Triveni Engineering & Industries Limited (TRIVENI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Triveni Engineering & Industries Limited Q2 and H1 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, sir.

Thank you. Good day, everyone, and a warm welcome to all of you participating in the Triveni Engineering & Industries Limited Q2 and H1 FY '21 Earnings Call. We have with us today Mr. Tarun Sawhney, Vice Chairman and Managing Director; Mr. Suresh Taneja, Group CFO; Sameer Sinha, President, Sugar; as well as other members of the senior management team. Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature, and a statement to this effect has been included in the invite, which was sent to you earlier. I would also like to emphasize that while this call is open to all invitees, it may not be broadcasted or reproduced in any form or manner. We will start this call with opening remarks from the management, followed by an interactive question-and-answer session. I would now request Mr. Tarun Sawhney to open the call. Over to you, sir.

Rishab, thank you very much. Good afternoon, everybody, and welcome to the H1 fiscal '21 consolidated results earnings call for Triveni Engineering & Industries Limited. The overall performance of the company during the half year ended September 30 has been in line with our expectations. Our revenues have grown by 28% in the half year to INR 2,392 crores, with a profit after tax of approximately INR 188 crores -- sorry, a profit before tax of INR 180 crores and a profit after tax of INR 115 crores. In the quarter under review, no export incentive has been booked pertaining to the previous years. However, in the corresponding quarter of the previous fiscal year, there was a booking of just under INR 92 crores on account of the export incentives. Including the half year, however, the total export booking of incentives has been INR 57.7 crores versus INR 91.8 crores in the previous corresponding half year. The highlights for the Sugar business. We anticipate in the sugar season 2021 that the country will produce approximately 31 million tonnes of sugar. This is after a diversion of approximately 2 million tonnes of sugar, which will go towards ethanol production. The previous year, '19/'20 sugar season, approximately 27.4 million tonnes of sugar was produced and 0.8 million tonnes of sugar was diverted towards ethanol. The sugar season for all 7 of the Triveni Group sugar factories has now commenced, with our last -- the 7th factory in Eastern Uttar Pradesh at Ramkola having started operations day before yesterday. I'm also happy to report that the initial signs of recovery show a positive bias compared to the previous year. And I think that is very encouraging for the teams on the ground and a result of considerable amount of hard work that's been done in the fields and in contact with our farmers. Ethanol prices have been recently increased. The C-heavy price has been increased by INR 1.94 per liter, B-heavy by INR 3.34 per liter, which is the more significant increase and used prices by INR 3.17 per liter. It's also important to note that 2 more slabs for transportation over longer distances have been added into the standard. And that is encouraging and will lead towards an early achievement of a 10% EBP10 for the Asian. During the half year, all off-season expenses relating to the Sugar business, including expenses incurred to repair the plant, to make them ready for operations for the ensuing sugar season, have been expensed out. And therefore, the Q2 results will always carry a lower margin owing to this treatment of accounts. On the review, effective 1st of April 2020, the management has combined the cogeneration operations with the sugar operations, and the cogeneration activities will no longer qualify the separate operating segment. In the alcohol business, the profitability of the Distillery in the current period was lower than the previous period in view of the much lower raw material price related to ethanol sold in the previous period. Besides higher proportion of production and the sale of ENA in view of the obligation to sell molasses to country liquor during the current period has resulted in lower contributions, which will be made up, of course, during the course of this year. Further, redundant capital items aggregating to INR 3.6 crores have been written off upon uninstallation of the incineration boiler at the Muzaffarnagar Distillate. The Board -- as far as the engineering business highlights are concerned, the Board has approved to redesignate the Gears business as the Power Transmission business, which is a more accurate representation of the present business. And accordingly, the terminology has been used in the segment information. Both the engineering businesses have performed much better in Q2 after their operations were impacted due to the pandemic in quarter 1. The profitability in quarter 2 is almost at the same level of the corresponding quarter of the previous year. However, the profitability in the H1 is lower because of the impact of lockdown, where operations came to a standstill for a total period of 6 weeks in Q1. And then, of course, the start of operations happened in a phased manner. The pandemic has also slowed the process of tendering and finalization of orders of the Water business, and I will discuss this in greater detail towards the end of these opening remarks. But there are encouraging trends of recovery despite the uncertainty, and this is not just domestically, but also internationally. And we found that across the Water and the Gears business, there's been a lot of new interest cropping up from a variety of sectors. In the Water business, we're seeing more discussions for newer tenders, and that, of course, is an encouraging sign. As far as the Engineering business is concerned, we're seeing that the COVID impact globally is making firms look at reliable, but lower cost options, especially for engineering products. And we, as far as our Gears business -- as Transmission business is concerned, in a fortuitous position to take advantage of that. There are, of course, consistent challenges in terms of meeting supply chain requirements as far as the