eid y 2013 earnings call 30 aprâ€™13

EID Parry Y 2013 Earnings Call 30 Apr’13

Operator Ladies and gentlemen, good day, and welcome to the Q4 FY'13 Earning Conference Call of EID Parry hosted by Axis Capital. As a reminder, all participants' line will be in the listen‐only mode and there will be an opportunity for you to ask questions at the end of today's presentation. Please note that this conference is being recorded. I would now like to hand over the conference over to Mr. Kashyap Pujara. Thank you. And over to you, sir.

Kashyap Pujara, Analyst Good evening, everybody. Thank you for standing by. It is a pleasure to have with us the management of EID Parry today. From the management side, we are represented by Mr. Gopalakrishnan, who is Vice‐President in Finance and Mr. Sajiv Menon who heads the Bio‐Production Nutraceuticals Business. Without taking any more time, I'll now hand over the floor to Mr. Gopalakrishnan. Over to you, sir.

Gopalakrishnan, Vice‐President, Finance Good evening, everyone, and thanks for joining us today. I'd like to quickly take you through some of the key highlights for the fourth quarter and the year and then I'll wait for your questions. For the fourth quarter, as you most of you are aware, there have been poor rains earlier in Tamil Nadu and that has had impact on our business particularly on the overall availability of cane and recovery. I'm glad that despite this we've managed more or less to maintain our operational performance. We crushed about 14 lakh tonnes of cane in Q4 compared to 15.36 lakhs tonnes in Q4 last year. The recovery dropped a bit by about 0.3% points. I think both are largely due to deficient monsoons during the latter part of last year, October and November, 2012. Our sales for the quarter is about 30% lower than last year, however we have been holding some stocks in the hope that the prices will go up considering the decontrol. The PBIT is also correspondingly lower by about 22% compared to last year same quarter. These are figures, only the Tamil Nadu and Pondicherry units.

For the year 2012‐13, despite unfavorable climatic conditions, we have done better in 2013 compared to 2011‐12. The quantum of cane crushed for the entire year went up 11% from 48 lakh tons to about 53.25 lakh tons. We have managed this with the recovery almost being same with a marginal drop 0.02% points from 9.04% last year to 9.02%. Top line grew by 7% and the PBIT grew healthy by 78% from 68 crores to 121 crores for the entire year. This is only for the sugar division of the Tamil Nadu and Pondicherry regions. The process of merger with Haliyal and Sankili is complete. The official takeover was completed on March 20, and therefore the fourth quarter results what has been published in clause 41, and you will be seeing that in the stock exchange website, reflects the three months performance of EID, erstwhile EID units and the full year figures of Haliyal and Sankili which are taken over, merged with EID Financials during the quarter. So, that is what we have done. The Biopesticide and Nutraceutical business have done well, and there is a reasonable growth during the quarter and the year. I will now request the participants to raise questions.

Questions And Answers

Operator Thank you very much, sir. We will now begin the question and answer questions. Anyone who wishes to ask a question press 'star' and 'one' on the touchtone telephone. Participants are requested to use handsets while asking a question. (Operator Instructions) We are going to take our first question from the line of Achal Lohade from JM Financial. Please go ahead.

Achal Lohade, Analyst

Hello. Good evening, sir.

Gopalakrishnan, Vice‐President, Finance Good evening.

Achal Lohade, Analyst Sir, can you help us with the volume number and realization number for EID's Tamil Nadu Unit as in except the two units which are merged now?

Gopalakrishnan, Vice‐President, Finance Yeah, I can do that. EID Parry Tamil Nadu Units this year ‐‐ you want only the quarter, right?

Achal Lohade, Analyst Only for the quarter as well as full year would also do, sir. Quarter, as I said earlier, we crushed 14.05 lakh tonnes against last year of 15.36 lakh tonnes. For the year, we crushed 53.24 lakh tonnes against 48.03 lakh tonnes last year. The recovery for the year stood at 9.02 versus 9.04. The realization you want, basically, the free sugar realization...

Achal Lohade, Analyst If you have full sugar including levy?

Gopalakrishnan, Vice‐President, Finance Including levy I can tell you. For the entire year, we were at about INR28,900 this year compared to INR27,300 last year.

Achal Lohade, Analyst Okay. And for the quarter?

Gopalakrishnan, Vice‐President, Finance For the quarter, it was about 30,200 this year compared to 28,000 last year.

Achal Lohade, Analyst And how about the distillery and co‐gen sales volume and realization?

Gopalakrishnan, Vice‐President, Finance Distillery, during the quarter, we sold 111 lakh liters compared to 91 lakh liters, and for the year we sold 468 lakh liters compared to 398 lakh liters.

Achal Lohade, Analyst And that's only for Tamil Nadu Unit?

Gopalakrishnan, Vice‐President, Finance

All the figures right now I told is for Tamil Nadu and Pondy Units.

Achal Lohade, Analyst Okay, for the EID standalone companies. And how about the PSL Units, two units which are merged?

Gopalakrishnan, Vice‐President, Finance PSL, the two units that have got merged, here are the details. The cane crushed during the quarter was 5,58,000 against 5.8 lakhs last year, same quarter. However, the entire year was 11.93 compared to 11.07 lakh metric tonnes. The recovery for the quarter was 11.13 compared to 10.96. There is a bit of improvement. However, for the entire year it was 10.15 compared 11.05.

Achal Lohade, Analyst For the year it is down?

Gopalakrishnan, Vice‐President, Finance For the year as a whole.

Achal Lohade, Analyst Alright.

Gopalakrishnan, Vice‐President, Finance And the selling price, average selling prices including levy, for the year was 28,700 compared to 26,200 last year. For the quarter, it was 30,000, around 30,000, compared to 26,600 last year.

Achal Lohade, Analyst Sir, the other thing is now, henceforth, we will have to consider these two units also while estimating the standalone numbers. Would it be possible to help us with whether the merger is EPS accretive, EPS dilutive as such and also I have read that you've raised some 200 crore through bond at 9%. I just wanted a bit more clarity as to how the debt structure is currently and how are you looking at it for next year or so?

