Hello, everyone, and a warm welcome on behalf of DAM Capital Advisors to the Q3 FY26 earnings call of E.I.D. - Parry.

We thank E.I.D. - Parry's management for giving us the opportunity to host this call.

On the call today, we have Mr. Muthiah Murugappan, Whole-time Director and CEO, along with the senior management team of E.I.D.

- Parry. I hand over the call to the management for opening remarks, followed by a Q&A session.

Thank you, and over to you, sir.

Thanks, Payal, and very good morning to everyone. Gives me great pleasure to be a part of the call to share our Q3 performance, but prior to that, I will start with a brief update on the global sugar scenario, and then I will also come to the Indian scenario after that.

The global sugar market is expected to remain in a mild surplus right through the sugar year '25-26. S&P Platts projects a global surplus of 3.5 million metric tons for '25-26.

This is despite some reduction of output from India, the EU, and Thailand. Brazil for '25-26 is estimated at about 40 million metric tons.

However, some lower yields and a flat price trading below production costs may impact the mix for the subsequent year. The raw sugar prices have been trading lower, lower hedge exposure by Brazilian and Thai millers, and a short position build-up by hedge funds is keeping a lid on the price rally.

Raw demand from Indonesia has been revised downwards for the second consecutive year. White premium values continue trading in the range of USD $90 to $105 per metric ton due to estimates of surplus trade flows, large Indian export surplus, and higher supplies from Brazil.

Weak oil prices are keeping ethanol parities at lower levels. However, geopolitical risks persist, and any rally in oil prices can impact sugar as well.

Coming to the Indian scenario, last year in '24-25 sugar year, India's net sugar production is 26.1 million metric tons, gross was 29.6 million metric tons. Last year's diversion to ethanol was just around 3.5 million metric tons.

Domestic consumption is 28.1 million metric tons, and exports was under a million metric tons. We had closing stocks of about 5 million metric tons.

Sugar year '25-26 estimates are as follows. This is as per ISMA.

Gross production is 34.3 million metric tons, diversion to ethanol considered is about 3.4 million metric tons, domestic consumption at 28.5 million metric tons, and the export quota which has been given is 1.5 million metric tons. This puts closing stock levels at about 6 million metric tons.

For sugar year '25-26 so far, the key states have seen some mild increase in crushing output. Maharashtra, Karnataka, and UP all have together reported about a 25% increase at an amalgamated level as compared to the previous period of last year.

However, production in some states, that is TN, continues to lag behind last year's levels. In terms of the monsoons, IMD has warned that there are some El Niño signs from August to September, and this may impact some of the rainfall distribution and reservoir levels later on in the year.

I'll now hand the call over to my colleague Venkat to take you through the operating and financial performance.

Thank you, Muthu, and good morning to all participants. It's a great pleasure to be part of the analyst call to share the key position of operational, and financial performance of the company.

I would like to share with you the key operating parameters of each of the segments. The crushing operations across all the states has been operated during the quarter, namely the Karnataka, Tamil Nadu, and AP.

Average crushing was about the 54 days during the quarter against the 45 days of the corresponding quarter of the previous year. I would like to share the quantitative details as under.

As far as the crushing is concerned, we crushed about 15 15.31 lakh metric tons as against the 12.7 lakh metric tons of the corresponding quarter of the previous year. As far as the recoveries is concerned, 11.19 against the 7.

7.78% of the corresponding quarter of the previous year. As far as the sugar production is concerned, we produced about the 1.39 lakh metric tons during the quarter against 1.07 lakh metric tons of the corresponding quarter of the previous.

Cane landed cost is at ₹4,122. This is due to impact of the FRP, as against the ₹3,899 per metric ton of the corresponding quarter of the previous year.

As far as the sugar is concerned, sales volume is about 94 94,000 metric tons as against the 1,03,000 metric tons of the corresponding previous quarter. Average selling price is about ₹40 around ₹40 against the ₹37.69 of the corresponding previous year quarter.

As far as we maintained the closing stock at 1,14,000 metric tons. We valued it at ₹37 also.

As far as the revenue is concerned, for the current quarter, it's ₹389 crores against the corresponding quarter of the previous year was ₹391 crores. All FRPs were paid as per the timeline.

As far as the consumer product group is concerned, the consumer product group has achieved a turnover of ₹143 crores during the Q3 during the current quarter, as against the ₹236 crores for the corresponding quarter of the previous year. The reason for reduction mainly on account of the restructuring of the distribution channel and lower release quota for the sweetener.

