Balrampur Chini Mills Limited (BALRAMCHIN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Balrampur Chini Mills Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Karl Kolah from CDR India. Thank you, and over to you, sir.

Thank you, Raman. Good afternoon, everyone, and thank you for joining us on Balrampur Chini Mills Q1 FY '21 Results Conference Call. Today, we have with us Mr. Vivek Saraogi, Managing Director of Balrampur Chini Mills; and Mr. Pramod Patwari, CFO of the company. We would now like to begin the call with brief opening remarks from the management, following which we will have the forum open for a discussion. 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 shared in the results presentation. I would now like to invite Mr. Saraogi to make his opening remarks. Over to you, Vivek.

Yes. Good afternoon, everyone, and thank you for joining us on Balrampur Chini Mills Q1 FY '21 Earnings Call. I hope you, your colleagues and family members are all well and keeping safe. I will initiate the call by taking you through the latest updates in the sector, after which Pramod will give you the highlights of the financial performance. So we begin with next year's estimates. The estimates made by ISMA, and we also concur with that estimate is net sugar production of 30.5 million, which is 305 lakh tonnes. The assumption is 320 lakh tonnes production and 15 lakhs being diverted for B-heavy. Net sugar production, therefore, being 30.5 million. So the various states have been accounted for Maharashtra's jump, et cetera, has all been accounted for in this estimate. Now I'd like to take you through the demand perspective on sugar. So initially, during the lockdown, figures of demand were being estimated at 24 million tonnes or 240 lakh tonnes. We were pleasantly surprised by the offtake in these months. And now based on the offtake already happened and the couple of months release has only been pending, it is very safe to assume that demand would be, maybe 1% higher than last year, could be closer to 255 lakhs against 252 lakhs of consumption last year. So basically, demand, if at all, will be equal to last year or, in my personal view, and in ISMA's view 1% higher. We are estimating export of about, Pramod, about 5.5 million?

5.8 million.

5.8 million. 58 lakh tonnes of export. So with an opening balance of 14.5 million, production of 27.2 million, domestic offtake of about 255 lakhs or 25.5 million and export of about 6 million, the closing stock would be about 10.5 million, which is 105 lakh tonnes. So given the fact that we are estimating a 305 lakhs production and maybe a demand of 26% next year, we are also expecting the exports to continue in this same trajectory of about 6 million approximately, and there is enough home for India sugar. And we have also seen a decent global market. So we are estimating that if 6 million goes out next year, like it went out this year, you will see and the difference between production and consumption being -- production being higher by 4.5 million, you could see a further drawdown to inventory of about 1.5 million or 15 lakhs next year. These are just assumptions, which are in the very early stages. Now let me give you an update on ethanol. With additional investments, the country's production for ethanol has increased to about 4,000 million liters, Pramod that is INR 200 crores. This will help government to procure higher ethanol in 2021. As laid down in the National Biofuels Policy, the government is firmly on its path to achieving ethanol blending of 10% by 2022 and 20% by 2030. The constructive measures being taken by OMCs has helped companies like ours to supply the higher ethanol quantity. This is something we are very proud of as a Balrampur's initiative. Our new Distillery, which came into operation in January, was able to optimize its capacity utilization rather we work at more than 100% capacity. The OMCs also undertook strict action during the lockdown to move supplies to alternate depots. So we could move our supplies from one depot to the other and managed to clock in a very decent ethanol dispatch. Now let me now briefly take you through the key highlights of Balrampur's performance. Overall, Balrampur has delivered a healthy quarter. The Sugar segment reported higher volumes. This combined with higher operational efficiencies on account of higher recoveries led to a better performance. The performance of this Distillery segment which was initially impacted in April, but picked up in the later months as has the Distillery segment itself also deliver better results. We also witnessed first full quarter contribution of our newly commissioned Distillery at Gularia. As I told you, we've produced beyond 100%. Overall, we anticipate offtake to remain healthy, which would enable us to deliver similar performance going ahead. Co-generation remains to be muted, and we are in litigation for the rate. So our idea now is if we get a better price of bagasse, which we derive from the market rather than by producing power, whatever power we need for our operations being the minimum, we sell the rest of the bagasse. In conclusion, I'd like to state that over the past few quarters we've continued to deliver healthy results even in periods of excess production. Over the year, the government's initiatives on ethanol, it's price linked to MSP, timely exports have removed the problems of excesses. These initiatives, together with our efficiencies, we hope will enable us to continually generate sustainable cash flows as we move ahead. And we hope to deliver shareholder value in the coming years. Thank you. Pramod, over to you.

