Triveni Engineering & Industries Limited (TRIVENI) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Triveni Engineering and Industries Limited Q2-FI27 Earning 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 this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Gavin from CDR India. Thank you, and over to you, sir.

Thank you. Good day, everyone, and a warm welcome to Treveni Engineering and Industry's Q2 and H1 FY27 earnings call. We have with us today Mr. Tarun Soni, the Vice Chairman and Managing Director, Mr. Suresh Taneja, the Group CFO, and Mr. Samir Sina, CEO of the Sugar Business. Before we begin, I would like to mention that some statements made in today's discussion 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 now like to hand over to Mr. Tarun Soni to make his opening remarks. Over to you, Tarun.

Thank you, Gavin. Good afternoon, ladies and gentlemen. Welcome to the Q2H1 Fiscal 27 Earnings Conference Call of Triveni Engineering and Industries Limited. Following the execution of the composite scheme of arrangement, the power transmission business has been demerged into Thriveni Power Transmission Limited with the effect of 1st of April, 2026. Accordingly, the financial performance discussed today relates to the continuing sugar, alcohol, and water businesses of the company. The consolidated results also include the company's share of profit from its associate Triveni Power Transmission Limited based on our equity holding of approximately 30%. The first half, risk, reflects a meaningful improvement in operating performance and profitability. The turnaround has been led substantially by better sugar... A stronger mix. We have continued cost discipline and a materially stronger balance sheet. At the same time, we are entering into the second half with a mixed operating backdrop. Sugar is supported by tight domestic availability, while alcohol faces a more challenging tender and feedstock... It still requires fast. Follow the consolidated financial performance and then discuss each business in detail, including the industry environment, the operational initiatives, and outlook, before concluding with the key priorities for the second half and then opening up the call for questions. For the past year of Fiscal 27, the consolidated revenues from operations increased by 5% year-on-year to 3,311 crores from 3,145 crores. The Q2 Fiscal 27 revenue also increased by 8% year-on-year to 1,731 crores. The operating margin for the first half improved by 383 basis points to 6.9% from 3.1% in the previous corresponding. Sharply to 131 crores for H1 Fiscal 27, compared with a loss of 25 crores. Higher sugar margins on account. Thank you. As far as the sugar business was concerned, the principal driver of the H1 turnaround was on account of this business. H1 revenue increased 5% year-on-year to 2,497 crores. The average sugar realization improved by 9% to 4,428 rupees per metric ton, while dispatches were broadly stable at 5.33 lakh metric tons. The segment BBIT improved the... 113 crores from a loss of 5 crores. Your revenue increased by 4% to $1,262. The domestic market has entered the sugar season of 26-27 with a very low... Thank you. Unorganized sector. Primarily, which has suffered due to irrigation, non-availability of irrigation, and the varied... Thank you. Have started operations. That our plant at Chandanpur commenced. has commenced. Thank you. And I think the estimates from both those states will become very clear. Continuous operation. There were some farm protests in Karnataka. There was also some talk of fires and some other... Thank you. The reports at this point are fairly scant for sugar production across the country, and therefore it is a little bit challenging to give early estimates for the production for sugar season 26-27. The domestic sugar prices have experienced... I hope that Haryana has announced its... Have recovered materially. I owe $561 per ton, and it's currently settled around $520. Thank you. For sugar, land it. Any margin. That is, without any margin for the trade or for the importer or for the tola. Similarly, white sugar imports without any margin. It is 59.15 rupees per kilo, and if you look at the March contract, which we will enter into very, very soon, is about 60.7 rupees per kilo, so substantially higher than what the prevailing prices are today. Thank you. Thank you. From the start of the next Brazilian crop, the total sugar-ethanol balance could change based on prevailing. Neither has the impact on the El Nino, which may impact the crop in Thailand for the following year, and Australia as well. All of these factors will lead to more imbalances, in our opinion. Something that will play out in markets in international as well as domestic prices. In the alcohol business, we... It's by 19%. This ethanol, stronger ADGS realizations. And the decline reflected... All blending has reached. We stood at 987 crore litres until September 26, although there is one full month. PSY 2627 tender, Material Changes. We have invited bids of 1,100 crore litres, but no offers were invited for ethanol produced from sugar. The tender allows maize procreation. However, the quantity of FCI rice-based ethanol has... Divide up. A little bit negative. This contract, as it stands, would be about 150 crores coming from sea-heavy molasses, 324 crores coming from FCI rice, and the balanced 626 crores split with a maximum of about 160 crores coming from DFG, and the simple subtraction would then show. Good morning, everyone. Thank you. There may be some...

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and then 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. A reminder to all the participants, you may press star and 1 to ask a question. We have the first question from the line of Aman Kumar Suntarya from AK Securities. Please go ahead.

