Triveni Engineering & Industries Limited (NSE: TRIVENI) Q1 2026 Earnings Call dated Jul. 30, 2025
Corporate Participants:
Unidentified Speaker
Tarun Sawhney — Vice Chairman & Managing Director
Analysts:
Unidentified Participant
Rishab Barar — Analyst
Rehan Syed — Analyst
Sudarshan Padmanabhan — Analyst
Shailesh Kanani — Analyst
Rajesh Majumdar — Analyst
Abhisar Jain — Analyst
Nitin Awasthi — Analyst
Maulik Chaudhary — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Treveni Engineering and Industries Limited 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 Mr. Rishabh Bharar from CDR India. Thank you. And over to you, sir.
Rishab Barar — Analyst
Thank you. Good day everyone and a warm welcome to all of you participating in the Gravini Engineering and Industries Q1FY26 earnings conference call. We have with us today Mr. Tarun Soni, Vice Chairman and Managing Director, Mr. Suresh Taneja Group, CFO Mr. Sameer Sinha, CEO of Sugar Business Group, Mr. Rajiv Rajpal, CEO Power Transmission Business as well as other members of the senior management team. Before we begin, I would like to mention that some statements made in today’s discussion may be forward looking in nature and a statement to this effect has been included in the invite which was shared with everyone earlier.
I would also like to emphasize that while this call is open to all invitees, it may not be broadcasted or reproduced in any form or manner. We will commence the call with opening remarks from the management following an interactive question and answer session. May I now hand it over to Mr. Tarun Soni? Over to you, sir.
Tarun Sawhney — Vice Chairman & Managing Director
Thank you. Good afternoon ladies and gentlemen and welcome. To the Q1 Fiscal 26 earnings conference call for Slovenia Engineering and Industries Limited. The key consolidated financial numbers for the quarter was that revenue from operations stood at 1598 crores with a PBT of 2.9 crores and a patch of 2.1 crores. The net turnover increased by 23% which was supported by a 53% increase in alcohol dispatches and a 14% increase in the consolidated sugar dispatches as well as improved sugar realizations in the power transmission business. We reported a 15% increase in order booking and a record closing order book of 423crores which has improved by 38% over the corresponding previous period.
At an overall level, the closing order book of the engineering business stood a shade under 2000 crores at 1975 crores, up by 32% compared to the previous corresponding quarter. The debt position of the company on a standalone basis stood at 1385 crores versus 1150 crores on 30 June 24. The standalone debt for the period under review comprises of term loans of 320 crores of which 180 are with interest. Subvention and on a consolidated basis our gross debt is 1688 crores compared to 1280 crores on 30 June 24th. The overall cost of funds has been very manageable and stands at 7.3% at the end of this previous quarter versus 7.1% in the previous corresponding period. However, I’m happy to share that from. The future perspective, over the next few quarters we will be because of our debt rating we will be able to see a decline in our cost of funds, especially when we need it the most. And so that is the expectation from our balance sheet position going forward over the next few quarters. I’d like to take some time to. Do a business wise review Turning to our sugar business, the growth in sugar turnover was on the back of a 14% increase in volumes that included the subsidiary and a 4% improvement in realization. So segment profit despite higher volume and realization declined 80% due to a 7.6 crore decline by 80% to 7.6 crores. And this was due to a higher. Cost of production of Sugar sold in Q1 fiscal 26 which could not be offset by the increased sugar price realization. The cost of sugar sold during the quarter pertains to the sugar season 2425 and was impacted by the gross rural recovery. So in a nutshell, the recoveries for the group were 69 basis points lower than the previous season and that had a direct impact on the cost of production and is the most significant contributing factor for the increased cost of production. With respect to the comment that I. Made about sugar price realizations at the beginning of the last quarter Q1, we did see higher sugar realizations that were in excess of 40 rupees. However, as the quarter went on, prices did decline. There’s been kind of a difference in terms of the demand of sugar across the nation this year, especially during the hotter summer months and as a result the prices fell even during the month of May and June slightly below 40 rupees 39.503960 and so that of course was unexpected. During the quarter when I talk about the I’ll bring you up to date with what we experience right now, but there has been a change in that position.
Of course, with great support of the DSPD. The sugar inventory on 30 June. 25 stood at 44.5 lakh quintals valued at 37.4 rupees per kilo and the current Exmoor domestic prices for refined sugar are 41.2 rupees and sulfitation is about 50 paisa lower per kilo, 50 to 60 peso. That, of course, is higher than even the start of prices in April 2026 at the beginning of the last quarter, just a shade higher. And it is because of the lower quota, it has been announced by the government, approximately 10% lower, when one compares year on year, has been the reduction in the quota that’s been announced by the NPT having a direct bearing on price.
And again, this is in reference to the comments that I made in the past as well. It is a regulated sector, but, you know, I repeat that there is huge. Amount of control that can be exercised. By the department, which has a positive. Impact on sugar prices. And the recognition that sugar prices have to be above a certain level, I think is a very welcome policy initiative by the dspd. Looking at the industry scenario, which is a balance sheet with an opening stock on the 1st of October 25th of. Just under 6 million tonnes. We produced 33 million tonnes and domestic sales were around 28.5 million tonnes. And we’re expecting the closing stock of just about 7 billion tonnes of sugar. And this is after considering about 4 million tons of sugar being diverted into ethanol. And these are, of course, estimates going forward. I think because of this slightly higher closing stock when compared to last year, despite the exports that have happened over the course of this sugar season, we. Have seen that little softness that happened. In May and June, primarily looking at the inventory balance, the balance sheet of. The nation, as well as the crop. That lies ahead for the next year, which I will cover in a little more detail when I look at our projections for the year ahead from an international basis. The global balance sheets pointing to a deficit. As for the latest S and P. Global and other balance sheets, we’re looking. At a deficit of about 4.6 million tonnes. However, for the 2526 sugar season, the outlook looks largely balanced, actually looks towards a slight surplus of about 2.9 million tons of sugar, which is primarily due to better crops in three very important countries, Brazil, India and Thailand. For the upcoming field, international sugar prices have been on a declining trend since January 25, where they had turned bullish in January and February. And in our last conversation I had talked about our sale of our export quota, which was done at very handsome prices and booked in Q4 of the last fiscal year.
