Balrampur Chini Mills Limited (BALRAMCHIN) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Balram Puccini Mills Ltd.'s Earnings Conference Call. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Jenny Rose from CDR India. Thank you, and over to you, ma'am.

Good afternoon, everyone, and thank you for joining us on Balrampur Trini Mills Q3 and 9M FY26 results conference call. We have with us today Mr. Vivek Sarawgi, Chairman and Managing Director of Balrampur Trini Mills, Ms. Avantika Sarawgi, Executive Director, and Mr. Pramod Patwari, Chief Financial Officer of the company. We would like to begin the call with brief opening remarks from the management, following which we will have the forum open for the question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you earlier. I would now like to invite Mr. Sarawgi to make his opening remarks. Over to you, Mr. Sarawgi.

Thank you, and good afternoon, everyone, and thank you for joining us on our Q3 nine-month FY26 earnings call. I trust all of you have had the opportunity to go through the detailed presentation put out by the team, which gives our operation financial performance. I will initiate the call with an update on the current developments in the sugar sector, followed by our company's key highlights for the period under review. India's net sugar production. So I will just put this very simply. Our estimate is like Balrampur Chinim's internal personal estimate, the company's estimate is 325 lakh tons, diversion 35 lakh tons, net production of 290 lakh tons, 4 lakhs has been contracted for exports, leaving a net balance of 280. Consumption is estimated, some people say 288, some say 290. So, net-net, if you do not go down to nitty-gritties and 1 or 2 lakh tons, the assumption is that there will be no addition to inventory. There will be a minor depletion to inventory. The opening inventory is at bone-thin levels, which is at 5 million tons. And this, in effect, will lead to a very strong demand situation with no inventory overhangs. So, therefore, the pricing seems to be moving. Therefore, it's bullish for the prices, and the prices in the month of February for U.P. Mills, for our factories, between 41 and 41.5, which we feel can inch upwards as the season progresses. As the year progresses. On the policy front, cane prices have been increased by several key producing states, adding to cost pressures for the mill. In UP, we have had a 30 rupee increase in cane price. In this scenario, a revision in MSP aligned with current cost structures becomes critical for timely payment to farmers and to maintain market stability without any fiscal burden on the government. So again, I'll give a little perspective to this. So, MSP might not be relevant at this point of time with the current prices of UP. However, this is a bottoming kind of a signal from the government, which will be a sort of, which comes in hand when you begin the season in December, etc. And it is a signal which is much needed and much overdue. However, if let's say MSP came today, it would not change the pricing trajectory. Now, the real concern is about the ethanol pricing. I'll come to it later. So, one concern about the potential ethanol imports from the U.S. and maize, etc., have been eased following the recent trade agreement. However, uncertainty continues around long-term revision of domestic ethanol price. Despite an increase of 16.4% in the FRP and operating costs, ethanol prices under B-heavy and juice root have not been revised. Pramod is the third year. Now, this is extremely disappointing. And we are extremely surprised since this revision which was sought would have marginally or absolutely sub-marginally impacted either the OMCs or if they decided to pass on to the, you know, consumer, it would be in the, you know, 10 to 20 Paisa per litre on a price of, what is the petrol, 500? Yeah, so around the pump price. For the consumer 100 rupees, this was a 10-20% price. So this kind of amazes us as to why this has not been done for the third year post-FRP revision of 16.4%. Without this, in future, millers will have to rethink about large-scale diversion and the E-20 program, I'm not sure, but... It needs more attention. It began with a lot of commitment. That commitment has been sort of reneged upon by the government midway. Against this backdrop, the company delivered a healthy operational and financial performance. Sugar segment performed well, supported by improved realization. Distility segment delivered stable performance back of higher volumes. However, margins remained under pressure in the absence of ethanol price distribution. Sugarcane crushing for the period under review increased by 8.4% to 387.6 lakh quintals, supported by early commencement of operation and improved capacity utilization. Despite a decline in overall sugarcane increase, company expects higher crushing levels for itself during the season under review, aided by additional area allotted by the company. And better yield going to our working with the farmers closely. Our PLA project continues as... The activities are in full strain with more than 3,000 workers. 50% of the imported equipment is arrived. Market development efforts have commenced.

