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

Ladies and gentlemen, good day, and welcome to the Triveni Engineering & Industries Limited Q1 FY '22 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 Q1 FY '22 Earnings Call. We have with us today on this call Mr. Tarun Sawhney, Vice Chairman and Managing Director; Mr. Suresh Taneja, Group CFO; Mr. 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 everybody earlier. I would also like to emphasize that while this call is all -- 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 following an interactive question-and-answer session. I will now request Mr. Tarun Sawhney to open the call. Over to you, sir.

Thank you very much. Good afternoon, ladies and gentlemen, and welcome to the Q1 fiscal '22 results for Triveni Engineering & Industries Limited. The overall performance of the company during the quarter has been quite satisfactory, especially in view of the challenges that have been posed by the second wave of COVID-19. For the company, while the sugar and distillery business are -- have been less affected, the operations of the engineering business, outflow and workflow to some supply chain disruptions and reduced availability of manpower at the contractor level, at subcontractor levels, et cetera. While the power transmission business was relatively less impacted, the operations at project sites of our Water business were impacted because of the supply of labor and local lockdown restrictions. As a result, the gross revenue from operations of the company stood at INR 1,111 crores, a decline of 9%. The profit after tax however showed a growth of 10% and stood at INR 92.3 crores. A few highlights of our businesses. For our sugar business, the operations during the quarter were completely stable. The recent estimate for sugar season 2021 indicate a diversion of 2.1 million tonnes of sugar for ethanol production. While the push by the central government on the EBP program, it is estimated that next year, we will see a diversion of 3.4 million tonnes of sugar approximately towards ethanol. And this is, of course, quite encouraging and very much in line with the planned target of EBP 20 by 2025 approximately. The estimated sugar production of the country stood at about 31 million tonnes for the sugar season. International sugar prices, of course, have continued their positive run and remain extremely buoyant and firm in view of deficit projections from around the world. On Friday, the #11 contract ended at 20.52. That's raw sugar traded at 20.52 at the close and white sugar traded at $514 per metric tonne. Just to give you an example. At the very end of July, the similar numbers for raw sugar were 18.45, and for white, it was 4.74. This is the March 22 contract that I've just shared this data for. So there's been a substantial increase, and there's clearly a lot of concern about the availability of sugar across global markets and other challenges for the foreseeable future. And this does bode well, of course, for the domestic sugar market, which has seen a similar amount of buoyancy in domestic prices. I'm happy to report that the distillery segment showed extremely good promise and a revenue growth of 23% in Q1 fiscal '22. We're well on our way to set up the additional distillation capacities of 200 KLPD, which will be operational in the last quarter of this fiscal year. Our target, of course, is by the very beginning of Q4 of this fiscal year. So we will be able to capture some amount of production from our new 2 plants, 160 and 40 KLPD plants that will be coming up. The company is enthused by the central government's commitment to the EBP and the recent media reports with respect to ethanol-based flex engines, which are being tested as we know in Maharashtra. All of this is very encouraging for the ethanol industry and bodes very well for planned investments from across the country. The planned expansion of the balance 140 KLPD is expected, I'm happy to report, by summer of '22. And so that is expected at least 3 months in advance of what I had reported on the last earnings conference call. Turning to the Engineering business, some of the highlights. That COVID-19 did have an impact. However, turnover was higher by 2%. There's a strong performance in the power transmission business. And the operation -- however, the operations of the Water business were impacted by COVID-19, and this is because of the disparate sites we operate at across the country and the paucity of manpower. The new capital works value, we received a new order for INR 170 crores for the Water business. And we expect the order booking for the Water business and power transmission to increase quite dramatically in the coming few quarters, primarily due to a buoyant market domestically and in international waters. The outstanding order book stood at INR 1,746 crores for the combined engineering businesses. Turning to the financial highlights. Our revenues from operations declined by 9% and stood at INR 1,111 crores. However, the profit after tax, as I mentioned, was 10% higher at INR 92.3 crores, and the EPS rose from 3.38 Q1 of fiscal '21 to 3.82 in fiscal '22. The tax incidence and effective tax rate for the company in this quarter under review is lower as the company has opted for the lower tax rate under the new regime. The total debt on a stand-alone basis on the 30th of June stood at INR 1,074 crores, 14% lower as compared to the previous corresponding quarter. It comprised of just under INR 350 crores of term loans. The interest on these term loans, of course, is at subsidized rates or with subvention. The average cost of funds for the company declined quite precipitously from the