Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross revenue increased by 21% to INR2,283 crore.
- Net revenue surged by 41% to INR969 crore.
- EBITDA rose by 21% to INR128 crore.
- PAT margin improved by 18%.
- Biofuels business showed significant growth, with revenue increasing from INR65 crore to INR139 crore.
Negative Points
- Finance costs remain high at INR35 crore, impacting overall profitability.
- Ennature Biopharma segment experienced margin pressure due to cost increases in nicotine and Thiocolchicoside.
- Despite revenue growth, the potable spirits segment's EBIT margin slightly decreased.
- The company has taken on fresh borrowings of INR165 crore, increasing its debt burden.
- Grain prices and other cost pressures continue to affect the biofuels segment's margins.
Q & A Highlights
India Glycols Ltd (BOM:500201, Financial) Q1 FY25 Earnings Call Highlights
Q: How confident are you in achieving the INR1,160 crore allocation to oil companies this year? Can we expect double-digit margins in the biofuel segment in the coming quarters?
A: We are confident in meeting the allocation numbers, as historically, actual orders have been 90%-95% of the allocation. Achieving double-digit margins in biofuels depends on several factors, including grain prices, DGCS sales, and government procurement prices. We are focusing on maize farming to improve profitability and ensure raw material availability.
Q: What is the progress on the new NSU plant and other CapEx plans?
A: The new chemicals business is targeting INR150 crore to INR200 crore in top line for this financial year. The CapEx for increasing capacity in Kashipur and Gorakhpur is expected to be completed by Q3. We have spent around INR60 crore on CapEx in Q1 FY25.
Q: What raw materials are used for the potable spirit business, and how has the raw material basket shifted recently?
A: We use 100% grain-based ENA, primarily broken rice and maize. Recently, maize has become more popular for ethanol production. For Indian made foreign liquor (IMFL), we use grain-based ethanol, while country liquor is made from both grain-based and molasses-based ethanol.
Q: Can you provide the EBIT margins for the biofuel business in Q4 FY24 and Q1 FY25?
A: The EBIT margin for Q4 FY24 was 7.9%, and for Q1 FY25, it is 7.82%. The margins have slightly improved due to operational efficiency and better sourcing, despite high grain costs.
Q: How much ethanol is required for 20% blending, and what is the current capacity?
A: The total demand for ethanol is expected to rise to 725 crore liters in '23-'24 at 14%-15% blending. For 20% blending, approximately 1,100 crore to 1,200 crore liters will be required. Our expanded capacity will allow us to supply around 25 crore to 26 crore liters in the next ethanol year.
Q: What is the current debt level, and what are the plans for reducing it?
A: Our current debt is around INR1,000 crore, including fresh borrowings for CapEx and working capital. We expect to receive funds from Clariant by March 31, '25, which will help reduce the debt.
Q: What is the capacity and utilization for MEG and ethyl oxide, and what is the potential revenue from nicotine production?
A: Our total capacity for MEG equivalent and ethyl oxide is about 600 tons per day. The capacity utilization is currently lower due to cost optimization measures. For nicotine production, specific numbers will be shared upon request.
Q: How are the margins and volumes in the country liquor segment performing?
A: We have increased our volume by 15% compared to Q1 last year, reducing overhead expenses. Packaging prices have decreased by 10%-11%. Margins are expected to remain stable as raw material prices are fixed by the government.
Q: What are the expectations for the new grain-based ethanol capacity and its impact on revenue?
A: We expect to utilize 80%-85% of the new capacity by Q4. The government’s support for ethanol blending programs and our strategic capacity expansions align with the expected demand.
Q: What is the strategy for the Ennature Biopharma segment, and how is it expected to perform?
A: We are focusing on penetrating regulated markets and developing branded nutraceuticals. While margins are currently under pressure, we expect improvement in the third quarter onwards with new product launches and market expansions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
