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

Ladies and gentlemen, good day, and welcome to the Triveni Engineering & Industries Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you.

Thank you, Ray. Good day, everyone, and a warm welcome to everyone participating in Triveni Engineering & Industries Q1 FY '27 Earnings Call. We have with us today Mr. Tarun Sawhney, the Vice Chairman and Managing Director; Mr. Suresh Taneja, the Group CFO; and Mr. Sameer Sinha, CEO, Sugar business. Before we begin, I would like to mention that some statements made in today's discussions may be forward-looking in nature, and a statement to this effect has been included in the invite, which has been shared to you earlier -- with you earlier. I would also like to emphasize that while this call is open to all invitees, it may not be broadcast or reproduced in any manner. I would now like to hand over to Mr. Tarun Sawhney to make his opening remarks. Over to you, Tarun.

Thank you, Gavin. Good afternoon, ladies and gentlemen, and welcome to the Q1 fiscal '27 Earnings Conference Call for Triveni Engineering & Industries Limited. Fiscal '27 marks the beginning of a new phase for the company. After NCLT approval, the composite scheme of arrangement became effective from the 19th of May 2026. The Power Transmission business has been demerged and vested in Triveni Power Transmission Limited with effect of 1st of April 2026. Accordingly, the Q1 fiscal '27 numbers for TEIL are for the continuing operations with the earlier period restated accordingly. I will first cover the consolidated financial performance and then discuss the business-wise performance and closely with an outlook -- with a perspective on the outlook for the various businesses as well. Our first quarter performance reflects improved operating performance in the sugar and distillery businesses, leading to an improvement in the profitability despite a challenging backdrop of lower cane yields, higher sugarcane costs and evolving ethanol demand and, of course, slower revenue conversion in the water business. The revenues from operations grew by 2% year-on-year to INR 1,581 crores, supported by higher sugar sales volumes and better sugar realization and partly offset by lower alcohol offtake and slightly lower water revenue. The EBITDA increased by 6% year-on-year, and the profit before tax stood at INR 5 crores versus a loss of INR 9 crores in Q1 fiscal '26. The improvement in profitability was primarily driven by higher sugar margins and better operating performance in the alcohol/distillery business, including lower maize procurement costs, better DDGS realizations and operating efficiencies. The stand-alone gross debt reduced to INR 1,238 crores, which comprised of term loans of INR 376 crores and a working capital of INR 862 crores as on the 30th of June '26, which is compared to INR 1,603 crores of term loans of INR 443 crores and working capital of INR 1,160 crores, as on the 30th of June in the previous corresponding year. The consolidated average cost of funds has reduced by a significant 70 basis points to 6.8% during the quarter compared with of course 7.5% in the previous corresponding quarter. I'd like to point out that this has been actually an extremely challenging task in this environment, where our bankers have been hesitant. However, we have been persuasive and very successful in continuously reducing our cost of funds and making them more suitable and according to our debt rating in the market. Turning quickly to the business-wise review, I'd like to cover the sugar business first. We witnessed a lower sugarcane crush for the sugar season '25-'26 of 8.25 million metric tonnes, which was lower by approximately 9% compared to the previous sugar season. This was due to poor yields eventually across our 8 sugar factories and also an increased diversion, especially in Western Uttar Pradesh. However, our intensive cane development initiatives have yielded excellent outcomes as compared to the previous year, where gross recovery improved by 26 basis points to 11.1%, and that helped achieve almost similar level of production costs despite a lower crush. I think it's important to mention that there have been a combination of factors that have allowed the performance of sugarcane actually to improve the input into the sugar plants. A lot of that has to do with select varietal replacement. A lot of that has to do with a more prescriptive approach towards pest and disease and the management in the fields across not just the grand growth period, but across the entire sugar year and, of course, increased interfaces with farmers using digital platforms, as well as more physical platforms and advice given by the vast array of consultants and experts that we have on our roads as well. Despite this, our sugar business has delivered a stable profitability during Q1 fiscal '27. Domestic dispatches grew by 7% and the average realization improved by 3%. The segment revenue rose 6% year-on-year to INR 1,235 crores, and PBIT for the sugar business stood at INR 14 crores, an increase of about 82% versus the previous corresponding quarter. The sugar inventory as on the 30th of June stood at 3.59 lakh metric tonnes, valued at INR 