Dhampur Sugar Mills Limited (500119) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Welcome to the Dhampur Sugar Mills Limited Q1 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agarwal, Head Institutional Equities at SKP Securities Limited. Thank you, and over to you, Mr. Agarwal.

Good afternoon, ladies and gentlemen. It's my pleasure to welcome you on behalf of Dhampur Sugar Mills Limited and SKP Securities to this financial results conference call. We have with us Mr. Gaurav Goel, Managing Director; and his colleagues, Mr. Anant Pande, CEO; Mr. Susheel Mehrotra, CFO; Mr. Vinit Gupta, [ EVP ] Finance; and Mr. Akshat Kapoor, EVP Finance. We'll have the opening remarks from Mr. Goel, followed by a Q&A session. Thank you, and over to you, Mr. Goel.

Thank you. A very warm month. Welcome to all of you at Dhampur's Q1 FY '23 Earnings Call. I will now ask our CFO to go over the key points of Q1 FY '23. Over to you.

Thank you, sir. Ladies and gentlemen, a very warm welcome once again to our Q1 FY '23 earnings call. First of all, I'd like to brief you about the current industry scenario as for the latest estimate of July '22. As of current estimate that sugar production is 36 million tons net of estimated sugar sacrifice of about 3.4 million tons in favor of the ethanol in current sugar season for '21/'22. The government allowed the export only through the pandemic and a fixed on [indiscernible] quantity of 10 million tons for the entire season on 24th of May 22. And subsequently, we expect approval of 1.2 million tons for the further export very shortly. The sugar exports have helped balance the entire sugar market. And as a result, there are no upward or downward spike in the sugar prices. The estimated sugar stock will be about 6.73 million tons at the end of sugar season as on 30th September '22, which is equivalent to about 3 months of the conversion of the country. 4.5 million tons of sugar production is expected to be directed to ethanol from the cane juice and B-Heavy molasses juice in the sugar season '22/'23 as compared to about 3.4 million tons estimated in the current sugar season. After accounting for the reduction of this 4.5 million tons in the sugar production through the cane juice and B-heavy molasses route, the sugar production in season '22/'23 at around 35.5 million tons of the sugar and [ Alcochem ] would be around 27.5 million tons. Therefore, keeping a surplus of about 8 million tons which will be available for the potential exports in the next season. Now coming to the performance of the company, we had our Board meeting to approve the Q1 FY '23 results yesterday on 27th of July, and I'm sure you have had the opportunity to go through our results. The company had crushed 7.18 lakh tons of sugarcane and produced 0.57 lakh tons of sugar in Q1 FY '23 as against 7.89 lakh tons crushed in the previous year corresponding quarter and 0.88 lakh tons produced in the same quarter. And I'm happy to inform that Dhampur plant crushed 244.29 lakh tons of cane in this year -- in this season, which is high ever crushed by the unit. Our recovery has been 7.93% net of sugar sacrifice for B-Heavy and syrup that would be for the ethanol production. The gross recovery has been 12.65% in Q1 FY '23. The sugar inventory is 1.39 lakh tons, including raw sugar of 0.04 lakh tons, valued at about INR 13,850 per ton. Sugar sales have been 1.23 lakh tons, including raw sugar of 0.31 lakh tons in Q1 FY '23. And our average sugar realization in the quarter has been upwards of INR 34,520 per ton. And the raw sugar realization has been INR [ 43,470 ] per ton. The company produced ethanol from the sugarcane syrup as well and 1.76 lakh tons of the cane was directed to ethanol production from the syrup. The ethanol produced from syrup was 148.71 lakh liters. The company's proposed disciplinary expansion plan is progressing as indicated earlier. And as informed in the last call, this will produce -- this will be a capacity of about 130 KL per day of C molasses, which will have a dual feed capacity of 100 KL per day on the grain. And post expansion, the total [indiscernible] capacity will stand at about 500 KL per day on B-Heavy, including 100 KL on the grain. The financial closure for the project has already been achieved. I'd now like to take you through the financial performance of the company for the quarter ended June 22. Our consolidated performance, the revenues have been about INR 828.9 crore, which is higher by 52.32% over the corresponding quarter last year. EBITDA has been INR 86.9 crore, higher by 23.3% over the corresponding quarter. The PBT is INR 57.4 crores, which is higher by 35.7% over the corresponding quarter. The profit after tax is at INR 39.3 crore, which is higher by 26.4% over the corresponding quarter. The cash profit is INR 60.3 crores as against INR 37.6 crores, which is again higher by 26.6%. Our stand-alone performance were revenues from operations during the year stood at INR 819.5 crores, which is higher by 50.6% over the corresponding quarter. EBITDA is INR 83.3 crores, higher 18.1% over the corresponding quarter. PBT is INR 53.8 crore, higher by 27.2%. Profit after tax, INR 35.7 crore, higher by 14.8%. And cash profit, INR 56.7 crores against 47 point -- INR 56.7 crore against INR 47.6 crores, which is again higher by 19.1% over the corresponding quarter. The company's performance improved mainly due to higher sugar sales by 0.37 lakh tons, which is at 3.69 lakh [ imports ] for the current quarter and higher sugar realization from INR 32,479 in the previous year corresponding quarter to about INR 34,520 per ton in this quarter. Our current ratio now stands at 1.26x. And long-term debt to equity is 0.25x Let me now take you through the business-wise performance. The stand-alone performance of our share of revenue from the sugar business is marginally higher at 56.4% as against 54.8% in the corresponding quarter last year. From [ power ] business, it is slightly lower, 4.5% versus 7.2% in the last year. Ethanol business is 14.8% versus 15.6% in Q1 FY '22. Chemical is 9.4% versus 9.7% and potable spirits have again the higher revenue at 14.2% versus 11.8% in the corresponding quarter of the last year. Our share of profits from the sugar business in the current quarter is 32.2% against 8.8%. Power is 20.9% versus 23.6%. Ethanol is 32.8% versus [ 32.2%]. Chemical is 13.4% versus 13.9%. Portable spirits have shown improvement by reduction of the segment loss. The company has made a repayment of long-term debt of about INR 10.2 crores in this quarter. And the long-term debt outstanding as of 30th June is INR 254 crores. So these are our financial numbers on the broad level. Thank you so much, and we'll be happy to answer any questions that you may have.