But since then prices have declined and consequently I believe that the million tonnes of exports that were anticipated and expected by DSPD will not happen in its entirety as some people in the trade may have taken positions that have turned against them. It is unfortunate because it would have helped lower the balance sheet of the country by a couple of hundred thousand tons of sugar. And every reduction is important, but that is sugar that will remain unexported. According to our estimates, turning quickly to. The alcohol business, we achieved our highest. Quarterly production of 6.5 crore litres, driven by the full quarterly impact of the new distillery at Rani Nangal. And therefore, if you do a simple multiplication, it is very much in line with with the overall estimates that one has been giving of our capacities and our production capabilities going forward. The sales volume for the quarter stood at 6.2 crore litres, increased 53% over the previous year. The average realization for Q1 is lower, and this is due to ethanol produced from FCI rice, which accounted for 27% of our total alcohol sales. I want to pause over here and provide an explanation.
Now. When we entered the tenders at that particular point in time, the price for maize was about 26 rupees, 26 rupees plus, actually closer to 26.5 rupees. And at that point in time, the. Relative contribution from fixed price FCI rice seemed more attractive from an operating perspective and to keep the distilleries operational. And therefore we did go ahead with that. Now, there has been a change in. Stance by MOP and G et cetera, but there’s not allowed the vulnerability of feedstocks from one to the other. Maize, of course, being at a higher price and MOPMG trying to control the price of ethanol, the procurement price of ethanol. And unfortunately that meant that people settled with quantities of rice which needed to be processed at lower levels or the lowest levels of contribution as maize Prices declined over Q1 of this fiscal year. However, going forward, we of course were procuring a lot more maize and the price of maize has fallen even further. So from the lofty levels of 26, 26 and a half rupees, our buying average for the last quarter was approximately 23 odd rupees Sakiloa and it will.
Fall even further by over rupee per. Kilo when we look at prices going forward. The profitability, as I mentioned, was impacted by that. It was also impacted by an increase. In the internal transfer price of sea heavy molasses and some increase in fuel expenses. Ethanol constituted 92% of alcohol sales in Q1,56, compared to 91% in the previous corresponding quarter. I think it’s Important for us to. Dwell on the outlook of the sugar business. The monsoons have been very encouraging across. North India and in the state of Uttar Pradesh. They bode very well for the agricultural sector. So at the board meeting which concluded yesterday, the board actually very closely considered the reinforcement that has happened thus far and the incidence of pest and disease, which are all well below our permissible limit thus far. It is very encouraging at this particular point in time. However, I will caveat it and say that the rains in August and September in the past two years are the ones that have particularly played sport with the sugar season. So we are keenly anticipating that. Skynet and the forecasting data that we have points towards very regular and normal rainfall over the next couple of months, which is very positive. However, that is still a prediction and. It will be a very important barometer in terms of the health of the crop. The health so far is actually quite excellent, both in terms of yield and in terms of the sugar content formation that has happened over this over the last few months. So at this particular point in time, all eight sugar factories are actually looking pretty good with a slight increase in cane area as well. For our sugar factories area under cane, we continue to make some judicious investments in our facilities to enhance our crush rate and with a particular emphasis on efficiencies.
I think there has been a particular onus in terms of improving our steam economies at our sugar factories which will result in higher gas savings which sold at fairly lucrative prices in the market. The prices have been pretty good over the last couple of years and so our focus in this off season on really single handedly reducing steam economies should result in higher gas savings which will be sold over the winter months during this fiscal year and on the next sugar year. We believe that a continuously increasing portfolio of refined sugar and pharmaceutical sugar and which is about 73% of our overall portfolio, augurs well for realizations for the company.
Yes, we do have a lot of. Important clients that buy plantation white sugar. And so there will be a gap in terms of how much refined sugar the company can produce. But it does offer very well. The quantum of institutional customers has increased. Over the last couple of quarters and there is a concerted effort as well from a realization perspective. And if you compare our realizations, I think we’ve actually done rather well in terms of our sugar sales and the absolute number in terms of value of sugar sales. And that is directly related to an increased amount of institutional customers that we have on a repeatable basis with respect. To the alcohol business. The outlook, the focus really is on. Improving the shower game crash which will help improve the molasses availability and address of supply chain, improve the molasses availability for the upcoming season. With respect to grain, I think there is concerted and substantial efforts in terms of addressing and improving supply chain issues. So in terms of procurement and in terms of storage of grain, especially maize, to ensure that we do a much better job, it has been a learning process. This will be the third year that the processing maize and so I think we’ve got a great amount of confidence in terms of how we procure it, how we transport it, how we store it.
And I think that will factor in to the yields when we look ahead. And as we get this maize crop processed, we’re also hopeful that the government will address the feedstock and profitability challenges in the various feedstocks and we hope that the government will remain committed to the EBP program. And as I say that I attended a conference last week where a portent cabinet minister made a public statement in his speech saying that the government was looking at announcing 27% in a graduated manner for the ethnology. My own personal view on this is that we will graduate potentially based on new BIS standards because the BIS standards are very important and as the BIS standards I understand will come out for 22, 25 and 27%, that will be the graduation in terms of the total quantum.
