The company cited erosion of fundamentals as the reason for the decision. The unit had accumulated losses as of March 31, 2025, were around Rs. 1,406 crore.
The current geo-political outlook is very challenging, the company said.
Parry Sugars had established a sugar refinery at Vakalapudi Village, East Godavari, Kakinada in 2006 as a 2,000 tonnes of sugar per day (TPD) Special Economic Zone-based export-oriented unit. The original business model was built on importing raw sugar, refining it into white sugar, and exporting the refined sugar to global markets where white sugar commanded a significant premium.
At the time of conceptualisation, the global white premium levels were quite attractive, making the project commercially viable. The project economics were also premised on the assured availability of natural gas at Kakinada and generation of surplus power to the Power Grid at a tariff which made the proposal commercially attractive, the company said in a stock exchange filing.
However, over the years, several structural shifts materially eroded the fundamentals on which the business model was built. Non-availability of natural gas resulted in investments in coal boiler thereby increasing the operating costs. Further to this, sharp decline in white premiums reduced the spreads and power export revenue dropped to one third of the original projections. In addition, there were shutdowns due to factory accidents, substantial demurrage charges, inventory write-off, hedge losses and high finance cost, which cumulatively have resulted in significant increase in accumulated losses, it noted.
Despite sustained efforts to improve operational efficiencies, optimise the product mix, reduce costs, and stabilise spreads, the business is unable to overcome the combined internal and external, current and potential challenges, the company said.
As of March 31, 2026, the total estimated liabilities of Parry Sugars Refinery India Private Ltd (PSRIPL) amount to Rs. 998 crores, which includes bank borrowings of Rs. 877 crores backed by support from E.I.D.-Parry.
Based on the estimated realisation of assets, net of other liabilities, PSRIPL expects to be able to settle Rs. 137 crores of these bank borrowings. The remaining Rs. 740 crores will need to be settled through funds infused by the company in the form of equity and loans, E.I.D. said.
E.I.D. said it will need to create a provision of about Rs. 655 crores (across FY 2025-26 and FY 2026-27). In addition, it will need to impair the current carrying value of its investment in PSRIPL, amounting to Rs. 46 crores.
The company said it has adequate funds as of date to meet the requirements.
E.I.D. said its board has approved investment in the shares of PSRIPL, the wholly owned subsidiary of the Company, up to an amount not exceeding Rs. 610 crores in one or more tranches.
The company’s board also approved an inter-corporate loan of up to Rs. 130 Crores to PSRIPL, in one or more tranches.
