Sakthi Sugars posted a weak set of number for the second quarter ended September, 2017. Revenue growth was weak and losses expanded across all sugar segments.
Impact of drought in South India hit their revenues.
M Manickam, Exec VC, Sakthi Sugars said most factories in Tamil Nadu (TN) and Karnataka don't have cane and TN is operating only around 15 percent capacity. Odisha plant is operating at 100 percent capacity but there as well in Q2 quarter there were no operations, he said.
The EBITDA loss was Rs 4.5 crore versus a profit of Rs 21.7 crore for the same quarter last fiscal. Revenues were down 20 percent at Rs 172.2 crore versus Rs 215 crore year on year. Finance cost were up 21 percent at Rs 38 crore.
This year the rains are better and so planting is progressing well, he said, adding that they will be back on their feet next year. However, FY18 is going to be a tough year for them, he said.
Going forward, in FY18 operating capacities are unlikely to improve much because Odisha is small capacity, which will do only 3.5 lakh tonnes of crushing, while Tamil Nadu which has capacity of 15 lakh tonnes will do only 2.5 lakh tonnes.
However, planting has been good and so far the company is on target with that, said Manickam, therefore, next year they are likely to do 20 lakh tonnes.
Talking about inventory and pricing, he said they have nil stock as of now. Prices are soft because Maharashtra and Karnataka have started crushing, so prices will remain at same level – around Rs 36-37/kg.
When asked about debt reduction plans, he said they have asked for deferment. However, once they start operating in full blast they would be able to reduce debt within 3-4 years, he said, adding that for this industry the turnaround time is very quick.
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