Dhampur Bio Organics Limited (DBOL) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Dhampur Bio Organics Limited Q4 FY '25 Results Conference Call hosted by SKP Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Pachisia from SKP Securities. Thank you, and over to you, Mr. Pachisia.

Thanks, Michelle. Good afternoon, ladies and gentlemen. It's my pleasure to welcome you on behalf of Dhampur Bio Organics Limited and SKP Securities Limited to this Q4 FY '25 financial results conference call. We have with us Mr. Gautam Goel, Managing Director and CEO; and Mr. Nalin Gupta, CFO. We will have the opening remarks from Mr. Goel, followed by Q&A session. Thank you, and over to you, Gautamji.

Thank you. Good afternoon, everyone, and thank you for joining us today, and thank you, Vaibhav, for the introduction. We are here to discuss DBO's operational and financial performance for the quarter and full year-ending 31st March '25. The results and investor presentation have been uploaded on the stock exchanges and our website. I trust you've had an opportunity to review them. On the sector overview, the sugar production for the current season for the country is estimated at 26.2 million metric tonnes. This excludes 3.2 million metric tonnes diverted for ethanol. Approximately a 15% decline year-on-year. This reduction is driven by lower output across Maharashtra, UP, and Karnataka. The production for Maharashtra is expected to be 8.1 million tonnes versus 11.1 million tonnes last year. UP at 9.25 million tonnes as compared to 10.4 million tonnes last year. And Karnataka at 4.2 million tonnes as compared to 5.2 million tonnes last year. Closing stock is expected to be around 5 million metric tonnes, while the domestic consumption is estimated at approximately 28 million metric tonnes. The government permitted 1 million metric tonnes of sugar exports this season, of which about 0.7 million tonnes, 700,000, is expected to be exported. However, there could be -- we do expect about 200,000 to 300,000 of sugar not to be exported in the current year. Following the export announcement, the ex-mill sugar prices rose by approximately INR 3 a kg, which was a much needed boost required to cover the cost of production, and this also helped bring down the cane price arrears. The Government of India has recently announced an increase of INR 15 per quintal in FRP for the season '25-26, which will enhance the cane price to INR 355 per quintal. The industry continues to advocate for price linkage between sugar, ethanol, and FRP to improve the long-term stability. The ethanol update, a total of 1,053 crore liters has been allocated by OMCs during ESY '24-25, ethanol season '24-25. The feedstock mix is as follows: Sugarcane juice quantity allocated stands at 195.61 crore liters, B-Heavy molasses at 132 crore liters, C-Heavy molasses at 13 crore liters, special food grains at 119 crore liters, damaged food grain at 107 crore liters, and maize at 485 crore liters. The sugar sector accounts for 341 crore liters, which is approximately 32.4%. And the grain sector at 712 crore liters, which is the residual 67.6%. Coming now to DBO's performance highlights for the financial year '25. We recorded a revenue of INR 2,713.86 crores in FY '25, a 14.94% increase year-on-year, driven by growth in sugar and country liquor segments, which were up 9.29% and 55.63%, respectively. EBITDA for FY '25 stood at INR 144 crores as compared to INR 162 crores last year. The PAT for FY '25 stood at INR 12 crores as against INR 49 crores last year. The Board has approved a dividend of INR 1.25 per share for the current year. Sugar production declined to 3.1 lakh metric tonnes versus 4.23 lakh metric tonnes last year. A diversion of 3.37 lakh tonnes of cane was diverted towards ethanol production this year. There was no diversion of sugarcane syrup or ethane in the previous financial year. Disease and pest-related issues adversely impacted our net recovery, which fell to 9.8% versus 10.32% last year. Ethanol produced during FY '25 stands at 60.98 million BL as compared to 93 million BL in the previous year. Power generated during FY '25 is 22.3 crore units versus 30.3 crore units in FY '24. The country liquor sold during FY '25 stands at 37.6 lakh cases as compared to 25 lakh cases in FY '24. We remain committed to improving agronomical practices by working closely with farmers to adopt high-yielding varieties and continue to address internal bottlenecks. Now with that, I now invite Nalin, our CFO, to walk you through the financials in greater details. Thank you.

