Balrampur Chini Mills Ltd (NSE: BALRAMCHIN) Q3 2025 Earnings Call dated Feb. 10, 2025
Corporate Participants:
Jenny Rose Kunnappally — Investor Relations
Vivek Saraogi — Chairman and Managing Director
Avantika Saraogi — Executive Director
Pramod Patwari — Chief Financial Officer
Unidentified Speaker
Analysts:
Sanjay Manyal — Analyst
Vikram Suryavanshi — Analyst
Shailesh kanani — Analyst
Deepak — Analyst
Rajesh Majumdar — Analyst
Krutika Vispute — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Chini Mills Limited’s Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms Jenny Rose from CDR India. Thank you, and over to you, ma’am.
Jenny Rose Kunnappally — Investor Relations
Good afternoon, everyone, and thank you for joining us on Balrampur Genie Mills Q3 and 9M FY ’25 Results Conference Call. We have with us today Mr Vivek Saragi, Chairman and Managing Director of Mills; Ms Avantika Saragi, Executive Director; and Mr Pramod Patwari, Chief Financial Officer of the company. We would now 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 Saragi to make his opening remarks. Over to you, sir.
Vivek Saraogi — Chairman and Managing Director
Okay. Thank you and good afternoon, everyone, and thank you for joining us on Geni’s Q3 and nine months FY ’25 earnings call. I trust all of you who had the opportunity to go through our results presentation, providing details of our operational and financial performance. I will initiate the call with an update on current developments from the sector, followed by our company’s key highlights for the period under review.
According to latest ISMA estimates, Indian sugar production net of diversion to ethanol is in the region of 272 lakh tonnes. This is down from 20 lakh tonnes, reflecting a 15% decline. Sugar diversion is expected to be at 37.5 lakh tons as against 20 lakh tons last year. The drop-in sugar production is primarily due to lower cane yields across all the three largest producing states, UP, Maharashtra and. UP’s production is expected to fall from — fall from 10.4 million to 9.3 million, primarily due to disease and ongoing red rot and ongoing varietal replacement. Maharashtra is likely to produce 8.5 lakh tons, a sharp decline of 11 lakh tonnes and Karnatakra is expected to see drop-in production from 52 lakh tons to 45 lakh ton.
Despite this decline in-production, overall sugar availability seems to be sufficient. We began with an opening stock of 80 lakh tonnes. Total supply for the current-season is expected to be 352, that is 272 production plus 80 opening is 352 and with consumption estimated at 280 lakh tonnes, an export of 10 lakh tons. We deduct to 90 lakh tons from 352, the closing stock is expected to be around 62 lakh tonnes by the end-of-the season. The government’s approval of 1 million tonnes has provided some relief to the millers, also help by helping strengthen the domestic price, which are now expected to remain robust going ahead. Current expected price in UP and our mills are prevailing upwards of INR41.
On the ethanol front, there has been a disappointment the tender was floated as usual in tender came in October, November, right? Yeah. And it also in the previous years has come out earlier and a price revision has followed. However, the recent keeping the price same or no hikes has been very disappointing. It is a deviation from the past practice of the linking ethanol hike in FRP and we’ve taken that up very strongly with the government. This will make the diversion unattractive and we will be taking it up very strongly from the industry association. And this we believe will put the government program in jeopardy, our Honorable Prime Minister even in the budget session, has taken credit and has sort of packed the ethanol program for having saved a lot of foreign-exchange. We also believe that is true, but going ahead, we will be discussing with the government on this.
Coming to our business performance, sugar segment delivered strong results supported by improved margin. The segment however, faced challenges due to lower recovery in juice impacted by reduced coal. The Fed recovery is now showing an uptrend. Cane crushing during the quarter was up by 10.4%. However, recovery was down by 48 bps for our company owing to adverse weather conditions.
So I’ll just now put on this performance into perspective, our performance and our expectation. And let me put a disclaimer by saying this is expectation, but a far more intelligent guess today than we would have been guessing a month back. So our company is now picking-up, which means that our decline of 48 bps will reduce as the season ends. In many of our factories on-date in — actually two of our factories on-date, we have crossed last year’s recovery on-date, that’s a very encouraging sign. We hope that our drop-in production should be too early, but it should not be more than 3% as far as we are seeing our figures today.