[Operator Instructions] The first question is from the line of Nimit [indiscernible] from GT Advisory.

Hello. Can you hear me?

Yes, we can hear you.

Congratulations, this is your first set of results and conference call after the subdivision of the company into 2. I have a couple of questions. First of all, your presentation was very exhaustive. So thank you for that. It did not contain any details of your debt. So if you could provide us with some information on your debt, long term, short term, what part of it is under this interest subvention, et cetera? The second question is on ethanol. Your plant is expected to be commissioned, the 130 KLPD before the season starts, ethanol seasons. During the upcoming season, that is '22/'23, will this plant produce about 14 crore liters through the molasses route apart from whatever additional it produces from the grain route. Is that a fair assessment?

Yes. So after you ask all of them, I'll answer after them.

Yes. And the last question is on cane. What is the initial outlook for cane in UP and in our command area in particular? Are we looking at a degrowth, growth, substantial growth, whatever. It's a bit early, but it's still...

Thank you. So I'll start with your first question. Our long-term debt is INR 254 crores as of 30th June 2022 as well as working on capital growth. As you know, that varies Q-on-Q. So obviously, Q3 and Q4 for us is a higher stock, Q1 becomes slightly lower. But as of 30th June 2022, our total working capital drawn was INR 550 crores as our working on capital drawn, which obviously will come down as of -- once we finish Q2. On your other question on our expansion, our expansion will be ready by 1st of January 2023. So we will lose out on about 2 months. And that was mainly because of certain issues on commodity prices that happened in March, April and May because of which our project got delayed by about a month. So 1st of January is when the expanded capacity is expected to come on stream, okay? On the cane side, as of now, the rainfall seem to be normalish. So we expect that came to be slightly higher than what it was last year. But in the Q2 call, I'll be able to inform you better with numbers because surveys are still on as we speak.