preceding corresponding quarter and stood at 5.27%, which is very encouraging and is reflected in our results. A more detailed review. Let me talk about our Sugar business. During the quarter under review, we crushed 1.64 million tonnes of cane at a gross recovery of 12.55%, producing 186,000 tonnes of sugar during this period, which is quite encouraging actually. And our dispatches -- our total dispatches stood at 214,000 tonnes, which was substantially lower than the previous corresponding quarter and due to the variances in the quota mechanism. As you know, the country is subject to a quota mechanism, which is decided by the Ministry of Food and declared on a monthly basis. And the quotas that Northern Millers have received over the past year have been lower than the previous year. And this is simply because the quantum of sugar available in other parts of the country has increased, and therefore, there has been a natural balancing since the -- it's on a proportionate basis, the quota is declared by the government of India. During Q1, the sugar revenues and segment profits are lower, primarily due to the lower sugar sales of approximately 26%. Export subsidies of INR 57 crores pertaining to exports made in fiscal '21 were recognized in the quarter. And the recognition of export subsidies of INR 11.69 crores could not be made in this quarter. The sugar inventory on the 30th of June stood at 45.12 (sic) [ 45.21 ] lakh quintals, which is valued at INR 25.5 per kilo. The co-generation operations, which we now report as a combined -- as part of the combined operations of the sugar business, achieved sales of INR 14.23 crores during Q1 fiscal '22, and this was slightly lower than INR 14.94 crores in the previous corresponding quarter. I'm very delighted to report that the company is one of the few firms that has absolutely no sugarcane arrears at this point in time. Looking at the industrial scenario. As per our estimates, the total acreage for sugarcane in the country is expected to increase to 40 -- 54 -- to over 54.5 lakh hectares, approximately 3% higher than the previous Sugar Season. For Sugar Season '21, '22, the production, as I mentioned, is going to be approximately 31 million tonnes. And this is very similar to this season's production. However, next year, we're anticipating a higher diversion towards ethanol of 3.4 million tonnes of sugar versus 2.1 million tonnes of sugar for the sugar season ending 31st (sic) [ 30th ] of September 2021. In the following Sugar Season, Sugar Season '21, '22, Uttar Pradesh is estimated to have a sugarcane acreage of approximately 23.12 lakh hectares, which is, broadly speaking, the same as the year that is closing up just now. However, we do see that because of excellent rainfall and dispersed rainfall for the last few months, there are very strong possibilities of higher yields, especially in the areas where Triveni has its sugar factories. The sugar production is expected to be just under 12 million tonnes for season '21, '22 in Uttar Pradesh. In Maharashtra, of course, it's expected to be just over 12 million tonnes. And Karnataka, we're anticipating a production of 4.9 million tonnes. So these are very encouraging numbers for the next year as well and quite substantial. And it really points to the fact that we will need some form of export to take place. And therefore, the buoyant prices that we have in international markets are very encouraging to be able to absorb sugar. And we are seeing quantums of sugar already being absorbed under OGL. And I'm going to talk about that in a minute or two. This year, 7 million tons of contracts have been entered into. This is higher than the MAEQ of 6 million tonnes. And all the additional quantity is under OGL, as I was mentioning. With an opening balance on the 1st of October '20 of 10.7 million tonnes, if we look at the balance sheet for the country, the estimated domestic consumption is 26 million tonnes with 7 million tonnes of export. Closing balance is anticipated at 8.7 million tonnes, which is approximately 2 million tonnes lower than the opening balance. Again, this is reflected in the present sugar prices that we're seeing across the country. For the marketing year 2021, ethanol contracts for 344 crore liters have been entered into. The ethanol manufactured from sugarcane juice. And B-heavy molasses is anticipated at 230 crore liters, so a substantial portion coming from B-heavy and juice. And we see this trend only getting more aggressive towards B-heavy and juice as time goes by and as the EBP levels start rising. This year, we're anticipating a blending just higher than 8% for the country. And next year, I think we're very much on target for having a 10% blend across the country, which is very encouraging, and that will be a record for the nation. Looking at international quarters, we've seen that major sugarcane-producing regions of Brazil are facing some hurdles with respect to their sugarcane production and the preference for ethanol versus sugar. In addition to that, the drought that has been faced, which has been quite significant as far as Brazil is concerned and potential frost impact as well have had a reduction in terms of the quantum of sugar that is estimated for production from Brazil, a fairly substantial reduction. And this has led to a fair amount of buoyancy in international prices. In Thailand, according to industry reports, local cane prices have risen quite substantially. However, there is a forecast for ample rains, suggesting a recovery in Thailand for sugar season '21, '22 after a very poor previous season. I think going forward, as far as international sugar prices are concerned, we are pretty much in unchartered