| Long and established operational track record in sugar industry and improving operating income
Incorporated in 1969, the society maintained an extensive presence in sugar industry for over five decades. Its strong acceptance among local farmers has facilitated timely and adequate cane procurement, ensuring a consistent crushing period. This, in turn, has helped the society scale up its operations over the years. The operating revenue of the society increased to Rs. 542.26 crore in FY2025 (Prov.) compared to Rs. 418.96 crore in FY2024 driven by increase in production and sale of sugar and ethanol sales on back of expansion of distillery’s capacity to 200 KLPD from 30 KLPD. Additionally, the society recorded operating income of Rs. 178 Cr. in 4MFY2026. Despite the rise in operating income, the operating margins declined to 9.80 per cent in FY2025 (Prov.) as against 13.57 per cent in FY2024 due to elevated cane procurement costs. As a co-operative entity, the society operates with a member-centric approach, often prioritizing farmer welfare over profitability. This is reflected in its practice of consistently paying cane prices higher than the government-stipulated Fair and Remunerative Price (FRP), resulting in lower retained earnings and modest profit levels. Similarly, the PAT margins fallen to 0.88 per cent in FY2025 (Prov.) from 2.49 per cent in FY2024. Acuité believes that CBKSSKN shall continue to benefit from the extensive experience of its promoters and established track record of operations in the sugar industry.
Integrated nature of operations providing better revenue mix
CBKSSKN had an integrated setup comprising an operational cane crushing capacity of 10,000 TCD, a co-generation power plant with a capacity of 28.70 MW, and a distillery with a capacity of 30 KLPD until FY2024. The society undertook capital expenditure of approximately Rs. 197 crore to upgrade its distillery to 200 KLPD and co-generation capacity to 31.70 MW, which became operational from September 2024. As a result, FY2025 witnessed an increase in ethanol sales due to higher diversion of sugarcane syrup towards ethanol production. Ethanol sales rose to Rs. 83.81 crore in FY2025 (Prov.) compared to Rs. 40.16 crore in FY2024. Acuité believes that the society’s scale of operations will continue to improve through the utilisation of its enhanced capacities, supported by government measures.
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| Average Financial risk profile
The financial risk profile of the society remained average, marked by moderate net worth, below unity gearing, and average debt protection metrics. The net worth of the society stood moderate at Rs. 411.88 crore as on March 31, 2025 (Prov.) as against Rs. 376.89 crore as on March 31, 2024. The networth includes accumulated losses of the previous years and depreciation reserve. The total debt outstanding of Rs. 342.84 crore consists of working capital borrowings of Rs. 134.86 crore and long-term borrowings of Rs. 207.98 crore as on FY2025 (Prov.). The society's gearing ratio stood at 0.83 times as of March 31, 2025 (Prov.) as against 1.15 times as of March 31, 2024. The debt protection metrics remained average with Debt Service Coverage Ratio (DSCR) at 1.45 times in FY2025 (Prov.) as against 1.37 times in FY2024 and Interest Coverage Ratio (ICR) stood at 1.93 times and 1.74 times respectively as on 31st March 2025 (Prov.). Acuite believes that the financial risk profile of the society is likely to improve in the near to medium term on account of likely improvement in the scale of operations and no debt funded capital expenditure in the medium term.
Working capital intensive operations
The society's working capital operations remain intensive, as indicated by gross current assets (GCA) of 270 days in FY2025(Prov.), compared to 407 days in FY2024 on account of high but improving inventory days. The inventory days stood at 234 days in FY2025 (Prov.) as against 334 days in FY2024. The higher inventory level as of March 31, 2024, was on a result of restrictions imposed on export of sugar resulting into piling of stock. Further, the debtor’s days of the society stood at 38 days in FY2025 (Prov.) as compared to 93 days in FY2024. Further, the average bank limit utilization for last 16 months ended June 2025 stood at ~59 percent. Acuite believes that working capital operations of the society may continue to remain intensive considering the nature of business.
Susceptibility to regulatory changes and inherent volatility in sugar prices
The sugar industry is susceptible to movements in sugarcane and sugar prices which results in volatile profitability. While the government policy of Fair and Remunerative Price for sugarcane has brought some amount of stability and predictability in input price, open market sugar price remains dependent on the demand-supply scenario. Besides this, the government also regulates domestic demand-supply through restrictions on imports and exports, sugar release orders and buffer stock limits. Government interventions will remain a driver for the profitability of sugar mills and continue as a key rating sensitivity factor.
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