Balrampur Chini Mills Limited (BALRAMCHIN) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Balarampur Cheney Mills Ltd.'s Earnings Conference Call. As a reminder, all participant lines 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 conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now have the conference over to Ms. Jenny Rose from CDR India. Thank you, and over to you.

Thank you. Good afternoon, everyone, and thank you for joining us on Balrampur Chini Mills Q4 and FY26 results conference call. We have with us today Mr. Vivek Sarawgi, Chairman and Managing Director of Balrampur Chini Mills, and Mr. Pramod Patwari, Chief Financial Officer of the company. We would now 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. Saragi to make your remarks. Over to yourself.

Good afternoon, everyone, and thank you for joining us on Burnapur's Q4 and FY26 earnings call. I trust all of you have had the opportunity to go through our results presentation, providing details of operational and financial performance. I will begin the call with an update on the developments in the sugar sector, followed by our company's key highlights for the period under review. During sugar season 25-26, gross sugar production is projected to be around 31 million tons. After accounting for 3 million tons of diversion, net production is expected to be around 28 million tons. The export was announced by the government in November based on the then prevailing estimates. However, season progressed. Certain key states, Maharashtra, UP, Karnathar. They're all impacted by lower-than-anticipated yields and weather-related abnormalities, resulting in a moderation of the overall production, which resulted in the government prohibiting exports. So just to let you know, 7 lakhs has gone out, Ramut, around 7 lakhs? Yeah. And this is not a cause of worry at all. I'll explain. Nevertheless, the inventory remains broadly balanced. With an opening inventory of around 5 million tons, domestic consumption expected to match consumption that is at 28 million tons, likely export of 7 lakh tons or 0.7 million, would reduce the stock from 50 lakhs or 5 million to 43 lakhs or 4.3 million. Just to point out, probably this is the lowest stock level, which I remember seeing in my... Recent living memory. It is one of the lowest. On the pricing front, domestic prices have remained supportive, aided by a balanced supply position and limited forward inventory overhang. In UP, prices have broadly remained in the range of 41 to 42. We believe pricing would remain steady and gradually probably in charge based on the data points given to you on the closing inventory. Everyone knows that there is no alarm at this top level. This is possible. The demand supply remains in favour of pricing. The blending program continues to remain a key priority. For milk, the absence, the problem is absence of revision of ethanol prices under the Hughes and B-Heavy route for the last three years. You can be integrated by UTM.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vishal Prasad from VP Capital. Please go ahead.

Hi, good afternoon. I have three questions. So, in the case of GUTCA, it is extremely important to get the packaging barrier right. And in one of the calls, Avantika did mention that we have got the barrier packaging right for GUTCA application. Other problem with Gutka is that And the packet remains in the supply chain for more than a year. So, given the requirement of long duration, what shelf life has been validated in the degradation testing?

Okay. Yeah, that's it.

Yeah, so, other two are unrelated. Do you want me to go through other two questions as well?

I mean, best, yeah.

Okay. So the second one is we have talked about two-way approach where we work with the customers directly, and the second is government mandate. So could you give a rough idea on the kind of mandate we are expecting and the expected timeline when we expect the government to come back and have a detailed mandate? And the last one is in... I mean, the capital that we have done, we have talked about a two-way approach, where we work with the customers, and the mandate, yeah, yeah, yeah, yeah, so I was just looking at what time, yeah.

Yeah, so on the mandate, you are well aware of the central government mandate. There's some problem with the phone.

Mr. Vishal Prasad, may I have mutated your line? There is a disturbance from your line, sir. Okay.

Yeah, so the other part is the mandate. You know, there's a mandate also being worked upon by the UP government. They have already formed a committee, etc., to take forward a, you know, so as to say, non-plastic mandate ahead there also. So we are working, just to summarize, three fronts. Central Government Mandate, UP Government Mandate, and Customers. So it's a three-pronged approach, and touch wood, so far, so good.

