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Ladies and gentlemen, good day, and welcome to Balrampur Chini Mills Limited's Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Jenny Rose from CDR India. Thank you, and over to you, ma'am.

Good afternoon, everyone, and thank you for joining us on Balrampur Chini Mills Q3 and 9M FY '25 Results Conference Call. We have with us today Mr. Vivek Saraogi, Chairman and Managing Director of Balrampur Chini Mills; Ms. Avantika Saraogi, Executive Director; and Mr. Pramod Patwari, Chief Financial Officer of the company. We would now like to begin the call with brief opening remarks from the management, following which we will have the forum open for the question-and-answer session.

Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you earlier.

I would now like to invite Mr. Saraogi to make his opening remarks. Over to you, sir.

Thank you, and good afternoon, everyone, and thank you for joining us on Balrampur Chini's Q3 and 9-month FY '25 Earnings Call. I trust all of you had the opportunity to go through our results presentation, providing details of our operational and financial performance. I will initiate the call with an update on current developments on the sector, followed by our company's key highlights for the period under review.

According to latest ISMA estimates, Indian sugar production net of diversion to ethanol is in the region of 272 lakh tonnes. This is down from 320 lakh tonnes, reflecting a 15% decline. Sugar diversion is expected to be at 37.5 lakh tonnes as against 20 lakh tonnes last year. The drop in sugar production is primarily due to lower cane yields across all the 3 largest producing states: UP, Maharashtra and Karnataka. UP's production is expected to fall from 10.4 million to 9.3 million, primarily due to disease and ongoing red rot and ongoing varietal replacement. Maharashtra is likely to produce 8.5 -- 85 lakh tonnes, a sharp decline of 11 lakh tonnes. And Karnataka is expected to see drop in production from 52 lakh tonnes to 45 lakh tonnes.

Despite this decline in production, overall sugar availability seems to be sufficient. We began with an opening stock of 80 lakh tonnes. Total supply for the current season is expected to be 352 lakh tonnes, that is 272 lakh tonnes production plus 80 lakh tonnes, opening is 352 lakh tonnes. With consumption estimated at 280 lakh tonnes and export of 10 lakh tonnes, we deduct 290 lakh tonnes from 352 lakh tonnes. The closing stock is expected to be around 62 lakh tonnes by the end of the season. The government's approval of 1 million tonnes has provided some relief to the millers, also by helping strengthen the domestic price, which are now expected to remain robust going ahead. Current ex-factory price in UP and our mills are prevailing upwards of INR 41.

On the ethanol front, there has been a disappointment. The tender was floated as usual in October -- tender came in October, November, right? And it also in the previous year has come out earlier and a price revision has followed. However, the recent -- keeping the price same or no hike has been very disappointing. It is a deviation from the past practice of linking ethanol price in FRP. And we've taken it up very strongly with the government. This will make the diversion unattractive, and we will be taking it up very strongly from the industry association. And this, we believe will put the government program in jeopardy. Our honorable Prime Minister, even in the budget session, has taken credit and has sort of factored the ethanol program for having saved a lot of foreign exchange. We also believe that is true. But going ahead, we will be discussing with the government on this.

Coming to our business performance. Sugar segment delivered strong results, supported by improved margins. Distillery segment, however, faced challenges due to lower recovery in juice impacted by reduced pol. The said recovery is now showing an uptrend. Cane crushing during the quarter was up by 10.4%. However, recovery was down by 48 bps for our company, owing to adverse weather conditions.

So I'll just now put all this performance into perspective, our performance and our expectation. And let me put a disclaimer by saying this is expectation, but a far more intelligent guess today than we would have been guessing a month back. So our recovery is now picking up, which means that our decline of 48 bps will reduce as the season ends. In many of our factories on date in -- actually 2 of our factories on date, we have crossed last year's recovery on date. That's a very encouraging sign. We hope that our drop in production should be too early, but should not be more than 3% as far as we are doing our figures today.

And as you are aware, we have shown an increased crushing in all our units. Our drop, therefore, if we -- even if you go and expect, let's say, a 0.4% drop and 0.35%, 0.4% drop, except Dalmia, whose recovery is, I think, marginally lower than last year. The others are way, way lower than us. So we also then would like to put this in perspective of our juice production. Initial starting the recovery was low, which has picked up. So the production in the juice in the coming sort of quarters will show a marked improvement and as will recovery.