38.41 per kilo compared to 4.45 lakh metric tonnes in the previous corresponding quarter valued at INR 37.41, as on the 30th of June 2025. The current prices of sugar as on today are approximately INR 4,600 per quintal for refined sugar and INR 45.25 per quintal for sulphitation sugar. So a reasonable increase than the average for the previous quarter. Turning to the alcohol and distillery business, we have continued our robust turnaround trajectory. And the key contributor to the improvement in overall productivity has been the mix, of course, of product as well as the procurement prices. I think that has been a very solid contributing factor towards the turnaround in this business. The production was 57,488 kiloliters, which was down 12% year-on-year. And the sales volume was 50,483 kiloliters, which was down approximately 19%. And this was primarily due to lower sales orders resulting in the decline of revenue by 13% to INR 373 crores. Despite the lower uptake, the PBIT improved 32% to INR 31 crores. And this was supported by lower maize procurement prices and better DDGS realizations and improved feedstock economics from the ongoing cost optimization program that has not yet concluded and will continue over the next quarter as well. So we hope to actually see more cost optimization improvements for the following quarter, and of course, beyond. Despite the grain-based ethanol accounted for 61% of alcohol sales during the quarter versus 58% in the corresponding previous quarter, showing the gradual shift that I've been talking about. In fact, when we look at the overall averages, and I will talk about that a little bit later in this call, we're going to see a more progressive shift towards grain-based ethanol. I think what is also equally important is to remember that for the following year, I think a commensurate shift can be expected for the nation as a whole. At the industry level, ethanol blending reached 20% during ESY '25-'26, up, and this was with the procurement of approximately 717 crore liters. Grain-based ethanol continues to dominate industry allocation and supply, as I previously mentioned. Our country liquor volumes were about approximately 15.5 lakh cases, down marginally due to a revision in the Uttar Pradesh excise quota allocation policy. In this, the quantum of monetary penalty has increased more than 6x if a retailer fails to adhere to the restrictions of 75% volume in a particular district for a particular brand. And that creates some level of confusion for the market. However, I anticipate a lot of this will get sorted out. We are, of course, aggressively pursuing the growth of this business over subsequent quarters as well with sufficient capacity to be able to meet that additional production. Turning quickly to the water business, the revenue of the water business declined by 21% year-on-year to INR 43 crores, primarily due to the slower execution of Prayagraj and Vadodara EPC jobs. Consequently, the PBIT declined to INR 2 crores. The decline in profitability was due to the revenue degrowth and the base quarter included a gain of INR 8 crores related to GST on interest for earlier periods, and that was for the previous quarter, which can be, of course, taken out in terms of this comparison. The orders received during the quarter were INR 9 crores. The closing order book remained at a healthy INR 1,472 crores, which included INR 1,065 crores of longer-duration O&M contracts. The business sees a viable pipeline as we look forward and bids during the quarter were quite substantial, in fact, in excess of INR 300-odd crores, and we expect to be L1 in certainly a few of those projects. I'd like to now focus on the strategic outlook of the businesses. In the Sugar business, the industry outlook remains constructive in the near to medium term. Domestic prices have strengthened meaningfully in recent weeks, supported by lower carryforward inventories, a tighter demand-supply dynamic that exists in the market and some growing concerns around weather-related risks. The industry estimates that closing stocks for sugar season '25, '26 are approximately 4-odd million tonnes with the possibility of it being slightly lower than that. And this would be the lowest level since September 2017, where we recorded 3.88 million metric tonnes in the country. That was at a point where domestic consumption was well below 25 million metric tonnes. I'm just throwing that -- those numbers out there because it's important to keep that in perspective as one looks to model sugar prices in the near term. The current market condition has also reflected concerns, as I mentioned, for rainfall distribution in the key cane growing states and the possibility of an evolving El Nino event, which could impact cane yields and sugar recoveries in this season and, of course, in the following season. With respect to Triveni, of our 6 sugar -- of our 8 sugar factories, 5 sugar factories have received absolutely adequate rainfall. It has been interspaced beautifully as well. And as a result, the crop is in excellent condition as on today. However, we are only, I want to say, just halfway through the grand growth period. And therefore, the next 6 weeks is going to be very crucial and critical