Triveni Engineering & Industries Limited (TRIVENI) Q3 FY23 Earnings Concall Transcript

Triveni Engineering & Industries Limited (NSE:TRIVENI) Q3 FY23 Earnings Concall dated Jan. 25, 2023.

Corporate Participants:

Rishab Barar — Investor Relations

Tarun Sawhney — Vice Chairman and Managing Director

Sameer Sinha — Chief Executive Officer, Sugar Business Group

Analysts:

Sanjay Manyal — ICICI Securities — Analyst

Yash Agarwal — JM Financial — Analyst

Anupam Goswami — BOB Capital Markets — Analyst

Shailesh Kanani — Centrum Broking — Analyst

Lokesh Maru — Nippon India Mutual Fund — Analyst

Nikhil Jain — Galaxy International — Analyst

Rajesh Majumdar — B&K Securities — Analyst

Nitin Awasthi — InCred Equities — Analyst

Rajiv Agrawal — Sterling Capital — Analyst

Udit Gupta — — Analyst

Shikhar Singh — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Triveni Engineering and Industries Limited Q3 and Nine Months FY ’23 Earnings Conference Call. [Operator Instructions].

I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, Mr. Barar.

Rishab Barar — Investor Relations

Good day, everyone, and a warm welcome to all of you participating in the Triveni Engineering and Industries Limited’s Q3 and nine months FY ’23 earnings conference call. We have with us today Mr. Tarun Sawhney, Vice Chairman and Managing Director; Mr. Suresh Taneja, Group CFO; Mr. Sameer Sinha, CEO of Sugar Business Group; 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 sent to everybody 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 start this call with opening remarks from the management, following an interactive question-and-answer session.

I will now request Mr. Tarun Sawhney to open the call. Over to you, sir.

Tarun Sawhney — Vice Chairman and Managing Director

Thank you, Rishab. Good afternoon, ladies and gentlemen, and welcome to the Q3 and nine months fiscal 2023 earnings conference call for Triveni Engineering and Industries Limited. The overall performance of the company for the nine months ended December 31, 2022, has definitely been satisfactory. The key highlights. I’d like to discuss that before we get into the business while — business wise detail following. The sugarcane crushed for quarter three fiscal 2023 is 3.12 million tons, which is an increase of 25.3% over the corresponding period of the previous year, and this is a result of the capex that was spent on modernization and debottlenecking at three of the factories of the group.

The net recovery stood at 9.38% after the diversion of B-heavy molasses with 92% crushed with B-heavy molasses during the quarter. The lower recoveries, which I will discuss later, are mainly due to the heavy late rains. We are expecting to narrow this gap in the balance part of the season as our sampling data suggests that the plant cane, which will start coming to the factories in the next couple of weeks, is showing great promise. The company has achieved sugar exports of 135,000 tons, which includes the sale of quota of 73,000 tons during Q3 fiscal ’23. And this is of course out of a total quota of approximately 205,000 tons. All of this has been achieved at remunerative prices.

The increase in net distillery turnover by 61% in the nine months has been driven by additional capacities for commission during the course of the year and this leads to a sales volume increase of just under 40%, coupled with an 8% approximate improvement in realizations. There has been a robust increase in the turnover of both the power transmission and water business growing by 29% and 41% approximately year-on-year for the nine months. The outstanding order book for our engineering business stood at INR1,766 crores.

Yesterday, the Board of Directors at our Board Meeting approved a capex of INR90 crores for the sugar business and INR100 crores for the power transmission business. The proposed capex of INR90 crores towards our sugar business is for a process change at Milak Narayanpur towards refined sugar and modernization, debottlenecking and, most importantly, efficiency improvements at our various sugar units, which will lead to substantial cost optimization and a reduction in our cost of production. The proposed capex of INR100 crores in our power transmission business is towards our brand-new bay that will be set up with complete equipment for a new gear shop. This will be at our existing facility at Metagalli in Mysore, and it will also include machinery towards our defense business project and plant, which is a separate facility that will be set up over the next 12 months as well. For the power transmission business, this will lead to an enhancement in terms of total capacity from a base of approximately INR450 crores to INR400 crores.

I’d like to also spend a few minutes discussing the financial highlights for the nine months of fiscal ’23. Profit before tax, before exceptional items, increased by 7.4% in the quarter. The profitability in the sugar business is lower as the cost of sugar sold pertaining to the previous season includes the impact of sugarcane price, which was increased for sugar season ’21-’22 and led to a higher cost of production when compared to the previous corresponding quarter. Further for the nine months of fiscal ’22, these numbers also include an export subsidy of INR57 crores related to the previous periods. The higher profitability of the engineering business is due to strong revenue growth of 45.8% and 35.8% during the current quarter and nine-month period compared to the previous corresponding periods.

The total debt of the company stood at INR389 crores on a stand-alone basis versus INR525 crores on December 31, ’21. The standalone debt comprises of term loans of INR335 odd crores. Almost all these loans, again, are with interest subvention or at subsidized rates of interest. On a consolidated basis, the total debt is INR480 crores compared to INR592 crores for the previous period. The average cost of funds on the 31st of December stood at 4.75% versus 4.15% in the corresponding period of the previous year. The company at this point in time is holding surplus funds through short term fixed deposits of INR1,278 crores. Our proposed buyback of INR800 crores is presently under approvals. The stake sale in Triveni Turbine Limited has infused substantial funds in the company, which even after the proposed buyback will meet the expansion requirements of the businesses and reduce finance costs or working capital requirements.

I’d like to give a brief update on the buyback. The company has obtained approvals from shareholders. The draft letter of offer has been filed with SEBI and final observation letter is awaited. Turning towards the financial highlights. Again, I’d like to point out that for the quarter the revenues from operations for the company grew by 34% to INR1,658 crores or INR1,659 crores, and the EBITDA margin stood at 16% at INR230 crores and the PAT was a shade above INR147 crores.

I’d like to now spend a few minutes discussing the various businesses in a little more detail. Starting with the sugar business, our realizations during the quarter were INR3,611 per quintal for domestic sales and our export realization was a considerable premium at INR4,041 per quintal for the same period. The current sugar prices as of the 24th of January at our factories for refined sugar is approximately INR3,560 per quintal and for sulphitation it’s about INR3,450 per quintal. Sugar inventory on the 31st of December was just under 24 lakh quintals valued at INR34.4 per kilo. Cogeneration operations have achieved external sales of INR36.5 crores for the nine months against INR33 crores, an increase of 10%.