Further, the focus more on the retail pack and profitable product mix in non-sweetener segment. As far as the cogen is concerned, we produced about 1,108 lakh units as against 954 lakh units in the corresponding period of the previous year.

We exported about 605 lakh units as against 503 lakh units in the corresponding period of the previous year. The average tariff realized is ₹4.4 per unit as against ₹3.98 per unit in the corresponding period of the previous year.

Revenues for the quarter is about ₹37 crores as against ₹41 crores in the corresponding period of the previous year. As far as the distillery is concerned, we sold about 407 lakh liters as against 422 lakh liters of the corresponding previous year's quarter, of which about ENA was about 215 lakh 215 lakh liters and ethanol was 192 lakh liters.

The price realized is about ₹67.91 against the previous year realized is ₹61.83 per liter. Revenues more or less at stand ₹289 crores as against ₹290 crores during the corresponding period of the previous year.

As far as the Nutra is concerned, turnover from Indian operations is for about ₹6 crores as against ₹12 crores in the previous year. At the consolidated level, the Nutra business turnover was ₹62 crores current quarter against the corresponding previous period, which was about ₹43 crores.

As far as the refinery operation is concerned, the operational revenues for the current quarter is ₹714 crores against the Q3 of 20 December '24 about ₹915 crores. The loss for the quarter is about ₹4.53 crores versus Q3 of '24-25 about ₹17.53 crores.

The refined sugar production Q3 is 2.23 lakh metric tons as against Q3 December '24 of 2.09 lakh metric tons. Refined sugar sales for the quarter is 1.57 lakh metric tons versus 1.87 lakh metric tons.

There is no ICD as on 31st December. It has been repaid.

External borrowings is about ₹78 crores as on 31st December as against the 31st December '24, which was about ₹532 crores. These are financial and operational performance of the quarter.

The floor is open for the questions.

Hi, good morning, sir. Thank you for taking my question.

My first question—

Hello, is it better? Voice is better?

Is it better?

Yeah. My first question is on sugar and distillery business, which is apparently facing challenges, plus our consumer product has not been growing.

Just wanted to understand and take a future outlook from the management. How are we planning to overcome this, and which segment you think will lead the revenue growth?

Vaishnavi, thanks for your question. Let me just start with the sugar and distillery business.

Now if you look at the numbers on the sugar business, we've had some better pricing from a sugar perspective when you compare to the same quarter last year. Whilst we've had better pricing, of course costs have gone up because the FRP sort of goes up every year.

There's still really no clarity on any upward revision of the MSP, this continues to put a strain from a sugar perspective. If you look at the distillery segment, volumes have sort of largely hovered around last year's volumes.

The challenge here is the ethanol offtake prices have also not gone up, and this has been now almost three years at the same ethanol offtake prices. There's also been increased saliency towards grain ethanol as compared to sugarcane.

Now this apart, operations in TN and in AP as well are subscale. There's been lesser cane planting in these two regions, and this again impacts throughputs.

It also causes for us to insource a lot of molasses to run our distilleries, particularly in the state of TN. There is a lot of cost pressure on the business in the case of the sugar and biofuel operations.

However, I will say that I think the team has done an excellent job on managing costs and improving efficiency, which is why you see better bottom lines on this segment. In terms of the consumer product group, I think the sweetener segment continues to fare well.

We, of course, launched in two years ago into the staple segment. Here, we've consciously taken a bit of a correction.

We just want to correct the business model to better manage working capital and to have a sort of a stronger distribution model. This is a conscious connection which will last two quarters, which is one reason why you have seen volumes drop.

The other reason is that market pricing itself for pulses, particularly lentils, etc., has been lower, and this will naturally bring revenues down as well because your realizations in the market are lower. This correction which we've taken and the strengthening of the incumbent business model should conclude in Q4, and I think we should be back on a better clip in Q1 with a more efficient operating model from the staples perspective.

This is just to give you a sense of where things are.

Thank you, sir. I just wanted to understand what is our future outlook in these segments?

In terms of the sugar and biofuel segment, I think we will continue to run efficiently. We will really need to look towards the policymakers for some respite on upward revision of MSP and perhaps ethanol prices as well.

We haven't really seen any positive changes from that front, I think we'll just continue to focus on efficiency, focus on driving planting, and running our operations better. I think really to move the needle, we'll need support from policy on that front.

In terms of the CPD segment, I think the growth story will continue. It is a key segment for the business.

While we've taken two quarters to really strengthen our operating and our economic model, what you will see in Q1 is a stronger operating model. We will also announce in Q1 the newer categories we wish to enter in the food FMCG space.

