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

Ladies and gentlemen, good day, and welcome to Dwarikesh Sugar's Q3 FY '24 Results Conference Call hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ajinkya Jadhav. Thank you, and over to you, Mr. Jadhav.

Yes. Thank you, [ Ms. Kant ]. Good afternoon, everyone. On behalf of Dolat Capital, I would like to thank the management of Dwarikesh Sugar Industries Limited for giving us the opportunity to host their Q3 FY '24 earnings conference call. From the management, we have with us today Mr. Vijay Banka, Managing Director; Mr. B.J. Maheshwari, Managing Director and Company Secretary cum Chief Compliance Officer; and Ms. Priyanka Morarka, President, Corporate Affairs. Without further ado, I would like to hand over the call to the management for their opening remarks, post which, we will open the forum for question-and-answer session. Thank you, and over to you, sir.

Yes. A very good afternoon, friends. I extend you a very warm and hearty welcome to the earnings call conference of our Q3 9 months FY '24 results. Our results are already there in the public domain. In this particular quarter, we have had a profit after tax of INR 10.52 crores, which is -- no, sorry, not -- profit after tax of INR 9.81 crores, vis-a-vis INR 10.52 crores that we clocked in the corresponding quarter last year. Our top line was INR 319 crores, vis-a-vis INR 391 crores in the corresponding quarter last year. So we have had lesser volume of sales in this particular quarter. We sold -- our sugar sales has been lower. We sold about 4.94 lakh quintals of sugar, vis-a-vis 6.47 lakh quintals that we sold in the corresponding quarter of last year. Of course, in the corresponding quarter last year out of 6.47 lakh quintals, we had exported 4.34 lakh quintals of sugar. So in a sense, the domestic sale of sugar is higher in this particular quarter, 4.94 minus -- vis-a-vis 2.13 lakh quintals. And during the 9-month period, we have sold 21.83 lakhs quintals of sugar. This is as against 33.24 lakhs quintals of sugar sales that we have in corresponding 9 months last year. Our average realization has been good so far as the quarter is concerned as well as the 9-month period is concerned. In this particular quarter, our average realization of sugar that we sold in the domestic market, the entire sales, in fact, was in the domestic market was about INR 3,852 per quintal. This is as compared to INR 3,560 per quintals in the corresponding quarter last year. And on a 9-month basis, our average realization has been INR 3,692 per quintal. This is as against INR 3,483 per quintal in the corresponding 9 months last year. We have -- our stock has gone up by about 3 lakh quintals. It stands at 7.71 lakhs quintals, vis-a-vis 4.72 lakh quintals on the same date last year. Stock is valued at INR 3,608 per quintal. The stock has gone up mainly because, number one, our sugar production was marginally higher, number one -- and number two, because last -- we had the same quarter, we had the benefit of exports, which was not available to us during this particular quarter. We have -- so further because of setback in so far as the ethanol sales is concerned, we sold INR 1.42 crore liters of ethanol, vis-a-vis INR 1.68 crore liters of ethanol that we sold in the corresponding quarter last year. However, on a 9 monthly basis, our ethanol sales has been higher, because in this 9-month period, our plan for both the distillery plants were operational, whereas in the last year or 9-month period, we had the benefit of both the plants -- the new distillery working only for a part of the period. So our loan profile is lean and still. We have -- as far as the term loans are concerned, we only have the subsidized term loans, which are all being repaid as and when they are due. Let me now take you through some of the industry developments which have taken place. The last quarter was very eventful in the sense that it was -- from an original estimate of net production estimate of 32 lakh tonnes, which is after considering diversion of more than 4 million tonnes for ethanol production, there was news of a drought impacting Karnataka and Maharashtra and the El-Nino factor playing out. So the production estimates were revised downwards, which led to the surge in the sugar prices. The sugar prices touched -- they were close to around INR 4,000 per quintal for a while. And then the government took this steep step of putting a lid on the ethanol blending program. So in fact, they did not want the sugar prices to be -- it was beyond their comfort level. So they wanted to encourage more sugar production. And of course, that could happen only at the cost of ethanol production. So the government immediately curtailed the procurement of ethanol which was to be made from sugarcane juice directly. And they also restricted the quantity of ethanol to be procured, ethanol made out of B-heavy molasses, it's procurement was also restricted to the quantity that we had originally offered to the oil marketing companies. And departure from the convention, they did not give us any increase in the price of ethanol to be made from juice and B-heavy molasses, rather they gave a very good increase for molasses to be made from the conventional C-heavy molasses route. And even they wanted -- in fact, they want -- the government's idea was to restrict the sugar sacrifice diversion to ethanol to only about 1.7 million tons. So that the production of sugar is concurrently boosted. But lately, there has been some news. In fact, All India Sugar Traders Association came out with their production estimate now. So the production estimate stands enhanced by nearly 1 million to 1.5 million tons. Maharashtra and Karnataka, both have reported -- both are likely to report a decent production number and so is Uttar Pradesh. So with this happening, and plus ISMA is also likely to announce the numbers today, so it is expected that production numbers will not be all that bad. So there is every likelihood -- we will, of course, request the government to revisit the ethanol blending program. And you see that the production of sugar has moderated. And we do hope that this will happen. As you are aware, sugarcane price for Uttar Pradesh has already been announced, the state advised price. So the state government has given an increase of about INR 20 a quintal. So which was more or less on expected line, considering the fact that we are in the midst of -- we are looking at a general election ahead. So that's how it is. As far as the rest of the quarter is concerned, we will have to wait and see how the sugar prices behave. We do expect that the prices remain at around INR 3,800 and not lesser than that. Much will depend on how the government looks at the new production estimates and what action -- what corrective actions the government takes. Thank you very much. I now leave the floor open to question-and-answer session. Please go ahead and ask your questions, be it sector-specific or company-specific, here we are ready to answer your questions.

