Balrampur Chini Mills Ltd
NSE:BALRAMCHIN
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Balrampur Chini Mills Ltd
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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 Mill's Q4 and FY '24 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 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.
Hello, and good afternoon, everyone, and thank you for joining us on our Q4 results. I trust all of you have had got the opportunity to go through the results presentation, providing details of our operational and financial performance.
I will initiate the call with a brief update on the sugar sector. As per the latest industry data, India's sugar production is expected to reach 32 million tonnes. This is net of diversion in the season, '23, '24, which is just slightly lower than 32.8 produced in the preceding season. Maharashtra sugar production unexpectedly increased to 11 million tonnes, where UP had a bit of a decline, which was not expected, but it came down to 103.5 lakh tonnes or 10.35 million. Karnataka produced 5.25 million.
Considering an opening stock of 5.6 million and a projected consumption of 28.7 million, we anticipate the closing stock for the year to be about 8.9 million. In the coming season, that is '24-'25, production is expected to moderate to 31 million tonnes pre-diversion.
So let me put out a sort of disclaimer here that this is very early days to be able to produce '24-'25 production, but this is the best guess available as on date.
Given the opening stock of 8.9 million, we expect the government intervention to facilitate the diversion towards ethanol to manage the excess inventory, and that would also support sugar prices. So basically, the knee jerk reaction, which happened owing to a perceived lower production, not only in '23-'24, but '24-'25, we hope there will be correction once we've already got '23-'24 production, 8.9 million stock. And next year, we are definite that the next year production will be higher than the consumption. Hence, there would be about modest 3.5 million tonnes available for diversion to ethanol. That's our best belief as on today.
Moving on to our business performance. We have delivered robust operational and financial performance during the year, supported by strong volumes and realizations, both in sugar and distillery segments.
On the PLA project, we have contracted with a renowned global technology provider, setting the stage for the development of India's first integrated sugar to bioplastic facility, projecting a new avenue for growth and market leadership.
Thank you. Now I hand over the floor to Pramod. Pramod, on to you.
Thank you, sir, and good afternoon, everyone. As the presentation has already been shared, I will not repeat the financial highlights. I would now request the moderator to open the forum for question-and-answer session. Thank you.
[Operator Instructions] The first question is from the line of Prashant Biyani from Elara Securities.
Sir, we had done very good crushing volume on FY-to-FY basis. But for the season also, we had guided for around 10% increase in crushing. Unfortunately, that has not happened. Can you explain the reason for it?
Yes, Avantika?
Yes. So thank you for the question. So there were about 2, 3 factors at play. I think the first and something which has not happened ever in my father's career of 37 years, and this has been widely discussed is that we had never seen the impact before of 0 winter rains. So the yield, which was projected and for plant cane was quite reduced due to this, which we could not predict because the cane was standing in the field but it had lower weight. This is one of the major reasons that we were not able to predict it even until the very end.
Couple of things which happened due to the reaction of the government also and then certain -- the election year being at play is that, divergent to unorganized MSME sector of Khandsari goods increased because we were able to pay higher prices due to the election and the unorganized liquor demand and as well as very good, [ gur ] prices, both consequently made farmers divert more than what we had anticipated as well.
And the third factor is that this time, there was, due to the lack of winter rain again, there were lot of extra animal attacks and rodent attacks, which had never occurred before. So these are the major reasons that we were -- we had a poor crush, but for -- also the reduced crush which happened in some of the mills due to the ethanol policy being changed, that also impacted us because we had to reduce crush in a few of our units.
One unit, mainly. Okay. So what I would like to add to this is, at Balrampur, we crushed 2% lower than our last year, I think Pramod, am I correct?
Yes.
Yes, sir.
Yes. And UP, Pramod, apple-to-apple basis crushed about 12% lower cane?
Around 8%. UP was down by around 8%.
We crushed 1,000 -- 80, 90 and this year, crushed 970, I think.
990, I believe.
936 last year.
We are talking seasonal basis?
Yes, seasonal basis.
[1,009,] we crushed.
No. Not, [ we]. So UP, if you see other groups, they've come down by 10%, 12%, and we've come down by 2%. So basically, there has been an error of average 10% calculation of [ cane ] by everybody in their projection, which did not fructifies. This is a very weird agro climatic conditions.
Ma'am, the first point you mentioned was that 0 winter rains impacted yield. Am I correct? Or...
Yes. Yes.
Okay. And...
In terms of the yield of plant cane.
