Sugar weak, see Rs 80-90 cr inflow from power: Sakthi Sugar

Anuj: I take your point but even within sugar business, the EBIT loss has come down to Rs 11 crore from Rs 30 crore. So, is the worst over? A: We have made some under provisions on the cane price. It is looking better but we are still not out of the woods. Reema: You indicated Rs 80-90 crore, is that the sustainable quarterly revenue run rate from the power business from hereon? A: It should be; we are now selling into the grid. Either we will be selling into the grid or we would be selling to third parties. If we sell to third parties, it will be even better than what we are doing right now. So, that we are looking at as a steady state runner as such.

Reema: What about at the EBIT level for the power business, this quarter it stands at Rs 20 crore, is that something which is also sustainable? A: Yes it would be sustainable at this level. Reema: You also indicated the domestic sugar realisation is at Rs 27 this quarter? A: Yes it is Rs 27, we need Rs 34. So, if we are looking at 3 lakh tonne that we crushed, we lost about Rs 20 crore there. So, it is still running rough on sugar. Anuj: If you could just clarify that point again on cane pricing and the kind of provisions you made – will you have to write that back in next quarter or next financial year; how does that work? A: Right now we have challenged the state government price. In fact from this year we are not paying the state government price, we have negotiations with the farmers and we are making bilateral settlements. So, there will be about Rs 30 crore which we may have to provide in future; we have filed writ in the courts, depending on the outcome of that writ we may have to provide for that. However, apart from that we don’t see a major provision beyond that.

Reema: You have already done a provision of Rs 15 crore in the December quarter and you could be making an additional Rs 30 crore of provision? A: That is right. Reema: Has there been any change in the domestic sugar realisation in this quarter versus the previous? A: It has gone down further; it has gone down by Rs 2 because the factories are under pressure to pay cane price they are earning. Maharashtra is now selling at Rs 24-25. So, we see a lot of impact coming in from Maharashtra and Karnataka where the factories are selling at a very low price. Anuj: What about exports, is there any silver-lining over there or there also things look quite bleak? A: It is politics. Since the Chief Minister of Maharashtra wants to base case pricing, it is a subsidy from the government of India which will primarily help Gujarat and Maharashtra. So, for us it is just news in paper; it doesn’t help us much. Anuj: Would you say that the politics will continue to be the major factor either in UP or Maharashtra? A: This will be the major factor in this industry. Reema: Did you monetise any non-core assets in this quarter and will you do so in the coming quarters? A: We are looking at selling some lands and possibly that will be coming in the current quarter which is not March. So, we are looking at it but nothing concrete as of today. We are looking at monetising some of the assets but nothing concrete right now.