I’d like to mention that our domestic realization price for this quarter is, as I mentioned, INR3,611, which is a 1% reduction versus the corresponding period of the previous year. Now, this, to me, frankly speaking, seems a little bit of an anomaly, because if we look at the stock position, especially on a month-on-month basis, to have prices at the same level, marginally lower than the previous corresponding period, is a little bit of an anomaly. Frankly speaking, the expectation for the remainder of this year is that prices will gradually increase to a more healthier level. The — from an industry perspective, the country as of the 15th of January has produced 15.68 million tons, which is an increase of 4% when compared to the previous year. 515 mills are crushing versus 507 mills at the same point last year. And Uttar Pradesh has produced more sugar, 1% more sugar at 4.07 million tons at this particular point in time, which is in line with our project business.

According to our estimate, Triveni Estimates, we are anticipating net sugar production in sugar season ’22-’23 of 35 million metric tons and this is lower than the previously announced estimates of us as well as Street estimates, which were approximately 36 odd million tons. We still believe that this is a very healthy amount of production and with 6 million tons of exports that have been announced there is a possibility of a second tranche of a maximum of probably about 1 million tons that can be considered by the government and our hope is that the government does consider an additional tranche very soon of 1 million tons of sugar as a window to truly export sugar from India will end with the sugar season and that is approximately the point in time when Brazilian sugar, et cetera, will also be in global market.

Turning to the international markets, based on report, the forecast is that sugar season ’22-’23 is a surplus of 3 million tons of sugar and this is primarily due to a substantially larger crop in Central South Brazil as well as an increase in Thailand. The global sugar prices have also softened very recently, but these are — it has been fluctuating for quite some time and very substantial and improved pricing in global markets. So, today, after touching highs of over USD0.21, USD0.2118 in December 2022, New York 11 futures are now trading at about USD0.198 per pound. London Whites, the 5 contract was trading at USD551 per ton, down from the recent highs of about USD580 per ton in December 2022. So we’re sort of hovering around recent highs, which is quite encouraging and which leads me to the point that if we were — if India were to export another 1 million tons of sugar, the timing is very appropriate right now. The world market would certainly absorb that sugar and the Indian mills will receive remunerative pricing.

Turning towards our alcohol business. We’ve had an 87% increase in production for the quarter under review. The same quarter has had an increase in average realization of INR2.5, which stood at INR56.6 per liter. Additional capacities have been commissioned in the nine months, which has aggregated — which has resulted in the increased sales volume and the aggregate distillation capacity now stands at 660 kiloliters per day. The profitability margins have been somewhat impacted by an increased transfer price of B-heavy molasses and as you will note we adjust the transfer price to be more relevant with the market prices from time to time.

The sale of ethanol produced from grain accounted for 33% and 20% of total sales volume in the current quarter and nine-month period, correspondingly. The ethanol produced from B-heavy molasses constitutes 57% and 72% of sales volume in the current quarter and nine-month period against 88% and 80% in the corresponding periods of the previous fiscal year — of the previous year. From a domestic industry perspective of the 470.5 crore liters that’s been finalized by OMCs against the total requirement of 600 crore liters contracts for just under 460 crore liters have been executed till January 1, 2023. Against the above, 38 crore liters have been lifted by the OMCs by January 1st, so the average blending is 10.43%. The target, of course, as we all know for the nation for this year is 12% blending.

The total contracted quantity from cane juice and B-heavy molasses is the 133 crore liters and 204 crore liters, respectively, till January 1, 2023. 5.8 crore liters is the contracted quantity towards C-heavy molasses, 18.7 crore liters from damaged food grains, 97 crore liters from surplus rice. Therefore, the sugarcane-based feedstock continues to be the dominant contributor towards the ethanol blending program. And my view on this is fairly clear that as we go forward and approach levels of EVP 20, the sugarcane sector should continue to play a disproportionately high role in terms of the government EVP program and we definitely need that to be accounted for in government policy. And I’m alluding directly towards the pricing of ethanol that is made from juice, because I think it is the most reliable source for ethanol and for the EVP program as we move towards the INR1,000 crore mark and beyond.

Turning quickly to the engineering businesses. I’d like to start with our power transmission business, which has seen revenue increases in the quarter of 71% to INR60.5 crores and a PBIT improvement of 91.5% to INR20 crores — a shade above INR21 crores. The closing order book is 23% higher at 262.75% — sorry INR262.75 crores. For the nine-month, the order book grew at 10% for the same period, and I will of course be happy to discuss the changes and the capexs of the power transmission business during the remainder of this call.

Turning quickly to the water business, there has been a 34.4% improvement in revenues in the quarter to INR104 approximate crores and the closing order book is a shade above INR1,500 crores, broadly in line with what it was in the previous corresponding period. The above results are based on the consolidated perspective including our wholly-owned SPVs. The orders that have been achieved in the water business for the nine-month period stands at just above INR190 crores, excluding OEM — O&M orders. The company is expecting robust order booking in the coming quarters and we’re anticipating several important orders to be concluded within Q4 of this fiscal year.

I’d like to spend just a few minutes talking about the outlook of the various businesses. As far as the sugar business is concerned, as a result of the debottlenecking and modernization carried out at our three factories, our crush is expected to be significantly higher this year. We are still maintaining as we did on the call — on our last call before the sugar season or just about the sugar season had started that we will have a higher crush of between 9% and 10% this year. Of course, the capex is a little bit flat. We proposed that we will have a higher crush in the next season, even higher crush compared to this year as well.

For the current ongoing season, there is a declining trend of recoveries across the state of Uttar Pradesh for the ratoon crop and this is due mainly to the rains during the grand growth periods and thereafter in late October. However, we’ve had fantastic conducive weather and it is expected that there will be a catch-up for the balance part of the season with the plant crop coming to the factories. Our test data from our labs indicates very positive results for the plant from which we anticipate coming to our clients over the next — that the start will happen in the next week or 10 days up to two weeks depending on each plant.