But we expect a 5% to 6% increase in the crushing this year vis-a-vis last year. And I also want to share some encouraging news for the upcoming year. We expect an increase in area of about 5% to 7% in the upcoming season as well. Not only since cane prices have been increased, but we have also been allotted some new geographies. Other than this, our development activities in cane, I want to highlight one in particular. So in our Insect Pest Disease Management program, we have now focused since the last two years very, very heavily on mechanical control by allocating labor budgets rather than chemical budgets. Actively since the last three years, we have ramped this up. And this has encouraged, this has not only increased the fertility of the soil, but increased the actual sort of resilience of the crop against these kind of insect-based diseases, whether it's top border or whether it is red rot. We have relied less and less on chemical and more and more on mechanical and biocontrol, reducing the carbon footprint of sugarcane cultivation. Secondly, now I would like to move on to PLA. Another figure which might not be so visible to investors, that the trade of PLA since the time that we have announced the project has nearly doubled if we are to take the annual import of PLA and its products. So it used to stand between 4,000 to 5,000 tons before we announced the project as neat PLA. And we expect that at least a four to five fold at a conservative level in compounds and finished goods was coming in. But now we see it at around 10,000 runs annually in the year of 2025. And again, we see a consequent four to five fold in compounds of PLA coming in. So while our trade and our sales figure might not exactly reflect the exact PLA. I just wanted to highlight this to show that we have been working relentlessly and with a lot of compounders and converters and achieving not only sort of goodwill, but real technical success, which has never been seen before in India. As highlighted, last time we had worked on over 50 projects, out of which 20 have been closed successfully, and 30 are ongoing, and we see success in them all. So the technical success is actually what I would like to highlight in the downstream technology.

Thank you. Good afternoon, everyone. I would not like to repeat the financial numbers which we had already shared in the detailed presentation. I would now request the moderator to open the call.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and 1. The first question is from Trashank Biyani from Ilara Capital. Please go ahead.

Yeah, thank you for the opportunity. Sir, regarding this ethanol pricing, if we have to look the other way, you know, what is the incentive for the government to increase the ethanol price right now? Lending targets have been achieved, and we have ample capacities also. So, till the time there is sugar glut or even standalone ethanol companies are on the verge of bankruptcy, See, government may not increase the price at all from here, your view on it.

So, we are talking as if, you know, government is running a business. So, government is supposed to be running a system which is for the well-being of the country, and that's where this policy began. So, just because you get capacity up to what you need, you don't stop increasing the price and the commitment which was made, which was followed up to 22-23, which was If 5% was the rise in FRP, 5% was the rise in ethanol price. So, you know, if we talk like, and if I may speak a little informally, government is not a money-off. Government is supposed to, this is climate-friendly, pharma-friendly. So, owing to this, exports were not needed. Export subsidies were not needed. Owing to this, pharma were paid on time. You suddenly for, you know, don't backtrack midway.

And just on the price front, they would just increase prices based on the consequent increase of sugarcane prices. They need not increase quantity of ethanol in that. So it actually has no relevance to sugar per se.

I agree with all that, but I mean, because now government is acting like a banya only, so then you're right.

So that's why they've not yet increased it. So, these are not moves with any kind of long-term thinking. Suddenly, something has gone up, and the government has been pragmatic for years, and I'm very hopeful that they would again see pragmatism down the line.

Sure. On PLA, while we would be supplying to converters, but have we got any formal or informal assurance from any of the potential client for offtake or, you know, either from railways or defense or temples, where we are also targeting them as a potential client for the end product?

So, I mean, I'm not at liberty to tell you as of today, but the fact that we have put the names in our investor presentation and how sort of prudent our conduct has been is indication enough. I think that, you know, these are just some institutions and then there are lots of private and everything. There's really very, very encouraging market coming for BLA. I highlighted it in the import figures for this very reason.