[Operator Instructions] First question is from the line of Neha from SKS Capital.

Am I audible?

Yes, yes, you're loud and clear.

I just wanted to ask, sir, what is the current status of the C-heavy molasses that you're talking about. You mentioned a bit on the initial remarks, I just wanted a bit of elaboration on that. Some pointers on what is the current, like, production looking like of sugar. I mean I listened to a couple of previous sugar companies as well, they're like the production is recovering, and it's likely to be a good -- I mean, a good year in terms of that. And any intake on exports by like -- I mean, any certainty by the government or any direction by the government that you could like highlight, that would be the highly helpful.

So you want to know from me the product -- how the production numbers are going to look for the industry as a whole or for our company?

Both would be helpful, sir.

Okay, sure. See, as far as the country is concerned, I mentioned in my opening remarks, that these estimates have seen some wild swings. Initially, we started with an estimated production of about -- net production of 32 million tons after considering diversion of about 4 million tons in favor of ethanol. So which means we were then talking about gross production number in excess of 36 million tons. But towards the start of the season, it became evident that because of the impact of drought and El-Nino on Maharashtra and Karnataka, the production numbers are going to be substantially lesser. So the last estimate when it was drawn, it was about 32.5 million tons after considering the gross production of 32.5 million tons. Which means if we deduct from that the sugar diversion of 1.7 million tons which the government wanted to restrict to, so the production that was being spoken to was about 30.5 million tons. But in the last 1 month or so, the production numbers again seem to be getting revised. Yesterday, AlI India Sugar Trade Association came out with a production estimate of 31.6 million tons, which is the net production. After considering about 1.7 million to 2 million tons of sugar diversion for ethanol. So again, which means we are looking at a gross production number in excess of 33 million tons. So ISMA is also likely to come out with this number today. So we have seen some big swings in the production estimates. But that happened, it becomes very difficult for anybody because the weather plays a big role. Delayed rains in the month of November have -- did help the sugarcane crop in the state of Maharashtra and Karnataka. So presently, we're looking to produce at least about 31.5 million tons, if not more. So production -- with production numbers seeming good, that we'll definitely even request the government to revisit the ethanol blending program. Now things can -- if they consider our request -- they see to our request favorably, then again the production numbers could undergo a change because then we will -- we still have some time to realign our production, such that we again go back to making ethanol directly from sugarcane juice. So if that happens, again, the numbers will undergo a change. So this is where we stand. Globally, of course, it's going to be a surplus year. But then, globally, if you have seen the prices are on the rise. Sugar prices are lot better than what they used to be in the past. And so far as our company is concerned, again, it all depends how does the government react going forward. So I mean if the ethanol blending -- if there is a lid on the ethanol blending program the way it is as of now, then naturally, we will maximize our sugar production. But you see 2 of our plants are located in Bijnor District. So I must put a word of caution here and Bijnor District was the most impacted district in UP around this season because it received excessive rainfall. And Red Rot, which had spread all across Eastern and Central UP, this leaves -- Bijnor District falls in the Western UP. So it's spread to East UP -- West UP as well. So we will have to wait and see. We've just about finished crushing the ratoon crop, and we have started the plant crop. So the yields can substantially vary here again and we could be in for some pleasant surprises. But as of now, yes, crushing numbers seem to be rather on lower side.