Good evening.

Hello, good evening.

Yeah, sir, this time I think Maharashtra and Karnataka, there is severe drought and the production is likely to come down. The only bright area was the Uttar Pradesh. So, recent rainfall, how much damage it has done to the crop of Uttar Pradesh?

Very good question. I talked about that in my opening remarks. I think it's very difficult to ascertain what damage has been done. The damage, if any, happens in two forms. The first one is in terms of yield, and the second one is in terms of sucrose, or the recovery from sugar cane. Typically, late rainfalls has an impact more on the sucrose. The impact happens if there is lodging of sugarcane primarily, of the rotund crop, which is fully mature, or near full maturity, so it's very tall, etc., and with winds, etc., it has the tendency of falling over. Sunshine is what experience is. Some of our sampling data before the factories have started. The true test, frankly speaking, is once the factories start. As I mentioned, our factory at Chandanpur started operations today. So we will not know what the recovery is for a few days' time when the laboratories are able to give those estimates. I would say around Diwali would be a great indicator where we will have three factories. On Diwali Day, we'll probably be best positioned to see what the impact has been year on year. What I can share with you is the recoveries. All of these late rains are slightly lower than the recoveries. the laboratories, because whole percent cane is very different from sugar percent cane. And sugar percent cane is what we will find out once the sugar factories start crushing. So there is a negative bias in terms of the recovery. However, the overall crop size remains unchanged, especially as far as prevailing.

And, sir, this time, I think there is severe drought and the production is likely to be lower than the demand. Sir, my understanding is that in the next sugar year, since government is not giving water for irrigation purpose in most of the part in Karnataka and Maharashtra, do you think that even 27, 28 crop will be lower than the demand?

What's 100%? Your assumption is... Exactly the way that I have been thinking as well. However, the negative part of that is that you may... I have a fresh seed.

And sir, this is also a very, very forward-looking thinking on my part, that since there will be very less plantation in the season, for the season 27-28, so for the season 28-29, there will be very little return. So in that case also, sir, do you think that the demand supply balance will be there at least for the next three years?

It could happen, but typically with the combination of robust pricing, robust profitability from cane for farmers, you can have a massive rebound in planting. In terms of your analysis of return, because that's logical. If the plant crop of 27-28 is poorly impacted, and that is impacted because of the sowing, that is going to happen in the next few months, right? But fast forwarding to two years from now, or two and a half years from now. To two seasons from now, I think that analogy is difficult to carry through, because you could, based on the attractiveness of sugarcane to farmers, see a massive planting. But there are many imponderables there. The first is that you have enough seed material. See, if you don't have enough seed material, Today, logically, the country, especially the central part of the country, you potentially have two challenging years.

One question sir, that the UP in the super-based industries are suffering because of 238 because of red rot. So, how much we have changed our seed from 238 to other varieties and how is the performance of those seeds right now?

We have done a huge amount of change. I want to share with you that we have factories spreading across the length and breadth of Uttar Pradesh. So if you look at our East UP plant, it's virtually zero. If you look at our Central UP plants, it is insignificant. It's single digit. In our Western UP factories, we have a little more 238 because it has not been impacted as yet by red rot. Overall, we are about less than the 30% mark. For 238, for group-wide level, having said that, because that percentage is skewed towards Western Uttar Pradesh, it remains a concern for the management team to be able to lower A live program. Thank you.

Sorry to interrupt. Aman, I would request you to please rejoin the view for more questions. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address all the questions from the participants in the question queue, we request you to kindly limit your questions to two-word participants. If you have a follow-up question, please rejoin the queue again. We have the next question from the line of Tanuj Nangalia from SKP Securities Limited. Please go ahead.

Good evening, sir. I'm audible. Hello.

Yes, hi.

Yes, sir. Good evening, sir. Yeah. So, firstly, a follow-up question. The late rainfall, will it impact the western UP much more or eastern UP? According to me, it should impact eastern UP more.

That's what I was saying. My estimation is that the impact will be on parts of the state where binding of cane is not a regular feature. In western Uttar Pradesh, the binding of cane is a regular feature, and therefore, with winds and heavy rain, etc., yes, you do have flooding, but you don't have lodging, and the lodging is what is a double blow, very honestly speaking, not just on recovery, but also on... Progressive farm practices is in better shape. Honestly speaking, the...

Okay, sir. So, my next question is, what is the sustainability of the realization at the level of 54, especially if down the line, like two, three months down the line, the crude price soften and, you know, the Brazil mills, they shift more towards sugar. So, how will it impact the global prices and the domestic prices then?

