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

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

Thank you, Janis. Good day, everyone, and thank you for joining us on Balrampur Chini Mills Q3 and 9M FY '22 Results Conference Call. Today, we have with us Mr. Vivek Saraogi, Managing Director of Balrampur Chini Mills; and Mr. Pramod Patwari, Chief Financial Officer 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 included in the results presentation, which was shared with you all earlier. I would now like to invite Mr. Saraogi to make his opening remarks. Over to you, Vivek.

Thank you. Good morning, everyone, and thank you for joining us on Balrampur's December quarter results earnings call. I trust all of you and your families are keeping safe and in good health. I will initiate the call with an update on the current developments on the sugar sector, followed by our company's key highlights for the period under review. As for latest estimates from ISMA, Indian sugar production estimate has been revised to 31.5 million for '21/'22 against the earlier forecast of 30.5 million. This estimate is after diversion of 3.4 million tonnes of production towards ethanol. UP is estimated to produce 10.2 million this season against 11.1 million last season due to lower cane yields and lower recoveries along with higher diversion for ethanol. UP is expected to divert 1.3 million for sugar towards ethanol as compared to 0.7 diverted last year. On the other hand, Maharashtra -- production estimate for Maharashtra is expected to be higher at 11.7 million on account of increased area, better yields and better recoveries. Sugar mills in Maharashtra expected to divert 1.1 million tonnes for production of ethanol as compared to 0.7 million tonnes. Sugar production in Karnataka is expected to be higher at 4.8 million tonnes against 4.5 million tonnes last year. On the export front, contracts for about 4.5 million tonnes have already been entered into and, therefore, India should be able to comfortably achieve its target of 6 million tonnes of export. Therefore, with an opening stock of 8.2 million as on 1st October '21, domestic consumption of around 27 million, export of 6 million and estimated production of 31.5 million, the net depletion to inventory would be 1.5 million, therefore, making it 6.7 million. This would be the second lowest stock we are carrying around in -- carrying at the end of the year in the last decade. Hence, demand-supply situation remains fairly balanced. And we should continue to see the effect of that in form of former realizations as the season progresses -- as the year progresses. Coming to the ethanol segment, the government continues to clearly drive ethanol procurement to increase blending. Country had achieved a record pan-India blending of 8.4%. Further, government is committed to achieving a blend of 10% in the current season. Following the revised target of achieving 20% in 2025 instead of 2030, government is working on a policy to mandate flexible engines. Towards this goal of 20% budget is also proposed to levy an additional duty of INR 2 per liter on an unblended fuel. Our understanding is that if 9% blending is not done, then this INR 2 additional excise will be attracted. So that is -- the unblended fuel means below 9%. We welcome this move as it reaffirms the government's push for blended fuel, which will help India reduce its fuel import bill while increasing farmer income and tackle environmental concerns. Also in the latest tender, the government has given some incentives for manufacturers in supplying in deficit areas like Chattisgarh, Jharkhand, West Bengal. Pramod, Jammu Kashmir, et cetera. So all in all, it's showing the government's deep resolve in achieving the target of blending as we proceed. Moving towards the company's performance, BCML recorded an encouraging performance for the quarter on account of healthy performance from both sugar and distillery division. Sugar segment achieved a healthy performance into former realization. Distillery business had a strong top line and operational performance attributable to growing volumes and improved realization. I'm pleased to share that we have successfully expanded our distillery at Gularia by 40 KLPD, expanding our overall capacity from 520 KLPD to 560 KLPD. So Gularia has gone from 160 to 200. Furthermore, by November '22, we are on track to commission another 490 KL of distillation, which will take our capacity to 1,050. This is basically at two destinations: Balrampur and -- 330 at Bijapur and 160 at Balrampur. So that is the breakup of the 490, which is to be commissioned in November. This will enable us to produce 35 crore liters of ethanol including 2 crores of ENA, which means 33 crores and 2 crores. Right, Pramod? So our capacity will be 35 crores. 2 crores will be devoted towards ENA, 33 crores towards open market. Following the expansion, the performance of the distillery segment will be further -- following the expansion, the performance of the distillery segment will get strengthened and will be a key driver of growth for us. To conclude, I'd like to point out that Balrampur has been delivering strong profitability even in surplus years on the back of various structure changes in the industry. So as the demand-supply situation sustainably normalizes, it will be very effective including the -- so basically, we are playing our integrated model to ensure that in all times, our company delivers and enhances value. I'm pleased to share that the Board of Directors have declared an interim dividend of INR 2.5 per share, aggregating to a payout of INR 51 crores. I'd now like to hand over the floor to Pramod. Pramod?

