We have had a good Q1 and earned a profit of about Rs 32 crore, said Vijay Banka, Wholetime Director & CFO of Dwarikesh Sugar Industries to CNBC-TV18.
However, quarter ending September is a difficult quarter for the sugar industry because there is absolutely no production in that quarter, he said.
Below is the verbatim transcript of Vijay Banka’s interview to Latha Venkatesh, Anuj Singhal & Sonia Shenoy.
Sonia: Tell us what the expectation is as far as production is concerned and also the inventory that you guys are sitting on currently?
A: The outlook seems to be positive. We have had a good quarter. We earned a profit of about Rs 32 crore. Now, going forward the sugar prices are hovering in the region of Rs 3,500 and they look pretty much stable and we should continue to have such realisations in next few quarters. So, the outlook seems positive. As of now there is nothing to indicate otherwise.
Anuj: Could give us some numbers in terms of the inventory, at what price are you carrying the inventory and what kind of volumes do you think you will be selling in next quarter so we can get some sense of your profitability?
A: We have had some good sales in the June quarter. We sold nearly 8 lakh quintals of sugar. On June 30, we have had a stock of about 11 lakh quintals, out of which not the entire thing will get sold in the September quarter but perhaps we will be able to complete all our sales by November. So, the stock that we are carrying should fetch us some good returns.
Latha: What exactly is the margin you make per quintal?
A: It depends from company-to-company. As I said we have also given a press release saying that we are carrying the June stock at a cost of about Rs 26.64 a Kg. So, it will all depend on what kind of sales price that we are going to have. However, one must keep in mind is in the quarter, typically this quarter which ends on September is difficult quarter for the sugar industry because there is absolutely no production in that quarter.
Latha: Did you export anything at all; after all you are getting a subsidy?
A: No, we didn't export because we are in the hinterlands but we completed our obligations because the scheme provided that those who do not export directly can enter into deals with mills which are exporting. So, we have completed our obligation. So, we should earn the subsidy.
Latha: You expect that subsidy to go away at the Cabinet Committee on Economic Affairs (CCEA) meeting later today, what is expected?
A: No, if you recall, it was announced a couple of months ago that the subsidy will be abolished but that is from prospective of it, not retrospectively. Those of us who have completed our obligations earlier will get the subsidy.
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