The next question is from the line of Prashant from Elara Securities.

Sir, what will be current [ ex mill ] price of sugar in UP?

It's around INR 3,800 a quintal.

Sir, there has been steep price correction in Maharashtra. Prices, I think, could be around [ INR 3,500 ] or even lower for a few mills. So do you expect this gap to reduce? I mean in terms of decline, we may catch up or Maharashtra could catch up on the upside?

I would believe Maharashtra should catch up on the upside. You see the -- Maharashtra was perhaps already aware that the production numbers would be higher. But once the numbers come in the public domain, there is the assurance that, okay, the numbers will be this much and not further higher. So I guess Maharashtra should be able to catch up now.

And sir -- so at current price, what would be your strategy for selling sugar at INR 3,800, would you be willing to sell the entire quota or you would want to wait for a while and recalibrate it?

We have always sold whatever quota was allotted to us. So there is no reason why we will not sell the quota that we receive.

Okay. And sir, for Q3, what was the mix of juice and B-heavy ethanol sales?

So you see, we have -- I'll tell you about the production numbers. We have -- in this particular quarter, our production was substantially lesser from ethanol. Because midway during the quarter, this changed. So only about -- very small quantity was used for direct transfer to distillery by way of juice. So the number is significantly lesser.

Sir, can you mention the number? Or I mean...

One second, I'll tell you the numbers. One second.

Sales volume, not production.

Certainly, I'll get back to you on this. I'll tell you the number.

Sir, so in our books, we would have taken sugarcane price of [ 360 or 340 ] only?

No, no, no. We have taken the enhanced sugarcane price.

And sir, would that lead to increase in transfer price of molasses or syrup?

It has resulted in higher transfer price.

And how much would that be for this?

Now transfer price of B-heavy molasses stands close to INR 1,400 a quintal.

And for the syrup?

For the syrup, again, it's -- you see the syrup costing is altogether different. So what happens is you take the cane cost and you deduct from that whatever bagasse has been cleared out of that. So it actually goes up by INR 20 a quintal. So syrup transfer cost naturally gets enhanced.

To the similar extent only maybe around INR 19, INR 20?

Yes, more or less. More or less. More or less.

Okay. Sir, one bookkeeping, not question, but clarification. If you look at last year, Q3 presentation, then the segmental EBITDA for sugar business was negative at around INR 11 crores.

Yes.

But this quarter's Q3 presentation, it is showing positive EBITDA of INR 15.3 crores.

Yes. I'll explain to you why it is like that. Because last year, we had 3 segments reporting done, sugar, power and ethanol. Now, sugar and ethanol have been clubbed into one now.

Sugar and COGEN.

Sugar and power. Sugar and power.

Sugar and power, they have been clubbed into one now.

You wanted some figure, right? Which figure? You wanted some sales figures?

Yes, B-heavy and juice ethanol.

Okay. That we'll give you later, yes.

[Operator Instructions] And the next question is from the line of Nikhil Gada from Abakkus AMC.

Sir, just firstly, could you help us with the gross recovery rates for the quarter? And what would have been the same -- for the same period last year?

Yes, I'll tell you, certainly. Just give me a moment.

Yes.

Yes. For the -- one moment. I'll tell you. So the gross recovery has been [ 11.05% ] Vis-a-vis -- for this quarter vis-a-vis 11.11%, which means a small margin drop of 0.06%. But we hope to make good recovery in the coming quarter because the recovery trends are a lot better than what they were in the last year. Except -- I mean, we have 3 plants. So in 2 plants, the recovery is better than what it was in the last year. And there has been one plant where the recovery is marginally low.

So fair to assume that we might not see any major decline in recovery rates or...

Not at all. In fact, we will see some improvement in the gross recovery.

