E.I.D.- Parry (India) Limited (EIDPARRY) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the E.I.D. Parry India Q1 FY '26 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Manyal. Thank you, and over to you, sir.

Hello, everyone, and a warm welcome on behalf of DAM Capital to the Q1 FY '26 Earnings Call of E.I.D. Parry India Limited. We thank E.I.D. Parry's management for giving us an opportunity to host this call. On the call today, we have Mr. Muthiah Murugappan, Whole-Time Director; and other senior management team of E.I.D. Parry. I hand over the call to the management for opening remarks, followed by a question-and-answer session. Thank you, and over to you, sir.

Thanks, Sanjay, and very good morning to everyone. It gives me a great pleasure to be a part of this analyst call and to share some updates on both the global as well as the Indian scenario and explain the Q1 performance of the company. You will also note that our quarterly investor presentation has been uploaded online post our Board meeting yesterday. I'll start with the global scenario. The global sugar market is projected to remain in mild surplus through the sugar year '25-26, primarily due to increased production in Brazil, India, and Thailand. Favorable weather has supported higher output in India and Thailand, while Brazil continues to crush aggressively with a sugar mix of about 52% despite dry conditions affecting cane quality. However, risks to Brazilian output persists due to lower cane yields, declining ATR and weak sugar prices, which may prompt the shift towards ethanol production. According to Czarnikow, the market is still oversupplied by approximately 2 million metric tonnes of raw sugar and 1.1 million metric tonnes of white sugar in 2025, with an additional 1.2 million metric tonnes of white sugar surplus expected in the first half of 2026. This has driven raw sugar prices down from $0.215 per pound in February to about $0.16 per pound at present. The white premium remains uncertain with refiners needing $100 per metric tonne to remain viable, suggesting a necessary range of $80 to $100 per metric tonne to incentivize supplies. EU sugar output is expected to decline, while demand from key destination markets such as China, Indonesia, and Bangladesh have softened. With prices trading near ethanol parity, any further shift in Brazil's sugar -- Brazil's mix towards ethanol would help stabilize the market. Strategic policy decisions and production responses will be key to rebalancing global fundamentals. I'll now move to the Indian scenario. As of mid-July, India sugar production stands at 25.7 million metric tonnes with 14 mills still operational. Early season yields were impacted by adverse weather, but improved recoveries on the back half of the season have supported output. Pre-monsoon rainfall, which largely occurs during the month of March to May 2025 was 42% above normal, significantly affecting cane growing states positively. Maharashtra, Karnataka, and Tamil Nadu all recorded surplus across major districts. Domestic consumption is projected to be 27.9 million metric tonnes with 0.6 million metric tonnes expected to be exported from the 1 million tonne quota, which was provided. 3.4 million metric tonnes is the expected diversion towards ethanol. Estimated closing stocks are in the range of 5.5 million metric tonnes, roughly 2.5 months of demand. Most states have seen a decline in sugar output with Maharashtra and UP showing the largest stocks in absolute terms. Statewise, UP leads with 9.24 million metric tonnes, followed by Maharashtra at 8.09 million, Karnataka at 4.5 million metric tonnes, and Tamil Nadu at 0.5 million as of mid-July. Key factors to monitor going forward will really be how the clean crop pans out in the upcoming sugar season. The good monsoon spells are encouraging on this front. Also developments on the ethanol blending program, particularly on ethanol pricing as well as outcomes of India-U.S. trade talks and any bearings this might have on the ethanol and sugar sector will also need to be monitored. I now hand over to our CFO, Mr. Venkateshwarlu, to take you through the operating performance of the company in Q1.