Thank you, sir. Good afternoon, everyone, and thank you for taking your time out and joining us today on Balrampur Chini Mills Q1 Financial Year '21 Earnings Conference Call. I would not like to repeat the numbers which we have already given in the press release and uploaded on the website of the stock exchanges. So we straight away open our quorum for the question-and-answer session. That's it from our side.

So basically, you're saying that all the data is uploaded?

Yes.

Yes. So if anybody now needs any more clarifications of the financial data or anything else, we welcome questions.

[Operator Instructions] The first question is from the line of Varun Goenka from Nippon Mutual Fund.

First, my best compliments to Vivekji and Pramodji. I think as we present on our slides, we've return back to shareholders, including the current buyback, probably now getting close to INR 1,000 crores over last 4, 5 years, even though it's not that we have seen a major upcycle or something. So really congratulations on that, sir. Very few companies can name this kind of a quantum. But just staying around, like you mentioned, Vivekji, on a sustainable cash flows, now that we have such large cash flows what is really stopping us from going ahead with next round of CapEx or reinvestment? Even if the policy framework, not give us that kind of visibility but it would still give us very good IRRs from being at current price. I think this question has been repeated time and again in the last few months and because the future looks reasonably promising or okay.

Yes. Thank you for the compliment you gave us initially, and we continue our conduct which is in a most predictable manner that excess cash gets returned. Secondly, on reinvestment, stock investments of cash, see, our idea is right now, we are deliberating and looking at various ideas, which might not be just buying sugar factories or expanding sugar factories alone. So we are looking at a lot of value-added products. We are in the process of examining. And as soon as the company finalizes and Board finalizes, you'll get to hear. So we, in our approach, have been very cautious. Our idea is we would definitely now like to move ahead on the value-added side and that's the approach right now.

Okay. So just to extend this further, the opportunities that we are evaluating, what, in your mind, could be the redeemed cash required to capture them? Also, what is the size of the profit, can it add anything meaningful in terms of INR 50 crores, INR 100 crores of profit over the next 3 or 4 years?

Why not. I mean, one is -- one would explore at those levels only. It's too early. So yes, absolutely. The profit size you're thinking of, one would look at a greater profit to invest good money. So see, it's too early hence to give any comment, but your thinking is absolutely in order. That's at the evaluation stage, right?

Sure. And on the ethanol export side and recent policy, if you could add your view, sir?

Ethanol export?

Yes.

No, there is no export of ethanol. There is some export of ENA or something, but ethanol gets consumed domestically by the OMCs.

I'm sorry, I meant of ENA only. So now that the government is allowing ENA export. So is there an opportunity there for us?

No. See, we basically tender our entire quantity to the OMCs. This is minute one. So it helps us hedge our operations on day 1. And we do not remain open in the market for ENA export. And it's a very good relationship building also. So if you see our quantities of offtake have sort of revalidated the relationship model.

Okay. Just a final point, if I get back in the queue, Brazil exports have seen a large jump. So if your view on international markets would really help us.

So you're talking of sugar exports from Brazil?

That's right. I see the Brazil sugar exports have seen a large jump. Or maybe if I'm missing something, you could help us with the -- your view on the international price.

You're right, sir. Brazil this year is expected to have a larger production of, say, around 36 million tonnes, 37 million tonnes. And they have a policy of covering or hedging their production forward. So a large portion of that has already been done by them. India will continue to export whatever is required from India in various pockets of the globe. Large opportunities have come up in the recent past, particularly the Indonesian market. So we will find a very lucrative time and price for our value-adds, for our export also.

The next question is from the line of Dhananjay Mishra from Sunidhi Securities.

Congrats on very good operating performance. Sir, when do you expect MSP to be revised?

Very soon. Government was onetime sort of put a clock to it which is very accurate. But we're hoping very, very soon.

And what could be the quantum, maybe INR 1, INR 1.5?

Yes. As you've read in the papers, the talk is of INR 2 MSP with some hike INR 1 -- INR 10 hike in FRP.