Power Transmission business is concerned, and because we have enjoyed excellent relationships with our vendors, we're able to meet new customers' requirements quite easily, at least for the foreseeable future. And I will, of course, discuss that also when I come to the Power Transmission business discussion. The company has completed a buyback of just under 62 lakh equity shares at a price of INR 105, aggregating to a total amount of INR 65 crores. If I turn to the financial highlights, the revenue from operations for Q2 stood at INR 1,168 crores, with a PBT of INR 51.1 crores and a PAT of INR 31.2 crores on a consolidated basis. The finance cost in H1 is primarily lower due to the lower average CC utilization by approximately 54% against the previous corresponding period, and this was due to higher sales volumes, which included some exports. The total debt of the company as of the 30th of September is INR 761 crores against INR 1,755 crores at the same time of the previous fiscal year. The INR 761 crores comprises of term loans of INR 442 crores. It's important for me to mention that INR 440 crores, of this, INR 442 crores are soft loans with interest concession. As a result, at the end of Q2, our average cost of funds stands at 6.04% average, this is the combination of term loans and working capital. Looking at our businesses in a little more detail. As far as our Sugar business is concerned, during the quarter, TIL sold 2.41 lakh tonnes at a growth of 33%. During the same period of Q2, TIL exported 28,000 tonnes of sugar. And that was, of course, significantly higher than the corresponding period in the previous fiscal year. In Q2, no export incentive was booked for the previous year. And I have discussed this in my opening remarks in the previous quarter of the corresponding year, there was INR 91.8 crores that had been booked. Pursuant to the additional export allocation granted over the initial allocations under the MAEQ program, the company has exported about -- just over 100,000 tonnes of sugar, which was the total quantity that was allocated from the Government of India. And therefore, the total quantity that was exported by the company stood at 285,000 tonnes. And this, I have to tell you, was an absolutely enormous achievement. Through all the reallocation processes, TIL had retendered for the -- for significant quantities, which was then allocated to us by the Government of India, and we were successful in exporting it. The challenge, of course, is the receipt of these amounts of subsidy from the Government in India, and we have a large quantum that is outstanding. However, we're fairly hopeful that through the winter session, we will be receiving a significant portion of those funds. As on today, we have approximately INR 398 crores of receivables from the Central Government. This does not include power dues from the UP State Government. So a substantial amount of money is owed to the company from both the state and center, more so from the center. However, I am very confident that over the coming few months, we will receive budget -- the Department of Finance will give budgetary allocations and a portion of this will be paid back and will directly, of course, go towards cane price. The Sugar inventory as of the 30th of September '20 was 27.4 lakh quintals valued at INR 27.9 per kilo. The cogeneration operations achieved external sales of 17.9 crore units during H1, which was significantly higher than 13.4 crore units in H1 fiscal '20, a growth of approximately 34% due to higher operating days during the current year. Current sugar realizations at the mill gate as of yesterday, sulphitation crystal sugar is being sold at approximately INR 32.5 per kilo and refined sugar, which accounts for approximately 40% to 45% of the group's production, is being sold at INR 33.5 per kilo. So we've seen that leading up to the festival period, higher quality sugar is commanding a reasonable premium, which is quite encouraging in these times of excess production. International sugar prices as of the 6th of November were GBP 14.16 for raw sugar and cast over $402 per tonne approximately for white crystals. Looking at the industry scenario. For the sugar season '19/'20, as I mentioned, the country produced about 27.5 million tonnes of sugar. The decline is due to the shortfall in cane in the states of Maharashtra and Karnataka. In the sugar season '19/'20, which ended on the 30th of September '20, the estimated sugar inventory is approximately 10.6 million tonnes across the country. And let me say this is far higher than what is required in the country. We need no more than 7 million tonnes, 6 million to 7 million tonnes, which is approximately 2 months' worth of consumption for there to be an equitable balance. And therefore, this will always be considered as a negative. However, during these periods, to have a MSP that has been strictly enforced by the Government of India is an absolute blessing. We've been able to ensure that the prices that we're getting are substantially higher. I mean in our case, as I have just mentioned, the rates that they're getting at the mill gate even now are because of the prevalence of the quota system and also the MSP. The bumper production for this year is going to be approximately 33 million tonnes with 2 million tonnes diverted out with this towards ethanol and therefore, 31 million tonnes of sugar being available for consumption in the country. And that means that the opening stock of 10.6 million is surely to balloon without an immediate export policy. The government has yet to announce any export scheme for sugar season 2021; however, where we're still -- from the industry's perspective, from Triveni's perspective, we've done a lot in terms of communicating why this is absolutely central, and why it will impact the farmer directly if such an incentive scheme is not brought about. We're hopeful that over the coming months, there will be a change in policy. If newspaper articles and communication or anything to go by, the most recent communications by Secretary Food are very encouraging on this front. The other important step and there were media reports that the GOM had recommended an increase in the MSP