The next question is from the line of Sanjeev Kumar Damani from SKD Consulting.

Am I audible, sir?

Yes, sir, you are.

Sir, congratulations for a very good set of numbers, and thanks for exhaustive presentation. But for the first time, I noted that you have not mentioned the valuation of the sugar inventory. Otherwise in your presentation, you always mentioned the rate per kg as you assess the -- I mean for the closing stock on the quarter. So can I know the rate at which it is being valued on 30th June?

Sorry, I think that we missed that point. From Q2, we will make sure that is there. So our valuation of sugar stock as of 30th June is [ INR 30.85.]

[ INR 30.85 ]. Now I want to learn from you that, sir, when we crush 1 ton of sugarcane, we get how much liters of syrup? And how much liter of syrup, I mean, this 1 kg cane can make ethanol directly? So I know the percentage can vary on the yield basis, but can you give some rough estimates so that we can take it into our calculation?

So basically, what you should assume is that in canes or in cane or the total sugar what I would get is at 10% the yield on [indiscernible] is about 650 liters.

Liters? Liters, right, sir? 650 liters. From 1 ton of cane?

On 1 ton of cane basis, the [ increased ] sugar, I would get at 10%. [Foreign Language]

Okay, sir. And in this case, you are not deriving any sugar survey directly need syrup to make ethanol, you are not recovering any sugar from this syrup. When we say that...

Right. [Foreign Language]

Sir, secondly, in the closing stock, you are not mentioning molasses as on this -- the molasses that you hold. So that -- I mean, the valuation of molasses can be assessed. And secondly, I mean, we do not know exactly how much liters of ethanol you are still going to make in the next quarter and quarter thereafter. So because of the stock of the molasses, if you have sufficient, then you can run for 6 months. So can I get some more idea about it as to the...

Again, you have to realize that we don't have to run from 30th June from 6 months. We have to only run for 4 months. But after that, that plant will start. And the new [Foreign Language] that will come back to us. So we have got sufficient stocks to run through the whole year.

Okay. Sir, can I get -- you have some closing stock of 12 lakh liters of ethanol right now as per the presentation, so how much more you are going to make? And will that be suffice to complete the obligation of last contract that we have taken with OEMs, please?

Yes. We have sufficient stocks to run our plan for the next 4 months till the time we start our next season. In that, we have B-Heavy molasses of 0.69 lakh tons in stock.

Okay. So how many more ethanol liters that we are going to make in this next 4 months? 5 lakh we have got already, sir, and how much more we will make up to...

So for each [indiscernible] we will do about 2.1 crore liters is what we will supply over the next 4 months.

Next 4 months, 2.1 crore will be net more supplied from 1st July onwards?

Yes.

Coming to the last question about portable spirits, you have inventory of 18,903 lakh cases. So here, also our obligation of supplying on -- based on our levy quota, is it over or you are still going to supply more in next coming quarters after June?

No, it will still be more and it will be done even in the next 3 months also.

Then the entire levy which we were supposed to give to them will be fully utilized in this?

Sir, I hope so, sir.

The next question is from the line of Shailesh Kanani from Centrum Broking.

I had a couple of questions on international front. Recently, we have witnessed that raw sugar prices last with the extend to 15 days have seen quite a lot of correction in spite of Brazil production, not looking that great. Can you throw some light on those figures and your view on the same?

Yes. So even we've also seen in the last about 10 to 12 days, we've seen New York really coming down. And that is in a region of 2. So one is that crude prices that have started to come down. That is why people believe that Brazil will start to produce more of sugar because crude being down. That is one of the reasons. Secondly, it has also been because India is seeing a very big drop for '22/'23. So these are the 2 reasons why we have seen sugar prices globally dropping over the last about 10 days.

