Dwarikesh Sugar Industries Limited (532610) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to the Q2 FY '22 Earnings Conference Call of Dwarikesh Sugar Industries. We have with us today the Managing Director of Dwarikesh Sugar Industries, Mr. Vijay Banka. So without further ado, I would like to hand over the conference call to Mr. Banka sir for his opening remarks, post which we'll open the forum for a Q&A session. Thank you all, and over to you, sir.

Very good afternoon, everyone. I welcome you all to the Q2 H1 FY '22 Earnings Call Conference of our company, Dwarikesh Sugar Industries Limited. We have -- our results are in public domain, have been put in public domain -- have been put in public domain yesterday. So let me quickly run through the results. We had -- in the quarter, we have had a total income of about INR 506 crores. PBT of INR 56 crores and PAT of about INR 40 crores, which is as compared to INR 418 crores -- INR 419 crores of total income during the corresponding quarter last year. INR 24 crores of PBT and about INR 18 crores of PAT. On a half yearly basis, we've had a turnover -- we have had total income of close to INR 900 crores. PBT of INR 92 crores and PAT of about INR 67 crores, which is a significant improvement over the H1 FY '21 results. It's INR 59 crores of total income, INR 49.25 crores of PBT and INR 36 crores of PAT. So in percentage terms, we have clocked impressive growth in terms of total income, in terms of PBT as well as in terms of PAT. So as we go ahead, we have -- the last estimate of sugar production of India, which was drawn by ISMA was about 31 million tonnes for seasons '21/'22. This is after considering a sacrifice of 3.4 million tonnes. ISMA is going to meet day after tomorrow when they will take cognizance of the evolving situation across the nation. And maybe they'll come up with a revised number or -- I mean, we don't know. They may stick to the same number or they may come up with a revised number. By the end of the day, day after we will come to know what the position is. You heard unseasonal and very heavy rainfall in Uttar Pradesh. As a result of which many rivers have overflown or there was waterlogging in several areas. It's too early to assess the impact of the damage caused on the crop. But certainly, there is impact, an adverse impact. It's difficult to hazard a guess what kind of production by our crushing numbers, production numbers will be there because -- reveals the water and the consequent waterlogging will definitely impact the sugarcane availability and also the recovery. But how much it is, whether it is going to be 5% or more than that, will be known only in the days to come. So I think ISMA will perhaps revise the numbers downwards. So we will have to wait and see what they do after tomorrow because they'll assess the situation from across -- from all over the places. During Q2 FY '22, our EBITDA margin was about INR 15 crores, same as for the half year as well. We have sold about 12.06 lakh quintals of sugar, which is as compared to INR 11.32 lakh quintals, which included 2 lakh quintals of export sales. So if we deduct that, we had -- if we deduct that in the last quarter, corresponding quarter, we had less than 10 lakh quintals of sales as against which we have 12 lakh quintals of sugar sales. And for the half year, we have sold about 21.7 lakh quintals, vis-à-vis it's 23.88 lakh quintals, which included export sales of 8.05 lakh quintals . Our stock because of the accelerated releases has come down and as on 30th September, we are carrying a stock of 13.33 lakh quintals as compared to 17.66 lakh quintals, which we carried on the 30th September 2020. So as you can see, there was about 4 lakh quintals reduction in our stock level, which is mainly because of the accelerated releases. And -- from this, we can also come to the conclusion that our stocks -- the stock of sugar for season 2021 will perhaps get exhausted by this -- by January, if not in December, so which is a significant improvement over last season's stock getting exhausted, which got exhausted in fact, in the month of April 2021. So ethanol sales was good. Yes, let me add here. This 13.33 lakh quintals of sugar was valued at INR 3,054 a quintal. During this quarter, we have had impressive sales of ethanol. We sold about INR 1.67 crore liters of ethanol. And for half year, this was about 2.79 crore liters of ethanol. So this is as compared to close to 90 lakh liters in the corresponding quarter last year and 1.33 crore liters in the corresponding half year. We are on course to -- during FY '22, we should be able to do about 5 crore liters of dispatch. So because of the rainfall, there is a delay in the start of the season. So we will perhaps see full-fledged operations of the season commencing post-Diwali. Because there is no point starting the season now and have uninterrupted -- have interrupted working. So we'll all start operations post-Diwali. And our term loan profile continues to be lean and trim. We have term loan outstanding of about INR 173 crores, which includes [ SEFASU ] loan -- has to pursue loan of INR 74 crores and balances the distillery loan. Our distillery loan for the new project has been sanctioned, but we haven't yet availed. Whatever CapEx we have incurred of about INR 50 crores has been funded from our internal accruals. And our external rating A+. We are pitching for a higher rating. Let's see what happens. Internationally, you have seen sugar prices going up. In fact, 1.5 months ago, the sugar prices were at $0.21 a pound, but there has -- it's seen some cost correction. Now it's around [ $19.35 ] or so, which has provided some kind of support to the domestic prices as well. We have seen domestic prices rallying in the month of September, presently, the domestic prices are hovering a little above INR 3,600. So we see the support to continue the support of the domestic prices to continue. Much will depend on how the Maharashtra sugar mills will react. How once their season starts, what kind of pressure they are under to liquidate their stocks much will depend on that. So there's been no announcement of export policy for season '21/'22. We have already contracted to sell about 25,000 metric tons of sugar for export purposes. Our shipment will get completed in the month of January. So further transaction -- further contracts, we will wait and see. We will wait and see how the situation evolves and only then we will take a call on doing further transactions. Rest all seems good. I'll leave the house open to you all. You can please ask me questions, and I'll be very happy to answer them.