Okay. Okay. And the third question is, in the first iteration of the CapEx, it probably took two years and nine months to complete the project. We are going to complete it in the month of October. So if we need to expand again, the timeline will remain the same or probably we can expect the next expansion whenever we decide to be done in within 12 to 18 months?

Yes. So, your last assumption is correct. Fifteen-odd months is very possible. Fifteen months is very possible, and we look to commission in the third quarter of this year.

Okay. So, sir, on the coming back to the first question, if you respond.

Yeah, I told you that we worked out the barrier property is error-free, and the duration, food safety, contact, everything is true.

Okay. Thank you, sir.

Thank you. The next question is from the line of Shailesh Gunani from Asian Market Securities. Please go ahead.

Yeah, good afternoon, everyone, and thanks for the opportunity. Sir, a few questions from my side. First, continuing with the PLA question, could you provide some color on the current global versus domestic PLA regulations and price trends? And also, if you can kind of highlight, because the environment is a little bit conducive, are there any advance talks in terms of, or any announcement in terms of volume uptake once, because the commercial production is kind of nearby? So, anything on that front that you can share?

No, sir, I didn't get your question, but what I have understood is, owing to the current crude price, you know, rise, the PLA prices have moved north, and that is good for us.

Yeah. So, in that backdrop, have we kind of any inquiry pipeline or any off-take agreements, anything, so it's only six odd months for our facility to kind of…

So, just to be able to answer your question, and this goes out to all our investors, the fossil-based plastic has gone up drastically, which is very helpful. Secondly, the mandates, the agreements, the customers, etc., are all progressing well. It is not proper to announce each and every, you know, agreement, etc. It is all going very well, and I think the first question was very detailed, and it gave a lot of insight into our, and my answer, I hope, gives a lot of insight.

Okay.

You know, each agreement, each customer, each dialogue, each mandate is being worked upon thoroughly with all testing, being the first of its kind in the country. The progress made by us till now deeply satisfies me of the potential ahead. Giving more details is not proper right now. Because everything is nearing finalization and to give you a note. Let it get fined, right? We are very near to everything.

Fair enough, sir. That's helpful. Sir, my second question was with respect to the imports, what we are doing under that division. So, any kind of technical or market-facing learnings if you would like to share? And also, I was just observing the revenue numbers. Those seem to be remarkably small, right? So, is there any underlying factor we should read into it?

So imports are happening. Whatever little learning is needed for our end product tweaking, we are doing. The imports and the seeding of the market is going on. We are happy and satisfied on all fronts. At this point, however, if you're saying the current sale of PLN, this environment, and the numbers, etc., you know, this is a tough one to answer.

Just to add on this, earlier we thought that we would be replacing the entire requirement of the existing customers. But what we learned is that they are okay with our quality and they are waiting for the production to hit the market. Then only they will replace the existing ones. They are not ready to replace the... They are current supplier base with us as of now.

Because they are saying, you need to come in with production, commit to me your volume, when you will give how much. So, guys, this has to be left to the management. Right? We are working on it. Lot of success. And just to let you know, the existing machines of the converters, everybody is all in sync. They need to make no changes for our product.

Fair enough. Thanks a lot. Just moving on to the sugar division. Sir, we have been working on various seed varieties to kind of replace the 0-2-3-8 variety. Any pipeline or any timeline where we can again have that kind of recovery, which can match, you know, 0-2-3-8 recovery level?

So, 2-3-8 to replicate that variety in recovery and yield looks tough. However, the varieties we are working on has shown a lot of promise. The fruits will be felt as we go ahead, but two-three-eight ko yaad karke, I mean, that barometer as of now looks tough. But having said that, this looks like the bottom.

Sir, can I speak with one more question?

Yes, why not? All yours.

Thanks a lot. Sir, this is a repeat, right? There has been more than three years, no revision on the internal prices. Is there any kind of… A feedback or input from your side to the government, and the government has kind of reciprocated positively on the revision of external prices, because we would have pressure on our margin, henceforth, at least in the first half, right, given the increase in the SAP, what we have seen in the last year, so is T5. So any kind of positive conversation, you can share some light on that.