of sugar by INR 2 kilo in August '20. And this is -- this too has not been made effective. And we're still waiting for an approval by the cabinet. One is hoping that, again, this is something -- because there has been an increase in the FRP, in the price of sugar across the country, but this is something that will happen as and when new sugar gets sold, and therefore, the sugar that is costed with the higher cost of cane. As per industry estimates, the total acreage on the sugarcane in the country is estimated to be 52.6 lakh hectares for the sugar season 2021, which is 9% higher -- substantially higher than the previous year. Uttar Pradesh, however, is expected to have a sugarcane acreage of 23 lakh hectares, 0.5% lower than the previous season. The real increase has come in Maharashtra, where the sugarcane area has gone up by 48%, very substantially compared to the previous year, primarily due to better monsoons, both the Southwest and the Northeast monsoon has been very, very kind in Maharashtra. And of course, we were seeing a commensurate increase in Karnataka as well. Due to the higher availability of sugarcane and surplus sugar, the enhanced ethanol prices actually has been a boon to the industry in terms of [ diverting ] more. Just to remind you the data points, about 0.8 million tonnes was diverted last year. And this year, we are expecting 2 million tonnes at least to be diverted from sugar towards ethanol. As for the Government data -- published data on the 11th of September 2020, INR 13,000 crores of sugarcane price arrears existed across the country. I don't have a figure for you for across the country. But as of today, INR 6,300 crores of cane arrears exist in just Uttar Pradesh alone. And this is a worrying thought. So without an export policy, without an increase in MSP, these numbers with the ensuing season underway are surely going to balloon. And I would imagine that this is a concern for all involved. The ethanol production capacity in the country, of course, has increased over the last 12 months by about 8%, which is an encouraging amount. For the 2020/'21 sugar season, the Uttar Pradesh Government has not yet announced its SAP, stated-wise price. However, the recent announcement has been made of a reservation of 18% of molasses for country liquor manufacturers. And lastly, the Central Government has recently announced or notified a new scheme for extending financial assistance to molasses-based standalone distilleries for the enhancement and augmentation of economic production capacity. In the recently announced ethanol tender, I'm happy to give you a quick brief of the results of this tender. The total tender quantity was 458 crore liters. Bids were received for 322.5 crore liters. There was a substantial amount of overbidding, and therefore, our anticipated contractual quantity is going to be in this round, 275 crore liters. However, there is greater flexibility and much easier terms for future contracts that have been put in place by the government, and therefore, we anticipate that these numbers will go up consistently through the tendered process over the course of this molasses year. Of the 322.5 crore liters, 41 crore liters is tendered through juice, 25 crore liters in Karnataka, 13 crore in Maharashtra, 1.1 crore liters in Uttar Pradesh. 7 -- 176 crore liters is tendered through B-heavy. And this, I think, is a huge achievement of the Government of India. It is in terms of trying to find a solution to the super problem and in terms of building up a robust ethanol sector. It is an excellent sign that the industry too has responded very favorably with a quotation of a bids of 178 crore liters, 87 crore liters in Uttar Pradesh, 56 crores in Maharashtra and 24 [ crore ] liters in Karnataka. 72 crore liters is through C-heavy, because, as you remember, a traditional route for manufacturing ethanol. Interestingly, 34 crore liters has also been bid through grains, 18 crores of which [Audio Gap]. I think this is an excellent start to this year's ethanol blending program. And I'm quite certain that we will certainly achieve significantly higher numbers than last year and perhaps record numbers for the country on our journey towards E10. The hope, of course, is that the select states, the Government of India will allow slightly higher level. That is an area that is -- it's currently being discussed. It's something, certainly, that's been supported by the industry and something that Triveni has been pushing for, at least in the larger states of Karnataka, Maharashtra and Uttar Pradesh to take this levels of E10 up to E13, so that the quantum being consumed in the states can go up quite easily without any significant change to car parts, et cetera, impacting the automobile manufacturers. Very briefly, I'd like to cover the international sugar scenario before turning to the other businesses. In the Center South Brazil, it's estimated that sugar production will touch a record high of 38 million tonnes. And production in Thailand is expected to be very low again, very substantially low, and we've seen that a lot for East Asia. And as a consequence, all the various agencies that did declare reports for the global sugar balance vacillates little bit. So I think the global sugar balance, in our estimation, will remain constant this year compared to last year. International sugar prices have been significantly volatile and from a low of $0.0924 in April 20 to $0.1314 on the 30th of September, was an increase of 45%. And of course, we have moved up significantly touching a recent high of just under $0.15, $0.1497 per pound on the 2nd November, 2020. Clearly, the fact that India has not announced its export program has had an impact in our opinion on global sugar prices. If India does decide to export between 5 million and 6 million tonnes of its sugar, there will clearly be some softening of these prices. However, if raw sugar has to be exported, which is what can easily be absorbed by global markets, the decision to export is one that needs to be taken sooner rather than later. Looking at the performance of our alcohol business. Our production has grown fairly substantially as has our average realization. All of these details