Okay. And sir, what is our accounting cost for this molasses and bagasses for our segmental businesses?

Pramod?

Bagasse, we are continuing with our earlier policy at INR 1,400 a tonne and molasses also at the same level. C-heavy which is INR 3,500 a tonne and B-heavy INR 7,000 a tonne.

Sorry?

INR 7,000 a tonne.

Okay. And sir, we have sold some molasses -- this, bagasses in market. So can we expect more selling in terms of volume going forward? Or it will be at these levels?

We still have proper bagasse of around 2 lakh tonnes as of 30th of June. So a portion of that will get converted at an appropriate time.

Yes. So 30th June Pramod has told you what would happen. If your question is based on next year's production, the attempt would be to maximize the selling externally.

Okay. Because this quarter, we have seen some jump in PBIT and our -- this power business?

Yes. So we are hoping to sell bagasse also. See it's a market decision. It's all on market prices, et cetera. So even during lockdown time, the moment it got opened up, we sold bagasse.

So as of now, selling bagasse is more profitable or selling at INR 3 is more -- power at INR 3 is more profitable?

It all depends on the price of bagasse. At INR 1,500 selling bagasse is better.

The next question is from the line of Sanjay Manyal from ICICIdirect.

Congratulations on a very strong set of numbers. One specific thing about the things which you have mentioned that you're probably looking for some sort of value-added things or next level of CapEx. So is sugarcane juice to ethanol conversion plant is there -- so something like that is in the plan? Or if -- suppose if something like that really fructify, then what kind of CapEx could be there? Or what are the operational parameters which you will have to really require to fill that?

So juice from bagasse -- I mean, sorry, ethanol from juice definitely is one of the considerations. It all has to be seen in a very balanced manner because we have 10 units and we've integrated the operations. So yes, that is one of the considerations but not the only one. So there's a lot of work going on. I can't give you figures till we actually arrive at something.

But sir, in general, if suppose anybody wants to go for a sugarcane juice to, what kind of capacity one has to create? Is it like a bigger capacity one has to create or if there is additional CapEx required?

If you go from juice, it is -- you need absolutely big capacity because juice is like loaded with sugar for the Distillery. So it will be a big capacity required.

Right, sir. Right sir. And, sir, from the global price perspective, what kind of a subsidy is required at these prices to sort of match the cost or match the current prices or the last realization -- realizationable prices for exports?

[Foreign Language]

[Foreign Language]

13 to 13.5 to get to last year's prices. 13 is good. Sorry, probably the subsidy one understands might remain at the same level. So if you get 13.5 March contract, it is good price.

The next question is from the line of Anupam Goswami from B&K Securities.

Congratulations on a good set of numbers. Sir, my question on this -- in this quarter, your sugar volume in domestic as well has been really high. But how come -- how much this is sustainable throughout the whole year? Will it be at this level? Or will it taper down since production from the southern states will also ramp up? And in the next year also...

Sorry, come again, please.

Sir, I just wanted to know how the sugar volumes in the domestic is sustainable throughout the year. This year -- this quarter, we saw a 50% jump in domestic volumes. So how that is sustainable?

See, the sustainable part, as you know, is part is determined by government reliefs. So one cannot give you any kind of guarantees, but all one can say is even reliefs -- government favors people who export and do B-heavy.

Okay. So in terms of...

So the thought of the government is to encourage both these activities and they do all kind of encouragements beyond even just the cash subsidies.

Okay. Okay. So the more B-heavy diversion is there, that you get an additional release, quota?

Kind of. You're not wrong. So much of detail please. Yes. But right, correct.

Okay. Sir. And sir, what is our Distillery volume target this time?

Pramod.

FY '21, we should be doing between 15 crores liter to 16 crores liter and for ethanol which begins from 1st of December and ends in November, next season target is 17 crores to 18 crores.

The next question is from the line of Madhav Marda from Fidelity Investments.

So my question was the value-added products or the CapEx that we're talking about. It will be restricted to the sugar, ethanol sort of business model, right? Or are we looking to go into something which is different?

Obviously, will -- the raw material would be available with the company. So not going to absolutely unrelated stuff, but could be a little more value-added than ethanol.

Okay. So it will be like a forward integration of ethanol?

Yes. Yes. Absolutely. Ethanol, sugar anything. So we'll have to wait there. Let us do something more tangible before we revert. But it's going to be a related stuff. And its -- time has said that we are very cautious people.

