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

Ladies and gentlemen, good day, and welcome to Triveni Engineering & Industries Limited Q4 and 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 Q4 and FY '21 earnings call. We have with us today Mr. Tarun Sawhney, Vice Chairman and Managing Director; Mr. Suresh Taneja, Group CFO; Mr. Sameer Sinha, President, Sugar; as well as the 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.

Thank you, Rishab. Good afternoon, ladies and gentlemen, and welcome to the fiscal '21 earnings call for Triveni Engineering & Industries Limited. The overall performance for the company for the 12 months ending 31st of March '21 has been good and satisfactory. It has been a challenging year due to the unprecedented pandemic and its impact that it's had on health, public health, especially on the industry and on the economy in general. The businesses have largely stabilized by the end of the third quarter. And by that, I particularly refer to our engineering businesses. And the second wave across the nation has had a limited impact on the company. The gross revenue from operations stood at INR 4,700 -- just over INR 4,700 crores with a growth of 6%. And the PAT for the year stood at INR 294 crores plus. The Board has recommended a final dividend of INR 1.75 per equity share, 175%. The increase in turnover for fiscal '21 was due to the higher sales volume in the Sugar & Distillery segment, which has compensated for the decline in the engineering segment which was impacted, that I had previously mentioned, by COVID-19 related issues. The operating profit was also 2% higher for the year under question. Some highlights for the sugar business. For the sugar season, the company has been ranked second in terms of production in the country. It's a big feather in our cap, and we're very proud of the performance of the sugar business of the company. We crushed 8.54 million tonnes of sugarcane and produced just shy of 1 million tonnes of sugar. Last year, we had produced just over 1 million tonnes of sugar. So this is pretty much setting the ballpark. Of course, this year, there was more B-heavy molasses that was diverted towards sugarcane. And I will cover that in a little bit more detail in just a few minutes. The Khatauli sugar mill achieved the highest sugar production in the country as a single unit and the second highest sugarcane crush in the country. And 2 of our units at Sabitgarh and Rani Nangal recorded their highest crush ever. So I think this augurs well for the future in terms of all the units really pushing the bar on their previous records and recording higher crushes, higher recoveries going forward. The recovery for the group was 10.98% for the sugar season 2021. We've had strong performance on the distillery where their production and sales, that is growth of 14% and 25% -- and 23% commensurately for fiscal '21. In the Engineering business, despite a turnover decline due to the impact of COVID-19, the profitability has been largely maintained by the business. There's been strong performance by the power transmission business, especially in the quarter under review due to the stabilization of business conditions and there's been an improved profitability in the motor business due to efficient project institution and project cost savings. Now these are very important contributors to the bottom line of our water business, and we hope that this will continue into the next few quarters as well. The outstanding order book stood at INR 1,178 crores for the combined engineering businesses. The Board has approved in its last Board meeting yesterday, the expansion of distillery capacity at our various units. And as you will recollect, the Board had previously in its last meeting approved 2 distilleries totally to 200 KLPD, which took the capacity or the projected capacity of TEIL up to 520 KLPD. The Board, at its recent Board meeting, has approved another INR 100 crore investment to increase the capacities of these various plants from 520 KLPD to 660 KLPD. This additional increase in capacity is expected to be commissioned in the next 12 months. Looking at the financial highlights. For the quarter under review, we achieved revenues of INR 1,188 crores with a PBT of INR 134-approximately crores. Despite lower buffer stock subsidies of just under INR 18 crores, the finance cost in fiscal '21 has been significantly lower by 35%, mainly due to the lower utilization of term loans, lower utilization of working capital and due to a significant reduction in cost of funds. An important point to note is based on the share purchase agreement, which was entered into March 2021, we have divested our stake in the rail-based company, Aqwise, and provided for INR 23.2 crores towards the impairment of this transaction. The tax incidents and effective tax rate for the current year is high, and we noted this as compared to the previous year, the deferred tax charge was lower by INR 40.59 crores due to the reimbursement in deferred tax liabilities. The total debt of the company as of the 31st of March, stood at under INR 1,000 crores at INR 943.6 crores, which was lower by 39% as per the figure on the 31st of March 2020. And this INR 943 crores comprised of term loan to INR 382 crores and almost all these loans were with interest exemption, and it -- all at subsidized rates of interest. Going forward, I think the policy of the company really is that if we are to take on it then will only be that of a subsidized nature, which is offered by Government of India for certain specific projects, especially those for distilleries. The average cost of funds as on the 31st of March '21 stood at INR 5.56, which was a smart reduction as compared to the same period a year ago. Turning to our businesses, and I'll very quickly cover the various businesses and their particular performance. Turning to the sugar business, we crushed 8.54 million tonnes of sugarcane, which was slightly lower than the 8.74 million tonnes of cane crushed in the previous season. As I mentioned, the company produced 93 lakh quintals of sugar versus 100 lakh quintals just over 100 lakh quintals in the previous year in the question. Our crush declined by 2.3% due to mainly the crop damage in Central and Eastern Uttar Pradesh due to pests and disease. However, we believe that this decline is exceptionally lower when we compare ourselves to our peers and especially with the state average. And this is primarily due to the good amount of work that is done on cane development by the group across all its 7 sugar factories. During the sugar season 2021, our recovery on a like-to-like basis have declined by 11 basis points. This is basically comparing like-to-like between the previous year and this year. The previous year's recovery being 11.97% and this year's recovery being 11.86%. We do believe that we have outperformed our expectations as far as this is concerned, given the weather conditions and the pest and disease impact that happened in the last sugar year. For the coming year, we expect an increase in the sugarcane area because the planting across all of our factories is now finished. We expect this increase to be at least 3%. And we're very hopeful that with a projected clear monsoon and a good monsoon that we will expect an addition in the yields as well. For the quarter under question, our domestic realization was INR 32.33 per kilo. And this was very much in line with the figure from Q4 of fiscal '20 as well. So some stability on that front. However, since then, during the first quarter this year, we've seen prices inch up a little bit, which is quite encouraging. As you know, the UP government had kept the state advised price of sugar constant, which was a welcome move by the industry. And it certainly allowed for a good amount of cane price payment to be made by the industry to farmers. It's quite important. During sugar quota for MAEQ for season 2021 was 1.82 lakh tonnes. And the entire quota was contracted. And 1.03 lakh tonnes was physically dispatched in fiscal '21. The remainder has already been dispatched. And it was all done at the previous subsidy rates which is INR 6,000 per tonne. Those rates, of course, have had been further revised, and I will cover that in terms of the industry comments. Our sugar inventory as on the 31st of March was 47.45 lakh quintals valued at INR 30 per kilo. For -- just to give you an idea of sugar prices, for the month of June, our average sugar price has been just a shade higher than INR 33 per kilo. So we've seen a kind of an uptick since the end of March up to now. I wouldn't look at a particular point in time because that's not reflected. That not -- it is a vacillating market, but the trend is certainly towards slightly higher pricing, as there are multiple things that will contribute towards that. Firstly, of course, there's ethanol. And second, of course, what augurs well is the movement in international sugar prices as well. Looking at the industry scenario for sugar, Maharashtra, of course, produced a significantly larger quantity of sugar this year, Uttar Pradesh producing slightly less. In the state of Uttar Pradesh, the sugarcane areas as on the 31st of March stood under INR 12,000 crores, in Maharashtra. The sugarcane areas based on FRP, excluding H&T, which is harvest and transport stood at under INR 1,000 crores on the 15th of June '21. All in all, I think this is better than the position that we were in the previous year from the industry-wide perspective. And I think that is quite encouraging. Looking at the scenario for ethanol, the oil marketing companies has issued an LOI for 348 crore liters, and the initial tender, of course, was for 357.6 crore liters, but the LOI was 348 crore liters and a good amount has been supplied. We expect blending of 8% to 8.5% for this ethanol and through all the various cycles and expressions of interest. I think that's extremely encouraging. The price points have been attractive. And there has been at least 2 million tonnes of sugar that has been diverted towards the EBP program. I'd like to forecast that for next year, this figure could go up to 3 million tonnes of sugar that we sacrificed. And of course, as we inch towards E20, we could have 6 million tonnes of sugar being sacrificed for ethanol, which, of course, is extremely encouraging. And for E20, we will need 850 crore liters. At today's basis, of course, that will go up as consumption in the country for petrol also increases. But the estimation is approximately 850 crore liters. And it will lead to, of course, a huge amount of capital investment in this industry. The government forecasts about INR 41,000 crores of investment that is required to meet E20 targets. We think this is broadly the quantum of investment that will be required. And there already has been a lot of movement. There been a lot of announcements by our peer groups and others in terms of entering this business. The entire ecosystem is buzzing and it is because of the sheer determination that the government has in terms of providing for energy security and for a cleaner environment, those are the 2 basic problems of this program and something that we at least in the industry are very happy that it has happened. And the fact that it has an accelerated agenda, which has been announced