Gopalakrishnan, Vice‐President, Finance See, one of the main objectives for merging these two units with EID Parry was to ensure that we do a financial restructuring, the operational performance was becoming better, financially we had to restructure and what has happened now is the loans which PSL used to borrow at around 13%, we were able to replace it with these bonds which are now at 9%. So, about 3.5% to 4% points of interest will come down for the PSL loans, which are now in EID books.

Achal Lohade, Analyst Alright. And as such PSL units are EPS accretive or they are dilutive?

Gopalakrishnan, Vice‐President, Finance No, it will be accretive, right? Because the number of shares that has been given for the PSL shareholders is five fully‐paid EID Parry shares for every 19 shares. And also the performance of Haliyal and Sankili will now get reflected in EID Parry at the full value. Alright. And what is the total debt, because I believe some debt will be also part of current liabilities that are payable next one year. So what is the total debt at the moment?

Gopalakrishnan, Vice‐President, Finance Total debt, I am talking only about the long‐term debt, which will be about 850 crores.

Achal Lohade, Analyst And short‐term?

Gopalakrishnan, Vice‐President, Finance Short‐term is basically because of the stocks which we are carrying. So that will be equivalent of another 500 crores. But that's more because this is the peak season for carrying stocks.

Achal Lohade, Analyst Understood. I think I'll stop here. I'll come back for more questions, sir.

Gopalakrishnan, Vice‐President, Finance Okay.

Operator Thank you. We are going to take our next question from the line of H. R. Gala from Quest Investments. Please go ahead.

Hasmukh Gala, Equity Research Hello, sir. Can you just help with a realization number of Tamil Nadu and Pondicherry. I didn't get it properly, sir.

Gopalakrishnan, Vice‐President, Finance I was telling the average year realization was about 29,000 compared to 27,300 last year, for the entire year...

Hasmukh Gala, Equity Research 26,900 for this year, right?

Gopalakrishnan, Vice‐President, Finance Hasmukh Gala, Equity Research Okay, 30,200?

Gopalakrishnan, Vice‐President, Finance Yeah.

Hasmukh Gala, Equity Research Okay, fine. And, sir, how do you see the current environment because of these delayed rains and things like that as far as the acreage and growing is concerned. How do you see different markets behaving now?


The average looks like there's going to be a 10% drop in cane crushing in coming financial year. So, that's basically driven by what the monsoon has already done last year. Now, we have to expect good monsoon or normal monsoon this coming season so the planting will be picking up so at least the following season the normalcy returns in terms of cane availability and crushing.

Hasmukh Gala, Equity Research Okay. And what is your take on the realization? Do you think these 30,000 levels will continue?

Gopalakrishnan, Vice‐President, Finance We don't know, because right now it's continuing some amount of desperation after the decontrol is announced particularly companies trying to sell stock to pay cane farmers predominantly in western part of the country and northern part of the country. So, there is a pull tendency. We expect things to normalize and may be improve a bit in June, because traditionally in July, August, September the prices keep going up. So, we believe that there could be same tendency reflected this year as well.

Hasmukh Gala, Equity Research Okay. Now, sir, with sugar decontrol etcetera coming in, I think the final decision I believe has not yet been taken, right?

Gopalakrishnan, Vice‐President, Finance The distribution side of the sugar control, decontrol has already happened in the sense...

Hasmukh Gala, Equity Research On the levy and non‐levy?

Gopalakrishnan, Vice‐President, Finance Levy has already gone. The release order mechanism has gone.

Hasmukh Gala, Equity Research Okay. That has already happened?

Gopalakrishnan, Vice‐President, Finance Yeah. The export can happen at any time, like that.

Hasmukh Gala, Equity Research Okay. Now, as a result of it, do you think that the states will ask sugar mills to pay higher price to the cane growers, the SAP and all that?

Gopalakrishnan, Vice‐President, Finance The next sugar season starts in October. So, the next sugar price, sugarcane price will most probably get shift in September or October. So, we'll have to see, how the formula is going to be adopted based on the, that is going to be based average realizations ‐‐

Hasmukh Gala, Equity Research Yeah, exactly, yeah.

Gopalakrishnan, Vice‐President, Finance Based on an incremental to last year's cane price that's something the states will have to work out in the next few months.

Hasmukh Gala, Equity Research Ok, fine and sir, last question from my side. What has been CapEx in this year? And how much are we planning next year?

Gopalakrishnan, Vice‐President, Finance We've been restricting CapEx to the depreciation including the merged units, I think the CapEx will be in the region of 100 crores. Last year also it was around that number and we believe it will be around that number coming year as well.

Hasmukh Gala, Equity Research Gopalakrishnan, Vice‐President, Finance Yeah, yeah.

Hasmukh Gala, Equity Research Okay, thank you very much sir.

Gopalakrishnan, Vice‐President, Finance Thank you.

Operator Thank you. We're going to take our next question from the line of Bhavin Chheda from Enam Holdings. Please go ahead.

Bhavin Chheda, Analyst Yeah, good afternoon, sir.

Gopalakrishnan, Vice‐President, Finance Good afternoon.

Bhavin Chheda, Analyst Yeah, first on the few numbers sir, which are missing in the press release, I'd just ask for them, one by one, I think co‐gen numbers are not there in the press release, which is there on BSE, if you can help as far as with the co‐gen numbers and then I'll come with other questions.

Gopalakrishnan, Vice‐President, Finance Co‐gen numbers are directly proportional to the cane crush and therefore, we thought, that is distillery numbers keeps changing. So, co‐gen numbers if you want for Tamil Nadu and Pondy regions, for the quarter, we generated 1,350 lakh units compared to 1,550 lakh units last year, reflecting the drop in sugar cane crushing. And for the year it was 5,273 lakh units compared to 5,243 lakh units.

Bhavin Chheda, Analyst 73 versus 5,243?

Gopalakrishnan, Vice‐President, Finance Bhavin Chheda, Analyst And for the PSIL de‐merged units?

Gopalakrishnan, Vice‐President, Finance The Haliyal and Sankili units during the quarter generated 504 lakh units compared to 350 lakh units and for the full year, they generated 1,259 lakh units against 1,160 lakh units.