Our PLA project remains on schedule with UP government's bioplastic policy further enhancing its viability. The Board has approved a CapEx of INR 2,000 crores previously, and those were figures we had done without the detailed engineering, which did take time. So now based on entire CapEx, OpEx review, our project cost stands at INR 2,850 crores gross or INR 1,750 crores net, which is expecting capital subsidy of around INR 1,100 crores. This higher investment will lead to an enhancement of the capacity from 75,000 tonnes to 80,000 tonnes and a much lower conversion cost than envisaged. So we have our advantages now having mapped everything globally. Our OpEx would be very comparatively very competitive. I would hazard to say it would be the lowest based on our reconfiguration of plant and based on the fact that our bagasse, et cetera, is all our own. We have reduced power consumptions and added some equipments to lower all this. So we feel very confident on that side.

CapEx also, if we globally benchmark, we'd be lowest per tonne by far. Our project cost is estimated to be funded through a long-term debt of INR 1,650 crores and INR 1,200 crores from internal accrual. At full capacity, the project is expected to generate INR 2,000 crores of revenue with EBITDA margins. Too early, but whatever we have seen, we are targeting 35% plus. Commissioning schedule remains to be in October '26. As we move forward, our focus remains on driving operational efficiency, strengthening farmer relationships and navigating the new sector we have undertaken. So we believe that our integrated business model, commitment to sustainability and strategic expansion to bioplastic will strengthen our position and long-term value creation.

I'd now like to hand over the floor to Avantika. So Avantika, you want to talk now or take the questions and then talk?

I think Papa has covered the PLA and the sugarcane segment well. I think I'll wait for questions to pose up.

Pramod, on to you.

Yes. Thank you, sir. Good afternoon, everyone. I hope all you had the opportunity to go through the detailed presentation that has been shared. So I would request the moderator to open the forum for the questions. Thank you.

[Operator Instructions] The first question is from Sanjay Manyal from DAM Capital.

One thing about the PLA project, so you mentioned that INR 2,850 crores, now the CapEx cost is almost like 40% up. And what the capacity increase you have taken is from 75,000 tonnes to 80,000 tonnes. So if you can just elaborate a bit of detail what exactly is the increase in the -- why the increase in the CapEx is so high, almost 35%, 40% kind of.

Thank you so much for the question. I just want to sort of bring it a bit into perspective. That was -- the CapEx, which was envisaged then was a go-ahead for the project. So it was at a just post a feasibility study level of CapEx, which is considered a Level 5 CapEx estimate, which can have a variation of plus/minus 50%. And now the level that we are at is a Class II estimate, where we should not be more than a 10% variation and hopefully nothing on the upside at all, so I just want to bring into perspective, once engineering happens, once certain local factors are considered into the situation, which you cannot consider before, then things do tend to change. If we've been able to optimize also more than we ever imagined, we could. So a lot of things have gone very well. Yes, that has increased the cost, but believe me, it's well worth every penny.

And just to tell you, we have put in very stringent penalties on the suppliers, and that has also added to the cost a bit, but it gives us a lot of safety in our mind. So it's on quality and achieving the targeted production. So that gives us a lot more safety in our mind undertaking a new venture.

Right, right, sir. And from the subsidy point of view, other than the capital subsidy, do we have anything on the operational side?

Yes. So I thought we've seen the subsidy, but I'll clarify. So 50% of ECI is the capital subsidy that is called eligible capital investment, which might include -- excludes some things like infrastructure costs, water, et cetera. There is a 5% interest subvention, which means assume we borrowed at 8%, we net pay 3%, we get 5% from the government, 5%, and there is an SGST refund. Avantika, clarify that.

A net SGST reimbursement. So for every -- for the amount of products sold within UP, the net of GST that we would accrue there, we would get it reimbursed up to 200% of CapEx. That is the rule. The GST stands at 18% total, so 9% is on...

Vivek Saraogi.

But it's a net refund.

Of course.

So this 35% EBITDA margin is considering these subsidies, all the subsidies or this without subsidies?

Let Pramod clarify.

So as far as 35% margin is concerned, surely, we have taken into consideration the capital subsidy and the interest subvention. But SGST net reimbursement as of now has not been factored into it.

