Triveni Engineering & Industries Limited (TRIVENI) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Triveni Engineering and Industries Limited Q1 F527 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 call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gavin Deesa from CDR India. Thank you, and over to you.

Thank you, Rayo. Good day, everyone, and a warm welcome to everyone participating in Praveni Engineering and Industries Q1 FY27 on this call. We have with us today Mr. Tarun Soni, the Vice Chairman and Managing Director, Mr. Suresh Taneja, the Group's CFO, and Mr. Samir 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 of this effect has been included in the invite, which has been shared 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. Dharam Soni to make his opening remarks. Over to you, Dharam.

Thank you, Gavin. Good afternoon, ladies and gentlemen, and welcome to the Q1 Fiscal 27 Earnings Conference Call for Triveni Engineering and 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 37 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 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. The encouraging backdrop of lower-cane yields, higher sugarcane costs, and evolving ethanol demand. Thank you.

We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. 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 start and run. Also, before we begin, a request to participants to please limit your questions to two per participant. For follow-up questions, we request you to rejoin the queue. The first question is from Shubhi Gupta from Trinetra Asset Managers. Please go ahead.

Hello, sir. So, my first question is that you are facing some challenges with respect to lower sugar cane 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 with Triveni Engineering, our total sugar production was down by 9%. This was primarily due to poorer yields. The 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 the best outlooks of top borers at unusual times that also impacted the yield of the sugarcane crop, primarily in... The primary determinant for the lower and poorer performance.

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

You know, 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.

Okay, so thank you. Thank you.

Thank you. The next question is from Aman Kumar Suntalia from AK Securities. Please go ahead.

Yes, good afternoon, 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. Maybe slightly diluted, which is why I think that we have... I think we have a sufficient amount of sugar in the country. Thank you.

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

Sir, the government's estimates are approximately 28.1 million metric tons. Somewhere around 28.

And, sir, one more question. Since the ethanol prices have not increased, and right now the sugar prices have 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 have gone up. So, in the coming season, the mills prefer not to make more ethanol or divert to bhaja juice or bhaja bhaja. And instead of that, they produce more sugar. So, do you think that it will increase the supply of sugar in the market?

So, you know, here is the point. I think there is a threefold answer to this question. It's not a simple question. It's not a binary question of producing sugar or producing ethanol. It's either producing ethanol or...

Last question is that last season, I think 3 million ton of sugar was diverged 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 diverged towards ethanol production.

This is on my side.

This question is from Sanjay Manial from BAM Capital. Please go ahead.

I have a few questions on the street side. Given the fact that our sales volume have declined between the quarter and the offtake seems to be poor from the OMCs, is it because of a lot of newly commissioned capacities in the country? We probably have 2,000 crore litre of capacity and requirement might be just 1,200 crore from ethanol side and maybe an additional 200 crore 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 1100 crores for this year, I think for next year, the total is going to be somewhere around 1300 crore litres, approximately, overall. And, of course, a novelty of business and the environment. Any external international shocks, of course, have this kind of impact. Let's assume 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 E&A requirement as well. The other important point is that you have the interest moratorium for a lot of the standalone distillery. the financial viability of The survival of that, and the operations of that comes under huge question next year, 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...

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

So I'm getting a very optimistic number. This is our own personal, our own estimates from an opportunity. Because I do think that at some point, right now, everybody seems to be on the defensive subject. So, you know, you'll have seen articles, even this morning's papers carried a front-to-edge 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 two grains that go into ethanol production, the largest quantum of ethanol that is being produced 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. at the end of the day. Thank you. Very, very little output. Yes, a little bit gets exported.

Absolutely. Thanks for a very detailed answer. Just one last bit on the maize part. What I have heard 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 two, three quarters? Two, three quarters have been, you know, phenomenal 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 poorer rainfall. 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 four or five months. ...combated by the increase... 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, come November, we will have access. Visit this crop.

Thank you. Thank you very much and all the rest, sir.

Thank you. Next question is from Rajesh Majumdar from 361 Capital. Please go ahead.

Yeah, good afternoon, sir. And I had a few questions. So, my first question is on Sir Shadilan because the FY26 results are not disclosed. What is the sales EBITDA in part of Sir Shadilan in FY26 and what is the total quantum of cane crushed and sugar produced and ethanol as well?

Let me clarify, since the appointed date of amalgamation was 1st April 25, in our results for 25-26, operations of Sir Shadilal have been amalgamated. Similarly, in the current quarter also, the results of Sir Shadilal have been emulated.

So, if you could have the numbers separately for Sir Shadilal for the year, as well as for the quarter.

For the year, the crush was 82 lacquintils at a sugar recovery of 10.4%. That was for the year. As far as the water is concerned, we don't have the numbers with us as right this second, but you can contact us offline to get those numbers from our IR team. As far as the ethanol production... That's how that's produced, and we use the molasses.

And, sir, what was the sales event done for Sir Shadiwal for FY26?

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

But if you could have some idea of the operations of Sir Shadiwal 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 three things. Number one, the quantum of Cain that is available. So, in terms of the total number of days of operation,

Point C can become 10.7, 10.8 in terms of recovery. Is that a fair assumption over a period of time?