[Operator Instructions] The first question is from the line of Rajesh Majumdar.

Congratulations on a good set of numbers. But I had a few questions. On the prices, our average calculation for the quarter was giving me a price of above INR 3,450 and your realization has come at INR 3,376. Any reason for this. I just did a weighted total of the quota based on the average prices for the month. And I came at a price between INR 0.80 or even a INR 1 higher than what you have reported? So any reason for this?

Our average is INR 3,375, which is correct. This is -- I mean, I -- just -- maybe you can separately share with me how you worked it out, but this number of INR 3,376 is a very authentic number.

Okay. Okay. And what is the transfer price of molasses per month.

Up till now it's INR 6.70 for B-heavy molasses. B-heavy molasses, of course, we are not transferring. During the season, we have entirely used B-heavy molasses, which was generated at 2 of our units. But definitely, the price needs revision. And once the season starts, we will revisit and review the transfer price for B-heavy molasses or which is going to be generated in '21/'22.

And that will be more accretive for business, right?

Yes. Yes. It will be definitely more. It cannot be as low as INR 6.70 , it has to be close to INR 1,000, at least according to power.

Okay. Okay. So yes, because currently, the prices are above [ INR 37 ] actually. You were mentioning [ INR 36 ]. But I'm assuming that the prices have been about [ INR 37 ]...

Some markets, though they're INR 37. I mean, okay, you talk about refined sugar, definitely, the prices are higher. See there are 2, 3 things. One -- number one, our units are in the hinterland, okay? And 2 of our units, they cater to the market, which is very, very competitive. They are sold in Delhi and in the markets of Haryana, et cetera. So there, the space is very competitive. And then thirdly, we do not make refined sugar. And fourthly, our policy is to sell as quickly as we receive the quota. So sometimes it works in our favor, sometimes it doesn't.

That might explain the price difference in 2Q actually because the prices they have moved up in the second half where have already sold your quota.

Yes. Yes. We do not speculate on the prices. We sell -- our attempt is to sell as quickly as possible.

Okay. And, see the kind of inventory correction we have seen as of the closing inventory of Dwarikesh is roughly 20% lower than last year. Can we extrapolate that same figure for the industry, is it?

No. If you take the stock levels, we get a report as to what the stock levels of each sugar company is. So as on 30th September, the kind of stock we are carrying in percentage terms of the production for the season '21/'22 is perhaps the same for most of the sugar companies. It may be a little more or a little less, maybe our liquidation is faster this year because of the weightage we have got for use of B-heavy molasses, which was not there in the previous year.

Right. So in your opinion, it will be under 8 million tonnes, the opening stock?

Sorry, both export as well as B-heavy behalf. Our exports during the season 2021 was also very aggressive. We exported nearly 150,000 metric tons of sugar. So the combined weightage of export of sugar plus use of only B-heavy molasses for making ethanol, perhaps that explains our better releases.

And in your opinion, the overall closing inventory should be under 8 billion tonnes then?

Overall inventory should be?

Under 8 million tonnes for the industry.

No. According to ISMA, it's about 8.6 million tonnes.

8.6. Okay.

Yes. Yes. I mean...

But the final figure is not yet out, right? The final inventory figures.

Yes. Yes. But we cannot go beyond the numbers that are obviously stated by ISMA.

Right. And with this kind of an opening inventory, what kinds of diversions ISMA has given a figure of 3.4 million tonnes for imports this year? And what would be the figure for exports?

Exports, I mean, ISMA is optimistic that 6 million tonnes of export will happen. I mean, I'm not too sure of the number, but I'm told already 2 million to 2.5 million tonnes of exports have already been contracted, okay? So perhaps the most of it has been contracted from the state of -- from the sugar mills in Maharashtra. Now Maharashtra sugar mills, there is a limitation beyond which they cannot export. Perhaps then will be the turn of the UP sugar mills to export, and we expect in the meantime the international crisis to get better.

What is -- Hello?

[Operator Instructions] We have the next question from the line of Pratik Tholiya from Systematix.

