Press Release

Press Release

July 14, 2026

L H SUGAR FACTORIES LIMITED
Rating Reaffirmed and Withdrawn

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	0.00	467.64	ACUITE A- \| Stable \| Reaffirmed	-	RBI
Bank Loan Ratings	0.00	233.52	Not Applicable \| Withdrawn	-	RBI
Bank Loan Ratings	0.00	22.50	-	ACUITE A1 \| Reaffirmed	RBI
Total Outstanding	0.00	490.14	-	-	-
Total Withdrawn	0.00	233.52	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

Acuité has reaffirmed the long-term rating to ‘ACUITE A-’ (read as ACUITE A minus) and short-term rating to ‘ACUITE A1’ (read as ACUITE A one) on the Rs. 490.14 Cr. bank facilities of L H Sugar Factories Limited (LHSFL). The outlook is ‘Stable’.

Acuité has withdrawn its long-term rating on the bank loan facilities of Rs. 233.52 Cr. of L H Sugar Factories Limited (LHSFL) without assigning any rating as it is a proposed facility. The rating is being withdrawn on account of the request received from the issuer and in accordance with Acuité's policy on withdrawal of ratings as applicable to the respective facility / instrument.

Rationale for rating
The rating continues to reflect the extensive experience of the promoters in the sugar industry, their long and established track record of integrated operations, strong relationships with sugarcane farmers, and a diversified customer base. The rating also derives comfort from the improvement in the company's operating revenue, which increased to Rs. 1,132.41 Cr. in FY26 (prov.) from Rs. 948.26 Cr. in FY25 and Rs. 993.45 Cr. in FY24, primarily driven by higher sales volumes and an increase in the average sugar realization. The company's operating margin also improved to 8.13% in FY26 (prov.) from 7.06% in FY25; however, it remained lower than 10.19% in FY24, primarily due to higher sugarcane procurement costs. Further, the rating factors in the company's healthy financial risk profile and adequate liquidity position. However, the rating remains constrained by the working capital-intensive nature of the sugar business, the inherent cyclicality of the sugar industry, exposure to agroclimatic risks, and intense competition in the sector.

About the Company

L H Sugar Factories Limited commenced its operations in 1910 by two brothers – Raja Lalta(L) and Sahu Hari(H). At present the company is being managed by the descendants of the two family. The company is engaged in manufacturing of sugar and its by-products such as molasses used for ethanol generation and bagasse used for power generation. L H Sugar Limited Factories has 12500 Tonnes Crushed Per Day (TCD) sugar mill at Pilibhit in north-western UP. The sugar mill is forward integrated with co-generation of 44.25 MW and a distillery of 160 Kilo Litres Per Day (KLPD). The company has it registered office at Uttar Pradesh and the current directors of the company are Mr. Sandeep Chandra, Mr. Ayush Agarwal, Mr. Dinesh Rai, Mr. Sidharth Prasad, Mr. Arvind Prasad, Mr. Yugal Kishor Agarwal, Mr. Bharat Swaroop, Mr. Raghav Chandra, Mr. Rahul Prasad, Mr. Bakshi Ram and Ms. Manisha Chandra.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has taken the standalone view on the business and financial risk profile of L H Sugar Factories Limited.

Key Rating Drivers

Strengths

Experienced management and Forward integrated business model with sugar by-products
L H Sugar Factories Limited commenced its operations in 1910 by two brothers, Mr. Raja Lalta and Mr. Sahu Hari and later in 1933, it was converted into limited company. At present the company is being managed by the descendants of the two family. The company has broad outlook with the company’s day to day operations being managed by qualified professionals which is ably supported by well experienced technical team. The company has sugar mill with a capacity of 12,500 TCD, the sugar mill is forward integrated with bagasse based co-generation of 44.25 MW. It has developed healthy relations with sugarcane farmers as the company has low cane arrears as compared to other sugar mills in the locality. Acuité believes that the company will be benefitted over the medium term on the back of established presence in the sugar industry for more than ten decades.