by the Honorable Prime Minister is very encouraging for investment going forward. Turning quickly to the international scenario, we project that for sugar season 2021, there will be a surplus of about 1.7 million metric tonnes. However, if we carry out that by saying that with the rise in crude prices, this could easily disappear as we see the most important country in this equation, which is Brazil, divert more cane towards its ethanol program to compensate for increases in crude prices. So it could -- there is a downward bias to this anticipated sugar surplus. Sugar prices internationally has, however, remained extremely robust, especially since the large stoke. And that, of course, had resulted in the Government of India reducing its subsidy for its export program from INR 6,000 per metric tonne to INR 4,000 per metric tonne. All in all, there will -- there is an expectation. Thailand, of course, performed quite [indiscernible]. So did several other countries in terms of the production numbers last year. But there is an anticipated rebound that is expected from some of the other important sugar-producing countries. I'm happy to take questions on that if there are later in the Q&A section. Turning to the alcohol business. Over the fiscal year '21, we produced over 10 crores -- actually, 10.7 crore liters of alcohol. And if you calculate that as per our rated capacity, it comes to an average operating number of days in excess of 330 days. The reason I mentioned this number is because it's important to highlight the excellent operating efficiency that is maintained by our ethanol business, really setting the industry benchmark in terms of operations. For the quarter under review, our average realization was INR 57.29, which was higher than the previous quarter where the number was INR 63.12 per liter. Turning towards our Engineering businesses. The Power Transmission business in Q4 had an excellent quarter, where we had gross revenues of INR 53 crores and a PBIT of just under INR 20 crores. The order booking was also about INR 60 crores, extremely robust and a huge turnaround that we had previously anticipated and I have spoken about on our last earnings call. The turnover for it was really because of the stabilization of the business conditions. We've seen a huge uptick in terms of our export orders, and we've seen a very robust domestic order book as well. The -- for the year, of course, the lower turnover is primarily due to the impact of COVID-19, especially in Q1, portion of it in Q2. But a lot of that, of course, has been compensated. The order book as on the 31st of March stood at a record INR 166 crores, which is -- which we're very confident will grow quite substantially in the quarters to come. The Water business had an excellent quarter, where we had revenues of INR 81 crores and the PBIT of INR 12.4 crores. The above results -- these results are on a consolidated basis and include our wholly-owned SPV Mathura -- which is executing the Mathura project, which is under the r Namami Gange program. The turnover for the year was lower, but that was also on account of COVID stoppages and lockdowns that happened across the country. As I have mentioned when we last spoke, the order finalization was slow. However, during this quarter, the business has secured its first and very important EPC project for water sewage treatment of INR 156-odd crores from the Ministry of National Planning and Housing and Infrastructure of the Republic of Maldives, which is funded by the Exim Bank of India. It is our first international project and augurs extremely well for the business and also reflects upon the capabilities of the business and the recognition of that with the international customers. And we're excited about this project. It will be executed in the next couple of years. The outstanding order book stood at INR 912 crores for the water business as on the 31st of March '21. Let me turn very quickly to the outlook for both businesses. As far as sugar is concerned, I mentioned the accelerated program for EBP20, E20 by 2025. And this actually is going to really accelerate the investment plan. 2 days ago, we had an announcement that the mandate for flex fuel cars, of course, the experimentation would happen immediately, but the program for flex fuel, that's E100 will also be announced by the government for the next 3 months. There are already sample and pilot projects running in 3 cities in the state of Maharashtra. This again is extremely exciting from a retail perspective for the ethanol business. And it could potentially result in higher numbers for the ethanol program. It is exciting, and it's very good to see that all the constituents of this business, the government, the ethanol manufacturers, the automobile manufacturers, et cetera, working cohesively together towards this objective. It is expected that the FRP for sugarcane will be increased by the central government, which is expected today, by INR 5 per quintal from INR 285 to INR 290. It's a small increase that has been expected. Turning towards our engineering businesses. I think I would like to say that we've seen a buildup in our order books. Both of our transmission and our water business are looking forward to robust quarters going forward in this fiscal year. We're seeing a lot of interest from our customers. We are anticipating greater numbers of order finalization for our water business in Q1 and Q2. And as far as the PTB, power transmission business, is concerned, we again are looking at a very strong uptick in order bookings in Q1 and Q2 for this year. Thank you very much, and I'd like to now open the floor to questions.