in terms of the growth of the crop. Our factories in Rani Nangal and Sabitgarh have received marginally lower rainfall as compared to previous years. However, this is not necessarily a negative. As a matter of fact, the crop condition is absolutely fine. There is no sign of any stressed crop, but it's important to talk about that when we look at all the sugar factories. Our plant in Ramkola in Far Eastern Uttar Pradesh has actually received a little excess rainfall as compared to last year. The crop health is excellent, again, because of indispersed rains, where there has been no groundwater collection. So all in all, I think from Triveni's perspective, thus far, the crop looks pretty good. The cane development and cane replacement, varietal replacement programs have had a good amount of success. I spoke about that in the Q4 conference call. And that will, of course, have positive benefits in terms of the recoveries that we anticipate this year. The question mark being, of course, when does the sugar season start? And the performance of the crop over the next 6 to 10 weeks before the start of the season is critical in terms of future estimates. On Tuesday, the government issued a directive stating that no sugar dealer will be permitted to hold or stock more than 30 days. Furthermore, as a part to keep sugar prices under control, a stock limit of 4,000 quintal has been established. The order will be effective from the 1st of August till the 30th of November '26. I think this is a very, very good order from DSPD. It is -- first thing, it is only for the festival period. So it covers August through the end of November, which is absolutely fine. The sugar factories will be in full production across the nation, certainly by that point in November. It also leads to moderate changes in sugar pricing. I think we're very comfortable with the pricing that we have right now. There is adequate stock of sugar in the country. We do the mental mathematics, we have sugar in the country up till mid-November, certainly until early November '26, at which point in time all the sugar factories are anticipated to have started the vast majority across the country, and therefore, there will be regular supplies. So we see excellent sugar pricing, if one has to look at it going forward. The levels that I've talked about earlier in this call should be maintained as we go forward. The recent industry updates also suggest that sugarcane acreage at a national level has remained reasonably resilient. However, the rainfall distribution in the central and southern states of Maharashtra and Karnataka remains a concern. As a result, there is a concern about less acreage at this stage for those 2 states. However, it is still, as I will repeat, too early to tell in terms of the overall impact on the nation's sugar balance sheet for sugar season '26, '27. The government has continued its focus on maintaining adequate domestic availability, including the restriction on sugar exports. And this underscores the importance of preserving a comfortable stock level. And as we look forward to the next year and even the ethanol supplier, I think we can look at possible differences in terms of the allocation of sugary feedstocks towards the ethanol blending program as a one additional lever and possibility for maintaining a healthy balance of pricing for the industry and for farmers and consumers in the country as far as sugar is concerned. We, of course, at Triveni remain focused on improving cane availability, enhancing recoveries and increasing farm productivity through our cane development initiatives and driving controllable efficiencies in our operations. The last point is critically important and some quantum of CapEx has gone in terms of improving our cost efficiencies at the sugar plants and lowering our cost of production for the upcoming season. Given the favorable market backdrop and our emphasis on this operational excellence, I think the execution both at field and factory level will continue to be our key priority. Turning to the distillery business, the medium-term outlook remains encouraging. India has successfully achieved 20% blending, which is a milestone, frankly speaking. We maintained it for the year. Q4, I think, will be a little bit stressful, and I will just address that in a minute. Of course, we're 5 years ahead of the original target. The real question is what happens next. As you all know, there has been a spate of negative publicity as far as ethanol blending is concerned. I do believe that there are certain vested interests that have been propagating false news. The genesis of this program is threefold as we will always recount. And I will again stress that it is about benefit to the Indian farmer, whether it be for grain or whether it be for sugarcane, it is about saving precious financial -- foreign exchange reserves, and it is about meeting domestic energy security. The last point is actually extremely critical and one that gets easily forgotten. the contribution to the environment, et cetera, is also critically important, but I'm downplaying that point because the other points of actual physical financial impact to all citizens of India and must not be disregarded very honestly, in