EID Parry India Limited (EIDPARRY) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the EIT Peri India Q1 FY27 Earnings Conference Call, hosted by Dam Capital Advisor. As a reminder, all participant line will be in the lesson-only mode, and there will be an opportunity for you to ask questions or if the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Mania from TAM Capital. Thank you, and over to you, sir.

Hello, everyone, and a warm welcome on behalf of TAM Capital to the Q1F27 earnings call of EID Perry. We thank EID Perry's management for giving us this opportunity to host this call. On the call today, we have Mr. Mutaiya Murguppan. Full-time director and CEO, along with the senior management team of EID Perry. I hand over the call to the management for opening remarks, followed by Q&A session. Thank you, and over to you, sir.

Many thanks, Sanjay. Very good morning to everyone, and hope you're all doing well. It gives me great pleasure to be a part of the Q1 F27 analyst call to share an update about our financial results for the first quarter. I will start with the global sugar scenario. Global sugar markets are transitioning from a surplus-driven bearish phase towards a more balanced outlook. According to the ISO, the International Sugar Organization, the world sugar market is expected to record a surplus of 2.24 million tons in 2526, compared to a deficit of 3.2 million tons in the previous year. This is largely driven by a better global production of 182 million tons. However, weather concerns are increasingly supporting prices. London white sugar prices have recovered from lows near $404 per ton. In early 2026 to about $471 per tonne by July 2026, while raw sugar prices remain subdued around 14-15 cents per pound. In Brazil, a stronger sugarcane harvest has increased ethanol production and lowered domestic ethanol prices, although more cane is relatively directed towards ethanol rather than sugar. I've come now to the Indian scenario. In sugar year 25-26, the latest estimates are as follows. Gross production is 31 million tons. Diversion towards ethanol, 3 million tons. Domestic consumption, 28 million tons. Exports, 0.8 million. And closing stocks, likely at 4.2 million. For sugar year 25-26, the net sugar production is about... 28 million tons, up from 26 million in the previous year. This has largely been supported by stronger output in both Maharashtra and Karnataka, partly offset by lower production in Uttar Pradesh. Domestic consumption, as mentioned, I'm sugar diversion to ethanol. It's about 2.9 million tons.

Thank you, Mathu, and good morning to all participants. It's a great pleasure to be part of the analyst call and share the key operational and financial performance of the company. I would like to take you through the key operating parameters of each segment. So during the quarter, we operated the Tamil Nadu units, and we have overall crush was about 54 days during the quarter, again as 37 days in the corresponding quarter of the previous year. We crushed about 1,47,000 metric tons of cane against the 2,12,000 metric tons of corresponding quarter of the previous year. As far as the grass recovery is concerned, we recovered at a 7.95% against the 8.02% in the corresponding quarter of the previous year. We produced about 12,000 metric tons of sugar during the quarter against 13,000 metric tons in the corresponding quarter of the previous year. Overall, cane landed cost is about Rs 4,031 per metric ton as against Rs 3,844 per metric ton in the corresponding quarter of the previous year. This increase is mainly on account of the FRP, which is moved up in the current year about Rs 3,550. As far as the sales volume is concerned, we sold about 89,000 metric tons of the sugar, and against the 56,000 metric tons in the corresponding quarter of the previous year. Average sugar selling price at 40.02, against the 40.097 in the corresponding quarter of the previous year. As far as the closing stock is concerned, we are carrying 1.1 lakh metric tons, which is valuing at about 42%. Thank you. As far as the revenue is concerned, we achieved about 410 crores, 347 crores in the corresponding period of the previous year, an increase driven by the higher sales volume. So all effort piece was... As far as the co-gen operations is concerned, we produced, we generated 180 lakhs units during the quarter, as against 221 lakhs units in the corresponding quarter of the previous year. As far as the power exports is concerned, we exported about 89 lakhs units during the quarter, as against the 122 lakhs units in the corresponding quarter of the previous year. As far as the power tariff is concerned, average rate realized is about 4 to 89 pesos per unit. As far as the power segment is concerned, we achieved about 6.6 crores during the quarter, as against 7.53 crores in the corresponding quarter of the previous year. As far as the alcohol industry segment is concerned, we produced about 351 lakh liters during the quarter, as against 412 lakh liters in the corresponding quarter of the previous year. So, we sold about 380 lakh liters, against the 430 lakh liters in the corresponding quarter of the previous year. Of which 380 lakh liters, we sold about ENA 138 lakh liters and ethanol 242 lakh liters. As far as the price relation is concerned, we average price relation is at 63 rupees 49 paisa per liter, as against the average relation of 67 rupees 59 paisa per liter in the corresponding period of the previous year. As far as the new tri is concerned, we achieved about 6.22 crores current quarter as against the 6 crores in the corresponding previous quarter. At a consolidated level, turnover was about 61 crores as against the previous corresponding quarter of about 27 crores. As far as the CPG is concerned, we achieved about turnover of about 94 crores against the 188 crores in the corresponding previous year quarter. So, as far as the PSR-IPL refinery closure status is concerned, as we have already updated in the last analyst call, so communication has been sent to all the statutory authorities about the closure and cessation of operations of the unit. So, as far as the bank liabilities is concerned, all bank liabilities are fully accepted. So, as and yet, there is no bank dues as and yet, as far as the PSR-IPL is concerned. As far as the ACZ unit exit related is concerned, we issued an influence penalty on December 20th, April 2026, and we are in the process of debonding the entire unit, and that is in the process. We are expected to close by 30th September. So as far as the funding is concerned, as approved by the board, 610 crores has been infused into the PSR IPLs to settle all the bank obligations that have been asked to be closed. So, as far as the liquidation of plant and machinery is concerned, which is in progress, subject to the approval of the SCZ unit and the denotification of the entire site. Okay, this is an update for the Q1. Thanks for everyone. The floor is open for the...