So, definitely positive conversation has begun, especially crude at 111, currency at 96. We know the cost. So, definitely both on the quantum and on the price, I think they will be serious now. And we have feedback to that effect. But, you know, once between price shy. I mean, if you ask me today, I think it will get done.

Sir, any call in terms of per liter increase and in terms of our expectations?

I feel very good. Let things happen. Too many years have gone by. Fingers crossed. All I can tell you that this environment, which is nasty for everyone, is not so nasty for us. So if you see the heat, it will help consumption. If you see our area, we have enough water, so you, Maharashtra, Karnataka, I don't know, which is again positive of not having too much of a surplus, therefore sugar price positive. PLA, we've told you, fossil-based plastic going up is very good for us. Government will get duty-bound, even commercially, if not morally, to increase the price they have not done over three years. Pure and simple numbers. So I feel that, you know, this, we are in absolutely good area.

Absolutely, I agree, sir.

Thanks for time, and best of luck, sir.

Thank you. The next question is from the line of Roshikesh Bhavad from Kotak Mutual Fund. Please go ahead.

Hi. Good afternoon, sir. Thank you for the opportunity. So, I understand that company is well-placed from the point of your water availability. Any perspective you can give on potential cropping impact because of the fertilizer availability?

So, that's a good question. We continue to track it. The yield, however, will not be known, even if there is a naked eye yield to be seen, nothing before September, October. Because the crop is just germinating and beginning to, you know, take shape. If you want an honest answer to this question, don't ask anybody before September. Sure, thank you. But yes, if there is a negative tenor to the crop field, Probably some rainfall, quantum, etc. Best assessed in now August, mid-August.

Thank you.

Thank you. The next question is from the Lion of Dhanis from Sawla Family Office. Please go ahead.

Hello, sir. My question is with regards to the ethanol price, which has not been revised. However, I see that, I mean, is there, can we draw any relation between the, we have increased our ethanol production from B heavy root this year, okay, but the price has not been revised, and we have, we have reduced it for the C heavy root, where the price had been revised. Any particular reason why we have done that? I mean, I think for the BIV route, the price had been devised, right? So why are we choosing to increase it to the BIV route even if the price has not been devised?

Pramod, so we have to do our optimization. So we were hoping that it would get revised. It didn't get revised. There was enough indication to say it would be. However, we have not lowered our CAV, Pramod.

Hardly anything, and the thing is that you need to, when the requirement is to get more and more ethanol to utilize the ethanol capacity, it can come only through use and DAV. He will not give you enough quantity. And as said, we were hoping that the internal crisis will come.

Yeah, and we have to fill our tenders in November.

Yes, we participated in the report.

So this year we'll be a lot more cautious and we'll take our internal call accordingly.

Sir, just a small follow-up. Do you think that the decision can be frozen, considering that the elections might be announced after November or something, if they are not processed, then it might take place for a furthermore delay in the announcement, right, because they cannot announce these things during the elections?

No, no, it's all unrelated stuff. UP elections should be in January, February, and, you know, ethanol pricing, UP election, I don't see any comment.

Okay, okay. So, one more question I had. We have this item on the presentation, this Obsidio financing services. I was not able to find much information on it, on the earnings which have been shared. Can you please tell us that, where can I actually see the actual impact of this?

So, in case you have any specific question, we can talk offline. We have uploaded the financials of OBSIBO on presentation. As well as the results will also get uploaded on the website. Okay. Thank you very much.

Thank you. The next question is from the line of Manpreet Arora from Arora Wealth Advisors. Please go ahead.

Thank you. Thank you. So, both my questions are on the PLA side. My first question is about, you know, do we have different grades in PLA, like different grades for packaging and different grades for 3D printing with different margin profiles, and targeting, you know, the different grades? Just wanted to understand.

Yes, there are different grades, different...

It will depend upon the end of your reputation. I'm sorry, sir. Can you please say that again?

Yeah, we will have different grades depending upon the area of application.

Okay, and are we targeting the different grades with, you know, maybe with higher margin profiles, or we're going to start with packaging monologue?