Congratulations on good set of numbers. Sir, just a couple of questions on the distillery side. If you could just give a breakup of how much was manufactured from B-heavy molasses and how much was some B-heavy?

No. In this financial year -- in this season, we have exactly I mean in 2 of our plants, we generated only B-heavy molasses and whatever B-heavy molasses has been generated has been used for manufacture of ethanol. No C-heavy molasses has been used for making ethanol.

Okay. So in H1, you almost made 2.7 crore liters. That is entirely through B-heavy?

No. No. At the beginning of the season, we had little quantity of B-heavy molasses, which was used for making ethanol, very little quantity.

Okay. Yes. Okay. But sir, for Q2, it is basically 100% is B-heavy?

Yes. This financial year, entirely, it is B-heavy molasses.

Understood. Understood. And sir, for H1, we have already done 2.79 crores of total ethanol sales. And I think in your opening remarks, you mentioned somewhere around 5 crore liters for the full financial year.

Correct.

So does this mean that going forward, our actually the run rate will drop in Q3 and Q4?

For Q3, the run rate is likely to drop, but Q4 should be brisk. Q3...

Okay. Mainly because molasses is now you would have exhausted all your molasses. So your production will drop in Q3.

We have molasses stock, but whatever quantity we had bid for, that supply will be -- our total bidding was for 4.6 crore liters. So that we are going to complete in this month. So we will see if there are other opportunities to sell ethanol. If that happens, maybe there will be -- that could provide us some help. Otherwise, Q3 normally for most sugar mills, this is a little lean quarter for as far as sale of ethanol is concerned. Because, I mean, by the time the tenders are opened, by the time the bidding happens, by the time the allotments are received, the process takes a little while.

Right. Understood. Yes, understood. And sir, for us, and sir, there was -- did we also suffer from this unexpected rainfall because we are largely in Western UP. And I think the rains were more heavy in the central UP.

Now let me explain to you unit wise. In our Dwarikesh Nagar unit, we don't see any significant impact. Okay. Dwarikesh Puram unit, there is a dam in the -- there is a reservoir in the command area of the unit. So there has been -- the sewage gates have been opened. There has been kind of flooding situation reverse, which -- with that flow. So there has been consequent waterlogging. So -- but when the fields are drying up faster, so the real impact we will not know now. In Bareilly district, again, there are some rivers which are overflowing as a result of which there is waterlogging at some fields. So real impact is very difficult to assess at this stage. I mean, if the sunshine is good in the coming days, well, things could drastically, significantly, improve. But a 5% drop is very much on the cards.

5% drop in terms of sugar production or in cane availability.

Basically on availability and there could be some impact on account of recovery loss also.

Understood. So sir, does this mean that, maybe this year, again, in this coming season, sugar season '22, if we are going to end up with a lower sugar production then the prices would actually firm up further going forward? As a kind of drop that you -- there are most people are expecting that currently the INR 37 and once the crushing starts, this should go down to INR 35 or INR 36. But that may not really pan out because the production expense has been forecasted to be lower.

I tend to agree with you. I tend to agree with you that is a possibility. That is a possibility.

Sure. So you may lose out a little bit on volume, but realization can form up -- that's a reasonable assessment.

Yes. Yes.

We have the next question from the line of Sanjay Manyal from ICICI Securities.

I have just one question. You mentioned that you will be able to do 5 crore liters this financial year, but you've already on 2.7. Even if it is lower volumes in Q3, at least Q4, because it's a full season, it could be a very high number. It could have higher probably than Q2 also. So is it a possibility that this number probably can be 5.3, 5.4 rather than 5 what you're mentioning?

Let's see, sir, our endeavor will be to cross 5 crore liters, but to say with certainty that we will cross the number at this point in time is rather [ unexpected ].

Okay. Okay. And you mentioned about the other opportunities. So is there any opportunity in ENA segment also in Q3?

Yes, there are offers, there are options, which we are looking at. There are some private buyers also. So we are looking at both options.

Right. Right. So -- and if strategic current price means that price is getting in first week or so for Dwarikesh, specifically, is it around INR 36.5 or it's higher?

No. It's -- see average is what is important. At this point at this point in time, it is INR 36.65.

Yes. And any -- I think that would be progress of the ethanol plant? Or is it one time? Will it be coming?

It's on time, in spite of the heavy rain, in spite of the inclement weather our execution -- maybe at this point in time, we can say is slightly delayed, but overall implementation is going to be on time, and we should commission the plant in the month of June or July 2022.

Which simply means that we can do almost 7 crore to 8 crore liters FY '23 financial year.

Yes. See, the strategy that, plan is like this, in the third unit, we have stuck separate B-heavy molasses, store it. The moment the plant is -- the distillery plant is ready, we will be able to -- we will monitor for want of feedstock. So that plant, let's say, we'll be operational June, July, I'm talking about clear month or so for stabilization. So it will have about what -- about 6 months of working at least.