This all works very, very well for the sector. I also believe that e85, which has been launched across 400 petrol pumps across the nation, will offer another substantial alternative for other ethanol production across the country. So you know you’re looking at 1000 crore litres being absorbed this year and with the maximum of what I’ve talked about could be well ahead of double that quantity in the coming few years. Of course not all of that can be produced so one will see an investment in additional distillation capacity across the country. Turning to the outlook of our bar. Transportation business, the economic growth is really very, very, very positive. And we’re seeing sectoral based investments and in manufacturing across India and across certain economies around the world. The company is venturing into new products. And has received encouraging results for these products. And for example, it would be in terms of compression gearbox technologies, looking at new developments, new research projects and commissioning new products that will be in the marketplace and will hopefully add to the entire basket in an addressable market segment for the company. The international market continues to be a key trust area. Our quality leadership in the domestic market has paved the way for many overseas customers to qualify Trobeni for steam turbine pump and computer presser gearboxes. Acceptability in the overseas market has risen because of continuous marketing efforts and an opening of a European sales office in Switzerland and also of course as a result the recent enlistment on AVRs, which are known as approved vendor lists of certain Creem OEMs as well as third.
Parties in the defense segment. We received recently completed the order for gearboxes for fast patrol vessels of the. Indian Coast Guard and we secured more orders for gearboxes. I think that bodes very, very well. Because we’ll be the only company in the country that actually makes that has. Complete technology for marine gearboxes within India. In addition, we’re also working and continue. To work on more products such as thin stabilizations and expand our service offering in propulsion shafting technologies Looking at the Water business outlook, the business anticipation anticipates good business opportunities and funding is expected to flow from both state and central governments due to the gap of demand and supply of water and wastewater treatment plants. The water sector has recently actually started. To receive a lot of positive outlook and there have been a lot of. Significant opportunities that have cropped up in Q1 in terms of inquiries, et cetera, that will hopefully fructify into actual commercial bid. The new opportunities are exactly on the. Same lines that I talked to in the past, which includes recycle, reuse, 0LD sorry, 0ZLD as well as EPC on ham models. Sewage recycling is a new area of business and wherever there are industries and off takers for buying treated sewage, this model should emerge as a successful, a quite successful model in the future. And we’re also targeting some foreign projects. We continue to do that, and I’ve spoken about that in the past as well. At an overall level, the company has implemented a series of strategic initiatives over. The last few months, much, much more so than the past. We’ve recognized the fall in recovery that we had in our sugar business and as consequence that has impacted our quarterly performance and really a targeted focus on improving that. Now a lot of the performance as far as sugar is concerned was. You see, sugar came in a two year crop cycle. So if you had red rock in. One year and the plant came, whatever was converted into ratoon would give you a poorer result both in terms of yield and recovery. Now a lot of that cycle, that two year cycle is over and so the anticipation for the next year is actually wholly different from the season that we’ve had, both in terms of productivity as well as in terms of Anticipated recovery. Internally we’re looking at three years ago as a benchmark, the weather patterns as well. Three years ago, which is a very positive year and we’re hoping that weather plays, weather, disease play spoil sport over the next three months before the start of the sugar season which we anticipate, frankly speaking, just after Diwali.
So Diwali actually is a little bit earlier. It is on the 20th of October very early this year and so soon after that we anticipate that all the best to be will start its operations. Regarding the proposed scheme, I think it’s. Important to just close out my opening remarks with a few comments on that. The amalgamation with Sir Shah Di Lal and the demerger of the power transmission business, we are still awaiting regulatory approvals. We’re following up continuously with sebi. We received some in course regular questions from the stock exchanges which have been answered. To our knowledge they will meet the satisfaction and we are hoping that we will get that permission very, very soon. In terms of what that means in terms of progress, I think we could broadly speaking be on time. If anything we could add another 30 odd days.
But broadly speaking, as I mentioned, we’re. Still anticipating Q1 of the next fiscal year and I think we’re still very much in line, very much in line with that. With that I’d like to pass on, I’d like to close my opening remarks and open up the question mark session.
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 their touchstone telephone. If you wish to remove yourself from the question key, you may press STAR and two 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 Rehan Syed from Trinetra Asset Managers. Please go ahead.
Rehan Syed
Good evening and thank you for giving me the opportunity. I have a couple of questions. First on the power transact. The PTP order book has grown strongly especially with the export traction. So how much of the 423 order book you expecting to convert into revenue in FY26? And do you see margins improving in the food heavy mix?
Tarun Sawhney
I’m sorry, the second part of your question was inaudible. You’ll have to speak a little slower and louder please. I want the first one about what is executable in this year. What is the second part of your question?
Rehan Syed
Do you see any margins improvement in the export having mixed for going forward or going forward.
Tarun Sawhney
Right. Okay. So all of the we crossed the 400 crore milestone. We stand at 423 crores. The long duration orders in this are 182. So the balance, the simple subtraction of that would be orders that are executable this year. It would also the typical order to delivery is about six odd months. It could be a little bit less. Depending if it’s an aftermarket order, et cetera. So we still expect a substantial amount of book and bill to happen in this fiscal year to allow us to. Meet the budgeted numbers we have internally for this business. And as I mentioned that our growth rate stands unabated. A lot of we had an increase in finished goods at the end of this quarter that some of our customers expected us, including defense orders, because expected us to push out delivery into Q2 and towards the end of Q2 as well. So we’re anticipating that Q2, Q3 and. Q4 will certainly make up for the limited growth that we had in Q1. But the business is looking very, very promising. In terms of your question regarding the margin profile of the business, I want to add two very important things. We have grown the business. The company’s invested quite substantially in the business. So it depends on where you’re looking. At what type of margins you’re looking at. Depreciation obviously will be higher because there has been a lot of capital investment into this business. In addition, we’ve also hired a lot of people not just to train them. For immediate growth, but for the future growth as well. So there is a slightly higher HR. Cost that does not by any means mean that we are looking at margin dilution. But in terms of growth of margins, it will take some time over the course of this year for that growth to come into fruition as we get. More orders and deliver more orders into export markets where we’re traditionally expecting slightly higher OEM margins.
