Good afternoon, everyone, and thank you for joining us on Balrampur Chini Mills' Q3 and 9M FY26 results conference call. We have with us today Mr.

Vivek Saraogi, Chairman and Managing Director of Balrampur Chini Mills; Ms. Avantika Saraogi, Executive Director; and Mr.

Pramod Patwari, Chief Financial Officer of the company. We would like to begin the call with brief opening remarks from the management, following which we will have the forum open for the question-and-answer session.

Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you earlier. I would now like to invite Mr.

Saraogi to make his opening remarks. Over to you, Mr.

Saraogi.

Thank you, and good afternoon, everyone. Thank you for joining us on our Q3 9-month FY26 earnings call.

I trust all of you have had the opportunity to go through the detailed presentation put out by the team, which gives our operational and financial performance. I will initiate the call with an update on the current developments in the sugar sector, followed by our company's key highlights for the period under review.

India's net sugar production, I will just put this very simply. Our estimate is, that's Balrampur Chini Mills' internal personal estimate, the company's estimate, is 325 lakh tonnes, diversion 35 lakh tonnes, net production of 290 lakh tonnes, 4 lakhs have been contracted for exports, leaving a net balance of 286.

Consumption is estimated, some people say 288, some say 290. Net-net, if you do not go down to nitty-gritties and of 1 or 2 lakh tonnes, the assumption is that there would be no addition to inventory.

There will be a minor depletion to inventory. The opening inventory is at bone-thin levels, which is at 5 million tonnes.

This, in effect, will lead to a very strong demand situation with no inventory overhang. Therefore, the pricing seems to be moving up.

Therefore, it's bullish for the prices. The prices in the month of February for UP mills, for our factories, is between ₹41 and ₹41.50, which we feel can inch upwards as the season progresses, as the year progresses.

On the policy front, cane prices have been increased by several key-producing states, adding to cost pressures for the mills. In UP, we've had a ₹30 increase in cane price.

In this scenario, a revision in MSP aligned with current cost structures, becomes critical for timely payment to farmers and to maintain market stability without any fiscal burden on the government. Again, I'll give a little perspective to this.

MSP might not be relevant at this point of time with the current prices of UP. However, this is a bottoming kind of a signal from the government, which comes in hand when you begin the season in December, etc., and it is a signal which is much needed and much overdue.

However, if, let's say, MSP came today, it would not change the pricing trajectory. Now the real concern is about the ethanol pricing.

I'll come to later. One concern about the potential ethanol imports from US and maize, etc., have been eased following the recent trade agreement.

However, uncertainty continues around long-term revision of domestic ethanol price. Despite an increase of 16.4% in B FRP and operating costs, ethanol prices under B-heavy and juice route have not been revised.

Pramod, this is the third year. [Pramod Patwari: Third year.]

Now this is extremely disappointing. We are extremely surprised since this revision, which was sought, would have marginally or absolutely sub-marginally impacted either the OMCs or if they decided to pass on to the consumer, it would be in the tune of 10 to 20 paisa per liter on a price of—what's the petrol price?

₹100? [Pramod Patwari: ₹100.]

Yeah, around if the pump price for the consumer is ₹100, this was a 10, 20 paisa impact. This kind of amazes us as to why this has not been done for the third year post FRP revision of 16.4%.

Without this, in future, millers will have to rethink about large-scale diversion. The E20 program, I'm not sure, but it needs more attention.

It began with a lot of commitment. That commitment has been sort of reneged upon by the government midway.

Against this backdrop, the company delivered a healthy operational and financial performance. Sugar segment performed well, supported by improved realization.

Distillery segment delivered stable performance on back of higher volumes. However, margins remained under pressure in the absence of ethanol price revision.

Sugarcane crushing for the company for the period under review increased by 8.4% to 387.6 lakh quintals, supported by early commencement of operation and improved capacity utilization. Despite a decline in overall sugarcane acreage, company expects higher crushing levels for itself during the season under review, aided by additional area allotted by the government and better yield owing to our working with the farmers closely.

Our PLA project continues as planned. Construction activities are in full swing with more than 3,000 workers being deployed at site.

Approximately 90% of the imported equipment has arrived, and the balance is on schedule and in transit. Market development efforts have commenced through trading of imported PLA.