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question 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 answers 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 Sanjay Shah from KSC Securities. Please proceed.

Yeah, good morning, gentlemen, and thanks for the opportunity. So, my first question was regarding our customer product division. Sir, revenue fell from 187, but the loss narrowed down. So, when do you expect CPG to reach quarterly breakeven? And even highlighting upon and elaborating something to understand about our evaluating into the ethnic snacks and limery convenience. So what is that? Is an organic launch or is it through acquisition? And third in the same division regarding your new jaggery plant.

Yeah, Sanjay, very good morning. Thank you for your question. Yes, the CPD division revenue has fallen significantly. This has been on account of a recalibration of the model, so this is intentional. Our contribution margin pool, the absolute margin pool, however, has grown very well as we have focused on, you know, more margin accretive products and a margin accretive. We don't have a quarterly break-even on this business. That's how we've designed it. The newer categories which we're exploring, at this point in time, it's still... And I think you're also asked about the jaggery plant. The plant will be commissioned in six months' time. It's coming up in Karnataka. Thank you.

What can we expect from jaggery, turnover and margins from that side?

Jaggery, again, margins are substantially better than white sugar. White sugar, of course, there are commodity margins. We command a premium. Jaggery margins are substantially better. They are more akin to gross margins you would see in food products. 100 crores in terms of turnover just from both of these plants in terms of the quantum of jaggery. I think, you know, if you look at the history of the CPD segment, we've had last year was about 600-650 crores, I think, in terms of revenue. The year prior to that was 800, in fact. We can expect revenues to remain lower.

Ladies and gentlemen, please stay connected. The management's line has been dropped. Ladies and gentlemen, we have the management connector.

Yes, sir, you may proceed.

I think we just answered Sanjay's question. Sanjay, have I clarified all of your queries?

Yeah, this was much on the first question regarding CP, consumer product business. Now my next question was regarding NutraCityCal. Sir, how much growth is from U.S. Nutra Valencia versus India, and how... What EBITDA and PBIT margin can uterocytical reasonably achieve when scales normalizes?

Yeah, so, Sanjay, the growth is largely coming through from the Valensa business. There have been some new product launches there, and I think some of our existing segments also are doing well. That has driven the growth. From an EBITDA margin perspective, steady state is likely between 12% and 15%.