Sure, sir. Sure, sir. Right, sir. Sir, one thing on the recovery part, 48 basis point lower recovery, so as you, I think, mentioned that you are now better with the plant cane. Can we assume that overall for the crushing season, it will be a 40 basis point kind of loss? And if I'm not wrong, you have mentioned 3% decline in the crushing number or the production number?

So our crushing number would be 3% lower is our estimate. And yes, 0.4%. I think the fact that our performance is very good.

Right, sir. Right, sir. Sir, on the -- just last one on the Distillery part. With the almost 7%, 8% kind of increase in SAP last year and so for 2 consecutive years, we have seen an increase in the cost of sugarcane and lower recovery. And the prices have not increased, ethanol price. Can we like -- what would be the impact on the margin from the ethanol perspective? Earlier, we were making pretty good INR 7, INR 8 kind of a margin, I believe, in the juice part. Now what would be the economics over here?

Pramod, would you like to answer that?

Yes, sir. So as far as the juice-based ethanol is concerned, as Vivek sir was also mentioning, there is a lower recovery from the cane, which is now showing an improving trend. In spite of that, we don't see a good margin coming out of the juice-based ethanol even if we take into consideration the full years of operation. Distillery margin will surely be at -- will be muted in comparison to last year's or previous years because of the increase in the raw material cost and no increase in the realization. In addition to the raw material cost, there is an inflationary pressure also on the conversion cost.

Okay. But having said that, it will look a lot better than what you are seeing now. Right, Pramod?

Yes, yes, sir. The reason for loss in this quarter is due to the fact that we had very little of feedstock available as of 30th September 2024. That can be validated once you see the presentation, what was the corresponding number on 30th September 2023. So there was hardly any stock to produce ethanol, hardly any finished goods of ethanol to sell in the December quarter. And in the last year, as because there was restriction in production, we migrated from juice and B to C and that we had some opening stock of B ethanol, which resulted in profit. This year, there was hardly any stock of B-heavy ethanol. So there was no sale of B-heavy ethanol in the current quarter.

The next question is from Vikram Suryavanshi from PhillipCapital India.

What is the export quota allocation we have got? And if you can share some -- what are the export prices -- some of the deals are negotiated in the industry?

Pramod.

So export quota for us was around 31,000 tonnes. We have traded our export quota, and we retain our domestic release. So we will be getting the release of this 31,000 tonnes over a period of 5 months beginning from March, so upside in the domestic...

Okay. So we have traded for the quantity, but price is not locked. Is that right?

No, no, we have traded our license policy. So we have [ INR 9,000 crores ] or something.

Okay. Understood. Understood. And basically, for the outlook on the ethanol blending also, sir has also given some idea. But what would be our production estimate given I think B-heavy and juice route may not be that attractive considering the sugar price increase in the domestic market. So will it significantly impact the full year volume for Distillery and how is the utilization for even grain to ethanol for us?

So Pramod, I'll take that. So there are 3 parts to this conversation. One, as you know what has happened as we have said it. So how we have reacted, we have converted 2 of our units from B-heavy to C-heavy immediately after the 0 increase. And post the export, sugar production will become attractive. Two, we -- in our mixture, we have 5 refineries out of our 10 factories. So refinery is seeing good demand. So we feel with this conversion, we'll make more sugar and, therefore, our realization -- blended realization should be very good, having 5 refineries.

Juice, however, we would continue as we have tendered the juice quantity. B-heavy will convert to C. And in our factories, we have spent the CapEx. So just assuming next year, we are sort of feeling that the economics is for producing more C-heavy, all our 10 plants can produce C-heavy throughout technically. C or B, we can produce every year. So we have multiple capacity going ahead.

So in case of B-heavy, we are not able to fulfill quantity. Can we convert that into C-heavy? Or is there any penalty?

No, we have converted. I told you in 2 factories, we could we have converted into C.

Okay. Okay. I was talking about from OMC side that whatever quantity we have committed...

That will get handled. That's not a problem.

Okay. I was actually looking from that side. And just one point, because we have seen the recovery drop and some of the mills have seen the cost of production has gone up significantly, while Q3 realization were not that high, so was there any inventory loss we have accounted from the inventory or for us, it was not the case?

Pramod, you take that?

Yes. So your question is with respect to inventory...

Was there any inventory loss we have accounted or write-off we have taken for this quarter?

Pavan, do you have the figure...