a quick summary judgment. It is an important central program where public sector banks have lent a huge quantum of money in terms of creating a massive sunrise sector that will actually be the starting point for India's biofuel journey as we look forward to the next 5, 10, 15, 20 years. The government has signaled that the country's ethanol ecosystem has been built keeping these future requirements in mind. Furthermore, flex fuel mobility has been announced. We have also have cars and motorcycles that have been released. Maruti has launched a Wagon R. We at Triveni have purchased the first Wagon R and are using it in New Delhi. The availability of E85 fuel is plentiful, and we're happy with that. The performance of the car, I must add, ladies and gentlemen, is actually pretty good. Furthermore, with respect to the ongoing court case, which has prevented the tender for allocation of ethanol from OMCs, as of now, the Supreme Court has stayed any alteration to the existing ethanol allocation framework and ordered the status quo as it examines BPCL's challenge to the Karnataka High Court ruling. We are awaiting the final judicial resolution, which could influence future OMC tender allocations. The AG yesterday has said that 100 crore liters should be allocated and is seeking the Supreme Court's permission to be able to do that. The hearing is coming up early next week. This will be divided up amongst the 200-odd bidders from previous allocations. Triveni will be a significant beneficiary if that does get allocated. These developments can improve the utilization of the installed capacities of ethanol across the country. At the same time, the increasing diversification of feedstocks and continued policy focus on energy security and crude oil substitution and of course, the farmer income enhancement remains the fundamental pillar of this program. Next year, I anticipate that we will see a substantial amount of ethanol coming from grain. I would say, in the broad ratio of 3:1, grain is to sugary feedstocks is my anticipation for next year. I think Triveni has the ability to also be able to perform in exactly a similar percentage manner given the fact that we have multi-feed distilleries available to the group. And I think that, again, is a strategy that has paid dividends and will showcase dividends as we move to the ESY '26-'27. Regarding the water business, which has been affected by the timely execution during the quarter, I think we still have a reasonably good order book. The O&M component is extremely important. However, we are looking forward to the execution and the conclusion of recent tenders, where we actually are holding some degree of promise. The business continues to show profitable performance, and we are encouraged that it will regain the position of national dominance as a point of discussion going forward. I'd like to summarize my remarks by saying that Q1 fiscal ' 27 was a very positive start for Triveni Engineering and Industries Limited in its new avatar and new form. We have witnessed an improvement in profitability and a reduction in debt as well as cost of funds. And while we continue to invest management bandwidth in operating efficiencies and capital discipline -- allocation discipline. Our sugar business is a priority with cane availability and cane quality and recoveries playing the most important role over the next few months into the sugar season '26, '27. And in ethanol, we are focused on feedstock economics. I've stressed this on previous calls as well. I think the product mix and feedstock economics continues to be a huge point of focus for the management. And I think we've done a pretty good job of showcasing our expertise in these 2 areas. Before I move to the question and answers, I would like to provide a brief update on the Q1 fiscal '27 results for Triveni Power Transmission Limited. As indicated on our previous earnings call, we intended to host an earnings call for TPTL, followed by the publication of the financial results for Q1. The Board meeting of TPTL was day before yesterday. However, in view of the applicable disclosure guidelines related to the information sharing prior to listing, it will not be feasible to publish the results nor feasible to conduct the earnings conference call before the listing of the TPTL shares. However, I would like to say that in the consolidated results of TEIL, the company has accounted for INR 4.35 crores as a share of profit in our consolidated accounts from TPTL. As far as the listing is concerned, we are very much in the final phase of this process. The record date for share allotment was the 22nd of July '26, and the allotment was completed yesterday. We will now submit the listing application, hopefully, this week. and this includes the information memorandum and other required documents. Based on the standard time line, we expect the listing to be completed in approximately 4 to 6 weeks, of course, subject to regulatory approvals. However, from our end, we will have completed all the documentation in a time-bound manner and then anticipate any questions, if any, and a timely approval for listing, which we are keenly anticipating. With this, I'd like to open the call for questions. Thank you.