Okay. That's nice to hear. Sir, just then on the overall crushing numbers. While you have said that the crushing has been suboptimal and you've also mentioned some amount of sugarcane getting diverted to khandsari and gur. So could you help us in the overall outlook of how the availability is for sugarcane and what kind of crushing can we do? If you can just give the FY '24 and FY '25 estimates, please.

No. Insofar as FY '24 is concerned, there will be no problem because the crushing will go on until March end or beyond, okay? So the problem may rise in FY '25. So if you ask me from a season's perspective, yes, we expect some decline in the crushing numbers. Last year, together in all 3 units, we crushed about 4.01 crore quintals of sugarcane last season. So that number will be lesser this season.

Sorry, I missed that number. What was the number?

Last year, we crushed -- during the season, we crushed 4.01 crore quintals of sugarcane. So that number is going to be lesser this season. Whereas, insofar as FY is concerned, there will be no reduction at all. And if at all, the numbers will vary, they will very marginally either ways.

Because season is overlapping financial year, that's why.

No, no, sir. I understand, sir. So just to give a context. If I look at FY '23 numbers, we did 38,21,000-odd...

Yes. So we should do similar numbers. We should do similar numbers...

For FY '24? And for FY '25, we might see a marginal drop, right?

Yes, yes. We may see a drop, yes.

Yes. Understood. Understood. And sir, I know it's still quite volatile in terms of how the situation will pan out. But can you give any ballpark number? I'm once again asking for fiscal year, how much would be the overall crushing based on C-heavy and B-heavy sugar cane juice for '24 and preferably for '25 as well.

You see C-heavy, we are crushing only now in one of our unit -- we are generating C-heavy molasses only in one of our units. That is only to cater to the country liquor requirement. So we will have to work it out and let you know how it will pan out, because we've done some quantity based on due diversion. And in 2 of the units we are doing on B-heavy basis. And in 1 unit, after this promulgation came, that we have to curtail our production of both juice and B-heavy, we started making C-heavy there because it's worthwhile generating C-heavy and giving it for country liquor purpose there, so that we can maximize sugar production there.

Correct. But then once our -- the amount that we have sort of been given to the OMCs, both the B-heavy and juice is over, I think we'll have to completely shift to C-heavy if my understanding is right.

No. You see now eventually everything will depend upon what kind of cane is available for us. So the template that we are going to follow is in 1 unit we will do C-heavy and complete our country liquor requirement obligation. And if there is excess crushing available, that we will generate B-heavy. Okay.

Okay. And it -- C-heavy?

That is the unit where we don't have a distillery, that's the Dwarikesh Puram unit. So that is a template we are going to follow there. In the rest of the 2 units, we are doing B-heavy. So the idea is to, under the given constraints, to maximize ethanol production and bring it at least on par with what we have offered to the OMC. And if there a likelihood of more production being there of ethanol, we are always at liberty to use C-heavy molasses and make ethanol out of that. So it's a very dynamic situation. So you still have to wait and see. I mean the -- around March, we will have more clarity on this.

Understood. And sir, just one last question. This is regarding the segmental performance per se. We have seen a decline in EBIT margins in distillery segment. Is it largely to do with -- such as the volumes being lower? Or is it also because of some amount of recovery impact and some other things as well?

No. It -- number one is volumes, but it has got nothing to do with recovery. Our recoveries are okay. The reason why it is lower is because last year -- this year, we have considered the incremental cane cost, the INR 20 increase that has been announced by the government. So that has been factored in the raw material cost, okay? So that is one reason. And secondly, unlike last year, where the government not only gave us increase in the ethanol price of both juice as well as B-heavy molasses made ethanol, this year they did not give any increase. And last year, we had another benefit because the government wanted the ethanol blending to happen. They wanted to encourage more ethanol blending during the lean months, they had given us some relief price also. The benefit of -- which was again not available to us this season.

Understood. Understood. And sir, just last question. You know now that we have to do the B-heavy as well in line with C-heavy for country liquor, this impact, which was of INR 20 crores, which we saw last quarter, this is sort of a recurring impact that we'll see every year, right, no?

So last year -- it's going to be slightly less, because last year, we had to give 20% of B-heavy. So this year, we will be under the revised molasses policy, under the new molasses policy of season '23, '24, we are required to give 19%. So there is 1% lesser obligation if we talk in terms of B-heavy. Okay? Insofar as C-heavy is concerned, last year, it was again 20% and now this year it is 26%.

So more or less, the impact would be INR 1 crores or INR 2 crores less?