Thank you, Gautam, and good afternoon, everyone. I will take you through the stand-alone financial highlights for the fourth quarter and full year FY '25, followed by a detailed update on our segmental performance. Starting with the company level financials. Revenue for Q4 FY '25 stood at INR 702 crores as compared to INR 595 crores in the same quarter of the previous year, backed by strong performance across all segments. EBITDA for the quarter stood at INR 100 crores as compared to INR 87 crores in Q4 FY '24. Profit after tax stood at INR 40 crores. For the full year '25, revenue was recorded at INR 2,714 crores as against INR 2,361 crores in the previous year. EBITDA for FY '25 stood at INR 144 crores. PAT, profit after tax, for the year was INR 12 crores. Now moving to the segmental highlights, beginning with the Sugar segment. Revenue for the Sugar segment for Q4 FY '24 was INR 443 crores as compared to INR 438 crores in Q4 FY '24. EBIT for Sugar segment was INR 83 crores in this quarter as against INR 68 crores last year. Sugar revenue stood at INR 1,748 crores in FY '25 as against INR 1,590 crores in FY '24. EBIT from Sugar segment for FY '25 was at INR 109 crores as compared to INR 79 crores in FY '24. Sugar production for FY stood at 3.1 lakh tonnes as against 4.23 lakh tonnes in FY '24. Net recovery for the year stood at 9.8% as compared to 10.32% in FY '24. We sold 3.5 lakh tonnes of sugar in this year as against 3.03 lakh tonnes from -- which was sold last year. Average realization was INR 39,370 per tonne in this year as compared to INR 38,350 per tonne in FY '24. As of 31st March '25, sugar inventory stood at 2.22 lakh tonnes, which has been valued at INR 37,662 per tonne as against 2.69 lakh tonnes, which was valued at INR 34,750 per tonne last year. We exported 71 million units at an average realization of 3.44 per unit in FY '25 as compared to 96.81 million units at 3.44 per unit in FY '24. Now turning to the Biofuel and Spirits segments. Revenue for the biofuels stood at -- in Q4 FY '25 stood at INR 116 crores as compared to INR 99 crores in Q4 FY '24. EBIT was at INR 4 crores. For the full year, Biofuel segment revenue stood at INR 343 crores in FY '25 as compared to INR 521 crores in FY '24. EBIT from this segment was INR 11 crores versus INR 56 crores last year. We produced 60.98 million bulk liters of ethanol this year, out of which 19.23 million bulk liters from B-Heavy, 22.82 million BL from syrup, and the balance from C-Heavy molasses. Ethanol sales for FY '25 were 50 million bulk liter at an average realization of INR 60.61 per liter as compared to 82.68 million bulk liter at INR 58.81 per bulk liter in FY '24. Of the total sales, 17 million bulk liters came from B-Heavy ethanol within an average realization of 59.7 per bulk liter. Ethanol stock as on 31st March '25 stood at 4.62 million bulk liters as compared to 7.74 million bulk liters last year. Now moving on to Country Liquor segment. Revenue from Country Liquor segment for Q4 FY '25 stood at INR 265 crores as compared to INR 148 crores in Q4 FY '24. EBIT from this segment for the quarter was INR 4 crores as compared to INR 2 crores in Q4 FY '24. For the full year, Country Liquor revenue stood at INR 925 crores as against INR 590 crores in FY '24. Segment for the full year from this segment stood at INR 14 crores as compared to INR 9 crores in previous year. We sold 37.64 lakh cases of Country Liquor in FY '24, up from 25.04 lakh cases in FY '24. Long-term borrowings as on 31st March '25 stood at INR 309 crores as compared to INR 241 crores as on previous year, while short-term borrowings of the company are at INR 844 crores as compared to INR 806 crores as of previous year. With that, I would now request the moderator to open the floor for the questions, please. Thank you.

[Operator Instructions] The first question is from the line of Niteen Dharmawat, CFA, from Aurum Capital.

So what is the outlook for sugar realizations in the domestic and export market this year because there is some price hike that we have seen in the sugar? So can you please elaborate on that?

Sorry, I couldn't understand. You said outlook for domestic and export?

Correct.

So I would imagine, for the export, as you are aware, the government allocated 1 million tonnes of release -- gave permission to export 1 million tonnes. It is our belief about 700,000 tonnes to 800,000 tonnes of the sugar that will get exported. We, as a company, decided to sell our export obligation. We've sold pretty much 99% of our export obligation. We have small percentages which we have to export to our institutional clients. And for the domestic prices, we don't -- and the international prices have come down. So we don't expect about -- we think there will be about 200,000 tonnes of sugar, which will not get exported. On the domestic front, I think the prices should remain firm. They have been holding steady. The closing stock is manageable and the FRP increase should also help keep the prices stable to firm.

And are there any anticipated changes in government policies with respect to sugar MSP, though we've already seen the retail market sugar prices have gone up? Do you see any changes over there?

We have been asking about a linkage as an industry that there should be a linkage of sugar prices and ethanol prices with the cane price. But as of now, we don't have anything firm to suggest.

And what is our current debt level overall and CapEx plan 1 to 2 years? What is the funding requirement for that? Because we have kept CapEx on hold in the previous call, you mentioned about it. So is there any change on that?

So there's no change in that. There should be marginal CapEx is on of any substantial wear and tear. We have adequate capacities in our, I think, the work, as you mentioned, will be on cane development and increasing the cane quantities either by better yields and better planting. But for the foreseeable future, we don't have any major CapEx to be -- we have no CapEx -- major CapEx is planned this year.