Right. Sir, secondly, our domestic quota for sugar, I believe, was somewhere around 159,000 tonnes. And we have sold 225,000 tonnes. I believe there is no -- I mean we cannot sell above quota, and there is no carryforward of previously unsold quota also. So am I missing something here?
Pramod?
So there is no separate penalty as such. Yes, you are right, we sold slightly higher in March quarter. And you may be aware of the fact that in the April month's quota, government has deducted around 25% out of our eligible quota. Beyond this, nothing is carried forward. Sir, just to reconfirm the UP crushing number, this year, it was 980 versus last year 1,082. So it's around 9%, UP was down.
Correct. Okay.
Vivek, sir, where do you expect the sugar price to move in one or two quarters?
Just to tell you, the sugar prices have been pretty stable despite this ethanol sort of curtailment of diversion. So we are selling at around 39, 50-odd -- average around 39, 25, 39, 50 because we have various mills making sulfitation and refined sugar. And don't think this price would come down from here, it would gradually incur, very gradually.
Right. And sir, post this price increase in maize ethanol, is the profitability better than what industry was able to earn from FCI rice-based ethanol?
Pramod, should answer that?
So Prashant, this will vary company to company, what kind of overhead we have in that particular unit. But having said that, even at the maize price of say INR 72, which is not as profitable, FCI rice works very well.
The next question is from the line of Sanjay Manyal from DAM Capital.
Have just two questions. One is on the reduction in the crushing number, which is 2%. So is there any impact of the lower sugarcane yield of newer variety? Means, is there any difference between Co 0238 and the newer variety, which you have sort of applied in last few seasons?
So definitely, 238, the yield was a bit more, but the point is that the deteriorated 238 yield versus other new variety yield, other new varieties are much better. So 238, yes, if you're talking about historical, like if you're talking about 4 years ago versus the new varieties of today, I would say that there is a slightly lower yield, but nothing to write home about, in the sense that the [ drawal ] which we have, that means the supply yield that we have is still quite low. So the varietal impact is not that much, I would say. So...
It's -- yes, it's 238 yield is not available in any other variety. Having said that, 238 was already dying and you cannot have that.
The deteriorated 238 yield recovery, everything was not working out.
Yes. So agro climatic conditions, how much ever we predict, when the cutting yield comes in and there are variations, some things are out of your hands. And this has happened all across UP, each group, comparative returns is not a defense. We have done the best price reduction of 2%.
Right, sir. Right, sir. So what -- means what would we can understand from the next season perspective, given that, now I believe 90% of our variety are the newer ones and if there are normal weather conditions, means, because last time, I think you mentioned that you planted almost 7% to 8% higher.
I'll give you the visibility. So basically, our 238 is down to 8% for next season. And there are all other good varietal balance apart from that. Now if we are to talk about yields, variety is not the only influencing factor. In fact, the agro climatic conditions will affect us much more than the variety because, all of the varieties which we have planted are only released by the scientists and agriculture research unit after they can prove a 1,000 quintal per hectare yield. Before that, a variety is not allowed by law to be released, right?
Our supply yield is around 300 only. So varietal, this varietal influence on yield is actually the lowest in our group. Other groups, I don't know. But for our group, the varietal impact on yield is a bit low. Other than this, the agro climatic conditions, if they are to be distributed [ rains ], we will enjoy a very, very good benefit of that, no matter which variety we have because all our varieties are still very, very, very good. And you see the increase in recovery. You've seen this 11.72% is the FY, Pramod ji?
Pramod, what's the recovery for the FY and for the season?
Season is 11.72%, FY 11.73%.
Okay. So FY 11.73%, this is one of our highest yield, highest recoveries ever that we have received.
Yes. So September will be better, on the September results call, which would be at end October. At that point of time, we'll be able to give much better visibility.
Sure, sir. Sir, just one more question on the ethanol front, given the fact that we have, as a country level, we have a sufficient inventory now and government most probably will allow higher divergence from the next season. So what could be our utilized, means, our distilled capacity utilization for the next season '24-'25?
Again, we have to wait it out. So these figures indicate that we will be much better off without a doubt. Having said that, it is very difficult to give this expectation data. Let it come out, let it come out, but there is enough sugar as we told you on the call, to be able to get distillation orders much more than the previous year.
The next question is from the line of Achal Lohade from JM Financial.
Sir, the first question on the cane crushing again. So if we understand correctly, basically, it is to do with the agro climatic condition, coupled with the election-related event, which is resulting into lower cane crushing for us as well as the state as a whole. Have I understood it right?