Rehan Syed
Okay, okay. On the second question is around the maize prices. So you have mentioned a correction in maize price benefiting margins. So apart from raw material cost, what other lever of cost optimization are you working on across business in FY26?
Tarun Sawhney
Yeah, excellent question. Very, very good question. So there are. Let’s talk about supply chain and then. I talk about operations separately from a. Supply chain perspective, you have to purchase maize and then you have to store maize. Maize, like any other crop, comes with small amounts of fungus, etc. And other impurities. So the first fundamental process is to improve the supply chain by dual testing. Point of loading, point of acceptance as well. The second thing is the keeping quality. And I think there’s been a lot of work and we’ve worked with other firms as well to improve that, keep heating quality, to add ventilation, et cetera, to ensure that there is no buildup and so that the. Starch content in. Maize does not change significantly at all over the period of time. So that is a very important step in terms of the keeping quality and. The procurement strategies as far as maize is concerned. The second is with respect to operations. I think our cost of fuel and our cost of is an important contributor to our cost of production at our. Distilleries, especially our standalone distilleries. And therein we are doing a lot of effort and we continue to. Some of it will happen now, some of it will require some small capex, not, not. But some tinkering capex will be required to further improve our steam economies which will allow us to then reduce our. Secondary fuel, which is the gas, which is very expensive. The gas during the season is 2020-220-500. Rupees per ton approximately during the season. But in the off season it increases by a good 20, 25% from that. Point, maybe even 50%. So you don’t want that. You want to store the maximum amount. We’re doing work in terms of raising the quantum of the gas with the share sugar factories will also have. So all of that is sort of tied in and will result in better. Operating results when we enter into the next supplier. Okay.
Rehan Syed
Okay, thank you for detailing explanation. It’s clearly answered for me. And the last question is around like from my understanding, could you provide a timeline update on the composite of the SSC and lccb?
Tarun Sawhney
Yeah, I just addressed that. That was my last comment before I opened up Q and A. We stand unchanged and our perspective is that it will happen in Q1 of. The next calendar year, Q4 of this fiscal year.
Rehan Syed
Oh, okay. Okay. Thank you. Thank you.
Tarun Sawhney
Thank you.
operator
Next question is from Sudarshan Padmanathan from Ask NDP Mesa. Please go ahead.
Sudarshan Padmanabhan
Yeah, thank you for taking my question. Am I audible?
Tarun Sawhney
Yes, I prefer it if you want on speaker. Yeah.
Sudarshan Padmanabhan
One thing. Yes. Is it more clear?
Tarun Sawhney
It is much clearer. Thank you.
Sudarshan Padmanabhan
Yes. So my question is to understand a. Bit more on the cost structure in the first quarter. Now historically when we look at, you know, the off season expenses, how it has been apportioned, it is usually the second quarter that takes a brunt of the overall impact as far as profitability is concerned. I mean, just to understand, I mean going by your commentary, whether the entire drop in the sugar business is primarily an account of lower gross spreads, as we call it. Or is there a departure or is there a little bit change in the way the off season expenses that have basically been booked in this quarter?
Tarun Sawhney
Yes, let me explain it. Number one, let me confirm that there is no change in the practice at all in this quarter. Whatever we had been doing in the past, the same is consistently being followed now in Q1. There is some part of the previous season which extends into Q1, and after it finishes in the month of April or early May thereafter, the off season starts. So as per the important policy of the company, all costs related to off. Season are expensed out in that quarter itself. So it subsequently forms a part of the cost of production of the next season. So therefore there is no change. But obviously the share of the off season cost in Q2 is more than Q1.
Sudarshan Padmanabhan
Yeah, sure, sure, sure, sure. So that basically will continue into the second quarter. And probably the only thing that would, you know, change in the profitability, if. At all, is if we, you know. If the sugar realization continues to be over 41, then probably the spread would. Be on the higher side. Would that be right?
Tarun Sawhney
Yeah. So therefore, if you look at the pattern because of such accounting, the profitability of Q3 and Q4 is substantially higher. So, you know, our average realization for Q1 stood at 40.4. On a consolidated basis, sugar prices already. In the month of July. Were approximately that. August is pointing substantially better than what this average is. And as we go into September, that will increase because you have an early Diwali. So a lot of the buying for Diwali is going to actually happen in September. And so I anticipate that you will see, you haven’t asked the question, but my view is that sugar prices are in a small gradual uptrend, as they. Typically are at this time of the year.
Sudarshan Padmanabhan
And the cost of, you know, the. Can would more or less be similar at 37.5 of inventory. Right, that’s what you had kind of pointed out.
Tarun Sawhney
Absolutely. Of course, that sugar is produced.
Sudarshan Padmanabhan
Sure. So definitely. So the spread should be higher. So that’s good news. Sir, coming to the ethanol side, I mean, it was heartening to see the volume increase in ethanol. But coming to the FCI grain is the entire cost of the impact of FCI rise has been taken in this quarter because I am looking at it from the point of view that if the volume continues and this baggage is kind of behind us, then the profitability of ethanol will be substantially higher.