Understood. And the growth CapEx in expanding our Distillery capacity, is that something that is also being considered? That's also one of options in the -- there for us.

Yes. Yes. See juice, et cetera. So there are many combinations one is playing with. So let it play out.

Okay. And just lastly, on the volume and free cash generation, that we will be doing, like, in your view, what could be the risk to our earnings or to our cash flows? I mean, MSP will likely due to be hiked, FRP goes up but by a lesser extent. So other than that what would impact our earnings and cash flows like what's the risk actually?

So if I'm saying that FRP goes up INR 10 and MSP goes up INR 2, we are net gainers, right?

Exactly, yes.

So our risk today is only government policy as I see it.

Yes. But -- I mean, the way I would think, sir, is, given their comments for their actions in the very recent past, I don't see why should be an adverse, right? I mean, they will just go back 5 years if they do that, right, I mean? That's sort of one thing.

Sorry, come again, your last portion.

I'm just thinking that government taking a u-turn on some of their good policy changes that they have made in the recent past. If they do that, this is going to open up the can of worms which we had 5 years back, right? So I mean, it wouldn't make sense for them to do anything adverse in this case, right?

You very beautifully answered your own question. So since someone asks you what’s your risk, you have to answer. Whether one sees that certifying in my mind, the answer is no. And probably, if you see the conduct of the government, there is 0 risk, in my mind. But if you technically are asked what do you do? So if we see why the government do this? So let's delve a little deeper into this. So government does this because it announces the cane price and the cane farmer is the best sort of place in the farming sector and the government being able to pay them the entire money is their mandate. So the entire program is engineered to pay the farmer. So if you see the export subsidy doesn't come to make -- gets credited to farmer account. So this program has lent absolute stability to all concerned in the sector. One, farmer mainly; two, again, millers have done very well; three, consumers have got sugar at very reasonable prices if you compare our prices with Europe internally. So all people can stand banker, every stakeholder is happy. And therefore, in my mind, as Vivek Saraogi personally, we see no risk. But that's the first loop hole with evidence which one has just presented.

Understood. And maybe just last question from my side. In terms of you -- you've earlier highlighted in terms of the group cash that has been given back to shareholders over the year. Along with the CapEx program that we will be doing, will there also be some sort of a stable dividend program of that we would like to implement? Or it would depend upon the CapEx intensity in any given year?

See, we always believe every stakeholder must participate in the prosperity of the company. So it will never, in my mind, and that's a Board decision, ultimately, is one in preference to the other. So everybody has to be looked after in a -- when you proceed ahead.

The next question is from the line of Chirag Surekha from DSP Mutual Fund.

This is Vivek here. Just a few questions on the balance sheet which is on Slide 21. Excellent management of inventories and debt aside, you said how it has come down. But could you please explain the cane dues. In the sense that the cane dues amounts has increased as doubled compared to last year. How that is going to play out? And then the second part is subsidies receivable from the government. Sir, you had mentioned about the government policies also. This time, the big difference is the stretch finances of the government because of COVID. So how do you expect the subsidy receipt in the timely manner going forward, both for sugar as well as in terms of power business?

So we are happy to inform everyone that we've got about INR 85 crores of our -- INR 83 crores out of our...

INR 200 crores.

INR 200 crores very recently from the Government of UP. And on the subsidy part and the cane price outstanding, if you go a little deeper into that statement, you'll see that our obligation as a company for cane price payment is 100% done. So now we are just waiting to reimburse or sort of ease the way of government paying the farmer.

Okay. So I should see the INR 63 crores minus INR 33 crores otherwise -- sorry, INR 634 crores minus INR 331 crores. Is that the way I should see it?

These figures are as of 30th of June. As we stand today, whatever is the cane dues, which is at around INR 450-odd crores, we are entitled for similar amount of receivables from the Government of UP as well as Central Government.

Absolutely.

The moment we receive that, it will be paid out.

And Pramod, just to tell them a little more detail, the Central Government subsidy doesn't come to us. It goes straight to the accounts of the farmer. That's the DBT protocol.