Improvement of scale of operations
The company's scale of operations improved significantly during FY26 (prov.), with operating revenue increasing by approximately 19.42% to Rs. 1,132.41 Cr. from Rs. 948.26 Cr. in FY25, primarily driven by higher sales volumes and improved sugar realizations. The operating margin also improved to 8.13% in FY26 (prov.) from 7.06% in FY25. However, it remained lower than the 10.19% reported in FY24, mainly on account of higher sugarcane procurement costs. Consequently, the company's net profit margin improved to 3.22% in FY26 (prov.) from 1.96% in FY25. Acuité believes that the company is likely to maintain a stable scale of operations over the medium term, supported by its established presence in the sugar industry, integrated operations, and healthy relationships with sugarcane farmers, while profitability is expected to remain at comfortable levels.

Healthy financial risk profile
The company’s financial risk profile remains healthy, supported by a strong net worth, comfortable capital structure, and adequate debt protection metrics. The tangible net worth improved to Rs. 529.49 Cr. as on March 31, 2026 (prov.) from Rs. 494.70 Cr. as on March 31, 2025, owing to the accretion of profits to reserves. The gearing ratio remained comfortable at 0.61 times as on March 31, 2026 (prov.), compared to 0.95 times as on March 31, 2025. Further, the Total Outside Liabilities to Tangible Net Worth (TOL/TNW) ratio improved to 0.87 times as on March 31, 2026 (Prov.) from 1.22 times as on March 31, 2025. The debt protection metrics also strengthened, with the Interest Coverage Ratio (ICR) and Debt Service Coverage Ratio (DSCR) improving to 4.92 times and 1.34 times, respectively, in FY26 (prov.), as against 3.36 times and 0.98 times in FY25. Acuité believes that the company's financial risk profile is expected to remain healthy over the medium term, supported by steady cash accruals, comfortable leverage levels, and the absence of any significant debt-funded capital expenditure plans.

Weaknesses

Intensive Working capital operations
The working capital operations of the company remain intensive, albeit with an improvement in FY26 (prov.). The company's Gross Current Assets (GCA) days stood at 199 days as on March 31, 2026 (prov.), as compared to 269 days as on March 31, 2025. The elevated GCA levels are primarily attributable to the inherently high inventory holding requirements of the sugar industry. The inventory period stood at 198 days in FY26 (prov.) against 262 days in FY25. Sugar inventory levels remain high due to the regulated nature of the industry, wherein sugar mills are required to adhere to monthly release quotas prescribed by the government, resulting in substantial inventory being carried on the books. Further, the company's debtor days remained low at 11 days in FY26 (prov.), while creditor days stood at 46 days. Acuité believes that the working capital requirements of the company are likely to remain high over the medium term, given the inventory-intensive nature of the sugar industry and the regulated release mechanism for sugar sales.

Profitability of sugar mills remains vulnerable to industry cyclicality and agroclimatic risks
Being an agro-commodity, the sugar cane crop is dependent on climatic conditions and is vulnerable to pests and diseases that may not only impact the yield per hectare but also the recovery rate. These factors can have a significant impact on the company’s profitability. In addition, the cyclicality in sugar production results in volatility in sugar prices. However, the sharp contraction in the sugar prices is curtailed after the introduction of MSP by the Central Government in June 2018. Over the long term, higher ethanol production with increased diversion towards B-heavy molasses and direct sugar juice is expected to help curtail the excess supply of sugar, resulting in lower volatility in sugar prices and in turn, cash flows from the sugar business. Further, the sugar industry is highly competitive and fragmented marked by presence of many organised and unorganised players in this industry, thus putting pressure on the profitability margins of the company.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

Growth in operating income by more than 30% with stable improvement in profitability.
Improvement in financial risk profile.

Potential triggers (individual or collective) for a downward rating action:

Any large debt funded capex, impacting the financial risk profile and liquidity.
Revenue falling by 20-25 percent and steep decline in profitability.

Liquidity Position

Adequate

The company’s liquidity position remains adequate, supported by generated net cash accruals of Rs. 62.31 Cr. in FY26 (prov.), which were sufficient to meet its debt repayment obligations of Rs. 41.70 Cr. during the year. Further, the current ratio stood at 1.52 times as on March 31, 2026 (prov.). The company has cash and bank balances of Rs. 1.98 Cr. as on the same date. Additionally, the average utilization of its fund-based working capital limits remained moderate at 45.87% during the six months ended May 2026. Acuité believes that the company's liquidity position is likely to remain adequate over the medium term, supported by steady cash accruals against its debt repayment obligations and the absence of any significant debt-funded capital expenditure plans.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 26 (Provisional)	FY 25 (Actual)
Operating Income	Rs. Cr.	1132.41	948.26
PAT	Rs. Cr.	36.41	18.57
PAT Margin	(%)	3.22	1.96
Total Debt/Tangible Net Worth	Times	0.61	0.95
PBDIT/Interest	Times	4.92	3.36