Yes, yes. Not much.

[Operator Instructions] The next question is from the line of Udit Gupta, an individual investor.

Sir, my question is that you just spoke about that our cane crushing could be lower, is there any impact of the Bindalagro plant also sir it's just come from a...

Yes, of course, it is there. There are 3, 4 reasons. I'll tell you why the cane crushing could be lower. Number one, unseasonal rainfall and consequent water logging in the fields. Number two, Red Rot infection -- I mean Red Rot having infected the plant. Number three, Bindalagro plant. And number four, diversion of sugarcane for gur and khandsari making. So there have been -- so all the 4 factors will play out and which is why we expect lesser -- smaller crushing. I mean, some decline in the crushing numbers.

Yes, sir. Yes, sir. But sir, the recovery you said is going to be higher than last year.

Yes, we do have...

Why it could be higher?

Yes, yes. Which is very encouraging because in spite of Red Rot menace being there, the recovery trends into -- we have 2 units in Bijnor District. So in 1 unit, the recovery is a little bit behind what we had talked in the last season. Whereas in other unit, it is higher than what we had talked in the last season. This is in spite of extremely harsh winter conditions in that part of the country. Whereas our Bareilly unit, where we have brought about this varietal change in our cane -- where there is some amount of varietal change which has happened, the recovery trends are definitely better.

What was the gross recovery last year, sir, last season, I mean?

Last year, it was around -- you're talking up to 31st December or the entire season?

The season, sir. The season.

Season was around 11-point -- one moment, I'll tell you. Just a second. Kindly bear with me for a moment. For the full season, it was 11.70% gross recovery.

Okay. And sir, this year, we're expecting it to be better by roughly how much, sir?

Well, I can't quantify that, but it looks better.

And sir, this thing that you just spoke about, the varietal thing, by when can we expect a significant varietal change for our company in all 3 units sir?

See, one of the -- no, I'll tell you, I'll give you a number. For example, in the Bareilly unit where we initiated the program earlier than what we did in the other 2 units, there, in the coming season, we should see about 65% replacement of the variety 238, by some improved and new varieties such as 15023, 14021, 98014, et cetera, et cetera, and 118 also. Where is the other 2 units in the Bijnor district, you see til the last year, that particular district was kind of insulated from the Red Rot program. Now how so ever must you try with the farmers, the farmers unless they are themselves impacted in terms of reduction in yield, et cetera, they are not very active participants in the varietal change program. So now they are also participating in big numbers. So there, over the next 2, 3 months -- 2, 3 years, we should see a substantial change in the variety.

So this -- the next season will be the first time that there will be some...

No. Even in this season, there is small -- I mean, some change we will see. But next season, yes, it will be a tangible change. And thereafter, it will gallop then thereafter.

I get it, sir. It will become like Bareilly in 2, 3 years.

Yes, yes, to some extent, yes.

And sir, the cane crushing, that we're expecting it to be lower roughly by 2%, 3%. So can you give us any more...

No, no. It's going to be more, but we will have to wait and see because just plant cane has started arriving. And plant cane, we have often seen that surprises. The yields can be better or they can be similar. So we will have to wait and see. We also expect some moderation in the gur and khandasari prices that they are offering to the cane growers. So all these factors will play out and only then we will have some clarity. But I guess by the middle of -- beginning of March or middle of March, we will have a lot of clarity on the crushing numbers.

And sir, about this, any further plans of CapEx or anything that we are thinking about for the next season or beyond that?

No. So we keep constantly doing something or the other for enhancement of efficiencies. So for example, this year, we have brought about some savings in our steam consumption, so which will make additional bagasse available. But considering the fact that the bagasse prices have also a bit tapered down, we are trying to maximize our power generation.

Yes, sir. And sir, one of the sugar companies have reported that their PPAs got terminated and then they shifted to market sale of power, so they are doing much better than that. So anything of the thought for us is going to happen in the near future?

No, we have -- our terminal date is way ahead. So we don't have to worry. We'll keep supplying to the power corporation. Because we have a stable and reliable buyer there. And yes, the prices may be a little lower. But here, there can be some mix in the price, so it's a little bit risky proposition.

[Operator Instructions] The next question is from the line of Mr. Ajinkya Jadhav from Dolat Capital.

