Highlights of the concall
- The net revenue of Bajaj Hindusthan for Q1 FY09 grew by 3% Y-o-Y to Rs 362.24 crore. The revenue in distillery segment has significantly declined by 83% Y-o-Y to Rs 12.44 crore while that in sugar division increased by 24% to Rs 355.91 crore.
- The OPM for the quarter stood at 10% against 29.3% in corresponding previous quarter while at bottom level the company incurred net loss of Rs 55.94 crore against net profit of Rs 29.67 crore in corresponding previous quarter.
- The company expects the total sugar production in India in current sugar season to be about 18 million tonne. The production would be lower on the back of lower cane production, lower recovery and more diversion of cane to gur and khandsari producers.
- The Gur and Khandsari prices remain firm in current season which has resulted in a large proportion of cane produce to divert to Gur and Khandsari producers.
- The company expects to crush 6 to 6.5 million tonne of cane on standalone basis and about 7.5 to 8 million tonne of cane on consolidated basis during current season.
- The sugar recovery for the company has been lower than 9%. So far the company has crushed about 2.5 million tonne of cane for Bajaj Hindusthan against 2.66 million tonne in corresponding previous quarter. The recovery in current season has been at 8.9% against 9.17% in corresponding previous quarter.
- During Q1 FY09 the company has not sold any material quantity of ethanol or alcohol. The company has stored the molasses during Q1 FY09 and now in Q2 FY09 the ethanol production will increase significantly. The current RS prices in UP are even less than Rs 21.50 per litre for ethanol.
- While the prices of ENA are comparatively higher, though came down from about Rs 35 to Rs 26-28 sequentially, the demand for ENA is limited. The demand of RS from chemical producers has been declined due to drastic fall in their end product and thus these players are offering prices about Rs 17-18 per litre.
- The company is planning to produce about 10-15% of ENA and rest of ethanol from molasses available with the company.
- The molasses production for the company (standalone basis) would be about 27-28 lakh quintal.
- During the quarter ended December 2008, the company has sold 1.95 lakh tonne of sugar at average realisation of Rs 17000 per tonne. The distillery production was about 40 lakh litre with average realisation of Rs 25 per litre.
- The cost of sugar inventory with the company is about Rs 17.5-18 per kg. The break even price for company (including all costs: interest and depreciation) is about Rs 20.50 to 21 per kg.
- The lower cane availability has impacted the efficiency of sugar capacities of the company. The sugar capacities will run for less days (about 120-125 days) from conventional crushing duration of more than 150 days, which will also impact the revenue from co-generation business.
- If company would be able to crush 8 million tonne of cane (consolidated basis) and at 8.9% recovery, the sugar production of the company would be about 0.712 million tonne and thus would be more than 40% lower than last year’s production of 1.2 million tonne.
- The company expects the domestic sugar production in next sugar season to be in the range of 20-22 million tonne.