So, my last question was regarding how we look beyond seasonal Q1 weakness. What are the three financial KPIs, the key performance indicator by March 27 that management itself will use to judge whether disciplined approach, what we have accepted in the last few quarters, is now going successful?

Sanjay Venkat here. If you look at the... As the financial KPS is concerned, we are more looking at efficient working capital, and also we are working on how do we leverage the debt cost. And also, if you look at it as a date, we had about 150 crores of long-term debt, about 800-900 crores of the short-term debt or something. We are also closely working towards the monetization of all non-performing assets or something to bring the cash pool into the business so that the debt levels will be lower and also we wanted to improve the current ratios for the business. And also, we are working towards the efficiencies on the operational side, also we are working on the efficiencies, and also we are working on the cost reduction programs across all the businesses, so that we can have the leverage on the current balance sheet, and we are also trying to strengthen the balance sheet by March 27 and March 28.

Yeah, just to add, I think Venkat's articulated well. Those are the effort priority areas. We're certainly hoping to see a stronger balance sheet over the next. Apart from Venkart's articulation, I think even on the consumer product group, we have set out certain margin KPIs, which we are well on the path towards achieving. The first quarter has been a good start. We still have some distance to go in F27. Those margin KPIs will enable us to get to that, you know, quarterly break-in-win level in the next four to five quarters.

That's helpful to understand, sir. Thank you very much. That's all from my side.

Thank you. The next question is from the line of Gautam Delia from Linda Securities.

Hello. Can you hear me?

He's right.

Yeah. Hi. Thanks for giving me the opportunity. So I just wanted to understand on the Nutra division, now that things have stabilized, over the next one, two years, what kind of quarterly revenues can this be scaled up to?

So, I think the growth on the Neutra front is largely coming through from Valensa. I think we will see that scale improving. I don't want to give any guidance particularly, but I think we're seeing an improving trajectory this year. I will say that we're perhaps going to do... This year, our highest-ever revenue in Nutra, and I think, consequently, EBITDA will also be healthy. But I want to refrain from giving any number guidance. What is work, or what is rather working at Valenza is an org and a management pre-structuring, and product development, which we have worked on over the last two or three years, is now coming into the market, particularly on the Derm health. Some incumbent product.

So, this 12-15% margin that you've indicated is contingent on you reaching a certain scale, or how does that work?

We'll have to build a bit more scale from the current levels. I think we can get to those margins at that point in time.

Okay.

In the India business, we're not really adding any capacity. It will likely remain at same level. A more consistent order load there. You know, we had some certification issues in India. The India business is only about 20-odd percent of the consolidated new turnover. But we had some, you know, certification issues in Europe, not entirely, you know, not entirely up, which was our fault. In the past, those have been results. So that scale has to pick up a little bit more. But the lion's share does come from the U.S. And I think once both settle down is when we can get to these EBITDA margin levels.

Secondly, on the consumer goods, when you say you want to break even in four to five quarters, what will be the drivers to that break even? Is it you achieving more scale on a quarterly basis or like your value mix shifting more towards value added?

Partly answered it, yes, value mix shifting more towards value added. There's avenues there. You know, we have a, in the.

Okay. And just a last question, can you just repeat what was the sugar inventory for the quarter and what was it valued at?

$1,015,000, we are valuing at about $41.50.

Okay. Thank you.

Thank you. The next question is from the line of Rajesh Muglumdar from 361 Capital. Please proceed.

Yeah, good morning, sir. How are you? Hey, Rajesh.

How are you?

So, I had a few questions. The first one was in the inventory, which you answered. Secondly, we are seeing some drop in the crushing from Tamil Nadu and Andhra Pradesh, which you've highlighted in the notes. How do we read this, this feedstock availability? Do we see a lower crushing going on, or do we see further restructuring in the business in Tamil Nadu? How do we read this in the sugar business?