Thank you, sir. Good morning, everyone. As you know, a detailed presentation has already been uploaded on the stock exchange as well as the company's website wherein all financial performance, including quantitative data has been given. So for the benefit of having a larger proportion of time at our disposal for Q&A session, we can straightaway go ahead with Q&A session. However, at the cost of repetition, we would like to state that our performance should always be seen on an annual basis. And in addition to that, our installed capacity of alcohol at all points of time will include around 2 to 2.5 crores liter of ENA production, which will hardly yield any profit. Thus profitability of ethanol division should always be worked out on the basis of net of ENA capacity that is around 33 crores liters from FY '24 onwards. I would now request the moderator to take it forward. Thank you.

[Operator Instructions] The first question is from the line of Pratik Tholiya from Systematix Shares.

And firstly, at the outset, I would like to compliment you and your entire team, specially Pramod sir, for putting up such a detailed presentation. And I think as far as disclosures are concerned, Balrampur is currently benchmark because not many companies are very forthcoming with very detailed disclosures and things for conference. Especially on the cost side, there is a full slide, which mentions a lot of details on cost front. How the cost is changing on quarter-on-quarter basis. So clearly, for disclosures standard, Balrampur is like a new benchmark for the industry and compliments to you and to Pramod, sir and his team for doing that. My first question is basically on the export front. We are seeing that the prices have gone below [ $0.18 ] recently. And we still have another 2 -- 1.5 million to 2 million tonnes of exports pending. And with the expectation of [indiscernible] doing at least 3 million, 3.5 million tonnes more, and we still -- we don't know how much it will do, but India is also the [indiscernible] 30.5 million to 31.5 million. So clearly, the deficit will not be as big as what was initially been forecasted. And therefore, the global prices have started to soften. So how do you see this? Because we still have 2 million to 2.5 million tonnes of exports still pending. Do you feel confident that this will -- the exports will happen because if it doesn't then the 6.7 million tonnes of closing inventory that you're stocking within the month, you might end up with somewhere around 8.5 million, 9 million tonnes.

So I'll answer one part. One -- Pramod, so what is your view on 4.5 million going to 6 million?

Pratik, we don't have the listing of the total contracts what has been executed so far. But whatever we understand from the market pulse that 4.5 million tonnes is the conservative number. And going forward on the basis of this prevailing raw sugar prices, maybe raw sugar will not be a major component in terms of further export, but the white sugar, refined and the low quality white can be a contributor. So what we have seen last year also, there is a perennial demand from various neighboring countries in terms of spot demand these days. So we don't see any challenge as far as the 6 million tonnes number is concerned. Raw sugar number may not go, but low-quality white and refined will definitely go. This is our sense.

So I'll just add to that. Basically, if you see -- if you rewind back a year to February last year, Pramod, I think we would have been at 3 million max on today's date. I don't remember. But achieving 4.5 million now seems to be an absolutely reasonable estimate. So there are a lot of small contracts, which go to Sri Lanka, Indonesia, et cetera. Having said that, even the global markets from here looks like trended up only. This is a correction definitely. But one feels that, that has also trended up. So in our view, 6 million is absolutely a real possibility. This is after checking with the international trade houses also. And hence, the depletion to inventory from 8.2 million to 6.7 million seems an absolute reality. And just to remind everybody, 2 years back, Pramod, we were at 14.5 million?

14.7 million.

14.7 million inventory, you're down to 6.7 million with an increased consumption base. With the 27-plus consumption base against a 25 consumption base, your inventory has moved from 147 lakh tonnes to 67 lakh tonnes. So that is where our bullishness on the firmness in the price comes from.

Got it. Sir secondly, in your opening remarks, you mentioned about this ENA contract, which we have to comply to the government. So I think that the ENA realizations have also corrected. So are these prices determined by the government on an annual basis in the way ethanol moves or it is on spot basis?

