Balrampur Chini Mills discussed their Q3 performance, noting a healthy operational outlook driven by sugar realizations. The company expects 5% to 6% higher crushing this year, supported by expanded cultivation. However, management expressed significant disappointment regarding the lack of revision in ethanol prices over the past three years, despite rising input costs (FRP). The company’s PLA project continues to progress as planned, with 90% of imported equipment arrived.
Operational Performance and Sugar Outlook
Balrampur Chini Mills delivered a healthy operational and financial performance, with the sugar segment supported by improved realizations. The distillery segment showed stable performance due to higher volumes. Sugarcane crushing for the period increased by 8.4% to 387.6 lakh quintals. Management anticipates 5% to 6% increase in crushing for the current year, driven by a 5% to 7% expansion in cultivated area and better yields.
Vivek Saraogi noted that the sugar outlook appears positive, forecasting crushing over 10.5 crore quintals this year, with facilities comfortably handling up to 11.5 crore quintals as a near-term target. The expectation is that structural tailwinds will support sugar prices as closures in Maharashtra and UP are expected by the end of February.
Ethanol Pricing and Policy Concerns
A major concern highlighted was the stagnation of ethanol prices. Despite a 16.4% increase in FRP and rising operating costs, ethanol prices under the B-heavy and juice routes have not been revised for the past three years. Management views this as disappointing and surprising, noting that a requested revision would have had a negligible impact on OMCs (approximately INR 0.10 to INR 0.20 per litre).
When questioned about the incentive for the government to raise prices given that blending targets are met, the management emphasized the policy’s goal of being climate-friendly and farmer-friendly, not treating the government as a trader. Management also mentioned that they expect prices across all products (C-heavy, B-heavy, and juice) to remain unchanged based on current indications.
PLA Project Update
The Poly Lactic Acid (PLA) project is progressing on schedule. Construction activities are in full swing with over 3,000 workers deployed. Approximately 90% of the imported equipment has arrived, with the remainder on schedule.
Cumulative project expenditures stood at INR 1,421 crore as of 31st January. Market development initiatives have begun with the trading of imported PLA. Management noted that PLA trade volumes in India have nearly doubled since the project announcement, underscoring significant market expansion.
Management confirmed they are engaging with potential end-users for packaging, including the highly visible application for Gutkha and pan masala packaging, which PMO initiatives are fast-tracking due to its environmental impact (22% filtering in drainage systems).
Financial Guidance
In terms of future guidance, the company anticipates realizing revenue potential of INR2,000 crore at full capacity utilization, targeting a 35% EBITDA profit margin from the PLA project, expected to commission in October 2026.
Regarding ethanol sales for FY2026, management revised the expectation slightly downwards, now looking between 26 crore liters to 27 crore liters, rather than the previously targeted 28 crore liters.
Source: BSE