This is a body of work which is being done currently with some industry experts, and when we meet in May, we will give you a clear picture as to which categories beyond staples and sweeteners we will enter in the food FMCG space.

Sir. I'll note this.

Just two more questions on consumer end. One is I wanted to understand what are our competitive advantages in this segment, and what is the total anticipated amount or impact for the channel correction we are taking?

We have taken some impairments on account of this channel correction, and that's reflected in the numbers this year. We've already taken in Q3 a ₹10 crore impairment, so that's from an impact perspective.

Can you just go over your first question again?

I wanted to understand the competitive advantages.

Sure. I'll just take you back to when we launched into this segment about 7-8 years ago.

I think obviously we had the brand Parry, which is with us, and it's a known brand from before. I think we have reinvigorated the brand and launched it into the sweetener space where it already has a lot of brand equity.

I think we've enhanced that significantly. I think that's the bedrock upon which we started further building the platform.

Given we are a sugar manufacturer, I think we do understand the back end and the supply chain. We also now make brown sugar and jaggery in our plants, this again is a competitive advantage.

We don't see too much competition in this segment. We are in the southern region a 55% market shareholder.

Now I think as we expand into other categories, if you look at the staples category, we have done some vertical integration, particularly on dals. I think this will give us better quality control and also improve margin capture going forwards.

I think we're building our competitive advantage further as we go along. When it comes to the newer categories which we'll talk about in the subsequent quarter, you will also give you guys some kind of an overview on how we wish to expand the business into these categories.

Also, sir, in long-term, do we plan to shift from trading to manufacturing in-house of these products?

We make a lot of our sweetener products are made in-house. We do have third-party manufacturing partnerships as well.

Similarly for staples, it will be a hybrid going forward.

Sir. Just last question on channel correction.

You mentioned the impact will be impact for quarter 3 is ₹10 crore. I wanted to know the total impact we are anticipating.

We will review at the end of quarter 4 whether there's any further impact. We're not foreseeing such a high impact if at all.

Sir. Thank you for taking the questions.

I'll join back the queue.

Is my voice audible?

Just one accounting question. What is the number for inventory, receivable, and payable as on 31st December?

Prashant, here you are looking at that. Prashant?

Prashant, can you hear us? Prashant?

Is it better now?

What is the number for inventory, receivable, and payables as on 31st December?

Okay. As far as the receivables is concerned, about ₹170 crores also, Prashant.

As far as the payables is concerned, about ₹250 crores that something will be there. As far as the inventory is concerned, about ₹800 crores will be there.

Okay. Am I right in interpreting that the cash generated had been used to pay off the borrowings?

No, because there will be a short-term borrowings also will be there to fund the working capital.

Okay. What would be the borrowing number be like?

Just we have already mentioned in the investor presentation Prashant. Short-term will be about eight ₹750 crores also.

Okay. Just one and the sugar, what is the recovery rate till 31st December, and how do you see that going forward?

Recovery is as of 31st December, it is about 11.19%, okay? Going forward, maybe the January-February, if you look at it, this slightly it may increase.

Okay. That's all from my side.

Thank you, and wish you all the best.

Thanks. Thank you.

Thanks for taking my question again, sir. You mentioned 55% market share in consumer product.

Just wanted to know, is this with respect to a particular product or segment?

This is the sweetener segment.

Thank you, that's it from my side.

Hello, sir. Thank you for the opportunity.

Sir, my question is you have mentioned that you will sell around 15 lakh shares of Coromandel. Can you give some idea about the outlook going forward, and when is the timeline for that sales?

Sorry, I didn't get the last part of your question, Mr. Saha.

Basically, I'm asking you have mentioned that you are going to sell 15 lakh shares of Coromandel around .51% of your total stake. What is the timeline for that deal, and going forward, what is the outlook of the investment in Coromandel?

Mr. Saha, it's an enabling resolution which the board has taken.

We will determine at the right time, basis any appropriate use of funds which we may have, we will determine at that point in time. It's an enabling resolution for now.

No final timeline that by that you will execute that deal?

No, as I said, it's an enabling resolution for now. We will determine, basis appropriate requirements what is to be done further.

Okay. Secondly, sir, can you give some idea of the current number of store count on your CPG segment and how much growth we can expect in the next couple of years?

Somnath, this is Balaji here, and I head the CPG business. If you look at our current coverage, it will be in the range of about 1 to 1.2 lakh outlets, and there are about 70,000 outlets which buy from us on a quarterly basis.

This will be growing as per our requirements of the business in the next few quarters.

Okay. Fair enough, sir.