[Operator Instructions] The first question is from [ Shubhi Gupta ] from Trinetra Asset Managers.

Sir, my first question is that you are facing some challenges with respect to lower sugarcane yields. So what are we expecting moving forward?

Right. Good question. I think as I spoke in my opening comments, if we look at the performance of sugar season '25, '26 for Triveni Engineering, our total sugar production was down by 9%. This was primarily due to poorer yields and supported a little bit positively by higher recoveries. I think a lot of that had to do now that we can do a full detailed analysis of the previous year to the massive quantum of rainfall that the majority of our units expected. Some of it had to do with pest outlooks of top borers at unusual times that also impacted the yield of the sugarcane crop, primarily in Western Uttar Pradesh. The combination of those 2 factors has been the primary determinant for the lower and poorer performance in yields for sugar season '25, '26. For the upcoming season, as I mentioned, there's been an enormous amount of planned effort. The first and foremost thing is a very micro level monitoring of pest and disease. And I'm happy to report that as of today, the -- across the 8 sugar units of the company, the incidence of pest and disease is not just below our monitoring line, but actually very, very, very little, if any. The small incidences of some pests that have occurred from time to time have been dealt with judiciously and expeditiously and have been mitigated. So we have, as of now, from a crop health perspective, a healthy crop. The other very important point is the quantum of rainfall that has been received across the sugar units, which, by and large, in our paraphrasing has been interspaced and pretty good. Lower levels, which is actually very good for us because as you will remember, the majority of our plants are in Western Uttar Pradesh, which also has the benefit of canal irrigation. So with that we don't want excess -- we don't want canal irrigation to be supplemented by the rain gods and then leading to standing water on the ground. And we've not had that occurrence at all. So as on today, looking pretty good. However, I want to stress that the next 6 weeks of the grand growth period are absolutely critical. We do anticipate rainfall. The monsoons have to play an important role in North India and in Uttar Pradesh. And if we expect, again, interspaced rainfall, no standing motor, then the crop will certainly be better than last year.

Sir, my next question is, sir, as you mentioned in your remarks that we have some slow execution in water business in Prayagraj, et cetera. So I wanted to understand if you could go more specific what are the bottlenecks and how can we sort of move forward and resolve this?

These kind of bottlenecks are part of the business. It does not really take place in an even manner. But however, as far as the total year is complete, year is concerned, I think by and large, we'll be able to achieve our operating plans.

The next question is from Aman Kumar Sonthalia from AK Securities.

Sir, when the monsoon started, it was anticipated that the monsoon in Maharashtra and Karnataka to be very bad. And definitely, it will impact the production there. So right now, I think monsoon in the beginning -- in the month of June was very bad. But after that, it has picked up. So how do you foresee production in Maharashtra and Karnataka going forward?

Very good question. I think I'll go back to my opening remarks. I foresee a flattish performance right now in terms of Maharashtra and Karnataka. I don't see any possibility of -- limited possibility of anything [ of really ] an upside. But I think that they will be able to maintain the levels of last year, maybe slightly diluted, which is why I think that we have -- right now, if one had to predict the balance sheet for the next year, I think we have a sufficient amount of sugar in the country to meet domestic consumption. There's no question about it. So you're right. I think the poor start of the monsoon season as far as the Central and Southern states are concerned was a source of worry. But I think a lot of that has been mitigated by the performance of the monsoon, especially over the last 30 to 40 days.

And sir, what is the actual estimated consumption of India?

That's a brilliant question. We are looking -- so the government's estimates are approximately 28.1 million metric tonnes. We at Triveni think that it should be somewhere around 28.3 tonnes, just slightly higher.

And sir, one more question. Since the ethanol prices has not increased and right now, the sugar prices has gone up. So do you think that in the coming season, the diversion into ethanol will be less and that leads to higher sugar production in the country?

Sorry, can you repeat that question? It's a little unclear.

Sir, my question is that right now, the ethanol price has not gone up. and the sugar prices has gone up. So in the coming season, the mills prefer not to make more ethanol or divert to via juice or via B-heavy. And instead of that, they produce more sugar. So do you think that it will increase the supply of sugar in the market or the production of [indiscernible]?

