Dwarikesh Sugar Industries Ltd
NSE:DWARKESH
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Dwarikesh Sugar Industries Ltd
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Ladies and gentlemen, good day, and welcome to the Dwarikesh Sugar Industries Limited Q4 FY '24 Results Conference Call, hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Nitesh Dhoot from Dolat Capital. Thank you, and over to you, Mr. Dhoot.
Thank you, Manav. Good afternoon, everyone. On behalf of Dolat Capital, I would like to thank the management of Dwarikesh Sugar Industries Limited for giving us the opportunity to host their Q4 FY '24 earnings conference call.
From the management team, we have with us today, Mr. Vijay S. Banka, Managing Director; Mr. B.J. Maheshwari, Managing Director and Company Secretary cum Chief Compliance Officer; and Ms. Priyanka Morarka, President, Corporate Affairs.
Without further ado, I would like to hand over the call to the management for their opening remarks, post which we'll open the forum for a Q&A session. Thank you, and over to you, Mr. Banka.
Sure. A very good afternoon friends. I thank you all for joining this Q4 FY '24 earnings call conference -- earnings conference call. So during this quarter, we had income of about INR 382 crores, which is significantly lower than what it was in the corresponding quarter last year, INR 534 crores. And similarly, on a full year basis, our income is INR 1,721 crores, vis-a-vis INR 2,117 crores in corresponding last year, in FY '23.
PBT was INR 55.80 crores vis-a-vis INR 69.59 crores. And for full year, PBT was INR 144 crores vis-a-vis about INR 153 crores. PAT was INR 22.89 crores vis-a-vis INR 46.69 crores. And on full year basis, PAT is INR 83.52 crores vis-a-vis INR 104.75 crores. Well the season 2023, '24 is going to come to an end now.
So what we understood is that production is going to be about 32 million tons. We saw various production estimates coming in the -- it was basically a roller coaster ride as far as the estimates were concerned. So production numbers got late support from -- I mean they got support from late revival of rates, et cetera, in Maharashtra and Karnataka. So their production numbers have got support from production numbers in Maharashtra and Karnataka, whereas UP production numbers are little discouraging.
Sugar prices are around INR 3,800 per quintal. Quickly on the numbers. Our EBITDA for quarter is INR 75 crores vis-a-vis INR 88 crores corresponding quarter last year. On a full year basis, EBITDA is about INR 217 crores, either is INR 229 crores. EBDT and PBT numbers, we've already gone through with the difference in the PBT and PAT at this particular quarter because of the extra [indiscernible] tax we have made so as to right off the MAT entitlement, which was standing in our books. It's basically a cash neutral item.
Okay. Now during the quarter, our sales was little sluggish. We sold only about 5.69 lakh quintals of sugar as compared to 8.75 lakh quintals during the corresponding quarter last year. Sugar as you are aware can be sold only against releases. So releases were lower, therefore, the sales was also lower.
Average realization on the domestic market was about INR 3,763 vis-a-vis INR 3,410 per quintal during the corresponding quarter last year. So there is about 10% improvement in the realization. On a full year basis, we have sold 27.52 lakh quintals vis-a-vis 42 lakh quintals that we sold last full year, which actually included export of about 10 lakh quintals this year, since there has been a ban on the export, where there was no opportunity to export sugar.
Average realization on domestic sugar sold for the full year was 3,707 vis-a-vis 3,464, the full year last year. We are carrying -- as I mentioned a little while ago, the releases were slow -- lesser, so we were carrying stock of 18.31 lakh quintals on 31st March as compared to 10.61 lakh quintals so clearly an addition of about 7 lakh quintals to our stock.
Our stock is valued at INR 3,355 a quintal. This is vis-a-vis INR 3,172 a quintal last year. Industrial alcohol sold during the quarter numbers are not very impressive. But on a full year basis, we sold about 94,407 kiloliters vis-a-vis 84,175 kiloliters sold in the last full year.
And during FY '24, only 20,944 kiloliters of industrial alcohol sold was made from sugarcane juice and syrup as compared to 46,203 kiloliters sold in the corresponding period last year. So sometime in November, December, there was a ban imposed on using of sugarcane juice for manufacture of ethanol.
So as a result, we were compelled to use B-heavy molasses, which normally otherwise we would have used in season -- during off season. So our loan profile is lean and trim. Outstanding loans of INR 215 crores, all are subsidized rate of interest, all are being repaid on time as and when they fall due. We -- our credit rating is AA minus. And for the short term, it's even plus.
Like I mentioned in the earlier, the sales was sluggish during the fourth quarter. Sugar sales were nearly 3 lakh quintals lesser because of the lesser releases. And the financial results of the year '24 was also impacted on account of higher levy obligation, which point has already been mentioned in the earlier quarters, which resulted in an extra expenditure of INR 19.92 crores. And policy of molasses. So again, this is a repetition. Last quarter also we had brought it to your notice that now in B terms, our levy obligation is 19% of the molasses produced and C terms, it is 26%.
So that's a big, big hit that we have to suffer because not other -- no other state has such a high levy obligation. Government has already SAP announced for season '23, '24, which is INR 20 higher than what it was for the previous season.