Okay. Excellent, sir. And sorry, you covered that point earlier, again, in most of these companies we look at the government finances it is undergoing a change. In the ethanol, is there any risk in prices at all I mean I know that the policy is saying that we should get to 10% and slowly getting there. But the crude prices have fallen down so much and, I think, there is a subsidy element in that as well.

Let me clarify this, again. So if we see FRP go up and MSP go up and past contract of the government being believed upon and which I do, you would see a rise in ethanol prices. So I think that step itself should clear up all the doubts which have been prevailing. There is no loss to the government. There is some tax maybe they collect less. But then they pay out subsidy less also if ethanol gets diverted. And this is a very small portion of business in the overall protocol of things, and it's passed on to consumer also. So the government doesn't pay anything from its pocket on the ethanol program.

The next question is from the line of Manish Bhandari from Vallum Capital.

Sir, I must congratulate you where very few managements have got alignment of interest with the stakeholders as you have demonstrated by the buyback. So my 2 questions are regarding the new agriculture impetus given by this government, does it speak about in any way about the changes in the cropping pattern where sugarcane remains one of the most profitable crop and that leads to the overproduction each year. So do you have any -- can you guide us, is there any change in the government philosophy to make a shift from sugarcane to other crop?

Okay. So that's a good question. We had also kind of deliberated internally and seen the economics of UP. At present, cane remains the most lucrative. However, these policies will help us in direct interaction with the farmer more and more and be able to improve agri practices, hence, recovery, et cetera. That's the target and take-home from the policy which we are doing. But safety of raw material is not a doubt.

Okay. Sir, my next question is regarding the yield variety which has resulted in the increase in the yield for our crops. So how far we can go? I understand that we are at 80%, 85% -- 88%, the UP is 88%, Can we go to 100%? Or what would be your view? And my last question will be the arrears in the industry related to the sugarcane.

Pramod, arrear, you answer. I'll answer the first part. Pramod will answer second. So we are hoping to get to the late 90s with the early variety. In this year itself, we would have very less of -- until you need some general varieties in some areas which are waterlogged, et cetera. So in our company, we will be attempting to close the loop this year and take things ahead in a manner which can even lead to further growth for future in terms of better variety and recovery. Arrears, Pramod?

So as far as the arrears are concerned, and the major portion of arrear is from UP, which are around INR 11,000 crores, INR 12,000 crores. UP was one of the largest exporter of sugar in the year gone by. A large portion of export incentive is still receivable from the Government of India. So if you take into account the subsidy portion which will move directly into the farmers account on account of export, on account of reimbursement of buffer subsidy claim, interest subvention from Government of India on account of Distillery projects and power dues payment from State Government. We are of the view that out of this INR 11,000 crores to INR 12,000 crores, maybe INR 7,000 crores to INR 8,000 crores will be paid out by October and the remaining can be paid once the new season begins.

The next question is from the line of Samir Rachh from Nippon India Mutual Fund.

Congratulations on good numbers and good payouts. So I have 3 questions. One is this command area mechanism which we have currently. So with the governments announcing lot of reforms in the agriculture, is there any likelihood of that changing? That's question number one. Second question is related to seeds. So last time, we saw a bumper increase in production, thanks to new varieties of seed. So is there any further progress happening in the seed thing which could lead to some further significant increase in productivity? That's question number two. And then my third question is that with thanks to COVID people becoming more conscious of what they're buying loose and what they're being packaged. So is there any scope for us to expand significantly into branded sugar?

Okay. So Samir, let me attempt to answer. Your first question was...

Command area.

Command area.

Command area. No, I don't think that being dismantled because from the Government of UP side, this is a big safety to the farmer. That is entire produce gets lifted, right? Otherwise, you might have, means if you don't put command area, they don't crush the cane and they shut down. So that's for safety of the farmer and responsibility towards the farmer. I don't think that will go. And you spoke on branded sugar. No, we are not very seriously dealing with that, the volumes, et cetera, that we have experimented in the past and not succeeded. Seed and all, I don't think is a big worry. Already we have -- now India has picked up to a level where I don't see the -- maybe some factories apart, I don't see a general big uptick in yields anymore.

The next question is from the line of Ambar Taneja from Vachi India.