We have the next question from the line of Vikram Vilas Suryavanshi from PhillipCapital.

Sir, I heard your initial comment, but would it be possible just on lower side what could be cane crushing expectations for the season and landed cost of cane per hour?

See the steel price has been increased by INR 25 from INR 20. So we are -- we normally buy mostly the early variety sugarcane, and so which is going to cost us INR 350 middle gate delivery. So -- but not the entire steel comes at the middle gate. So we will have to buy -- we will have to procure lot of cane from the cane centers. So there is going to be additional transportation costs because they reimburse at other particular rate, which is lower than the actual cost that we incur. Additionally, there is going to be society commission also. So if we factor for all those, the landed cost could be about INR 365 a quintal. What was your next question? About the availability, yes. See, before the onset of this rain, heavy rain unseasonal real, we thought we might crush at least about 5% more than the cane that we crushed in the season 2021. So now this is -- we will have to -- at this point in time, it is difficult to assess the impact. But last season, we crushed 378 lakh quintals. So I don't know. It's very difficult to tell you. Maybe we will crush the same quantity or maybe a little less.

Understood. And we have one of the best recovery in region so how is that possible?

No, the recovery on the -- see, the worst -- rains and the waterlogging will impact the recovery. But how much exactly, again, it's very difficult because if the weather is fine from here onwards, it can offset the adversity that we are presently facing. So it's not just what happened now in terms of heavy rainfall, et cetera, how the weather pans out in the days to come is also very relevant and important.

Understood. And last question from my side. This is regarding the monthly, quarterly sales what we are doing out of 1.2 million tonnes, is there -- I think you already highlighted, but is the significant component because of this ethanol sales, which we have got extra release? Or -- and how that is used probably looking at our inventory level next year on a quarterly basis?

See, like I've mentioned it a little while ago, our stock level in percentage terms, vis-a-vis production of season 2021 is more or less similar to what other sugar companies are carrying. Maybe in the last season last financial year, we suffered because we did not do any -- we did not use B-heavy molasses. And so therefore, more weightage was given for the use of B-heavy molasses in manufacturing ethanol. Additionally, in the season went by 2021, we have exported 150,000 metric tons. So perhaps we have received adequate weightage on both the scores, which is why our releases are better. But having said that, I must add that, yes, our inventory levels are more or less closer to the inventory levels that other sugar companies are carrying, in percentage terms.

We have the next question from the line of Giriraj Daga from KM Visaria Family Trust.

So just clarification, a couple of clarifications. First, you mentioned the current realization INR 3,665 versus the 33.5 what you reported...

Non-realization, the average realization can be different for the entire month. October realization is definitely about INR 3,600.

Okay. I think that, like last year, ethanol, we had bidded for 4.6 crore. How much bidding you're expecting from this 1st October, 1st December?

We'll bid for higher quantity. Of course, we'll bid for higher quantity.

No. Higher bid -- like that was like added like how much?

From one plant , we can generate ethanol of about 5 crore to 5.5 crore liters. So we'll bid for that thing. And as we get closer to the start of the new plant because these bids are invited several times in a year, not just one time. So when our new plant is up and running, before that, we'll bid for sale of ethanol from that plant as well. So the existing plant, definitely, we can do about 5 crore to 5.5 crores liters. So we'll bid for that quantity minimum.

Okay. So you guided about like 7 crore, 8 crore kind of liters is possible in FY '23.

Yes. Yes. 7 crores is a very realistic possibility.

Okay. Second, like you are mentioning that we can try to -- mid-November will be a lean month because we already had completed the contract.

Yes.

Like, suppose, like, we are doing like 55 less per month last quarter. Can you do similar amount of ethanol, ENA sales also like the switching like very...

No. ENA there is no such demand. Demand is not so much and you don't get so much of pricing also for ENA.

Okay. And then the idea was that sir, if you are just letting plant idle, why not better...

No. No. We are going to run and produce and keep it. About 10 to 15 days is the annual maintenance period which we have timed in during this quarter, okay? So that's the mandatory thing, which every distillery has to go through. So we will be stopping the plant -- we had to stop the plant in any case about for about 15, 20 days for our annual maintenance or cleaning up the boilers, et cetera, their membranes have to be cleaned. A lot of work is to be done. So it will be utilized like that. And secondly, we are now -- plant is not going to be idling. We'll produce and we have adequate storage capacity. We will produce and keep the ethanol for sale.

Understood. Last question, sir, like how much -- what is the kind of price expectation you have from ethanol for next year? Like what kind of increase we can expand and anticipate.

The FRP has gone up by the -- FRP has gone up. So at least commensurate to that, the ethanol prices should go up. And plus there has been clamor for increase in the MSP. So I mean government should take cognizance of both and give us a decent increase in the ethanol prices.

So MRP figures have followed MRP -- like FRP 2%, 2.90% to 2.95%. So that is the kind of increase we're anticipating 2% to 2%, 3% kind of scenario?