Now coming to the crushing numbers. During season, we crushed about -- last season, we crushed 4.01 crore quintals of sugarcane, achieving a recovery of 11.93%. However, we started our seasons. Straightaway, we faced a lot of challenges. And Bijnor district, where 2 of our 3 units are located, received unprecedented rainfall and this particular district, which was not under the impact of red rot was severely impacted.
And as a result, the yield at the crop level was very low. And for the full season, we have been able to crush only 268 lakh quintals. So from 401 lakh quintals to 268 lakh quintals, we are down by nearly 33%.
So crushing operations also ended early. All our plants got closed within the month of March.
Had -- March and April, these are the best periods for recovery, so we couldn't derive advantage of better recoveries. So plus the ethanol program also -- the ethanol policy, which the government changed, that also changed the dynamics.
And obviously, that resulted in underutilization of distilling capacity. Recently, government has allowed 6.7 lakh metric tons of B-heavy molasses, which is aligned with various sugar mills to be converted into ethanol. But it's a question -- it's something too little, too late according to me.
So basically, these are -- the season was that characterized by subdued sales, lower capacity utilization, et cetera, et cetera. But we did get support from sugar prices, which were good. But in fact, our recovery in the last Q4 was better than the recovery in the Q4 that we had cropped last year.
And plus we also got support because -- juice was not allowed to be used for making ethanol. During this quarter, we used B-heavy molasses for converting -- for making ethanol. So obviously, the margins are better when you use B-heavy molasses as the feedstock.
So we expect transformations in the coming season. A lot of work is happening. If weather doesn't play truant, we should see significantly improved crushing numbers in the coming season. We have seen the -- surveyed the fields. Crop conditions seem to be good. Farmers are participative in so far as fighting the methods of red rot is concerned. Varietal program is going a big change.
And also, we do expect that the government will resume the ethanol policy with its -- with renewed vigor. So as a result of which, whatever debts we all suffered, I mean, we will be able to come out of it. Additionally, we will have the advantage of carrying heavy stock. So we do expect that sugar prices should now revive at least from June onwards.
So once there is a revival in sugar prices, we should get the benefit of selling the sugar stock available with us. Thank you very much. Please go ahead and ask questions.
[Operator Instructions] We have our first question from the line of Mr. Darshan from JM Financials.
It is Sudarshan. Yes. My question is on the ethanol side. So on the ethanol side, I think the government has basically relaxed a bit on the B-heavy as you had mentioned earlier. But given that we are looking at a favorable monsoon, I mean, at least that's what the agencies are talking about.
And even in Brazil, I mean, until the last week, I think the production of sugar has been pretty strong. In that context, I mean, with respect to curbs on ethanol, especially going forward, do you think the government should go back to prioritizing the ethanol lending program, which has basically been halted in the last 2 months or so.
Yes, sir. Yes. Of course, yes, we expect the government to revisit the ethanol blending program. So what the government did was paused the ethanol blending program. They have not truncated or stopped the ethanol blending program, because sometime in the month of November or so, the sugar prices rose too high for the comfort of the government. So which is why -- and then at that point in time, there were indications that the sugar production may be lesser.
So -- I mean, as situation has evolved, sugar production has also gotten better, which is why they are now allowing that 6.7 lakh tons of molasses to be converted into ethanol. And next season might be a little tight season. So for government to go full throttle back on the ethanol blending program, they may wait for indications from the sugarcane cropping -- I mean sugarcane availability, et cetera, for the next year. And I'm sure they will revisit with full throttle.
Sure. Sir, my question -- and the second question is on the multi-feed on ethanol. While I think on paper, government has encouraged probably not using sugarcane but other feedstock. Historically, we have seen that the Food Corporation of India is struggling to provide rice. And there has always been difficulty in procuring maize. I mean, prices of the raw material has been all around the place.
One, with respect to a policy, which ensures like a sugarcane that there can be some kind of stability in the prices of the input? And second is with respect to the availability, has there been any direction to the Food Corporation of India to make the feed available?
Sir, it's like there's actually -- use of price for making ethanol, again, it was -- there was an embargo placed on it. So maize was the one thing which was available. And now since there has been unprecedented demand for maize for use -- for maybe converting it to ethanol. The maize prices which were steady have also risen. So -- and it was basically food versus -- it was a question of food security.
So all the actions that the government took, according to me, there was a knee jerk reaction basically to ensure that enough sugar, enough rice is available in the country. There is no runaway inflation. So all these were aimed at pegging the prices lower. This is something which is not kind of so much edible, so much consumed.
It's not an item of mass consumption. So they allowed it and at one point in time, use of maize was a very profitable proposition. But in terms of the rising demand of the price of maize also has gone up.
Sir, going forward on the multi-feed, is there a proposal by ISMA or the government to revise the ethanol prices because -- I mean, like using cane, there is at least fixed EBITDA per KG or there is a minimum profitability that you can at least estimate. But it looks like, at least in noncane, it is very difficult to estimate that. In that context, has there been any representation by the industry body to the government?