[Operator Instructions] The first question -- the first question is from the line of Pratiksha Daftari from Aequitas Investment.

So my first question is for the distillery division. So I think you've mentioned that the margin for this business was impacted because of higher molasses prices. So I just wanted to understand, do we procure molasses from third party? Or it's usually from our like captives procurement?

It is captive procurement. And the difference, if you're looking at year-on-year is because we price molasses as per market price, our transfer price is market price. So it reflects the difference in the market price of molasses in, name, a different year versus the year or the quarter in the question.

So then would it be safe to assume that then this is helping the margins with Sugar division accordingly?

You could do that, but I would rather view it from a different perspective altogether. If we were to compare 2 years ago, the quantity and quantum of distillery capacity was very different. And therefore, because there was oversupply of molasses, we had an impact across the industry of lowering the molasses price. When we look at that fiscal '21, that is a normalization, where you are using 100 -- you're using all captive molasses, actual distilleries and the industry, in general, has achieved a self -- a stable level. And so going forward, I don't see any vast increases in the transfer price of molasses and any substantial increases. We have now reached the most stable level because there is that much more capacity that is available and that has come on stream.

Okay. So -- okay. So basically, 18%, 19% is what you think would be sustainable margin because of the demand for same situation.

Well, you see -- now that you're turning it into percentages, I do want to say that the -- with E20, I'm hopeful that there could be potentially an increase in this margin percentage for 2 reasons. Number one, we have a very aggressive target of achieving E20. The sugar-based distillery business is going to play a very important and crucial role in the achievement of ethanol at 20%. And therefore, to have this investment come on stream, the only way is to have slightly more attractive prices. Now with crude prices being quite firm and fairly hopeful that in the next revision of prices, especially for juice and for B-heavy, you will see more attractive prices. And then, of course, it depends on the individual strategies of the company in terms of what quantum of juice do you use, what quantum of B-heavy do you use and, of course, see the de facto or default molasses that is available to key distilleries.

Right. Sir, last time, you mentioned about the mix. I think this year, you mentioned that we've done 56% from B-heavy. And with the current expansion plans in place, how do you see this percentage? How do you see this mix shaping up for the next of the season basically with the next expansion and then one that is announced now?

Right. So when you look at those numbers for -- well, 56% was B-heavy for ethanol, but there was some amount of ENA also produced, et cetera. So next year, while we don't give guidance, it's going to be very, very different. There is -- there are significant -- at the end of the day, we're setting up a distillery at our [indiscernible] unit that has the capability of processing juice. So we intend to be processing juice at that unit during the season. So the percentage -- the percentages are going to change very dramatically next year. Let me tell you that, very dramatically.

Understood.

All in favor of the B-heavy and juice.

Understandable. Okay. And so new expansion that we have announced, I think that is 120 KLPD expansion and now our outgo is INR 100 crores. So this kind of significantly defers from the cost that we expected for the last CapEx that we have announced. So what would be a material difference here?