Sir, on the distillery front, can you give the breakup of the grain route ethanol, how much is coming from maize and how much is coming from your FCI rice? Any idea of the current ENA pricing?

On the grain route, we have only one facility in Andhra, roughly about 120 KLPD. The balance 400-odd KLPD is in the molasses route.

The current pricing on ENA has been under pressure due to under allocation of ethanol in Karnataka, resulting in most players trying to sell ENA. It's hovering in Karnataka around 58 to 60.

We have a better ENA pricing in Karnataka around 72—sorry, in Tamil Nadu of around 72. We expect the pressure on ENA to continue for another month or so, after which we'll see an upward revision once the crushing comes to a close in Karnataka markets.

Sir. Sir, lastly, if I see the sugar division performance, despite the strong realization in the market, we made loss this time also.

Is this only for the lower quota or anything that we are missing out, sir?

If you look at it, this is a seasonal business. If you see the better results in Q4, because normally all the sugar companies, you will have only the two months operations during the quarter.

When it comes to the next quarter, the operations results will be good. You can look at it all the sugar industries.

Suresh, that's fine. Somnath, usually Q3 we will report a loss.

Our Tamil Nadu season start very late Q3. Karnataka kind of starts early November, the plants are technically not running.

I think December, Jan, Feb is when plants are generally running all together, these are the more profitable months. You'll, as Venkat said, you'll see that in Q4.

This has been the trend for us kind of every year.

Sir. Understood.

Maybe what you really want to compare is the level of losses versus the same quarter last year, wherein which we've fared better. Certainly from an EBITDA delivery, we have fared better.

This is obviously despite FRP increases and increases in other input costs. This is really been driven by efficiency and cost work which the business has done over the last year.

Okay. Thank you, sir.

Good morning, sir. Thanks for taking my question.

My question was on the refinery business. I think your costs have come down significantly over the last nine months or so.

You think that cost of $41 per metric ton is sustainable? How do you see that?

Thank you for the question. This is Suresh Kannan.

You're right. The costs have come down during the current year, mainly on account of energy efficiency projects that were implemented toward end of last year giving results.

We expect we should be able to sustain these cost levels going forward.

I think if I see correctly, the spread this quarter has come down significantly. What is your view on that and why spreads have come down?

As Muthu explained as part of his opening remarks, the world is turning into a sugar surplus scenario, and we also have a higher white sugar stocks that are sitting in origins such as Brazil, Thailand, as well as India waiting for the world market to capture them as far as the right opportunity is concerned. The white premiums, which is the indication of spread availability, has been under pressure over the last six months.

This is basically a reflection of the surplus refined sugar and white sugar availability globally. We expect this tightness or the lower white premium environment to continue at least for the next two quarters going forward.

Just one more question on this. I noticed that the net working capital in this business is hugely negative, -$55 million as of December '25, and it has jumped from $25 million as of Dec '24.

What is the main reason for this, and do you think this will continue, because—

Sorry? Yes, please go ahead.

Sorry, yeah. No, and a related question is, if working capital is this negative, then it should throw up a lot of cash, if I'm not wrong.

Okay. As far as the net working capital is concerned, you must see it in conjunction with the borrowings, external borrowings that are there.

As the external borrowings have come down, net negative working capital has increased. This is on account of basically a higher inventory turnover that we are able to get, as well as the long credit period that we have from the suppliers.

Actually, if you look at

our investor presentation 28, page 28, there you can see SRIPL, we have given the note, because if you look at it, YTD December is the 532, whereas December '25 it has come at 78. We also given the note that why there is any reduction, because non-fund based limits has increased.

Thereby you can see the upside in the negative working capital increase coincided with the reduction in the short-term borrow.

No, just from an operational perspective, your payables are much, much more than inventory and receivables, is that correct?

That is the situation at the moment based on the sale and the inventory numbers that what we have.

That's not every time, this is a peculiar situation this quarter, right?

This quarter may not be reflective of the normal street of business.

Okay. Thanks.

Hello, am I audible, sir?

Yep.

Sir, sorry, I joined a little late. I just wanted to understand why did our non-sugar branded business degrow, and what is your expectations going ahead?

I think on value terms, the price of pulses itself was about 35% to 40% lower in the market compared to the previous year. If you look at value turnovers for the quarter for non-sweetener business, we would have degrown from ₹221 crores to about ₹155 crores, and that is for the YTD.

That's largely because of the reduction in the price of dal which degrew. The other reason is that we're taking some corrective actions in terms of channel corrections in order to revise the way in which we are doing our business.

