Dalmia Bharat Sugar and Industries Limited, a flagship company of the Dalmia Bharat Group, has received a significant update from the Lucknow Bench of the Hon’ble Allahabad High Court concerning a pending legal dispute over a retrospective export pass fee demand of ₹21.10 crore raised by the Excise Department of the Government of Uttar Pradesh.

The development, disclosed to the Bombay Stock Exchange (Scrip Code: 500097) and National Stock Exchange of India Limited (Symbol: DALMIASUG) on August 1, 2025, comes as an important update under Regulation 30 read with Clause 8, Para B, Part A, Schedule III of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Background of the Dispute

On July 24, 2025, Dalmia Bharat Sugar and Industries Limited had informed the stock exchanges that it had received a demand notice of ₹21,10,06,000 (Twenty-One Crore, Ten Lakh, Six Thousand) from the Assistant Excise Commissioner, Uttar Pradesh. The demand pertained to export pass fees levied retrospectively on the supply of Denatured Power Alcohol (Ethanol), covering the financial years 2018-19 through 2025-26.

The company, along with other sugar producers, challenged the demand through the Uttar Pradesh Sugar Mills Association, filing a writ petition before the Lucknow Bench of the Allahabad High Court. The core contention was the retrospective applicability of the fee and the absence of clear legal grounds under existing rules or government orders.

Interim Relief by the High Court

On July 30, 2025, the Allahabad High Court issued an interim order, which was made publicly available via the High Court's website on August 1, 2025. In its order, the Court provided conditional relief to the members of the Petitioner’s Association, including Dalmia Bharat Sugar and Industries Limited, allowing them to:

• Move out trucks loaded with industrial alcohol from the distillery premises

• Maintain proper records of movement

• Furnish indemnity bonds to the district Excise Officer

The indemnity bonds must clearly acknowledge the company’s responsibility to pay the fee if the writ petition fails and a final decision is passed in favour of the Excise Department. This condition is subject to any further right to appeal, if such a provision is available in law.

Legal and Operational Implications

The interim relief is a crucial development for Dalmia Bharat Sugar and the wider sugar and ethanol industry in Uttar Pradesh. It ensures that the company's logistics and supply chain remain uninterrupted, particularly for industrial alcohol, which is a significant revenue stream due to the increasing adoption of ethanol blending in automotive fuels.

However, the legal risk persists until the final verdict in the writ petition is announced. If the High Court ultimately sides with the UP Excise Department, Dalmia and other petitioners will be liable to pay the export pass fee, possibly along with interest and penalties.

This uncertainty may have accounting implications, including potential contingent liabilities in financial statements, and could influence investor sentiment depending on the court’s final ruling.

SEBI Regulation 30 Disclosure

Dalmia Bharat Sugar’s disclosure was made in compliance with Regulation 30 of SEBI LODR Regulations, which mandates prompt and transparent disclosure of any material events that may impact the company’s operations or financials. The notification was submitted by Rachna Goria, the Company Secretary and Compliance Officer (FCS 6741), and confirmed the company’s ongoing litigation status as well as the interim order from the High Court.

Such disclosures not only ensure regulatory compliance but also provide transparency to investors, analysts, and stakeholders, allowing them to make informed decisions based on the company’s current legal and financial exposure.

Broader Industry Impact

The retrospective demand raised by the UP Excise Department affects not only Dalmia Bharat Sugar but also several other distilleries and sugar mills in Uttar Pradesh, which is India’s largest sugar-producing state. If upheld, the fee may set a precedent for retrospective taxation in the ethanol sector, potentially affecting production costs, pricing, and investment planning.

Moreover, the ethanol industry is a key part of India’s biofuel and energy strategy, particularly the government’s plan to achieve 20% ethanol blending in petrol by 2025. Any uncertainty or cost escalation in this sector could hinder national energy objectives.

Looking Ahead

Until a final decision is delivered by the Allahabad High Court, Dalmia Bharat Sugar and other association members are expected to continue their operations under the interim arrangement. The company must:

• Maintain proper documentation for ethanol transport

• Submit indemnity bonds as required by the district Excise Officers

• Monitor legal proceedings and prepare for possible financial impact depending on the outcome

The final verdict will determine whether the export pass fee stands and if it will be applicable retrospectively. In case the writ petition is dismissed, Dalmia Bharat Sugar will be obligated to pay the demanded fee, though the right of appeal remains open under applicable law.

Conclusion

The interim order by the Allahabad High Court, allowing Dalmia Bharat Sugar and Industries Limited to continue dispatching ethanol while the ₹21 crore export pass fee demand remains under judicial review, offers temporary relief but does not conclude the matter.

This event has significant regulatory, operational, and financial implications for the company. As a respected name in the sugar and ethanol sector, Dalmia’s next steps, including how it manages legal risk, stakeholder communication, and financial provisioning, will be closely watched by the market.

In line with SEBI disclosure norms, the company has acted with transparency, enabling stakeholders to remain informed about developments in this high-stakes legal challenge. The final judgment in the coming months will be a key factor in shaping the financial outlook and policy environment for the ethanol industry across India.

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