Full year production likely to be at 24 mt: Balrampur Chini

Uttar Pradesh-based sugar company Balrampur Chini Mills reported net profit at Rs 60 crore in the third quarter of financial year 2012-13 as against net loss of Rs 64 crore in a year ago period, beating analysts' expectations. Its net sales jumped 43 percent - ahead of forecast - to Rs 950 crore from Rs 663.7 crore during the same period.

Speaking to CNBC-TV18 about the financial performance of the company, managing director Vivek Saraogi said, Balrampur Chini sold 26.7 lakh bags of sugar in the third quarter and their opening inventory stands at 15 lakh bags of sugar.  "For the quarter gone by free sugar realization was Rs 34.67 per kilogram. In January-February the price is around Rs 32.50 per kilogram," he added. Further, the company aims to produce about 240 lakh tonne in this year. Below is the edited transcript of Vivek Saraogi’s interview with CNBC-TV18 Q: What kind of inventory did you sell in the quarter gone by and do you still have any leftover inventory going into this quarter? A: We sold 26.7 lakh bags, total combination levy free. Our average was about Rs 34.67. Q: How much inventory is left to sell now? A: We have 15 lakh bags closing inventory on 31st December. Q: What were average realizations like in the quarter gone by? What kind of prices are you seeing in the market right now in January-February? A: For the quarter gone by free sugar realization was Rs 34.67 per kilogram. At present in January-February the price is around Rs 32.50 per kilogram. Q: Is that good enough for you to breakeven on sugar for the remaining quarters given the kind of State Advised Prices (SAP) that has been advised at Rs 280 per quintal? A: No. For sugar division to breakeven it has to cross Rs 35. Q: How is pricing sitting in with production? What kind of early targets have you all set in terms of crushing and what kind of output there maybe this year for the country and for you? A: We are looking at producing about 240 lakh tonnes. It is going to be lower than last year for sure. Hence in the second half after the crushing season finishes one sees a definite change in the sugar prices which are at Rs 32.50 now. We would also be about 8-10 percent higher. Uttar Pradesh is higher, so in Balrampur we will be about 7-8 percent higher than last year. Q: There is a cabinet meeting scheduled today and they maybe looking at hiking the sugarcane Fair and Remunerative Price (FRP) by about Rs 40 to Rs 210 to a quintal. Any impact on your company because of that? A: No, FRP will relate back to a levy price for 13-14, so that will go up substantially in 13-14 if levy does not go out before that. That is the impact. Q: Cogen sales were down 18 percent in the current quarter. Can you take us through why that was the case? A: I will take you through Cogen and distillery. What happened is sugar mills all over the country have quoted for ethanol, so one does not see ethanol dispatches happening before April 1. We have to stack up for that. In our distillery we started a little late, plus to ensure that the distillery works later on we also started the power a little late, because we have to have bagasse to run the distillery also. So, we have started late and in this quarter if you see the distillery division is also starting to perform, because we have sold almost nothing. We are waiting for the contract of ethanol because you have put in a certain quantity; we have put in certain quantity there which is a higher quantity, so you have to hold for that. Q: Any idea what is going on with the government’s examination or study of the Rangarajan Committee Report? We were talking about it a month or month and a half back, not much seems to have changed since then. Any update you can give us? A: As far as our information goes, we are very clear that budget is the window and there is a definite chance on the levy and releases. It is under examination. Q: How are global prices trending? What kind of demand do you guys foresee on the global front this year? A: Global prices have come off their highs definitely. They are at around 18.5 cents now. A couple of days back we read that Petrobras had raised their Net Asset Value (NAV) prices, so it is definitely getting a lot of support on the floor. One does not see any serious downtick from here on the global prices.