BALRAMCHINNSE14 November 2022

Balrampur Chini Mills Limited

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12analyst exchanges

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Key numbers — 40 extracted

36.5 million

for the period under review. According to ISMA’s latest estimates, India is expected to produce ~36.5 million tonnes of sugar for 2022–23 season after accounting for a diversion of ~4.5 million tonnes. More

4.5 million

d to produce ~36.5 million tonnes of sugar for 2022–23 season after accounting for a diversion of ~4.5 million tonnes. More visibility on this probably would be available after a month where mills will get in

28 million

s likely to be on account of higher acreage of sugarcane in the country. Given our consumption of ~28 million tonnes and inventory of ~6 million tonnes, we remain in a surplus situation. So, it is expected th

6 million

acreage of sugarcane in the country. Given our consumption of ~28 million tonnes and inventory of ~6 million tonnes, we remain in a surplus situation. So, it is expected that we would need to export ~8 mill

8 million

million tonnes, we remain in a surplus situation. So, it is expected that we would need to export ~8 million tonnes this season to ensure stability in prices, while safeguarding the availability for sugar in

35.5 million

more clarity on the production. So, assuming the production is not ~36.5 million tonnes and it's ~35.5 million tonnes, the Government would probably tweak up the export from 6 million tonnes to 7 million tonn

7 million

s ~35.5 million tonnes, the Government would probably tweak up the export from 6 million tonnes to 7 million tonnes. Moving to the Ethanol sector. As most of you are awa

12%

for the Ethanol Supply Year 2022-23. This should provide impetus to the country's plan to achieve 12% blending of ethanol with petrol this year. As the third largest importer of oil and consumer in th

20%

d consumer in the world, India is clearly making efforts to double the ethanol blending program to 20% from the current level of ~10% by 2025-26. Maybe it could happen a year earlier. On the business

10%

is clearly making efforts to double the ethanol blending program to 20% from the current level of ~10% by 2025-26. Maybe it could happen a year earlier. On the business front, the company reported sub

15%

ls by five to seven days. However, cane availability for us in the current year is estimated to be 15% to 20% higher than last year, ~10.25 crore quintal to ~10.5 crore quintal, against from 8.88 crore

10.25 crore

ane availability for us in the current year is estimated to be 15% to 20% higher than last year, ~10.25 crore quintal to ~10.5 crore quintal, against from 8.88 crore quintal last year. We will get further bet

Guidance — 20 items

Vivek Saraogi

opening

“This should provide impetus to the country's plan to achieve 12% blending of ethanol with petrol this year.”

Vivek Saraogi

opening

“So, there will be some delay in starting of mills by five to seven days.”

Vivek Saraogi

opening

“This estimated higher level of cane will enable us to deliver healthier operational and financial performance in the next year to not only make sugar, but also for the byproducts as well.”

Vivek Saraogi

opening

“This includes our cutting-edge distillery project in Maizapur, which should be one of its kind in the country.”

Pramod Patwari

“My question is on the next quarter, which is Q3, given that the inventory valuation that we have taken for sugar at 35, inventory at 10.9 lakh quintals compared to 18 before and again our inventory on alcohol side, ethanol side, so how would you portray Q3?”

Shailesh Kanani

“We'll be shipping out in the third quarter or the fourth quarter, how will that pan out and what will be the bifurcation between raw sugar and refined sugar in that?”

Pramod Patwari

“Shailesh, we cannot get the exact quantity which will be shipped in the third quarter or fourth quarter, but our endeavor would be to ship as quickly as possible.”

Vivek Saraogi

“Currently, with 1,050 KLPD distillation, we will be able to handle 11.5 crore quintal to 12 crore quintal of cane which we hope to get next year itself.”

Nishant Sharma

“So, it's nothing major we will be losing because like for Q3, it's already 45 days are over.”

Nishant Sharma

“This is out of the entire quota or this is just for the time, I mean, we may get more allotment or quota going forward?”

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Risks & concerns — 3 flagged

Sir, second on the Distillery front, we have seen a decline on volume front as well on ethanol business.

— Shailesh Kanani

And if I may ask, what is the impact of this wage revision you have quantified for the total impact, but on a recurring basis what is the cost impact of wage revision?

— Achal Lohade

And if you could also clarify on this molasses quota part, as to what is the quantum now and what is the impact of that in the September quarter with respect to that?