So ethanol, as I told you, be very clear what Pramod said, that's a cost-to-cost endeavor. That is for -- it's a kind of a levy, which the UP government takes -- ENA, sorry.

Sir, but my question was that ENA realizations have corrected to almost 20% Y-o-Y. This is a price which is fixed once a year by the government or this is on a spot changes, which changes every quarter or every month?

There is no price which is fixed formally for the ENA. It is around the INR 21, INR 20-odd, INR 20 mark. It remains there early. There is no 20%, 30% correction like that and all.

In your presentation, it was 25 -- 24.6% in Q3 of FY '21. Right now, it's 19.81%. So there's almost a INR 5 change.

This are the rates of GST. GST has gone up.

See Pratik, the current prices are around INR 20 only.

Exactly. Pratik, if there's INR 2, INR 3 correction of INR 2 crores, it's a matter of INR 4 crores we are discussing in our balance sheet.

The next question is from the line of Rajesh Majumdar from B&K Securities.

So sir, I had actually one question primarily. We have been seeing that the sugar recovery for the company has fallen in this quarter as well over last year's Q3. And last year's Q3, you had cited the red rot disease as a reason for the fall behind the sugar recovery. So this year, barring the late swing, there has been no such disease-related factors. So why has the recovery fallen, a. And b, if you look at it over FY '20, '21, it is coming down from 11.93 to 11.77. And if you assume that a similar kind of fall will happen this year as well, we'll end up at 11.7, 11.65 for FY '22. So are we to assume that the recoveries are falling in Eastern UP on a secular basis?

That's a very good question. So 2 parts to your question to answer. Pramod, he's talking of recoveries extrapolated on C.

Yes, pre-diversion.

Pre-diversion. So yes, then it looks like maybe we go to 11.7 million this year. The weather conditions have been very bad. Last 1 month, there is no sunlight, 30 days. As soon as sunlight comes, which we are hoping. The weather condition, on the net, they show an improvement and continued sunlight from the 6th of February. So that is the main factor this year. Disease, et cetera, is lower. So we are not so worried on the disease this year, but the weather conditions have been very, very bad. So if you see maybe at the end of the year, and this is a maybe from my side, that Balrampur's fall might be lower than everybody else's fall on a comparative basis. Yes, and results will be end of the season.

Right. Sir, and my second part was that is it a secular fall happening in the region going forward?

So what I'll do, since there will be many questions on cane. So Avantika, may I request you to just brief on the efforts of the company, which is on a structural basis on how we look to enhance quantity and quality, ensure sustained availability with better recoveries?

Thank you so much. So also to answer just to add to the part that my father was addressing about the recoveries, possibly having the lowest drop in comparison to the rest is, we had already last year unleashed a very, very robust game development program, wherein we had achieved 85% of our planting of cane in March. So that cane is yet to be properly and fully crushed at this moment, and we should be better off than anybody else, I would think in terms of our neighbors, of course. In terms of recoveries, once that scene comes into crush fully, again, we are going to be doing this and preponing planting. So this gives the crop an extra 1 month to grow and it saves us from these cruel weather conditions that we've been dealing with this year. So that's the first program. We plan to increase planting by 10% this year. So we want to increase the area -- sorry, we increased planting 15% to 20% this year. So area under cane, we want to increase by 10% next year, that would also consequently lead to higher crush. And we have already unleashed a very, very, robust, again, varietal balance, wherein, we are no longer going to be depending on just one high sugared variety, but we are going to be setting ourselves over 4 or 5, which are all up to the mark of 238. We should achieve this very, very soon, in fact, as also mentioned last year, I'm repeating my mention, 118 variety is something which we have aggressively gone towards and we are increasing that as we speak. That is supposed to have -- or supposed not -- I'm sure it has higher recoveries than 238. So that is very good news. We've been able to sell it across our areas. And you should see a result of that as well. Other than this, we have put in a state-of-the-art tissue culture lab, which is going to be servicing all the 10 units. Tissue culture is -- it's a way to multiply new varieties faster and also to keep them disease free. So we are not only multiplying newer variety, but we are also keeping 238 -- we are keeping the reinvigoration program for 238 as well. Other than this, we are also -- so that we never fall into trap of disease and we are able to protect our crop from any problems that might occur, we are doing a seed nursery program as well. Where every 2 to 3 years a crop becomes fresh in the entire catchment area of 3 to 3.3 lakhs per hectare. Rather than this, another thing we are focusing very, very greatly, we're testing upon right now is the tool management. The tool management has historically been very backward in Eastern UP area. Central UP is still all right. But Eastern UP area has been backward and that's why when you see the season start, we have slightly lower recovery, slightly lower yields. We want to change that, and we are putting a very, very big [ touch ] this year on it. So again, next year, maybe even start of season should be better. Other than this, we have also achieved the highest ever amount of autumn planting last year. We've achieved around 6% of our total area under cane as autumn planting. So at this time, where we are right now, where you are changing over from ratoon to plant, the autumn plant cane gives us a very -- it gives a shot in the arm, so recovery doesn't dip as much as it could have actually right now considering the weather conditions. Without sunlight, to be even getting what we're getting now is a big deal. And also, this crop tends to be disease free. And lastly, we have also raised 3 state of the art soil testing labs across our units, wherein the soil will be tested from all the catchment area and fertilizer nutrients, micronutrients will be prescribed in a tailored manner and according to the need. And it should have better results with lower cost to the farmer. That's it from my side.