Okay. So when do you -- just carrying on with the same question, when you say that we are seeing a good crop for '22/'23, what are the estimates over the market expectations on that front?

So see, as we spoke about earlier, that's about 8 -- 7.5 million to 8 million tons of raw sugar is what we believe will be in surplus in India in FY '22/'23. That is sort of a quantity that India will have to export next year. So we are in touch even government is aware of all these numbers. And they are fully -- so we are in dialogue. They have been very proactive, as you all know, for the last about 3 or 4 years about the exports, about blending. So we are very sure that they will come out with an answer as to how India will evacuate this 8 million tons next year.

Okay. So just drawing a picture, supposition, and I think right now the rates are up [ 17 ] points around holding around [indiscernible] over the last couple of days, So that would not be remunerative either for [ light job ] players in UP or on coastal region, right, be it Maharashtra or Karnataka. So what other avenues do you think we have just in case if the international prices don't improve from here on? What do you think about different revenues for producing this 7 million, 8 million tons, whatever the figure may be, going ahead of excess inventory?

Shailesh, you know, we have seen this over the last about 3.5 years, right? Right now, it's still early days to say whether New York will go up or not when we start to export at that point of time. But as I said, if you see apart from last year when there was no subsidy given by government to us the previous year, the previous year to this, if we talk about 2021, they gave us 6,000 per ton to export. And the previous year, prior to that, they offered us 83,000 So they are also very proactive and they are seeing what is the global price, what is the overall COP at that point of time. So I'm sure that we'll come out with an answer, but there is no option for India but to export 8 million tons in FY '23.

Okay. Because I believe that export subsidy is more [ local ] to be traveling given that WTO ruling. Do you think that can still come in?

Yes. So see, there are lots of ifs and buts. But as I said that we are still very early in the year, right? Right now, exports will only start in the Q4 of FY '22. Let's talk about what the prices are, see, India -- the world needs Indian sugar. Whether they need from us 6 million tons, 7 or 8, anyone's guess. Even for '21/'22, India has already done exports of about 10 million tons and [ 1.2 ] [indiscernible] is what we'll -- we'll do exactly a year back, when would not have ever expected India to export as much as to what we all have done. So there is a global shortage. We'll have to wait for about 1.5 months more to see what is the final crop of Brazil. And then we will know how much of sugar India can export next year. 6 million tons is still a global shortage, which only India can meet.

Sir, second, on realizing on the domestic front, we have seen a flattish rates for Q-on-Q. Any color you can throw on that? What is the outlook you'll see prices shipping at domestic market?

You see, I have said it even earlier in my earlier calls, I believe the prices to stay pretty much stable. We are right now at about [ 34.5% ] to [ 35% ]. I would see just about $1 plus or minus. For me, I don't expect prices to drop down to [ 42 ], and I'm talking about North India as of now, not about West. So I expect prices to stay within that range of about [ 34 to 36 ] is the price range that I see for the next 3 to 4 months.

Okay. Okay. Fair enough. Sir, last question from my side. I believe in some reasons we have already reached around 11% of blending. So how -- just how has been the outlook on -- or how has been the offtake from the OMC side?

[indiscernible] I mean I think that support that we have got from government and from OMCs have been very, very good. We are already speaking about taking it higher. As of now as of 30th June, the average blending has been about 9.8% for India-wise, which is excellent. [ That been said ], they have already allowed going to 11%. Now we also were speaking about going to 12% next year. Because as you know, the expansions are happening both on the side of the sugar side and also on grain. So to achieve even 20% by 2025, this has to be a gradual increase, this we have to do. I think that we are all geared up now to reach 20% by 2025.

Okay. Fair enough. Sir, [ another ] question. Sir, what is the current ethanol production capacity India-wise? And how has it been for last year? How is it [indiscernible]. If you can just talk about the installed capacity?