Good morning, Ashik here. Yes, the cane availability in TNN and Andhra is a concern, but it's a macro concern. If you see the industry is suffering from cane as farmers shift to more lucrative crops. There are some corrections within our organization that we take to make it more economically feasible to farmers, which is an ongoing exercise. I think the government has also seen, you have seen recently some announcement on state support in Tamil Nadu for sugarcane. We keep ourselves fully aware of the situation and we keep evaluating the scenario and take appropriate actions in that direction. What we are currently doing is to ensure we run a tight ship in terms of costs in these two geographies, so that we improve on our margins.

And will we see a lower crush for the company because of this reason in the season 26-27?

In the current year, yes, probably there is going to be flat or about a 5% drop in these geographies.

The only place, Radish, where we can make up is Karnataka, but I will say the back half, while we can cheer the rains in July and August, I think the rains in the back half of August and September are very critical to ensure that yield. Yields remain intact, and I think... It is given that.

Sir, with the current increase in the gain price in TN and the lower recoveries and the problems thereof, does it make sense to continue in TN in terms of the sugar business anymore? Because already you saw a few years ago, you had relocated one plant to Karnataka. And is there any further plans of any kind of further restructuring in the TN sugar business particularly?

Thank you.

Right. My second question is on the refinery. We have seen some operations in this quarter, so will that continue into second quarter, or that will be not there at all on PSR and PLO?

Rajesh, what you have seen, the operations is that basically there was a closing stock, which was there as on 31st March. Those closing stocks have been liquidated. Other than that, there is no other operations as such. The operations have been fixed as on 31st March.

Right, so from 2Q, it will be zero, PJs and IPL.

Yes, there will be some period cost incurring will be there, that as per the plan.

And secondly, can you make me understand this, you know, write-off and then the write-back because I want to understand the cash impact of this because you invested, you are saying 610 crores to meet the obligations of the subsidiary. But then again, you have taken a re-measurement of the financial guarantee and loans of 591 crores. So I understand that that's a non-cash. So I think the cash outgo will still be 610 crores.

Yes, Rajesh, what you are understanding is correct. First, let me clarify on the, what is 610 crore, what is the 591 crore. As on 31st March, being 100% subsidiary, so we have guaranteed all the loans of the PSRHL, thereby, we have to, as a parent, we have to create a financial liability as far as the PSRPL is concerned. So that's where we have created a liability, but that doesn't mean that we have infused the money as on 31st March. The actual infusion has happened somewhere in April. That investment, which we have put it as a part of the infusion, which is in line with the board approval as on 31st March. So, since the business sees these operations, there is no, there is, as per the accounting requirement, we have implied that asset. At the same time, since all obligations are completed, we have remeasured the financial liabilities, and we reversed that liability. So, net-net impact for the quarter, what you have seen is the 710 crores is the impairment, 591 crores is the reversal of the impairment, about 18 crores is the fresh impairment, which we have done for the quarter.

No, no, I understand the impairment part. I am trying to understand the cash part. The cash part is still outgrowth of 610 crores, right, for the unwinding?

610 is already done. That is there in the public, Rajesh. 610 crores already been. And we have said that. Over and over that, 55 crores loan also we have given. Total 665 crores, which we have increased during the current quarter.

Right. You mentioned also 130 crores, out of which you have given 55 crores. So, balance 65 crores is also left, right? Yeah.

65 crores is left, but over a period, based on the requirement, we will be giving it. So, it is not that 130 crores we will give at one stage, because today, if you look at it, the 55 crores was required for the quarter one, we have given it. If BSR IPL starts generating any cash or something, then we will not be giving it.

And in terms of the assets, will we get any value out of selling the assets in that plant?

Yes, we will get cash out of selling assets, yeah.

The prospecting is already going on.

Of course, we have to get all of our clearances before we can start any dismantling, but we will get value. I wouldn't like to put a number to it. I think that prospecting is certainly underway.

Right. And sir, after all this, what is the standalone debt as of 30 years? I'm sorry, I missed the first part of the speech. Maybe you mentioned.

No, Rajesh, we were just saying that we were prospecting the sale of the asset. We can't really dismantle anything until all of our statutory clearances come through. And I think once that comes through, we would have also prospected and arrived at the plan to divest the business.