So what we are doing, as you would have heard, is we are unleashing a full fledged cane research protection growth program, if I may say so. So this is a -- for example, in expansion, if you have to put up machineries, and our expansion is -- the investment is about INR 1,000 crores, you need to spend in cane to create sustainability, which is in a structured fashion. So that is also a very big program we are taking up in the company. So hopefully, or probably till now because of East UP, we've been falling short. But hopefully, in the next 1 or 2 years, you should see the differentiator.

Okay. So are we to assume that yields will go back to like 11.9, 12 or something which we have seen in FY '20 last, in terms of the pre-recovery yield?

That's what I said. Just hopefully, just wait for a year more. So we'll to -- let the performance talk.

Right. My second question was an allied question that we are talking about crushing 5% to 7% more cane during the current season. Now my -- 3Q is already flat, which is, some part of the field over. So we'll have to crush incrementally around the 9% to 10% more in 4Q? And as you already said that the first month has been impeded a little bit because of the lack of sunshine. So are you still confident that we'll be able to recover in the fourth quarter in terms of the crushing?

Yes. Fourth quarter and in April.

Some portion of crushing gets spill over from March.

Yes. And that is good. Until April, what -- we are very clear on that one till now.

So Rajesh, just to clarify, when we say 5% to 7% more, it will not be on a financial year basis, but on sugar year basis.

Yes, on a sugar season basis.

Sugar season basis.

That basically means it will, basically. Yes.

Yes, yes, so just wait it out a bit more. So when the need for cane comes in with big expansion and big distillation capacity, we hope to come in with both feet in and with open arms giving cane to the mills.

The next question is from the line of Vikram Suryavanshi from PhillipCapital.

Sir, only that about this reporting structure in quarterly, we have not seen the segment reporting up power. So going ahead are we reporting -- combining with the sugar or how is our view on that?

So as permitted by Ind-AS, the way the accounts are internally reviewed by the management. So that becomes an operating or reportable segment. We're taking that into consideration. And you are aware of the fact that Cogen is no longer operational in the off-season. We operate only during this season to support our manufacturing processes and the activities. So the Cogen activities has been combined with the sugar and the distillation activities has been combined with the distillery segment. We have just given the operational cogeneration data and financial data has been merged with the respective sees.

Got it. And in case of distillery, how much would be our capacity, which will be dual period out of the total capacity going ahead? Or are we still considering on that?

We have already commissioned Gularia distillery. With that, our current capacity is 19 crores liters. And by FY '24, it will go to 35 crores liter. Again, I would reiterate that within this 35 crores, 2 to 2.5 crores liter will be dedicated towards production of ENA, which will hardly yield any profit. And this ENA will be for discharging our UP state excise reservation obligation, molasses reservation obligation.

My question was on raw material side. We -- some of the capacity will be on grain based out of this and how much of that capacity would be? So...