waters. So it's very difficult to ascertain where these prices will be headed, but there are certainly big changes in demand supply, big changes in the quantums of sugarcane that are being produced and will be produced. And therefore, it is a very exciting time for the global sugar trade. India will play a critical role in terms of meeting any deficits for Sugar Season '21, '22. As far as the alcohol business is concerned, over the quarter under review, we produced a 26,800 kiloliters. And we sold just a little higher quantity of 27,300 kiloliters at an average realization of 53 -- just under INR 54 per liter, INR 53.98. And as a result of our very high operating efficiencies, we've seen an increase, a substantial increase in our PBIT of this business quarter-on-quarter. During the current quarter, the company produced 75% ethanol through B-heavy molasses, which was compared to 48% for the corresponding quarter in the last fiscal year. The higher profitability in the current quarter is driven by higher sales volumes and higher realizations and a very strong focus on cost control and operational efficiencies. The company has alcoholic beverages vertical, started producing Indian Made Indian Liquor towards the end -- the very end of Q3 fiscal '21 at its bottling facility in Muzaffarnagar. This has continued quite well over the quarter under review and has substantially increased. We've seen substantial increases on monthly sales, and we see this new business for the company proceeding at a very healthy pace and growing at a very healthy pace. The company is also in process of expanding its distillation capacities. As I mentioned upfront, we're looking at 200 KLPD coming up by January '22. And we're looking at the balance, 160 KLPD coming up -- sorry, 140 KLPD coming up by summer of '22, which was 3 months ahead of what we had forecast the last time that we had spoken. Looking quickly at our engineering businesses. I'd like to comment that our power transmission business has had a very successful quarter, with substantial increase in revenues and in profitability and a growth -- a handsome growth in our closing order book, which stood at INR 165.8 crores. During the quarter, the business did witness some supply chain disruptions, which are certainly normalized as we speak today. But despite that, we were able to increase our revenues. There were some orders that were actually pushed back into Q2, and so we are very well on track with respect to our budgeted numbers going forward and the catch-up that will happen in the following quarters. As far as the Water business is concerned, the revenues fell slightly to just under INR 44 crores. However, the PBIT total increased due to project cost savings at all of our sites and stood at just under INR 6 crores. The closing order book stood at INR 1,580 crores, which was substantially higher than INR 912 crores when we spoke 3 months ago. This is for the quarter ending March '21. And of course, it was substantially higher than the previous corresponding quarter where the number was INR 967 crores. The consolidated results include our wholly-owned SPV, executing the Mathura Project under the NMCG, under the Namami Gange program. The second wave of COVID-19, which started towards the end of fiscal '21 and continued during the quarter, did have a substantial impact on our business. And we had to take precautionary steps to safeguard our manpower. And there were some disturbances in the supply chain at our vendors and, of course, the reduced availability of labor and the non-supply of oxygen for industrial purposes. However, we see a lot of that getting ironed out in this quarter and, of course, going forward. And the hope, of course, is that we do not see a third wave which could, of course, potentially have an impact on all industrial activity. Just very briefly. As far as the future projections of the Sugar business and future highlights of the Sugar business are concerned, the government has announced 20% ethanol vending. We're fairly certain that we will achieve 10%. As I had mentioned, this augurs very well for sugar -- integrated sugar companies like us. We are well positioned to capitalize on this opportunity. And various new distillery expansions are on their way, and others are being contemplated by the company. We are also looking at incremental enhancement of our crushing capacities at very, very low levels of CapEx, and those projects are underway as we speak. And when we have some more details, we're happy to come back to you in terms of what kind of balancing we can do at very, very low levels of capital expenditure. The engineering business looks fairly solid when we look forward. Power transmission business has been focusing on business opportunities from defense. And we're looking at the conclusion of several tenders over the next couple of quarters, and we feel that we're well positioned in a lot of these tenders. We've seen strong economic recovery in fiscal '22, and this is primarily from demand from sectors such as steel, cement, oil and gas, thermal power plants and fertilizer. And this bodes well for the PT business. On the Water business, the company has participated in a very large number of tenders, which are, as I mentioned earlier, and -- in increasingly final stages of completion. We have won a substantial tender recently, and we look forward to positive results out of the many tenders we participated in. And again, the renewed focus on the water infrastructure and water map of the nation by the central and state governments is -- augurs very well for our Water business. Thank you very much, ladies and gentlemen. I'd like to open the floor to questions.