Considering the crush and recovery expectations, we expect higher production for the year and with 60% of our total sugar being refined sugar and the doubling of the pharmaceutical grade production plants, this was all boost realizations and profitability in the coming quarters. The plant at Deoband, which was converted into a refinery is operating brilliantly and the sales of that refined sugar will be reflected in Q4 and beyond, a very small quantum was reflected in Q3. On the policy front, we believe this is the most appropriate time for the government before the budget to consider during the budget an increase on the MSP of sugar to offset the impact of costs and cane prices, et cetera. As I mentioned, the Board has also approved INR90 crore capex to further modernize, debottleneck the plants and for efficiency improvements across the various synergies.

I would like to also mention that the recoveries for this year and last year are not directly comparable, because last year our largest factory at Khatauli ran a C-heavy molasses and therefore a higher recovery versus this year the factories has run — in fact six out of the seven plants have run on B-heavy molasses. So the quantums are different as I mentioned earlier.

Turning to the outlook of our alcohol business, we have a capacity of 660 KLPD and a planned increase up to 1,110 KLPD with two more distilleries, both of the new ones being dual feeds. We believe that that is the modus operandi for sugar mills that that should be adopted giving you ultimate flexibility in terms of looking at the bottom line and the availability of different feedstocks for the distilleries. We’re encouraged by the recent increase in ethanol prices, however there is an urgent need for the government to improve the pricing of ethanol produced from juice. It is our understanding that the government is considering this as well as an improvement in ethanol prices from grains. As far as Triveni is concerned, we have 260 KLPD of ours that can operate on grain or the 660 KLPD and so, therefore, we do have a great deal of flexibility of being able to take advantage of the relative increases in prices as and when they happen.

Looking at the power transmission business, the outlook for the domestic product segment within high-speed gears is extremely promising as industrial capex in sectors like cement, energy, distillery are growing and has been supported by policies and robust economic growth and we’re very encouraged by the increase in demand from these sectors. I would like to mention that following the expiration of the high-speed license agreement with Lufkin Gears LLC, which happened just a few weeks ago in January 2023, the company will pursue the high-speed, high-power segment independently and energy is confident, and I am confident of enhancing our market share in identified target markets, which includes global markets.

In the aftermarket business, the company is focused on expanding its addressable market and market share looking both at domestic and identified target markets. The government Make in India initiative has led to new opportunities for diverse engineering products and the power transmission business is actively participating in many of these indigenous projects. In the defense segment, the business expects strong orders in areas such as propulsion shafting and many others. We believe that there is long-term growth in this segment combined with the machining infrastructure that is likely to show growth over the coming years.

Furthermore, the LM2500 package indigenisation, the agreement that we have with GEAE is expected to grow and to result in positive and good revenues for this particular segment with a capex of INR100 crores, which is split sort of two-thirds — sorry, in the 66% for gears and 33% for the defense business. That will allow the business to really meet the accelerated order booking that is anticipated over the next few quarters.

Very quickly for the order — for the water business outlook, the company is expecting a fantastic order booking, hopefully, in the next — in this quarter and the next quarter with many projects coming under conclusion. We are expanding our activities in overseas markets as I had mentioned earlier and that too — and there are certain tenders in international markets, which will also be concluded during the first half of this calendar year. And there are many attractive states such as Karnataka, Uttar Pradesh, Punjab, Delhi, Telangana and Maharashtra, where the company is working aggressively on securing project. The overall output for EPC and HAM projects, which is driven by large investments for the government both at the state and central level is extremely positive and we hope for some positive news on that front as well.

Thank you very much, ladies and gentlemen. With that, I’d like to conclude by opening remarks and open up the floor for questions.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sanjay Manyal from ICICI Securities. Please go ahead.

Sanjay Manyal — ICICI Securities — Analyst

Hi, sir. Just a few questions I have. One is, if you can give a range for the gross recovery decline till December and till date? And what is your expectation for the full season?

Tarun Sawhney — Vice Chairman and Managing Director

So the gross recovery decline till 31st December was about 0.39 units. As we stand today, we are around 0.34 units, 0.35 units down and we believe that we will be very close to last year’s figures, may not touch it, but generally at a touching distance.

Sanjay Manyal — ICICI Securities — Analyst

So you are expecting there would not be — on a full season basis, there should not be much decline.

Tarun Sawhney — Vice Chairman and Managing Director

There will be a decline, but not significant.

Sanjay Manyal — ICICI Securities — Analyst

Sure, sure. Just on the accounting purpose…

Tarun Sawhney — Vice Chairman and Managing Director

Also, let me just add to it, and this is predicated on the plant cane performance, which is yet to come which will come in February. It may even turn out to be better than what we are seeing at our laps right now.

Sanjay Manyal — ICICI Securities — Analyst

Sure. Sure, sir. Just one more thing on the accounting purpose, where have you accounted for this INR29 crore profit book from the Quota C?

Tarun Sawhney — Vice Chairman and Managing Director

It is appearing as part of the revenue.

Sanjay Manyal — ICICI Securities — Analyst

This is not part of other income?

Tarun Sawhney — Vice Chairman and Managing Director

No, it’s not a part of other income.

Sanjay Manyal — ICICI Securities — Analyst

Okay. Okay. And just one last thing on the alcohol side. I think you are still selling some 10% around ethanol from C-heavy. Given the fact that it is not that remunerative, why you are still selling C-heavy?

Tarun Sawhney — Vice Chairman and Managing Director

We are not selling from 10% of ethanol to — from C-heavy. It is largely ENA, which is for our in-house consumption for IMIL business as well as a little bit of grain ENA.

Sanjay Manyal — ICICI Securities — Analyst

Okay. Okay. Perfect. Perfect. And just lastly if you can just elaborate on the engineering business from a two to three-year perspective, what is your vision for this business given the fact that you are taking substantial capex? What do you think, how the revenues for the gears as well as the defense business can pan out in next two to three years’ time?

Tarun Sawhney — Vice Chairman and Managing Director

So you’ve seen the growth in order booking across the power transmission business and I’ve always given this as a combined number which includes gears and defense. And we’re anticipating that on the defense side, certainly there are lot of projects that are nearing conclusion. The growth has been very good this year. It will fructify into revenues. And, therefore, that business requires an independent facility for the manufacturer of these varied products, that’s part of the capex.

The other portion of the capex that has been announced is for a brand-new facility at the same complex in Mysore, because we will be touching full capacities at some point during the course of the next fiscal year. And so we need to set up a brand-new facility, because we’re seeing this business growing, we’re seeing, we’re anticipating a larger quantum of business both from OEM and aftermarket sales and, therefore, there is a requirement for newer capacity addition.