Good question. So, as you can see, the trend of the rose of a contract, if we look at March, Markets that have already been factored in with a higher projected. Thank you. So if you add a little bit of margin over there, let's say 2.5 odd rupees of margin, taking it up to about 57 rupees, so the 58 rupee price is broadly about 1 rupee off around about then. So I think that is, you know, you may have a slightly downward bias in the short term, but these prices are very much what one can expect.

Okay, sir, sir, that's very informative, sir. So, sir, basically, my understanding is that the domestic prices are largely driven by the import parity price. Am I correct?

Yes, I think it is important that even though India is allowed to import only a million tons of raws right now, that number is going to go up. It's almost certain, it's almost certain that The DFBD is going to allow at least 2 million tons of imports of sugar, primarily raw sugar to be imported. White sugar, as I mentioned, the parity is significantly higher at a break-even price of 60. I'm very far off.

Okay, got it sir. Thank you for the answer.

Thank you. We have the next question from the line of Neha Suryavanshi from Dan Capital Advisors. Please go ahead.

Hi, sir. This is Sanjay Manial from Dam Capital. Just a few questions. One is, you know, one on the, as you have mentioned, it is difficult to give exact increase in the sugarcane availability at this point in time. But if you can sort of share some light on what kind of an area increase or decrease we have seen in our command area, in our catchment area. And, yeah, that's my first question.

Broadly speaking, we have a positive bias. I'm very hesitant to give you exact numbers, because then I will be held to those numbers. But as of this point in time, I can say that the area under Cain that has been allotted to Triveni is better, is definitely better.

Okay. And as far as the survey or the testing which you have mentioned about the recovery part, so was this, you are talking about the 50 basis point, minus 50 basis point, this is for us or, you know, a particular region we are talking about?

I'm talking about the state as a whole. I'm not talking about Triveni as a 50 basis point. For Triveni, I think we have had a sharp impact in two out of the eight factories, but six out of eight are, broadly speaking, fine, with one factory even being better in terms of our poll testing year on year. So, you know, yes, two pair of plants, and, you know, you don't know. With great dry weather, with great RTDs, those plants can also catch up and cover up, and the state can cover up. But my earlier estimate to the previous gentleman was more about the state rather than Triveni.

Right. And given the fact that there has been so much volatility in the sugar prices of late in the last few months, maybe probably it will be better for us to sort of get a sense about the averages. So if you can share what kind of an average you have seen in October month.

Sanjay, can you repeat that question?

So, what kind of an average sugar prices we have seen in the October months? So, that probably will give us a sense given the fact that there is so much volatility in the sugar prices.

So, the volatility in the month of October was pretty substantial. So, we saw prices about 49 rupees, a little bit over 49 rupees through the month of... October, but they went up very sharply in the month of November.

Right, right. And lastly, on the ethanol part, Now, given the fact you have mentioned now, the CI rise proportion has come down to 30%. I believe this was 40% last year. And the sugar cane is not available, you know, juice and B-heavy is not available. And what I understand you mentioned about the C-heavy, also 150 crore litres or so, which is also, I believe, less than the potential probably production. And so, you know, the entire, so I think this entire burden is coming to maize, how the profitability will impact. I think last year, we would have made upwards of eight, nine rupees on the maize ethanol part. At the current prices of 26, 27, what you have mentioned, what would be the profitability of maize ethanol, considering the fact that DDGS also is at a substantially higher level?

So, I would say that the present prices of maize would totally erode the profitability coming from maize-based ethanol, completely. And then it would be about how efficiently you can sell your DDGS, what your fuel costs are, what your conversion costs are. It will be all about that. But even then, I think it will be... For an integrated plant, it could be all right, but for a standalone facility, it could be very negative.

And will that change our volume number or the capacity? So we have 25 crore litre plus kind of a capacity. But will that change our number in any manner? It means will we tender less? Or how would that sort of impact our volume numbers?

So, Sanjay, I think there is, you know, the tender is not yet finalized right now. One has to also remember that Bihar and UP mails, which comes in post... The fact is that the prices have been very buoyant in the... ...are going to actually support a very large maize crop, hopefully, for Bihar and for eastern Bhutan Pradesh. And therefore, there could be, when you start using maize to manufacture ethanol, which is primarily in Q3... Thank you.

Thank you very much, sir.

Next question from the line of Chigit and Sharma from Systematic Shares and Stock Limited. Please go ahead.

Congratulations on the excellent set of numbers. Just have two queries. One is the, how do you see the UP sugarcane price increase and what is your expectation and when ideally it would happen? And number two is basically, out of 1 million, this government is allowed to import. How much has been imported till date? Because there is literally no parity. Actually, there is some import happening.