Bhavin Chheda, Analyst And there would be two more figures, one is the Sadashiva unit and one is the Ramdurg, which would come in console, so if you can give me co‐gen of that also?

Gopalakrishnan, Vice‐President, Finance Ramdurg doesn't have a co‐gen.

Bhavin Chheda, Analyst Okay. And ‐‐ Sir, Ramdurg has six ‐‐

Gopalakrishnan, Vice‐President, Finance Yeah, it is small co‐gen, in fact, for the year they generated about 339 lakh units and Bagalkot generated 600 lakh units.

Bhavin Chheda, Analyst Ramdurg is 339 lakh units and Bagalkot would be?

Gopalakrishnan, Vice‐President, Finance 600 lakh units.

Bhavin Chheda, Analyst 600 lakh units, for the year?

Gopalakrishnan, Vice‐President, Finance Yeah, for the year. Fine, if you can give me for the quarter also?

Gopalakrishnan, Vice‐President, Finance Quarter, Ramdurg generated 160 lakh unit and for Sadashiva, Bagalkot generated about 300 lakh units.

Bhavin Chheda, Analyst And, sir, in the Cogen, if you can give me roughly standalone and controlled sales volume also and the NSR you realized there?

Bhavin Chheda, Analyst

Sales volume should be around two third...


Bhavin Chheda, Analyst ...and what would be the realizations in...?

Gopalakrishnan, Vice‐President, Finance Realization remains the same like what we did in the last year. The Tamil Nadu average realization will be about 3.4 to 3.5...

Bhavin Chheda, Analyst Okay.

Gopalakrishnan, Vice‐President, Finance ...whereas, the rest of the units will realize about 4.5.

Bhavin Chheda, Analyst Realization will be about 4.5. Okay. Sir, coming to next distillery I believe the numbers in the press release is equal to consolidated...

Operator Bhavin Chheda, Analyst Yeah. Now it is clear?


Bhavin Chheda, Analyst Sir, distillery, the standalone and consolidated numbers are same, because I understand Ramdurg and Bagalkot doesn't have distillery, right? So, the numbers which are there in the press release equals to consolidated numbers also.

Gopalakrishnan, Vice‐President, Finance Correct.

Bhavin Chheda, Analyst Okay. Now coming to cane crush, there will be two more number which are not there in the press release. Again, you have to give me Bagalkot and Ramdurg separately to arrive at the consolidated number?

Gopalakrishnan, Vice‐President, Finance Bagalkot, the cane crushed for the quarter was 330 lakh tonnes against 2.77 lakh. 3.33 versus 2.77.

Bhavin Chheda, Analyst 3.33 lakh versus 2.7 lakhs.

Gopalakrishnan, Vice‐President, Finance And in the case of for the year, complete year, 6 lakhs versus 4.6.

Bhavin Chheda, Analyst 6 lakhs versus 4.6.

Gopalakrishnan, Vice‐President, Finance Ramdurg for the quarter will be 2.5 versus 2, 2.5 lakh tonnes versus 2 lakh tonnes. And for the year, it's roughly about 5.8 versus 5.4. Okay. Regarding sugar sales volume, if you can give me for everything ‐‐ for EID, PSL and as well as Bagalkot.

Gopalakrishnan, Vice‐President, Finance Sales volume, in fact, I can share that quickly.

Bhavin Chheda, Analyst Alright.

Gopalakrishnan, Vice‐President, Finance The total sales for the year in Tamil Nadu and Pondicherry units is 4.2 lakh and Haliyal and Sankili, the taken over units is about 80,000...

Bhavin Chheda, Analyst Okay.

Gopalakrishnan, Vice‐President, Finance ...Sadashiva is 31,000 and Ramdurg is about 30,000.

Bhavin Chheda, Analyst Ramdurg is about 30,000. Okay.

Gopalakrishnan, Vice‐President, Finance This is for the year sales.

Bhavin Chheda, Analyst Okay. And sir, my last question would be regarding the bio‐products we have seen a significant improvement in the quarter, so was it a one‐off or can we assume this margin to sustain going forward?

Bhavin Chheda, Analyst Hello?

Gopalakrishnan, Vice‐President, Finance Yeah. I think, to some extent it is one‐off, but predominantly it is a growth in the volume. So, in case of PBID margin it was a one‐off ‐‐ there was no cost portion in this quarter something like that happened?

Gopalakrishnan, Vice‐President, Finance No, it's not like that. There were some provisioning reversal which was a small number, but predominantly its growth.

Bhavin Chheda, Analyst Okay. Thanks a lot. I'll come back if I have more questions.

Operator Thank you. (Operator Instructions) We are going to take our next questions from the line Rishab Bothra from B&K Securities. Please go ahead.

Rishab Bothra, Analyst A very good evening, sir.

Gopalakrishnan, Vice‐President, Finance Yes.

Rishab Bothra, Analyst If you could let me know the dispatch number for Sadashiva. You mentioned the EID combined TN and Pondicherry it is 4.2 PSL 80,000 tonnes and ‐‐

Gopalakrishnan, Vice‐President, Finance Can you just speak up a bit, Rishab?

Rishab Bothra, Analyst Sir, Sadashiva sales volume number?

Gopalakrishnan, Vice‐President, Finance Okay. For there it is about 30,000 to 32,000 is what I mentioned.

Rishab Bothra, Analyst Gopalakrishnan, Vice‐President, Finance Correct. Because the full year impact of if Haliyal and Sankili will be there.

Rishab Bothra, Analyst

And, sir, one more thing, because of the ‐‐ in fact of the decontrol, what kind of additional revenue will be flowing? I believe that will be directly flowing into the bottom line as of now, because six months from October 2012, till this March figure, I believe the decontrol, should be there. So, have we incorporated that in that or are we yet to do that.

Gopalakrishnan, Vice‐President, Finance The difference between the cost of production or evaluation of stock to the levy price that impact will be there up to March and the difference between the selling price to cost of production will be reflected whenever the sales happens.

Rishab Bothra, Analyst Okay, right. So, at the current inventory level, what is our cost of production?

Gopalakrishnan, Vice‐President, Finance The inventory evaluation is roughly 28,500 to 29,000 across the units.