I'm glad you brought this up. This is balancing CapEx at various distilleries. All 4 distilleries, there is a certain amount of balancing CapEx that is going in to enhance their production capabilities. So it is not a standard -- a new stand-alone unit that is being established. It is utilizing -- you see we build quality plants, industry benchmark plants at all of them. The two that are coming up as well are the most sophisticated distilleries that are possible. They have the ability to be able to function at greater loads, and we are now investing to be able to increase that capacity by 120 KLPD. And therefore, it is not an apples-to-apples comparison for a greenfield project. This is expanding our existing distilleries and achieving 660 KLPD for the group.

Okay. And for the sugar division, I think this quarter, we've seen our dispatches to be lower as compared to last quarter. So any material reason that you would want to highlight for this?

Yes, it's the quota that we received from the government. While we do receive our fair share of quota on a monthly basis, and we are governed by the central government monthly quota mechanism, the total quantum of sugar that was released, it is a COVID impact. If you look -- if you try and compare Q4 of FY '21 with Q4 of FY '20. Q4 FY '20 was only COVID impacted in the last 2 weeks, whereas we've had a COVID impact through this particular quarter. And of course, the start of the second wave as well was experienced during this quarter under review. So that is the most significant difference. We have sold all the quantum of sugar that has been released to us by the Government of India, the total quantum of course, was lower, which has had that impact. But I would encourage you not to look at quarterly numbers. I'd encourage you to look at yearly numbers as far as this is concerned because my projection is that we will have enhanced consumption of sugar in the country. So after a few years of stagnant consumption in the country, I think we're returning to higher levels of consumption, and that is extremely important as we look ahead.

[Operator Instructions] The next question is from the line of Sanjay Manyal from ICICI Securities.

Just a few things. One, what is our export realization? And what would be the proportion of raw sugar and the white sugar?

Export realization for the year was INR 24,381 per metric tonne.

If I just may ask, what was the export contracted? Means I'm sure you have contracted the entire quantity, but what would have been the contracted price? And what would be the proportion of [indiscernible]?

So we don't usually give out those details, but it's a combination of 3 things. We did sell a little bit of our quota because there were -- there was about 40,000 tonnes because it was very attractive at that particular point. And then the rest was primarily raw sugar that was exported.

Okay. Okay. And the export realization, which has been given in the presentation, does that include the -- is it net of the freight cost or the freight cost would be over and above this?

This is only realization, except subsidy. Exactly, it does not include any subsidy.

Okay. Okay. And with this kind of a CapEx, which we are taking in the distillery segment, what is the expected volume of distillery in say, '22, '23, because what I understand that after the -- this year probably will have 2 or 3 months of the new distillery, so we probably can still do, say, INR 13 crores, INR 14 crores, if I'm not wrong. And probably '23 would be INR 17 crores, INR 18 crores, if I'm not wrong with this kind of CapEx, which we are coming?

Yes. I think you're broadly correct that we do anticipate to have the 200 KLPD operational in this fiscal year. And so we should get the benefit of most of it Q4 of this fiscal year. Whether it's the 3 crore liters, I think we'll have to wait and see. But that could be -- that -- we will certainly be trying for a number in and around that. For the following year, for fiscal '23, of course, all of this capacity will be operable. And in fact, at that point, we will also have an additional 120 KLPD for most of the year operable. And so therefore, we have the capacity to go significantly higher.

Right. Right. And just one last on the taxation part. What could be our '22 and '23 taxation income tax for these 2 years, if you can just mention that?

Yes, I'll just answer that. In the financial year 2021, we have exhausted all our deductions and exemptions. We have exhausted all our MAT credit. And as it looks as of now, next year, we'll be moving to low tax regime where the applicable tax rate would be about 25%.

This is '22, FY '22.

Yes, I'm talking about FY '22.

The next question is from the line of Vipul Sanghvi from Systematix.

Yes. So my question is on E20 being further advanced to April 2023. I think there were some press reports earlier this month about the deadline being further advanced. So one, your thoughts on the same that is it practically possible to achieve in the next 2 years' time frame? And second, I just wanted to confirm the number that you mentioned that at 20% blending, there would be a diversion of approximately 6 million tonnes of sugar.