are in the notes that has been sent out to you. The new 160 KLPD Distillery, that was commissioned at the end of April '19, was completely stabilized by September '19. And this now has resulted in higher volumes of production and dispatches, especially when we compare the quarter and half year against the previous year. The profitability of the Distillery, as I've mentioned, was lower on account of lower raw material prices in the previous year. And in addition, we produced a larger quantity of ENA, which is sold at a lower price in view of our levy molasses obligation. However, I would encourage you to look at this process over a full fiscal year because that will then get balanced out because the supply of ENA only happens at particular times of requirements, et cetera. The lower cost of ethanol sold in the corresponding quarter of the previous year was due to the molasses prices that I'd mentioned, which were prevailing at that point in time. The Distillery has received contracts of 10.14 crore liters during the current marketing year. Looking at the Engineering businesses. The Power Transmission business had an excellent revenues of INR 38 crores approximately and an order booking of just under INR 40 crores. The turnover in profitability in H1 is lower, and that is primarily, as I mentioned, due to the impact of the lockdown in Q1. However, the Transmission business has adapted quite well to digital platforms and continues to interface with its customers through a variety of new means. And that has led to a greater acceptance of orders being taken through -- by utilizing technology and has really allowed our order booking to come back to normal levels. Our anticipation, of course, is higher, but they are normal levels compared to the previous year under the given circumstances. The business has received strong inquiries from defense, and it's hopeful of concluding more tenders positively in the coming quarters. As you know, over the last 2 quarters, within the defense spaces, well, there has been precious little that has actually been finalized. Turning to the Water business. The gross revenues for the quarter were INR 66 crores with a PBIT of INR 6.1 crores. And these results are based on the -- these are the consolidated results, which include the wholly-owned SPV executing the Mathura project, which was awarded to us by NMCG under the Namami Gange program. Due to the pandemic, no tenders -- no major tenders were finalized in H1. And this, of course, has had a small impact on the order booking for H1 fiscal '21. But we believe that this is very short-term, as there is a requirement for larger numbers of tenders to be finalized. The water situation across the country is growing worse by the day. And so we're very hopeful that we will be in a positive position and be able to report positive numbers on order bookings to you in subsequent quarters. The outstanding order book on the September 30 stood at INR 874 crores, which included INR 472 crores towards O&M contracts, which are for a slightly longer period of time. I'd like to very briefly cover the outlook for the key business segments. For the Sugar business segment, as I mentioned, we are indeed hoping for the announcement of an export policy -- a subsidized export policy by the Government of India. There are -- now there has now been a lot of communication from the industry to the government that the timing is absolutely crucial, especially if we want to produce raw sugar. And I anticipate that if the government is to take this kind of a decision, it would certainly be over the next 4 to 5 weeks, which will give ample time for manufacturers across the country to convert from crystal sugar to raw sugar and export at a timely amount. The first half of the calendar year actually has the greatest acceptance of Indian sugar, given our geographical advantage as India compared to high sugar demand countries around us. You have Iran, you have East Africa, you have Sri Lanka, Bangladesh and of course, you have Indonesia, which is a recent sugar trading partner for India. In addition, we are also looking at the continuity of subsidies that were announced in previous years by the Government of India, and we're hoping for a positive outlook on that front. And this includes a INR 2 per kilo increase in the MSP, which was approved earlier, but has yet to reach the cabinet and gain the cabinet's approval. And therefore, a lot of it -- and of course, we are still waiting for any increase of SAP from the State Government. However, the anticipation is that it will be no more than INR 10 at the very maximum. The industry has very recently represented to the State Government that at this point in time, there is a lot of paying with INR 6,500 crores of arrears of the previous year. And this year, having just started, we have to mitigate any -- against any unforeseen increases in cane price arrears, which may very well happen if there are any inordinate increases in the cost of sugarcane. Turning to the Engineering businesses. While the pandemic did slow the tendering in finalization across both the Water and the Power Transmission business, I'm happy to say that we're seeing very encouraging signs. So as I mentioned, because we've been able to reduce costs in our Power Transmission business, we find ourselves being able to afford the same level of margins and report the same level of margins quarter-on-quarter. In addition to that, we're able to offer better terms to our international customers, and a larger portion of our business is now coming from outside of the country. As far as the Water business is concerned, we expect some subdued activity over this quarter. However, we see that from the next quarter, there will be a substantial number of tenders that will be closed out, and the business is gearing up to positively participate in the next generation of water projects across the country. Lastly, I would like to mention that the buyback that was approved by the Board of Directors of the company has been completed, and the company bought back an aggregate of 61.9 lakh equity shares at INR 105, amounting to just under INR 65 crores. Thank you very much. I'd now like to open for questions.