Now, in terms of two to three-year perspective, I think the growth that is anticipated across both these businesses of power transmission is extremely robust. We’re looking at not just the domestic market contributing towards it, but also select international markets and the signs of that are already flowing in, in terms of enhancement of order booking from key customers. So I typically don’t give you numbers in terms of what our anticipation is, but we’ve been growing at good rates, I expect those excellent double-digit rates of growth to continue.

Sanjay Manyal — ICICI Securities — Analyst

Sure. Sure. Thank you. Thank you very much for all the answers.

Operator

Thank you. The next question is from the line of Yash Agarwal from JM Financial. Please go ahead.

Yash Agarwal — JM Financial — Analyst

Yes. Hi. Congrats on a good set of numbers. Firstly, what is our distillery capacity at the moment in terms of liters? Annually, how many liters can we do? And, going forward, what are our plans to enhance this capacity further? And what amount of liters would that get us to, also? Sorry.

Tarun Sawhney — Vice Chairman and Managing Director

Right. Okay. So we have enhanced our capacities very recently. There has been one distillery that was commissioned in April of 2022. A second distillery that was commissioned in July of 2022 — June, July of ’22, taking our total capacity up to 660 kiloliters per day across the four distilleries. This year, as we have projected, we would be producing about 18 crore liters of alcohol. On a steady state, the 660 KLPD, which will be next year, fiscal ’24, will produce just a shade above 21 crore liters of alcohol. The Board has also announced a further addition of two distilleries of 225 KLPD each, which will be commissioned in Q4 of the next fiscal year. Those distilleries when they are running at full capacity, we take our total production above 31 crore liters.

Yash Agarwal — JM Financial — Analyst

Okay. Sure. That’s helpful. Secondly, this question again on sugar prices, so you mentioned that you expect sugar prices domestically to move up as the season progresses. On that count, what is the probability of further cut in production numbers from 35 million tons, because I think we started at 36.5 million tons, 37 million tons, now we’re down to 35 million tons. So is there any further probability that the domestic production could be lower? First question is that. And second question, obviously, is, suppose if the government does not allow exports, further exports, beyond 6 million ton, would that pressurize prices or subdue the momentum in terms of prices in any way?

Tarun Sawhney — Vice Chairman and Managing Director

So, I think the — my interpretation of this is that the markets at this particular point in time have taken the view that the government will have no further exports. And, therefore, if there are exports that happen, it will certainly boost domestic sugar prices, number one. That’s an important point to consider. So I don’t see any downside from a perspective of the government does not announce another 1 million tons of exports it will have a dampening effect. In fact, it’s quite the opposite. I think it’s already been factored in. If there is exports, it will boost domestic prices, number one.

Number two, further downside revision, one’s hope is, of course, anything can happen, because we are dealing with agricultural products and last year the most significant impact on the plant crop was unseasonably high temperatures in the month of March. Now, today, as we stand at the end of January, we’re still 35, 40 days away from March. So meteorological data suggest, which is far more accurate, suggests that we will have normal temperatures as we go through the rest of the season. Now, in case that is — that remains so, I believe that there will not be any great vacillation from the numbers that we project from the country after making estimates of 35 million tons of production after diversion towards ethanol. However, if there is any possibility — I don’t think there is a great possibility of the production, the net number being higher than 35 million tons, frankly speaking.

Yash Agarwal — JM Financial — Analyst

Okay. Got it. Sir, I wanted to know what is the diversion to ethanol that we’ve considered in the current sugar season and what could possibly be the diversion in the next season once more capacities come along in the country?

Tarun Sawhney — Vice Chairman and Managing Director

So the diversion this year is taken — we’ve taken it at 4.5 million tons. There is a little bit of work that is required to touch 4.5 million tons. And my hope is that with the subsequent tenders and the government pick should be proactive in terms of facilitating with 12% blending for this year that we will see more diversion of sugar as the season concludes by March. And — sorry by May, by the end of May. That’s number one.

As far as next year is concerned, I think, it is — it really depends on the capacity addition that takes place. Now, the capacities, frankly speaking, new capacity addition from sugar factories to process juice has waned. So the sugar industry investing large into large distilleries, that is not projected to increase by any dramatic amount between now and the next year. And, as a result, I don’t see that increasing, although I do believe that we need higher prices of ethanol based on cane juice and then — and we will very quickly see more investments happening.

So there are few isolated distilleries. Triveni has two coming up. There are few other groups that have a few coming up, but nothing substantial. But I do believe the government is looking at this and my hope is that that policy will change, and it will allow the sugar industry to divert more juice, taking it up to at least 6 million tons of diversion and beyond over the coming years. My personal view is that the sugar industry should be able to divert north of 8 million tons of sugar towards the ethanol blending program and that should be a more sustainable model over the medium to long-term basis.

Yash Agarwal — JM Financial — Analyst

Got it. Got it. And, sir, last question from my end. What approvals are required for the buyback to go through?

Tarun Sawhney — Vice Chairman and Managing Director

It is — we — major thing was the shareholders’ approval, which we have already received. And we have given all the draft, advertisements, et cetera, and letter of draft, letter of offer has been filed with the SEBI, and we are awaiting the final observation, which is expected soon.

Yash Agarwal — JM Financial — Analyst

It’s an open market route or is it a tender route, the buyback?

Tarun Sawhney — Vice Chairman and Managing Director

It’s a tender on a proportionate basis.

Yash Agarwal — JM Financial — Analyst

Okay. Okay. Okay. Thank you. Thank you so much for answering all my questions.

Operator

Thank you. The next question is from the line of Anupam Goswami from BOB Capital Markets. Please go ahead.

Anupam Goswami — BOB Capital Markets — Analyst

Yes. Hi, sir. Sir, I want to know what is our ethanol mix target this year and going forward?

Tarun Sawhney — Vice Chairman and Managing Director

So this year we have already done the numbers, which are already with you in terms of 90% coming in from B-heavy — 90% being the total ethanol and 10% being ENA. Of that, 57% is from B-heavy and 33% is from grain. This is for the Q3 numbers. Now, for the total alcohol, which we will be dispatching in FY ’23, I think the number will be — from B-heavy will be about 74% to 75% and grain will be about 25% to 26%.

Anupam Goswami — BOB Capital Markets — Analyst

Okay. Okay. So our endeavor would be more towards producing B-heavy till the maximum we can, right?