No, no, I'm asking, what is the debt at the standard level as of 30th June?

30th June, about 980 crores as far as the short-term debt is concerned, Rajesh. About 150 crores on account for a long term.

And, sir, actually, this is just the first quarter when there's no crushing. So, actually, when the crushing starts, third and fourth quarters, this debt will again go up the short-term debt, right? Is that a correct understanding?

Yes, because even if you look at it, as in 31st March, our short-term debt was about 1250 crores, so now it has come down to 980 crores. So once the crushing starts, then because it's in quarter to also, then further it will reduce. So then once the crushing starts, it will go. It's like completely the short-term debt is linked to your working capital.

Rajesh, to your point, though, I think this Venkat did articulate earlier on in the call that, you know, we do have a rootless focus on working capital. We expect to improve upon this position in the... We will be a bit more measured around that basis market condition. To that extent, I think this number will also improve in the coming periods of time. So while long-term debt certainly gets retired, And we don't have, you know, too much of capex plans which are imminent. Short-term debt also, you will see an improved position as we are quite, there is a conviction to better this position.

Right. And so, employee costs have also shot up quite sharply from 51,000 to 59,000 for the quarter worldwide. So, I guess you're building kind of curabilities for the CPEG business. So, how will we see the employee costs, you know, down the line? Is it going to be similar or higher as you build up the business? Yeah, some clarity on that.

Radish, they've gone up because of VHS, which we...

So, this is a one-off, I mean, in terms of the VFS, which you have expensed, is that correct?

One-off, but one-off in one plant, there's more that we tend to.

That's very useful. And, sir, if I could sneak in a last question, in terms of a strategic point of view, how do we view EID Perry standalone, say, three, four years down the line? What are the broad components or the contours of the business that is going to be shaping up, say, over a period of time, if you could outline that? Yeah.

Thank you. So, Rajiv, the aspiration is to have a consistent EBITDA generation from the sugar and biofuels business. I think that is the core business. As you know, our operations in Karnataka, In the other states. The consumer product group. Here, I think it articulated. Lastly, on Nutra as well, we're seeing a better performance on the Nutra segment, and I think this is in line with the strategies that we've written. I think this is how we are looking at the...

Thank you, sir.

Thank you very much.

Thank you. The next question is from the line of Raja Kumar Vaidyanathan from RK Investment. Please proceed.

Yeah, good morning. Thanks for the opportunity. Sir, the first question is, given the current static ethanol prices and given the high sugar prices, does it make sense to produce more sugar than the converted juice to ethanol?

Yes, obviously, it makes sense to produce more sugar at this current pricing. We will evaluate our option of producing ethanol, ENA. And sugar, from which feed stock, is a constant review mechanism where we have, and we try to maximize our margins. But there is a base volume of sugar we should produce to take care of our customers.

And on the inventory, you mentioned it's 1.6 lakh times, right? That is the inventory that we are carrying.

1.16.

1.16. Okay. Got it.

It is similar to what we had in the last year, same push.

Got it. Then the next question is on the Tamil Nadu sugar situation. So with the government announcing further incentive to increase the area under sugar skin cultivation, so just wanted to know whether it will have any significant impact or do you think it's more cosmetic benefit that's given?

I would be cautiously optimistic on that because it's a good increase that the government seems to have given. Obviously, it's incumbent on the farming community to evaluate. One of the challenges in Tamil Nadu is a rampant shift towards paddy in the last six to seven years. Given various reasons why PADI is better for the farmer, it's completely mechanized, and there are three cycles of planting the farmer does. And so the farming community would evaluate both the crops and treat it on merit. Initial feedback from the farming community has been optimistic, is what I would say.

Okay. And this will not improve? Will it weaken the working capital? Because I don't know what is the framework of providing the government directly to the farmers? I just want to know what is the impact on the working capital.

There is no impact on working capital. There is a direct benefit transfer from the government to the farmer account. We play a facilitating role. At the end of the season, we give the farmer details, etc., to the government. It's fairly efficient. It will not have any impact on the company's working capital. Okay, good.