Thank you, Muthu. Good morning to all participants. It's a great pleasure to be part of the analyst call and to share the key information on the operational and financial performance of the company. I would like to share with you the key operating parameters of each segment. So as far as the sugar operations is concerned, we have crushed the Tamil Nadu plants and about 63 days, average 64 days we have crushed during the quarter 1. So I would like to share the quantitative results agenda. The Q1, we crushed about 211,000 metric tonnes when compared to the corresponding quarter of the previous year was 1.93 lakh metric tonnes. Recoveries are under pressure because the recoveries for the current quarter is 8.02% against 8.6% of the corresponding quarter of the previous year. We produced sugar about 17,000 metric tonnes during this quarter and against the 16,000 metric tonnes of corresponding quarter of the previous year. So cane cost is about INR 3,844 per metric tonne against INR 3,491 per metric tonne of the corresponding quarter of the previous year. This is mainly on account of the FRP impact, which was declared by the central government from the INR 3,150 to the INR 3,400 per metric tonne. As far as the sales -- sugar sales volume is concerned, sugar sales volume for the current quarter is 84,000 metric tonnes. This is completely driven by the domestic sale. There is no export quota available to us. Whatever the quota was available, we already exported. The corresponding quarter of the previous year was 1.05 lakh metric tonnes. So the previous corresponding quarter also, we were completely domestic. That was about 6.05 lakh metric tonnes. The reduction is mainly on account of the lower release order quota, which is given by the [indiscernible]. As far as the sugar selling price is concerned, average selling price overall is INR 41.99 against the previous year's corresponding quarter of INR 38.60. We are carrying about 1.2 lakh metric tonnes of sugar as at June '25, and we are valued at an average at INR 37. So as far as the segment revenue is concerned, sugar revenue for the current quarter is about INR 347 crores as against INR 404 crores of the corresponding quarter of the previous year, registering a decline of about 14% on a lower release quota. So the Consumer Product Group delivered a turnover of about INR 192 crores for the current quarter, registering a decline of 11% over the corresponding quarter of the previous year of INR 216 crores, mainly on account of lower release quota for the sweetener category, partly offset by steady performance in the staples segment, which has registered a growth 33% over the corresponding quarter of the previous year. As far as the Co-gen is concerned, the power generated during the quarter 1 about 221 lakh units as against 307 lakh units in the corresponding quarter of the previous year. We have exported about 122 lakh units against the 170 lakh units in the corresponding quarter of the previous year. Average power tariff for the current quarter is INR 3.67 per unit as against INR 4.23 per unit in the corresponding quarter of the previous year. So revenue for the quarter is about INR 7.53 crores as against the previous year, INR 11.94 crores in the corresponding quarter of the previous year. As far as the Distillery is concerned, we have sold about 413 lakh liters against the previous corresponding quarter, 390 lakh liters, of which ENA is 153 lakh liters and ethanol was 260 lakh liters. As far as the realization is concerned, INR 67.59 per liter against corresponding quarter of the previous year's realization of INR 64.31. Revenues were INR 296 crores compared to INR 263 crores during the corresponding quarter of the previous year. As far as the Nutraceutical segment is concerned, as far as the Indian operation is concerned, we have done about INR 5.94 crores the turnover against INR 8.41 crores in the corresponding quarter of the previous year. At the consolidated level, Nutra business turnover is about INR 27 crores as against INR 59 crores in the corresponding quarter of the previous year. As far as the refinery operations is concerned, the operational revenue is about -- this quarter is INR 908 crores against INR 1,213 crores the corresponding previous year quarter. As far as the PBT is concerned, good story because we made a positive PBT of INR 67 lakhs against the loss of INR 6.79 crores. Sugar production is about 2.25 lakhs metric tonnes against 1.6 lakhs metric tonnes in the previous year quarter. Refined sugar sales is about 2.02 lakhs metric tonnes against previous quarter -- previous year quarter of 2.23 lakhs metric tonnes. So as far as the loans is concerned, there is no long-term loans, which is repaid to parent company, about INR 200 crores. And as far as the short-term loans, external is concerned, it is INR 461 crores against Q1 of '24, '25 is about INR 220 crores. So these are all operations of the Q1. Now the floor is open for the questions.

[Operator Instructions] The first is from the line of Rajesh Majumdar from B&K Securities.

So I had a few questions. Sir, first question was on the Consumer Product Group, the sweetener category. So how do we read into the volumes of the consumer part of this business as in the entire sale is quota driven? So if we are not able to grow our sugar volumes over the next few years, will the consumer part as a proportion of the sweetener category be -- can it be theoretically 100% or what percent? Or do you have to sell some raw sugar as well? How do we read this? That was my first question.