Tarun Sawhney — Vice Chairman and Managing Director

Absolutely. Correct. And I would also — as I mentioned in my concluding remarks, the crush increase that is happening of 9% to 10% this year gives substantially improved feedstock for the distilleries. And the fact that we are now — we’re looking at more optimization next year means that we will have more feedstock, more B-heavy molasses that will be available for the distilleries for the following year as well.

Anupam Goswami — BOB Capital Markets — Analyst

Okay. Okay. And this recovery scenario which caused due to late rains, I was under the impression, like, why haven’t the price moved in UP then, if the whole UP had a lower recovery and how chances are good that for additional export quota will come?

Tarun Sawhney — Vice Chairman and Managing Director

So, I think, I’ve just answered part of that question just a few minutes ago. The movement in sugar prices or rather the stagnation in the movement of sugar prices is a bit of an anomaly, frankly speaking. There is no reason given the balance sheet position as of even today that the sugar prices should be at the levels that they are. My view is that the market is assimilating what the production numbers will be. We are happy to give our Triveni Estimates in terms of production today. There the association meetings are happening early next week, but there’ll be more announcements of the production for the nation as a whole and I think all of that once it gets absorbed will reflect into some positive movement in sugar prices.

Anupam Goswami — BOB Capital Markets — Analyst

But, sir, according to you how much another — like, do we need another 3 million tons of exports to keep the stock as well as the price is steady for millets who have at least [Indecipherable] margins on this?

Tarun Sawhney — Vice Chairman and Managing Director

Absolutely not. If I run through the quick balance sheet numbers, if you have just under 26 million tons of consumption in the country, so let’s say 27.5 million tons to 27.7 million tons and you have 35 million tons of production with 6 million tons of exports with another 1 million tons of export, so it pretty much maintained the opening balance — the closing balance for sugar season ’22-’23. So there is not that much exports that is required. But I think the government is judicious in this perspective and is watching what the total production numbers are. My hope of course is that with these estimates coming up, the government will quickly announce 1 million tons of exports. However, my personal view is that the market, the trade has factored in no more exports and so therefore I do not see any downside to sugar prices. Frankly speaking, I only see some upside.

Anupam Goswami — BOB Capital Markets — Analyst

Okay. Some upside will obviously calls when there is a demand/supply — again more of a demand and less of a supply, it comes. Otherwise, it stays more or less at this level, the prices.

Tarun Sawhney — Vice Chairman and Managing Director

No, that’s not what I’ve said.

Anupam Goswami — BOB Capital Markets — Analyst

Okay. Because if there is no exports, there would be no — again, no pressure on the supply, so the prices could be at this level basically?

Tarun Sawhney — Vice Chairman and Managing Director

Frankly speaking, see, prices of course move from time to time. There is a quota that is announced by the Central Government on a month-to-month basis. It has an impact on pricing. The variables that actually result in market prices are fairly substantial. It is not simply a demand and supply equation. Because it’s a controlled commodity, there are various elements, so it is — I would agree with you that the prices will remain stable at this level. I think, there is huge opportunity and other mechanisms to allow for price enhancements to happen. The majority of those rest with the Central Government and the FPD.

Anupam Goswami — BOB Capital Markets — Analyst

Okay. Okay, sir. Sir, even though we have — had a good export realization, what is our cost of production, because I’m trying to gauge like what caused the margin to decline like this?

Tarun Sawhney — Vice Chairman and Managing Director

If we are able to get almost the same recovery as last year, I think the cost of production would also remain at the same level. The cost of production as of 31st December is not very relevant, because as of now the recoveries are a little less and going forward the season recoveries would further improve. So, therefore, you would get the benefit as the recoveries improve.

Anupam Goswami — BOB Capital Markets — Analyst

Okay. Okay. So still 31st December, since the inventory has now valued at INR34.4.

Tarun Sawhney — Vice Chairman and Managing Director

Correct.

Anupam Goswami — BOB Capital Markets — Analyst

Can we take that similar to this level or INR34.4?

Tarun Sawhney — Vice Chairman and Managing Director

No, that’s not what we said. We said that with the rest of the season, the recoveries will improve, the cost of productions will come down, and if we achieve the same recoveries as last year and with higher crushes, despite some small increases in other costs, in input costs, et cetera, we will still maintain the average cost of production as last year. Just to give you an example, March 31, 2022, our cost of production was INR32.7.

Anupam Goswami — BOB Capital Markets — Analyst

Okay.

Tarun Sawhney — Vice Chairman and Managing Director

So with the recoveries converging now, I think one should move towards that figure.

Anupam Goswami — BOB Capital Markets — Analyst

Okay. I got it. I got it. Thank you so much, sir. I’ll join back in the queue.

Operator

Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead.

Shailesh Kanani — Centrum Broking — Analyst

Thanks for the opportunity, and congratulations on a good set of execution. Sir, my couple of questions were on the PTB division. What would be the capital employed as on third quarter in this division?

Tarun Sawhney — Vice Chairman and Managing Director

Just one second. I think, it will be here. Yes, it will be here. Just one minute. INR141 crores.

Shailesh Kanani — Centrum Broking — Analyst

INR141 crores. Okay, sir. And if my understanding is right, we are spending roughly around INR180 crores more in this division, considering our earlier announcement and the announcement in this quarter. So, broadly, given the asset turns what we have, which is, let’s say, in the range of 1.5, we are expecting very good growth in this division, is that understanding right, sir?

Tarun Sawhney — Vice Chairman and Managing Director

Your understanding is correct. I would also urge you to consider that the capex that is being incurred, the total amount that you have mentioned is pretty much split towards the 1. So 66% of it is for growth of the traditional gears business and the balance is for the new facility that is being set up for defense production. That — the latter is required as a discrete independent facility for all the defense products — orders that we have won as a company and we will continue to win as — over the next few quarters and we anticipate excellent growth on that front.

As far as the traditional gears business is concerned, with a focus of expansion in certain areas, especially a dual-pronged strategy of OEM growth and service and aftermarket revenue growth, we do need further capacity additions and the growth rates that you’ve assumed are very much in line with what we expect and what we are already seeing in terms of enhanced order booking levels.

Shailesh Kanani — Centrum Broking — Analyst

Okay. Sir, to just summarize what you’ve said, so out of this INR180 crores, INR120 crores is going towards capacity expansion and one-third is a little bit longer gestation period are expected, right? So that is the understanding, right. Is that right? I don’t want to [Technical Issues] the gas business?