So, if you see inside, and I think this may be of interest to all investors, and Avandika knows better. So, the BMO initiative, and if, you know, those things play out, I mean, well, let me talk

about the entire program of this Ghutka Bind Mansala packaging. So there was an article and a press release from the government which included our name and our PLA and basically for the application of gutka and paan masala packaging. So this is one of the most visible litters causing 22% silting in drain systems in urban India. So, the PMO is really taking up this in a very fast-track manner, and we have been able to get technical success, which has only before this happened in China, in terms of being able to convert the product with quality and on the existing legacy machines that exist in the country. That was the only roadblock. We have already achieved technical success. We have done prototypes, and it has already gone for user and degradation testing and SOP, and all of that is being done. So, the government is working really, really fast and really, really cohesive on that. So, you know, if we look at sachet usage in India, you guys will probably be better at estimating the exact figures, but it's something like in hundreds of thousands of tons. And why I'm harping on the technical efficiency is that it's extremely... It's very difficult to get the oxygen and water vapor barrier right with bioplastics and biodegradable materials, which we've been able to do. This is a great thing, and the cost is also decent.

So there's a lot of promise, there is a lot of interaction, and it's not up in the air anymore.

Sure, and while we are not really impacted by it, but on the other side is the government also trying to separately pick up the waste product or the packing material which is made out of PLA at the garbage picking front.

Do you mean waste segregation?

Right, right, right, waste segregation.

I mean, the less we comment on waste segregation in India, the better. I don't know what to tell you more than this. It's not where it should be. And if it does happen like that, it's rather simple to separate PLA. There are N number of technologies and even mechanical properties which can be taught to the rack pickers, just as they do for other products, they can easily separate PLA.

Sure, that's it from my side. Thanks.

Thank you. The next question is from Vikram Suryavanchi from Phillip Capital. Please go ahead.

Hi. Good afternoon, sir. Hope I'm already well.

Yes, thank you. All good.

Okay, so first of all, I want to acknowledge you for giving more realistic production estimates in presentation compared to what we used to get from different sources. For initial, if you look at our initial estimate as a country and now significant downward revision which was accepted, how about coming from UPA and Maharashtra, if you can give some broad sense?

So, Raksha, we are looking at maximum of 10 billion at a gross level, and Maharashtra, Karnataka, maybe 17 and a half to 18 million.

So, 10, 18, 28, and the rest of India, 47. Well, 325 people.

Okay, got it.

That's the breakup.

And second, you highlighted about increased cane allocation by 5-7%. So, does that additional land what we have got already has a significant amount of cane or there is a further scope to improve further cane development going forward there? So, we can see, apart from the area, cane availability can also improve significantly.

Good question, actually. I just want to clarify, it's not 5-7% increase in allotment, it's 5-6% increase in crushing that we expect. This is not only through external areas, but internal development and yields and everything. Now, moving to the second part of the question, yes, definitely the new areas which we have got already have cane, but they have a large opportunity to increase cane as well. And these are farmers who have not been paid properly. So, they are very, very happy and very, very excited to actually see the color of money and work with us and increase cane area. We are very, very hopeful.

You got it. And in terms of yield improvement, we have seen improvement, but probably I was expecting significant improvement further from here. So was that improvement mainly because of weather-related and recovery from the disease, or we can expect some structural yield improvement with varietal difference going forward? So, in terms of... Recovery Aguilar GLD, if you can comment.

So, I just want to highlight that we've been working very hard on variety since, you know, since red rot hit. So, while the red rot variety is reduced to low single digits, we see an increase like 14.201 is an established variety now. This year, we're already going to crush around 16% of it and we see a significant increase in the coming year. Similar to this, we have two more varieties in the pipeline, which have good potential for yield as well as recovery. So this is something that we are working on. Plus, we have a go-to five-year plan and four other pipeline varieties, which will then come in. So this is a very strong program with the tissue culture and everything that we have established. So we always strive for structural change so that we do not need to rely as much on outside factors.

Got it. And the last question, I think Sert also talked about on ethanol views and all that, but just for clarity, if you look at situation remain and with sugar prices currently what we have, can we go for maximized sugar and then use the distillery capacity more for grain-based ethanol as a structural change going forward? We still hope that the government will... Consider the revision in ethanol prices so we can stick with the existing models.