Okay. Okay. So that out of 33 crores liter of ENA capacity, INR 5 crores will come from grain side. And 5 crores will come from juice and the rest will come from B-heavy side.

Yes. And I think what we are hearing recently that there has been significant increase in the transfer price for the B-heavy molasses. So what was it for us in this quarter?

So we increased the transfer size of B-heavy molasses from INR 7,000 a tonne to INR 10,300, which has become effective from 1st of October.

Okay. And was our export under MAEQ or it is without any government support and under any obligation?

Yes, we have exported 15,000 tonnes during the quarter, and this has gone without any support from the government.

The next question is from the line of [ Trilok ] from Aditya Birla Capital.

Yes, and thanks for the opportunity. First of all, I must also reiterate the fact that the disclosure and the detailed presentation is top class and maybe among the top quartile across sectors, not only sugar. Second, I just wanted to just hear your thoughts that you guys -- from a 2-year perspective, I know you've already announced your grain-based molasses. So do we intend to sort of reconsider the plan of further expansion because nearly 50% of the India's demand will be met from grain-based ethanol. So I just want to hear your thoughts on that.

So basically, as you know, we are a little bit of conservative people. So we'll first do this entire program in the year and pick up based on economics, how [indiscernible] comes in, what's the profit there? We'll be going for it next year. We are actively internally seeing that, but post commissioning of every expansion in the...

Sure. And last question is with regards to the export, when we -- do you think this could be last year of probably the exports from the country, given we'll be very tight in context of demand supply after this sugar season ends?

So it all depends. So therein you yourself are building in the best case for global prices to remain strong down the years. So, Pramod, if we see India over the last 3 years.

Sir, 17.5 million tonnes to 18 million.

17 million tonnes has been provided by India to the world market.

Correct.

I assume what you said is true and there are a lot of chances that being correct. Maybe if that happens, the world market, itself can get to a level where exports a little bit of 1 million or 2 million export if so needed, can be a very profitable proposition, if at all. So have I made myself clear India has exported 17 million in sugar.

No, I hear you. I hear you. Fair point.

And India vanishes from the market, 67.5 million is the opening stock. Assume you produce diversion is -- I'm just drawing a scenario next year, Pramod, [ diversion ] 4.5 next year. If there is a little bit of tweaking of monsoon in Maharashtra or something, and assume production comes down to 28 million, consumption production matches and you don't need to export or it just remain at 29 million and you need to export 1 million or 2 million it should go like in [indiscernible]

The next question is from the line of Falguni Thacker from Jet Age Securities.

Sir, what would be the cost of sugar before considering interest cost for the current sugar season '21/'22?

No, we don't give forward-looking statement. Whatever cost we have achieved for the 9-month period ended that has been disclosed in the presentation.

But sir, this would be known, right given that we know the sugarcane costs and rest costs are mostly same.

Ma'am, recovery is not known, no.

Okay, right. And what would be our expected distillery volumes for FY '23?

FY '23 maybe 23 crores to 24 crores.

Because we'll get a full months working in the franchise.

Okay.

We did have 23- 24 days, INR 2 crores, INR 2.5 crores should be [ in it ].

Yes, Pramod, that you said.

Okay. And just to ask the other way, I mean, I'm not asking the precise cost of production. On account of the cane cost increase would have gone up by INR 2.5 kg, right, this season?

Cane cost has gone up by INR 25 per quintal.

Yes.

Yes, so the cost of sugar per kg would have gone up roughly by INR 2.5 a kg, right?

That will depend upon the time of recovery.

You kindly wait for March, you'll get an answer. That's also, what we are saying is if you're talking of margin, basically, if I am to see the price of sugar last year in the month of January, right, it was INR 31.5. Pramod, do I recall correctly, [Foreign Language].

These are the figures sir.

But just check it, from it, we can tell you. So I remember, they were between INR 31.5 and INR 32.

Yes.

Today, you're at INR 34.5, INR 35. So you're already seeing the result of the inventory depletion, which we have briefed you on the call.

That's true.

We are seeing firm sugar prices and some volume improvement. So maybe, the cost will get known when it does get known. But we remain buoyant as we proceed into crushing -- this season's realization in April, May onwards, continuing from now and as we proceed into the future.

The next question is from the line of Achal Lohade from JM Financial.