Of course, as I said, we are doing everything. We will have, our plant is built well to handle different grades, different applications, etc. So, yes, while the question is absolutely in order, as I said, we have a big team which is dealing with the, you know, Schulzer, which is the, what should I say, the technology supplier. Enough grades have been imported, enough learnings have been developed to be able to understand which grade will fit in where. All right, perfect.

Thank you. The other question, sir, was a little more, you know, on the margin side. Now, you know, if you look at total energy Corbyn journey in this space, you know, they started with 35% margins, and now they're, you know, down to 12% odd, and now they're, you know, put their asset up for sale as well on the, on the, their PLA asset. And similarly, if you look at the Chinese, the Zhejiang, they are also making around 15% of victim margins on this business. So I'm sure the management would have studied these case studies. So how do we see our ability to make 35% margins? Good question.

I can answer the second part first. We have a unique advantage of availability of sugar as well as the bagasse, which will be the key ingredient for fuel at the doorstep, which will save us a lot of logistics costs. This is one part. To the best of our understanding, Total Corpion is not capturing the entire value addition in the manufacture of BLA. Up to lactic acid, they are taking it in a different company, and from lactic acid to PLA, it is going in another company.

I'll also just add, again, our sugar transportation will not cost a penny. Our bagage transport will not cost a penny. And the bagage-based power versus energy-based power, which others are paying, is massively different. And it's going to get so much more different, which makes me far more bullish on our margins. And Pramod has also put in an answer, which is very valid.

Yes, sir, to summarize, you know, we'll have our own feedstock for, you know, with part of sugar, logistics. Yes, yes. Then energy will save on. Correct.

Feed time.

Yeah. Even though, you know, we are not the lowest cost producer, Inga is not the lowest cost producer for sugar, as you had mentioned in one of our previous calls, but will it be fair to say that? On PLA, we will be one of the lowest-cost producers in the world.

Yeah, so let us begin. So where our disadvantage is only in sugar price, the rest will be hugely positive. And I'm sure with scale, our chemical costs, etc., for which also we are doing lots of laboratory work, will enable us to become the lowest-cost producer very soon. I mean, with expansion, definitely, even without expansion, very clearly, we are very big. If you're saying crude remains here, I'm sure you will be lowest cost. Great, great.

So just one last on the margin side, you had earlier mentioned that 35% margin is our target. Now... Does this include the incentives, all the incentives, starting from, you know, the 1100 crore, CAPEX, plus the electricity and the SDST? All these are factored in in this calculation, or that will be over and beyond it? Maybe you've answered this in a previous call, but it was not very clear to me. So if you can talk about that.

Yeah, we have stated that we are aspiring to make 35% of EBITDA margin. The incentives are largely in the form of capital subsidy and interest prevention. So both these items are below EBITDA. One will get captured either in the form of lower depreciation and the other net of interest. So EBITDA margin will not get impacted because of this. We haven't considered the benefit of incentive while guiding 35% EBITDA margin.

All right, perfect. And just before I move back to the queue, sir, you mentioned that, so will Raven be our end product, or will we be involved in compounding? The product and do our customers need to, I think you mentioned that our product will work with their machinery as is. Yes, yes, yes. Correct, correct.

Yes.

So even if it is injection molding or thermal molding?

Yes, yes, yes, yes. That has been a big victory, including the barrier properties, establishing all technicals, everything.

Perfect, perfect. Thank you very much. Thank you.

Thank you. The next question is from the line of Tanmay Zaveri from Fintress Capital. Please go ahead.

Yes. Hi, sir. I have a couple of questions on detail on the side. The government is now talking beyond E20 through flat fuel vehicles and higher branding like E85 and E100. But the ecosystem still appears to be at very early stage from infrastructure and vehicle readiness perspective. So basis of discussions with the OMCs and automotive OEMs, how do we see the roadmap evolving over the next couple of years? Is there a groundwork really happening at that phase or will it take considerable time before translating into meaningful demands?