And as you are aware, we have shown a increased rushing in all our units. Our drop, therefore, even if you go and expect, let’s say, a 0.4% drop and our 0.35, 0.4% belong, except Dalmia whose recovery is I think a marginally lower than last year. The others are way, way lower than us. So we also then would like to put this in perspective of our juice production. Initial starting, the recovery was low, which had picked-up. So the production in the juice in the coming sort of quarters will show a marked improvement and as will recovery.
Our PLA project remains on-schedule with government’s bioplastic policy further enhancing its viability. The Board has approved a capex of INR2,000 crore previously and those were figures we had done without the detailed engineering, which did take time. So now based on entire capex, OpEx review our project cost stands at 2850 gross or INR1750 net, which is expecting capital subsidy of around INR1,100 crores. This higher investment will lead to an enhancement of capacity from 75,000 to 80,000 tonnes and a much lower conversion cost than this out.
So we have our advantages now having mapped everything globally. Our OpEx would be very comparatively, very competitive. I would hazard to say it would be the lowest based on our reconfiguration of plant and based on the fact that our bagas, etc is all our own. We have reduced power consumptions and added some equipments to lower all this. So we feel very confident on that side.
Capex also, if we globally benchmark, we’d be lowest per ton by far. Our project cost is estimated to be funded through a long-term debt of INR1,650 crores and INR1,200 crores from internal accrual. At full capacity, the project is expected to generate INR2,000 crores of revenue with EBITDA margins. Too early, but whatever we have seen, we are targeting 35% plus. Commissioning schedule remains to be in October ’26. As we move forward, our focus remains on driving operational efficiency, strengthening farmer relationships and navigating the challenges — the new sector we have undertaken. So we believe that our integrated business model commitment to sustainability and strategic expansion to bioplastic will strengthen our position and long-term value-creation.
I’d now like to hand over the floor to. So, you want to talk now or take the questions and then talk.
Avantika Saraogi — Executive Director
I think — I think Papa has covered the PLA and the sugarcane segment well. I think I’ll wait for questions to up.
Vivek Saraogi — Chairman and Managing Director
Ramond on to you.
Pramod Patwari — Chief Financial Officer
Yeah. Thank you, sir. Good afternoon, everyone. I hope all you had the opportunity to go to the detailed presentation that has been shared. So I would request the moderator to open the forum for the questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Sanjay Manyal from DAM Capital. Please go-ahead.
Sanjay Manyal
Yeah. Hi, sir. One thing about the PLA project. So you mentioned that INR2850 now the capex cost is almost like 40% up. And what the capacity increase you have taken is from 75,000 to 80,000 tons. So if you can just elaborate a bit of detail what exactly is the increase in the — why the increase in the capex is so high, almost 35%, 40% kind of?
Avantika Saraogi
Hi, thank you so much for the question. I just want to sort of bring it a bit into perspective. That was a — the capex which was envisaged then was a go-ahead for the project. So it was at a — just post a feasibility study level of capex, which is considered a level five capex estimate, which can have a variation of plus, minus 50%. And now the level that we are at is a Class II estimate, where we should not be more than a 10% variation and hopefully nothing on the upside at all. So I just want to bring into perspective, once engineering happens, once certain local factors are considered into the situation, which you cannot consider before, then things do tend to change. It’s — we’ve been able to optimize also more than we ever imagined we could. So a lot of things have gone very well. Yes, that has increased the cost, but believe me, it’s well worth every penny.
Vivek Saraogi
And just to tell you, we have put in very stringent penalties on the suppliers and that is also added to the cost a bit, but it gives us a lot of safety in our mind. So it’s on quality and achieving the targeted production. So that gives us a lot more safety in our mind undertaking a new venture.
Sanjay Manyal
Right, right, sir. And in the — from the subsidy point-of-view, other than the capital subsidy, do we have anything on the operational side?
Vivek Saraogi
Yeah. So I — we’ve seen the subsidy, but I’ll clarify. So 50% of ECI is the capital subsidy that is called eligible capital investment, which might includes — exclude some things like infrastructure costs, water, etc. There is a 5% interest, which means assume we borrowed at 8%, we net pay three, we get five from the government, 5%. And there is an SEST refund, I from a ticket level.
Avantika Saraogi
And a net SG&T reimbursement, so for every — for the amount of amount of products sold within UP, the net of GST that we would accrue there, we would get it reimbursed up to 200% of capex. That is the rule. The capital — the GSE stands at 18% total, so 9% is on.