Difficult to say, sir. We are pitching for a higher price.

[Operator Instructions] We have the next question from the line of Kavya Shah from Manashvi Securities.

I just have one question. For the past 2 quarters, there has been some impact on the sugar EBITDA margin despite higher realization. So I just wanted to understand if this is because of some inventory cost? And do you see the margins improving going further.

I have a request to make in case of sugar companies, number one, the quarter-on-quarter results should never be seen in isolation. And similarly, the segment results should never be seen in isolation. We should always have a look at the total segment, total results of the company. So viewing the results of one segment and comparing it with the other segment is going to be little, I mean, it will little slightly misleading. But having said that, I must say that, our inventory is valued at INR 3,053. So I'm guessing in the subsequent quarter, we will have some delta as the sugar price is now prevailing better.

We have the next question from the line of Sanjiv Kumar from SKD Consulting.

Am I audible, sir?

Very much, sir. Please go ahead.

Sir, congratulations for excellent results. Sir, actually, most of my questions are answered as such, but there are a few left out. So I begin with one as opinion of yours about the fact that how you view next year in terms of molasses, ethanol and ENA realization way. Can they swing, sometimes selling molasses in the open market can fetch you a better price or selling B-heavy molasses when process are giving you the best results. So I think there will not be any compromise there. Whatever B molasses are there, we are going to give it to the government only. But if the sugar price realization is higher for any reason, would we be able to shift or do some interchanging, how you view it, sir? Will you be kind enough to guide me?

No. No. Sure, sir. My personal view is that we should not be swayed by this short-term factors. We should not have a very myopic view on all these things. Ethanol blending program is something which we should all actively participate in. Come what may, sugar prices can spurt in the short run. But eventually, if ethanol, it's export, these are things which are very, very relevant and very important. So I don't think any increase in the price of sugar in the short term can make any course correction in so far as our ethanol manufacturing is concerned. We will continue to manufacture ethanol. We utilize our distillery capacity to the fullest extent possible. And whatever sugar sacrifice will happen in the process will happen. Because we must take a very holistic view. We cannot take a very narrow and myopic on these things.

Sir, got it. Got it, sir. Are you having any program to make ethanol directly from sugar juice, that is cane juice.

Yes. Yes. That will happen, sir. See, presently, whatever B-heavy molasses we are going to generate that will keep our distillery fully operational in so far as season '21/'22 is concerned. But in season '22/'23, when our both the distilleries will be fully operational, we will be using during the season at both the distillery sugarcane juice directly for making ethanol. And during off-season, we will be storing B-heavy molasses and using the B-heavy molasses for making ethanol. So only then we will be able to achieve a total ethanol production of about 10 crores to 11 crore liters.

Okay, sir. One more question, sir. That -- I mean, at any given point of time, do you ever have sold molasses during this last year? Or do you intend to sell molasses? Or other way around, are you required to buy molasses from market?

No, sir. We have not bought any molasses from outside. In the last year, in the last season is -- as I have mentioned, we have generated B-heavy molasses in 2 of our units. In the third unit, we have generated C-heavy molasses. So we have used the C-heavy generated molasses for fulfilling our levy sale obligation, which is 18% of the total molasses generated. And we have sold some quantity of molasses also in the open market because whatever left, whatever after fulfilling our levy obligation was there with us, we have sold it at the market price.

[Operator Instructions] We have the next question from Rajesh Majumdar from B&K Securities.

I just wanted to ask you a couple of more questions. One is that last year, we have seen this rainfall/virus issue lead to a drop in field in Eastern UP, particularly. So how should we read the late rainfall, is it going to be 5% to 6% cane area drop? Or will there be an impact on the yields as well? What is the assessment on that?

Sir, very difficult to answer at this point in time. Like I said, if any improvement in the weather is there in the coming days that can offset the loss that one has suffered. Now for example, I'll explain to you, you see heavy rainfall, gusty winds and all have resulted in lodging of sugarcane. But sugarcane maybe about 25%, 30%. But that doesn't mean that the entire cane has been lost. Lot of it will be retrieved back. It could be farmers will straighten it up and...

Right. Right.

Okay. So it's very difficult to assess the impact. But yes, this rainfall is not good for the red draught because it will spread, with the water it will flow. And we will have to be extremely careful. It has been rather unfortunate, this unseasonal rainfall. But to give a number at this point in time, is very, very difficult, sir.

Got it. Okay, so and basically, by the middle of next month, you get some idea on this?

I'll just give you an example, sir. For example, when we commenced our last crushing season. For the season, I had told that we may crush about 340 lakh quintals of sugarcane. And eventually, we ended up crushing 378 lakh quintals of sugarcane. So the number -- I mean there isn't any expert who can tell you exact quantity actually. Some kind of number based on the satellite survey, et cetera, which is what ISMA comes up with.