I had 2 very targeted questions. The first is on Slide 14, you have given the realization you got for the exports without the government assistance. And Q1 FY '21, you've written INR 25.03 and Q4 FY '20 INR 21.66. I found this to be remarkable given that the raw sugar price was exactly the opposite. If I pick up the 6 months chart of raw sugar, I see that it was roughly $0.14 in the first quarter and much lower in the second quarter. So my first question is, how did you manage this? And secondly, what is the cost of -- what is the differential in the shipping cost of sugar from India to Indonesia versus Brazil to Indonesia since you have indicated that Indonesia is going to be a major market for export this year.

See The INR 25 realization which we have mentioned on Slide 14, we were able to conclude the deal in the month of February itself when the raw sugar prices were rolling very high.

It did touched $0.15.

Yes, thereafter, it touched $0.15 also. And if I remember correctly, the Government of India came out with the reallocation on around 24th or 25th of February and we concluded the deal on the same day. That was the reason that we were able to capture this high price. Just a point from our side, this INR 25 is the FOB price. After this, there is an expenditure of around INR 2.5 per kg. So this is for the benefit of all the audience, we are sharing this. Now the fret differential between Indonesia and Brazil is a variable factor. It depends upon so many things. And this is a very -- from one period of shipment to another. So it's very difficult to give any thing to some...

So if I just may have a follow-up. So what you're saying is that, that means the sugar prices that you get, they are somewhat in advance, right? So we should not exactly go by what the international price of sugar is. But as previously mentioned, if you're getting $0.135 for March of '21, which I think is the current price, and assuming the same subsidy of whatever, 10,448, you should be fairly comfortable. Is that understanding correct?

Correct. Correct.

200% correct.

Yes. And the current prices are very much worthy from which exports can really happen.

Yes. And with the rupee dollar where it is, it's absolutely workable.

Okay. Really great commitment to shareholders. I just wanted to congratulate once again.

Thank you.

Thank you.

The next question is from the line of Varun Goenka from Nippon Mutual Fund.

Yes. Just 2 clarifications, sir. One, our ethanol capacity will get fully utilized by next year, like we're indicating 17 crore liters, 18 crore liters. The next round of CapEx, if at all, we consider, do we have land and to expand the same ethanol capacity? Will it be brownfield or will it be fully greenfield? And second, on the recent agri reforms, if you can have your view? Also, is there any effect on our company in any way?

So the land, et cetera, won't be a problem. And as we said, we are exploring. Our factories itself has some land. And today, with modernization, that is one, it doesn't take too much of land. So be rest assured there, that's not a problem. And at the agri policy, et cetera, see, they are mainly for people who sell in the mandis, et cetera. So as far as we are concerned, you have a lot more ability to connect with the farmer, et cetera, but nothing else from our side. Our business would continue as usual.

The next question is from the line of V. Rangan from Billion (sic) [ Billionloans ] Securities.

Congratulations for the excellent this one. And I would like to know what is the current stock available in quintals and what is the rate at which you have valued them? And what will be the current expansion this year, I mean, forward? And what would be the average rate of interest now that has fallen? Again, what is the rate of interest for the loan? Now previously, we were talking about the government giving all lots of -- I think you are thoroughly satisfied with the present government in terms of policies in relation to the past experience of the previous government. Could you say some highlights because they are very proactive, I think, like that.

We are holding stock of 5.5 lakh tonnes as of 30th of June and which has been valued at INR 29.90 per kg. In terms of interest cost, long-term funds, we are enjoying between 4.5% to 4.75%, the interest subvention benefit given by the Government of India as well as the State Government. Now as of now, we don't have any requirement for our short-term working capital. Maybe by end of August or first week of September, we will be net working capital positive. Whatever working capital is outstanding as on date will be paid by that period of time. So we won't be borrowing anything. Maybe by end of December or -- before 15th of January, we won't be borrowing anything. Now the current CP market is around 3.5% to 4%. The moment we enter into commercial paper market, we are a company that we should get funded at round 4%.

So current market conditions prevailing, Balrampur could get short-term borrowing at 4% for its working capital.

Current -- the farmers this on liability is almost everything you have been settling at the -- I mean, better than all other mills, correct?

Yes. I mean, as you've seen from our end, there is 0 payment due. Of whatever comes from the government goes there. And yes, we are almost at the top of the chart, I guess.

Excellent. Excellent. Current expansion anything this year?

No, not. We are contemplating various projects, as I've said from the beginning.

The next question is from the line of Bhavin Chheda from Enam Holdings.