So here's the point. I think there's a threefold answer to this question. It's not a simple question. The first most important point is, yes, everybody has their own cost economics. There are juice distilleries that have been set up that don't have crystallization capacity. So it's not a binary question of producing sugar or producing ethanol. It's either producing ethanol or shutting down. So it's not the case for everybody that they have that option, number one. Number two, I think the cost economics in Uttar Pradesh are very clear. I can't speak for the rest of the country. But as far as Uttar Pradesh is very clear, crystallization capacity has to be maximized. For Triveni, our perspective, what I can share is that we will be maximizing our crystallization capacity completely for the next year. I do think that we have enough sugarcane in the country. And therefore, I don't see sugar in terms of the total quantum of sugar being under stress, frankly speaking. The government -- and this is the third and most important factor. The government has done an outstanding job. DFPD has done an outstanding job of monitoring and balancing the sugar and sugar ethanol balance sheet across the country. And they've done a super job over the last few years. And therefore, it is the DFPD themselves in terms of working with MoPNG that will balance out how much sugary feedstock will be diverted towards ethanol and then how much will go into crystallization capacity based on the availability of sugarcane at the end of this quarter or perhaps in October 2026, which is the right time and where you can make proper estimations of the quantum of sugarcane that is available across the country. So I don't see any stress to sugar prices. If your question was about will there be stress to sugar prices going forward, I don't really see that. I don't see anything that is going to really spike things up. I think we're going to see a moderate level of sugar pricing with perhaps some small increases from time to time before the sugar season starts. And then once the sugar season starts, we will see some amount of dampening. But we have made a step change in terms of sugar prices. I think this is very important. On a 10-year average sugar prices have only increased by 2% a year. So it's been a terrible performing commodity. And so the small jump that we've seen in the last 30 to 40 days is actually a very welcome jump considering the cost of cane has gone up significantly more than 2% as an average over the same period of time. And therefore, I think that's a very welcome proposition for the sugar industry.

And sir, one last question is that last season, I think 3 million tonnes of sugar was diverted towards ethanol production. This season, sir, what is your conservative estimate? And what is your pessimistic estimate for the diversion.

So C-heavy will always get diverted towards ethanol production. And I think there will be a smaller -- I'm uncertain about if there will be juice diversion. I think juice diversion will only be known once we have a complete estimate of sugarcane across the country. So I won't balance it between pessimistic and optimistic because there are too many imponderables over there. But I will say that right now, the diversion of sugarcane juice towards ethanol blending program is a bit mixed. If there will be any, there may very well be some B-heavy diversion towards ethanol blending. So I don't think it's going to be 3 million tonnes because the total cane crop is probably going to be a little bit lower. But it certainly is not going to be 0 million. So it will be a number between 0 million and 3 million in terms of diversion, but not 3 million, of course.

The next question is from Sanjay Manyal from DAM Capital.

Just a few questions on distillery side. Given the fact that our sales volume have declined during the quarter and the offtake seems to be poorer from the OMCs. Is it because of the -- a lot of newly commissioned capacities in the country? We probably have 2,000 crore liter of capacity and requirement might be just [ 1,100 crores, 1,200 crores ] from ethanol side and maybe additional [ 200 crores ] from the ENA side. So in an ideal manner, should we assume that utilization won't go beyond 70%.

No, Sanjay, I think you have to look at the cost economics. Yes, you are absolutely right about the overall capacity in the country. Now -- and your question is forward-looking. So while the total quantum of ethanol procured by OMCs and private sector was in excess of 1,100 crores for this year. I think for next year, the total is going to be somewhere around 1,300 crore liters approximately overall. And of course, a normalcy of business and the environment. Any external international shocks, of course, have this kind of impact. But let's assume -- and any additional court cases, which we should hopefully avoid for the next ESY. So we're looking at about that amount. And then on top of that, you have an ENA requirement as well. The other important point is that you have the interest moratorium for a lot of the stand-alone distilleries which will expire next year. So I see the financial viability of some portion of that 2,000 crore liter capacity to come under question, where their operations, from what I understand, there is a number of distilleries across -- stand-alone distilleries across the country that have been operating at 20%, 30%, 40%, sub-50% capacity utilization. The survival of that and the operations of that comes under huge question next year when all of this -- when interest then becomes another important factor for them to consider as far as their operations are concerned. Now I'm basing that on the subsidized loans that were given by PSU banks for establishing this entire sector. So I see there'd be some kind of shake up. I don't necessarily think that that figure you mentioned of 70% capacity utilization is one sacrosanct. I think it will depend from group to group. I think it will depend on those that have multi-feed capacities as well. I think that plays a very critical and crucial role in terms of utilization of capacities. So it's broad-based, you may come to that number because you're dividing total capacity of the country and total offtake of the country. But the mix between companies within that will be even more acute next year.