Yes. So for FY '21/'22, ethanol has been about 460 crores liter is what is for FY '21/'22. For '23 -- FY '22/'23, we expect it to go up to about 550 crores liter.

Okay. So that is what we are talking about blending, right?

Yes. That is what will go to the OMC.

Yes, my thing was that I wanted to know the installed capacity India-wise. India-wise, what is the installed capacity of ethanol per phase? And how is that shifting? What kind of capacities are coming up in the phase.

Currently, it is 450 crore liters. Next year, it will grow to 550 crore liters.

[Operator Instructions] The next question is from the line of Pratiksha Daftari from Aequitas Investments.

So my first question is regarding the ethanol profitability. So we've seen some big debt. I just wanted to understand what is the transfer price for molasses this quarter vis-a-vis last quarter?

Could you please repeat the question?

Transfer price.

Okay. Transfer price for the feedstock were last -- I mean, it's basically considering the market potential. And the last year, the price was about INR 800 per quintal. And this year, it is INR 1,350.

So would this be the key reason for profitability impact? Or is there anything else?

Yes, you're right, this is the impact.

It is basically on transfer price where we actually see 2 things: the cost of gain and the price of sugar that we can get out of sugar itself. And on that basis, we have finalized transfer price.

Okay. Okay. Understood. And if you could just give the detail of the volumes exported during this quarter and average realization for exports in this quarter?

We have exported about 32,000 tons in this quarter and realization has been about INR 33,470.

Sorry, INR 33,400?

INR 33,470.

The next question is from the line of Nimish [indiscernible] from GT Advisory.

Just a follow-up question. In your presentation on the last slide, cost trends, et cetera, you talk about growth focus: ethanol and chemicals. So on ethanol, yes, you've clearly specified everything, your expansion. What are your plans on the chemical side? Are there any plans that you wish to discuss or share with us?

So still slightly early days. I'll be able to perhaps offer you a better light on that. But I think that the chemical side is one thing that we've paid now studying for the last few months. As to what next for Dhampur as a company, we will have doing basic chemicals for the last 20 years. But now what next? So that is the plan that how do we get into specialized or we don't. So that is a study that we are doing as we speak. We are hiring experts on that to try and help us if we really believe that, that is the field that we want to go into. So specialized in chemicals is one area that Dhampur wants to explore over the next 6 to 12 months. That is why, as you also know, that we've hired a new CEO whose expertises are on that side. And we hope that he help us plan the future for us on that front.

[Operator Instructions] The next question is from the line of [indiscernible] from SR Industries.

Yes. My question is Dhampur or Dhampur Sugar Mills [ that ] include Dhampur Bio Organics and Dhampur Sugar Mills. So could I know when Dhampur Bio Organics will be listed in the stock market? And what is the dividend that -- you didn't mention any dividend that you are going to provide to the investors?

So on Dhampur Bio because it is separate company now, I can clearly say that all the papers have been filed with the stock exchanges. And we hope it is done shortly, but we cannot offer an exact time, but we are offering -- but we do believe it can be -- why don't you tell us [indiscernible]

On the listing of Dhampur Bio, the [indiscernible] principle approval has been received from the stock exchanges. Now the request letter has been filed with the SEBI. And in the normal course, they would take anything up to 1 month. So it is expected by third week of August which will [indiscernible].

Okay. And what about the dividend that -- for the June quarter?

Are you talking about Dhampur Bio?

No, Dhampur Sugar Mills.

No. So Q1, so we have known dividend that was proposed or approved by the Board for dividend in Q1.

The next question is from the line of Asha Motwani, Individual Investor.

Congratulations on a good set of numbers. I just have one -- a couple of questions. One is, I wanted to understand what is the pricing for power? I see there's a small dip in the realization from [ 3.75 ] to [3.59] in the current quarter. And my second question is in terms of pricing of raw sugar in the international market. I wanted to understand what is the cost of production, if you will give me an idea of cost of production of raw sugar in Brazil vis-a-vis what the current pricing is. So if you could just throw some light on that.

