Key highlights from Magadh Sugar & Energy Ltd (MAGADSUGAR) Q1 FY25 Earnings Concall
- Sugar Production
- ISMA reported sugar production reaching approximately 314 lakh tons.
- Final net sugar production anticipated to be near 320 lakh tons.
- Increase in number of operating factories to 516, up from 460 last year.
- Projected closing stock of 91 lakh tonnes by September 30, 2024.
- Expansion Plans
- Increasing crushing capacity at Narkatiaganj Unit from 7500 TCD to 10,000 TCD.
- Implementing innovative steam saving measures to enhance efficiency and productivity.
- Converting Sidhwalia Distillery to a multi-fit distillery by adding grain attachment.
- Financial Performance
- Revenue from operations for 1Q stood at INR288 crores, down from INR299 crores last year.
- EBITDA increased to INR81 crores from INR69 crores in the previous year.
- Full-year consolidated revenue reached INR1,098 crores, up from INR955 crores last year.
- PAT for the full year significantly improved to INR177 crores from INR50 crores in the previous year.
- The increase in EBITDA was attributed to higher sugar realization and increased sales volumes in both sugar and ethanol.
- Ethanol Production
- Total ethanol production for the full year reached 498 lakh liters, up from 393 lakh liters in the previous year.
- Ethanol sales increased to 467 lakh liters from 399 lakh liters in the corresponding year.
- Average realization for ethanol stood at 60.14 per liter, slightly down from 60.76 per liter in the previous year.
- Crushing and Sugarcane
- The company completed the 2023-2024 sugar season with crushing of around 2.37 crore.
- This represents an increase of 4% to 5% compared to the previous year’s 2.28 crore.
- The company is replacing the 0238 variety due to infestation with red rot.
- New promising varieties like CO-0118 and CO-9301 are being introduced.
- The goal is to have no single variety exceed 40% of the total crop.
- Capex Plans
- The company is undertaking two major capital expenditure projects.
- At Narkatiaganj, crushing capacity is being increased from 7,500 to 10,000 TCD.
- This project will cost INR141 crore and is expected to generate an EBITDA of at least 25%.
- The Sidhwalia distillery is being converted to a multi-feed facility to address ethanol production challenges.
- The multi-feed capability will allow the use of maize and rice in addition to molasses.
- These projects aim to increase efficiency, production capacity, and flexibility in ethanol production.
- Global Sugar Market
- Brazil is expected to produce 3.57 million metric tons of sugar next year, up from 3.49 million metric tons last year.
- White sugar prices in the London market are hovering around 570.
- Raw sugar prices have come down to around 19.5.
- No substantial downward movement is expected from these prices.
- Cane Pricing
- The cane cost for the company was INR353 last year.
- In Bihar, sugar industry players collectively decide cane prices with the government for the upcoming season.
- Current prices are INR335 for general variety and INR355 for early variety in Bihar.
- Comparatively, the price in Uttar Pradesh is INR370.
- Multi-feed Distillery
- The company is converting its Sidhwalia distillery to a multi-feed facility at a cost of INR32 crores.
- This conversion will allow the use of various grains, including maize and rice, in addition to molasses.
- The daily requirement for grain is around 7,800 metric tons.
- Maize availability in the surrounding area (Samastipur, Begusarai, Khagaria districts) is approximately one lakh metric tons.
- Cane Availability
- The company crushed 237 lakh quintals last sugar season and has the potential to reach 280 lakh quintals.
- The company has not yet reached saturation point in cane availability.
- Increasing the processing capacity at Narkatiaganj is expected to boost crushing by 28% to 29%.
- The maximum crushing days range from 140 to 150, with one unit operating up to 150 days.
- No significant threat from competitive crops in Bihar, with maize being used as an intercrop with sugarcane in some areas.
- Power Generation Capacity
- The company has a total power capacity of 38 megawatts.
- 22 megawatts of the 38 megawatts is surplus or sellable capacity.
- The power generation primarily runs for 140 days during the sugar season.
- At the Sidhwalia unit, power generation can extend for an additional 7 to 15 days beyond the regular season.
- Future Production Strategy
- The company would prefer to use B-heavy molasses as the first choice for ethanol production.
- The ideal mix could be around 90% B-heavy molasses and 10% C-heavy molasses.
- However, the decision will depend on factors such as cane cost, ethanol pricing, and sugar prices.
- The company will evaluate which product (sugar or ethanol) is more beneficial based on market conditions and government pricing policies.
- There is an expectation that the government may revise ethanol pricing policies after the elections.