— Achal Lohade

Q&A — 12 exchanges

The first question is from the line of Lokesh Maru from Nippon India Mutual Fund. Sir, I have just one question. After Q4, it is quite evident that if we have 15%, 20% higher cane, the next season is going to be quite upbeat. My question is on the next quarter, which is Q3, given that the inventory valuation that we have taken for sugar at 35, inventory at 10.9 lakh quintals compared to 18 before and again our inventory on alcohol side, ethanol side, so how would you portray Q3? As in would the pain from Q1 or the loss from Q2 continue in Q3 and then Q4 is actually going to be really good or j

Vivek Saraogi

Yes. And the crushing begins in Q3, though, three, four days late. So that's not a big deal. So, I don't think we have to give a quarter-to-quarter forward-looking statement, but yes, quarter three will not look like this at all.

Sir, couple of questions. One on the sugar export front what we have contracted. We'll be shipping out in the third quarter or the fourth quarter, how will that pan out and what will be the bifurcation between raw sugar and refined sugar in that?

Pramod Patwari

Shailesh, we cannot get the exact quantity which will be shipped in the third quarter or fourth quarter, but our endeavor would be to ship as quickly as possible. But shipment, some part would happen in third quarter. Yes. Some part will definitely happen in the third quarter also. So out of 1.4 lakh tonnes, 35,000 is the raw sugar and the rest is refined sugar. Out of 1.4 lakh tonnes, 35,000 tonnes is raw sugar. Yes. And 1.05 lakh tonnes is refined sugar. Right. So, it is 25%-75%. Okay. But this should be shipped by the financial year end, that is March-2023, right? To a large extent. ~ 90% t

Sir, two questions from previous participant’s just to reconfirm. On the Distillery side, you said, whenever it will start, we’ll first start with the grain, post which, basis the sugar season starts, so we'll switch to sugar. And once the sugar season gets over, we'll again get back to grain. Am I correct on this, sir?

Vivek Saraogi

Absolutely correct. Then sir, how we would be switching? I mean, is there a time lag which would be required for switching from grain to sugar or it's absolutely in a day or two, how that transition takes place? In a day. Okay. So, it's nothing major we will be losing because like for Q3, it's already 45 days are over. And so, I'm just trying to understand that we won't be losing out much in terms of the production days? Absolutely not. Sugar juice will take predominance over anything else. Having said that, as you understood and your initial remarks in the call were absolutely correct. Okay.

Yes. Avantika, will you take that question.

Avantika Saraogi

Yes. Basically, even though this untimely October rain has scared people, as mentioned by the Chairman, it was quite late in the cycle when the crop had already attained certain maturity. If I may give you a bit more technicalities, at the time of the initial growth, that is the main timeframe, when the weather was very, very conducive. So, we were able to attain many more tillers, which increases the quantity right upfront. After this is just a matter of attaining height. So, it has impacted very marginally. We have been reviewing time and time again the yield is higher per acre. Also, our ar

Sir, if you could clarify on the lower sales volume for distillery in terms of the target what we had indicated, are we on track to achieve that FY23 distillery sales volume target?

Pramod Patwari

Yes, Achal. We are on track as far as FY23 is concerned. Which is around 25.5 crore liter, if I recall that right, sir? Total alcohol supply will be around 23 crore liters to 24 crore liters. That is for next year you are saying, right? FY23. This year cane availability was lower; hence distillery was low. If cane is lower, molasses is lower, distilling capacity will be lower, in the year gone by. In the year to come, Pramod will give you the figures. And for FY24, it should be around 35 crore liters. If you could help us with the realization for the second quarter in terms of the ENA and also

I would like to understand sir, what were the expectations of the revised rates of ethanol that you had? And how do you perceive the rates given by the Government as of now, you as the Company and you as the representative of the industry? How do you perceive these rates? Do you think it's fair? Do you think there's a revision required? So, let's be clear as to what the thinking going around is. There was a special incentive given from June to November. So, that if you supplied more than your contract, if you supply during that period, you would get something higher in terms of INR1.6 per litr

Nitin Awasthi

Got it, sir. The second question following relating to the first one is that, given that currently we have capacities in molasses, grain and juice, and you do the math better than anybody else, would you still go for the juice route in the current season or the molasses route is more profitable? Juice. Even in the current rate, juice is more profitable. Yes. That investment has already been set up, basis juice in one unit. So, we will go ahead and do juice.

We will answer your question from the sugar season perspective. So, we would be diverting around 6% to 7%.