Status of non-cooperation with previous CRA (if applicable)

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
18 Apr 2025	Working Capital Demand Loan (WCDL)	Long Term	50.00	ACUITE A- \| Stable (Upgraded from ACUITE BB+)
	Term Loan	Long Term	21.60	ACUITE A- \| Stable (Upgraded from ACUITE BB+)
	Cash Credit	Long Term	50.00	ACUITE A- \| Stable (Upgraded from ACUITE BB+)
	Term Loan	Long Term	14.65	ACUITE A- \| Stable (Upgraded from ACUITE BB+)
	Working Capital Term Loan	Long Term	22.25	ACUITE A- \| Stable (Upgraded from ACUITE BB+)
	Cash Credit	Long Term	300.00	ACUITE A- \| Stable (Upgraded from ACUITE BB+)
	Term Loan	Long Term	49.50	ACUITE A- \| Stable (Upgraded from ACUITE BB+)
	Proposed Long Term Bank Facility	Long Term	193.16	ACUITE A- \| Stable (Upgraded from ACUITE BB+)
	Bank Guarantee (BLR)	Short Term	22.50	ACUITE A1 (Upgraded from ACUITE A4+)
13 Jun 2024	Bank Guarantee (BLR)	Short Term	9.00	ACUITE A4+ (Downgraded & Issuer not co-operating* from ACUITE A1)
	Working Capital Demand Loan (WCDL)	Long Term	50.00	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Working Capital Term Loan	Long Term	60.51	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Term Loan	Long Term	11.16	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Cash Credit	Long Term	160.00	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Cash Credit	Long Term	145.00	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Term Loan	Long Term	56.08	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Term Loan	Long Term	20.44	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Term Loan	Long Term	18.59	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Term Loan	Long Term	24.75	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Cash Credit	Long Term	50.00	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Proposed Long Term Bank Facility	Long Term	113.13	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
	Proposed Long Term Bank Facility	Long Term	5.00	ACUITE BB+ (Downgraded & Issuer not co-operating* from ACUITE A- \| Stable)
16 Mar 2023	Working Capital Term Loan	Long Term	82.97	ACUITE A- \| Stable (Reaffirmed)
	Term Loan	Long Term	21.15	ACUITE A- \| Stable (Reaffirmed)
	Term Loan	Long Term	12.53	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	160.00	ACUITE A- \| Stable (Reaffirmed)
	Cash Credit	Long Term	145.00	ACUITE A- \| Stable (Reaffirmed)
	Term Loan	Long Term	59.08	ACUITE A- \| Stable (Reaffirmed)
	Term Loan	Long Term	38.45	ACUITE A- \| Stable (Reaffirmed)
	Proposed Long Term Loan	Long Term	2.61	ACUITE A- \| Stable (Reaffirmed)
	Proposed Long Term Loan	Long Term	15.00	ACUITE A- \| Stable (Assigned)
	Term Loan	Long Term	51.21	ACUITE A- \| Stable (Reaffirmed)
	Term Loan	Long Term	11.91	ACUITE A- \| Stable (Reaffirmed)
	Term Loan	Long Term	24.75	ACUITE A- \| Stable (Assigned)
	Cash Credit	Long Term	50.00	ACUITE A- \| Stable (Assigned)
	Cash Credit	Long Term	40.00	ACUITE A- \| Stable (Assigned)
	Bank Guarantee (BLR)	Short Term	9.00	ACUITE A1 (Reaffirmed)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Listing Status	Regulated By	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
State Bank of India	Not avl. / Not appl.	Bank Guarantee (BLR)	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	22.50	Simple	ACUITE A1 \| Reaffirmed
H D F C Bank Limited	Not avl. / Not appl.	Cash Credit	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	50.00	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Cash Credit	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	300.00	Simple	ACUITE A- \| Stable \| Reaffirmed
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	233.52	Simple	ACUITE Not Applicable \| Withdrawn
State Bank of India	Not avl. / Not appl.	Term Loan	Unlisted	RBI	15 Jan 2022	Not avl. / Not appl.	30 Sep 2026	10.79	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Term Loan	Unlisted	RBI	27 Mar 2020	Not avl. / Not appl.	31 Mar 2028	35.50	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Term Loan	Unlisted	RBI	29 Sep 2023	Not avl. / Not appl.	30 Mar 2029	15.60	Simple	ACUITE A- \| Stable \| Reaffirmed
State Bank of India	Not avl. / Not appl.	Term Loan	Unlisted	RBI	15 Jan 2022	Not avl. / Not appl.	30 Sep 2026	5.75	Simple	ACUITE A- \| Stable \| Reaffirmed
ICICI BANK LIMITED	Not avl. / Not appl.	Working Capital Demand Loan (WCDL)	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	50.00	Simple	ACUITE A- \| Stable \| Reaffirmed