Right. So let me answer your first question. About the press reports, I mean, I can't comment on the press reports per se. But I think if EBP20 by 2025 seems like an achievable target, it requires a huge amount of investment for over INR 40,000 crores by the industry to be able to achieve that. A large portion of it coming from molasses on sugarcane and then a significant portion also coming from grain. All of this needs to happen. It cannot happen in the time period that the press articles report for the simple reason that it takes time to get commissioned, and then, of course, setting up these large factories also is a time consuming process. I think that you should consider 2025 as the horizon for EBP20. With reflection in 2025, looking at the quantum of ethanol required on a normal basis, assuming that we have returned to business as usual, my figure, Africa at Triveni for quantum of sugar that will be diverted could be 6 million tonnes.

The next question is from the line of Anupam Goswami from B&K Securities.

Sir, my first question is on the expansion of the 660 KLPD now. So where do we lie on the cane availability? Do we have such cane availability? Or are we going to sacrifice more sugar and later on going forward will be selling less sugar. Is that so?

Yes. So the -- as far as cane availability is concerned, we are working, and we're not giving any projections, but we are certainly working aggressively in terms of bringing more area under cane and looking at some small tinkering of crushing capacities at our sugar plants and optimizing it even further. But most of it will come from diversion of sugar towards ethanol. So we will be utilizing syrup and B-heavy molasses generated by the group to facilitate the production at our distilleries.

Okay. Okay. Sir, and one more thing, our grain based of 40 KLPD, what are the economics in that? How much CapEx just for the 40 KLPD?

Sameer?

Yes. Your question was about the economics of 40 KLPD?

Grain based, yes.

Yes. So we are spending around, let's say, about INR 45 crores, INR 46 crores, and -- as a CapEx. And we would also be looking at enhancing the capacity of this in the 120 KLPD expansion that we were talking about or going up to 660, this would also get included. And the payback for this would be about 4 years.

Just to have an idea of the margin fund, in that grain based distillery, how is the margin compared to the molasses based, let's say, for B-heavy orders?

Either way, B-heavy grain base would have a slightly lower margin. I'm talking from an ethanol perspective. I'm not talking from a ENA perspective. But from an ethanol perspective, it will have a margin which would be slightly lower at the current prices as compared to the B-heavy margins that we get. And that compared to our cane juice numbers, yes, the margins would be somewhat comparable.

The next question is from the line of Karan Agarwal from Tusk Investment.

We would like to understand a bit on the water business part of it. So you mentioned that the order book is around INR 910 crores. So how much time period will be required for the execution of these projects?

Right. As far as the water business is concerned, the order booking of INR 912 crores, INR 457 crores of this is towards operations and maintenance contracts, which are for a longer period of time, let's say about approximately a decade. The balance of it, we expect execution within the next couple of years, 2 years or so, at least. Hello. I can hear you. Do you have another question?

The next question is from the line of Udit Gupta, an individual investor.

Sir, my question is that after the entire expansion is completed of 660 KLPD, sir, how much ethanol are we poised to produce?

Sameer, do you want to take that?

Yes. And then assuming that even the grain is on ethanol, you see our -- we always try to maximize our capacity utilization. And the thumb rule we take is that an operating number of days as a benchmark is between 330 to 335 days with that 100% capacity utilization. That's the benchmark we can calculate the numbers.

Okay. And sir, how much of ENA or that levy molasses will be included in this?

See, in terms of levy molasses, which we are manufacturing, we are doing about around 90 lakh liters, which will continue to happen.

Okay. So if I multiply that number then deduct that 90 lakh liters, that should give me...

Absolutely, 100 lakh liters would be the number.

Correct.

And sir, what would be our processing cost per liter of ethanol?

Well, Mr. Taneja, would you like to take that, but it would be somewhere around, let's say, a little...

Sir, a ballpark figure. I don't want the...

Little less than INR 9 a liter.

Sir, does that include the depreciation of the interest cost?

Yes, it would.

It would.

The next question is from the line of Harshil Kotari, an individual investor.

I would like to know does our plant have capacity to, let's say, change the fuel mix at any point of time, let's say, if sugar is not available and, let's say, lower cost of grains is available. So if we have that shifting available in our plant as of now and not -- and if not as of now, if there is any possibility to do going forward?

Are you talking in reference to our distilleries?

Yes, distillery.