Yes, sure. Thank you. Power price is slightly lower because, as you know, that we have got 2 plants, which supply power to the grid. Rajpura plant, the power rate there is 4.1 per unit. And in the Dhampur plant, it is 3.1. Our Rajpura plant because it shuts slightly earlier than last year, that is why you have seen a slight dip in the overall price of power that we got for Q1. On the raw side, Brazil's sugar price is half of ours. So that is why the costing is exactly half of ours. So our costing of raw comes to about INR 28 to INR 28.5 per KG. Brazil is at about [ INR 20 to INR 21 ]. I'm talking about India -- I'm talking about as per our own rates, not as per riyal.

Right. So okay -- so that's -- so would you have a sense in riyal per ton what would be the costing?

So because the riyal has also fluctuated a lot, right, so riyal has depreciated a lot in the last about 2.5 years. So I really don't have that exact number, but I can have it worked out for you.

[Operator Instructions] The next question is from the line of Rajyav Sonthalia from Astralit Investments.

Congratulations on a good set of numbers. [indiscernible]

Sorry, but I can't hear you, Rajyav. I can't hear you.

Sir, if you're [indiscernible] your phone, probably you would have to speak directly from the handset one?

Now?

Yes, that's better now.

So congratulations on great set of numbers. Sir, my question is what on the industry side and [indiscernible] feeling the same order in term of ethanol exports. My question is considering how much ethanol has being diverted, how much of a sugar production has been diverted towards ethanol, unless we said a few years ago also that the ethanol production on a yearly basis [indiscernible] of massively in the previous time. But overproduction in the current inventory will eventually decrease to your [indiscernible] every company and the industry as a whole should carry. So although this 10 million tons was anticipated as a nonevent, can we still see the theme playing out where eventually in 2, 3 years, the industry won't have enough sugar to export and whether it's banned or non-banned and we will only be left with our buffer stock for the next 4 or 5 months in our planned living stock.

Fair point again, but we have to realize one thing, the government banned exports only after India exported 10 million tons. Prior to that, it was under OGL exports were happening. Government had a slight sort of an issue that India shouldn't fall short of sugar for next year. They've got convinced and that is why they are now -- they are announcing that, yes, about 1 million to 1.2 million tons of further exports can happen. I mean I would surely believe that India vis-a-vis our sugarcane vis-a-vis the extent and monsoons that we are seeing all over India. We have a great crop even for FY '22/'23. 3.4 million tons was diverted this year, we should improve to -- we should go up to about 4.5 million tons next year. Even if we reach [ even to 20 ], almost close to about, we all do believe that version which will take place will be almost close to 10 million to 12 million tons. And once we get that done and assuming that the cane crop will not be higher, India will be self-sufficient where we will not need to export too much even after 3 years.

And not exposing too much will not make a difference to the company's operating.

Yes, exactly. So one of the basic reason that India exports or is exporting is because we don't have any other [ ad ] revenue as on date. Once the ethanol capacities go up, we can divert more and more sugarcane into that area, and that much of lower export is what India will then need to do for years to come.

Sir, 2 more very quick questions. One is all rumors about the government trying to try ethanol within aviation fuel, shipping, is there any true -- is there any truth to this rumor and can we see that happening in the future?

Yes. So globally, it has already started to happen. India is also doing their own trials. But as of now, that is slightly far ahead in the future because we need, first of all, blending for our 2-wheelers and for our 4-wheelers because we had aviation fuel, shipping fuel the world over is being tried upon. And I do believe there is a success story, which has started happening there. Obviously, India will also take up to that challenge as soon as we have that much of capacity in place.