The average recovery for the group was 11.1, as I mentioned. So you can do the mathematics in terms of what the averages are. We expect that the average could be. Shambhali, of course, is at the bottom end of that average, lowering the average, and therefore there's a lot of ground to make up to come to the average, and then, of course, to rise. And we fully anticipate that that move northwards will happen in the...

Right. Okay. And so secondly, with the current sugar prices, of course, and the realization that we are seeing in sugar, will we see a reduction in the debt at the end of the year or will you continue to hold the low cost debt and so the working capital is a normal function of the sugar inventory at the end of the year? So then there will be excess cash flow. So I just had a question on that. What is the level of debt in this? Yeah. Yeah.

You know, working clear tool borrowings are a direct function of what is the total stock position at the end of the shiver year. Since we are expecting a very low inventory, Working capital borings would also be lower as compared to the last year, because since we are starting with a low base, and as far as term loans are concerned, Right, sir.

And my last question is a bit strategic in the sense that we have seen a significant capex in the PTB business before the de-mergers, and now that is in a separate company. So for Triveni Engineering, if you look at a, say, five to six-year strategic vision or even ten years, what are the areas that you'll see, the growth areas, capex, if you could outline it, give a little bit of turn around, that will be useful.

You know, that's an excellent question. As we go forward, because as we stand today, the signal... Have their own varying fortunes. Thank you. I, the Triveni board. You must also remember that Triveni engineering has always been the incubator as far as the Triveni group is concerned. All of our engineering businesses have come out of Triveni engineering. A turbine business that was spun off in 2011 was part of Triveni engineering for many decades before and grew to a good size. So many power transmission in our defense business, which has been demerged very recently, again, has come out to this company. So there is a culture of establishing... And one key business is within this.

Yes, sir, I know that. If I could just, you know, ask you whether it is water or country liquor or IMFL, some strategic areas which can be identified as future KPEX, because water is still a very small business for us, and there are lots of opportunities in that sector. Yes, yes.

So, I am happy to amplify on that. As far as the water business is concerned, Thank you. For many and for capital allocation, the water business today does not offer that. Yet, it remains an excellent business. So, until those return metrics actually improve, we will be constrained to add a lot more. The country like a business is concerned. Thank you. So, it will not be these two businesses.

That's useful. Thank you so much. We look forward to the next area we're going to invest in here.

Next question is from Neil Behl from Nijen Capital. Please go ahead.

Hi. Just wanted to follow up on the previous line of discussion around the vision for the company going forward. So, you know, one thing that I personally think could get us a very good multiple, I'm sure you must also be thinking about, is our branded alcoholic beverages segment. I believe we are already at 58.9 lakh cases. And you already have capacity increased to 90 lakh cases. Personally, what would you think is your vision around this for the next three, four, five years?

So, I'll specifically talk about alcoholic beverages. For Sriveni, the vast majority, 95-96% of that quantum that we talked about right now is for country liquor. The balance is of Rented Spirits, which is growing. That business... Yes, of course, holds great promise. However, it is not generating... We don't disclose the numbers, but we're not going to talk about that. The growth in that business is very different. The kind of capital allocation that business requires is very interesting. Yes, it leads to higher multiples. You and I are all aware of... Thank you. It has happened thus far. We, in that business, have that capacity. So our strategy now, given the constraints of excise policy that keeps changing annually in the state of Uttar Pradesh, is to maximize our market share. Do that and expand our business, certainly over the next two or three quarters. So you will see that performance uptick right now. However, as I mentioned to the previous gentleman, the quantum...

What kind of answer we were also looking for? Because I do know that the 30% stake in power transmission that... Probably you follow a playbook that you didn't give any turbine. At the right time, maybe you monetize it and do a buyback. So that's fine. We completely trust you on your corporate governance on that front. But the point is, what we do for making this business much more exciting. So as you said in the previous, when you were talking, that these are under active consideration. So I think we look forward to some announcements on this, whether we go with the branded alcoholic beverages segment or some new idea altogether. That would make it very interesting for us to remain invested here and also the power transmission business.

You see, Triveni, in its history, has always been part of associating itself with the national identity and sectors that have been of national importance. Food was of national importance. We got into the sugar business. Energy, and energy secure, energy was essential, and the entire power sector, the power transmission business. The turbine business was entered into at an appropriate amount of time when India needed, Indian industry needed energy. As far as energy security is concerned, this was one of the first few things that the Honorable Prime Minister addressed when he took office. And Sriveni invested very aggressively as far as its ethanol sector is concerned. The consumer sector has seen a resurgence in the post-COVID era, and we have taken a small role to play as far as alcoholic beverages. So I think the mantra and the way that the board looks at it is very much...

Before I sign off, if you could, going forward, when you feel appropriate, maybe even give a separate line item for your branded alcoholic beverages as to how they are doing, because I feel if you are able to, in the next three to four years, get to a 100 crore EBITDA with those kind of branded, I mean, you get a completely different multiple. And the market starts looking at this company kind of in a different way. You can even do private equity. I mean, all kinds of possibilities kind of open up for you. So if you could just, you know, every quarter tell us how this is growing, it would give us some comfort.