I must complement here with respect to the presentation, very exhaustive and very interesting one. My first question is in terms of the bio-syrup, wanted to check your view in terms of have we already tested it? And if it is doable, how does that change in terms of our dependence on the grain for our Maizapur plant? And also with respect to the capacity additions in the future?

No, I didn't get your question at all. What are you asking, Maizapur is...

Storage of bio syrup setup, which industry is talking about?

So why should we do that? Our capacity is built on a certain amount of cane crushing daily. So the distillery size at a level where whatever I crush during the season, I can consume that in the distillery. The reason we have done that is also to test and play out this grain-based business, off season, we'll do grain based. So had we gone in for the bio syrup technology, we could have made that distillery at 200 KL instead of 330 KL. We could have stored the syrup. So we're not looking to do that. We're looking to use the capacity in the off season for grain.

Fair point. That is for the current expansion plans what you have. But if this was to be viable alternative, would that mean that we will go for further distillery capacity additions? Would that be a fair assumption?

So I would say that we would look at grain, let the things play out. And we have enhanced our distillery to a level where as per the current configuration of the factories, it is not fully utilized. So mostly, I would see any more business coming could be through grain because we won't want to sacrifice more sugar also. So everything is doable. It depends on the economics. So let us see the economics the way they play out.

Right. If I understood correctly, you are saying the current distillery capacities are keeping in mind the cane crushing capacities and they are kind of fully utilized. If further expansion, it will be more from grain or the way Maizapur has played out. Is that -- have I got it right, sir?

Okay. Just forget all what you said and listen to me. There are 3 parts to this. One, how much of sugar do you want to make? In bracket, how much do you want to sacrifice? So only now if you want to sacrifice more sugar, would you put up another distillery on the juice level, right? That would cause you to sacrifice the sugar. So we are already reaching a very big level of sacrifice next year because Balrampur also will be partly run on juice, right, Pramod? Maizapur fully run on juice, a lot of the heavy capacity is available everywhere. So therefore, there is a certain level of sacrifice you would have reached. Our view, therefore, on sugar prices from the next year onwards is also not bearish at all. So you want to, as a company, produce that much of sugar, right? So therefore, more distillation capacity can be looked at if grain business is viable. We get that being conservative, we want to let 1 year run and then see it.

Understood. That's very, very clear, sir. If you could help with a couple of data points in terms of what is the landed cane cost for the quarter gone by?

Yes, Pramod will answer that.

Just a moment, 368.

Yes, 368. Okay. And in terms of this distillery volumes, you said 23 crore liter, 23 to 24 for next year. In the last con, you were talking about 16.5 or 16 crore liters thereabout for the current year. Would we be able to achieve that? Or you think there could be some delay or push in the following years?

FY '21, we achieved 16.5 crores, including ENA. And we are hopeful of achieving 16.5 crores to 17 crores in FY '22. We have already achieved 12.5 crores in 9 months period.

Pramod, are you talking dispatch or production?

Dispatch.

Okay. Yes. Right, dispatch. Yes.

Understood. And this 16.5, 17 will include 2.5 crores liter of...

FY '22, 2 crores.

FY '22, 2 crores. Sir, can you help us understand what is this exact obligation? Is it 18% of the normative calculation?

Yes, yes. You've got it right, 18% is normative.

Right. But in that case, like this number looks fairly high in the following year. So this 2, 2.5 crores liter is basis is 18% or there is a cap to [ digest much ].

No, no, it's 18%. Our calculation is perfect. Out of 2 crores, 2, 3 lakhs lower only not higher.

Understood. And in terms of the update for this cogeneration case, where are we? And since we are kind of now rework on the segment disclosures, does this also mean that this possibility of me having the kind of profitability contribution from cogen is gone?

So the case despite our best efforts, we don't get it on hearing with COVID, some excuse or the other. We are trying our very best there. And what was the second, Pramod?

Achal, as far as the profitability of the cogeneration segment is concerned, it will continue to be there. I'm not commenting on any numbers, and it will get clubbed with the sugar division and the distillery division.

And we get time to sell bagasse to get the revenue, which is better than converting into power, owing to these revisions -- downward revision of the tariffs. It's not like you know...

Sorry, sir, please complete sir.

That's all, that's all from me.