In terms of volume, our focus is also shifting more towards the profitable SKUs. We've done backward integration of dals, we've got our own dal processing plant.

Our focus is more on dals. Because the product mix moved more towards dals, and the price of dal in the market was significantly lower than last year, you see a degrowth in the value turnover of the non-sweetener business.

Sir, how do you see it going forward, volume growth and probably are we trying to enter into some other states except for the Tamil Nadu and Karnataka?

I think going forward, the business will be consolidated and we will stay focused on ensuring that we sell more of the profitable SKUs. Our focus on backward integration will remain and we will continue to run our plants at max capacity.

Expansion into non-South markets for non-sweetener, we will consider it only at the relevant point of time. As of now, there are no plans to go beyond South for non-sweeteners.

Understood, sir. Thank you so much.

Just to understand the consumer product business on the non-sweetener category. Since we have initiated the foray into this, what have been the learnings and what is the strategy, how have we changed the strategy, and if you just share thoughts going forward from a 2- to 3-year perspective.

I understand South market we have a good right to win there. How are you planning to scale it up?

Rushabh, I think we've had some of the learnings. This business also follows a certain amount of cyclicality and seasonality.

There are periods of the year when the price goes up and down. Depending upon the export import policies of the government, the raw material prices of imported toor and domestic toor will vary accordingly.

We've got our share of learnings. We've also done this year we had bought lentil in the raw form and we had bought our own plant and we have processed it.

We've done a full-scale backward integration of this entire exercise. Our learnings in that area are significant in terms of the cost of conversion, as well as how do we play out on the pricing.

There has been significant learnings in that aspect. There is also a significant learning in terms of the channel and how the channel responds to a new brand which comes into this business and this category.

There are significant learnings and our attempt is to try and build all of them into a more robust strategy for the next financial year as we go forward into it. Can you please repeat the second part of your question?

That was not very clear to me.

I was just asking, in the South market at least, I think we have a reasonable right to win. How are you planning to scale it up since, I think, the learning curve has it been achieved or you think there is still more to go in terms of new product launches and the learning curve in the existing products?

See, I think the learning curve will never stop because there will always be something more that we will be learning on this business, I won't say that we are experts in this business as of now, but we have got significant learning. The right to win is very, very clear in the South markets because of the Parry brand and the share that we have in the sweetener business is a very dominant share.

I think we'll be focusing more on the South markets in order to stay focused on the business.

What about the new product launches that you were planning earlier? I think—

There is a lot of work in progress on some of those new products, and I think we will come back to you maybe by the end of next quarter in terms of what the plans are. We will probably be able to outline some of the plans to you when the time is more relevant for it, please.

Rushabh, just to overlay what Balaji said, and I think I had sort of covered it earlier in the call as well, where of course in the staples and in the sweetener segment for now, we do aspire to go deeper into both these segments as the build of the business progresses. Particularly in the staple segment, we will aspire to build a more profitable model.

Certainly on sweeteners, we will be doing this as well. We will also give you guys an overview as to the newer categories we wish to enter, and we will do this in May call.

As I said, there's a body of work which we are just about concluding with some industry experts to help us really put that narrative together on what new categories we want to enter are.

Okay. Are you looking at inorganic opportunities in this consumer non-sweetener business or—

Yes, we are.

Okay. Thank you.

Yes, sir. Just a follow-up on previous participant's question.

You said that you are discussing with some industry experts to expand your product portfolio. Have you appointed any external consultant or is this internal team only, or what is it exactly?

Yeah. The industry expert is external.

Okay. Understood.

We are expecting the report by probably this year-end, right?

Yes, it should be done in the next six weeks. As I said, we'll cover elements of that in May, we'll give you a clear picture of which categories we're going to be going after.

By that time, we will get into the next phase of implementation.

Understood. Thank you, sir.

Yeah.

Hi. Just a follow-up.

Did you mention that you're open to inorganic opportunities in the consumer segment, and if so, what would be a typical product category or size of business that you would be looking at?

Hi, Gautam. Yes, we are open to inorganic opportunities.

I think it would be a nice optimal way to grow. I think, as I mentioned earlier, we'll come back clearly with the categories we're looking to expand into.

We don't see, on sweeteners, there won't be any need for inorganic. It's a segment which we have built over the last couple of years and will continue to build.

Too on the staples. There are other segments in the realm of food FMCG wherein we'll certainly consider inorganic growth, and maybe we'll give you guys an overview or some color of that in the May call.

Thank you.

Thank you all for logging in to our Q3 earnings call. We look forward to meeting you all again at the end of the next quarter.

Thank you, and have a good day.