Right, right. As you said, that probably multi-feed facilities will be more beneficiary. But this 1,300 crores, which you've mentioned at a 20% blending because I don't see given the backlash from the consumers, blending probably immediately going beyond 20% until and unless we have a substantial flex fuel sort of vehicle capacity.

So I'm giving a very optimistic number. This is our own personal -- our own estimates from an optimistic perspective because I do think that at some point -- right now, everybody seems to be on the defensive, Sanjay. So you'll have seen articles even this morning's papers carried a front-page article. I think that there has been a tremendous amount of negative press without a realistic understanding of the dynamics of this. And I'll just repeat it, and you know this extremely well, but the benefit to the farmer has been huge. Let's understand that even from a grain perspective, the 2 grains that go into for ethanol production, the largest quantum of ethanol that is -- that we produce is going to be produced from rice and maize this year and next year. As far as rice is concerned, it is all about extra stocks in the country, huge stock that will dwindle, rot and will be not fit for human consumption at the end of the day. So actually, the industry is doing a huge favor to the Indian consumer by allowing those capacities at FCI, et cetera, to become free of old stock, et cetera, and -- of rice that will actually become unusable, frankly speaking. The second is the absorption of damaged food grain, damaged rice, which actually has very, very little output. Yes, a little bit gets exported, et cetera. But frankly speaking, to give farmers value for damaged rice, the only industry that can do it in ethanol. Then you move to grain. Grain, the Honorable Prime Minister announced 2 new varieties. Now it will take time -- in the 15th of August speech last year. Now it will take time for those varieties of maize to propagate themselves, et cetera. But the average yield across the country is approximately 3 tonnes per hectare, which is abysmally low from all national standards. And very honestly speaking, the increase in yield for a crop that is completely disregarded in our agricultural ecosystem is huge for farmers. Maize, the vast majority has been used for animal feed. And as you know, the DDGS produced from maize is animal feed by itself. So frankly speaking, they're extracting a huge amount of value and giving a higher return to farmers. Without the ethanol industry, you would have the kind of pricing that you had for maize earlier of INR 17, INR 18, which is, as you know, in this kind of a climate of cost inflation, et cetera, will have a very negative impact on the farmers. So that's the farming side of it. And then there's, of course, sugarcane, which actually will have a lower role to play. And it is only the C-heavy molasses that will continue to -- and frankly speaking, I think that's a very good continuing factor. The next, of course, is the INR 1 lakh crore plus of funding that has been given by public sector banks to create this entire industry and to foster a bioenergy ecosystem, which is essential over the years. How else do you create such a powerful bioenergy ecosystem? It's by state funding, et cetera. Now all of that has happened, and it will continue to happen. The next, of course, is the impact of the environment. I'm not going to stress that. We all know that any beneficial impact to the environment is absolutely critical. There were some critics saying that, yes, but even when you burn ethanol, you have carbon dioxide. Yes, of course. I mean we're all students of chemistry. We understand that there will be carbon dioxide. However, you will not have carbon monoxide. You will have clean energy burning. You will have a much better balance and you won't have greenhouse gases being emitted. That is something that is very keenly overlooked by naysayers of this program. And lastly, as far as pricing is concerned, there, I have to say this is the domain of the government to understand what the pricing should be, et cetera, et cetera. Yes, the calorific value is slightly lower for the ethanol component. However, there are massive benefits in terms of safety, security of transportation, of cleaner burning, of higher octane, of engine efficiencies, of engine preservation, et cetera. The rubber part argument, I think, is a complete false, eyewash. I think that is -- it is unfounded in fact, at the end of the day. And therefore, if these arguments are made in a cohesive, comprehensive manner, we can do this through calls like this. But it needs to be done through state actors, through industry associations, et cetera, to counter this non-government actors that have actually taken up a little bit of mainstream media. I hope that answers your question.

