Divya Delhi: According to a report by Crisil, India's gross sugar production is anticipated to increase in the sugar season (SS) 2026 due to an above-average monsoon that increases cane acreage and yields in important sugar-producing regions like Maharashtra and Karnataka. According to the Crisil research, sugar production is predicted to increase by roughly 15–35% to reach 35 million tons. The triple whammy of issues—high cane prices, muted ethanol prices, and muted exports—that reduced sugar mills' operating profitability by roughly 200 basis points (bps) to 8.7-9 percent in FY2025 is anticipated to be somewhat alleviated by this uptick. With better supply and maybe more sugar diverted for ethanol blends with gasoline, sugar mills' operating margins might rebound to roughly 9–9.5 percent in FY 2026. The credit profiles of sugar players, which were under some pressure during the previous fiscal year, are probably going to benefit from this. Furthermore, due to its quicker cash-flow churn, ethanol diversion is anticipated to increase to almost 4 million tons, bolstered by strong sugar production and the government's 20% blending objective. The goal of the strategic diversification to ethanol was to reduce the risk to sugar mills' profits and cash flow. However, stagnating ethanol procurement prices and rising cane costs (cane FRP was raised by 4.5% to Rs 355 per quintal for SS 2026) have hampered the rise in profitability, according to Anuj Sethi, Senior Director, Crisil Ratings.