As of 31st January, cumulative project expenditure stands at ₹1,421 crores, funded through a combination of ₹790 crores via debt and balance through internal accruals. We remain committed to sustainable value creation by optimizing operations, maximizing value extraction from each unit of sugarcane.

Our diversified product portfolio, including PLA's initiatives, is closely aligned with emerging global sustainability trends and strengthens the long-term resilience of our business. We continue to focus on debottlenecking, enhancing efficiency, strengthening stakeholder relationships, and we continue to be very careful and prudently look forward to deploying our capital.

This brings me to the end of our discussion. I'll now hand over the floor to Avantika for giving an update on cane and PLA.

Thereafter, Pramod can take you through the financials. Thereafter, we'll do the Q&A session.

Good afternoon, everyone. Thank you for having me.

Just a very quick update on both, first cane and then PLA. I just want to highlight that, as already highlighted within the opening remarks, we expect a 5% to 6% increase in the crushing this year vis-a-vis last year.

I also want to share some encouraging news for the upcoming year. We expect an increase in area of about 5% to 7% in the upcoming season as well, not only since cane prices have been increased, but we have also been allotted some new geographies.

Other than this, our development activities in cane, I want to highlight one in particular. In our insect-pest disease management program, we have now focused since the last two years very, very heavily on mechanical control by allocating labor budgets rather than chemical budgets, actively since the last three years we have ramped this up.

This has not only increased the fertility of the soil, but increased the actual sort of resilience of the crop against these kind of insect-pest diseases, whether it's top borer or whether it is red rot. We have relied less and less on chemical and more and more on mechanical and biocontrols, reducing the carbon footprint of sugarcane cultivation.

Secondly, now I would like to move on to PLA. I want to highlight another figure which might not be so visible to investors, that the trade of PLA, since the time that we have announced the project, has nearly doubled if we are to take the annual import of PLA and its products.

It used to stand between 4,000 to 5,000 tonnes before we announced the project as neat PLA. We expect that at least a 4- to 5-fold, at a conservative level, in compounds and finished goods was coming in.

Now we see it at around 10,000 tonnes annually in the year of 2025. Again, we see a consequent 4- to 5-fold in compounds of PLA coming in.

While our trade and our sales figure might not exactly reflect the exact PLA market in India, I just wanted to highlight this to show that we have been working relentlessly and with a lot of compounders and converters and achieving not only sort of goodwill, but real technical success, which has never been seen before in India. As highlighted, last time we had worked on over 50 projects, out of which 20 have been closed successfully and 30 are ongoing, and we see success in them all.

The technical success is actually what I would like to highlight in the downstream technology. That's it from me.

Hi, good afternoon, everyone. I would not like to repeat the financial numbers which we had already shared in the detailed presentation.

I would now request the moderator to open the forum. Thank you.

Thank you for the opportunity. Sir, regarding this ethanol pricing, if we have to look the other way, what is the incentive for the government to increase the ethanol price right now?

Blending targets have been achieved and we have ample capacities also. Till the time there is sugar glut or even standalone ethanol companies are on the verge of bankruptcy, government may not increase the price at all from here.

Your view on it?

We are talking as if government is running a business. Government is supposed to be running a system which is for the well-being of the country, and that's where this policy began.

Just because you get capacity up to what you need, you don't stop increasing the price and the commitment which was made, which was followed up to '22-'23, which was if 5% was a rise in FRP, 5% was a rise in ethanol price. If I may speak a little informally, government is not a bania.

This is climate-friendly, farmer-friendly. Owing to this, exports were not needed, export subsidies were not needed, owing to this farmers were paid on time.

You suddenly don't backtrack midway.

Just on the price front, they would just increase prices based on the consequent increase of sugarcane prices. They need not increase quantity of ethanol in that.

It actually has more relevance to sugar per se.

I agree with all that, but because now government is acting like a bania only, then why to increase?

Then you're right. That's why they've not yet increased it.

These are not moves with any kind of long-term thinking. Suddenly something has gone up and government has been pragmatic for years and I'm very hopeful that they would again see pragmatism down the line.