Good afternoon to the team for the excellent results and outlook. Vivek, just on the next year tenders, how much of the OMCs have already ordered to the industry? And how much Balrampur has got from these tenders?

Bhavin, next year tenders will come out sometime in the month of September, October. August end, no and not even, September end, I believe. So that is when you put in the tender. Our targeted quantity, we've told you.

Okay. So the current tender all -- they run till December or they run till August?

No, November end. Whatever we bid for in the current tender, we are well ahead of our average supply per month. So we will complete our current tender in the given period.

Right. And regarding this bagasse which is sold in open market, so most of the sugar companies producing power in state reducing. So you see some resolution there because still, this is the cheapest form of power which states are procuring and if everyone starts selling bagasse in local market at someday that price has to go up, right? So what's the sense there? And you also said that you are in talks for litigation regarding that Cogen rate. So any development there?

Bhavin, that's a good point. We continue to engage. And we pointed out at everything you have said itself, there's being green power, et cetera. So not achieved any breakthrough yet either on the dialogue side with the government or on the court side. Unfortunately, due to COVID, hearings haven't happened. So that's still work in progress.

Right. And last one on the export subsidy. So next year also, the target is around 6 million. So you talked about the possible FRP hike of INR 10 and INR 2 on sugar MRP. So on export subsidy, when does that expire? And again, that needs to be reinstated for that volume, right? So where is the progress on that?

Absolutely right. The reinstatement there is the -- what one feels will happen because these are WTO compliant payments. So probably everything from the government side would get concluded...

September.

Middle September because of new season kicks in 1st October technically. So, I think, in the next 1 month odd, one should see all the policies come out.

So the industry is confident of same export duty reinstatment, right?

Yes, export subsidy reinstatement, yes.

The next question is from the line of Nikhil Goel from Shivansh Capital.

My question is, sir, what is the minimum selling price Balrampur Chini is selling in the market ex-mill price? What is the ex-mill price?

You want the current ex-mill price?

Yes, sir.

It is closer to INR 33. It's like INR 32.70, INR 32.75 around that range.

Okay. And can you just tell me if the MSP will be increased INR 2 and will the ex-mill price will also be increased?

Yes. That is the meaning of MSP increase, minimum selling price of sugar. So...

No, no. I'm asking if the -- like MSPs increase by INR 2, that is INR 33, then your ex-mill price will be -- also be increased?

No I don't think this will -- see, I always believe in the past giving you all the evidence for the future. So UP's price has been at INR 1 premium to the MSP in the past, INR 1 plus. So if MSP goes from INR 31 to INR 33, sugar prices should pick up to INR 34-plus. That is the barometric assumption.

The next question is from the line of [ Udit Gupta ], who is an Individual Investor.

Sir, my question is, sir, what are we looking at the mix of B-heavy and C-heavy ethanol in FY '21, sir?

We're going to tilt the balance towards B-heavy. It's still in planning stage, but probably 80% should be B-heavy.

Okay, sir. And sir, what is the processing cost of ethanol per liter leaving the cost of molasses?

Approximately, processing cost is INR 5.

INR 5, sir. Sir, this doesn't include the interest of the depreciation or the transportation?

Yes. Let Pramod come back. Yes, the interest, et cetera, might be -- and depreciation might be there, but it must be minimal. Pramod, processing cost on -- from leaving out raw material price of ethanol, INR 5?

INR 5 to INR 5.5.

INR 5 to INR 5.5. And does that include interest depreciation?

It does not include interest, but it includes depreciation.

Okay. And does it include transport cost?

Yes.

Including transport cost?

Transport cost of molasses.

Yes, internal transport?

Internal transport.

Yes. So it includes transport cost of molasses. It includes depreciation.

And sir, the transport cost of the ethanol to the OMCs, sir, that's separate?

No that's ex-factory, no? You're selling ex-factory.

Okay. So that's like -- that's not a cost to us?

No, that's not a cost to us.

We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.

So thank you, everyone, and we will continue to interact in this manner. And now on to Pramod. So if you have any other queries, Pramod and me are always there. Over to Pramod.

Thank you, everyone, for taking out your time and participating in the conference call. We are always available for whatever queries or questions you might have. Thank you.

Thank you once again, and keep safe.

Thank you very much. On behalf of Balrampur Chini Mills, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.