EID Parry (India) Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from EID Parry (India) Ltd (EIDPARRY) Q3 FY22 Earnings Concall

Q&A Highlights:

• Mayur Limon from Profit Mart Securities asked about the outlook for 4Q22. S Suresh MD replied that the Karnataka and Tamil Nadu plant should be crushing 5-10% better cane compared to the previous year. And the season in Karnataka is expected to last up to end of February. In Tamil Nadu and Andhra Pradesh, the season will go up to first week of April.

• Anupam Goswami from B&K Securities enquired about refinery profitability, which has stayed flat QtoQ. Suresh Kannan Director answered that in refinery segment, EIDPARRY had a couple of headwinds for 3Q22 in the form of inflation on the fuel as well as packaging material price. The inflation on the fuel side continues to be there in 4Q22. The company is looking at the ways to mitigate this impact by sourcing of raw sugar. On the demand side, it’s quite strong for refined sugar.

• Anupam Goswami from B&K Securities asked about the spreads. Suresh Kannan Director answered that looking on an Indian basis, EIDPARRY has spreads for immediate business in the region of around $50. But with the availability of Indian raw in terms of timing is not quite clear because the exports out of India may not be as high as what it was last year. However the parity in terms of Brazilian is not yet opened up.

• Anupam Goswami from B&K Securities asked about the recovery rate, if it’s net or gross and how much is diverted towards Ethanol and ENA and Etahnol breakup for 3Q. Sridhar A CFO said it’s a gross recovery that was mentioned. Ethanol volumes produced during 3Q22 was about 207 lakh liters versus last year of 102 lakh liters. And ENA for 3Q was around 45%.

• Anupam Goswami from B&K Securities also asked about good sugar margin and how sustainable it is going forward. S Suresh MD said that plants have been shifted to Karnataka to a location called Haliyal. The benefits will be in the form of better absorption in the fixed cost because the expansion is happening in the existing premise. So in terms of the cost, EIDPARRY should get better as this new line is going to produce to the fullest capacity.

• Gautam Dedhia from Nalanda Securities asked if there is any export subsidy that the company still has to receive from the government for previous years. Sridhar A CFO replied that at least 95% of the subsidies have already been collected. In the last few months majority of collection happened and the balance also should be received in about a week or 10 days’ time.

• Gautam Dedhia from Nalanda Securities asked about the retail branded sugar volume for this quarter compared to YonY. Sridhar A CFO answered that retail volume for the quarter was 55,000 metric tons YTD and about 19,000 metric tons for 3Q22 as against 15,600 metric tons for 3Q21.

• Gautam Dedhia from Nalanda Securities also asked about the general working capital cycle for branded sugar. Sridhar A CFO said that there is no major working capital requirement as the retail works on cash and carry concept except on institutional sales where there is a credit extended for a month.

• Gautam Dedhia from Nalanda Securities asked about any PLI happening on the nutraceuticals end. Srikanth Santhanam Business Head said that while the company has already invested a good amount of capital in its existing nutraceuticals business, at least in the near immediate future EIDPARRY is not contemplating going to government for any PLI on this.

• Kashyap Pujara from Broadview Research enquired about the breakup of debt in EID standalone and debt at refinery business. Sridhar A CFO replied that EID standalone long-term debt is about INR104 crores and short-term is INR202 crores as of Dec. 2021. For PSRIPL, the overall debt is about INR953 crores, which includes the long term loan of about INR200 crores and short-term of about INR100 crore given by EIDPARRY to PSRIPL. Therefore, totally there is a borrowing to the extent of about INR300 crores between EIDPARRY and PSRIPL.