[Operator Instructions] The first question is from the line of Shanti Patel from SP Investments.

My first question is [Technical Difficulty]

I'm sorry, you're not audible.

Shanti Patel, your voice is -- can't hear.

Now? Is it okay?

Sir, your voice is breaking.

Now? Now? Now?

Yes, sir, it is better.

Yes. Will you be able to tell us segment-wise revenue in terms of percentage? That is number one. Number two, what is our PAT margin and return on capital and return on capital employed? And whether we will be able to maintain in the next 2, 3 years same? That's all.

Suresh?

I thought -- I think have you got my questions?

Yes. Suresh?

[Operator Instructions]

Your first question was, what is the percentage revenue of each business segment? If you look at the segment revenue, which is given in the results, it is very, very clear. And obviously, the sugar -- and sugar and co-gen are performing a major part of the total revenue. In terms of total percentage...

Go ahead, Suresh.

Yes, just 1 minute. It is, roughly speaking, about 86%, which is Sugar and co-gen. And if you also take Distillery into picture, it becomes about 90%. So -- and the balance 10% is contributed by our Engineering business. Now as regards return on capital deployed, et cetera, for the financial year, March 31, 2020, if you look at the return on equity, that was 27.9%. If you look at return on capital employed, it was 17.43%. And if you look at return on capital employed for H1 FY '21, it is 16%. So I think...