Vivek Saraogi
Yeah, but it’s a net refund.
Avantika Saraogi
Net. Of course, right.
Sanjay Manyal
Yeah. So this 35% EBITDA margin is considering these subsidies, all these subsidies or this without subsidies.
Vivek Saraogi
Let’s let clarify.
Pramod Patwari
So as far as 35% margin is concerned, surely we have taken into consideration the capital subsidy and the interest. But SGST net reimbursement as of now has not been factored into.
Sanjay Manyal
Sure, sure, sir. Fact, sir. Sir, one thing on the recovery part, a 48 basis-point lower recovery. So as you, I think mentioned that you are now better with the plant cane, can we assume that overall for the crushing season, it will be a 40 basis-point kind of loss and — if I’m not wrong, you have mentioned 3% decline in the crushing number or the production number?
Vivek Saraogi
So our crushing number would be 3% lower is our estimate and yes, 0.4%. Right, right. And with the — just very good.
Sanjay Manyal
Right, sir. Right. So on the — just last one on the part, with the almost 7%, 8% kind of increase in SAP last year and so for two consecutive year, we have seen an increase in the cost of sugarcane and lower recovery and the the prices have not increased, ethanol prices. Can we like what would be the impact on the margin from the ethanol perspective. Earlier, we were making a pretty good INR7, INR8 kind of a margin, I believe in the juice part. Now what would be the — what would be the economics over here?
Vivek Saraogi
Ramar, would you like to answer that?
Pramod Patwari
Yes, sir. So as this ethanol is concerned, as sir was also mentioning, there is a lower recovery from the cane, which is now showing an improving trend. In-spite of that, we don’t see a good margin coming out-of-the juice-based ethanol. Even if we take into consideration the full years of operation. Distillery margin will surely be at — will be muted in comparison to last year for previous years because of the increase in the raw-material cost and no big increase in the realization. In addition to the conversion — in addition to the raw-material cost, there is an inflationary pressure also on the conversion cost.
Vivek Saraogi
Okay. But it will look a lot better than what we are seeing now. Right?
Pramod Patwari
Yes, yes. The reason for loss in this quarter is due to the fact that we had very little of feedstock available as of 30th September 2024, that can be validated once you see the presentation, what was the corresponding number on 30th September 2023? So there was hardly any stock to produce ethanol, hardly any finished goods of ethanol to sell-in the December quarter. And in the last year, as because there was restriction in-production, we migrated from juice and B2C and we had some opening stock of B ethanol, which resulted profit. This year, there was hardly any stock of BAV ethanol. So there was no sale of ethanol in the current quarter.
Sanjay Manyal
Perfect, sir. Thank you. Thank you very much. I’ll come back-in queue.
Pramod Patwari
Thank you.
Vivek Saraogi
Thank you.
Operator
Thank you. The next question is from Vikram Suryavanshi from PhillipCapital India. Please go-ahead.
Vikram Suryavanshi
Yeah. Good afternoon, sir. What is export quota allocation we have got? And if you can share some what are the export prices most — some of the deals are negotiated in the industry.
Vivek Saraogi
Remote.
Pramod Patwari
So export quota for other was around 31,000 tonnes. We have spreaded our export quota and we retain our domestic release. So we will be getting the release of this 30,000 tonnes over a period of five months beginning from March to upside in the domestic.
Vikram Suryavanshi
Okay. So we have traded for the quantity, but price is not locked. Is that right?
Pramod Patwari
No, no, we have traded our license. So we have sold our INR9,000 crores this.
Vikram Suryavanshi
Okay, understood. Understood. And basically for the outlook on the ethanol blending as sir has also given some idea, but what would be our production estimate given I think and juice route may not be that attractive considering the sugar price increase in the domestic market. So will it significantly impact the full-year volume for distillery and how is the utilization for even grain to ethanol for us?
Vivek Saraogi
So, I’ll take that. Sure. So there are three parts to this conversation. One, as you know what has happened that we have said it. So how we have reacted, we have converted two of our units from B-heavy to C-heavy immediately after the zero increase. And post the export sugar production will become attractive. Two, we — in our mixture, we have five refineries out of our 10 factories. So refinery is seeing good demand. So we feel with this conversion, we’ll make more sugar and therefore, our realization — blended realization should be very good having 500 refinities.