And sir, my last question is on the ethanol production front. When we reach it, can you see India with the whole crude oil -- our dependence on crude oil and the crude oil imports effectivity. Have you seen a drastic change in the mindset of the government in terms of increasing their focus on renewable sources of energy like ethanol or there has been no impact whatsoever?

No, no, I think there has been a good impact. I think that the government -- I mean what we are talking about, blending to 2 years back, we did about 200 crores liters. We have already touched 450 crores. Next year, we're talking about 550 crores. We are talking about close to 1.3 million liters in the 3 next years. I think that we are on the right track, totally on the right track. We have also now started to talk about [indiscernible] fuel. So why stop at E20? Why not go up to E100 or E75? [indiscernible] So FFE are already there. We've had meetings with the auto guys. By FY '24, FFEs will start to come into India also. So by 1 April 2023, all 2-wheelers will be ready to blend up to 20. [indiscernible] FFE as far as what my understanding is from the auto guys is that they will start to supply FFEs from FY '24/'25.

So FFEs classified over 20%, if I'm not mistaken?

Yes. So FFEs are classified -- as of now in India, it is classified up to 85%. But we're also now speaking to [indiscernible] why to stop at 85%, why not do FFEs up to 100%. But as of now the current rule in India is FFEs up to 85%.

And sir, most of your cars can accommodate like [indiscernible]

So only the new ones. The new ones will start to come up from, as I say, from '24, '25, they can do up to 85%. Vehicles, which will start to come from 1st April 2023. They'll be fully compliant for blending up to 20%.

And sir, going ahead, let's say, just give you an example, if we target 50% blending by, say, 2030 at about 1,500 crore liters. And where -- how much percentage do you see of that 50% blending coming from sugar vis-a-vis grains?

Again, it's extremely hard to answer right now, but India sugar mills have capacity to do as much, but we have to also see that we have sufficient amount of sugar. So it will [ already ] we have a balance but that will happen year-on-year. That is why even our own expansion that we all are doing, we are also putting up a grain-based plant just in case India more sugar. Our existing ethanol plant won't shut and we will divert 100s of [ grains in them]. So I think everyone will try and do that.

Let's say, the whole process of the grain-based production of ethanol versus sugarcane -- using sugarcane is even -- not but -- even sugarcane will be more profitable for you [indiscernible]

That is an option that sugar mills will have. So that is a great option. So you see you have a hedge. In case you see sugarcane being lower, you can go to grain. If you see grain being a higher, stick to grain. So this is an optional -- it's optional hedge that sugar mills will always have.

And sir, my last question is, can we assume that the majority will be from sugarcane and not grains?

See, for sugar mills, it will always be from cane. For the grain guys, obviously, they'll have no option but to do with grain only.

Correct. Correct. But my question is sir, let's say, 1,500 crore liters [Foreign Language] that the government sell in 2030 [indiscernible] 1,500 crore [indiscernible] of now. Can we assume that 60% ethanol minimum level, of course, it's very hard to assume, will be from sugarcane-based ethanol and the others can be grain based? Or would you say the balance should be more 50-50?

I mean I would say, again, very hard to say as of now. Take any number you like, it can be in that range. 50% to 60% will come from sugarcane, balance will be out of the grain.

The next question is from the line of Sanjeev Kumar Damani from SKD Consulting.

This is just to acknowledge that you have been very, very kind and we are thankful to you for getting our answers. And sir, I tell to you for your excellence, and I wish you all the best. And in your leadership, Dhampur will reach in a very big heights. This is what I wish. Thank you, sir.

Thank you so much for your kind words, [Foreign Language] but thank you, sir.

The next question is from the line of Udit Gupta, individual investor.

So my question is that what is the processing cost for ethanol per liter, sir?

Excuse me? What did you say?

What is the processing cost for ethanol per liter?

It comes about 7 per -- about $7.

Sir, does that include transportation costs?

Transport is -- I mean, that is -- this is I'm speaking about COP. So my COP, if I don't take my [indiscernible] into it, then it is about $7 per liter is my -- yes.