Rishab Bothra, Analyst And, sir, any specific purpose why we are withholding such quantum of inventory, are we withholding in anticipation that prices will move up gradually?

Gopalakrishnan, Vice‐President, Finance It is not like that. I think, we have been holding because the prices are not good and most of the cases it was lower than cost of production during the fourth quarter.

Rishab Bothra, Analyst Okay, right. So, we might see a good revenue profile in coming quarter?

Gopalakrishnan, Vice‐President, Finance Traditionally, as I told earlier, the sugar prices tend to go up later first quarter and the second quarter.

Rishab Bothra, Analyst Gopalakrishnan, Vice‐President, Finance Yes, we thought we wanted to relocate back to north.

Rishab Bothra, Analyst And regards to your Cargill refinery, what's the status, sir? We have been delaying, I mean it has been delayed almost by three, four years, because of gas allocation and other stuff and our partners there have also moved out. What's the status as of now, sir?

Gopalakrishnan, Vice‐President, Finance In the last concall meeting, we said that we're putting up a coal side boiler and we've placed order. Now the work has started and we're started putting the civil construction, boiler work is also in progress. As we've stated earlier, the boiler erection should be completed last quarter of '13, '14. And then we're ready to start the operations.

Rishab Bothra, Analyst So, what would be the additional CapEx, which we'll be incur because of this conversion?

Gopalakrishnan, Vice‐President, Finance Additional cost you've asked?

Rishab Bothra, Analyst Yeah.

Gopalakrishnan, Vice‐President, Finance It's about 45 crores to 50 crores.

Rishab Bothra, Analyst So, this is over and above the 100 crore, which you've mentioned?

Gopalakrishnan, Vice‐President, Finance No, no, no. 100 crores, we've now cut down to 45 crores to 50 crores. The cost of the boiler will be 45 crores to 50 crores.

Rishab Bothra, Analyst Gopalakrishnan, Vice‐President, Finance Yeah, yeah. This is over and above. That's the normal CapEx, this is over and above that.

Rishab Bothra, Analyst Because of the de‐control, can we have a scenario where corporates and farmers tune in together and create a buffer stocks to be exported to international market going forward? Can that be a scenario?

Gopalakrishnan, Vice‐President, Finance Right now, export is open for anyone to export at any time. The only criteria will be we wait for the right price or the right dollar to rupee value to make the call. As of today, it's not viable to export, unless you get some good prices.

Rishab Bothra, Analyst That is, makes a business sense, until it's viable no one will export, but my question was, can there be a possibility that India starts creating a buffer stock that whenever prices are in favorable scenario, we could export, I mean corporates could export, because see, whenever the production number jumps above 26, 27, prices in the domestic markets tend to be lower. So, that is not a favorable situation.

So, what I am trying to say is, even in case of surplus production, will domestic prices stabilize at a certain point and not move below that and we will be open to export market?

Gopalakrishnan, Vice‐President, Finance But it will largely depending on the company's requirement of cash and the need to generate cash to make farmers payments et cetera. So, withholding of stock by companies will be very selective on a case‐to‐case basis. It's my guess.

Rishab Bothra, Analyst What are the regions where we will be importing raw sugar for this refinery?

Gopalakrishnan, Vice‐President, Finance Pardon?

Rishab Bothra, Analyst What will be the region from where we will be importing raw sugar for this refinery?

Gopalakrishnan, Vice‐President, Finance Right now, the decision on transaction has not been met for refinery. Once the production starts somewhere in Q4, that's when we'll take all. But normally we buy from, if the Indian market is attractive, then even EID Parry and its subsidiaries can sell sugar to the Silk Road.

Rishab Bothra, Analyst Okay. Otherwise it would be Thailand or Australia, because I believe ‐‐

Gopalakrishnan, Vice‐President, Finance Yeah. It could be anywhere from other countries also Brazil also if it is much cheaper.

Rishab Bothra, Analyst Okay. Lastly sir, any clue in case of cooperatives, take on cooperatives which are still prevalent, can there be a complete possibility that it is opened up for corporates to be taken over?

Gopalakrishnan, Vice‐President, Finance That we don't know. It's anyone's guess. If there is an opportunity, at that time we'll see.

Rishab Bothra, Analyst Okay. Fine, sir. Thanks a lot.

Gopalakrishnan, Vice‐President, Finance Yeah. Thanks.

Operator Thank you. We're going to take our next question from the line of Falguni Dutta from JetAge Securities. Please go ahead.

Falguni Dutta, Analyst Hello.


Falguni Dutta, Analyst Gopalakrishnan, Vice‐President, Finance

No. I think, it is better break that up into sugar, because the sugar cane prices went up by INR250 effective October 1, in Tamil Nadu. And so is the case with most other states as well. So the landed cost of cane in Tamil Nadu is about 25.50, per ton of cane. In Andhra Pradesh also it will be around that number.

Falguni Dutta, Analyst Okay.

Gopalakrishnan, Vice‐President, Finance In the case of Karnataka also, it will be about 2500 except that you have to add harvesting and transport in the case of Karnataka, which will make it closer to 2900.

Falguni Dutta, Analyst Okay. So, this will be for FY or it will be sugar year.

Gopalakrishnan, Vice‐President, Finance It will be for sugar year. These are the prices announced from October 2012.

Falguni Dutta, Analyst Okay. And sir, what is the inventory on books consolidated in EID standalone?

Gopalakrishnan, Vice‐President, Finance EID Tamil Nadu and Pondicherry, we have about 1.3 lakh tons of stock. Haliyal and Sankili which has come into EID has about 80,000 tons of stock.

Falguni Dutta, Analyst Okay. And sir, this refinery of ours, how much loss did it incur in FY'13?

Gopalakrishnan, Vice‐President, Finance Including interest and depreciation it will be about 40 crores.

Falguni Dutta, Analyst Gopalakrishnan, Vice‐President, Finance Thank you.

Operator Thank you. We're going to take the next question from the line of Chintan Sheth from SKS Capital. Please go ahead.