Juice, however, we would continue as we have tendered the juice quantity. BAV will convert to see. And in our factories, we have spent the capex. So just assuming next year, we are sort of feeling that the economics is for producing more CAV, all our 10 plants can produce CAV throughout technically. C or B, we can produce everywhere. Correct. So in case, we have fungible capacity going ahead.
Vikram Suryavanshi
So in case BAV, we were not able to fulfill quantity, can we convert that into CAV or is there any penalty?
Vivek Saraogi
No, we have converted. I told you in two factories, we could be converted into CAV. Okay.
Vikram Suryavanshi
I was talking about from OMC side that whatever quantity we have committed?
Vivek Saraogi
That’s all for me. Okay.
Vikram Suryavanshi
I was actually looking from that side. And just one point because we have seen the recovery drop and some of the meals have seen the cost of production have gone up significantly, while Q3 realization were not that high. So was there any inventory loss we have accounted from the inventory or for us it was not the case?
Vivek Saraogi
Sam. Samant will take that?
Pramod Patwari
Yes. Yeah. So your question is with respect to inventory?
Vikram Suryavanshi
Was that an inventory loss we have accounted or write-off we have taken for this quarter?
Pramod Patwari
Yeah., do you have the figure?
Unidentified Speaker
So yeah, for the quarter, our sugar costing is 4120 and we have valued the sugar inventory at 3826. So this is the phenomenon every year because in Q3 we get 40 45 days of proceeds. So this cost really on a full-year basis will come down because next quarter we will have 90 days of proceeds.
Vivek Saraogi
So just to summarize, Pravant, what is the inventory we are carrying forward at what cost?
Unidentified Speaker
We are carrying for about 31.6 lakh of inventories to the valuation of 38, right.
Vivek Saraogi
So we are carrying for 31 lakh plus bags at 38% currently selling above 41 25 lakh yeah.
Vikram Suryavanshi
Right, sir. Yeah. And last question is that this non-238 variety in terms of variety replacement, how is that share right now? And does that recovery decline also has some impact of this migration to new variety or it is like a purely on and other parameters?
Avantika Saraogi
Yeah. So we’ve already reduced our percentage over the last three years considerably. So our percentage this year for 28 should be something between 10% to 15% in crush and the recovery drop is not with respect to the varietals exactly, it’s more the weather phenomenon. I also want to say that last year our recovery was actually much higher than we had envisaged that it would — it was very strong. So if you look at absolute terms, our recovery in comparison to the rest of the state, we are actually very strong.
Vivek Saraogi
So last year C basis was INR1,75, which in itself was very good. And there has been a drop because of the weather conditions. So we would still be, let’s say, if we are assuming 0.4 drop, we’d still be at 11.35, which from perspective is looking quite over and it is a fact. But from the state perspective, points still look very good except.
Vikram Suryavanshi
Definitely, sir. No, we really acknowledge our can development efforts and we clearly see our recoveries are much better and even whole cane availability is much better than the state what we are seeing numbers are coming. So thank you very much, yeah.
Vivek Saraogi
Thank you.
Pramod Patwari
Thank you.
Operator
Thank you. The next question is from Shailesh Khanani from Centrum Broking. Please go-ahead.
Shailesh kanani
Good afternoon, everyone, and thanks for giving me the opportunity. Sir, my first question was regarding to something mentioned in the PPT about PLA wherein it has stated that the imports for analysis and product development by compounders and inverters have already begun. Additionally, we have also mentioned that we will be exploring alternative feedstocks such as rice and Quant for future expansion. Could you elaborate and provide more details on this, sir?
Avantika Saraogi
Yes. So basically we have started getting — seeding the market activities. So we have started importing PLA the kind exactly that we will be making in order to work with the downstream industry, which is the compounders and converters and also brand owners and the whole value chain who would then be using those products to start developing that value chain from our end. That is what it basically means. So in — if you want a more detailed thing, we are getting PLA. We are going to give it to different people who are going to make different products from it, prototyping and actually seeing whether it is working in their applications. So it does not — we don’t lose that time after we are producing. Although all that will be taken care of much before. That’s the first thing.
The second thing is feedstock flexibility, which we will explore for the future. It’s a really actually very rudimentary thing. It’s like you can produce produce ethanol from rice or sugar. It’s very much similar to that. At the fermentation level, everything becomes the same in any case. So it’s just a preparation of the raw-material which changes, which is not rocket science. It’s fairly simple.