Thank you for your suggestion.

Perfect. Thank you.

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

Hi, good afternoon. So, just wanted to know, like, seeing the current pricing, the higher realization in sugar prices, do you foresee any increase in these SAP going forward in rupee?

So, I think this is a very, very difficult question to answer because we are looking at an election year in Uttar Pradesh in March, April of 2020. But, you know, you have to also look at it that for the last sugar year, the 30 rupee... This was the highest in the history of the existence of SAP, SMP in the state of Madhupadish. But we had a huge increase last year. We don't want arrears to take place. Thank you. We want to exacerbate that problem also by... I have to ask, um, Got that.

And, sir, I wanted to ask one more thing, like, how is Western UP different from Eastern UP in terms of recovery levels, if you could give a brief about it?

Sure, it depends from year to year. I think the, if I look at a five-year time horizon, the impact of red rot on the 238 variety, the Wanda variety, was very significant in East UP. In Central UP, it was also quite serious, but in West UP, it has not been that serious. It's not as if it doesn't exist, but it has not been that serious. And I think that is a very important distinction in terms of the genesis of recoveries across the three areas of... This is canal irrigation. Thank you. Very relevant and dominant.

And sir, just a last question, seeing the increase in price, I guess current prices are around at 45-46, do you see any intervention from the government in this side?

At this price level, I don't see any intervention. The government is already intervened, by the way. I just spoke about that in the opening remarks. We have placed some stop. It obviously means that they have very little sugar in that part of the country and the bulk of the sugar exists in North India. So it's not as if... As a nation, any increase? Because you may have scenarios that sugar from North India may go to Central India even. That will be an amusing occurrence over the next time. For one day, two days, it doesn't mean that you get to sell your sugar, all your sugar at that price. Certainly not the evening.

Thank you so much, sir.

The next question is from Siddharth Shah from SRS Capital. Please go ahead.

Yeah, hi. Thanks for taking my question. Just one question, you know, I think on our share in Priveni Power's profit, I think we mentioned this about 4.3 crores. You know, just for our 30% stake, going by the historical numbers, wouldn't that have been close to maybe 7 or 8? I'm just trying to understand, is it like an accounting thing, or were the numbers, you know, much weaker this quarter?

This basically represents profit after tax. So, obviously, you take the share from P.A.T.

And at the end of the... From a Q1 perspective, the Q1 was actually much better than what one had forecast, and it was extremely, it was a very good quarter one, despite the crisis in West Asia, etc., and much better than Q1 of the previous corresponding year. So I don't know how you've done the math, but I don't think, if you had done the math comparing quarterly results, I don't think you would have found that.

Sure, because I was just going broadly, like, say an 85 crop at, you know.

I think if you look at one of the previous fiscal year, which was a PBIT figure, then take 4.35 as a PACT number, you are happy to work it out. And in any case, all these numbers will be disclosed to you the moment we have listed, or rather the authorities have given us permission to list the share. And frankly speaking, we're moving along very nicely as far as that list of systems.

Okay, great. Thank you so much. We look forward to those numbers.

Thank you. We take the last question from Kevin Gandhi from CapGro Capital. Please go ahead. Kevin, we can't really hear you. If you're on a handset, we request you to use the handset.

Hello. So, I just wanted to know, so basically, on the power transmission side, what has been the order booking for this quarter? And also, just wanted to understand that you had mentioned earlier in the calls that of this faced Asia impact, so all this work going on for the construction of refineries in that zone. So, how is that going to benefit the power transmission business of France? Something which I actually want to understand.

Sure. So, you know, it is a separate company now, so you'll have to just wait until we can publish those results, which will happen very soon, and you'll have those numbers with you. What I can talk about is the impact of West Asia. That's a more general subject. I think the impact was on Q4, less so on Q1, and we're seeing, even though the crisis in West Asia, frankly speaking, if you look at the news events of the last 48 hours, it's only ramped up. You can see that reflected in oil prices, but I think there is a sense of normalcy that is coming back, because there is only that much time that one can delay the execution of new projects I'm talking about in Europe and in Africa and in other parts of the world. So we're seeing a return certainly to normalcy and perhaps a catch-up for what happened in Q4. The crisis continuing is something that has been factored in by a lot of industries, by a lot of our OEMs, etc., and we have balanced that out in terms of our expectations. India is bouncing back. So let me comment on the crisis.

Sir, just a question on that. Any rough estimation that you have got on how much can be the KPIX estimate, and what can be the direct benefit to the power transmission business?

You know, we'll have to wait for that business. Thank you very much.

I would now like to hand the conference over to the management team for closing comments.

Thank you, ladies and gentlemen, for joining us for the Q1 Fiscal 27 Earnings Call, which remaining engineering and industries limited. I think this quarter under review was a very good call. And of course, we are deeply anticipating Thank you very much.

With that, we conclude today's conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.