Tarun Sawhney
Excellent. Very good question. And I think this is a, a strategic decision that we’ve taken that has not proved right. And I want to recognize that we took that decision at a point in time looking at maize prices, but it has not panned out well for us. And it accounted for 27% of our. Volumes for the last quarter. For Q2 production, it will be less than half that. So it is not over, but it will be less than half. Less than half of what was supplied. So 27 was supplied. I would say it will be. We’re trying to minimize it as much as possible. Worst case scenario, it will be 13, 13 and a half. Best case scenario, it will be even lower than that.
Sudarshan Padmanabhan
Sure, sure, sir. And one final question before I join back to Q is, you know, today, I mean, when I look at, on a year, on year basis, I mean, we had an easier base as far as etronic blending is concerned. Where I think around the blending was around 14%, but when I’m tracking the monthly blending, I think already the blending is close to 20%. Now, what is it that the government has going forward from here in terms of rate of change, in terms of economic blending program? How is it going to translate into growth going forward from here on?
Tarun Sawhney
Okay, you know, great question. And I’m going to just refer to a conference that I was. An important conference convention that I was. A part of last week where we. Had one of the most senior cabinet. Ministers who gave a very long speech. It was a sugar technologist conference, but a very long speech about the future. Of ethanol and his perspectives on that. So he announced publicly that 27% blending has been approved. It is my understanding that DIS is expected to come out with standards for 22% blending. 25% blending. Approximately 25%, 27% blending. It may be divided into four, not three, but that is effectively going to be the graduation in increase in ethanol blending for, for the EBP program. Now, with that being announced, I think Parliament is on the right now side. I imagine that that would have to conclude. The session would have to conclude and then the decision will be announced by the cabinet or rather by MOP entry officially. But I expect that that is pretty. Much set in stone. In addition, we also have the possibility of E85. We have the possibility of E85, the number of petrol pumps being 400. And again, the Road Transport Minister has clearly said that he is looking for a factor increase in that. In fact, the Minister was quoted in. This morning’s papers about 27% blending by the end of August. Being announced by the end of August. So yeah, that is very much in. Line with the end of the monsoon session and. Or rather just post the monsoon session. So I see a graduation and a huge volume build up. Now you may ask what happens to the automobiles, etc. Because all of these discussions have taken. Place and it is my understanding that 25% blending is easily possible without any change in engine technology for two wheelers. And four wheelers whatsoever. So there is nothing that needs to change between now and 25%. I think there is still a lot. Of consideration between what happens between 25. And 27 and I think we will. Learn a lot from Brazil. But that is still about a year. Or two away to get to 27 because you need to have that kind of perspective production in the country. But it’s very, very positive that this is the step that is being taken towards E85 as well as towards E27. The other thing of course is that the Minister has also announced that most. Of the large automobile manufacturers are coming out with flex fuel cars that will be available for the Indian public. So again, it’s creating that sort of. Harmonious ecosystem not just for supply but also for demand for. For the EPP program.
Sudarshan Padmanabhan
Sure, sir. Thanks a lot. I’ll run back with you.
operator
Thank you. Next question is from Shailesh Kanani from Centrum Broking. Please go ahead.
Shailesh Kanani
Good evening everyone. Is my voice audit?
Tarun Sawhney
Yes, it is.
Shailesh Kanani
Yeah. So first question is on the margin front. So we have seen margin pressure for. Some time now across segments. I understand for sugar we are having issues of 0238 with compression of yields. But just from your perspective, when do you expect the margins, what we enjoyed. In 22, 23, 24 coming back to our businesses.
Tarun Sawhney
So let’s talk about which business because we have our engineering business, we have a distillery business and we have our sugar business.
Shailesh Kanani
So predominantly margin compression is meticulous in distillery and sugar. So if you can highlight that engineering. Is one of that is part of Izu.
Tarun Sawhney
Engineering has improved so that we don’t. Have to worry about. Yes. With respect to the distillery and with respect to the sugar business, let me start with the one that has been. Affected the most, which is the distillery business. I think that the worst is behind us and I think as far as the distillery business is concerned, because of what I’ve talked about, I won’t repeat everything that I said. It will be on the Concord Transcript. Which will be on our website. Also I’ve just talked about what we’re doing to improve Our margins, both in terms of cop as well as well. We can’t do anything about sale price. It’s all about copy, be it operating strategies, be it supply chain strategies to. Help improve our margin structures, et cetera. That is all in place and that will come very soon in these next ethanol supply year and even before that. The rise that I’ve spoken about will reduce even in Q2, et cetera. And so you will see a natural bump up now, a return to the type of margins that existed in, in 2223. That is a billion dollar question. But I think that if the government, and this is the way that you. Have to look at it, if the government is announcing 27% ethanol blending, the. Only way you get to ethanol blending of 27% as well as E85 petrol pumps is if more distilleries are established. Across the country, regardless of feedstock, be. It sugar cane stream or be it grain stream. For that to happen, you have to have better margins so that entrepreneurs actually. Spend money in this sector. That will of course help not only those who have existing capacities, but also. Invite people to come in and set up capacity. Now, the government announcing the 27% as the Honorable Road Transport Minister has done in the papers today, I think that bodes very well. So I can’t give you a timeline, I can’t even definitively say that we will touch that. But I certainly see margin improvement happening because of better pricing policies, because the nation needs more ethanol production. Now with respect to the sugar business, I think that’s the second part of your question that is not a billion dollar question. That is something that is a very. Real question that we have tackled right now. The replacement of 238 in low lying areas is by and large the vast majority of it is done. It still exists in higher areas across our factories. And yes, we will continuously reduce that. But that hurry and urgency is slightly less. You can manage it a little bit with better seed treatment, with better pesticides. And, and fertilizer dosage, etc. Etc. And so you will see that fast improvement happening. From this sugar season onwards. Now to get back to that margin, it’s twofold. One is to look at your cost of production. Your cost of production will improve if your recovery improves. We’re expecting the recovery to improve. Will we touch the Same recoveries at 23, 24? I think it will take some time. That was a golden period. The variety was in its absolute prime. The variety is no longer in its absolute prime and we don’t have A variety that can replace it and give the same kind of results. There is a lot of work being done, but as of today there isn’t a magic solution there. But yes, we can improve. We can make a lot of improvements in terms of more yields and therefore better capacity utilization. And you can try and approach the element of cost of production through other.