Tarun Sawhney — Vice Chairman and Managing Director

Absolutely. That is correct.

Shailesh Kanani — Centrum Broking — Analyst

Okay, sir. And what would be the key monitorables apart from the private capex what you’ve highlighted for this division, because I’m not that aware with that division as such, so private capex would be one monitorable, apart from that other monitorables for the division?

Operator

Shailesh, your line is a bit unclear. Could you just go softer and slower. We are not able to hear you clearly.

Shailesh Kanani — Centrum Broking — Analyst

Sure. I’ll just repeat it out. I just wanted to know monitorables for the division apart from the private capex what sir has mentioned in the opening remarks?

Tarun Sawhney — Vice Chairman and Managing Director

I’m sorry, what exactly do you mean by monitorables?

Shailesh Kanani — Centrum Broking — Analyst

See, what I’m trying to understand is that, see, basically I’m expecting around 30%, 35% jump in this business. So just wanted to know where the order inflows are expected to come from apart from private capex, any other monitorables for us to look out for in the next couple of years in this division?

Tarun Sawhney — Vice Chairman and Managing Director

There is defense. There is private capex, there is public capex and there is defense. There are three. And I’m not going to comment on the growth rates that you’re expecting, but what I will say is that we’re expecting very reasonable growth across both the traditional gears segment and the defense segment. The boost in terms of order booking, the very large quantums of course will come from the defense side, but that will have a longer gestation period, that will be over a larger number of years. On the traditional gear side, it is expected with shorter duration, as is always that is the nature of the business.

I do want to mention that the growth will not be at a consequence of profitability. We’re very proud of the margins that the business has maintained over the last 15, 20 quarters of over approximately 35% EBITDA margins and over 30% PBT margins, broadly brush strokes I’m giving you for the last number of quarters and the growth will certainly not be at a consequence of that. So we’re looking at profitable growth as it happens.

Shailesh Kanani — Centrum Broking — Analyst

Okay. Thanks a lot, sir. That was very useful. Sir, coming to the water division, there has been some margin pressure till nine months, any views on that? Any particular reason for that? We are facing margin pressures on our water division?

Tarun Sawhney — Vice Chairman and Managing Director

I mentioned this in my opening remarks, I think, I would encourage you not to look at nine-month numbers and to wait for the next quarter and look at the annual numbers, because a lot of this is just an execution and recognition of revenues, et cetera, and that is lumpy. So business is lumpy, the recognition is lumpy, and so point in time to look at the margins is — will not do justice to that business and it’s unfair to that business. I do believe that it is a challenging business, but we have got excellent margins, especially when we compare ourselves to our peers in the group, certainly in the top echelon. And I believe that that — this business is growing profitably and growing well, and you will see that reflection when you review our full year results.

Shailesh Kanani — Centrum Broking — Analyst

Sir, one more news…

Operator

Sorry to interrupt you. Sir, we would request you to please come back in the queue. [Operator Instructions]. The next question is from the line of Lokesh Maru from Nippon India Mutual Fund. Please go ahead.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Thank you. And, sir, I just wanted a sense on what is your take on SAP price hike for this season and next season?

Operator

Sorry to interrupt, sir. Lokesh, your voice is not very clear. Please speak with the — through the handset.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Hello? Am I audible now?

Operator

Yes.

Tarun Sawhney — Vice Chairman and Managing Director

Yes. You are much better. Thank you.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Yes. Thank you. Just wanted a sense on what you’re expecting on or what you’re hearing on SAP price hike expectations front, basically given that this year is the pre-election one, so from the current sugar season and the next one, if you can provide any clue on that?

Tarun Sawhney — Vice Chairman and Managing Director

So, Lokesh, this is not the pre-election year. In fact, next year is the pre-election year. And we are halfway through the course of this year. There have been press articles. Your news is as fresh as mine, but my perspective is that there is really no reason for any increase to happen this year, even if it is from a political perspective. From an economic perspective, I don’t think there is any reason. The real improvement to farm incomes has happened as a consequence of yield and farm incomes has done very, very well.

I think, it is very clear to me that if there were any increase in SAP this year it will lead to substantial cane arrears and that is something that the government definitely wants to avoid. It has done extremely well thus far to ensure that cane price payments have been better than ever before, frankly speaking. And so even at this particular point in time, I don’t think that position is something that the government wants to tinker with. My view would be that there will be no increase in SAP this year. And I would certainly argue and then put forward our perspectives to the government for next year to see where sugar prices are and give our views in terms of what the pricing should be for the following year.

Lokesh Maru — Nippon India Mutual Fund — Analyst

Understood. And got that, sir. Thank you.

Operator

Thank you. The next question is from the line of Nikhil Jain from Galaxy International. Please go ahead.

Nikhil Jain — Galaxy International — Analyst

Yes. Thank you for the opportunity. There is two questions.

Operator

Sir, your voice is not very clear. If you can speak through the handset.

Nikhil Jain — Galaxy International — Analyst

Yes. Just two questions. On the water business side, what do we anticipate as our sustainable EBITDA margin in that? On a long-term basis, what is it that we can actually achieve? And second is that the business, the engineering business and the water business, so they are, let’s say, distinctly different from the sugar business, so do management have any thoughts or any plans to demerge that at some point of time, let’s say, it’s now a INR500 odd crores business plus, right?

Tarun Sawhney — Vice Chairman and Managing Director

You have a — you’ve asked a very pertinent question. Let me answer the first one. On a long-term sustainable basis, we’re certainly looking at EBITDA margins north of 10% or double-digit PBIT margins is what is the expectation of this business. Of course, there is lumpiness, order value changes, its execution changes, et cetera, et cetera, but for a long-term basis that is the expectation at a sustainable level and a much larger level of revenues from where we are today. Point one. The second point is in terms of the disparate nature of businesses that you’ve commented on the Board at this point in time has not evaluated any form of demerger, et cetera, et cetera. As and when it does, we will inform the stock exchanges and to come back to you to discuss it further. But at this particular point in time, the businesses are all under the umbrella of Triveni Engineering.

Nikhil Jain — Galaxy International — Analyst

Sure. Thank you. Thanks a lot.

Operator

Thank you. The next question is from the line of Rajesh Majumdar from B&K Securities. Please go ahead.