Yes. Of the quarter, our sugar costing is INR 4,120 per quintal and we have balance sheet sugar inventory at INR 3,826 per quintal. So this a phenomenon every year because in Q3, we get 40, 45 days of crushing. So this cost really on a full year basis will come down because next quarter, we will have 90 days of crushing.

So just to summarize, Pawan, what is the inventory we are carrying forward at what cost?

We are carrying forward 31.6 lakh quintal of inventory of sugar at a valuation of INR 3,826 per quintal.

Right. So we are carrying for 31 lakh plus VAT at 38 INR 3,825 per quintal -- INR 3,824 per quintal. We're currently selling above INR 4,125 per quintal.

Right, sir, yes. And last question is that this non-238 variety in terms of variety replacement, how is that share right now? And does that recovery decline also have some impact of this migration to new variety or it is like purely on weather and other parameters?

We've already reduced our 238 percentage over the last 3 years considerably. So our percentage this year for 238 should be something between 10% to 15% in crush. And the recovery drop is not with respect to the varietal exactly. It's more the weather phenomena. I also want to say that last year, our recovery was actually much higher than we had envisaged that it would be. So it was very strong. So if you look at absolute terms, our recovery in comparison to the rest of the state, we are actually very strong.

So last year, C basis was INR 1,175 per quintal, which in itself was very good. And there has been a drop because of the weather conditions. So we would still be, let's say, if we are assuming 0.4% drop, we'd still be at INR 1,135 per quintal, which from Balrampur's perspective is looking 0.4% lower and it is a fact. But from the state's perspective, 0.4% still look very good, except Dalmia.

Definitely, sir. No, we really acknowledge your cane development efforts, and we clearly see your recoveries are much better. And even full cane availability is much better than the state, what we are seeing numbers are coming.

The next question is from Shailesh Kanani from Centrum Broking.

Sir, my first question was regarding to something mentioned in the PPT about PLA, wherein it has stated that the imports for analysis and product development by compounders and converters have already begun. Additionally, we have also mentioned that we will be exploring alternative feedstocks such as rice and corn for future expansion. Could you elaborate and provide more details on this, sir?

So basically, we have started getting -- seeding the market activities. So we have started importing PLA, the kind exactly that we will be making in order to work with the downstream industry, which is the compounders and converters and also brand owners and the whole value chain who would then be using those products to start developing that value chain from our end. That is what it basically means. So if you want a more detailed thing, they are getting PLA. They are going to give it to different people who are going to make different products from it, prototyping and actually seeing whether it is working in their applications. So it does not -- we don't lose that time after we are producing. All that will be taken care of much before. That's the first thing.

The second thing is feedstock flexibility, which we will explore for the future. It's really actually very rudimentary thing, like you can produce ethanol from rice or sugar. It's very much similar to that. At the fermentation level, everything becomes the same in any case. So it's just a preparation of the raw material which changes, which is not rocket science. It's fairly simple.

Okay. So that's helpful. So the way I understand is that -- so our facility, PLA facility, would be fungible and only the pretreatment of the feedstock would be something which would be needed. And the rest part of converting fermentation and lactic acid to PLA is something which can be done from the current facility only. Is that understanding right?

Absolutely.

And the fact that we are importing PLA compounding, so we want to -- and we have budgeted for marketing and development expense in our project cost is we want to have our sort of facility sold out is our target, before we begin. So there's a lot of work going on, on all the fronts, technology, marketing, et cetera, government engagement, et cetera.

That's quite useful. Sir, I wanted to understand, in your opening remarks, you also mentioned about that the facility would be starting somewhere in the period of October 2026, that is second half FY '27. So I just wanted to understand one thing. In terms of certifications or approval for the product and from regulatory authorities from both domestic and international, would there be any time lag or that is factored in the time line what we are giving for the project?

It's all factored in. It's all factored in.

Okay. Great. One thing on number, ma'am. We have also mentioned about INR 2,000 crores revenue coming from the plant at optimal capacity. Can you specify what is that number, optimal capacity, what we are factoring in?

80,000 tonnes.

So 100% capacity that you...

And why not?

Yes, yes, absolutely.

We pride ourselves on being able to run over the capacity, which is rated. So we should -- we are thinking that rated is optimal.