Shailesh kanani
Yeah. Okay. So that’s helpful. So the way — so the way I understand is that, so our facility, PLA facility would be fungible and only the pre-treatment of the feedstock would be something which would be needed and the rest part of converting fermentation and lactic acid to PLA is something which can be done from the current facility only. Is that understanding right?
Avantika Saraogi
Absolutely.
Vivek Saraogi
And the fact that we are importing PLA compounding, so we want to — and we have budgeted for marketing and development expense in our project cost is we want to have our sort of facility sold-out is our target before we begin. So that there’s a lot of work going on all the fronts, technology, marketing, etc., government, engagement, etc.
Shailesh kanani
So that’s quite useful. Thanks for that explanation. Sir, I wanted to understand in your opening remarks, you also mentioned about that the facility would be starting somewhere in the — in the period of October 2026, that is second-half FY ’27. So I just wanted to understand one thing. In terms of certifications or approval for the product and from regulatory — regulatory from both domestic and international. Would there be any time lag or that is factored in the time-frame what we are giving for project?
Avantika Saraogi
It’s all factored in. It’s all factored in.
Shailesh kanani
Okay, great. So one thing on number map. We have also mentioned about INR2,000 crores revenue coming from the plant at optimal capacity. Okay, can you specify what is that number optimal capacity what we are factoring in?
Vivek Saraogi
80,000 tons
Shailesh kanani
100% that volume.
Vivek Saraogi
Okay. And why not?
Shailesh kanani
Yeah, yeah.
Avantika Saraogi
We guide ourselves on being able to run over the capacity which is rated. So we should — we are thinking that rated is in optimal.
Vivek Saraogi
So by the way, a lot of this business is linked to fermentation or big lot of it and that we run the best fermentation business by making ethanol from juice, the single plant in the country which makes no — not even one bag of sugar. So just we feel a little more confident than this.
Avantika Saraogi
And in fact, actually that is the place that determines your recovery, your conversion cost. That is the thing and that is the thing that —
Vivek Saraogi
Energy costs, lots of other things. But yeah, certainly, yeah.
Shailesh kanani
Yeah. Sir, just last question from my side. In terms of capex, can you — can you give some indicated numbers — indicative numbers about FY ’26 and ’27 and also the current consolidated in divisions?
Vivek Saraogi
Remote?
Pramod Patwari
Yeah. So the long-term, look, we borrowed around INR325 crores for the purpose of PLA within December and our existing long-term debt is INR200 crores. Out of this INR200 crores, INR22 odd crores will be repaid within March ’25, thereafter INR89 crores is payable on an annual basis in next two years. Short-term loan is fully backed by inventory. The figure as of now is net of — net of cash-and-cash equivalent equivalents should be around INR1,200 crores, INR1,200 crores to INR1,300 crores.
Shailesh kanani
And sir, in terms of capex figure for ’26 and ’27, how can we factor-in that in our models? So I’ve done the whole project cost, but just for cash-flow perspective in.
Pramod Patwari
So by March ’25, I think we have already spent INR700 crores, right? The INR2850, we will retain around 10% to 15% that will be paid after the commencement of the project. And that the rest is we will have to just proportionate — proportionate exposure. It’s difficult to give you month.
Vivek Saraogi
So you know it’s not spend machine is coming orders that probably next quarter, we’ll have a better visibility.
Avantika Saraogi
And it’s a milestone achievement milestone achievements.
Shailesh kanani
Right, right. That’s quite helpful. That’s quite helpful, sir.
Vivek Saraogi
As we said, we put in very stringent penalties and payment conditions on the suppliers. International.
Shailesh kanani
Fair, sir. Thanks a lot, sir. That’s all from my side. Quite. Insightful and best of luck, sir. Thank you.
Vivek Saraogi
Thank you.
Operator
Thank. The next question is from Priyanka Dingra from SBI Mutual Fund. Please go-ahead. Priyanka, you may go-ahead with your question. Yes, there seems to be no response from the line of Priyanka. We’ll move to the next question. Next question is from Deepak from Sundera Mutual Fund. Please go-ahead.
Deepak
Yeah, am I audible? Yes. Yeah. Sir, first, this cost escalation of INR850 crores. I just want to understand what exactly is it? Meaning is it more to do with plant and machineries or is it something else? Because in your PPT, you have mentioned that this higher investment will lead to a lower conversion cost. So is there some kind of backward integration we are doing? Where exactly this cost escalation is coming from?