Right. So we'll get some color on the productions once ISAM release the figures as you said day after.

Yes. Yes. ISMA should -- the meeting day after tomorrow, I don't know whether they'll take a call on this. But if they do take a call, you'll know the numbers by the end of the day tomorrow, day after.

Right. And if even 5% is like gone, that means -- the impact could be another 0.5 million tonnes on the overall production for the year.

Yes. 0.5 million tonnes. Yes.

Okay. That will again push the inventory picture to more sustainable levels of pricing, I guess.

But from the price perspective, that may induce some optimism, I would say.

And what is the export premium now because we calculate the overall export price as the cents per pound plus the Indian premium and then we add the subsidiary. So what is the export premium? So that is one thing which keeps on changing.

There is no premium that is being offered as of now. It's only the core premium of -- which is -- how it's computed these days is, whatever is the London -- New York spot price multiplied by 1.042, which is the whole premium into 22.0464 crore, which is the conversion factor for pound to metric ton. And you multiply it with the INR USD equation. And that's how you arrive. Last year, when we exported there was premium, which is now not there, maybe because Maharashtra sugar mills are offering sugar at lower prices because for them, the advantage is the domestic market, they see their export realization in conjunction with the domestic realization, which is at least INR 2 lesser than what we get in UP.

Okay. Correct. Correct. So basically, if you take [ INR 1.042 ], it's roughly about $0.75 to $0.80 above the current spot.

No. Current spot is about 19.35 or what?

INR 19. I'm taking INR 19. So INR 19 plus 0.7 or 0.8 something.

Yes. You can do your arithmetic based on that.

Right. And if it is even INR 19 and the INR 4 subsidy continues then still India can export another 4 million tonnes.

Yes. But the government has already announced that they are not going to announce any subsidy. Although we are pleading with the government to announce some subsidy.

So as of now, the earlier announced INR 4 is still there, right? That's not changed.

Not for the season '21/'22.

Okay. Okay. So there is no assumption that this is like considered, unless it's announced.

No. No. Whatever quantity contract we have entered into -- based on the assumption that we will not get any subsidy.

Got it. Got it.

[Operator Instructions] We have the next question from Anupam Goswami from B&K Securities.

Yes. Sorry for joining a little late. I don't know if it has been asked. Sir, we find that your realization was a bit lower this quarter than what we were tracking. I see the realization has gone up to INR 3,637, in fact.

No. No. I explained this to Mr. Majumdar. The same question. This is a very authentic number. So I have requested it to share his computation as to how he has arrived at a higher realization, only then I'll be able to comment.

All right. Sir, what's your realization currently going on?

It's INR 3,665 or more actually.

INR 3,360?

3-6-5-0. On date, if you ask me, it's more than INR 3,660.

Okay. Okay. And sir, where do you feel like now the new crushing season will start, where do you see it going? Should we see that the new supply will come and it will soften a bit.

October is kind of done deal. November, Maharashtra sugar will come into the market, so we will have to wait and see. It's always had a bit of sobering effect on the domestic prices. So much will depend on the trading community, how they view it? I mean whether they would want the pipelines to be full or empty or they want it to be replenished. So it will all depend on that. It will all depend on the international sugar scenario also. So most of factors will determine what the price levels are going to be from November onwards. Normally, we have -- you're right, we have seen some sobering influence on the domestic prices once the Maharashtra sugar comes into the market.

Okay. Okay, sir. And sir, now that inventory also coming down in the whole industry in the country. So do we see sir, a good chance of a sugar strong sugar scenario, at least for the next 2 years, where about, around like 34 or 35 level on an average for the whole year.

Yes. I think so. That's very much a possibility. Now you see we are -- the industry is maturing. The sugar mills are very actively participating in the ethanol blending program. Lot of capacities are coming up. This year, the coming season, the expected sugar sacrifices is about 3.4 million tonnes, which is expected to go up in the year in the subsequent years. So we will eventually reach a position where the demand and the consumption and the availability of sugarcane -- the production of sugarcane is more or less the feat. And we carry about 3 months of stock in the pipeline, which is a healthy situation. So we don't want and we don't expect runaway increase in the sugar prices because holistic view is to be taken, and there has to be a good balance between sugar availability and sugar demand.

Okay. Okay, sir. Sir, last question is on the -- now that the staff is also has increased, what do you see on the MSP side and also on the exports of subsidy, will there be an MSP hike? And what's the chance of an export subsidy coming again.

So the reason to hang in the sugar price is I think -- I mean what were we asking the government about 34, INR 3,450 will our -- request is still pending with the government because it's done, it will sanctify the price -- the base level price at least so which is going to be good for the industry in future. So that clamor of our still remains. And exports, the government has already announced that it is not going to give any subsidy, but we are again pleading because when the government said they do not give subsidies at the time the international prices were higher, and about 2 million to 2.5 million tonnes of sugar was contracted for export. But now since then there has been lull, but we will have to wait and see how the sugar mills in Maharashtra react, whether they're going to go aggressively forward in contracting export deals regardless of whether subsidy is coming or not.