So by the way, a lot of this business is linked to fermentation, our big -- a lot of it. And that we've run the best fermentation business by making ethanol from juice. The single plant in the country, which makes no -- not even one bag of sugar. So just we feel a little more confident, I guess.

And in fact, actually, that is the place that determines your recovery, your conversion cost. That is the thing, and that is the thing that...

Energy cost and lots of other things.

Yes. Sir, just a last question from my side. In terms of CapEx, can you give some numbers -- indicative numbers about FY '26 and '27 and also the current consol debt in divisions?

Pramod?

Yes. So the long term, we borrowed around INR 325 crores for the purpose of PLA within December. And our existing long-term debt is INR 200 crores. Out of this INR 200 crores, INR 22-odd crores will be repaid within March '25. Thereafter, INR 89 crores is payable on an annual basis in the next 2 years. Short-term loan is fully backed by inventory. The figure as of now is net of cash and cash equivalent, it should be around INR 1,200 crores -- INR 1,200 crores to INR 1,300 crores.

And sir, in terms of CapEx figure for '26 and '27, how can we factor in that in our model? So I've got the whole project cost, but just for cash flow perspective in '26, '27?

So by March '25, I think -- we have already spent INR 700 crores. So the INR 2,850 crores, we will retain around 10% to 15%. That will be paid after the commencement of the project. And the rest is we will have to just proportionate expenditure. It's difficult to give you a month-wise breakup or quarter-wise breakup...

Yes. So it's not man-machine needs coming orders. That probably next quarter, we'll have a better visibility.

And it's a milestone achievement.

Milestone achievement.

Right, right. That's quite helpful, sir.

As we said, we put in very stringent penalties and payment conditions on the suppliers, international as well.

The next question is from Priyanka Dhingra from SBI Mutual Fund. There seems to be no response from the line of Priyanka. We'll move to the next question.

Next question is from Deepak from Sundaram Mutual Fund.

Yes. Sir, first, this cost escalation of INR 850 crores, I just wanted to understand what exactly is it? Meaning is it more to do with plant and machineries? Or is it something else? Because in your PPT, you have mentioned that this higher investment will lead to a lower conversion cost. So is there some kind of backward integration we are doing? Where exactly this cost escalation is coming from?

Okay, let's assume capacity is going up by 8%, 10%, so factor in something there. The rest is to put up machines, which can lower your energy cost and lower your chemical cost and your input cost -- input material consumption. So these are complex engineerings, which we've hired the best brains globally and we saw that we could have a big -- quite good saving in the -- all the conversion costs, as I'd mentioned, chemical cost, energy cost and raw material cost. Based on that, certain reconfigurations were done. And therefore, this is the result.

Okay, sir. And is there any possibility that this cost may further go up as we do more of engineering studies?

Not necessary.

No.

Ordering has all been done largely. All the big bought outs have been ordered.

There's no space for it to go up if anything...

No, no, no, let's not say that. So it's intelligently done exercise with all 90% orders in place.

Okay. So that won't be that material even if some little bit of CapEx inflation happen?

Yes, definitely. Yes. I mean -- I mean, yes, that's all you can say right now.

Okay. And from end-use application point of view, means are we still in the R&D process? Or are we thought about what could be the end-use application is what kind of product that end consumer will be making of this PLA pellets whom we'll be supplying to? Is it still in R&D stage or there is some understanding of that?

So basically, the SUP ban is one of the main kickers for us because now those products are very easily made with PLA. We are looking at all the applications. And it's not an R&D in the sense that everything is possible. We are just sort of working with multiple people. If you ask me who exactly are we selling to, I don't know, but I'm working with 10 people on 10 applications to see which one goes -- which one gives us the highest revenue actually.

Okay. And let's say, if I have to compare -- so if I'm an end consumer, I would have to look at the cost also, what could be my cost through a PLA pellet versus, let's say, normal plastic pellets. So are we cost competitive? I mean to say, let's say, by the time we commercialize this, how will the end consumer look at it means because he would be worried about the cost, right?

So firstly, the end -- let's talk about the end consumer first, and let's pick up like a product like, let's say, water bottles just because if everybody knows what about...

The cap of the water bottle, yes.

So hypothetically, if only the cap of the water bottle is being made from PLA and there's some INR 0.50 difference, I don't think that matters to the end consumer. We are very, very conscious of Indian consumer being price sensitive. And we are only targeting those applications wherein the cost is easily borne or absorbed either through the value chain or at the end, it is not going to a person who is -- who cannot afford it INR 50, INR 1 here and there. We are looking at those kind of applications itself. So not the ones which will hurt the common man.

