Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Balrampur Chini Mills Ltd (BOM:500038, Financial) is on track to meet the government's ethanol blending target, with a current bid for 18% blending and a goal of 20% by 2025.
- The company is benefiting from government policies, including a 50% CapEx subsidy for bioplastics projects, which supports its sustainability initiatives.
- The company's integrated operations and focus on blockchain development are helping to mitigate challenges and optimize capacity utilization.
- Balrampur Chini Mills Ltd (BOM:500038) has announced an interim dividend of 3%, reflecting its commitment to delivering shareholder value.
- The company is confident in its ability to create long-term value through its PLA project, which aligns with sustainability goals and strengthens relationships with the farming community.
Negative Points
- The company's profitability was impacted in the quarter due to high sugar volumes and lower crushing, which prevented full absorption of fixed costs.
- The distillery division faced challenges due to lower availability and government restrictions on sugarcane juice diversion.
- There is pressure on sugar prices due to high opening stock levels, prompting the industry to request an increase in the minimum selling price (MSP).
- The company is facing challenges in sugarcane production due to late planting and potential weather impacts, which could affect availability.
- Balrampur Chini Mills Ltd (BOM:500038) is awaiting government action on overdue MSP adjustments and export permissions, which are crucial for price stability.
Q & A Highlights
Q: Can you provide an update on sugarcane crushing and yield expectations for the current season?
A: Vivek Saraogi, Executive Chairman, stated that the area under sugarcane cultivation remains similar to last year. The company expects improved yields if winter rains occur, which could enhance production. Avantika Saraogi, Executive Director, added that new sugarcane varieties are acclimatizing and should yield better results over time.
Q: What are the expectations for ethanol production this season, given the lifting of restrictions?
A: Pramod Patwari, CFO, mentioned that the company expects to produce around INR25 Crores of ethanol, with a significant portion coming from sugarcane juice and B-heavy molasses. The company has received allocations for ethanol production, which will support these targets.
Q: How are current sugar prices holding up, and what factors are influencing them?
A: Vivek Saraogi explained that sugar prices are stable, but the industry is awaiting government actions such as the declaration of a minimum selling price (MSP) and export allowances. These measures could help improve prices further.
Q: What is the company's strategy regarding the PLA project and its potential impact?
A: Avantika Saraogi highlighted that the PLA project is progressing on schedule, with significant government support in terms of subsidies and incentives. The project aims to produce bioplastics, aligning with sustainability goals and offering long-term value.
Q: How does the company plan to capitalize on potential increases in ethanol blending targets?
A: Pramod Patwari noted that the company is well-positioned with adequate distillation capacity to meet increased ethanol demand. The focus is on enhancing sugarcane production to support higher ethanol output.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