Okay. So the last question is, given the higher sugar prices and given Tamil Nadu has, you know, provides harvest twice a year, so just wanted to know, are you doing any early crushing in Tamil Nadu sugar?

Come on to Sugar Mills, we are currently crushing and we will continue to crush. There is an opportunity to pre-draw from the main season to leverage the pricing advantage. We will evaluate at the end of the crushing season depending on the maturity of the crop. So the trade-off is between how mature the crop is and is it ready for crushing. We will take a calculated call after that.

So, what you are saying is, there could be a lower recovery, but it will be compensated by higher prices. Is that what you are saying?

We should, in this business, recovery is a key parameter. We should, I mean, our principle is not to try and compromise recovery for crush volume. I think it's better to crush at the right time, depending on the maturity of the crop.

No, sorry to labor on that point. So my question is, will you compromise on the recovery given that the higher prices are prevailing? That's my question. Because if you're going to crush earlier, so even if there's a small reduction in recovery, you would be okay to compromise on that.

We would not want to do that in Tamil Nadu because it's already a low recovery zone. What I meant on pre-drawal is we would test the plant crops. We have our field teams which pick up the sugar content on the crops and the maturity of the crops based on the age. If there is an opportunity, we will leverage that. But at no stage, if we have reasonable technical knowledge to see that the recovery may not be commensurate, we will not pre-draw. Okay, got it.

Last question is on the corporate structure. So, currently, we are holding Coromundal as a subsidiary. So, are there any plans to, you know, rework on the structure?

There is no such discussion at this point in time.

Okay, sir. Thank you so much.

Thank you. Participants who wish to ask a question may press star and one on their touchtone telephone. If you wish to ask a question, please press star and one now. The next question is from the line of Sanjay Manyal from Dam Capital. Please proceed.

Hi, sir. I just want to know about the way sort of sugarcane price has gone up now in Tamil Nadu specifically. So this is, I think, if I'm not wrong, if you can elaborate on, is it the incentive which has been given by the government or the entire cost has to be borne by the company?

The current sugarcane, sugar price increases no link with the sugarcane pricing, because the sugarcane pricing just got announced in the TN budget about a week, 10 days back. There is no impact for the company on this, because there is a direct benefit transfer from the government to the farmers.

Right, right. And secondly, the way the sugar prices have moved up, I think as you mentioned also, probably it makes more sense to make sugar rather than ethanol. So, you know, how much, given the kind of a fungibility we have, how much ethanol volumes we can do from C-heavy plus grains, so what would be the sort of impact on the ethanol volumes?

So, 582 KLPDs are capacity, which is roughly about 18 crore litres, out of which about 120 KLPDs are grain capacity. In terms of switching between ethanol and sugar, that's an evaluated call we have to take depending on the margin profile.

And Sanjay, we have to keep in mind whatever the committed volumes to the OMC, if you are not able to supply, so there will be the penalty for each litre which we are not supplying. So, when you are evaluating it, we have to take into consideration the commitment what we have given to the OMC.

Right, sir. Understood. Thank you. Thank you, Vajmal, sir. That's all for my question.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press start in one now. Next question is from the line of Gautam Delia from Nalanda Securities. Please proceed.

Yeah, hi. Thanks for the follow-up. I just have one question. I think in the beginning of the call, you mentioned you're looking to dispose of some non-core assets. Can you just, to reduce that, so can you just highlight what these assets are and what would be the content?

Basically, some of the land parcels which we are trying to dispose of, it is not relating to any of the operations.

And any quantum that you can highlight?

So, no. As of now, no, because once it comes, then it will be this one.

And any timelines?

We expect to do something in F27. Thank you.

Thank you. The next question, before we take the next question, we would like to remind participants that you may press star and one to ask a question. Participants who wish to ask a question, please press star and one now. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments. Over to you.

Thank you all for logging into this conference. We look forward to seeing you again at the end of the next quarter.

Thank you. On behalf of Dam Capital Advisors, that concludes this conference. Thank you for joining us, and you may not disconnect your line.