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

Ladies and gentlemen, good day, and welcome to Dhampur Sugar Mills Limited Q1 FY '24 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; along with his colleagues, Mr. Anant Pande, CEO; Mr. Susheel Mehrotra, CFO; Mr. Vinit Gupta, VP Finance; and Mr. Akshat Kapoor, VP, Operations. We'll have the opening remarks from Mr. Goel, followed by a Q&A session. Thank you, and over to you, Goel.

Good afternoon. Thank you, Navin. Good afternoon and a very warm welcome to all those who are present in the Dhampur Sugar Mills Limited Q1 FY '24 Earnings Conference Call. First of all, let me share the operating numbers of the company. The company crushed 7.45 lakh tons of cane in this quarter vis-a-vis 7.18 lakh tonnes in the corresponding quarter last year. During the season '22/'23, cane crush was higher by 7% at 39.28 lakh tonnes. This was against 36.6 lakhs during the season, '21/'22. During season '22/'23, the Dhampur unit crushed 26.5 lakh tonnes cane, which was the highest ever in the history of Dhampur unit. During the quarter, we have successfully commissioned 100 kilometers per day grain-based tisle and also additional 5.5 megawatt capacity cogeneration of our into Dhampur unit. The gross recovery in this quarter was marginally lower at 12.39% versus 12.65% in the corresponding quarter last year. Sugar production during the quarter is 51 lakh tons versus 0.57 lakh tonnes in the corresponding quarter. This was lower mainly on account of divergence of 2.63 lakh tonnes of gain per production of ethanol through the syrup route, which was 1.6 lakh tonnes in the corresponding quarter last year. Sugar sales during the quarter has been 1.22 lakh tons. In the corresponding quarter last year, the company sold 0.90 lakh tons white sugar and 0.32 lakh tonnes of rose, aggregating to total sugar sales of SIM, 1.22 lakh tons. Average sugar realization in this quarter has been INR 36,387 per tonne versus INR 3,469 per ton in corresponding quarter last year. Moving on to ethanol. Our total ethanol production during the quarter is higher by 70% at 35.30 lakh liters versus 196.85 lakh liters in the corresponding quarter last year. Production during the quarter through KLPD is 211.52 lakh liters and from BS molasses is 13.7 lakh liters. This was against 152.7 lag liters to KLPD is 211.52 lakh liters last year and 44.58 lakh liters from B-Heavy molasses in the corresponding quarter last year. Sales of ethanol during the quarter is 251.56 lakh liters those of crude and 159 lakh liters through B-Heavy molasses versus 171 lakh liters through sales crude and 49.4 lakh liters from B-Heavy molasses in the corresponding quarter last year. This is an increase of about 62%. In Chemicals segment, the production of triacetate is 101.5 lakh kgs, which was 14.5% -- 4% higher compared to the previous corresponding quarter last year. Sales of retail estate, 11.78 lakhs kgs versus 6.07 lakhs in the corresponding quarter last year. In the portable spill section, we [indiscernible] is 6.2 cases versus 5.9 lakh cases in the corresponding quarter last year. And the sale of portable spirits is 55 lakh cases versus 5.7 lakh pieces in the corresponding quarter last year. Those were the operational numbers, and I would like to invite our CFO, Susheel Mehrotra, will take you through the financial performance of the company. Thank you very much.

Thank you. Good afternoon, once again, ladies and gentlemen, and a very warm welcome to our earnings call for Q1 FY '24. Coming to the financial performance of the company, our Board of Directors approved the results for Q1 FY '24 Yesterday, that was 8th of August, '23. During the quarter ended June '23, our overall financial performance has shown improvement on all the fronts. Income from operations is higher by 11% at INR 915.9 crores versus INR 824.6 crores in the corresponding quarter last year. Profit before tax is higher by 26% at INR 67.8 crores, which was INR 53.8 crores last year in the same quarter. Profit after tax is higher by 27% at INR 45.2 crores, which was INR 35.7 crores in the corresponding quarter last year. And the cash profit is higher by 24% at INR 69.5 crores vis-a-vis INR 56.1 crore in the corresponding quarter last year. The sugar inventory valuation rate is 2.15 -- 30th June 2023. The closing sugar inventory as on 30th June 23 is 0.48 lakh tonnes, which is lower mainly on account of diversion of 2.6 lakh tons of cane for production of ethanol through syrup, which is higher by 49% as compared to corresponding quarter last year. Let me now take you through the business price performance. Our revenue from sugar business is higher by 6% at 581.6 versus INR 54.2 crores last year in the same quarter. Revenue from Power business is higher by 7% at INR 46.8 crores versus INR 43.8 crores in the corresponding quarter last year. Revenues from its lower business is higher by 66% at INR 3.3 crores versus INR 13.8 crores in the corresponding quarter last year, which is mainly on account of better utilization of efficiencies and our additional capacity, which was commissioned in Feb 2023. Revenue from Chemicals business is marginally lower by 11% at INR 81 crores versus INR 91.3 crores in the corresponding quarter last year. Revenue from portable spirits is higher by 4% at INR 143 crores versus INR 137.6 crores in the corresponding quarter last year. Our profit from sugar business is INR 27 crores versus INR 25.5 crores. Power business profit is INR 16 crores versus INR 16.6 was almost same as last year. From April, the profit is higher by 51% at INR 39.2 crores versus INR 26 crores in the corresponding quarter last year. From chemical business, the profit is INR 7.2 crores versus INR 10.6 crores in the pure quarter of last year, and the portable period was INR 1.1 crores versus INR 0.1 crore in the corresponding quarter of last year. Now coming to consolidated results. Revenue from operations during the quarter stood at INR 916.4 crores versus INR 833.9 crores in the corresponding quarter last year. EBITDA is INR 95.5 crores versus INR 869 crores. Profit before tax is INR 68 crores versus INR 57.4 crores, and profit after tax is INR 45.4 crores versus INR 39.3 crores last year. The cash profit is INR 69.7 crores in midyear June quarter versus INR 59.7 crores in the corresponding quarter of last financial year. With that, I would like to thank you once again for joining us on this conference call. We'll be happy to answer any questions that you may have. Thank you so much.

Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] We'll take the first question from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas.

I have a couple of questions. First, on what will be our distillery capacity now after addition of this net new capacity? And my second question is on the sugar production. So for this coming to that the field, what is your outlook in terms of production and [indiscernible].

So distillery capacity with the current expansion, we have gone up to 350k per day on C-heavy molasses, plus 100k per day on grain. So we can run either all because we can run almost about INR 475 or 480 gal on B-heavy and otherwise 350 C-heavy and 100 on grain.

And on sugar production, what is your outlook on...

Again, very early days as of now. So we've been having a lot of rains all over India right now. It seems that vis-a-vis North India, at least I can say that the yields seem to be slightly higher. But right, I mean, the low-lying areas where there's a bit of flooding. It's still early days, but I still believe that North India should make more than what we did last year. But I think in the Q2 call, I'll be able to offer you all better than numbers because we will raise util on as of now as we speak. A reminder to all the participants.

We'll take the next question from the line of Nikhil Saboo from SKP Securities.

Sorry. Sir, now with enhanced capacity, distillery capacity, 350 from CPR and 100 kt from grain. So what would be our guidance for ethanol production for FY '24?

See, again, on that, it becomes slightly hard to answer strategy because we are not sure about what will be the policy of levy, which is there in UP, which you all must have heard in your earlier calls. So that -- because of that, we are still not sure. But if we see that on our BV and surely can go up to 455 BL and to run for 45 days at least. So from that perspective, we can do almost close to about INR 14 crores, INR 14.5 crores even if we take maybe. So that is what we have to just wait and watch what is the levy policy that uptake in the year '23, '24. But I would say that safely, we can talk about INR 11.5 crores to INR 12 crores is what we can supply to the OMCs next year.

Okay. And sir, additional anything from grain?

So this is a part of grain. So grain was put as an option. In case we believe that sugar priorities or BL prices are more viable, that part, we can ship 100 kilo of our full 455 into grain. So grain for us is an option with the increase in grain prices that we have seen, which have just happened last week, we do plan to start our grain plant back. So grain will always be an option for us. And grain was put up only from that, but we met as to how much of sugar I will sacrifice and how much of that all put into grade.

Got it. Sir, of late, the FCA has stopped supplying grains and government has also compensated -- have also compensated in terms of better prices. They revised the prices higher, but it still prices are not as remunerative as compared to your FCI supply? So what will be like your guidance, if this FCI remains for a long period, that what would be as?

See, again, as I said earlier, we're also out you. So waiting for us is an option. As soon as we see there is a bit opportunity whether sugar sacrifice and grain, we will move to grain. So we are not single like single plant, which can only do grain or be heavy on sort of ours is all joint. So from that perspective, this is the -- you will see that right now within our structure is that in case we find the margins better from grain. We can switch 100k to grain or we stick to [Technical Difficulty] heavy. So this is an advantage that Dhampur got as of now.

Okay. Got it, sir. Sir, my last question is for sugar season '22, '23, of course, it was more towards diversion -- and as of now, our sugar inventory is on the lower side. So by when do we expect that complete inventory to get liquidated? And what would be our strategy for next year? Because currently, when the sugar purchases are quite high, in a range of 36% to 37%, but we are low on sugar inventory right now. So I just maybe...

This is a call out here. Nikhil, that will take year-on-year. I still believe that even next year, India will have a surplus, whether exports are done or not, I really can't say as of now. So as far as per approvals, we'll still continue our focus on diverting sugar more and more, and that is one of the reasons why you're seeing our stock to be low. Now I could have had a higher stock and not done this. So I would always say that India, as long as we are in surplus as far as approvals, we would like to go more on the side of types to the OMCs rather than us speaking sugar. Now with the grain, we bring that down. If the grain prices sort of drop, grain price -- and the grain on price will go up, that opportunity, as I said, will always be there. So sugar stocks for me always go to be low, right? So sugar stocks, we don't ever want to have high sugar stocks. And I can say it for everyone. Sugar stocks in India are healthy as of now. So there is no issue of sugar shortage. So yes, every company will play to little sort of tweaks and balances. But I think that we are in a sweet spot as of now. Got it, sir.