[Operator Instructions] We have the first question from the line of Shanti Patel from Shanti Patel Investment Advisors.

Sir, my question is what you are thinking about realizations per kg in quarter 2 and quarter 3 and quarter 4 of this accounting year? And what would be the scenario of ethanol as far as the industry is concerned and our company is concerned in terms of profitability?

Okay. Well, let me take the second part of your question first. I'm afraid we don't really give any forward-looking projections for profitability. However, in terms of quants, we see a higher quantity. In the next -- in the upcoming Sugar Season, we see a substantially higher quantity of diversion towards ethanol. We will be operating our distillery at our -- new distillery at Muzaffarnagar when it's commissioned in January of '22 on sugar cane juice and syrup -- on sugar cane and syrup. And therefore, we're seeing a larger quantum of cane being diverted towards ethanol for the company. Of course, the profitability numbers are dependent on the announcement of the new ethanol prices and, of course, on sugarcane prices. And therefore, it's impossible to give you a projection of profitability. With respect to sugar prices over this quarter and the next 2 quarters of this fiscal year, the sugar prices have gone up a fair amount over the last 15 to 20 days. We've seen [ solicitation ] sugar, which is approximately just over 50% of the sugar that is produced by Triveni, trading at INR 36 per kilo as of today, and refined sugar INR 1 higher at INR 37 per kilo. Frankly speaking, if these levels are maintained for the remainder of the year, I think that would be a very successful outcome and balance of government policy and our export program. It's important to mention that we do need to have sugar exported to international markets because we are going to be producing about 31 million tonnes of sugar next year with consumption this year at currently 6 million, next year perhaps maybe 0.5 million tonnes higher. And so we will have a substantial amount of excess sugar. Plus, you must remember that Triveni's projection for our closing balance is at 8.7 million tonnes, which is certainly higher than 2 months consumption, which is what we -- and I've said in the past, also what we typically need at the end of any sugar year. And therefore, we have substantial excess sugar in the country. And if we are able to evacuate the sugar into international waters and export the sugar, then we should be able to maintain the prices that we've seen at this level. So there's a lot of contingency. There are a lots of ifs. But my personal perspective is that we should be able to maintain the sugar prices that we have seen and the levels that we have today for the remainder of this year.

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

Yes. I just have questions regarding the guidance with respect to, what will be the cane crushing that is expected in the company this year?

Well, the sugar here is very different to the fiscal year because the sugar year and the season runs from October through to May. So it's not a number that we typically give an advanced estimate towards. It's also very difficult for us to do this because we still have rains and weather conditions that we need to see in the remainder of August and September, which is the monsoon period, which is absolutely vital for sugarcane growth and the grand growth period of the crop. The hope is that with the amount of work that we have done, if we do not have any unpredictable weather conditions, we should be able to see an improvement in our yield. We've had a small improvement in terms of area under cane for Triveni that we can -- I'm happy to report, we've seen a single-digit growth in the area in the cane for the company, and we hope to see some increase in yield. Of course, that is contingent on a variety of other factors. It's impossible for us to even estimate that at this particular point in time. We'll be in a much better condition to provide you with more information on this subject when we speak next in 3 months.