Yes, yes, of course. Yes. For example, there was increase in the price of ethanol made from juice and the B-heavy stock -- the B-heavy molasses. In fact, if you recall, we were [ collaborating ] for a higher -- much higher price of ethanol, which is made from sugarcane juice because that's where the sugar sacrifices the maximum.
So the government did not grant any increase. So our industry association has made a representation for increase in the price of ethanol made from both sugarcane juice and B-heavy molasses. Government has given a decent increase in the price of ethanol to be made from C-heavy molasses, which is nearly INR 7.87 per liter and also on the grain-based ethanol. So they have given a price increase. We -- like I said, we expect government to revisit -- post-election, we expect government to revisit all the policies.
[Operator Instructions] We have our next question from the line of Mr. Sanjay from DAM Capital.
Just want to understand the -- what is -- what exactly is the new variety in our catchment area from the next season, we can expect? Means what would be the reduction in dependence on the Co 0238 from next season?
Yes. I'll talk to you -- plant to plant, I will talk. In our DD unit, this time, our supply itself of non-0238 variety was -- almost about 34%. And next year, we expect in that particular unit 238 to be less -- percentage to be in single digit.
So that is the kind of varietal change we have done. In fact, in our -- this particular unit, although the crushing numbers were lower and we did miss the golden recovery period, our recovery is still higher by about 20 basis points as compared to the last season.
Now coming back to these 2 units, yes, your question was also on the kind of varieties. So you see, 15023 is an excellent variety, but we find the farmers a bit reluctant to adopt it in a big way because as of now, the density of that variety is not very high.
So it is susceptible. It's vulnerable to attack from the animals, et cetera. So -- but 118 has caught up in a good way. And so there is 118, there is 14021. And for low-lying areas, there is 94184. These are the kind of varieties that farmers have taken fancy for. In DP and -- Dwarikesh Sugar DP units, we are a year behind so far as our varietal change program is concerned because that area was absolutely not prone to red rot attack until the last season.
So now -- and the good part is the farmers of this particular district are very hard working and very cautious farmers. So they are working on the plant protection. They are working on the red rot management. And they are also working on the varietal change. And we expect nearly not in season, '24-'25. '25-'26, we expect new varieties to be there in a big, big way.
Okay. But what would be the percentage? So you are saying the '24-'25 percentage terms, it will be miniscule as of now in the DP?
No, in percentage terms, it could be about 10% to 15%, supply percentage, I'm talking. So it will be about 15% -- 10% to 15%. But thereafter, it will be more than 50%.
Okay. So means the recovery in the crushing side in '24-'25, we can expect previous high or it would be lower than that?
So we can expect good recoveries because like I said, the big advantage with the farmers in Bijnor district, number one, they are prosperous. They are well educated, and they are conscious of -- they have simply not like the fact that their fields were kind of dried up totally. So they are working very hard. Even 238, whatever is available with them, they are trying to protect that variety in the best possible manner. And simultaneously working on the varietal replacement also.
[Operator Instructions] As there are no further -- we have our next question from the line of Somnath Saha from B&K Securities.
My question is that almost 30% decline year-over-year -- monthly sugar quote, any reason for that, sir?
Sorry to interrupt, Mr. Somnath. Can you please be a little louder?
Am I audible?
Yes, yes.
I want to ask you, there's a decline in monthly sugar quota, almost 30% for the fourth quarter. Any reason for that, sir?
Sir, we have had the benefit of higher releases in the last couple of years.so -- which is why -- and government has -- DFPD has changed the computation formula, et cetera, which is why we are getting lesser releases, sir.
Okay. And sir, any guidance for growth -- are you planning CapEx?
No sir. Not as of now. Not as of now. We are constantly doing all efficiency enhancement measures, steam saving -- we are working on the stream saving, et cetera. But nothing in terms of capacity building because this year was a year of -- I mean, jolted us in the sense that our crushing numbers suffered a big dent.
So our first and foremost task is to -- and also we got a jolt in the form of pause on the ethanol blending policy. So we would want to first back -- first get back to normalcy and then we will take the next step ahead.
Okay. And sir, lastly is that as the government has allowed for production ethanol from B-heavy molasses from the stock as on 31st March. Sir, how much inventory have B-heavy molasses, sir...
See, on 31st March, we had about 1,68,000 quintals of B-heavy molasses, out of which about 30-odd thousand quintal was for [indiscernible] for levy purpose. So roughly about a 1,25,000 to 1,30,000 quintals of B-heavy molasses. So for which -- I mean we already have the -- we were in the queue for the allotment of quota. So it will not be an additional gain that will come to us actually out of this 6.7 lakh tons.
[Operator Instructions] As there are no further questions, I would like to hand the conference over to management for closing comments.
Thank you so much. Thank you, everyone, for the trust and confidence that you all have reposed in us. Thank you very much for participating in this conference call. I'll ask my colleague, Mr. Maheshwari, to say a few words, if he has to say.
Thank you very much for your active participation, and we look forward for this continuity in the future also. Thank you so much.
Thank you, sir.
On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.