Ways and not just recovery because there are other constituents of that as well. And that is what we at Triveni are doing in the coming season. And beyond that in terms of lowering our cost of production. The next quantum is in terms of, is in terms of sugar pricing. Now while FRT doesn’t affect us in Uttar Pradesh, the FRT has gone up a lot and the sugar price has not kept up. And I think there is a deep realization in the government that if we. Have to have enough cane for the ethnol lending program and we have to have enough cane for consumption and the. Balance can be exported, then we need. To have sugar prices that are commensurate or sugar prices increases that are commensurate. So you’ve seen the government, of course, let me give you an example. The quota that was given by DSPD of 2.25 million tons for the month of August is a reduction of 200,000 tonnes over the previous corresponding month of the previous year. That’s a very significant reduction in a high consumption month. And it is really to ensure that sugar prices follow the right trend so. That we don’t have a problem in the next year.
Shailesh Kanani
So that is, that is helpful. So just one follow up on that. What is the 023 exposure this year versus last year?
Unidentified Speaker
It is presently under 40% versus close. To 55% the previous year.
Shailesh Kanani
And our plan is to build it below 25% I guess last time we discussed.
Unidentified Speaker
Right, that’s right. While we plan to bring it down, we are at the same time doing. A very rigorous surveillance program to extend the life of the remaining 25% also.
Shailesh Kanani
So my second question is on capital allocation. We have been investing in our water division and we have kind of spoken. In the past many times about the opportunities over there. I think a capital employed is somewhere. More than 600 crores over there. How do we see this division in. Terms of return profile? When do we expect 12 to 15% ROE ROC numbers? Because currently it is less than double digit. Right. So how, when, by when we expect this return profile to come.
Tarun Sawhney
You know, number one, in the case of water business, we have not made any capex in that particular business because. No capex is required. So we basically carry out an asset light business model according to which most of the manufacturing is outsourced. This is number one. And number two, there is a working capital requirement which is definitely there in this business. And that basically depends from project to project depending upon what billing, milestones, etc. Are. But by and large, you know, you quoted a figure of 2,600 crores or something.
Shailesh Kanani
That figure is also not segmental assets. 600 crores. More than 600 crores. Yeah, yeah, yeah.
Tarun Sawhney
So basically I think reasonable return actually depends. Like the way just said that we are looking at the project overseas, abroad, etc. The very purpose over there is number one, so that, you know, over there it enables you to complete the project in a timely manner so that you are able to collect your money, come back and you get a good return. So idea over there is to pick and choose good project where the returns are good. So this is the direction we are proceeding into.
Shailesh Kanani
Okay, fair enough. Thank you. Investor pluck.
Tarun Sawhney
Thank you.
operator
Thank you. Next question is from Rajesh Majumdar from BNK Securities. Please go ahead.
Rajesh Majumdar
Yeah, good evening sir and thanks for the opportunity. So my first question is what is the cane crush for the sugar season 24, 25 and the grass recovery for the year?
Unidentified Speaker
The cane crushed 24%. The sugar season it is 819lakh quilters. And the gross recovery, which is the CPU recovery is 10.8%.
Rajesh Majumdar
And how does the gross recovery compare to the gross recovery two years ago? How much has it declined gross recovery. In the last two years?
Unidentified Speaker
So the previous year it was 11.49. And the year prior to that was also in the same range.
Rajesh Majumdar
So 11.5 was the peak and now we are at 10.8.
Unidentified Speaker
Prior to that we have gone up to 11.97 on this basis starting in a couple of our factories.
Rajesh Majumdar
So GROSS Recovery at 10.8, you think there is no downside now and this can Recover by say 20, 30 basis points this year as a realistic assumption?
Tarun Sawhney
Well, you know, I don’t give forward looking estimates but you know, you can sort of try and calculate what the impact of rain was that was, you know, unprecedented as well as the impact of disease. The impact of disease was higher than. The impact of rain. I would certainly think that all going well. If there is no untoward change, then. We will certainly see a significant improvement in terms of sugarcane recoveries. And crush.
Rajesh Majumdar
And crush. So basically the area under cultivation also we guided that there’s been some improvement for this.
Tarun Sawhney
The idea of the cultivation has increased somewhat year on year. We’ve already done the surveys, so there has been an increase, low single digit. Percentage, but that’s still quite a lot. And that if you factor into better. Yields, means that the clean availability of course could be better. And that is the hope, of course. And I keep giving this caveat, weather and pest and disease permitting.
Rajesh Majumdar
Right, sir. Second, on the alcohol policy, I mean, how should we take this FCI rise policy? Because last quarter when you had done the con call, you had said that we’ll be using maize and suddenly we find this quarter that we use 25% FCI rise. You know, this kind of a flip flop is giving us a kind of wrong direction in terms of what the company is really doing on its procurement. And since we were expecting that the maize will be a substantial figure this quarter, there was a disappointment in terms of the kind of feedstock that you used.