Yes. So Rajesh, hello, good morning. Yes, it is quota driven. So we'll have to do a couple of things on the sweetener side, of course, focus on sales of value-added product from the sweetener segment, launch new products, expand the product portfolio. That is on the anvil as well. We will also make tactical calls to take in more quota. We also have to now feed an institutional market wherein we have to sort of balance overall pricing as well. So we'll take some of those tactical calls going forward. So those are opportunities for sales to grow in the sweetener part of the CPG segment. There also, I would say the last point I would like to make here is you could also have traded volumes wherein which you would obviously, based on the right quality control, have other mills pack for you. That's something which will also be -- being explored. It needs to be done at the right economics. So there are opportunities to take this up. We will be tactical about it.

So theoretically, it can move up to whatever percentage of the overall quota, depends on the part of the business?

Yes, it can move up. It's about the tactical choices that we make. I mean one theme of Q1 is to -- obviously, we've got distribution, which we're expanding, and we wanted to -- within our current quota, we wanted to take the attractive business, and we've actually [ reticent ] some of that very low-value business wherein discounting factors are high, so on and so forth. So we made some conscious calls in Q1.

Yes. My second question, sir, was on the Refinery segment. While we have seen we have closed down some step-down subsidiary in the UAE, which was into exports, we are also committing more capital in terms of the business. So what's really going on here in terms of the refinery business, I would like to know?

So yes, I can comment on this. Rajesh, so I think the -- as you know, the refinery business, there is a lot of debt and this capital has really gone in for debt reduction in order to strengthen the operations of the refinery. And I think that's why we've had these infusions.

What about the closure or the step-down, sir, which was into exports? What is it indicating?

We didn't find that of any strategic significance to the refinery operations. I think we are happy with the stand-alone operations here in Kakinada, and we'd like to remain focused on that.

Okay. And sir, we've seen a sharp increase in the short-term debt in a quarter where normally 1Q and 2Q, we see the short-term debt coming down and then probably it goes up when the sugar crushing starts in 3Q and 4Q. But in 1Q, we've seen a sharp increase in the short-term debt. So that is a bit alarming. I mean, any reason why that has happened? And how should we read that going forward?

Venkat, you can…

Rajesh, if you look at the short-term debt, this is not only relating to the crushing and also we have started sourcing the molasses from the other states because keeping in view the -- since we increased the distillery capacities in the last year. So we need molasses over and above what we are going to crush it. So those are all the molasses. So we have done a forward contract. And some of the places we already sourced the molasses. That is one of the reason. Second reason also you have to look at our CPG business is going well and our receivables also is -- slightly is going up in line with the turnover and in line with the industry standards. Thereby, our working capital requirement is going up. So thereby, correspondingly, your short-term debt is going up.

That means the overall short-term debt for the end of the year will be even higher when the actual crushing happens?

More or less it will be the same levels, Rajesh, because if you look at it today, you are looking at about INR 1,100 crores or something. Even at the year-end also, we'll be looking at the same. Because if you look at it, most of the crushing will get closed by the February or somewhere. So the [ F&D ] payments and all the things will be already we have given the advances. So that will be offset against the advances what we have given.

Sir, if I could sneak in a last question. This is for Muthu, sir. We have 50% stake in Coromandel and the Coromandel stock is now at 52 weeks high. So can we contemplate some stake still because technically it can come down to 51% and still retain a majority holding to reduce our debt?

So Rajesh, I think the -- we're really focused on the stand-alone business here. I think these are broader conversations which are more sort of board and group level. And I think we should stay focused on the stand-alone operations here.

[Operator Instructions] The next question is from the line of Vaishnavi Gurung from Craving Alpha Wealth Fund.

Just one question from my side.

Ms. Vaishnavi, can you speak a little louder?

Hello? Is it better?

Yes, much better.

Yes. So my question was regarding the revenue from nutrient and allied business. The revenue is significantly up compared to last June quarter. So just wanted to know any specific reason for that?

No. The Nutra business revenue is actually lower. I…

Muthu, I think she is asking about the Coromandel from the consolidated.

Okay.

Yes, sir.

Yes, I think that -- yes, the consolidated is -- we consolidate Coromandel International. We can't comment on their results. I think their Board and earnings call has already concluded. They've had a good first quarter, but you may want to look up publicly available data to go over their results.

So my second question was, is there any capacity expansion plans we have?