Vivek Saraogi
Okay, let’s assume capacity is going up by 10%, so factor-in something there. The rest is to put up machines, which can lower your energy cost and lower your chemical cost and your input cost. Input material require consumption. So these are complex engineerings, which we hired the best brains globally and we saw that we could have a big — quite good saving in the — all the conversion costs, as I mentioned, chemical cost, energy cost and raw-material cost. Based on that, certain reconfigurations were done. And therefore this is the result.
Deepak
Okay, sir. And is there any possibility that this cost may further go up as we do more of engineering studies.
Avantika Saraogi
No,
Vivek Saraogi
The ordering has all been done largely. All the big have been ordered.
Avantika Saraogi
There is no space for it to go up if anything hits.
Vivek Saraogi
Let’s not say that. So we — it’s a an intelligently done exercise with all 90% orders in-place.
Deepak
Okay. So that won’t be that material even if some little bit of capex inflation happened.
Vivek Saraogi
Yeah, definitely. I mean 15 — I mean, yeah, that’s all you can say right now.
Deepak
Okay. And from end-use application point-of-view means are we still in the R&D process or are we thought about what could be the end-use application is what — what kind of product that end-consumer will be making of this PLA pellets whom we’ll be supplying to? Is it still in R&D stage or there is some understanding of that?
Avantika Saraogi
So basically the SUP ban is one of the main kickers for us because now those products are very easily made with PLA. We are looking at all the applications and it’s not an R&D in the sense that everything is possible. We are just sort of working with multiple people. If you ask me who exactly are we selling to, I don’t know, but I’m working with 10 people on 10 applications to see which one goes, you know which one gives us the highest revenue actually?
Deepak
Okay. And let’s say, if I have to compare, if I’m end-consumer, I would have to look at the cost also. What could be a cost through a PLA pellet versus, let’s say, and normal plastic pellets. So are we cost-competitive? I mean to say, let’s say, by the time we commercialize this, how will the end-consumer look at it means because you would be worried about the cost, right?
Avantika Saraogi
Okay. So firstly, the end — let’s talk about the end-consumer first and let’s pick-up like a product like, let’s say, water bottles just because everybody knows what —
Vivek Saraogi
A water bottle.
Avantika Saraogi
Yeah. So hypothetically, if only the cap of the water bottle is being made from PLA and there’s some 50 pes difference, I don’t think that matters to the end-consumer. We are very, very conscious of Indian consumer being price-sensitive. And we are only targeting those applications wherein the first is easily borne or absorbed either through the value chain or at the end, it is not going to a person who is — who cannot afford it, 50 pesa, one rupee here and there, we are looking at those kind of applications itself. So not the ones which will hurt the common man.
Deepak
And so that is. Just to clarify, I was not asking from the from the point-of-view of the end-consumer like you and me, but the people who are making it like — the people who are manufacturing the bottles or people who are making the plastic bags management.
Avantika Saraogi
So similarly, look, everybody puts in a margin when they are doing some work, right? So it is — we are looking at those where the cost can — where INR50 INR1 doesn’t matter even to the middle person in the value chain because at the end-of-the day, it’s the brand or the end-consumer who determines the procurement, right? That’s number-one.
Number two, if you’re asking me for a straight answer pellet to pellet cost, then a PLA cost almost double of a normal plastic. Now because of our optimizations and everything, let us see how — where we get to. But in my opinion, I’m not really looking at it being a challenge to be sold at the price that I would like.
Vivek Saraogi
So I’m just putting a few more clarifications right now right. One, if there is an SUP ban, let us say whatever, so we compete, we will very well compete with the alternate product. Let us say, it’s paper or glass, we’ll compete. We don’t need any help there.
Avantika Saraogi
Metal?
Vivek Saraogi
Yeah, or metal. Three, there are many applications of just coatings. So coating is not just changing the game. So to sell-out 75,000 tons is — doesn’t seem to challenge at all.
Avantika Saraogi
So we envisage also the usage of plastic in India to be around 14 million to 15 million order is nearly, I would say 45 odd percent of that is the SUP. So look, it’s really not — 75,000 tons, not even a drop-in that ocean.
Deepak
No, no, that’s fine. The addressable market is fairly large, that I understand and opportunity is also big and we have a good execution track-record. I was just wondering about the volume offtake, but fair, you have answered whatever could be answered at this point of time. Okay.
