Release Date: May 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- E I D Parry India Ltd (BOM:500125, Financial) reported improved gross recoveries in sugar operations, reaching 10.89% compared to 10.69% in the previous year.
- The company achieved a 2% revenue growth in sugar operations, attributed to an increase in the release quota.
- Ethanol production showed positive results, with increased average realizations due to price increases in Tamil Nadu and Karnataka.
- The consumer products business is expected to grow at a rate exceeding the 12% annual growth of the branded packaged food industry in India.
- The company is running its ethanol production facilities at over 90% capacity utilization, indicating efficient use of assets.
Negative Points
- The global sugar deficit widened, impacting the company's operations due to production cuts in key regions like India, Pakistan, and Thailand.
- E I D Parry India Ltd (BOM:500125) faced challenges with sugar realization as the government-held MSP while FRPs increased annually.
- The company reported a negative EBITDA for the current quarter, indicating financial strain.
- There is concern over potential policy shifts, such as the lifting of curbs on US ethanol imports, which could negatively impact the domestic ethanol market.
- The refinery business experienced a challenging period due to a drastic fall in white premium prices, affecting financial performance.
Q & A Highlights
Q: Are there any plans for E I D-Parry to enter the organic or chemical-free category in the non-sweetener segment?
A: Balaji Prakash, Vice President of Sales and Marketing, stated that currently, there are no plans to enter the organic or chemical-free staples category. The company is focused on the conventional staples business and has not optimized the supply chain to the extent of going up to the farmers.
Q: With the increase in distribution reach, why hasn't revenue increased proportionally in the sweetener category?
A: Balaji Prakash explained that new outlets typically contribute less to revenue compared to existing ones. The company is working on new product plans and will provide updates when ready.
Q: What is the outlook for sugarcane availability and ethanol production for the next season?
A: Ashik, heading the sugar and biofuel business, mentioned that favorable monsoon conditions in Karnataka and Tamil Nadu provide comfort. The company is maintaining a neutral outlook and will have a clearer view by the end of the next quarter. Ethanol production will be dynamically adjusted based on market conditions.
Q: Why has there been no increase in ethanol prices, and what is the impact of potential US ethanol imports?
A: Muthiah Murugappan, CEO, noted that ethanol prices have not increased in nearly three years, despite rising FRP costs. The industry has represented this issue to policymakers. The potential import of US ethanol, which is subsidized and cheaper, could negatively impact the domestic industry.
Q: What is the strategy for the consumer products business over the next few years?
A: Balaji Prakash stated that the focus will be on aggressive distribution and volume growth, aiming to exceed the 12% annual growth rate of the branded packaged food business in India. The company is currently focused on South India but plans to expand as demand grows.
Q: Can you provide a breakdown of the debt for the sugar and refinery businesses?
A: Y. Venkateshwarlu, CFO, reported that the sugar business has approximately ₹850 crore in short-term debt and ₹2.5 crore in long-term debt. The refinery business has no short-term debt and ₹200 crore in long-term debt.
Q: What are the reasons for the impairment in the sugar business, and how is the company addressing it?
A: Muthiah Murugappan explained that the impairment was due to poor financial performance and declining spreads. The company is focusing on refined sugar and institutional sales to improve realizations and is working with policymakers to address release quotas and other pressures.
Q: What is the expected impact of increased sugar production on prices and profitability?
A: Muthiah Murugappan highlighted the risk of price declines with increased sugar production. The company hopes policymakers will consider export programs to maintain reasonable pricing and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