The next question is from the line of Nitin Awasthi from InCred.

I wanted to understand a few things on your Country Liquor segment as a whole. So the whole market as of now in UP would be somewhere around 110 million cases. Would that number be right?

I think it's about INR 100 crores, yes. So UP is broken into 2 parts. One is the grain UPML and Country Liquor. If my memory serves me correct, it was about 100 crore liters -- 100 lakh cases, like you said.

So both of them combined.

Totally speaking all right, yes. [Technical Difficulty] We lost you there.

We lost. Sir, in that case, we'll take the next question from the line of Vikram Suryavanshi from PhillipCapital India.

Congratulations for good performance given the challenging time we have. In this quarter or full year, what was the export sugar revenue or volume, what you can share?

Sorry, we lost you. You said export revenue. Thank you for your good wishes, Vikram. And we missed you in between. You said export revenue?

So export revenue or quantity because since we also got allocation of exports, so was there export sale accounted in this quarter?

So we didn't export -- we sold pretty much all our quota, which got accounted in this quarter and some of it probably this -- all got accounted in this quarter.

So that will be accounted…

It was very small -- 1% or something, very small quantities, a couple of negligible quantities of sugar, which we hope to export to some of our institutional clients with who we are at different stage of negotiations and QC approvals.

I was trying to get because of just see the impact of additional quota because of export. Or will this be run rate for next quarter also as a sales volume? So from that point, I was trying to understand.

So the quota that we have sold, we will continue to get the additional release on account of the sugar that got exported out of our quota. So we expect additional 15,000 tonnes of sugar -- [ 1,000 ] tonnes to [ 1,500 ] tonnes of sugar to be coming into our releases on account of the quota sale.

And what we have seen the significant impact in the recovery, how are the early signs in terms of varietal replacement or probably coming back to the normalizing of the recovery rate in the coming cycle? If you can give some feedback on that?

So see, varietal replacement is going on at full speed. So the tune, of course, there will be more 238, but I think we do hope that the most interested part of 238 would have been uprooted. On the plant cane, from our perspective, a sizable at least about 30% or 35% of the variety has been replaced this year. And we continue to work hard to maximize productivity and recovery by managing both red rot and pest. So fingers crossed, we hope to come back with a stronger recovery in the coming years.

And with a view to increasing the sugar prices, how is the outlook on ethanol expected in terms of coming season? So we'll try to maximize it or still probably think since sugar is giving better profit, how that ethanol volumes will pick up in coming season? And situation from the grain to power that dual feed also, if you can give some outlook?

Vikram, yes, so like it's an interesting -- great question because our grain plant is pretty much ready for operation. We have got the call -- the latest tender with the OMC is released with FCI rice. We have about 25.5 lakh liters, which we will be supplying from our grain ethanol plant. In the coming year, we do anticipate to be using at least 30% or 25% to 30% of our capacity -- distillery capacity to supply ethanol with grain. We don't anticipate at this point of time, I mean, it's too early to say what the final pricing will be. But probably if the current trend continues, we will not be diverting sugar into syrup. It could be a combination of B and C, but let's see how the -- what are the prices for the coming year.

I think just last, I think, because FRP for cane has been increased, but I think for us, SAP is more important. So till the SAP is announced, I think we can see -- or is it like a similar increase we can see in SAP also, how we are factoring that? And what is the -- we have really failed to understand that ethanol price has not been revised for 2 years. But what is the government thought process for not increasing it or even for MSP also?

We hope that what you say, the government will also listen to you. We have been pursuing them aggressively both on the account of sugar prices and ethanol prices. So I think the export decision was in the right direction. The government did feel that the prices needed to correct to get the industry back in its proper health. And hopefully, the same thought process will prevail when the time comes to refixing the ethanol prices. But I'm sorry, I can't give you any comment on government thinking.

But industry as in, for UP is prepared…

I'm sorry to interrupt you, sir, Mr. Suryavanshi, please rejoin the queue for follow-up questions. We have others waiting, sir. [Operator Instructions] The next question is from the line of Nitin Awasthi from InCred.

So as I was asking earlier, so we would be having around 4% of the whole industry market share. However, this liquor that we're selling is mainly to meet our levy obligation. So profitability is not something that is looked at in this whole pie. Is that understanding correct?

I think now we've reached a stage in the short span of 2 years where we are going to be selling, now, at the current run rate, we should be selling beyond our levy obligation. In fact, we have now started buying levy molasses. We have distillery capacity. So we do hope this will help enhance both -- will also help towards augmenting the profitability in the coming years.

So this is where I was getting at. So the current year, we were basically close to our levy quota. And now we have expanded our capacities. We are at 8 million cases capacity, which is currently up and running, if I'm not wrong.