So, I think the vehicles technically can go up to E25, and government will gradually improve the mandate. So, I just made a quick remark in the beginning. Government is looking at both increasing the E20 level as well as correcting the error on the pricing.

And for E85 and E100, automobile companies are ready with the prototype. Government has also come out with a draft notification for public comments. So, in the times to come, you will see announcement on this.

Right. So my second question was more on the industry side. We have seen that in the past year, there have been lots of oversupply of ethanol. But at the same time, lots of players have started adding more ethanol capacities lately. So how are we thinking about the supply demand side for this year and maybe next year? And what kind of volumes are we looking for this financial year?

For Balrampur, in the year gone by, that is, about 26, we produce around 27 crores litre of ethanol, and our existing nameplate capacity can, with that capacity, we can reach around 34, 35 crores litre of capacity. The only thing is, price is going to be a deciding factor, whether we will target more silver cane towards juice root ethanol or the conventional seed root. That is one part. At the industry level, definitely there is an overcapacity. To address that, government is coming out how to increase the demand by way of going beyond E-20, E-85, E-10.

Okay, that's it from my side. Thank you.

Thank you. Before we take the next participant, reminder to everyone to ask a question, please press star and one. The next question is from the line of Vishal Prasad from VP Capital. Please go ahead.

Yeah, thank you. So, sir, in the case of PLA, it itself might not be conducive and converters will add other materials. Thank you. If in the form of laminate structure or some coating on PLA, so from the perspective of biodegradability, the other materials would be biodegradable or we are going to add something which may be a derivative of crude?

Again, good question, very detailed, but see, if you're going to go into a mandate, Let's say the Paan Masala Gutka Dad mandate, government will probably give you all, you know, biodegradable stuff, and we've tried all that also. Like ink, also printing. Like the printing ink, the glue, everything has been tried. In, let's say, customers and or other mandates, probably the mandate will decide if certain percentage of a PBAT or something else which is, Biodegradable can be mixed. And for private customers, it's what they want. Let's say for cuddly, for whatever, it's what each person wants. But yes, if you have to qualify for something, you have to make that.

Okay. So, yes, and I'm not very sure, so I don't have the answer that I'm going to ask you. So, let's say, assuming a hypothetical scenario where 50% is PLA and 50% is crude derivative, and then it goes to landfill, will the nature be able to separate out the crude derivative and PLA and PLA, will biodegrade and crude derivative will remain?

I will not be able to answer that. Yes, if it is PLA, landfill will kill it within a very short time. At Indian temperatures, it will go in one season. Okay.

And to mix anything with PLA, the government will come out with a mandate.

Exactly. We have to follow the mandate.

Okay. Okay.

Mandate will be very detailed.

Okay. So do we expect them to come back within this year, or I mean, when we start, or it will probably be sometime in 2027?

We are hoping that it will be sooner than later. No, no, I'm not looking at six months from now.

Okay, okay. And second question is, let's say there is another company in India who wants to do this PLA thing, and they are not, and then they don't use sugar cane. So, they will really find it difficult to get the margins that we are expecting because of the advantages that you have mentioned?

I think you more than answered your question.

Yes, yes.

Okay, so it has to be, if you appear from the same industry, if they decide, maybe they will be able to get it.

Yes, they will have that same sugar available. Same bagage available, but yes, ours is a group, so we have more advantages than anyone. Also, we are located close to each other in two plants, but yes, definitely, if a sugar factory owner with a large size wants to do it, he would have the same basic advantages, except what is the two years of research which has gone into our business.

Right. Thank you, sir.

Thank you.

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to management for closing comments.

Thank you, everyone, and today was a very detailed interaction on PLA, which made me happy. So, rest assured, we are doing our very best, and all points mentioned by and concerns mentioned by our dear investors have our attention and a lot more. Other issues are being addressed. So, this is the first time such a plant has been set up. It comes with excitement as well as its challenges. We are ready for both. So, thank you, everyone.

Thank you. Thank you. On behalf of Balrampur, Trini Mills, that concludes this conference. Thank you for joining us, and even now, disconnect your lines.