Okay. Sure. Understood. I have another question with respect to the -- similarly, on the cane crushing. But like you said, the new distillery capacity would be functioning in January FY '22, right? I just need to know that out of the entire distillery capacity, how are we going to go about it? Let's say, what percentage would be from B-heavy molasses and what percentage would be from C, and et cetera, sugar cane juice like?

So a lot of it is contingent on when the new distillery capacity has come up. And of course, there will be 40 KLPD of the new distillery capacity that's coming up that will operate on grain. So it's a blend of 5 -- of 4 different fleet stocks. We will have 3 molasses. And this typically comes from our factories in East UP, where we don't have a distillery. It also meets the requirement of country liquor, which is required by the state government. The other factories in Western and Central Pradesh will be focusing primarily on B-heavy. And of course, we will have juice that will -- that we will have at our factory in [indiscernible]. And we will have grain at the Port [indiscernible] in Muzaffarnagar. So it is a balance. If you contact us offline, we can share with you some numbers in terms of what will be the percentages of all 3 -- of all 4.

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

So my question was around the international sugar prices. Considering that the prices have now shot up to more than 20 pounds -- $0.20 per pound. So my question is that, will we be able to liquidate our [indiscernible]? I mean, we enter into, say, future contracts for later date and then liquidate our inventory because, as you mentioned, India is a sugar surplus country, so the rise in sugar prices is a good opportunity for us to liquidate our excess inventory. I would like your comments on that.

Yes, absolutely. So firstly, while there has been an increase in international sugar prices, they are lower than domestic prices. So there's no reason for liquidating sugar from Triveni where our factories are landlocked, they're all in the state of Uttar Pradesh and export our sugar internationally. That -- there is a delta in our favor to sell domestically, a substantial one. The second thing is that the -- under OGL, you have the ability to be able to export that sugar. So the question that you asked is more relevant for factories from coastal states, from Karnataka, from Maharashtra. And we've seen 1 million tonnes, and we are projecting 1 million tonnes of OGL export this year or up to 1 million tonnes of OGL export for this sugar year. Going into the next year, I think that, that certainly will happen. There will be a requirement for some form of assistance from the government of India, certainly. And I know that it's just being contemplated as we speak. The quantum of which is completely unknown, but there is -- there will be firms that are cash trapped that will utilize this opportunity to be able to evacuate some quantity of their sugar. I don't see that as a possibility at this point in time with current prices for Triveni.

Okay. What -- could you please repeat what are the current domestic sugar prices right now? Is it INR 36?

The current domestic prices are INR 36 for plantation white sugar and INR 37 for refined sugar for Triveni. That may be different for other groups.

Yes. Okay. And my next question was, I was going through your investor presentation where you mentioned that you're working on a new variety of seed to reduce dependence on the 0238 variety, which everyone in the industry uses. So could you comment on the development?

We have developed a structured program, a 3-year program for significantly reducing the dependence on 0238. We have identified the varieties, and we are already working on this substitution for the past year. And we are happy that we have reduced our dependence by at least 7%, 8% in the coming year, which will significantly get enhanced in the next 2 years. We have identified, A, a variety which has already been planted and also, an upcoming variety. I would not be in a position to divulge the varietal percentages or the names of the varieties for obvious competitive reasons. You will understand that.

So is the new seed more profitable to grow as in the yields are higher?

The answer is that the farmer also knows that some diseases have been -- are getting observed in 0238, he's also aware of that, and the new varieties given similar yields and recoveries. And absolutely, new variety, which I just mentioned to you, which is under observation in our nurseries, et cetera, may give us a higher recovery even than 0238.

We have the next question from the line of Rajesh Majumdar from B&K Securities.

So I had a few questions on the sugar business as well as the industry. My first question was on the cane crushing. So we've seen a 24% kind of decline in 1Q. Is that due to some kind of crop patterns or red rot or anything like that? Or it's just due to the lockdown?