Okay. And but sir, there's a chance of MSP hike anyhow because the staff is asking it.

No. It's not being discussed. It's -- the request is pending with the government. But if you ask me, as on date, is there a talk of increase in the MSP? We have not heard of anything.

We have the next question from the line of Karan Agarwal from Tusk Investment.

Would you -- yes, so, sir, can you help us understand how the government calculates the monthly available quota for the government.

So it was -- we don't have much clarity on that, but what -- the stock which a sugar mill is carrying and the production that it has had plus weightage is given for exports done by the concerned sugar mill plus weightage is given for the use of B-heavy molasses. All these factors are combined and call is taken on the -- monthly -- how for a particular sugar mill. We are not ready to the -- put to the formula of the government.

Okay. Got it, sir. And sir, could you please share your [indiscernible] value to 3.5 and what -- when will it impact on...

I'm sorry. I'm not able to hear you properly. There seems some disturbance.

Hello? Is it better now?

Yes, it's better.

Sir, could you share your view on the rise in UP sugar, UP cane prices and the impact will it have on our cost of production.

So it's a INR 2 increase -- INR 20 -- sorry, INR 25. So whatever is the -- for example, if my recovery is INR 12.5 or INR 12. So you can accordingly divide and it's going to be about INR 200 a quintal increase in the price of sugarcane and the cost of sugar produced.

We have the next question from the line of Ashutosh Chaubey from Centra Advisors.

I have an operational-based question that, now that you earlier you mentioned that the company may around crush around, say, 378 lakh tonnes, that is around 3.78 million tonnes. And if the company is going to do, say, 100% B-heavy this year, that then we have a roughly ethanol volumes coming up at, say, around 8 crore, 8.1 crores. But if we go according to the -- according to the operational days of 320, 330 days, our capacity, we cannot produce more than, say, 5.4 crores, 5.3 crores. So what would happen to this extra?

That is in one of the plant, sir. We have another plant which is going to be operational in June-July 2022. So that's where we will be producing again ethanol. We'll be storing B-heavy ethanol and using it there.

Okay. So but that would be, sir, next year onwards right?

Yes. Yes. Next year. I never mentioned about the financial year. This financial year, we will be able to do about 5 crore liters of ethanol.

So sir, if we crush around, again, same amount of cane say, what we did last year. So this extra 3 crores, do we sell this molasses in the open market? Or do we just store it.

No. No. We have no intention of selling any molasses. We will sell only so much of molasses, which we are obligated to sell under the levy requirement of the state government of Uttar Pradesh. The manufacturers store -- generate it and stored for using our upcoming distillery in Dwarikesh Dham unit of -- in Bareilly District.

Okay. Okay. Sir, my next question would be, sir, once that in next year, June-July '22, the second 175 KLPD comes into the distillery's production. Could you give me a percentage bifurcation as to how much are we looking at, say, 60% would be produced through A-heavy through juice route and B-heavy would go through say for 40%.

See, let me clarify this. Actually, it is very confusing when we talk about financial year and then ethanol seasons. So let me talk for the season. So in the season, we tend to -- during season, we do use the juice directly in both our distilleries. And then during the off season, whatever during the season we have manufactured B-heavy molasses, which will get stored and will be used during the off season to make ethanol. So roughly 60% or 60% to 65% will be juice-based and the balance will be B-heavy based.

Okay. Okay, sir. Sir, I have just one last question with respect to your debt structure. Do we see any debt repayment or any dividend happening again this year?

Sir, the debt is -- all our repayments are happening on schedule. All our long-term debts are debts which are at subsidized rate of interest. One debt is at 5% rate of interest. And our distillery debt is at 7.9% rate of interest on which -- [ for 50% ] of the amount we get subsidy from the -- mention from the central government. So effective the rate is also lesser. So there is no incentive for me to prepay the debt. But having said that, since we have liquidated a lot of our stock, our stock levels have been moderated, our working capital utilization has come down substantially. Additionally, we have also raised commercial papers. We have issued commercial papers during this year. So as to rationalize our interest cost further.

Okay. Okay. Sir, just taking that -- taking that further, could you give me a ballpark number, say, what would the debt position to be at 31st March this year? Like how much would be the debt standing in our balance sheet? Sir, debt and long-term borrowings and the working capitals combined.

Working capital borrowing is something very difficult to talk about because how much of releases we will get, we cannot say as of now. Now about the long-term debt, as on the 30th of September, we have long-term debt of about INR 173 crores. So one debt is how much we are paying about -- so whatever due installments are there that we get paid. So it will come down by about, how much, I'm not able to calculate and tell you just now, but it will come down and short term -- and additionally, we have been sanctioned a loan for the new distillery. So we will be availing that debt -- that loan. So to that extent, our long-term debts -- long-term debt will go off.