Yeah, so current figures show that 300,000 tons have been imported out of the 1 million metric tons. So there is still sufficient amount of quantity that can be imported under this present campaign that's been allowed by GOI, by DNPD. Thank you. Thank you. It's the cane price of is that within the next three to four weeks, we will have a in-price announcement by the state government. A bit of time beyond that usually does. I shared the Haryana numbers of an increase of 15 rupees this year and an increase of 20 rupees next year. Now, I know Haryana is not Uttar Pradesh, but I hope that that is a signal to policymakers in Uttar Pradesh for a reasonable... I will not put a number on it at all, but I'm just sharing the events around that have happened very recently.

Thank you. You have said, you have said in your conversation that government may, nobody is sure what kind of majors government may bring to, you know, keep the prices under control because 54, 55, 56 may be looking high to them. So, one is that they allow import, but allowing import unless they subsidize it, it is not making viable for them also. So, do they have any other majors also to control it?

Not to my mind.

Thank you. We have the next question from the line of Sobnath Saha from 361 Capital. Please go ahead.

Yeah, hi, sir. Thank you for the opportunity. My first question I've already discussed regarding maze-based ethanol and the profitability. I have another question regarding your employee cost. Despite the demurge of power transmission business, we have seen employee cost this quarter have increased. Can you explain the results?

Thank you. There's been a wage bill increase that you must remember. Good question for asking. Thank you for asking. The new Labour Code has forced us. And that changes. Their cost has been separately shown under and discontinued operations. You are seeing like-to-like comparison between last year and this year, and there is no significant increase.

Thank you.

Thank you. We have the next follow-up question from the line of Aman Kumar Santhaliya from AK Securities. Please go ahead.

Sir, as you have said in the opening remark that the recovery is likely to, is not looking very exciting. It's down by around 0.5 to 0.7%. So, sir, this is due to late rain and it may gradually go up once there is bright sunshine.

Yes, and I was talking about it for the state as a whole. I was not talking about it for the remaining. Lab data comes in. 100% parallel for juice percent gain.

Sir, the UP government has not announced the gain price so far. So, what's your opinion when it will come and what can be the increase?

I was just mentioning this to the gentleman. Thank you. So, one last question.

The government has said that the closing stock was 35 lakh tons. But when I see the pipeline, sir, it is virtually nil. There is no pipeline. There is no stock in the pipeline. So, do you agree that it was 35 or even much below than 35?

I don't, uh, I, I... 3.5 million metric tons. The month of October had a significant quota, which has been met and sold, because the DFBD monitors that completely. And as you know, and we know, even Triveni has sugar coming into the month of November. So other factories and other companies will also have sugar coming into the month of November. So that figure of 3.5 million metric tons Thank you.

That's true, sir, but the pipeline is totally dry. So, I think at least 10 to 15 lecterns will be required to fill the pipeline.

You know, you have very significant stockholding limits. So the pipeline that you will consider normal, which is a million metric tons, as you're talking about, cannot exist today simply because of the stockholding limits that have been.

Okay, sir. Thanks a lot. That's my pleasure.

Thank you. We have the next follow-up question from the line of Tanuch Nangalia from SKP Securities Limited. Please go ahead.

Sir, just a short question on capital allocation. So, this year we will have a very high profitability. So, where will be the management focus? Will it be to repay debt or there will be any new capex in sugar or distillery or any other new project or something?

There is no meaningful capex that is planned for the year. Look at his thumb. Yeah, nothing. Thank you.

Thank you so much.

A reminder to all the participants, you may press star and 1 to ask a question. We have the next follow-up question from the line of Chetan Sharma from Systematics, Shares & Stock Limited. Please go ahead.

Sir, this kind of balance sheet for sugar industry where there is a severe shortage kind of a situation and import is also looking very expensive. So when you have seen the last such kind of situation?

I want to say a near situation like this existed 18 or 19 years ago. It was a very similar scenario, although at that particular point in time, the import prices had gone well above 20 cents. I forget the exact year. I think it was 2008, 2009, in my opinion, where prices had gone very, very high, and even domestic prices had increased. At that point, international prices were much higher than domestic prices on all accounts. So that would be my closest comparable. That's almost two decades ago.

Thank you very much. All the best, sir.

Thank you so much.

Thank you. Ladies and gentlemen, that was the last question. And with that, we conclude the question and answer session. I now hand the conference back to the management for their closing comments.

Ladies and gentlemen, thank you very much for joining us for the H1Q2 Financial Year 27 Earnings Conference. I think our three business verticals are all facing an exciting environment, interesting challenges, interesting forecasts for each. The supply-demand balance sheet. Having said that, our focus remains. The delivery is rounding season. For the ethanol supply 2627, primarily because the tender has not been closed.

Thank you, members of the management. On behalf of Triveni Engineering and Industries Limited, we conclude this conference. Thank you, everyone, for joining with us today, and you may now disconnect your lines.