One-time gain of Rs 101 cr on back of debt restructuring: Sakthi

Sugar manufacturer Sakthi Sugar reported a good set on first quarter earnings where revenue increased 45.40 percent to Rs 283.60 crore year-on-year (YoY) and a net profit of Rs 79 crore against a loss of Rs 22.80 crore (YoY).In an interview with CNBC-TV18, M Manickam, Executive VC, Sakthi Sugars said that the one time gain of Rs 101 crore the company had was on the restructuring its liabiliites with Arcil.Below is the verbatim transcript of M Manickam’s interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18. Anuj: Yes, we have your numbers now in place. Something that I asked you yesterday or day before. What explains this onetime gain of Rs 101 crore? A: We have restructured our liabilities with Arcil and they had acquired these debts from the banks at a discount. So, we were able to get remission on interest and some principal. So, we got a remission of about Rs 101 crore from restructuring. Sonia: So, adjusting for this gain what would the earnings before interest, taxes, depreciation and amortisation (EBITDA) margins be? A: Right now, actually if you were to compare last year June quarter we made a net loss of Rs 31.99 crore and this year we made about Rs 11.22 crore profit. So, roughly swing of about Rs 43 crore green but quarter to quarter if you compare June quarter of 2015 with June quarter of 2016. Anuj: But suffice to say that quarter-on-quarter (Q-o-Q) your numbers would have fallen a bit? A: No, in fact operations numbers have increased. Anuj: No, Q-o-Q means sequential, from last quarter Q4 to Q1? A: Yes, but Q4 to Q1 operations were not uniform. Sugar factory operations are not constant. So, it should be comparable with the first quarter of last year. Sonia: I can see it in your P&L that your operational performance has come in at Rs 11.3 crore versus Rs 19.77 crore last quarter. So, there is a bit of dip there but what is the expectation for the next couple of quarters? A: It should be better because if you look at the sugar prices as I was saying if I look at the Q1 of 2015 we made a loss of Rs 32 crore. The same quarter this time we had made a profit of about Rs 11 crore. So, it is a swing of about Rs 43 crore. So, because mainly the swing is because of sugar prices having gone up by about Rs 10, I mean Rs 23 to Rs 33. So, we expect the same kind of pricing to maintain. So, we should have better profitability in the calendar year. Anuj: And what kind of inventory are you holding? A: We are not holding too much. We are holding maybe about 50,000 to 60,000 bags. Sonia: Your industrial alcohol business has seen the EBITDA half this time. Although it is still a small portion of your business but your EBITDA has gone to about less than Rs 5 crore versus Rs 9 crore same time last year. Is there a problem there? A: Yes, last year we had produced more alcohol because sugar prices were lower, we were actually concentrating on producing more alcohol. So, the quantity has come down quite drastically last quarter to this quarter.