Sure. Sir, on PLA, while we would be supplying to converters, but have we got any formal or informal assurance from any of the potential clients for offtake or either from railways or defense or temples, where we are also targeting them as a potential client for the end product?

I'm not at liberty to tell you as of today, but the fact that we have put the names in our investor presentation and how sort of prudent our conduct has been, is indication enough. I think that these are just some institutions, and then there are lots of private and everything.

There's really very, very encouraging market coming for PLA. I highlighted it in the import figures for this very reason.

If you see inside, and I think this may be of interest to all investors and Avantika knows better. The PMO initiative, and if those things play out, our capacity [Avantika Saraogi:

Let me talk about the gutkha, pan masala packaging.] Yeah, but in short give them the perspective.

There was an article and a press release from the government, which included our name and our PLA, and basically for the application of gutkha and pan masala packaging. This is one of the most visible litters, causing 22% silting in drain systems in urban India.

The PMO is really taking up this in a very fast-track manner, and we have been able to get technical success, which has only before this happened in China, in terms of being able to convert the product with quality and on the existing legacy machines that exist in the country. That was the only roadblock.

We have already achieved technical success. We have done prototypes, and it has already gone for user and degradation testing, and SOP and all of that is being done.

The government is working really, really fast and really, really cohesive on that. If we look at sachet usage in India, you guys will probably be better at estimating the exact figures, but it's something like in hundreds of thousands of tonnes.

Why I'm harping on the technical efficiency is that it's extremely difficult to get the oxygen and water vapor barrier right with bioplastics and biodegradable materials, which we've been able to do. This is a great thing, and the cost is also decent.

There's a lot of promise, there is a lot of interaction, and it's not up in the air anymore.

Sure. While we are not really impacted by it, but on the other side, is the government also trying to separately pick up the waste product or the packing material which is made out of PLA at the garbage-picking front?

Do you mean waste segregation?

Right, right, right. Waste segregation.

The less we comment on waste segregation in India, the better. I don't know what to tell you more than this.

It's not where it should be. If it does happen like that, it's rather simple to separate PLA.

There are n number of technologies and even mechanical properties which can be taught to the ragpickers. Just as they do for other products, they can easily separate PLA.

Sure, that's it from my side. Thanks.

Hi, good afternoon, sir. Hope I'm audible.

Yes, thank you. All good.

Sir. I want to acknowledge you for giving a more realistic production estimates in presentation compared to what we used to get from different sources.

If you look at our initial estimate as a country and now significant downward revision which was expected, how it's coming from UP and Maharashtra if you can give some broad sense?

Pramod?

UP production, we are looking at maximum of 10 million tonnes at a gross level. Maharashtra, Karnataka maybe 17.5 to 18 million tonnes.

Maharashtra, Karnataka put

10, 18, 28, and rest of India 47 to 45 to 325, 328.

Got it.

That's the breakup.

Second, you highlighted about increased cane allocation by 5% to 7%. Does that additional land what you have got already has a significant amount of cane or there is a further scope to improve further cane development going forward there?

We can see apart from the area, cane availability can also increase significantly?

Good point. Good point.

Good question, actually. I just want to clarify, it's not 5% to 7% increase in allotment.

It's 5% to 7% increase in crushing 5% to 6% increase in crushing that we expect. This is not only through external areas, but internal development and yields and everything.

Now moving to the second part of the question. Yes, definitely the new areas which we have got already have cane, but they have a large opportunity to increase cane as well.

These are farmers who have not been paid properly. They are very, very happy and very, very excited to actually see the color of money and work with us and increase cane area.

We're very, very hopeful.

Increase cane area, improve variety, everything.

Mm-hmm.

Got it. In terms of yield improvement, we have seen improvement, but probably I was expecting significant improvement further from here.

Was that improvement mainly because of weather-related and recovery from the disease or we do can expect some structural yield improvement with varietal difference going forward also in terms of recovery as well as yield if you can comment?

I just want to highlight that we've been working very hard on variety since red rot hit. While the red rot variety is reduced to low single digits, we see an increase like 14201 is an established variety now.

This year we're already going to crush around 16% of it and we see a significant increase in the coming year. Similar to this, we have two more varieties in the pipeline which have good potential for yield as well as recovery.