[Operator Instructions] We have the next question from Monish Ghodke from HDFC Mutual Fund.

Sir, any plans to set up a distillery at Dwarikesh Puram unit?

No, sir. We will -- if we are setting up a third distillery, we will have to outsource our feedstock, which we have no intention. So all the -- you see will be generating as -- once both the distilleries are fully operational, we will be the Dwarikesh Nagar and Dwarikesh Dham during season, we will be using juice. And during off-season, at both the units, both the distilleries we will be using B-heavy molasses, which is generated at all the 3 units. So that is how we'll be able to keep our clients fully operational. So we will set up another distillery. We will not have adequate feedstock.

Okay. Sir, so any possibility to explore a grain-based distillery like Balrampur is doing in their Maizapur unit.

No. No. We are not doing grain base. We are not doing grain base.

We have the next question from Udit Gupta, Individual Investor.

Sir, my question is that, sir, by when can our expanded distillery be operational? When can we expect it, sir?

June-July 2022, sir.

June, July. And sir, what will be our capacity in terms of liters after expansion is complete?

So once both are -- see the Dwarikesh Nagar unit is 162 KLPD plant. So let's say 160, and that will be 175. So together, it will be about 330 KLPD plus.

Okay. And sir, in terms of liters, how much can we expect?

We expect to produce about annually anything between 10 crores to 11 crores liters, sir.

10 crores to 11 crores. So this is after levy molasses. Like this is the saleable quantity, sir.

Yes. Yes. Saleable quantity. Partly made out of juice directly and partly made up of B-heavy molasses.

We have the next question from Anupam Abu Goswami from B&K Securities.

Sir, my question is on the [indiscernible] we are putting too much majority on the proportion on juice base, that is, as you said, like 60% to 65% and the rest is B-heavy. I am to understand that the juice based margins are a little lower than B-heavy. So what's the thought process? I mean putting both the portion...

Sir, B-heavy we will let go anything waste sir. B-heavy will be used in entirety.

Okay.

So we -- it's not that we are going to produce ethanol from juice by sacrificing production of ethanol from B-heavy. B-heavy will be used in entirety.

Okay. So juice days would be somewhere to just to offset the sugar.

I'm just throwing that number of 50 to 65, exactly, I'll have to see and tell you how -- what kind of number it is.

Okay. Okay. So -- and you have also...

No sacrifice in so far as the use of B-heavy is concerned. It will be used totally.

Okay, okay. That's good, sir. And sir, we are -- I am to understand that we have also applied for expansion of our installed sugar crushing capacity as well, right? So where do we stand there? And how much can we increase in the capacity of crushing?

Sir, we got our capacities, approval for capacity increase because of regulatory reasons. Because what happens is, in all our plants, on a few days, we work more than the rated capacity, which is not acceptable to the authorities, which is the reason why we have got higher capacities approved. Having said that, every year, it's our constant endeavor to do improvisation in the plant capacity, to carry out such CapExes, which will ensure uninterrupted working, enhancement of efficiencies and wherever possible increase in the capacities also.

Last it was...

But I mean, as such, sugar is not going to be a single project to increase the capacity as such.

Okay. Okay. So last declared it was 26,500 TCD. So where do you stand now?

Sorry?

Last declared, 26,500 TCD. So where do we stand now in terms of...

21,500 TCD for Dwarikesh Nagar. Dwarikesh Dham, we are taking approval for 10,000 TCD from 7,500 TCD to 10,000 TCD and also in DM. So the capacities on paper rated capacity will be higher.

Okay. Okay. Fine, sir. And sir, last question. Sir, what would be your crushing guidance in the next coming years?

Sir, I already mentioned, it's very difficult to hazard a guess. Last year -- last season, we thought we will crush about 340 lakh quintals. We ended up crushing 378 lakh quintals. Before the start of this season, we thought we will do at least 5% more but this unseasonal rainfall has played havoc everywhere. But if the weather improves dramatically, drying happens, if there is good sunshine. So we will have to revisit the number time and again. I mean, whatever number I tell you at this point of time cannot be sacrosanct.

Okay. So it might -- could not be -- it might be a little less than, what, 5% hike, which you mentioned earlier.

It might be less also. It might be less also.

That was our last question for today. I would now like to hand the conference over to Mr. Vijay Banka for closing comments.

Thank you so much, friends, for your active participation in this earnings call conference. And thanks once again for reposing trust and faith in us. We are indeed grateful to you for the kind of support that you have lent us throughout. And we continue to strive, to improve our performance as much as is possible. And ours is a regulated industry. So there are a few parameters within the confines of which we have to work. We have tried our best to enhance efficiencies, and we'll keep -- continue to do so. Thank you so much.