Vivek Saraogi
And coating demand would be huge. Coating means just coating the, let’s just say tray. So just putting that you can’t imagine how much offtake there is. And that doesn’t change again.
Deepak
Okay. And sir, few questions I had on the financials to promote, sir. Sir, you mentioned that this 35% EBITDA margin includes the subsidy and interest rates some mention also, but I was just wondering how is that possible from accounting perspective because all the grant incomes usually falls in other income, which is below EBITDA. So is the interest expense?
Pramod Patwari
Yeah. So you are right. PBTA, EBIT and EBITDA will be more or less similar in this case. So why I mentioned this because up to the date of commencement, we will be capitalizing the interest. Similarly, the depreciation as and when we capitalized will be computed on the basis of net figure only. So when we talk of cost of production, which includes depreciation also. So from that perspective, I mentioned that it is including subsidies. But you are right, at EBITDA level, it would make any difference.
Deepak
So just to clarify, so excluding subsidy and interest-rate means what is our actual EBITDA margin, which we can do at optimal level.
Pramod Patwari
So this is our actual EBITDA margin which we are targeting because depreciation and interest post capitalization will be below EBITDA.
Deepak
Okay, okay. Okay. So core EBITDA margin remains at 35%.
Pramod Patwari
It would be right.
Deepak
Okay. And sir, any color, what could be the gross margins here?
Pramod Patwari
This is gross margin.
Deepak
At gross level, how much can we make at EBITDA, it is around 35% at gross margin level, what could be the range.
Pramod Patwari
Between revenue minus raw-material only.
Vivek Saraogi
So let us do some more work. We have done a lot of work before we let these figures out. That’s why we’ve taken so much time. So maybe give us six months more to get you more accurate. Let us get more-and-more accurate. So we are feeling and understanding that as we are proceeding, we are getting more-and-more confident on each aspect of the business, be it marketing, be it technology, be it energy consumption, be it chemical consumption.
So we are feeling more-and-more confident as we are proceeding. See, at the end-of-the day, it is something new. There is going to be the first integrated plant worldwide. The advantage is your sugar and bagas is going through a conveyor. World over, they are getting sugar from somewhere, something from somewhere, gas, etc., which is going to cost far, far more. So we are hoping to be very, very competitive.
Deepak
Okay. Got it, sir. And one question on this interest-rate summation. So you have clarified in your opening remark also that if we have an 8% interest and 5% summation for the net interest cost for us 3%. So from our modeling perspective means what shall one assume that on an ongoing basis in FY ’26, ’27, however, the future, what could be our net interest cost?
Pramod Patwari
So by the time project comes, our existing long-term loans will be paid-off.
Deepak
So I’m asking about the cost of debt.
Pramod Patwari
That’s what I’m saying. Then let us assume we draw completely before the commencement of the project. So the net interest charge on the PLA account will be 3%. Our existing loans are variable, so with a drop-in the repo rate, the cost has come down by 25 basis-point on some portion of the loan. Okay. Is that clear?
Deepak
Yes, it’s clear. And on the tax front, is there any advantage we have or is it the general corporate tax-rate ex of grants?
Pramod Patwari
And because we are of the company, it is as usual income tax rates.
Deepak
Okay. Thank you so much, sir for all the clarifications.
Vivek Saraogi
Thank you.
Operator
Thank you. So before we take the next question, a reminder to participants that you may press star and one to join the question queue. Next question is from Rajesh Majumdar from B&K Securities. Please go-ahead.
Rajesh Majumdar
Yeah, good afternoon, sir. So myself, I had a couple of questions on the sugar-ethanol equation. So my first question on the sugar quotas, you’ve been selling more than the quota allocated to you. It is actually two-parts. The second part is that if we go by this trend and the loss of manufacturing of various other mills in the state, will we be able to go back to-1 million ton plus kind of sales this year?
Pramod Patwari
May I answer this?
Vivek Saraogi
Yeah, please.
Pramod Patwari
So as far as the sugar production is concerned for this year the sugar season looks like we will be doing around 9.4 to 9.5 tons.
Rajesh Majumdar
Okay and what about the sales?
Pramod Patwari
Sales per one?
Unidentified Speaker
I 7.4 lac is what we have done in 9, nine months.
Rajesh Majumdar
Yeah, that’s correct.