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Siddharth Garg
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

List of instruments and names of regulators of the instruments

As required by SEBI Circular (SEBI/HO/DDHS/DDHS-PoD-2/I/4685/2026) dated February 10, 2026, a list of activities or instruments falling under the purview of various Financial Sector Regulators (FSRs), along with the names of respective FSRs, is being disclosed below:
A. Rating Activity:

Sr. No.	Instrument / activity Name	Regulator of the instrument
1	Listed/Proposed to be listed Bonds/Debentures/Preference Shares (all securities)	SEBI
2	Unlisted/Proposed to be unlisted Bonds/Debentures/ Preference share (all securities)	MCA
3	Listed PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	SEBI
4	Listed PTCs / Securitisation Notes (originated by entities not regulated by RBI)¹	SEBI
5	Unlisted PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	RBI
6	Listed Commercial Paper and NCDs with original maturity less than 1 year	RBI
7	Unlisted Commercial Paper and NCDs with original maturity less than 1 year	RBI
8	Loan Facilities (Fund/Non-Fund Based) from Bank / NBFCs/ NHB/ FIs ²	RBI
9	External Commercial Borrowings and other similar borrowings	RBI
10	Certificates of Deposit	RBI
11	Fixed Deposits raised by NBFCs, Banks, HFCs, FIs	RBI
12	Fixed Deposits raised by corporates other than NBFCs, Banks, HFCs, FIs	MCA
13	Inter Corporate Deposits/Loans extended by Corporates	MCA
14	Borrowing programme ³	-
15	Issuer Ratings ⁴	-
16	Credit Ratings for Capital Protection Oriented Schemes (by Mutal Funds and AIFs)	SEBI
17	Credit quality ratings (CQRs) for Mutual Fund Schemes and Schemes of AIFs	SEBI
18	Listed Security Receipts	SEBI
19	Unlisted Security Receipts	RBI
20	Independent Credit Evaluation (ICE)	RBI
21	Expected Loss Ratings (For Loan Facilities [Fund/Non-Fund based] from Banks/NBFCs/NHB/FIs)	RBI
22	Expected Loss Ratings (Listed / Proposed to be listed Bonds / Debentures / Preference Shares (all securities))	SEBI
23	Expected Loss Ratings (Unlisted / Proposed to be unlisted Bonds/ Debentures / Preference Shares (all securities))	MCA
24	Unlisted PTCs / Securitisation Notes (originated by entities not regulated by RBI) ¹	Investor-side Regulator such as IRDAI, PFRDA ⁵

¹Includes securitisation transactions involving assignee payout, acquirer's payout.

² Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions.
³The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In Press Release(s) subsequent to issuance(s), Acuite shall separately capture the rated quantum details along with names of respective regulators.
⁴ There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs.
⁵ These ratings were assigned during regulatory regime prior to the introduction of SEBI CRA Circular dated Feb 10, 2026 and accordingly, investor side regulators have been included.

B. Other activities:

Sr. No.	Activity Name	Regulator of the activity
1	Monitoring Agency	SEBI
2	Research activities, incidental to rating, such as research for Economy, Industries and Companies ⁶	Not applicable

⁶ permitted by SEBI vide SEBI Master Circular for CRAs.

Disclosure on instruments / activities and names of regulators:

A list of products/activities or ratings of instruments falling under the purview of various financial sector regulators (FSRs) along with the names of respective FSRs has also been duly disclosed by Acuite on its website. A link to the same has been provided below for ready reference:

https://acuite.in/Activities-and-Regulators.html

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.

Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.