Vivek Saraogi

Maybe 7% up. Maybe 8%. in juice, and 20% for ENA and the rest will go to B-heavy Anupam Goswami: Okay. And the rest would be for grains. So, our endeavor mostly still is lies on B- heavy more, and because of the higher margin till now, sir? It's all a very related business. So, let us run the juice, it is being done for the first time. Let us see the return, we hope to get a good return. Once we establish everything, the juice capacity is limited. So, one will deal with all these mathematics, the moment we have stabilized and run it. So as someone said, we know our numbers well. Trust us with

Sir, my first question is regarding the exports bit where you said that it's going to be in the ratio of 25% to 75%. Would it be possible to even share the realization, what we would be garnering over here? So, yes, we are still in the process of writing it. Will get back to you. See, we are going to sell refined sugar as a major part of it. 75% refined sugar and 25% is raw which is at a very good realization. We will give you the figure shortly.

Nikhil Gada

Okay sir. Sir, my second question is just when you mentioned that for the distillery breakup, 8% juice, 20% ENA, that means basically C-heavy route, right? Yes. That is the liability to be discharged as per the policy for country liquor. If you give molasses, you get a poor realization. You give ENA, you get a better realization. Understood. Got it. Lastly, any comments on the global prices and how do you see them, because in the last month or so we have seen a very sharp spike in sugar prices globally? And how do you see the situation with the expectations of Brazil and Thailand coming back t

Sir, my question is on expected recovery this season. If you can give some guidance on that?

Vivek Saraogi

So, as we said in the beginning, as Avantika had mentioned, see understand, let me explain to you a little more about the cane crop. So, when the yield is good, the cane is healthier. So, when the cane, each sticky is healthy, recovery, the sucrose inside it is higher. So, we are hoping for a better recovery based on the hand mill analysis and based on the weight of the mother shoot. So, that trend is higher definitely. In our area, we have done the mapping and once we start the crushing, we will get more and more data as we proceed. Okay. So, can we expect at least 1% higher recovery or it is

Sir, just a small little clarification. When we guided for INR23 crore alcohol sale, that is for FY23. Is that right?

Pramod Patwari

Yes. So, that would imply a implied growth of around 65% to 70% in the second half of the year, which I think we are already, I think that is basically balance for four and a half months, right? So, is that achievable? 65% to 70% jump on volume terms? Yes. This will take full four months of working. Okay. Because the first half volumes around 9.3 crore litres alcohol sales. So, if you're guiding for ’23, so basically, we'll be doing something in the range of 25 crore litres. Let's say 23 is the number we are working on. Yes. So, when you make juice, you make a hell of a lot more quantity and t

Sir, my question was pertaining to the cane development program, what you had mentioned is that, for the current season 10.5 million tonnes, for the next season 11.5 million tonnes to 12 million tonnes. So, the question is a, how much more scope do we have given our catchment area? B, would that also require additional crushing capacity to be set up?

Avantika Saraogi

I will take your questions. So, in the east where eight of our factories are located, there is lot of of scope for acreage increase. There's no shortage, really. And we don't need to set up more crushing capacity to handle up to 11.5 million tonnes. Beyond that, madam? Is there any plan to set up? Is there a plan to increase the acreage further ahead? We will revisit the topic. Understood. The second question I had with respect to the exports for the industry. In the last season, of the total export 11.2 million tonnes, how much would be white sugar? And how much of it is raw sugar? Would ther

Thank you very much. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarification or would you like to know more about the Company, please feel free to contact us. I again, thank you for taking the time to join us on this call. Thank you.

Vivek Saraogi

Thank you, everybody. This is a transcription and may contain transcription errors. The transcript has been edited for clarity. The Company takes no responsibility of such errors, although an effort has been made to ensure high level of accuracy

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Speaking time

Vivek Saraogi

Pramod Patwari

Achal Lohade

Moderator

Shailesh Kanani

Nishant Sharma

Avantika Saraogi

Nitin Awasthi

Dikshit Mittal

Shaliesh Kanani

Opening remarks

Vivek Saraogi

I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you and over to you, sir. Thank you. Good afternoon, everyone, and thank you for joining us on Balrampur Chini Mills Q2 and H1 FY23 Results Conference Call. We have with us today, Mr. Vivek Saraogi, Chairman and Managing Director; Ms. Avantika Saraogi, Business Lead and Mr. Pramod Patwari, Chief Financial Officer of the Company. We will initiate the call with opening remarks from the management, following which we will have the forum open for a question-and-answer session. Before we begin, 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. Good afternoon everyone and thank you for joining us on Balrampur’s Q2 & H1 FY23 earnings conference call. I trust you've all had the opportunity to go through

Pramod Patwari

Thank you and good day everyone. We can straightaway move into the Q&A section, as the detailed presentation has already been shared. Thank you.

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