Chintan Sheth, Analyst Yes. Sir, just wanted to ask a few general questions, not very specific to the results. Since I'm attending this call for the first time ‐‐ so EID Parry is essentially a holding company, bulk of its revenues on a consolidated basis is coming from a subsidiary Coromandel. I was just wondering if there is any long‐term plan to merge the two and make it one operating company, because it seems, that Coromandel also listed and EID Parry also listed. It's a difficult choice for EID Parry investors to capture the value of the Coromandel, because there is a holding company discount et cetera, which the market gives it and any case there is duplication of dividends, et

cetera, double taxation all that. So, what is the, I mean, logic to not merge the companies?

Gopalakrishnan, Vice‐President, Finance It was the single company till 2000, in fact the fertilizer business was mostly in EID Parry till about 2003, when it got de‐merged and added along with Coromandel. So, that is the first piece of information. Whether to do it back again, I don't think, I'll have the answer right now. But on the distribution of dividend, I can say that there is no double taxation, because being the holding company, we get that, take the credit of the dividend tax paid, if the dividend occurs in the same financial year.

Chintan Sheth, Analyst Okay. Okay, so, that's a small ‐‐ actually part of the question.


Chintan Sheth, Analyst Larger part is, is there any?

Gopalakrishnan, Vice‐President, Finance If you're asking for plans, I don't think, we have any right now.

Chintan Sheth, Analyst Gopalakrishnan, Vice‐President, Finance Correct.

Chintan Sheth, Analyst So, now for EID Parry, when I look when, why should I look at EID Parry, why should EID Parry have call when bulk of its businesses coming from Coromandel on a console basis? Sugar is still not contributing anything to your profits and contributing very small amount to your overall console turn over. So essentially, EID Parry today, whatever it is, is just a 90% of that is Coromandel. So, I'm just trying to understand the whole purpose of existence of the EID Parry as well ‐‐ as the separate holding entity?

Gopalakrishnan, Vice‐President, Finance If you look at the EID Parry's structure, sugar now ‐‐ late used to be one unit and we have been adding the number of units. So, gradually in the last 15 years, one unit is now close to 13 units of sugar along with its bi‐products and each of the factories have multiple sub‐factories like sugar, cozen and distillery. So, I think that size is growing at a reasonably fast pace and if you add the subsidiaries plus the Silk Road Sugar for example, that makes probably EID Parry as number three or four in the country, which sizes significant enough and to get the right focus, I think EID Parry will continue to look at sugar as the key growth business.

And similar is the case with Coromandel with its separate focus has been focusing on growth and adding value to the business. So, I think therefore there is a big rationality why sugar needs to be identified separately. Though the value part of it, one can question that there is a lot of holding company discount, which is something which we'll have to work and see how to bridge that or narrow down that discount and enhance the overall value.

Chintan Sheth, Analyst Exactly. So as an EID Parry shareholder, I am not deriving the value of your investments in Coromandel. So, I would rather get, I understand the logic of having the two ‐‐ either one as company with two separate divisions as clear‐cut de‐marketed operating divisions. And then there is no holding company discount, or one just distributes the holding in Coromandel to the shareholders of

EID. So, EID Parry becomes a focused sugar company with sugar operations and can grow that.

And Coromandel ‐‐ and you can have the holding at the promoter level, because this concept of India of having a holding company listed separately and operating company listed separately just not creating any shareholder value at all. And your group is one of the ‐‐ ones which are proactive about creating shareholder value and have a strong record in history of and are committed to creating shareholder value. So, take it as my humble views and comments, perhaps even suggestions to the management.

Gopalakrishnan, Vice‐President, Finance Point noted, Chintan. We'll surely see what can be done and surely we'll take it forward on this. Alright, sir. Thank you so much.

Operator Thank you. We're going to take our next question from the line of Satish Mishra from HDFC Securities. Please go ahead.

Satish Mishra, Analyst Yeah. Good evening sir.

Gopalakrishnan, Vice‐President, Finance Good evening.

Satish Mishra, Analyst Yes sir. First question on the ethanol prices, I think ‐‐

Gopalakrishnan, Vice‐President, Finance On the?

Satish Mishra, Analyst Ethanol realization.

Gopalakrishnan, Vice‐President, Finance Okay.

Satish Mishra, Analyst I think, this quarter also, it is in the range of INR35 per liter. Am I correct with the calculation, because the segmental number is for both Tamil Nadu as well as ‐‐ mental number is for both sugar ‐‐ as well as PSI demerger duty, right?

Gopalakrishnan, Vice‐President, Finance We've not yet started selling ethanol, because we're right now quoted for the ethanol and in the negotiations phase with oil marketing companies. Yeah, we've been selling ENA. ENA's prices traditionally in the fourth quarter rule low. So, our selling price was in the region of 31 to 33. That's where we are, but right now there is a bit of upside that's happening on the ENA prices. And on the ethanol sides, do give a little more clarity.


On the ethanol, we've made a quote and I think we get a bit of the overall order which the oil marketing companies are planning to give to the sugar companies.

Satish Mishra, Analyst Okay. By what time is the decision?

Gopalakrishnan, Vice‐President, Finance I think that should happen mostly in this quarter, quarter one.

Satish Mishra, Analyst Okay, great. And sir, second question is related cane availability for next sugar season. Because as you mentioned that definitely there is a pressure in other regions, but Tamil Nadu, will you stick your with your earlier guidance of 10% kind of increase or how will be the situation FY'14?

Gopalakrishnan, Vice‐President, Finance The volume will come down by about 10% based on the indications given by ISMA and also the monsoon that has happened last year. I think ‐‐ but otherwise the sugar prices are largely depended on the sentiment and overall international prices. So, that's something which we will able to guess what it will be. And also the cane prices which will be subject matter to be considered that will become effective from October. So, these are three large parameters, the cane availability probably we know we're going, but the other two will be a variable at this point of time.

Satish Mishra, Analyst Sir, 10% decline, you're talking for India as a whole, right?

Gopalakrishnan, Vice‐President, Finance I'm talking more on Tamil Nadu, but even in the Indian context it's excepted to decline by about 5% to 10%.

Satish Mishra, Analyst Thanks, sir. That's it from my side.

Gopalakrishnan, Vice‐President, Finance Sure.