This is something that we're working on, plus we have a 4- to 5-year plan and four other pipeline varieties which will then come in. This is a very strong program with the tissue culture and everything that we have established.

We always strive for structural change so that we do not need to rely as much on outside factors.

Got it. Last question, I think sir also talked about on ethanol views and all that, but just for clarity, if you look at if situation remain and with sugar prices currently what we have, can we go for maximize sugar and then use the distillery capacity more for grain-based ethanol as a structural change going forward, or we still hope that the government will consider the revision in ethanol prices so we can stick with the existing models?

What we have done, pursuant to the fact that government did not increase price, we have already diverted many of our units to C-heavy. Grain is not possible in these units because grain is a separate line of machinery, which is only available in Maizapur.

We have taken those decisions internally to maximize sugar production.

Got it. Can we also go for multifeed in other places also?

No, no, that's not what we are planning.

Got it. Thank you, sir.

I think my questions are pretty similar to what the previous participant has mentioned. It is about the recovery specifically.

I think initially we were talking about 50, 60 probably basis point recovery improvement in western UP and probably 20, 30 basis point recovery improvement in eastern UP. I think it's fizzled out.

Is it because of the ratoon crop or we may get a better in plant or you think that recoveries will probably be flattish kind of for the season?

Good question, Sanjay. You're right.

West, I don't know, even that's not as nearly as high as what you are saying. Lot of west is higher by half and lot of west is lower than last year.

West is also divided in two parts. Having said that, we began with an improvement of 0.3 kind of expectation.

For 1.5 months we got no sunlight. Beginning as of yesterday, bright sunshine is started again.

Maybe we have lost some time which we did not anticipate. So 0.2, 0.3 may not be possible, 0.1, 0.15 may be possible.

Okay. Second about the fungibility part only, it seems that Maizapur, I think initially when we did the CapEx for Maizapur for 320 KLPD, it was assumed that in a certain situation like today when the maize or the grain ethanol prices are higher, probably we'll utilize this Maizapur facility for a higher grain ethanol.

It seems that it will be less than 5 crore only. It seems to be that way only.

What's your view on that and why we have not been able to scale that up to 8, 10 crore liters probably?

Sanjay, please understand, we have a capacity of 5.5 crore, 5 crore liters of maize for the balance amount of season after sugar season shuts down, right? Balance period.

Let me get it very clear. Government has accepted only 60% of the tenders put out for maize.

You cannot put out a tender then your capacity. We tendered for 5 crores, we got 3.12 or something,

3.15

crore. [Pramod Patwari:

We also divided between rice and maize in the ratio of 40:60.]

To pura grain ko diye fir divide kiye. Government is not inherently very much in favor of that segment.

If you wanted to increase maize, you'd put in a CapEx, let's say, for another distillery of 10 crores, you would only be able to sell 6 crores, balance the distillery would be idle. Am I clear?

Right, but my question was

Bolo

bolo. Sorry sir.

My question over here is that why we couldn't bid more than 5 crores, because if I'm not wrong, the entire Maizapur facility is a fungible towards grain. Maybe I could do a C-heavy, means ethanol to be heavy or B-heavy.

Right, right. That was possible, but at that point of time, one did not know that they're not going to increase the price.

Having begun and tendered, it's not possible to roll back.

Right, sir. Right.

Understood.

In the overall scheme, until you reduce sugar, you don't get good price for sugar. Yes, if I knew on day one that they're not going to increase any price, maybe we would have done lesser juice.

Right, sir. Right.

Understood. Understood.

Sanjay, the capacity would have been idle, huh? B, C you would have done, but that grain would have gone unutilized, yeah, or 60% utilized.

Yes, your question is valid. If we knew this on day one, we would have not done full juice.

Right, sir. Right.

Understood. Understood.

Sir, lastly, on PLA front, I think you have mentioned that you already started trading PLA. Is it that to build the market as of now, we have to significantly reduce the price or sort of come up with the lower price to the clients?

No, no, no, no. This is not the case.

We are wanting to do this so that we can get the technical feedback required for our own production, and also start creating a name in the market, meeting the right customers and everything. Customers are largely still importing on their own and just buying a small percentage from us and giving us feedback, which is very valuable for when we start production.

