Highlights of the concall
- The net sales for the quarter increased 25% Y-o-Y to Rs 457.58 crore. The OPM for the quarter improved 60 bps to 23.3% on the back of significantly higher sugar prices on Y-o-Y while PAT at the end stood 10% higher at Rs 37.77 crore.
- Sugar operation achieved turnaround during the quarter with 60% growth in sugar revenue to Rs 320.08 crore and registering a strong PBIT of Rs 50.37 crore (Rs 1.13 crore in Q2 FY08).
- Engineering businesses registered a dip of 9% in revenue on account of the overall market conditions. There have been some deferments of deliveries to the customers due to their financial condition and availability of funds to make the final payment. However the turnover during Q2 FY09 is higher by 40% when compared with Q1 FY09 indicating improved sentiments.
- During the current sugar season the company has produced 335,300 tonne of sugar, 42% lower Y-o-Y with average recovery of 8.98% (9.89% in FY08).
- The sugar dispatches during the quarter were at 124,200 tonne with average realization of Rs 19600 per tonne.
- The company has sugar inventory of 342,000 tonne of sugar at the end of March 2009. The company will get benefited from firm sugar prices on this inventory.
- The average cost of production for sugar during the season stood at Rs 2000 per quintal. The average landed cane cost was at Rs 154 per quintal.
- The company exported 725.64 lakh units of power during the quarter at average realization of Rs 3.37 per unit. The company is not expected to sell any significant amount of power in coming two quarters.
- During the quarter the company produced 100.50 lakh liters of alcohol and sold 73.76 lakh liters of alcohol at average realization of Rs 25.66 per liter. The company has 70 lakh liter alcohol inventory at the end of March 2009 and expects to produce about 150 lakh liters of alcohol in next 2 quarters of this sugar year. The management expects the alcohol realization to improve in coming quarters.
- The company has total order book of Rs 768.10 crore as on 31st March 2009 in its engineering division. Out of which Rs 517 crore stood at steam turbine business for 715 MW, Rs 63.1 crore from speed gears and gearboxes business and Rs 188 crore from water and waste-water treatment business.
- The management expects that the India will import about 2.5 million tonne of sugar (including raw and white sugar) and would export 3.5-4 million tonne of raw sugar in next sugar season. The management expects that the duty free raw sugar import scheme will be extended to the next year as well.
- The management expects that the sugar prices, which have softened recently, may rise again post election but up to the maximum of highest price touched recently.
- The management further expects that the sugar prices may depress in Q4 FY09 and Q1 FY10 when the sugar selling pressure will come from Brazil.
- The company has contracted to import 40,000 tonne of raw sugar from Brazil. The arrival of the sugar may take couple of months. The company has contracted the sugar at favourable price and the total cost (landed cost + processing cost) would be quite lower than the current sugar realization. The company will process this sugar in next sugar season only.
- The company has Rs 1390 crore debt as on 31st March 2009 at average cost of debt being 9.4% consisting of Rs 575 crore working capital loan (debt cost @ 10%) and Rs 815 crore term loan (debt cost @ 9%).