So will this be a continuing thing or will this stabilize somewhere? And I mean, can we see some kind of a constant gray news which can actually be more, you know, give more steadiness to our earnings?
Tarun Sawhney
Yeah, yeah, okay. So no, you’re very right. I think, I don’t quite recollect what I had said, but I think when I spoke to you at, in May, at the very end of May, May’s prices had declined a lot. So that comment was relevant at that particular point in time that this procurement strategy was going hammer in tongues in terms of procurement because the maize procurement price dropped from 26.5 rupees at that point. It was around 23. Now at that particular point in time, we’d already bid for FCI rice. The FCI rice bid was done when FCI was, when rice was opened up for us rather for ethanol lending much earlier. And at that particular point in time. Prices prevailing for maize were substantially higher, which was the rationale for it. Now you’re absolutely right, it did turn out to be poor decision. And since we don’t give you the. Actual blend of which grain we’re using at what particular point in time this. Has come as a little bit of. A shock to you. One fully appreciates that. I think in terms of clarity. For. The foreseeable future, we’re certainly not going. To be taking in any FCI rise given where the price of ethanol derived. From FCI rises and the price of FCI rise given. And I find it actually quite surprising. That the price is what it is because we have so much of it in the country. And I think the point is well taken. We will Provide you more clarity in terms of what great stocks we will be consuming in each quarter so that you can work out the margin structure.
Rajesh Majumdar
Yeah, thanks sir. And my next question is on the capex in Mysore. So how much of the capex is already done and how much is spending and whether the defense bay will be commissioned this year?
Tarun Sawhney
Yeah, excellent question. So the vast majority of the capex has been committed and it will all be executed on time as one is. Forecast within this fiscal year. And the tune of that is about 150 odd. Crores for this year which is the total amount pension. Now with reference to the defence base there are two aspects. There’s the office block and the manning of that and there’s the manufacturing facility. We are very hopeful that within this calendar year the manufacturing facility will be. Operable and so the machines will be. In place and production will start within this year. So it’s in contract with what I. Had mentioned in the last conference call. The office block will be complete a few months from because we’ve devoted all of our energies in terms of getting the productive asset to be operable and. People can commute from the other facility with respect to any office work, etc. Yeah.
Rajesh Majumdar
So if I could speak in a last question. Although you’ve been sounding optimistic on the ethanol blending going at 27% extra, there’s also negative sentiment coming in from India’s ongoing trade negotiations with the US to ease the IS A16 ethanol imports. While that may be debatable and you may have a different point of view, I was just wondering as a company. Post demerger, do we have any thoughts. On the sugar alcohol business beyond ethanol where we can see some kind of growth areas other than ethanol? If you have thought about any.
Tarun Sawhney
So you asked two questions. I’ll answer both with respect to the ongoing trade policies. The industry associations have written to the. Government, we too have written to the. Government and said that we would like. To see maize imports if possible. Now even if it is GMO maize, the DBGs from that it is actually it was being considered that the GMO is going to be one GMO but frankly the speaking, talking to the poultry associations etc. They’re very happy to buy that DDGs. So if we can import DDGs maize at competitive rates it will allow us then to have more utilization of our plants and perhaps even some more plants. To be set up across the country. So I don’t see that as a. Negative unless you have direct ethanol imports. If you have direct ethanol imports, it’s the Green, It’s a competing product that is a bit of a pickle. I don’t see that happening so easily at all. And I think that from what I’m. Hearing and understanding it is the maize imports that direct maize imports that could possibly happen. The government is trying to work out. The modalities of GMO which as you know in India is a very ticklish subject. Now with respect to Trivedi, after the demerger, looking at other things, we have. Some time for that demerger to happen yet. The thought process has been on and the board is going to conduct workshops, etc. And evaluate a series of different options. I don’t have anything concrete to share with you right now, just that the. Intent is certainly there to look at all available options that are in front of us today because yes, we do have good cash flows from the business that are investable and we have to. Do something to regain, as a previous. Person mentioned, the margin structures that we had in 2223.
operator
Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant. The next question is from ABHI sir, Jain from Monarch aif. Please go ahead.
Abhisar Jain
Yeah, hi sir, thanks for the opportunity sir. Just wanted to know that the capex in the gear business that we have been doing to take the capacity to 700 crore turnover and which is supposed to complete by September 2026, how is the progress on that and is it on time? Can you just give little bit more color on that?
Tarun Sawhney
Sure, I just answered that question. I had partially answered it earlier as well but in response to the previous gentleman who asked a question in terms of diversification I had forgotten to add our alcove business which has actually grown, the country business is profitable and is growing quite substantially. Very good double digit growth and we continue to see that growth, profitable growth. As far as the IMFL business is concerned that is in an incubation stage. It will take a couple of years. Before it starts throwing out some profitability. But it is a business that is really a sunrise business as far as. India is concerned and part of the two generation of Indians is concerned. So there have been moves in terms of diversification. They’re small right now but they certainly have large prospects for the future. Now I’m sorry, I answered somebody else’s. Question when you asked the question. Let me return to ptb. As I had mentioned, our capex is. Very much underway and it is being completed as per the track that one had mentioned and as you mentioned, so. The production Capability is pretty much in space. It doesn’t mean that it gives us the capacity utilization. Our full capacity utilization will be a higher amount. It doesn’t mean that we achieve it straight up, but it will certainly be in place on time. We’re already a lot of the machines are already in place and our productive assets as we speak.
Abhisar Jain
Yeah, so sir, just clarifying. So you had earlier mentioned the difference. Where will be commissioned within this year. But also the Gear capex expansion to 700 crore capacities on time till September 26, right?