And sir, like the costs that you have to incur -- can be ethanol, could be OMC or is that separate orders?

Yes. So transport, they all pay us. But if we go to certain areas which are slightly far or slightly closer there, I might lose about INR 0.30 to INR 0.80, depending. Or I may gain INR 0.10. But that is it, not too high.

It's not a big figure, I guess?

No.

And sir, you're saying that the expansion of this [ levy ] will be completed by January 2023. How many liters are we expecting to produce after the expansion of [indiscernible]? Is it about 12 crore liter?

So we are right now at 250 KL on C, we will go to 380. And on B-Heavy and on syrup, we'll be around close to about 500. So assuming that we get about 10 months for the full, we will do about 15 crores -- about 14 crores to 15 crores is what we expect to sell to the OMCs in FY -- in the whole year of '23.

Sir, I was talking about like FY '24 [indiscernible] about the entire production of it.

Fro FY '24, you can expand it by about 1.5 crores or more. So about 16 crores is what we will do for the whole year of '24.

And sir, this excludes our heavy molasses and all that. So like the...

So yes, so that is over and above that. Sorry, if am cutting. Udit, Udit, Udit, I just want to answer that one more. So it is 500 into -- so 16 crores, as I said, I'm so sorry, it includes maybe also -- so levy would be minus out of this.

Okay. Sir, it would be roughly how much, sir?

So see, as of now, levy is at 18. So our export will be about 14 and 2 will go from levy.

Okay. So 14 for [indiscernible] and 2 for levy.

1 to 1.5 to, so again, levy rates are changing every day. Right now, we are at 18. Last year, we were at 12. Next year, they are talking to have it even higher. So I'm just offering you a ballpark.

The ballpark is about 14 [indiscernible].

The next question is from the line of Nimish [indiscernible] from GT Advisory.

Sorry, you gave us an answer of the long-term debt as on 30th June 2022. That's INR 254 crores. How much of this is the debt that's under subvention, I mean, the lower interest debt? Most of it, some...

I think largely, this is under the [indiscernible] we call [indiscernible] for the projects. But some debt, which we had raised last year is in the range of about 6% to 7.3%. So that adds us to somewhere around INR 150 crores. So that is outside of this. And the balance is all under convention.

And the new loan of 120 that we are taking right now, that will be also under the [indiscernible]

The next question is from the line of Shailesh from Centrum Broking.

Just continuing with the answer you replied our production technical [indiscernible] by 2 months because of commodity prices, can you just elaborate I mean understood that, how the prices have impacted the delay? Just any [indiscernible]

No. The prices didn't impact us. Even though CapEx was finalized earlier, but as you know, that during the month of March, April, May, the steel prices went through the roof. And that is where the suppliers sort of had lots of issues to procure steel. And most of our own input costs for our CapEx is mainly steel, whether it is stainless or mild steel. These are the 2 main components. So because of that, they were not able to get the steel, and that is why our project got laid by about a month to 1.5 months.

Okay. Just to understand [indiscernible], these are fixed-price contracts. [indiscernible]

Yes, as they are all fixed price. But we have to appreciate practical, right, that in case a person who you place in order to, if is on cost goes up by almost 30 to 40 [indiscernible] percent, [indiscernible] will always come back to us for a higher price. So we were all in the wait-and-watch mode. So that is why we have to be fair on both side, the prices of steel right now are just to high. I mean if it's a small gap here or there, we all can handle it.

Yes. Can we just know the other involved parties that are involved [indiscernible]

Yes. Expansion is happening from this firm [indiscernible] call excel. And our boiler is from [indiscernible] turbine, its in 3 months.

Thank you. That was the last question. As there are no further questions, I would now like to hand the conference over to Mr. Goel for closing remarks.

Thank you, ladies and gentlemen, once again for joining our call. We appreciate all your support and interest in our results, and we look forward to meet you again around the next quarter. Thank you so much.

Thank you very much. On behalf of SKP Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.