Rajesh Majumdar — B&K Securities — Analyst

Yes. Good afternoon, sir. I had a couple of questions, one specific to the company and one at a macro level. So, again, on the sugar number, ISMA started off with a figure of 40.5 million tons as on December and now we’re hearing figures like 38.5 million tons, 39 million tons where it will go. And it seems that this production loss is going to be coming from Maharashtra, Karnataka mostly, is that a correct assumption, because most of the UP mills are thinking the recoveries will be higher in the fourth quarter and production will be slightly higher than last year. Is that a correct assumption?

Tarun Sawhney — Vice Chairman and Managing Director

So, broadly speaking, I think the most significant lower production numbers are certainly coming from Maharashtra. One or two mills — I’m hearing one or two mills have already shut down and more and more will be start. So the reduction is coming there. As far as the ISMA Estimates are concerned, I think earlier they were broadly — Triveni Estimates were very much in line where we had 4.5 million tons of diversion coming to about 36 million tons of sugar production. We’ve now reduced that number to 35 million tons as we believe that the numbers coming from Maharashtra and a little bit from Karnataka will be lower to the majority of this. Uttar Pradesh should be broadly in line with what is last year, some higher — some companies are higher, some companies lower.

Rajesh Majumdar — B&K Securities — Analyst

So effectively the same as last year?

Tarun Sawhney — Vice Chairman and Managing Director

Correct. Your second question?

Rajesh Majumdar — B&K Securities — Analyst

Yes. My second question was a larger question on the E20. If you could give me some color on the way the supply side is gearing up, because we are hearing by April 2023, there’ll be E20 in the pumps, so how is it going to be like? It’s going to be like a separate dispenser like we see abroad or is it going to be the pumps changing over to E20? Plus, the latter is not possible given that the old cars or not — well, they are actually likely to run on E20. So some color on the supply side, because I know how the auto companies are gearing up, but on the supply side how will the pumps gear up to sell E20?

Tarun Sawhney — Vice Chairman and Managing Director

So — well, actually, I’ll answer both, even though you’ve asked me only on the supply side. On the supply side, frankly speaking, from the announcement, the press announcement from MoPNG, it is going to be on a pilot basis in certain cities across the country and I think that is going to basically look at certain distribution points, certain petrol pumps that have the facility to bifurcate E20 from E10 and offer that optionality to customers. We don’t know as yet what the pricing of E20 will be, very frankly speaking. So will it be at the same price or will it be at a potential discount is still something that is to be discovered? That’s point one.

The second point that I would like to make is that most four wheelers from a metallurgical perspective have engines that can meet higher levels of ethanol blending. So they don’t really have any performance related issues. It is the two wheelers that have the bulk of the problems of historic vehicles. But, going forward, from 1st April, there is no problem for any new vehicle in the country. And so, this announcement strategically matches with the automobile manufacturers having E20 vehicles being sold to the public. I do believe that from a pilot perspective, it’s the best way to go, because frankly speaking otherwise creeping up from E10 to E11, E12, E13, E14 all the way up to E20 is not a viable scenario. This is an ideal scenario, and it is, frankly speaking, a visionary move in terms of adoption of E20 across the country.

Rajesh Majumdar — B&K Securities — Analyst

So even the old four wheelers are…

Operator

Sorry to interrupt you, I would request you to please come back in the queue.

Rajesh Majumdar — B&K Securities — Analyst

Just a follow-up on earlier question?

Operator

Okay.

Rajesh Majumdar — B&K Securities — Analyst

So just — Yes. So, as I understand, the old four wheelers can also handle the E20 as per what you just discussed, as per the engineering of the old four wheelers are concerned?

Tarun Sawhney — Vice Chairman and Managing Director

I can’t comment on old four wheelers, but only from a metallurgical perspective there are — there may be some rubber part issues, et cetera, et cetera, but broadly speaking the answer would be towards, yes. Everything is shades of grey here.

Sameer Sinha — Chief Executive Officer, Sugar Business Group

So can I just supplement it. What you will have is finally two dispensers coming in. One will be E10, which will be the base or the protector, which may move up to E11, E12 and the other one will be a E20 dispenser. So that would be the — what the pilot is going to undertake right now and that’s how you are going to get blending. But four wheelers, to answer your second question, by and large, should not face any problems.

Operator

Thank you. We’ll move to the next question from the line of Nitin Awasthi from InCred Equities. Please go ahead.

Nitin Awasthi — InCred Equities — Analyst

Sir, I would like to know what was the grain ENA prices which you’ve realized last quarter?

Tarun Sawhney — Vice Chairman and Managing Director

Grain ENA prices which we’ve realized last quarter were about INR54 plus 18% GST.

Nitin Awasthi — InCred Equities — Analyst

Grain ENA I was referring to, not grain ethanol, there would be a difference, right, because grain ENA would be selling in the market?

Tarun Sawhney — Vice Chairman and Managing Director

So that’s why I said INR54 plus 18% GST. So this matches in with the ethanol prices of INR58.50 plus 5% GST. If you look at those parity numbers, you will come closer to those numbers.

Nitin Awasthi — InCred Equities — Analyst

Okay. Understood, sir. Sir, second question was, if — like you mentioned, you are looking for the government to increase the ethanol prices. If the government were not to increase the ethanol prices, would it be under the investment plans going ahead in the ethanol cycling?

Tarun Sawhney — Vice Chairman and Managing Director

I think the speed at which new capex could come up would certainly be impacted, because you are seeing material price increases, you are seeing input cost increases that are happening. For example, for the grain-based plants you are seeing that the cost of fuel has increased quite substantially. You are also seeing metal price increases and some delays. So, yes, there will certainly be an impact. It will delay the amount of capex coming into this industry. However, is it a total negative? Not a complete negative. There is still a difference between grain and molasses and juice-based plants.

Nitin Awasthi — InCred Equities — Analyst

Understood, sir. Thank you.

Operator

Thank you. The next question is from the line of Rajiv Agrawal from Sterling Capital. Please go ahead.

Rajiv Agrawal — Sterling Capital — Analyst

Thanks for the opportunity. I just wanted to understand in this distillery division, we have recorded very good growth in IML sales, Indian made Indian liquor because sales, so which areas do you market this product? And can you share the quantum of sales for the quarter and for the nine months in terms of liters?