Operator Thank you. We are going to take our next question from the line of Calvin Ogmore [ph] from Genesis. Please go ahead.

Unidentified Participant Hi, sir. I just wanted to ask. You already put in quite a bit of money for Silk Road Sugar Refinery, with the acquisitions what is the total money you put in and along with conversion to poll, what is the initial investment you're looking at?

Gopalakrishnan, Vice‐President, Finance The coal boiler will cost us about 45 crores to 50 crores where the work is already on and ready to complete in the next nine months or so. We acquired ‐‐ EID Parry acquired shares of Cargill, even in the third quarter, the consideration was about 36 crores.

Unidentified Participant What is the total amount you've put in for the refinery so far?

Gopalakrishnan, Vice‐President, Finance The total cost of the project originally was 400 crores and we have incurred that money.

Unidentified Participant That was initial cost. Would you be spending more than what you've initially planned?

Gopalakrishnan, Vice‐President, Finance Pardon.

Unidentified Participant Would you end up spending more than you had initially planned and if yes, by how much?

Gopalakrishnan, Vice‐President, Finance This coal fired boiler is the excess, which was not originally planned.

Unidentified Participant How confident are you on starting the refinery by January 2014? Yeah. The order has been placed and the lead time for supply is nine months, then a couple of months for ejections. So, by Q4 of 2014, '13‐'14, we should have the boiler in place for production.

Unidentified Participant And would you also look at capacity expansion right now or that will happen later?

Gopalakrishnan, Vice‐President, Finance Right now, we have a capacity of 2,000.

Unidentified Participant Okay. Sir, one more question, what is your outlook on sugar prices? Again do you expect prices to go up with next year's output looking lower.

Gopalakrishnan, Vice‐President, Finance That is anyone's guess, but as I was mentioning, the last few years trend indicates that the price marginally go up during the months of May‐June and August‐September.

Unidentified Participant Sir, one question more on Silk Road. Are you looking at closing another trade partner for the refinery?

Gopalakrishnan, Vice‐President, Finance That is not under our consideration, now.

Unidentified Participant Thank you so much, sir.

Operator Thank you. We will take a follow‐up question from the line of Achal Lohade from JM Financials. Please go ahead.

Achal Lohade, Analyst Yeah. Thank you so much for the opportunity, sir. You mentioned that the CapEx would be about 100 crores. Just wanted to know what is it towards, is it towards sugarcane crushing capacity, co‐gen or distillery rate, would you see the expansions? Because looking at the gross log of about 1,200 crores or 100 crores seems fairly substantial number. These are ‐‐ sugar industry has a normal CapEx to the extent of depreciation, our depreciation is about 100 crores and that's the reason why I said normal CapEx will be about 100 crores. 100 crores for about nine factories put together, it's about 10 crores per factory which is the normal depreciation ‐‐ normal replacement.

Achal Lohade, Analyst Replacement. Okay. But that is not part of replacement that is separate to replacement.

Gopalakrishnan, Vice‐President, Finance Yeah. That these are all replacement of assets, I should say, which have fall in due for replacement.

Achal Lohade, Analyst Understood. Sir, you mentioned that cane volume could decline by 10% for the coming season. Is it for all the units put together or it's only for Tamil Nadu and Pondicherry units, you said?

Gopalakrishnan, Vice‐President, Finance I think it's across Tamil Nadu, Pondicherry, Karnataka, and Andhra.

Achal Lohade, Analyst Understood. Another question is, you mentioned the inventory numbers and the evaluation, would it possible to give us a break up in terms of how much is held in PSIL units and standalone units?

Gopalakrishnan, Vice‐President, Finance I thought I gave it. It's about 1.3 lakh for Tamil Nadu and Pondicherry and about 80,000 for Haliyal and Sankili, that has got merged.

Achal Lohade, Analyst And value is about INR28, you said?

Gopalakrishnan, Vice‐President, Finance And it's about 28.5 to 29.

Achal Lohade, Analyst Understood. Sir, last question, in terms the debt, what is the average interest cost for us moving forward? The long term borrowing will be about 9, and 9.5 and short term borrowing will also be around 9%.

Achal Lohade, Analyst And just last question on the tax rate, do we've any tax benefit from this PSIL units getting merged? Do they have any carry forward losses? And what will be the tax rates for the standalone company as such? Will it be MAT or it will be a normal tax rates?

Gopalakrishnan, Vice‐President, Finance Yeah, we're under MAT, because, you're right, we have carry forward losses and part of it has been adjusted.

Achal Lohade, Analyst So, we can assume 20% tax rate for the standalone company going forward?

Gopalakrishnan, Vice‐President, Finance Yeah, 20 to 23 is a possibility.

Achal Lohade, Analyst And just one more question, if I may, sir, in November the government actually allowed companies to go for just 40% jute packaging instead of 100% earlier. Have you already started doing that? Has that benefit already reflected in the numbers, or you think the benefits will come in a full way in the current year?

Gopalakrishnan, Vice‐President, Finance I do not know whether it's a benefit or not, because the customers will discount the price if the packaging is different from gunny. So, I think it's more market driven rather than any specific benefit in the industry.

Achal Lohade, Analyst Okay. Using that ‐‐ that's already actually have been implemented in terms of realization to some extent? Understood. That's all, sir. Thank you so much.


Operator Thank you. We are going to take our next follow‐up question from the line of Rishab Bothra from Batlivala and Karani Securities. Please go ahead.

Rishab Bothra, Analyst Could you just brief on the quarterly capacity in each of the segment company wise and EID Parry Sugar, Sadashiva and ‐‐

Gopalakrishnan, Vice‐President, Finance Pardon?

Rishab Bothra, Analyst ...capacity for each of the segment? I believe, you have 21,000 for sugar, 135 KLPD for distillery, 85 for power and 0.6 million tonnes for refinery that was EID. Can I have it...


Rishab Bothra, Analyst Can, I have it for Parry Sugars, Sadashiva and...

Gopalakrishnan, Vice‐President, Finance No, Haliyal and Sankili we had another 8500 tonnes to 9000 tonnes of crushing.

Rishab Bothra, Analyst Okay.

Gopalakrishnan, Vice‐President, Finance And they have 90 KLPD of distillery.