So let me take over from there, Suresh. I think that in terms of -- we don't give forward-looking statements. But the intention of the company is that we are embracing positive growth, and we've invested in areas that will deliver positive change. So we're very hopeful that this, going forward, will be equally positive. Now we're in businesses, which have significant government intervention, and that intervention has an impact on the profitability of the firm. Provided a status quo is maintained, we believe that we will be able to deliver commensurate results going forward. However, it is contingent on a lot of things happening in the ecosystem.

Sorry, I mean, repeat, return on equity is around 17%, ROE is at around 17%, is it correct?

Yes, we've answered -- yes, we've answered the question. If you need the details again, you are welcome...

No, I don't want details. Just to confirm, just to confirm.

All this information is very much available in the annual report also. And return on equity for FY '19/'20, which is a full year, was about 28%.

The next question is from the line of Sanjay Manyal from ICICI Securities.

Just want your views on 2, 3 things. One is what kind of an ethanol volume we can do for the full year perspective? We have a capacity of 11 crores, 11.5 crores. And what is your tender quantity? Out of which, what is B-heavy and C-heavy?

Sameer?

Yes. See, we mentioned, like you rightly mentioned, we can do a quantity of about 11 crores. And we are looking at this -- the coming -- upcoming tender of at least 10 crores, if not more, and depending on the production and B-heavy, C-heavy, how it pans out, we can just fine-tune that number going forward. In terms of the percentage of our total production, we are looking at about 85% to 90% in terms of B-heavy.

85% to 90%, sir, okay. Okay. And is there any planning for the -- I mean a lot of your peers have announced the CapEx in the sugar cane juice. Do you have any plans in that perspective? There has been -- what I understand, the government is giving subsidy interest subvention for the CapEx. So have you applied in that?

We had applied earlier on, and we were evaluating multiple projects at various locations of our sugar factories. So yes, to answer your question, we have applied, and they are at various stages of evaluating those ventures. As you can understand, there's a lot -- it's a fairly long drawn-out process, acquisition of land and then pollution clearances, et cetera, et cetera. So we're still in the process of evaluating expansion of ethanol projects across the group.

Okay. Okay. And is there any fresh update or clarity on sugar export or subsidy or MSP?

I wish I could offer you more information than what I had said in my opening remarks. Unfortunately, at this point in time, no, there isn't. I think that we have to wait for several political events to pass by and the festival period to pass by. And then hopefully, we will be able to see which policies will be continued by GoI. The hope, of course, is that all of them will be implemented. And I think the one great parameter is once the entire country has started producing sugar, there may be a greater willingness to look at these policies again. Now with an increase of INR 10 FRP, which the GoI had announced with this sugar season, to not announce an increase in MSP is something that I am concerned about. And therefore, I'd say it is something that will certainly happen sooner rather than later.

[Operator Instructions] The next question is from the line of Resham Jain from DSP Investment Managers.

So my question has been partially answered. But just on the CapEx side. Currently, you are -- with the new 160 KLPD facility, now you have a very good ethanol capacity. So what will be your thoughts on balancing between sugar and B-ol -- B-heavy molasses or maybe cane juice also directly over a period of time? Because as of today, it looks like ethanol is much better, and it will take away a lot of inventory. But situation can keep changing over a period of time. So to what extent, let's say -- just from a long-term perspective, what will be the balancing act between the sugar and the ethanol going forward? That was my first.

Okay. So I think your question is more of a medium-term question. It's not about this year and next year.

Yes, yes.

