Working to offload existing stock, expect better Q4: Ugar Sugar

Prashant: Just explain the quarter. Put it in context for us because it was also the festive season. Your topline is down, but otherwise earnings before interest, taxes, depreciation and amortisation (EBITDA), profits are looking very good.

A: Actually, what has happened is that compared to the first two quarters, this quarter has definitely seen a pick up mainly due to the sugar prices which have gone up as compared to the previous two quarters as well as the same quarter last year. There has been a slack demand. Although it has been the festival season, the demand has been quite on the lower side as such. There has not been much of demand, but the quarter has seen a good result mainly due to the valuation of the stock. Our last year’s stock which was valued at a much lower price, so mainly due to that we have been able to get some good margins. And the sugar price also seems to be holding at around what the cost of production is today. So, it has been a better quarter, definitely.

Prashant: Now, of course, you are making a decent profit. It is not exactly at cost of production, right?

A: No, if you see the average cost of production in the country, we are looking at Rs 37-37.50 and if you go to see the nine-month average, we are still below the cost of production. So, maybe at this quarter, the quarter coming from January to March, we might just marginally exceed the cost of production numbers.

Sumaira: What is your inventory?

A: Our inventory for the current season will be around 10 lakh quintal.

Sumaira: And how does that compare?

A: It is a drop because if you see, there has been a drop throughout the Karnataka state as well as there has been a drop in Maharashtra. Except for Uttar Pradesh, there is a huge drop in inventory as compared to last year.

Sumaira: Now, Q4 you say is likely to be your best quarter?

A: Yes.

Sumaira: How much will you wrap up the year with in terms of your bottomline?

A: I cannot give a number right now, but we are definitely holding some stock of the previous year, a certain percentage which we will definitely be looking at offloading for this particular quarter. So, based on the change again, the price of valuation will definitely be able to make some and better results are expected in this quarter for sure.

Prashant: Would volumes pick up as well?

A: Volumes have picked up a bit, but it has been sporadic.

Prashant: So, how much sugar did you sell in the quarter gone by?

A: We sold a little over four lakh quintal in the last quarter.

Prashant: So, it would be what in the January-March period? Around the same?

A: It depends again. We still have another few weeks to go. So, it depends. I would look at hopefully a similar.

Sumaira: There was a news that we had done that the government is looking to scrap subsidy to states for Public Distribution System (PDS) sugar. Is there any impact you see on account of this?

A: The centre has taken that decision as per the Budget, but it is now up to the states. I think the states will be egged on to provide that subsidy because the common man will not be burdened for sure. The person who is buying the sugar will still get the same subsidy. It is up to the states to take care of that.