Just to clarify, I was not asking from the point of view of the end consumer like you and me, but the people who are making it, like the people who are manufacturing the bottles or people who are making the plastic bags, manufacturers.

Yes. So similarly, look, everybody puts in a margin when they are doing some work, right? So it is -- we are looking at those where the cost can -- where INR 50, INR 1 doesn't matter, even to the middle person in the value chain because at the end of the day, it's the brand or the end consumer who determines the procurement, right? That's number one.

Number two, if you're asking me for a straight answer, pellet to pellet cost, then a PLA cost almost double of normal plastic. Now because of our optimizations and everything, let us see how -- where we get to. But in my opinion, I'm not really looking at it being a challenge to be sold at the price that I would like.

So I'm just putting a few more clarifications, right? One, if there is an SUP brand, let us say, it's straw, whatever, so we compete -- we will very well compete with the alternate product. Let us say, it's paper or glass, we'll compete. We don't need any help there.

Metal.

Yes, or metal. Three, there are many applications of just coatings. So coating is not just changing the game. So to sell out 75,000 tonnes is -- doesn't seem to be a challenge at all.

So we envisage also the usage of plastic in India to be around 14 million to 15 million, out of which nearly, I would say, 45-odd percent of that is the SUP. So look, it's really not -- 75,000 tonnes not even a drop in that ocean.

That's fine. The addressable market is fairly large, that I understand and opportunity is also big, and we have a good execution track record. I was just wondering about the volume offtake, but you have answered whatever could be answered at this point of time. Okay.

The coating demand could be huge. Coating means just coating the, let us say, bagasse tray. So just coating that, you can't imagine how much uptick there is. And that doesn't change the game.

Okay. And sir, a few questions I had on the financials to Pramod, sir. Sir, you've mentioned that this 35% EBITDA margin includes subsidy and interest in subvention also. But I was just wondering how is that possible from accounting perspective because all the grant incomes usually falls in other income, which is below EBITDA so is the interest expense.

Yes. So you are right. PBT and EBITDA will be more or less similar in this case. Why I mentioned this because up to the date of commencement, we will be capitalizing the interest. Similarly, the depreciation as and when we capitalize will be computed on the basis of net figure only. So when we talk of cost of production, which includes depreciation also. So from that perspective, I mentioned that it is including subsidies. But you are right, at EBITDA level, it won't make any difference.

So just to clarify, so excluding subsidy and interest rate, means what is our actual EBITDA margin, which we can do at optimal level?

So this is our actual EBITDA margin, which we are targeting because depreciation and interest post capitalization will be below EBITDA.

Okay. Okay. Okay. So core EBITDA margin remains at 35%?

That would be right.

Okay. And sir, any color what could be the gross margins here?

I didn't get you, gross margin?

At gross level, how much can we make at EBITDA? It is around 35%. At gross margin level, what could be the range?

It means revenue minus raw material only.

So let us do some more work. We have done a lot of work before we have let these figures out. That's why we've taken so much time. So maybe give us 6 months more to get you more accurate. Let us get more and more accurate. So we are feeling and understanding that as we are proceeding, we are getting more and more confident on each aspect of the business, be it marketing, be it technology, be it energy consumption, be it chemical consumption.

So we are feeling more and more confident as we are proceeding. See, at the end of the day, it is something new. It's going to be the first integrated plant worldwide. The advantage is your sugar and bagasse is going through a conveyor. World over, they are getting sugar from somewhere, something from somewhere, gas, et cetera, which is going to cost far, far more. So we are hoping to be very, very competitive.

Okay. Got it, sir. And one question on this interest rate subvention. So you have clarified in your opening remark also that if we have an 8% interest and 5% subvention for the net interest cost for us 3%. So from our modeling perspective means what shall one assume that on an ongoing basis in FY '26, '27, however, in the future, what could be our net interest cost?

By the time project comes, our existing long-term loans will be paid off.

No, sir, I'm asking about the cost of debt.

That's what I'm saying. Let us assume we draw completely before the commencement of the project. So the net interest charge on the PLA account will be 3%. Our existing loans are variable. So with the drop in the repo rate, the cost has come down by 25 basis points on some portion of the loan. Is that clear?