Tarun Sawhney
Yes, that’s exactly what I’m saying. It doesn’t mean that we’re going to. Be producing 700 crores. It means the capacity.
Abhisar Jain
Yes, of course. Yes, sure. Answer on the defense capacity. Since it will be commissioned, can you. Now provide some guidance on how that ramp up will be there in FY27 and 28? What is the line of sight and revenues from that multimodal capacity?
Tarun Sawhney
You know. It’S really a startup business. So to provide line of sight of. Revenues and it’s a business that is. Famous for delays in terms of orders. It even in some respects it’s like. Our water business where you just don’t know when the orders are going to be finalized, et cetera. So you know, you know when you have bid for orders. But the actual opening an award is something that is totally out of your hands and that is the peculiarity of that business. So with all due respect, I’m going. To refrain at this point from providing any future guidance on that business.
operator
Thank you. Next question is from Nitin Avasti from Incred Equities. Please go ahead.
Nitin Awasthi
Hello sir. Actually my first question you have just answered a bit in that whole pie of IMFL and IMIL that you just spoke about. One extension to that was left which I’ll ask right now. Any movement you want to make into the UPML market because of the new excise policy in up, we have already.
Unidentified Speaker
Started and introduced UPML brands from June of this year.
Nitin Awasthi
Okay. From June of this year you have introduced them in both the segments.
Unidentified Speaker
In one segment, in the other one. We are about to do.
Nitin Awasthi
Okay, so is it 28 you have introduced and 42 you will be doing. It in the future. Is that understanding correct?
Unidentified Speaker
We have already done 28. We are doing. We will be doing 42.
Nitin Awasthi
Okay.
Unidentified Speaker
So it could be happening this month itself.
Nitin Awasthi
Understood, sir. Also, our current machinery that we have post the last expansion that we did within the IMIL segment, that machinery itself is capable of handling almost the whole packaging of a UPML Product also right? Is that understanding also correct? Yes, that is right.
Unidentified Speaker
We have adequate machinery to handle both UPML and Amilia.
Nitin Awasthi
The total capacity output, if at 100% would be 9 million cases, it would be.
Unidentified Speaker
Could you just repeat?
Nitin Awasthi
Yes, understood. The second question that I had was something interesting you spoke about earlier. When a question was asked to you about how would you be increasing margins, you spoke about a cost component within which you specifically mentioned steam. Now steam for any grain distillation is a very heavy cost, the biggest cost after raw material cost. And of course a lot of work is going on in the space. But would it be correct to understand, given the engineering excellence that your company holds, you will be able to make waves faster within the space? And is that some way that you’re moving about? Like what is the current consumption per liter and which is the movement, which way do you see it moving?
Tarun Sawhney
So I’m not going to give you the consumption per liter because then I would have to give it every quarter. But I will say there are two things. Firstly, with respect, there are things that are low hanging fruit. And then as I had mentioned in an earlier comment, we have just completed a consulting exercise to look at what can we do with small investment, small capital investments to further improve the steam. Economies in the distillation. So reduce our power cost effectively. And that is something that. So let’s understand the low hanging fruit you’re going to see immediately. But in terms of the most significant and telling reductions that will then have. A lasting impact on our profitability, you should also see that in the near future. But we will have to time it. Firstly, we have to consider everything which. We will do immediately over the next couple of weeks. Then of course the timing of this is dependent on when you take those. Little shutdowns at the distillery. Because as you can imagine, you cannot do any welding work at a distillery. That operates 24 hours a day because. Of the alcohol fumes, etc. The habit of this nature prevents you from doing that. So then we will have to look at what are our schedules, when will this equipment, the tag along equipment, the. Vessels, et cetera that need to be. Potentially added be in place and post. Which we will have the reduction in that. But yes, you can certainly see this. As a short term measure over the next few quarters that we will be contemplating, not contemplating, that we will be executing.
operator
Thank you. Next question is from Molik Chaudhary from Monarch Net Worth Capital. Please go ahead, Malik, you may go ahead with the question.
Maulik Chaudhary
Am I audible?
Tarun Sawhney
Yes, you are.
Maulik Chaudhary
Yes, I Just have one bookkeeping question. So out of regarding power transmission business, so out of this long duration, a lot of 182 Karos, how much is related to defense?
Tarun Sawhney
The largest pie is related to defense. I don’t have the exact number actually. Rajiv is on the call. Rajiv, can you. Of the 182, what percentage would be defense? What percentage would be yours? If you could answer that please?
Unidentified Speaker
Roughly about 80% would be defense.
Maulik Chaudhary
Okay, and what is the order execution timeline for this long duration order?
Tarun Sawhney
So the gears orders will be executed in the next fiscal year, which that’s long term. The defense orders will be executed over. The next 24 months.
Maulik Chaudhary
Okay.
operator
Thank you very much. We’ll take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Tarun Sawhney
Right. Thank you ladies and gentlemen for joining. Us for Q1 fiscal 26 results. I look forward to speaking to you in three odd months time with hopefully. Much better news to share. Both in terms of weather and in terms of performance of the various businesses, et cetera. This has been a relatively hard quarter. I think we’ve recognized that. We’ve really worked very hard firstly to recognize and then to find improvements around all of this so that we can come back to the type of profitability that we had showcased in previous quarters. The company is fully committed to excellence in all of our businesses, et cetera. And I hope that you will be able to see that kind of result very, very shortly. Thank you again for joining us on this call and speak to you in three months. Goodbye.
operator
Thank you very much on behalf of Trivani Engineering Industries Ltd. That concludes the conference. Thank you for joining us ladies and gentlemen. You may now disconnect your lines.