Tarun Sawhney — Vice Chairman and Managing Director

Well, in terms of the number of cases, I’ll just give it to you. We are selling it…

Rajiv Agrawal — Sterling Capital — Analyst

The number of liters?

Tarun Sawhney — Vice Chairman and Managing Director

Yes. So number of — I’ll just give it to you. I’ll just give it to you. What we are doing right now is that we are selling it in UP and our focus is on two areas. One is, which are the areas which are close to us, where we save on the freight costs going ahead. And, B, it’s also a little distant away to some good cities within UP, wherein our brand gets built up. And the numbers we have in terms of cases is about 9.31 lakh cases in this quarter and 21.84 lakh cases in the nine months.

Rajiv Agrawal — Sterling Capital — Analyst

Sir, I wanted this in details. Can you share it in details?

Tarun Sawhney — Vice Chairman and Managing Director

So…

Rajiv Agrawal — Sterling Capital — Analyst

Sales in liters, sales in nine months. Hello?

Tarun Sawhney — Vice Chairman and Managing Director

Multiply it by nine cases, you will get the liters. Can you hear us?

Rajiv Agrawal — Sterling Capital — Analyst

Okay, sir. Okay. Thank you, sir.

Operator

Thank you. The next question is from the line of Udit Gupta from — an Individual Investor. Please go ahead.

Udit Gupta — — Analyst

Sir. Good afternoon, sir. I wanted to understand, sir, what is the amount of grain required to produce a liter of ethanol, sir? And, sir, what is the price of the rice that we’re buying right now for the grain?

Tarun Sawhney — Vice Chairman and Managing Director

So there are two aspects to it. One is the surplus rice which comes from FCI. Now that’s fixed by the government at INR20 and the recovery we are getting right now is between, let’s say, virtually 470 liters per metric ton of grain. The other one is what we buy from the market, that’s called the damaged food grains, and their pricing has been somewhere around INR19 to INR25. And we get about 45.5 plus liters per or 455 liters per metric ton of the grain.

Udit Gupta — — Analyst

Thank you, sir. So, that was my question.

Operator

Thank you. The next question is from the line of Shikhar Singh, Individual Investor. Please go ahead.

Shikhar Singh — — Analyst

Hello. Thank you for giving me the opportunity. Can you put some light on the cost of production of the ethanol, both syrup-drived and B-heavy ethanol, and also the country liquor? Hello? Am I audible?

Tarun Sawhney — Vice Chairman and Managing Director

Number one, in the case of ethanol produced from B-heavy molasses, we have a transfer price of INR1,000 and the recoveries are approximately about INR29.5 to INR30, so you can come to the material cost. And over and above that, you can take approximately INR10 to INR11 considering variable costs as well as the fixed expenses. So that would be your total cost of production. And, similarly, in the case of grain. I think we have already given you the figures for recovery, et cetera. We have already given you the procurement price. So you can arrive at what is the material cost per liter of ethanol and, thereafter, approximately the same amount, INR11 to INR12, you can add towards the variable cost and fixed expenses.

Shikhar Singh — — Analyst

Okay. And regarding the country liquor?

Sameer Sinha — Chief Executive Officer, Sugar Business Group

No, I think, we don’t declare our prices for the conversion of country liquor.

Shikhar Singh — — Analyst

Can you please, pardon?

Tarun Sawhney — Vice Chairman and Managing Director

In terms of grain, it’s an important thing that we also get a co-product out of it and which is DDGS, which is about 36% of it and of the alcohol produced and which we market at about INR25, INR26. So, at the end of the day, my net convergence cost comes to about INR4 or INR4.50.

Sameer Sinha — Chief Executive Officer, Sugar Business Group

That’s for a grain-based.

Tarun Sawhney — Vice Chairman and Managing Director

Yes, grain-based.

Shikhar Singh — — Analyst

Okay, sir. Thank you.

Operator

Thank you. The next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead.

Shailesh Kanani — Centrum Broking — Analyst

Thanks for the opportunity, sir. Sir, just have one question I had to ask. Sir, in the sugar division, what is our strategy to increase the availability of feedstock going ahead? If you can elaborate something on that front, because we are seeing good growth on that front end and crushing facilities also is excellent. So, can you just help me with understanding on that front?

Tarun Sawhney — Vice Chairman and Managing Director

Absolutely. We have a multi-pronged cane development strategy that has been in place. There are short-term and medium-term targets that go down to the macro — the micro level to meet over 1,000 people that actually work within the development function of the business. Now to give you a small idea, all the work that is being done, it is being done right from soil mapping and understanding the constituent elements of the soil and improving the soil balance so that you can get higher productivity at the farm level to the actual planting of the crop to propose newer technologies across our area, we’ve had huge success, and we will continue to hopefully have great success in terms of newer technologies and better planting practices deeper and wider just to paraphrase, et cetera.

In addition to that, the provision of quality seed, seed treatment, quality fertilizer, pesticides, herbicides, et cetera, that is extremely vital. Lastly, I think the program that we have in place with respect to technology in terms of capturing information is absolutely vital in terms of our sourcing the cane once it has grown. So it’s a multi-pronged approach.

The last point that I left out is a vast number of demonstration plots. The show intel method is absolutely vital in terms of encouraging farmers to adopt more modern and current practices and that is extremely important in terms of our medium-term targets. And I’ve actually left start one more element, which is an association that we have with leading institutes across the country in terms of getting the best advice really at the ground level to be disseminated amongst our pharma. So it’s a six-pronged strategy that we have in place to ensure continued availability and greater availability of sugarcane.

Shailesh Kanani — Centrum Broking — Analyst

Excellent, sir. Thanks a lot, sir. That was very helpful. Thanks a lot.

Operator

Thank you. As there are no further questions, I now hand the conference over to management for closing comments.

Tarun Sawhney — Vice Chairman and Managing Director

Ladies and gentlemen, thank you very much for joining us for the Q3 and nine-month results for Triveni Engineering. It’s been a very interesting quarter. I believe a good set of numbers. There have been some challenges in the sugar production front, but the other elements of the business have all performed well. As we move into the fourth quarter of this year, there is huge hope in terms of a turnaround, not really a turnaround but a vast improvement in sugar production and cost of goods as far as sugar is concerned. And, of course, the expectation from the engineering businesses as well as our distillery business is quite robust. I look forward to talking to you with our full year results in May. Thank you very much, and good afternoon.

Operator

[Operator Closing Remarks]