Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Triveni Engineering & Industries Ltd (BOM:532356, Financial) reported a 7.1% increase in revenues from operations for the half-year, reaching ₹2,792 crore.
- The power transmission business achieved a 30% increase in revenues during Q2 FY25, marking its highest-ever quarterly turnover.
- The company completed its highest-ever quarterly alcohol sales of 5.62 crore liters, a 9% increase over the corresponding period.
- The defense business secured a significant order for propulsion shafting valued at ₹33.8 crore.
- The water business saw improved performance with order bookings aggregating to approximately ₹450 crore, including new EPC projects.
Negative Points
- The sugar business profitability remained subdued due to no manufacturing operations during the quarter and offseason expenses being expensed.
- The alcohol business faced challenges due to a shortage of molasses-based feedstock and high procurement costs of maize.
- The company reported a ₹12.4 crore loss related to the recently acquired subsidiaries of Shadri Enterprises.
- Net debt increased to ₹418.8 crore as of September 30, compared to ₹101 crore the previous year.
- The water business experienced a decline in revenues due to delays in project execution and order awards.
Q & A Highlights
Q: How confident is Triveni Engineering about the government's commitment to revising sugar and ethanol prices, given past delays due to elections?
A: Tarun Sawhney, Executive Vice Chairman and Managing Director, expressed confidence that the government is serious about making the industry remunerative. He noted that industry associations are actively engaged with the government to enhance ethanol prices. The company is hopeful for a positive outcome, although specific timelines for price revisions remain uncertain.
Q: What is Triveni Engineering's strategy regarding the use of maize for ethanol production, given the volatility in raw material prices?
A: Tarun Sawhney explained that the company has learned from past experiences and expects better maize crop yields, which should lead to lower procurement prices. The company is also exploring new seed varieties to enhance productivity. The strategy includes optimizing procurement and operations to improve profitability.
Q: Will Triveni Engineering report its liquor business separately, given the investments in IMIL and IMFL?
A: Tarun Sawhney stated that while the company currently does not report its liquor business separately, it may consider doing so once the business reaches a significant size. Currently, the IMIL business is profitable, and the IMFL business is in its early stages, focusing on brand building and market penetration.
Q: What is the status of Triveni Engineering's expansion plans for its distillery capacity?
A: The expansion plans are on hold pending a revision in ethanol prices that would ensure adequate returns. The company is ready to proceed with the expansion once the pricing environment is favorable.
Q: How is Triveni Engineering addressing the challenges posed by the 0238 sugarcane variety and its impact on yields?
A: The company has reduced its dependence on the 0238 variety from 75% to 50% and expects further reductions. Measures include substituting seeds in affected areas, intensive surveillance for early disease detection, and curative actions. The company is confident in achieving better yields and recoveries this season.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