Right, sir. Absolutely. Just one last bit on the maize part. What I've heard is that maize price off late has sort of risen to some extent. How are the economics now compared to what it was, say, from last 2, 3 quarters? 2, 3 quarters have been nominal profitability from the maize. But has it changed? Or is it sort of seasonal in nature and probably will go back to the same prices in October?

So that's a great question. It is about supply and demand. The crop from Bihar and the crop from Uttar Pradesh has actually been impacted by a poorer rainfall, okay? And as a result, we've seen a small increase in pricing. However, it has not been even double digit. It has been very sort of medium single-digit increase in pricing over the last 4, 5 months. However, some of that increase in the price of maize has been combated by the increase in realization from DDGS. So going forward, I think that balance is something that will be maintained. There could be a little bit of softness, but it will broadly be maintained by a higher contribution from DGGS. Now the important factor to understand is from November, we will have access to Madhya Pradesh maize. And the Madhya Pradesh crop is, at this point in time, suggested to be better than the crop in Uttar Pradesh and in Bihar. We are absolutely covered until October, November because our procurement has been done over the last few months, et cetera. So I think we have actually been very, very cognizant that these changes can happen as supplies from different states lead to different types of pricing, and we have covered ourselves well in advance. So I think that is an important factor for consideration.

Next question is from Rajesh Majumdar from 360 ONE Capital.

I had a few questions. So my first question is on Sir Shadi Lal because the FY '26 results are not disclosed. What is the sales, EBITDA and PAT of Sir Shadi Lal in FY '26? And what is the total quantum of cane crushed and sugar produced and ethanol as well?

Yes. Let me clarify. Since the appointed date of amalgamation was 1st April '25 in our results for '25-'26, operations of Sir Shadi Lal had been amalgamated. And similarly, in the current quarter also, the results of Sir Shadi Lal have been amalgamated.

So if you could have the -- if I could have the numbers separately for Sir Shadi Lal for the year as well as for the quarter?

For the year, the crush was 82 lakh quintals at a sugar recovery of 10.4%. That was for the year. As far as the quarter is concerned, we don't have the numbers with us at right this second, but you can contact us offline to get those numbers from our IR team. As far as the ethanol production for the period, there was no ethanol that was produced. And we use the molasses from our factory at Shamli at one of the other distilleries in the group.

And sir, what was the sales, EBITDA and PAT for Sir Shadi Lal for FY '26?

It is not reported separately. It is amalgamated, as Suresh mentioned, with the total results.

Okay. But if you could have some idea on the operations of Sir Shadi Lal and where we are going in that business, that would be useful for us sir.

Absolutely. So the crush was 82 lakhs with a recovery of 10.4%. It was significantly poorer than what one had anticipated. This coming season, we're expecting a massive rebound in 3 things. Number one, the quantum of cane that is available. The crop looks fantastic. The factory will start on time. The factory did had some operational issues last year, which we had completely resolved. So, in terms of the total number of days of operations, that will be higher this coming season, and therefore, the quantum of cane processed with the unit will automatically be significantly higher. The quantum of diversion that happened last year will also be commensurately reduced. In terms of the recovery, the quality of the crop, this year, at this point in time looks much better. And therefore, I -- and last year, unfortunately, the crop coming into Shamli had a little bit of negative impact because of unseasonal watering and application of urea that happened. And these are old practices that, frankly speaking, we don't support at any of the other Triveni factories. And therefore, this year, we've done a tremendous amount of work, and we'll continue to do that work to ensure that any sort of negative farming practices we've taken out of that equation and therefore, expect a higher recovery. Lastly, in terms of factory performance, I think the lessons from last year and the CapEx that have been incurred this year will ensure better steam economics, higher gas savings and commensurately a lower cost of production and of course, lower losses.

So, 10.3% can become 10.7%, 10.8% in terms of recovery. Is that a fair assumption over a period of time, I mean?