Rishab Bothra, Analyst Okay. Power?

Gopalakrishnan, Vice‐President, Finance And power will be about 40 megawatt.

Rishab Bothra, Analyst Gopalakrishnan, Vice‐President, Finance Sadashiva will be no distillery.

Rishab Bothra, Analyst Okay.

Gopalakrishnan, Vice‐President, Finance Power will be about 15 megawatt.

Rishab Bothra, Analyst 50?

Gopalakrishnan, Vice‐President, Finance No, no 15.

Rishab Bothra, Analyst 15. Okay.

Gopalakrishnan, Vice‐President, Finance Ramdurg has no distillery. And power will be about 6 megawatt.

Rishab Bothra, Analyst And what is the present capacity in these two locations?

Gopalakrishnan, Vice‐President, Finance Sadashiva will be 4,000 and Ramdurg will be 4,000.

Rishab Bothra, Analyst Sir, in Parry Sugar, we have 0.6 million tons, we were ‐‐ we are hearing that it would be expanded to 1 million ton?

Gopalakrishnan, Vice‐President, Finance That is Silk Road Sugar.

Rishab Bothra, Analyst Silk Road, sorry. Refinery division.

Gopalakrishnan, Vice‐President, Finance But, right now, we're continuing at 0.6 million ton.

Rishab Bothra, Analyst Sir, one more think, except for Coromandel, I believe everything is now into EID Parry's, no other separate entity?

Gopalakrishnan, Vice‐President, Finance No, we've other subsidiary also, Parry Sugar Industries, Sadashiva Sugar.

Rishab Bothra, Analyst These are currently working as 100% subsidiaries?

Gopalakrishnan, Vice‐President, Finance Yeah, US Nutraceuticals, yeah.

Rishab Bothra, Analyst

All these are 100% subsidiaries?

Gopalakrishnan, Vice‐President, Finance Yeah. This Parry Sugar industry is one unit is not 100% that's 55%. But Sadashiva, Parry Infra, US Nutraceuticals are all 100%.

Rishab Bothra, Analyst And sir, in this infrastructure, since we are having a SEZ in Kakinada, what kind of value creation can we have from the infrastructure company?

Gopalakrishnan, Vice‐President, Finance Once we start adding units in the SEZ, then that's the way to ‐‐

Rishab Bothra, Analyst Gopalakrishnan, Vice‐President, Finance Not yet.

Rishab Bothra, Analyst Okay. Thanks a lot.


Operator Thank you. We are going to take our next follow‐up question from line of H.R. Gala from Quest Investments. Please go ahead.

Hasmukh Gala, Equity Research Just wanted clarification, this 40 crore lose you mentioned including interest and depreciation is for the refinery, I believe?


Hasmukh Gala, Equity Research And how do you see its operations in FY14?

Gopalakrishnan, Vice‐President, Finance We're planning to start the operations towards the end of FY14. So the benefit will start accruing in the following year.

Hasmukh Gala, Equity Research In the following year, from FY15 only. Okay, fine. Thank you, sir.

Gopalakrishnan, Vice‐President, Finance Right. Thank you. (Operator Instructions) We are going to take our next follow‐up question from the line of Falguni Dutta from Jet Age Securities. Please go ahead.

Falguni Dutta, Analyst Yeah, sir. What is the conversion cost of sugar on an average for us?

Gopalakrishnan, Vice‐President, Finance It will be about 3,500 to 4,000.

Falguni Dutta, Analyst This is after considering all the credits and all the ‐‐ net cost?


Falguni Dutta, Analyst And sir, what is the cost at the PBIT level for alcohol?

Gopalakrishnan, Vice‐President, Finance No, alcohol depends on the molasses prices, which keeps varying. So, it's better to talk conversion cost without alcohol, without the molasses cost.

Falguni Dutta, Analyst Sir, this year what would have been ‐‐ what would have been the cost including molasses and the other cost? I mean, to add at the PBIT level, what would be the cost per liter?

Gopalakrishnan, Vice‐President, Finance Of rectified spirit, the cost will be about INR20.

Falguni Dutta, Analyst Okay.

Gopalakrishnan, Vice‐President, Finance Falguni Dutta, Analyst And ENA?

Gopalakrishnan, Vice‐President, Finance ENA you have to add another seven rupees.

Falguni Dutta, Analyst Another?

Gopalakrishnan, Vice‐President, Finance INR7.

Falguni Dutta, Analyst Okay. Fine, sir. That's all from my side.


Operator Thank you. Next question from the line of Kashyap Pujara from Axis Capital. Please go ahead, sir.

Kashyap Pujara, Analyst Hi, I just missed one or two data points. So, you were mentioning regarding the field realization on the distillery side, what was it for the quarter in the year?

Gopalakrishnan, Vice‐President, Finance For the quarter sales realization was about 33 ENA. And during the year, average was about 31.

Kashyap Pujara, Analyst Pardon me?

Gopalakrishnan, Vice‐President, Finance 31.

Kashyap Pujara, Analyst 31 was for the full year?


Kashyap Pujara, Analyst Okay. And second point was related to your sales tonnage you mentioned 4.2 lakh was the sales for sugar during Q4?

Gopalakrishnan, Vice‐President, Finance No. For the year.

Kashyap Pujara, Analyst For the year, sorry.

Gopalakrishnan, Vice‐President, Finance ...excluding, what to say, export.

Kashyap Pujara, Analyst Excluding exports?

Gopalakrishnan, Vice‐President, Finance Export was about 1.5 lakhs tonnes. That is vide the Tamil Nadu unit. In Haliyal and Sankili, the sales was about 80,000.

Kashyap Pujara, Analyst Okay. That was for full year, fair enough. And what is your view regarding the overall, the entire situation right now about the drought that was playing out in Maharashtra, Gujarat and the consequent production drop? What is the sense that you have in terms of overall industry output the coming year?

Gopalakrishnan, Vice‐President, Finance As I had earlier mentioned for a question, the ISMA expects about a 10% drop in the production. Okay. Considering the kind of carry over stock that we have, you don't see that sugar prices can firm up in the ensuing period. Is it?