Yes. I have a couple of questions. So looking at the current restrictions on ethanol to be made from B-heavy and syrup. So if we are planning to future capacity, what will be our strategy to go with the, let's say, grain, FCI, or like which route we will target for the future CapExes?

Sir, we expect the government to go back to the ethanol blending program and carry it out with the same vigor and enthusiasm that they have done. It's just that it -- the use of shortage in production, et cetera, came and which resulted in government restricting the ethanol procurement made out of juice and B-heavy. So we expect the government normalcy to be restored soon. And we expect our distillery brands to be optimally operational once the normalcy returns.

So should we assume that in the long term, we won't be going for a grain-based route capacity?

No, no, we are examining. But grain again, now the option that is available to most sugar millers is to use maize. Yes, it makes sense now to use maize. But these are all again subject to big swings in the procurement price. There are big swings in the procurement price, be it maize and, for example, the rice. Again, the FCI stopped giving rice to the sugar mills, so they had to resort to -- I mean, the distillery, so they had to resort to buying it in the open market. So there are a lot of complexities associated with that.

Okay. Okay. Yes, that's helpful. The second question is regarding the molasses levy obligation. So in the last con call, you were expecting -- you said that like the UP government treated both B-heavy and C-heavy equally. But like they have done good in terms of like now the B-heavy obligation is cut to 19%. So like as an industry, you -- like is it -- are we trying to convince the UP government to put it way below that, like below 19%?

Yes. For example, if the crushing numbers are good. You see, eventually, government is concerned with what is -- UP government is concerned with how much of country liquor is required. So they do the backward working. So for that much country liquor, how much is the feedstock that is required. And then based on that, they provide some cushion and then they determine the percentage. So there is always a possibility that -- having determine this percentage also, there is a possibility that they may not source the entire 19% or 26% as the case may be.

Okay. Okay. So considering the elections this year, I think -- like you will be expecting also the higher requirements for country liquor, correct?

Yes, they must be expecting. But that has already been factored while determining that as 19% and 26%.

Okay. Okay. So lesser chances to go down.

Yes. Yes.

Okay, yes. The next question is regarding the Red Rot. So as you mentioned that the severity of this Red Rot in the Bijnor District is high currently. So...

Now, high. Yes.

Yes. So compared to like what we have seen in the past year. So like how do you see the situation? Like is it the highest or like how should we take it?

It's very high because the ratoon crop is severely impacted, but only one difference, that we observe is, when the Red Rot impacted the Eastern and the Central UP, it also impacted the recovery. Fortunately, it has not impacted the recovery in Bijnor District. The recovery continues to be as good as it was before the Red Rot impact was there. So yes, now the farmers are also very enthusiastic about changing the variety, having understood that this variety, 238, has perhaps outlived its utility. So it's going to be a very collaborative and corroborative exercise. So we expect in 2, 3 years time, we will be able to bring about significant change in the varietal mix there.

Yes. Okay. Yes, understood. And then my final question is regarding like if, as you said, ISMA will come up with its projections for the sugar production this year. And if the government gets convinced like we should provide some relief for ethanol production from B-heavy, like can we expect the ethanol prices from B-heavy and syrup to go up? Because they have -- well, the government has kept the prices same Y-on-Y. So can we expect prices relief in...

Yes, yes. There can be. Because even old price also -- it makes imminent sense to make ethanol out of that. Because sugar prices as of now are INR 3,800, and we have every reason to believe that there will be around INR 3,800. But when the government revisits this ethanol blending program and wants to encourage it, I'm sure our request for enhancement of price also may be considered favorably.

The next question is from the line of Sanjiv from SKD Consultants.

Sir, actually, I'm a bit late in joining. So my first question was regarding the yield that we have got in the first 3 months in this quarter. Because I try to search it, but nowhere I found the figure of the yield -- recovery, yield means recovery, recovery, I'm sorry, recovery is the correct word.

Yes, yes. I mentioned about it. It is 11.06%, 11-point -- gross recovery is 11.06%. And this is vis-a-vis -- I'm sorry, 11.05%, vis-a-vis 11.11% in the corresponding quarter last year.

Last year. And this is a without B-heavy? This is recovery...

This is gross recovery. This is after factoring for juice direction, whatever sugar sacrifice we make on account of juice, whatever sacrifice we make on account of B-heavy, this is factoring for all that.

