Highlights of the concall
- During Q2 FY09 the net sales of the company grew 15% Y-o-Y to Rs 357.11 crore mainly on the back of higher sugar prices. The OPM for the quarter slipped from 43.2% to 36.7% on Y-o-Y, though was notable considering the past down cycle and performance of industry pees and PAT ended 1% higher at Rs 66.19 crore.
- The segmental revenue from sugar business surged up 19% at Rs 293.85 crore while that from distillery and cogeneration business dipped 8% and 19% to Rs 41.34 crore and Rs 75.84 crore respectively.
- Sugar production during the quarter was at 27.28 lakh quintals (56.87 lakh quintals in Q2 FY08 with average recovery of 9.35% (10.41% in Q2 FY08). The average sugar realization for the quarter was at Rs 20.3 per kg as compared to Rs 14.52 per quintal in Q2 FY08.
- The company has produced 44 lakh quintals (bags) of sugar during the season. The company had 31 lakh quintals of sugar at the beginning of the season with average cost @ 1405 per quintal which has almost been sold till end Mar’09.
- As on 1st April 2009, the company has sugar inventory of 43 lakh quintals, the average cost of production for which would be Rs 2050 per quintal (including costs for whole year) pre-interest and pre-corporate overhead.
- The landed cost of cane to the company for the season stood at Rs 151 per quintal.
- The current RS and ENA prices are about Rs 30-31 per liter and the management expects it to surge up to Rs 35 per liter going forward due to demand supply mismatch. Current molasses prices are about Rs 5500 per tonne
- The company is expected to produce 5.68 crore liters of alcohol and ethanol in sugar year 2008-09 (so far has produced 3.20 crore liters of alcohol and ethanol in H1 FY09). The company has committed 21% of its capacity to supply to Oil Manufacturing Companies.
- The Uttar Pradesh government has bought power at Rs 4 for a special window for three months (i.e. March, April & May’09). The company expects its co-gen operations to conclude by May 2009 and will get benefit from higher prices from UP govt. The company expects to produce and export about 9-10 crore power units till May’09.
- The management expects the effective income tax rate to be about 20% for FY09 and going forward as well.
- The company has long term loans of Rs 1020 crore and working capital loan of Rs 290 crore. The average interest cost being at 9% and about Rs 105 crore debt repayment would be due for the year ended September 2009. The company expects the interest cost to be about Rs 95 crore for FY09.
- The management expects that the sugar production in next year would be about 18 million tonne. And company would be producing about 6 lakh tonne of sugar in next sugar season.
- Considering most of the countries including India are facing sugar deficit and this deficit is expected to continue atleast next 2 years, the management expects a structural change in sugar pricing and consumer behavior in India as well as in world as sugar contributes not very significantly to the consumer basket. The management expects the sugar prices may surge up quite significantly going forward.