We'll take the next question from the line of Udit Gupta, an individual investor.

I would like to understand the increase in the prices by the government for the grain base, so is it now remunerative? Or is it still not that remunerative anymore?

No. Even after the increase in the prices that they have done, I think that we are just about to come to some sort of a breakeven status. Because since SCI sort of said no for supplies and then rice exports were banned, prices have sort of gone up as such in the open market. So I'm very happy that government has taken the stand. But even after the price which has gone up for rice by almost 4.8% and by -- and for maize by about 6%. It is just about viable right now, but it's not some higher margin gain that we all are playing.

The price in the broken -- for the broken rice in the market is about 24 per case for?

More than that. It is actually more than that. 25 by the time we'll reach our plant, it'll be about 25, 25.5. And that also the availability of broken rice is also limited as of now. So apart from the price perspective, the availability is the issue.

Sir, are we just doing it from right? Or are we looking at...

So we have just started from May as we speak.

Okay. So that is more than related for us.

As of parties, again, we are trying maize for the first time. So we'll have to see what are the yields, what is we've done [Technical Difficulty] paper. But once we go into actual practicality of the plant, we will know exactly what are the costs, what is the amount of DDG that we will get. So I think that again -- but again, we don't say believe that maize will be a loss, but we'll have to wait and work to see exactly what are the margins that we have about maize.

And sir, the DDGS, have they also come down?

Yes. DDGS prices have also been down for the last about 2.5 months.

How much have been that?

So they were down to almost about '24. Now they have to about '25, '25, '25.

And sir, the prices, are they in same in case we sell any?

No, we don't sell any as of now. So all the stocks that we have you have not sold anything or had to buy. So that's why the gas prices, as far as I know what they are moving in North India, is about INR 500 per tonne is the price as of now.

Okay. Sir, by next quarter, you'll be able to give us a better idea for the grains [indiscernible].

Yes, for sure will, definitely.

And sir, if -- for the last question that you just talked about the leading molasses change in this year. But if you assume that the lending molasses remain the same, then we can supply about 12 crore liters to the OMC.

Yes.

We'll take the next question from the line of Aditi Agarwal, an individual investor.

My question is about the transfer pricing and recovery of syrup and B-heavy. And also, can you shed some light on the costing in terms of yield?

So our transfer pricing right now for B-heavy is around 25, INR 4,450. As far as the yield goes, so the field, I mean, B-heavy yield anything from -- depending on the PRS, right? So there is no actual rule on that. But you should assume from INR 300 to -- is the yield for B-heavy. So the head obviously there is again vis-a-vis what is the polling can at that point of time. So it may be hard to put a number because the column is lower in the starting, then it goes up during Jan and March. So that's why the yield is not very easy to judge. There is no update that I can offer you.

[Operator Instructions]

I think it's okay. I think that because they've already had so many sugar costs that until now, everyone has got all the answers.

We'll take the next question from the line of Udit Gupta, an individual investor.

I had another question, sir. Sir, we were thinking of doing something in the chemicals or the bioplastics line. Is there any progress on that front?

Not as of now because there are so many other opportunities with the government has thrown up in front of our vis-a-vis CBG [indiscernible]. So from that perspective, we are seeing this to be a line that perhaps is right down our alley right now. So chemical, the option isn't shut right now, but we are starting more on the CBG part as of now.

Okay. And sir, for the listing from the OMC, so there was -- some companies have said that there was a problem in the last quarter in the current quarter. So how is it going to...

I think that it has all become fine for us at least. We haven't had an issue for the last about 2 months now. Earlier, yes, for 1 month, we had 5 bit of issues. But right now, we will have had no issues at all, and it's going pretty smoothly as we speak.

And sir, do we have storage capacities for about a month or so because everyone is saying that you now need to people to [indiscernible]

Yes, we all do. So as for the new norms, which have been fixed for a full storage both for feedstock and for the final product.

And sir, are we looking at any CapEx in the current financial year other than maintenance CapEx.

Not really, we are expanding down put by 1,000 tonnes of [indiscernible] per day, but that's, again, not really expansion. That's just tweaking. As such, we have no major expansion plans apart from making our plants more robust.

Okay. And sir, the Bengali plant, sir, that we've spoken about last time, is there any excess update? Or like are we expecting any loss due to that?

So obviously, some of our scan is going to go if they start. When they start, I really can't say, but we've already made plans that we still should be able to crush almost the same as what we did for the year 2022, 2023. We may be slightly lower, but it will not be very, very high. So yes, we surely will lose or gain to them if they start.

Ladies and gentlemen, that was the last question in queue. As there are no further questions, I would now like to hand the conference over to Mr. Goel for closing remarks. Over to you, sir.

On behalf of Dhampur Limited, we would like to, once again, thank you all for taking your time out for this conference call. If you have any further questions, please feel free to contact us either by phone or by e-mail. You can also visit our website, www.dhampursugar.com and post any queries you may have, and we'll get back to you as soon as possible. Thank you.

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