Right. So yes, the plants that we have at -- that is being set up at our factory [indiscernible] will have a dual feed. So it will -- it can be molasses and juice and it can also process grain, which is if you run the plant and juice during the season, you can run it on grain in the off season. We are looking at these bolt-on packages very carefully. -- for our other distilleries at the other locations as well.

[Operator Instructions] The next question is from the line of Ankit Sancheti from Kotak Asset Management.

I had just one question on this point #8 on notes to account. You are looking to acquire 100% stake in United Shippers and Treasures Limited. Can you share what exactly is the idea behind subscribing or acquiring these equity shares? And can you throw some more light here? Is it involved much higher investments somewhere down the road?

No, I'll answer this question. It requires very minor investment of about INR 25-odd lakhs. This company possesses land, which is -- just gets in to our Khatauli sugar factory. We thought it is a good idea to have that land within our position. That was the whole objective.

Okay. So basically, the idea is for expansion when you guys decide. And there is nothing which is going into this dragging or shipping...

Nothing.

[indiscernible]

No.

The next question is from the line of Anupam Goswami from B&K Securities.

Yes, sir. So if you can elaborate more on the investment that we did and associate in the Israeli company? And why did we divested our stake? And what was the purpose of the investment in the first place?

Right. So the investment in Aqwise we've done many years ago at a point in time where the focus of the water business was on a technology platform. You will recollect this was a decade ago. And the company was particularly keen on -- and this business division was particularly seen on participating on the technology line. So we were restricting ourselves to only the technology portions of water projects at that point in time, whether it be for private sector or public sector clients. That -- of course, that strategy did change as the sector itself evolved. And therefore, we were never -- we moved very quickly away and being agnostic to the type of technology. Aqwise, of course, our investment in that company did continue. To give you an example, the -- one of our most successful projects has been the Agra water treatment, so a treatment project. And that had been done utilizing the technology from Aqwise. We've had the President of the country of Israel come and inaugurate that site. And it's a very successful initiative because that technology can be used in other areas. However, due to COVID and to a variety of other reasons, there has been a negative impact on the operations of Aqwise as a business entity. So from a strategic perspective of gaining technology and utilizing it in India, we invested in that objective. However, from a financial objective because of the vacillating business conditions in Israel and with global clients, the performance of the company, Aqwise, has been negatively impacted and the company, TEIL, has taken a call and taken a position that we will now sell these shares and take the commensurate hit in terms of the loss.

The next question is from the line of Anurag Patil from Roha Asset Managers.

[Technical Difficulty] INR 350 crore CapEx you are undergoing, will it be completely under [Technical Difficulty].

I think I've answered this question [Technical Difficulty] in the last call and the CapEx that we've announced in this call, the portion that comes under subsidized subsidies from the central government, we will obtain that. The policy, as I had mentioned, is that if there are loans that are available at concessional and subsidized rates, the company will subscribe for those from the Government of India. That is the policy. So a portion of this CapEx, a portion of it will be funded through debt at subsidized rates.

How much can this portion be? Can you give that number?

It is between [Technical Difficulty].

[Operator Instructions] Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Ladies and gentlemen, thank you very much for joining us today for the fiscal '21 results with Triveni Engineering & Industries Limited. I think there's a -- we're at a very exciting point across our businesses within sugar, alcohol as well as our engineering businesses. All of them have come out of the COVID period stronger. We anticipate a very robust year at higher prices as far as sugar is concerned. As far as the distillery business and the alcohol business is concerned, again, there is certainly great news that is in the offing. The implementation of that, of course, the devil always lies in the details, the implementation of that will be seen. We have large CapEx projects that are underway, and we will certainly be reporting back to you on the developments that we make in those projects. They have aggressive time schedules as well. As far as the Engineering businesses are concerned, again, there is a return to normalcy. We're seeing international and global interest across both the businesses, which is quite exciting. And of course, a rebound in domestic demand as well for our water business and for our power transmission business, both fairly exciting. Thank you again for joining us today, and I look forward to our next conversation for the Q1 results of fiscal '22.

Thank you. Ladies and gentlemen, on behalf of Triveni Engineering & Industries Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.