Okay. So I just wanted to understand this bagasse selling. Because what is true for us will be true for the entire state. In that case, what is the kind of demand supply we're looking at for the bagasse, where the user industries are? What their capacity, their requirement for bagasse is? How much is met by industry, et cetera, et cetera?

Boss, we don't do so much of research in terms of this, we know who our buyers are. It's basically paper and pulp units, and they are very -- some of them are very close to us in terms of location and we try and get the best price out of them. This year, we got a higher price than last year.

Right. No, where I'm coming from, sir, is currently, what we are realizing probably would be between INR 1,700, INR 1,800 per tonne for bagasse. Could there be a downside risk to that number?

No. Next year, we are seeing it up. Last year, I don't remember exact figures, we are going to get a higher realization by at least INR 200 to INR 300 a tonne this year. And in the next year, our cogen -- our juice business and the grain business would require bagasse from our factories only. Therefore, having lesser quantity to sell, we should get a much better pricing.

Understood. And just last question. In terms of -- you talked about 5% to 7% higher crushing for the sugar. But if you could help us in terms of assuming all normal for the current coming year given our plants with respect to the varietal change, the plantation area overdrives. In terms of the cane crushing volume for FY '22 and '23, if you could help us with that, sir.

So we just told you for the current season, which is on -- which is...

From a fiscal year perspective, fiscal year.

That Pramod said, 5% to 7% higher. And next year we can't...

For the fiscal year?

So fiscal year, Pramod, you'll...

Fiscal I don't have the figure right now.

He'll give it to you. We talk crushing season. Next year, definitely, based on what Avantika told you and our very, very concentrated effort, we are hoping for a much, much better year. Yes, so we can have better ideas to get in August where the entire planting data and monsoon has largely played out. Yes, some early data will be available in May -- in May.

May, okay, understood.

Because [indiscernible]. Yes.

The next question is from the line of Manish Ostwal from Nirmal Bang.

I have only one question because most of the questions already answered. The end of ethanol production from B-heavy route for every 100 quintal of sugarcane. So because since we are now talking about aggressive diversion of sugarcane towards ethanol production, so that will result in the impact of the overall company profitability. So what is the end movement in that space sir, could you give some indication over there?

Will be in the region of around 31.5% to 33% recovery. Recovery of the ethanol from B-heavy molasses will depend upon the level of sugar [ sack's prices ].

It's closer to 33%.

Not for us, it should be around, yes.

Closer to 33%, just slightly.

For us it should be around 33%.

33% for our company, yes. Closer to 33%, just slightly dip.

And in terms of -- you always say, sir, we should look at our performance on a yearly basis. So in terms of cost of production of ethanol. So apart from the sugarcane, what are the other variables which move in a high volatility or the such variable?

Chemical.

So other than raw material costs, you can make some inference with the last year's number. And for the B-heavy transfer pricing, we have already updated you that we have decreased it from INR 7,000 a tonne to INR 10,300 a tonne.

The next question is from the line of Jignesh Kamani from GMO.

Just a follow-up further on what Achal has asked on the bio syrup. So what [ Rajesh ] commented, that the bio syrup can be stored throughout the year with 1 years of shelf life and it should be easily transported? So as you've been small distillery, which doesn't have independent distilleries can cover part of the sugarcane into bio syrup, say 30% to 40%? Will it increase the availability of bio syrup, and [indiscernible] technology level to be able to use this, I can say [indiscernible] and run for -- a higher number of days on the sugar over bio syrup, or you can increase the distillery capacity?

We've answered that. We've answered that.

No, I'm not talking about your increasing the consumption. I think, bio syrup, like right now, you're consuming the molasses.

I don't know the answer.

So if bio syrup is available, can you use that to increase your capacity without increasing your sugarcane capacity or sacrificing sugar?

Which we have already spoken about our road map. As of now, we are not looking at this segment.

Sure. Second question on the Brazil. Last year, there was a heavy draught and hence production in Brazil got impacted a lot. Recently, there's has been enough, I can say rain in the Brazil. Do you expect that plantation the Brazil and the sugar production will be increased a lot in Brazil, at least from next year onwards which will impact the global sugar supply?