I just now heard that this Red Rot has not affected the recovery, but the crop will be somewhat lower than last year? Or we are planning to crush last year's quantum? Or are we going to get more quantum for crushing this year?

No, sir, Red Rot has played havoc with the yields of the farmers. So insofar as ratoon crop is concerned, they have suffered a huge setback. But plant cane has just most started coming, so we will wait and see how is the yield in the plant crop. But yes, the crushing numbers are going to be impacted because of 4 reasons. Number one, because the yields are lower because of the rain, because of Red Rot and there are 2 other factors which will be responsible for lower crush rate -- lower crushing. Number one is the coming up of another unit in that district. So it will take a while for the thing -- I mean, cane harvest to go up. And then the rates were -- rates offered by the Kolhu and Khandsari sugar manufacturers for cane is very high. So these are factors which are playing out on the cane availability. So we will have to wait and see.

And sir, regarding export of molasses has been banned, so in any way, it's going to help our company get more molasses from outside for processing?

No sir, as of now, we are not buying. We are just weighing all the things in our -- we are evaluating all such proposals, whether we should buy molasses and maximize our distillation capacity. So we are constantly on the watch in so far as that is concerned.

Okay, sir. And can you, for my understanding, tell me that this Red Rot is a problem only in the western part of the UP or it is for the entire state?

Sir, first it started in East UP, then spread to Central UP and now gone to the Western UP. So Central UP has -- was the first to bring about the varietal change, followed it up by Central UP (sic) [ Eastern UP ] and now the Western UP is also going to replicate this. So as I mentioned in one of my remarks earlier, you see the farmers unless they are directly impacted, they do not -- they are not very enthusiastic participants in the varietal change program. And so once the yield suffers a setback, that is when you see them making efforts -- joining our efforts. We are making efforts all the time. But they join us only when their yield starts -- takes a setback.

But about this Red Rot, sir, some of the western unit who are holding con calls, they have not talked about it. I mean so is it that your districts are ahead of the Meerut and all these districts? Which is...

So we are -- Bijnor District as such is in the West of Central or one can say East of Western. So where is the question of time.

Yes. So sir, I mean, can you tell us whether Triveni or Dhampur, Dhampur Bio, et cetera, they are also going to get affected?

Yes, yes. Sooner or later.

Some problem will be there with them also.

Yes, yes.

[Operator Instructions] The next question is from the line of Rishabh Shah from Dalal & Broacha.

Am I audible?

Yes, yes. Very much loud and clear.

I just have a slight doubt that is it too early to ask regarding how much B-heavy molasses will be stored for off-season for making ethanol or sugar? And if no, then can you give some guidance over that? It would be very helpful.

It's too early, sir. Actually, first, we will have to have some clarity on our crushing numbers. Once we have some clarity and then it is evidently -- like I said, we are making -- there are various constraints within which we are operating. Number one, the government has restricted the quantity of ethanol that they will lift, which will be using B-heavy molasses at the feedstock to the number -- the quantity that we had initially offered, number one. So number two, we are yet to have more clarity on the crushing numbers. So it's a very dynamic situation. As we go ahead, as and when there is more clarity and then certainly, like I said, we're again going to request the government to restore the ethanol blending program now that the production numbers seem to be reasonably on the higher side. So only then we will have more clarity. As far as our plant capacities are concerned, we have enough flexibility. We can use juice. We can use B-heavy molasses. We can use C-heavy molasses. All can be used for generating ethanol.

Yes, yes. Yes. And also I would like to ask that in the previous call, you had mentioned that we aren't going to go through grain -- a grain division for producing ethanol in off-season. So is that still on or largely...

We are constantly evaluating all such proposals, sir. As of now, we feel that the capital cost is a little, too, on the higher side and -- with the benefits that are going to accrue. And secondly, this program has received only a pause as of now, ethanol blending program. And we do hope that our distilleries will be up and operational on full capacity basis very shortly.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Vijay Banka for closing comments.

Thank you very much, friends. Thank you for participating in this earnings call conference and for asking questions. It was a great pleasure interacting with you all and sharing our thoughts and our plan of action. We look forward to your continued support. And we, once again, thank you for the confidence and trust that you have reposed in us. And I would ask my colleague, Mr. Maheshwari, to make any comment if he has any.

I thank each and everyone of you for active participation in this earnings call. I look forward to again meet you in the next conference call. Thank you.

Thank you so much.

Thank you. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.