The fact that the Government of India is looking at ethanol as a new sunrise sector is absolutely -- is vital. Now the ethanol industry in India is well over a decade old. But in terms of the push towards other raw materials, that is a very recent push. And the success of the B-heavy campaign this year will add further encouragement, in my opinion, to the Government of India. Also the larger quantity of -- that has been tendered, 41 crore liters, out of 322 crore liters was bid for juice. Now I think that will require substantial increases in capacity. For B-heavy, the larger groups across the country have the capacity to be able to process B-heavy, by and large. There may be some increments and some changes and some capacity addition that may be required. But to start looking at juice as a viable option requires substantial more capacity -- capacity addition. And this is something that with the government postponing or rather extending their subsidy program, which is a very welcome initiative. It's not -- it's welcome, but it's not -- it has to be coupled with a commensurate or rather a viable price from ethanol, from juice. And we're seeing that scenario happening. So I'm very hopeful that in the next couple of years, you will see more distilleries crop up across the country, to process ethanol from -- directly from juice or syrup. And I would say that in the 3- to 5-year period, once we have crossed E10 and we're on our way to E20, the only way that we achieve E20 is by a large-scale capacity to be able to process juice or syrup into ethanol. So I see that, that is now coming much more of a reality. At this time last year, if you'd asked me, what are your thoughts, what are the impediments to get to E20, I would have been far more reticent. I think given the very positive step that the government has made with the pricing this year, the continuing of the loan scheme, I think these will go a very, very long way in terms of propelling more investment into the ethanol sector. The one thing that is required, I will have to say, is the time lines that have taken for pollution clearance. As you know, a good 9 to 12 months can be taken in terms of land position and subsequent pollution clearance. Now GoI is cognizant of this, and industry representations have been continuous on this front. And so hopefully, we will see some type of process improvement in terms of this initial hurdle and that is absolutely vital. Because what you don't want and one of the reasons why they has been reticence from the perspective of the industry, is that ethanol prices are announced for the period of 1 year. But if it takes you 2 years to build an ethanol plant, a distillery, then there are business questions, viability questions that, that will always linger. And so if you can reduce, a, the time period to get the plant off the ground and operational, number one. Two, you have clear indication in terms of the direction of pricing, that will be a very powerful tool in terms of spurring the ecosystem. As of now, I'm -- I have to say that I'm certainly much more optimistic than as it was in the past.

Yes, sir. I got that point. What I was trying to understand is, at what level you will stop? Let's say, as of today, we have a good headroom to put up more ethanol capacity to divert sugar. But at what level you will feel that, okay, this is the right balance because we have seen years when sugar prices also go up. So just from that perspective, how much headroom do we have to -- from currently 11-odd crores liter which we manufacture, until what level we can go if we intend to, let's say...

You see, you're absolutely right about that. You see in years of excess, the incentive for a company would be to minimize their stocks on hand, so that their balance sheet, their internal balance sheet looks pretty good. Now to that extent, you may look at investing in juice capacity. Now it depends from company to company, frankly speaking. So you have to really evaluate, a, the balance sheet of an individual company. So for Triveni, for example, if we were to look at a scenario, and we said that juice is here to stay and the juice prices will follow the same trend that they've been following, we would say that at least we should have fungibility in the medium-term of 10% of our total production. Now that is a very significant amount, about 10%. And it means that we need to see those indicators from the government. Provided we see those indicators, a balance of about that much will be good. Now in Brazil, you have greater security, frankly speaking, because you own the farm land, number one. So you know exactly -- or you know the efforts that you put in and the yields that you're going to get pretty much. And because you have that security over farm land, you have the ability to take big bets of having dual capacity of sugar processing and ethanol manufacturing. In India, you certainly don't, because you don't. The quantum of having 50-50 just simply is something that we simply cannot have. We must also remember that we have a target of only E10 right now in the nation. So because we have a target of E10, that itself curtails the amount of new capacity coming online for juice. And if there is going to be an advantage for the first few firms that tries out, et cetera, because when you touched E10, you hit 1 hurdle. Then, of course, it's up to the government to take E10 up as planned towards E20. For the E10 route, I would anticipate that it is not something that will apply to all factories across the industry. It is really about the first few movers into that segment. And I would say that there is approximately 2%, 3% headroom in terms of percentage blending, which can come from juice. That kind of scope exists today. That's about it.

Right, sir. Sir, just one small question is on the ethanol application which you have already filed for. What is the total amount of, like, in terms of KLPD you have applied for?

Are you talking about the tender?

Yes -- no, no, sir. I'm saying the -- under the new government scheme, you mentioned it's into the evaluation stage and all, but you have already applied for the new ethanol capacity. What is that number you have applied for?

So we put in an applications to set up 160 KLPD plants at 2 other units.

Okay. So...

However, those are all under evaluation as of now. The Board will have to approve them, they will have to be a lot of work done on those plants.