We are not very expert as far as the global scenario is concerned. But whatever we understand looks like Brazil can go to a level of around 34 million tonnes of production mix.

Much if India is out of the market.

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

So my first question is on the Maizapur unit. We are to understand it is based on cane juice and grain. Will only that Maizapur unit, what will be the max revenue at a full capacity operation and what could be the EBITDA on that?

We can't...

Anupam, we have...

Capacity you can give.

Yes, we have spoken earlier also, that it will have a potential to generate around INR 650 crores of annual revenue.

And of that, can you assume an EBITDA margin of like 45% to 50%?

No, we can't answer that.

The EBITDA margin will vary depending upon the many factors, including the transfer pricing and the cost rice as well as the cane juice. But again, I would like to say that, you kindly visit the stock exchange site, wherein we have said that it will have a payback period of 3.7 years.

3.75 years. Right, very good.

Okay. Okay. I'm asking from the point of view that right now, what the margin is excluding the transfer pricing effect, will you dilute the margin going forward with cane juice mix, and grains, or it will that be of when you said, question was from that angle?

We don't look to put up new money in businesses, which in our sector dilute margin. So trust us on that one, that is our calculation.

Okay, sir. Okay, sir. And my last question on the associates, that we decided to sell off our stake. How much would cash flow can that generate and what could be -- if there is as all any profit from that?

Anupam, Board of Directors has just approved the disposal of our investment. So in due course of...

As the transaction happens...

Yes, we will let you know.

Yes.

The next question is from the line of Gangadhara Kini from Elara Securities.

My question is at what price level of sugar would you consider not diverting to ethanol? Because at some point, if sugar becomes extremely profitable, then there's no point in converting into ethanol, right?

So the truth is if you don't divert into ethanol, you will produce more sugar, which will dampen the price. So there is a blend and a mix which everyone decides. And we would try to create every -- at the beginning of the season, a best case blend for the company.

Okay. Now my direct question was, let's say, sugar prices go to INR 40 per kg. Would that motivate you to not sacrifice sugar for ethanol?

Okay. Let me attempt to answer that directly. If everybody in the country is having ethanol capacity sees this price of INR 40 and stops diverting to ethanol, you will make 3 million, 4.5 million tonnes of more sugar, which will ensure you don't get INR 40. So as I said, this price will be available, if there is no surplus. No surplus is going to be owing to diversing into ethanol. That ethanol price is being I would say, to the best of my understanding, the government of India has taken a very pragmatic view on the ethanol pricing. So having sort of -- you can't look at just 1 portion. That's what I was trying to explain to you. So if sugar goes to INR 40 everybody puts up, everybody stops making ethanol, sugar will come back to INR 35. Am I clear?

We take the last question from the line of Suhas Nayak [indiscernible].

Congratulations on a very nice presentation. I have one question. When you say -- you said you'll wait for -- you're being cautious and wait for a year before taking further call on grain based. So what are the unknown factors right now, which you are not aware of right now or which can be potential risks which is why you're planning to wait for some time before taking fresh call on further investments.

So it's a good question. The whole thing is there is a limited amount of capital and we want to put up at a certain point of time, having undertaken such a large expansion of sugar and distillery together. So we just want to give it some time, one. And two, we just want to run the grain business for some time. So like we've run sugar over years, grain we'll be doing for the first time. So it's just nothing, we just want to wait a little before spending more. There is no large variable one is grappling with our uncertainty. So it's management bandwidth, we want to -- we won't take up as much as we can do very well.

And just to add, in January '21, we were at [ 360 K in sugarcane ]. So we are moving to 360 to 1050.

Yes. And maybe just one more question, last question. Is the kind of cash generation you are looking at going forward, are you planning any related diversification, maybe chemicals or something right now?

We are -- as a company, one keeps evaluating various opportunities. So as and when something comes up, everything is at the drawing board stage yet. As and when ideas fructify, the Board will deal with it and everybody will come to know. But yes, one keeps dealing with ideas.

Thank you very much. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments. Thank you, and over to you all.

Thank you, everyone. Thank you for being with us on this call. Any more clarifications, me and Pramod are there.

Thank you so much.

Thank you very much. On behalf of Balrampur Chini Mills, that concludes this conference. Thank you all for joining. You may now disconnect your lines.