No. It was because that's the fag end of the season. So you should look at the entire sugar year as it's -- in its entirety, which stretches from October through to May. The previous sugar season was a longer sugar season. There was more cane that was available. The last sugar season for -- that has just completed in May of this year, we had a lower crush. But the comparison for quarter-on-quarter, while those are absolute numbers and we represented them, is not significant for the full sugar season and the difference in crush of the entire sugar season. You should also note that for sugar season 2021, which has just completed, we did start our sugar factories earlier than we did in the previous sugar year.

Right. So there is no impact or like you saw in Eastern UP in terms of the red rot and on the Western EP mills. Can we take it that way?

No. That is absolutely correct. And we have a mill in Eastern Uttar Pradesh, where we did see a decline in terms of the crush. However, the incidence of red rot, even in out of our 7 factories, 1 is in East Uttar Pradesh. And our factory in East Uttar Pradesh did not see a significant amount of red rot or incidents of red rot. I would also like to mention, you didn't ask it, but since you're asking about red rot. For this year, we have seen no incidence of red rot in Central and Western Uttar Pradesh. And in East UP, the incidence is [ minute ]. So there's absolutely negligible amount this year, and that's because of a very stringent control over seed and over our cane development by the teams at Triveni.

Right. So my second question was, sir, regarding the area and the cultivation. We have not seen much consolidation in the industry, and the largest player has just 4% market share. So while there are so many stand-alone sugar mills who really cannot -- don't have the wherewithal to expand into distillery business, is there not any opportunity in terms of increasing our key and acreage by taking over these mills?

I -- your question is an economics-based question. Everything has a price to it, so -- and a return to it. So I'm not in a position to be able to comment because each mill is different. The area of each mill is different. But the ecosystem is such that, I think, that with the focus on ethanol and the focus on biofuels that's happening and the recognition that is being received through public markets and equity markets, I think we're coming to some sort of point where we could see potentially some consolidation in the years to come. However, I would say that we are dependent on government policies for enormous impacts on the profitability of the industry. And if we see the impact of policy reducing, I think that will augur very, very well for consolidation in the industry, which definitely needs to happen. You've raised a very important point. With over 500 sugar factories in the country and so many different people, operate so many different companies, operating single units across the country, there is -- there should certainly be scope for consolidation. There should certainly be scope for efficiencies that come through consolidation as well.

Right. So will we move to that eventually over a longer period of time, you think, some more consolidated, some in the industry?

Yes. But you'll have to -- I think it's very difficult to tell. As I mentioned, some of it is contingent on government policy. And that, clearly, of course, is not in our hands. But the government has, I should mention, been very supportive of the industry, both the Uttar Pradesh government and the central government, in terms of recognizing what the areas of concern are and recognizing the areas where a push can be given, for example, the entire ethanol sector.

Right. And sir, my other question was regarding the sugar prices that some people have been asking. So given the fact that international price have risen at a traditionally weak quarter where there's no slowing for us, how much realistically can the industry export without sacrificing in terms of [indiscernible] to get the real benefit of this? Because we are going into next season, so it's just about 2 months left. So -- and the prices, I don't know whether it's hold or not until that time. So how much can the exports realistically increase in this short time frame given the fact that domestic quotas are also to be fulfilled and inventory position is already quite low.

Right. You should note that domestic quota has guided quantity of the maximum that you can sell. You can certainly sell less than what you're allotted. And the next thing is that there is a price difference for domestically traded sugar. Classically, in Uttar Pradesh, you get INR 2 per kilo premium over Maharashtra. And therefore, Maharashtra prices are closer to internationally traded prices. And there can be spot premiums. Not everything is traded on the tape. Not everything is traded at international prices. Sometimes, destination sugar can be traded at a premium if there's any demand. And so Maharashtra could certainly find -- could find opportunities for exporting their sugar. However, I will say that there is an anticipated increase in SRP for next year's sugar that is coming right now. And I think a lot of people will be a little cautious and cautiously optimistic, but cautious nonetheless in terms of placing unrestricted orders for export. So we'll see a balance. I think that quite a lot of sugar can be exported, but it will certainly need some amount of government assistance that we've got this year and the previous year in terms of the MAEQ and the previous MIEQ subsidies from GOI.