Pramod Patwari
Best will depend upon releases.
Rajesh Majumdar
So my question was that do you hope to get additional sales better than your quotas and reach 1 million tonnes this year? That’s what the question was actually, sir.
Pramod Patwari
That is difficult to tell at this point in time. But as far as export release is concerned, we will start getting this 31,000 quota allocated over a period of five months beginning from March. So 6,000 tonnes every month will be an additional impetus.
Rajesh Majumdar
Okay. And also since you’re going to be making more sea-heavy ethanol, will we see a reduction in the overall ethanol volumes compared to last year?
Pramod Patwari
For FY ’25, it looks like alcohol volume will be in the region of around 21.5 crores to INR22.5 crores, okay, including E&A and everything.
Rajesh Majumdar
Okay. So that’s down from 28, right?
Pramod Patwari
No, earlier also we gave guidance around INR22 crore to 23 crores liter.
Rajesh Majumdar
Yeah. And what would be the impact of FCI rice and all these things? So what was the grain mix till-date and what would the FCI new tender kind of, you know, contribute to our overall ethanol mix.
Pramod Patwari
So I don’t think you know is viable option. So we will. We will be using the maj as well as the open-market rice.
Vivek Saraogi
So mostly promote, it seems we will be using May,
Pramod Patwari
May and our target is around INR4 crores liter during this —
Vivek Saraogi
That’s what we for from grain.
Rajesh Majumdar
And for the ethanol year ’24, ’25, could you guide any number on that on the green?
Pramod Patwari
Yeah, that is that target is for INR24 crores.
Rajesh Majumdar
Year ’25. Okay. Okay.
Vivek Saraogi
No, you think total ethanol, I think
Pramod Patwari
No March ’25 volume target around INR21.5 crores to INR22 crores for the ethanol production out of major will be around INR4 crores suitage.
Rajesh Majumdar
And for the overall ethanol for EY ’25,
Pramod Patwari
That permanent.
Unidentified Speaker
Yeah. So total is around 28 considering towards ENA. So around 25 will be the for the FY year ’24.
Rajesh Majumdar
So that INR3 crore year for yen, is it?
Unidentified Speaker
Yes, yes.
Pramod Patwari
So that INR25 will include made conduction also.
Rajesh Majumdar
Right. And sir, if I could ask one question on the recovery. So we’ve seen the recoveries again falling this year to, 11 35 or whatever you’re targeting at. So if we look at the changeover in the varietal that we’ve been doing, when do we see that actually coming into our recoveries and benefiting us from which sugar year? Is it going to be next year or that also is not very clear right now?
Avantika Saraogi
So Rajesh ji, per se, last year recovery was quite up as compared to the year before that. So the varieties are definitely performing. It’s agro-climatic conditions which happen and some used to offer maybe some other changeovers which farmers do at a local level, but largely these are agro-climatic factors. I would not be surprised if next year the recovery would again be up. It just depends on things which are beyond control sometimes. It’s not the variety which is the problem for us. It might be for other sugar companies.
Rajesh Majumdar
Right. Thank you. Thank you.
Operator
Thank you. Next question is from Kritika Vispute from Tata PMS. Please go-ahead.
Krutika Vispute
Yeah, thanks for the opportunity. Most of my questions have been answered. Just one clarification, sir, you mentioned that you would shift most of the crushing towards sea heavy route. So just confirming on that, you know, be heavy would now be very negligible number going-forward now.
Vivek Saraogi
Two things. Already till-date, we have done maybe whatever, 60, 65 season over. We’ve just post the announcement of zero increase, we have shifted. So already, it’s not that we will be negligible and we’ve shifted in two units. So, it’s not going to be a big, big difference. But yes,
Krutika Vispute
Any guidance you can give in terms of how much would be the proportion going-forward in terms of how much goes towards sea heavy, be heavy and juice between these three?
Vivek Saraogi
We are — yeah, we’ll get back since it’s very unit-specific, we’ll get back on the order now.
Krutika Vispute
Okay, sure. Thank you. Thank you very much.
Operator
We’ll take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Vivek Saraogi
Thank you, everyone and we are always there to answer any more queries.
Pramod Patwari
Thank you.
Avantika Saraogi
Thank you so much. Thank you. Thank you.
Vivek Saraogi
Thank you, everyone. Thank you.
Operator
Thank you. On behalf of Balrampur Mills Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.