Right.
Yes.
Okay. Now specifically for us, if you could talk about Avantika with respect to -- you said 8% of sugar season '25 will be the 0238. What was it for FY -- sugar season '24 and '23, would you be able to give that number?
'23-'24, it was upwards of 20%.
And prior year, would you know that?
It would have been -- I mean I don't know the exact figure, but it would have been upwards of, between 35%, 40%.
I would say closer to 40%.
Okay. Understood. So since we have done so much of work on the sugarcane part for several years now. our mix is substantially different from the other groups or in the state according to you or everybody is kind of working towards that and hence, I mean, we would be better, but still is that materially different from peers?
I think the -- our 118 percentages should be higher than the rest of UP. And maybe some, one or two other new varieties should be higher than rest of UP, but...
And it's very difficult Avantika, to be able to give other variety, configuration of others.
So see, best we know has more to...
Best we're having a lot of 238.
And they will take one more year to come out.
They will take 1 year, yes.
Okay. Understood. And if you could give -- I mean, you have kind of covered in the answer with respect to the yield is lower than the original 238, but it's better than the deteriorated 238. But in terms of recovery rate, how do they stack up?
Because you've seen the performance already with the upwards of 20%, 238 versus what it was last year. And then next year, let's hope for a rise again, let's see.
Yes, but, October, there is a [ floor], October. So if your question, if I've understood is how much better are we, you're comparing us to the competition, right?
No. No. Let me rephrase for the 118 variety, what is the recovery rate, a thumb rule compared to 238?
118 is very decent recovery. 118 is the best recovery in the current variety list.
Okay. Okay. Would you be able to share any percentage, sir?
We can't do it this way, actually, because it will not be accurate data.
Yes. All this is will be in October. But we are on the right line.
Better than old 238, also, 118.
[Foreign Language] old 238 at its peak was very good.
So let me ask in terms of given where we are standing, I know it's hard to call out. But still, if we were to build a number for coming year, fiscal year FY '25, how do we look at the cane crushing volume? Do we assume an increase or assume flat?
No. We're not...
Please, bear with our -- we were not able to predict it this time. Now we will not predict it.
Pretty careful. This is -- I don't care if others were down more than me, et cetera, we'd be very careful and cautious when we predict next year. They are going to far part deeper calculation.
Understood. Okay. Now with respect to the PLA, if you could give some heads-up, is there any further update post the last -- post the last call, what we had on PLA, apart from the tie-up what we have with the vendors and the tech partners like any particular time line, any update on numbers, et cetera?
Everything is on track as per what it was the last time. When we do have an update, we'll probably organize a separate call for that. At the moment...
Yes. Yes. Orders are out, we are working hard on developing the market. It's building towards the commissioning, what all has to be done before that. So as Avantika said, anything more meaningful, except saying that we are in the right direction, later on.
Understood. Okay. I mean, since you are not able to give the cane guidance, I presume you won't be able to give any crushing in terms of the distillery volume guidance as well, right?
They would be linked to each other.
Exactly. Okay. Understood. Just a transfer pricing, if you could mention what is the transfer pricing? Is there a change in this season.
Pramod?
for B syrup?
Sir, no change. Actually no change from last year. B is still at 1,090 and juice obviously at a cost.
The next question is from the line of Shailesh L. Kanani from Centrum Broking.
Sir, couple of questions from my side. Sir, wanted to get some sense on realizations. You have answered in part. But FY '24 was good in terms, where we have seen 6% increase, especially considering that last year was 15% export as well. So in our model building how do you think we should factor in this, considering the current environment in next season? If you can give some color on that?
Pramod?
So for the financial year gone by, it was INR 38. Currently, we are selling sugar at around INR 39 plus. So now it's up to -- we have given our thought that it is going to remain stable at this point in time and with a bias towards inching up, but on a gradual basis. So that's the range in which you can assume in your model.
Fair enough. Sir, also on PLA project, just an extension of the earlier question. Can you give some guidance with respect to how the CapEx is going to flow in the next 2 years in terms of our project, if that is possible?
We won't have the visibility exactly. But when we...
Bear -- yes, let's get more visibility, and we will definitely keep you updated.
In fact, the moment we do have something to report, we will definitely organize a separate call just for that and we'll have enough substantial information to give you all.
Okay. Fair enough. Sir, in that case, just a last question. Tax rate going ahead, we had little bit of higher tax rate for last year. So '25-'26, what is the tax rate we are going to have?