Gopalakrishnan, Vice‐President, Finance The trend is, last few years, the sugar price have firmed up during late first quarter and second quarter.

Kashyap Pujara, Analyst Okay. Fine and once ‐‐ after this merger of Haliyal and Sankili units, going forward in FY'14 despite you're giving a sense that crushing would lower broadly, but what is the sense in terms of crushing that you can do now at a combined level?

Gopalakrishnan, Vice‐President, Finance See this year we have combined, we've crushed 53 lakhs in Tamil Nadu, Pondy and 12 lakhs in Haliyal, Sankili. So, combined is about 65.

Kashyap Pujara, Analyst Correct.

Gopalakrishnan, Vice‐President, Finance Maybe we'll do 60 lakhs.

Kashyap Pujara, Analyst Okay. Okay, fine. That's all from my side.


Kashyap Pujara, Analyst Rahul, do we have any further questions?

Operator Yes, sir. We're going to take the next question from the Manish Mahawar from Edelweiss Securities. Please go ahead.

Manish Mahawar, Analyst Gopalakrishnan, Vice‐President, Finance No, we're just assuming 10% rough.

Manish Mahawar, Analyst 10% cut. Okay, sure sir. Thank you.

Operator We are going to take a follow up question from the line of Bhavin Chheda from Enam Holdings. Please go ahead.

Bhavin Chheda, Analyst Yeah, sir. Crushing during the year it was 65 vide EID PSL and there was also a crushing at Bagalkot and Ramdurg, so

Gopalakrishnan, Vice‐President, Finance So, that will about six lakhs plus five ‐‐ about another 11.5 lakhs.

Bhavin Chheda, Analyst 6 lakhs plus 5.8, right, sir?


Bhavin Chheda, Analyst 11.8. There also you expect 10% to 12% drop?


Bhavin Chheda, Analyst Or the drop in Karnataka would be more?

No, we expect it to be at similar levels.

Bhavin Chheda, Analyst Okay, and another thing on the closing inventory side, you gave TN 1.3 and Haliyal and Sankili. Can you give for Bagalkot and Ramdurg also closing inventory?

Gopalakrishnan, Vice‐President, Finance Those to put together will be about a lakh, 90,000 to a lakh.

Bhavin Chheda, Analyst Bagalkot and Ramdurg would be 90,000 to lakh. Okay, and regarding sales volume for the year, sir, what volumes you mentioned earlier didn't include export volumes?

Gopalakrishnan, Vice‐President, Finance Yeah, I clarified 4.2 for domestic and about 1.5 lakhs tons for export.

Bhavin Chheda, Analyst 4.2 plus 1.5 lakhs for export?


Bhavin Chheda, Analyst There is not exports at other unit, right?


Bhavin Chheda, Analyst Okay, thank you sir.

Gopalakrishnan, Vice‐President, Finance Yeah. Thank you. And we're going to take next question from the line of Pawan Kumar from Capital Market. Please go ahead.

Pawan Kumar, Analyst Sir, can you through some color on international sugar prices. How the scenario will be, so once again one more year of surplus, I think?


Present prices are the less than $0.18. So with the Brazil production on, I think it should be at this levels, that's the expectation.

Pawan Kumar, Analyst Okay. Thanks.

Gopalakrishnan, Vice‐President, Finance It will go different at that place.

Operator Do you have some more questions, Mr. Kumar?

Pawan Kumar, Analyst No.

Operator Thank you, We are going to take our next follow‐up question from the line of Rishab Boitra from Batlivala & Karani Securities. Please go ahead.

Rishab Bothra, Analyst Sir, quickly a final questions. Sir, in sugarcane...

Operator Sorry, gentlemen, to interrupt you. Sir, we are not able to hear you, sir. I request if you can speak up louder?

Rishab Bothra, Analyst Gopalakrishnan, Vice‐President, Finance In the beginning of the call I said that for the quarter we have ‐‐ that is fourth quarter of EID Tamil Nadu units but as four quarter of Haliyal and Sankili.

Rishab Bothra, Analyst Okay. Sir, any contribution to be made in Coromandel for its acquisition plans or expansion plans?

Gopalakrishnan, Vice‐President, Finance Any?

Rishab Bothra, Analyst Any contribution to be made in Coromandel for its expansion or acquisition plans by EID?

Gopalakrishnan, Vice‐President, Finance Coromandel is a separate company, right?

Rishab Bothra, Analyst No, as a promoter or parent, do we need to infuse any capital or something of that sort, any plans?

Gopalakrishnan, Vice‐President, Finance I don't think there is any plans like that.

Rishab Bothra, Analyst And, what could be the replacement cost for each of the division as of now sugar, distillery, power and refinery?

Gopalakrishnan, Vice‐President, Finance Each of the...?

Rishab Bothra, Analyst Divisions? What was the question please?

Rishab Bothra, Analyst Replacement cost, sir.

Gopalakrishnan, Vice‐President, Finance Replacement cost?

Rishab Bothra, Analyst Yeah. If one needs to put up a sugar plant or distillery or power...?

Gopalakrishnan, Vice‐President, Finance Used to be about 5 crores to 5.5 crores for megawatt, about 1.5 crore for distillery for PLPD and about 4 lakhs to 5 lakhs for TCD of sugar plant.

Rishab Bothra, Analyst And for refinery, you mentioned you have infused about 400 crores, so that would be the rough figure currently or it has increased?

Gopalakrishnan, Vice‐President, Finance Could have increased. We have not got a recent assessment. Yeah. It should have increased.

Rishab Bothra, Analyst Sugar, you mentioned 4 crores to 5 crores.


4 lakhs to 5 lakhs per TCD.

Rishab Bothra, Analyst Okay. Thanks a lot, sir.

Operator Kashyap Pujara, Analyst Thank you so much, everybody, for participating in the fourth quarter conference call of EID Parry. I thank the management for participating with us. That's all from my side.

Gopalakrishnan, Vice‐President, Finance Thank you. Thanks a lot.

Operator Thank you. On behalf of Axis Capitals, that concludes this conference call. Thank you for joining us. You may now disconnect your lines. Thank you.

eid y 2013 earnings call 30 aprâ€™13

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