Okay. Okay.

These are only pilot works which is happening as of now, it seems.

No, we are doing commercial sale also, but to a small percentage in order to get feedback on quality.

Understood. Understood.

Thanks, thanks. That's it from my side.

Hello, everyone. Good afternoon.

Sir, I wanted to know whether there is any change in the ethanol mix. As you said, you will be making more of C-heavy.

The previous mix you had said, it was 25% C, 65% B, and 10% syrup?

It's a very marginal tweak because midway

[Pramod Patwari: Largely it will remain in that range only.]

Yeah, just one unit midway we are shifting, which may not, because we have a 10-unit company, may not look very visible. Yes, whatever we can salvage, we are salvaging.

Sir. Thank you, sir.

My next question would be, sir, are we on track to close the financial year '26 with ethanol sale of 28 crore BL?

Looks like between 26 to 27 crore.

26 to 27. Okay.

Sir, one last question, what kind of revenue are we expecting in PLA from the Pan Parag sachets which you were talking about right now?

No, no, this is too early in the day. Too early.

Patience,

patience.

Yeah.

What we are wanting to say, let's understand what we are wanting to say. Without overexpecting or underdelivering.

Today, this is something new for us. We are going in.

There are two parts to this. One to make the quality, that is the functioning of the plant level; two is to sell this, that is what your Pan Parag, etc.

is. Separate working on these two.

With the interactions we are having around, we feel very, very confident and happy that we should see success on both the fronts. The detail of how we are hoping to be successful is all what we have spoken about.

Got it, sir. Sir, just I can squeeze one last question.

What is the cost of production of the sugar in Q4?

Q3?

No, aage ka puch raha hai. [Pramod Patwari: Aage ka puch raha hai.]

Yeah, for the coming

For the full year, we are expecting in the region of around 37.5.

₹37.50.

Sir. Thank you so much.

That's from my end.

Good afternoon, everyone.

Good afternoon.

Good afternoon.

I just wanted to check up on this PLA, how much is the capacity utilization right now and what sort of at the full capacity it will add to the profit?

Right. We are commissioning in October of 2026.

Right now there's of course no capacity utilization.

Plant has not come up yet.

Then if on full capacity utilization, the revenue potential is ₹2,000 crore at peak and we have given guidance before of a 35% EBITDA profit margin.

Thank you very much.

Hi, sir. I think so most of my questions have been previously answered, but just wanted to know on the ethanol bit.

Have we know what kind of pricing are they going to go on this C-heavy route for this current sugar season? Because they have given an increase last year also, if they given increase right now, then the price differential between the B-heavy route and the C-heavy route is very minimal.

In that case, it looks ominous that they might actually increase the price high on the B-heavy route, right, at least, or any in line with that on the cane juice route. What my second question is, what is our current conversation with regards to the government on this particular aspect?

Are we still in talks with the government for a price revision or have the talks stalled for now?

I think what you're meaning is whether there'll be a revision for C-heavy. Currently the indications are there is no revision on the anvil.

We have pitched, pitched, and pitched. No reply is the message we have, I cannot against this government, which gives a feeling that they might not be looking at it.

That is the indication.

Okay.

All contracts hence will remain the same: C, B, juice.

As per the November 2024, October 2025 season price, right?

Right.

Right. Okay.

Okay. Thank you.

Okay. Sorry, sorry, can I give some closing remarks?

Our hope and not more than hope, we are hoping to crush over 10.5 crore quintals this year, which is about 50 10.55 actually, which is about 60 lakh increase over last year.

99

to. About a 58, 60 lakh quintal increase, which amounts to about almost 6%.

Our ability with the CapEx already done is to very easily handle 11.5 crore quintals. We hope to achieve that very soon is the wish list.

It's not a dream. We are working towards that and feel very positively inclined to achieving that.

My hope is maybe part of that vision gets completed next year itself. In Maharashtra and UP, you would start seeing closures by February end.

That is why the price is where it is, and even the monsoon prediction which we have read about till now is not great. One sees a structural kind of a tailwind to sugar prices as we proceed.

Yes, one sector ditch, ethanol; the other looks good, and specially for Balrampur. Right?

Thank you.