So we will continue to be under MAT, but we -- there will be some provision on account of deferred taxation. In the year gone by, it was around 29% put together. For the time being, we can assume to be at the same level.
Okay. Sir, just one last question. I'm just trying to get some clarity on ethanol volume. In the last call, we had guided that we will try to achieve the same volume numbers for next year. Do you think that is a possibility for FY '25 to achieve the same volume numbers?
Sir, can I take this question?
Yes, please do.
So Shailesh though, it's very difficult to give any visibility on cane crush for the sugar season. But as far as March is concerned, I think for the purpose of model building, we can assume around 9.8 crores to 10 crores quintal of sugarcane crush. This will obviously include whatever cane we have crushed in the month of April this year.
And Pramod is talking about the financial year, not the season.
Yes, I'm talking only of financial year.
Fair enough. And how would that translate into ethanol volumes because there will be some component of [ cane ].
We have to assume certain things that we will get full diversion in place with respect to juice, with respect to B-heavy. And if that is played out, then we can definitely estimate the numbers as well.
So -- but Pramod -- to everybody, that is not yet clear.
Right, sir. Yes...
It is not clear as of now. You'll have to wait till September end to get assigned.
Yes. If we get that...
So just wanted to get clarity, current, yes. Yes, sir, please go ahead.
Sorry, Shailesh, come again?
Yes. Yes. So I was just saying that, so currently, our facilities, Maizapur facility, is it running on corn or rice, what is the approach till the time the season starts? Any color on that, if you can provide.
Sorry, I didn't get the question.
So the current Maizapur facility, are we using any of the feedstocks available from the market broken rice or maize.
Yes. We did run for a few days on broken rice and we -- on maize also. So Pramod, can you give -- do you have the figures in hand? Because I'm in...
For the full year? FY '25?
Yes, I think. No. Till September, what is up -- I think we run 40 days of rice and about 30-odd days of maize, if my memories is correct, but we'll get back to you.
Whatever feedstock we are having as of 31st of March and whatever additional crush we did in the month of April, on that basis, I think we should be in a position to distill around 10 crores liter of ethanol before beginning of the new season.
The next question is from the line of Vikram Suryavanshi from PhillipCapital India.
Sir, you gave transfer pricing for B and juice, but what was the transfer price for molasses, from C molasses...
C molasses is INR 600 a quintal.
Okay. And was there any bagasse sale for full year or fourth quarter, if you can give the quantity of bagasse sale.
Bagasse sale for this full year? We'll come back too, on this.
Okay. And because what I was trying to understand that now your -- some of the power plant PPA has been expired, so that prices are quite remunerative. So how is the process for other plants to renew power PPAs? How is that [ schedule ] and will that makes sense to convert that bagasse. Because I think 5.25 is quite good price for to convert from bagasse to power?
So Pramod, you can give the data.
Bagasse, we sold around 5 lakh tonnes in the full year FY '24. And 2 of our plants are already outside the ambit of PPA. So we are exporting power through this plant in open access market. And I think the next plant will come out of PPA only in the year 2026.
Okay. And for bagasse...
It is '25 and '26 something like that. I don't know the numbers.
Yes.
We are getting very good rates. In 1 unit, we got INR 8.
Right. And the bagasse prices currently, how much is the prevailing prices in -- for us? If you want to scale upwards...
Transfer pricing -- bagasse trander price is INR 1,800 a tonne.
I think that is same of what we have continued. Okay. And last question, sir, if you look at today's prices for maize, will we use a multi-feed grain distillery for maize to ethanol or we'll use it, keep it for optional or when, if government allows us to from B or juice, I think that would be more in the profitable -- at prevailing prices, can we go for this maize to ethanol capacity utilization?
We already -- on maize. This we're running on stage.
So around 4 crore to 5 crore liter capacity we'll use it for this year also?
Yes. Yes.
Yes. So what we -- our ability is to run on all feedstock. Depending on the price and the profitability, one takes a decision at the beginning of the year based on government policy. So we -- don't worry, we will do our best capacity utilization, but not everything is in our hands.
Ladies and gentlemen, we will take that as a last question for today. I would now hand the conference over to the management for closing comments. Over to you.
So thank you, everybody, and I think Pramod is there, we are all there for any questions. And we hope to clear a lot of ambiguity in the September quarter results.
Thank you. Thank you, everyone.
Thank you. Thank you, members of the management. Ladies and gentlemen, on behalf of Balrampur Chini Mills, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.