So what we have done, first of all, to the fact that government did not increase price, we have already diverted many of our units to, you know, C-A-V. Grain is not possible in these units because grain is a separate line of machinery which is only available in Mezzapurra. So we have taken those decisions internally to maximize sugar production.

Okay, got it. So, I was just keen to, can we also go for multi-fuel in other places also?

No, no, that's not what we are planning.

Okay, got it. Thank you, sir.

Thank you. The next question is from Sanjay Manial from Dam Capital. Please go ahead.

Yeah, I think my questions are pretty similar to what the previous Parchpet has mentioned. So it is about the recovery specifically. I think initially we were thinking, we were talking about 50, 60, probably basis point recovery improvement in Western UP and probably 20, 30 basis point recovery improvement in Eastern UP. But I think it's fizzled out. Is it because of the ratoon crop or we may think we may get better in plant Or do you think that recoveries will probably be flattish for the season?

Good question, Sanjay. So, you are right. Waste, I don't know, even that's not as nearly as I was using. Waste is higher by half, and lot of waste is lower than last year. So, waste is also divided into parts. Having said that, we began with an improvement of 0.3. We do not anticipate. May not be possible, 0.1, 0.15 may be possible.

Okay, okay. And second, about the fungibility part only, it seems that, you know, Mezapur, I think initially when we did the CAPEX for Mezapur for 320K LPD, it was assumed that in a certain situation like today when the maize or the grain ethanol prices are higher, probably we'll utilize this Mezapur facility for a higher grain ethanol. But it seems that it will be less than 5 crore only. It seems to be that way only. What's your view on that and why we have not been able to scale that up to 8, 10 crore details probably?

So, Sanjay, please understand, we have a capacity of 5.5 crore, 5 crore litres of maize for the balanced amount of season after sugar season shuts down, right? Balanced period. Yeah, let me get it very clear. Government has accepted only 60% of the tenders put out for maize.

Okay.

And you cannot put on a tender. Then what you have, then your capacity. So we tendered for 5 crores, we got 3.12 or something? 3.15. 3.15 crores.

We also divided between rice and making the ratio of 5.6.

So government is not inherently very much in favor of that segment. So if you wanted to increase maize, you'd put in a capex, let's say for another distillery of 10 crores, you would only be able to sell 6 crores. Balance. The distilled would be ideal. Am I clear?

Yeah, but my question over here is that why we couldn't bid more than 5 crores because if I'm not wrong, the entire Mejapur facility is fungible towards grain. So maybe I can do a C heavy means ethanol to C heavy or B heavy.

Right, right. So that was possible. But at that point of time, one did not know that they are not going to increase the price. Having begun and tendered, it's not possible to roll back. And in the overall scheme, you know, until you reduce sugar, you don't get a good price for sugar. Yes. I mean, if I knew on day one that they are not going to increase any price, maybe you would have done lesser juice. Right, understood, understood. But the capacity would have been idle, huh? B, C, you would have done, but that grain would have gone unutilized. Yeah, or 60% utilized. But yes, your question is valid. If we knew this on day one, we would have not done full use.

And, sir, lastly, on the PLA front, I think you have mentioned that you already started trading PLA. So, is it that to build the market as of now, we have to completely reduce the price or sort of come up with the lower price to the clients?

No, no, no, no, no. This is not the case. We are wanting to do this so that we can get the technical feedback required for our own production and also start creating a name in the market, meeting the right customers and everything. So, customers are largely still importing on their own and just buying a small percentage from us and giving us feedback, which is very valuable for when we start production.

Okay. Okay. So, these are only pilot work switches, which is happening as well.

No, we are doing commercial sale also, but to a small percentage in order to get feedback on quality.

Okay, understood. Thanks, thanks. That's all.

Thank you. The next question is from Tanuj Nagalia from SKP Securities. Please go ahead.

Hello, everyone. Good afternoon. So, sir, I wanted to know whether there is any change in the ethanol mix. As you said, you will be making more of C heavy. So the previous mix, you had said it was 25% C, 65% B, and 10% syrup.

