capital. Across procurement, SAP Ariba implementation resulted in streamlined vendor collaboration and digitised sourcing workflows with aim to optimized procurement cost.

Our agronomy operations also saw a leap forward. We scaled regenerative farming pilots, linked field-level data with factory analytics. We are in the process of deploying satellite sensing and drone technology to improve cane yield, soil health, and input efficiency. Research and development activities focused on seed quality improvement and data-driven productivity enhancement, reinforcing our commitment to future-ready farming.

Human capital was a key enabler. We launched focused upskilling programs on digital tools, analytics, and automation. Digital learning platforms like Nalanda were leveraged to increase accessibility, while simulation tools and interactive content supported deeper engagement. Industry 4.0 skills and digitised SOPs were embedded across functions, ensuring our people are equipped to lead in a digitised environment.

In FY2025, we focused on building a future-ready manufacturing ecosystem by scaling smart, sustainable infrastructure and deriving operational leverage from prior investments. Despite external challenges - including reduced sugarcane availability in Uttar Pradesh and regulatory constraints on sugar diversion for ethanol - we maintained healthy plant utilisation and completed all major expansion projects on schedule. Significant capacity enhancements were delivered across the sugar business. The Nigohi unit was upgraded to 10,500 TCD, Ramgarh to 7,700 TCD along with a modernised packing house, and Ninaidevi reached 4,000 TCD with improved diversion capacity. The newly acquired Baghauli Sugar and Distillery Limited, comprising a 5,500 TCD sugar unit and 12 MW co-generation plant, was revived and made operational within just 90 days of acquisition - an outcome that demonstrated execution speed and operational discipline.

In the ethanol segment, installed distillation capacity reached 850 KLPD, supported by the full-year contribution of the 250 KLPD grain-based plant at Jawaharpur. These upgrades were strategically timed and completed ahead of the crushing season, ensuring seamless integration into FY2025-26 performance cycles.

Our Capital expenditure for the year was directed toward high-impact projects designed to increase capacity, embed digital maturity, improve environmental performance, and build longterm operational resilience. Our ability to pivot between feedstocks, combined with digitally synchronised systems, provided the flexibility to adapt production in response to market dynamics while sustaining efficiency and quality standards. This de-risked scalability approach has positioned us to capture full performance benefits in the coming fiscal year, further strengthening our leadership in the sugar and ethanol ecosystem.

In FY2025, we adopted a financial strategy rooted in prudence and forward-looking capital allocation. We balanced our ambition for growth with a disciplined approach to managing the balance sheet - ensuring resilience across operational cycles while investing in capabilities aligned with our long-term strategic objectives.

We demonstrated strong financial performance, generating Rs.450.45 crore in Cash from Operations during the year. This robust internal accrual base enabled us to pursue capital expansion without undue leverage. Access to concessional finance - particularly through government-supported interest subvention schemes for ethanol-linked projects - further strengthened this position. These schemes reimburse approximately 50% of the interest burden, resulting in an effective borrowing cost of around 6%. We maintained a conservative capital structure, with a Net Debt-to-Equity Ratio of 0.18x as of 51^st March, 2025, reflecting a well- balanced and robust financial foundation.

During the year, Rs.149 crore was deployed as capital expenditure towards high-impact, growth- oriented investments. Key allocations included the commissioning of the Baghauli grain-based distillery and the expansion of ethanol capacity at the Jawaharpur unit - both strategically aligned with the national ethanol blending roadmap. Additional investments were directed towards supply chain digitisation, leveraging platforms like SAP Ariba, and smart agriculture initiatives, including drone-enabled fertiliser application and satellite-based geo-sensing to enhance field-level productivity. All capital allocation decisions were guided by a disciplined productivity lens, aiming to maximise asset yields, reduce operating costs, and strengthen our strategic positioning. Investment decisions were calibrated to prevailing market conditions and sector fundamentals, with an internal rate of return (IRR) expectation in the range of 18-20%.

In FY2025, we advanced our innovation and research agenda as a strategic enabler of sustainable growth. We focused on embedding precision and data-driven intelligence across our agricultural and industrial value chains to boost productivity and operational efficiency.

On the agricultural front, we continued to strengthen our sugarcane seed varietal programme, addressing key agronomic challenges and improving yield performance. We also piloted advanced precision farming technologies, including satellite-based geo-sensing and drone- enabled fertiliser application, with notable implementation at the Baghauli unit. These tools generated granular data to optimise resource use and enhance field-level decision-making.

Within factory operations, we invested in process innovation and began exploring Al-enabled manufacturing intelligence to support predictive analytics and real-time optimisation. This integrated approach created a continuous feedback loop between innovation, execution, and impact, ensuring that process improvements are both scalable and measurable. Crucially, the innovation agenda informed workforce capability-building efforts, further strengthening the integration between Intellectual and Human Capital. Through this synergy, we are positioning ourselves as a technology-led enterprise, ready to meet the evolving demands of the sugar and ethanol ecosystem.

In alignment with India's National Biofuel Policy, we pursued a deliberate and assertive sugar-to-ethanol diversification strategy in FY2025. Despite regulatory constraints on sugar diversion during the year, we maintained high plant utilisation by leveraging our feedstock flexibility, particularly through expanded grain-based distillation capacity. Our operational ethanol capacity reached 850 KLPD, supported by the full-year contribution of the 250 KLPD grain-based facility at Jawaharpur. These strategic investments were completed ahead of the crushing season to ensure seamless integration and full-scale performance in FY2025-26. This pivot to grain-based ethanol not only mitigated the impact of sugar market volatility and diversion restrictions but also strengthened our alignment with the national goal of achieving 20% ethanol blending. As ethanol continues to emerge as a key driver of future value, our biofuel strategy is positioned to deliver both environmental benefits and long-term financial resilience.

Our growth in FY2025 was pursued with a risk-adjusted approach, assessing and managing risks related to market volatility, policy changes, and operational factors. We made measured capital allocation decisions for strategic investments and expansions, including those aligned with our digital transformation efforts. Our financial approach in FY2025 centered on balancing growth aspirations with prudent financial stewardship, leveraging strong cash flows for future-ready investments aligned with the digital transformation theme. We continue to manage our debt effectively. We remain strategically confident in our grain-based ethanol and blended revenue base, supported by policy tailwinds such as ethanol blending targets.

As we move forward, we do so with renewed confidence in our strategic direction and the resilience of our integrated business model. We are committed to deepening our digital capabilities, expanding sustainable practices, and investing in our people, communities, and innovation agenda. Our journey of transformation is a shared one, and we are grateful for the trust and support of all our stakeholders. On behalf of the leadership team, we extend our sincere thanks to our shareholders, employees, farmers, business partners, and customers for standing with us as we continue to build a future-ready Company.

Warm regards,

Managing Director