One last question. Just add-on question, and just the last add-on question. Sir, my add-on question was that, given the fact that we have seen a year where there has been unusual conditions in Brazil, which has exacerbated the international pricing scenario, and we're moving to, say, next year where things could normalize, and in which case, we -- the Government of India also the target of cutting the export subsidy to 0 over a period of time as per the WTO regulations. So for a longer time frame, if you look at the overall diversion to it, it has been a maximum 6 million tonnes or something like that. So if we increase the cane price and additional area [indiscernible] over the next 2 years, then the industry will again go back into a 10 million, 11 million-tonne kind of scenario, is what I try to get at?

I'm sorry. You're going to have to repeat that question. You tailed off towards the end. Is your question -- yes, just repeat it.

Yes. My question is, sir, that this year, we have an unusual weather conditions in Brazil, which has exacerbated the overall demand-supply scenario globally, and it has coincided with the fact that we also have some additional sugar diversion in India. However, going into sugar year, say, '22, '23 and beyond and given the fact that cane pricing will increase with additional area and cultivation, will we again see things normalize back what we have seen earlier? Because as per the WTO regulations, India cannot go back to the subsidy levels that it had enjoyed earlier, say, INR 10 plus. So I mean...

I got your question. So you see, what your argument is there are 4 or 5 things that you need to consider. The first thing is the quantum of ethanol and where you're getting the ethanol from. The -- you threw out a number of 6 million tonnes of diversion. Well, 6 million tonnes of diversion, it can necessarily be higher, it can also be lower at the end of the day. It's depending on what comes from grain and what comes from sugarcane juice, et cetera, et cetera, from sugar factories. So those numbers can also change. The numbers that you're talking about are government reports that have been talked about, and those are the approximate numbers coming up with one scenario. There can be many other such scenarios. You are correct that the government doing their subsidies will have to end. That we have just over a year for that compliance. However, we do have the opportunity for diverting more sugarcane, our excess quantities of sugarcane towards the ethanol blending program. Next, you mentioned sugarcane prices. Yes, they may go up, but there's no necessity for them to go up continuously over periods of time. In fact, there's been increasing debate to have some mechanisms in place by the central government in terms of linkage and bringing about linkage. And the hope, of course, is that when you do have compliance with WTO regulations, it is met with a linkage of some form to ensure that all constituents in this value chain, pharma, factory, consumer, all have an equal benefit coming out of the system. So that's another point. Then you also mentioned that increasing acreage. Well, acreage goes up and down by a few percentage points. I mean, land in India is fairly limited. So I see any increase coming only from increases in yield per hectare, which, of course, has its own challenges because you have smaller and smaller plot sizes across the country. But the total quantum of area under cane is not going to suddenly increase by 20% to 20%, 30%. That's not going up.

[Operator Instructions] We have the next question from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas.

I have 2 questions, one on your consolidated bid. So it stands now at around INR 1,126 crores. So do you expect it to reduce by end of this fiscal considering your CapEx program -- ongoing CapEx program?

Yes. As far as the debt is concerned in respect to the new distilleries, which are coming up, we'll be contracting another INR 160 crores to INR 170 crores. So therefore, the total debt as on 31st March '22 may not come down.

Okay. Okay. Okay. Got you, sir. And sir, just now, 200 KLPD coming up by the end of this fiscal and another 140 coming by FY '23. So can we expect the ethanol production to be around 13 crores to 14 crores by -- for FY '22 and around 17 crores to 18 crores by '23?

Good question that you've asked. Yes, of course, the ethanol production will be higher. We will see for this year, because we're only going to get less than a quarter for the 200 KLPD that is coming up. We will see about 12.5 crores. So just about approximately for this year. And next year, we will see some number between 19 crore to 20 crore liters.

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

Just a few questions. One is on specifically...

Mr. Manyal, I'm sorry to interrupt, but the audio is not clear from your line, sir.

Can you hear me?

Yes, it's better now. Thank you.

Yes.

Just a few things about the export specifically. If I'm not wrong, you're still about to export approximately 35,000 to 40,000 tonnes for this Sugar Season?