Dharani Sugars narrows first-half loss to Rs 37.70 crore

Dharani Sugars and Chemicals Limited reported a net loss of Rs 37.70 crore for the half year ended September 30, 2026, compared with a Rs 40.34 crore loss a year earlier, as its sugar, distillery and power segments all remained loss-making while manufacturing facilities stayed non-operational for a prolonged period.

Why did Dharani Sugars report a first-half loss?

Dharani Sugars reported the Rs 37.70 crore first-half loss because income from operations of Rs 1.71 crore did not cover expenses of Rs 18.36 crore and finance costs of Rs 21.05 crore. The loss before tax was Rs 37.70 crore for the half year ended September 30, 2026, with no tax expense reported.

The first-half loss narrowed by Rs 2.64 crore from Rs 40.34 crore in the corresponding half year ended September 30, 2025. However, the operating loss before finance costs was Rs 16.65 crore, against Rs 20.77 crore a year earlier, and Dharani Sugars said its manufacturing facilities and operations had remained non-operational for a prolonged period.

The September 2026 quarter recorded a loss of Rs 17.73 crore, compared with Rs 19.75 crore in the September 2025 quarter and Rs 19.97 crore in the preceding June 2026 quarter. September-quarter income from operations was Rs 1.21 crore, while depreciation and amortisation amounted to Rs 5.40 crore and finance costs were Rs 10.50 crore.

Which Dharani Sugars businesses made losses?

Dharani Sugars' sugar business recorded a first-half segment loss before tax and finance cost of Rs 11.63 crore, making it the largest contributor to the Rs 16.65 crore aggregate segment loss. The sugar segment's loss was lower than Rs 15.84 crore in the comparable 2025 half year, but Dharani Sugars reported no segment revenue from sugar operations in the period.

The distillery segment posted a Rs 4.34 crore loss for the half year ended September 30, 2026, compared with a Rs 4.28 crore loss a year earlier. The power segment reported a Rs 2.39 crore loss, versus Rs 2.64 crore in the prior-year half, meaning each of the three operating businesses remained loss-making even though the total operating deficit reduced.

The reported Rs 1.71 crore of income from operations was allocated to unallocated income rather than to sugar, distillery or power. The reduction in the operating loss therefore occurred without reported operating revenue from the three manufacturing segments, which management said it is seeking to restart through funding and revival measures.

What did Dharani Sugars' cash flow show?

Dharani Sugars reported net cash from operating activities of Rs 51.22 crore for the half year ended September 30, 2026, but its cash-flow note says this positive amount was only due to reclassification of current maturities of long-term debt. The note also says there was no repayment of long-term borrowings, so the stated inflow did not indicate an operating recovery at the idle manufacturing businesses.

Cash generated from operations was Rs 51.15 crore, following a Rs 58.05 crore increase in provisions and other liabilities. This outweighed the Rs 37.70 crore pre-tax loss, the Rs 10.80 crore depreciation charge and the Rs 21.05 crore finance cost included in the cash-flow reconciliation.

Financing activities used Rs 51.41 crore during the half year, including a Rs 30.12 crore movement reported under long-term borrowings and Rs 21.05 crore of interest paid. Cash and cash equivalents consequently increased by Rs 9.99 lakh to Rs 23.49 lakh at September 30, 2026, from Rs 13.50 lakh at the beginning of the financial year.

What are Dharani Sugars' main debt and liquidity issues?

Dharani Sugars had negative equity of Rs 300.63 crore at September 30, 2026, compared with negative equity of Rs 262.84 crore at March 31, 2026. Total liabilities were Rs 738.96 crore against total assets of Rs 438.43 crore at the half-year date, while Dharani Sugars disclosed accumulated losses, liquidity constraints and defaults on borrowings and settlement obligations.

Dharani Sugars entered a Master Restructuring Agreement, or MRA, with India Debt Resolution Company Limited, acting as trustee for National Asset Reconstruction Company Limited, on May 24, 2024. After breaches of repayment obligations and financial covenants, the MRA was cancelled and Rs 334.65 crore of unsustainable debt became payable, although Dharani Sugars continued to disclose that amount as a contingent liability while discussions with lenders continued.

The reviewer said borrowings that had become due and payable should have been classified as current liabilities, and that current liabilities and the current portion of borrowings were understated by Rs 96.90 crore at September 30, 2026. The reviewer also identified a material uncertainty that may cast significant doubt on Dharani Sugars' ability to continue as a going concern.

Other disclosed obligations included Rs 219.63 crore outstanding from directors and related parties, on which the reviewer said interest expense had not been provided according to agreed terms. Dharani Sugars also said Rs 36.08 crore due to sugarcane farmers under a settlement arrangement remained unpaid, while Rs 31.31 crore owed to I Heart Properties Private Limited, including Rs 6.61 crore of accrued interest, was overdue.

What does Dharani Sugars plan to do next?

Dharani Sugars said management is pursuing revival and recommencement measures, including arrangements for working capital and operational funding, as well as discussions with lenders and other stakeholders. Management is evaluating external funding and financial support to restore production capabilities and meet working-capital needs, although the filing gives no restart date for sugar, distillery or power operations.

Dharani Sugars said it is considering a fresh One Time Settlement, or OTS, application for its Sugar Development Fund loan after the Government of India extended the OTS timeline on August 18, 2026. Its earlier Rs 61.11 crore OTS had been extended to April 6, 2026, but Dharani Sugars defaulted and the arrangement was cancelled on April 22, 2026, making the original liability plus applicable interest payable.

Dharani Sugars also said it is taking steps to regularise defaults and seek restoration of trading in its shares. Trading in its equity shares has been suspended on the National Stock Exchange of India and BSE since July 3, 2023, and 83,14,328 shares issued in financial year 2024-25 under a debt-resolution agreement had not been dematerialised or listed as of September 30, 2026.

Conclusion

Dharani Sugars reduced its first-half net loss to Rs 37.70 crore from Rs 40.34 crore, but the improvement did not coincide with a return to production or profitability in its sugar, distillery and power businesses. The Rs 51.22 crore operating cash inflow should also be read alongside Dharani Sugars' disclosure that it resulted only from debt reclassification rather than an operating turnaround.

The next developments to watch are Dharani Sugars' discussions with lenders and prospective financiers, a possible fresh Sugar Development Fund OTS application, and progress on working-capital funding needed to restart plants. These measures remain material because the cancelled MRA made Rs 334.65 crore of unsustainable debt payable and the reviewer identified a material going-concern uncertainty.