Yes, sir, it's clear. And on the tax front, is there any advantage we have? Or is it a general corporate tax rate ex of grant?

As because we are an integrated sugar company, it is as usual income tax rates.

[Operator Instructions] Next question is from Rajesh Majumdar from B&K Securities.

So myself, I had a couple of questions on the sugar, ethanol equation. So my first question is on the sugar quotas, you've been selling more than the quota allocated to you. It has actually 2 parts. The second part is that if we go by this trend and the loss of manufacturing of various other mills in the state, will we be able to go back to 1 million tonne plus kind of sales this year?

Sir, may I answer this?

Yes, please.

So as far as the sugar production is concerned for this year, the sugar season looks like we will be doing around 9.4 lakh tonnes to 9.5 lakh tonnes.

Okay. And what about the sales?

Sales? Pavan?

I think 7.4 lakh is what we have done till 9 months.

Yes, that's correct.

Rest will depend upon releases.

So my question was that do you hope to get additional sales better than your quotas and reach of 1 million tonnes this year? That's what the question was actually, sir.

That is difficult to tell at this point in time. But as far as export release is concerned, we will start getting this 31,000 quota allocated over a period of 5 months beginning from March. So 6,000 tonnes every month will be an additional impetus.

Okay. And also since you're going to be making more C-heavy ethanol, will we see a reduction in the overall ethanol volumes compared to last year?

Yes. For FY '25, it looks like alcohol volume will be in the region of around 21.5 crores to 22.5 crores, including ENA and everything.

Okay. So that's down from INR 28 crores, right?

No. Earlier also, we gave guidance of around 22 crores to 23 crores liter.

Yes. And what would be the impact of FCI rice and all these things? So what was the grain mix till date? And what would the FCI new tender kind of contribute to our overall ethanol mix?

I don't think rice at this price is a viable option. So we will be using maize as well as the open market rice.

So mostly, Pramod, it seems we will be using maize.

Maize. And our target is around 4 crores liter during this...

That's what we bid for from grain.

And for the ethanol year '24, '25, could you guide any number on that on the grain?

Yes. The target is for INR 4 crores.

Ethanol year '25. Okay, okay.

No, you think total ethanol, I think.

No. March '25 volume target around 21.5 crores to 22 crores. For the ethanol production out of maize route will be around 4 crores liters.

And for the overall ethanol for EY '25?

Pavan will let us help on this.

Yes. So total is around 28 crores considering 3 crores more ENA, so around 25 crores will be the ethanol for the EY '24, '25.

So that's INR 3 crore ENA -- liters per ENA, is it?

Yes, yes.

So that '25 will include net based production also.

Right. And sir, if I could ask one question on the recoveries, so we've seen the recoveries again falling this year to 1,135 or whatever you are targeting at. So if you look at the changeover in the varietal that we have been doing, when do we see that actually coming into our recoveries and benefiting us from which sugar year? Is it going to be next year or that also is not very clear right now?

Rajeshji, last year, recovery was quite up as compared to the year before that. So the varieties are definitely performing. It's agroclimatic conditions which happens and some used to of maybe some other changeovers, which farmers do at a local level. But largely, these are agroclimatic factors. I would not be surprised if next year, the recovery would again be up. It just depends on things which are beyond control sometimes. It's not the variety, which is the problem for us. It might be for other sugar companies.

Next question is from Krutika Vispute from Tata PMS.

Most of my questions have been answered. Just one clarification. So you mentioned that you would shift most of the crushing towards B-heavy route. So just confirming on that, B-heavy would now be a very negligible number going forward, right?

Two things. Already till date, we have done maybe whatever, 60%, 65% season over. We've just -- post the announcement of 0 increase, we have shifted. So already, it's not that we will be negligible. And we've shifted in 2 units. So it's not going to be a big, big difference. But yes, there will be...

Any guidance you can give in terms of how much would be the proportion going forward in terms of how much goes towards C-heavy, B-heavy and juice between these 3?

We are -- we'll get back since it's very unit specific, we'll get back on the overall number.

We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.

Thank you, everyone, and we are always there to answer any more queries.

Thank you.

Thanks very much. Thank you for attending.

Thank you, everyone. Thank you.

Thank you. On behalf of Balrampur Chini Mills Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.