It's a very marginal tweet because midway is much of a profile. Yeah, so just one unit midway we are shifting, which may not, because we have a 10 unit company, may not look very visible, but yes, whatever we can salvage, we are salvaging.

Okay, sir. Thank you, sir. My next question will be, sir, are we on track to close the financial year 26 with a ethanol sale of 28 crore DL?

Looks like between 26 to 27 crore.

26 to 27. Okay. And so one last question, like, what kind of revenue are we expecting in PLA from the Panparag satchits which you were talking about right now?

No, no, this is too early in the day. Too early, too early. Patience. So what we are wanting to say, let's understand what we are wanting to say, without over-expecting or under-delivering, you know. So today, this is something new for us. We are going in. There are two parts to this. One, to make the quality, that is the function at the plant level. Two, is to sell this. That is what your pan para, etc. So, we are separately working on these two. And with the interactions we are having around, we feel very, very confident and happy that, you know, we should see success on both the fronts. The details of how we are hoping to be successful is all what we have spoken about.

Okay, got it, sir. Just I can squeeze one last question. What is the cost of production of the sugar in Q4?

Q3. No, I'm not going to ask.

I'm not going to ask. I'm not going to ask.

So for the full year, we are expecting this region of around 37 and a half.

37 and a half. Okay, sir. Thank you so much. That's from my end.

The next question is from Hitesh Sharma from Goldman Sachs. Please go ahead.

Good afternoon, everyone. Good afternoon. I just want to check up on this PLA. How much is the capacity regulation right now, and what sort of, at the full capacity, will add to the profit?

So, we are commissioning in October of 2020. So, right now, there is, of course, no capacity utilization.

That did not come up, yeah.

And then, if on full capacity utilization, the revenue potential is 2,000 crore at peak, and we have given guidance before of a 35% EBITDA profit margin.

Thank you very much.

Thank you. Before we take the next question, a reminder to participants that you may press star and 1 to join the question queue. The next question is from Dhvanit from Stabla Family Office. Please go ahead.

Hi, sir. I think most of my questions have been cleared. Yeah, but just wanted to know on the ethanol bit. Have we been, have we know what kind of pricing are they going to go on the sea-heavy route for this current sugar season? Because in case, they have given an increase last year also. So if they give an increase right now, then the price differential between the B-heavy route and the C-heavy route is very minimal. So in that case, it looks ominous that they might actually increase the price high on the B-heavy route, right, at least, or anything in line with that on the C-use route. So, and what my second question is, what is our current conversation with regards to the government on this particular aspect? Are they still in talks with the government for the price division or have their talks stalled for now?

So, I think what you are meaning is whether there will be a revision for CAV. So, currently the indications are there is no revision on the annual. So, we have pitched, pitched, and pitched. No reply is the message we have. I mean, I cannot against this government, which gives a feeling that they might not be looking at it. That is the indication.

Okay.

All the water remains the same. See, we juice.

So, as far as November 24, October 25, season 5. Right. Right. Okay. Okay. Thank you.

Thank you very much. That was the last question in queue. Okay. I'll just ask. Sorry, sir.

Can I give some closing remarks?

Absolutely, yes, sir.

Yeah. So, our hope, not more than hope, we are hoping to crash over 10.5 crore quintals this year, which is about 10.55 actually, which is about 60 lakh increase over last year. Yeah, about a 58-60 lakh quintal increase, which amounts to about almost 6%. Our ability with the CAPEX already done is to very easily handle 6.5% and we hope to achieve that very soon is the wish list. But it's not a dream. We are working towards that and feel very positively inclined to achieving that. My hope is maybe part of that. Vision gets completed next year itself. And in Maharashtra and UP, you would start the closures by February end. So that is why the price is where it is. And even the monsoon prediction, which we have read about till now, is not great. So one thing is structural kind of a tailwind to sugar prices as we proceed. So yes, one sector ditch, ethanol, the other looks good. And specially for Balramko.

Thank you very much. On behalf of Balram Puccini Mills, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.

Thank you.