Triveni Engg upbeat on sugar sector, but cautious on ethanol
Triveni Engineering & Industries Ltd, a leading sugar manufacturer based in Uttar Pradesh, on Wednesday announced to commission a new dual-feed distillery at Rani Nangal, in the state by March 31, but has withheld its plan for the 250 kilo litres per day (KLPD) distillery expansion at Sabitgarh, for now. It also announced its foray into Indian Made Foreign Liquor (IMFL) manufacturing which is likely to start during April-June period of next fiscal.
“With the commissioning, the total distillation capacity will stand enhanced to 860 KLPD,” said Tarun Sawhney, Vice Chairman and Managing Director of Triveni Engineering & Industries.
The company also announced the October-December 2023 financial results, which showed its net profit declining 6.7 per cent to ₹137.4 crore from ₹147.3 crore in the year-ago period. However, for the nine months to December 31 in current fiscal, the company’s net profit has recorded 85 per cent decline to ₹234.1 crore despite gross revenue in the period rising by 2.5 per cent to ₹4,603.3 crore.
The company has attributed this to inclusion of divestment proceeds from the stake in Triveni Turbine in April-Dec of FY23, which was reflected under exceptional items. There is no such item in the 9M FY 24, it said.
“For Q3, it is a very satisfactory performance, given the current market conditions. Sugar (business) has done pretty well, power transmission is also equally good. But water (business) has been mutated. In distilleries (producing ethanol and alcohol), there has been a lot of activities, policy changes which has impacted performance,” Sawhney told business line. But the long-term fundamentals remain very positive, he added.
Stressing that company’s sugar inventory as on December 31, 2023 was 29.63 lakh quintal as against over 23 lakh quintals in the year-ago period, he said the price point is also higher.
Higher sugar realisations have led to much improved contribution margins, which have offset the impact of lower sales volumes and increase in cane price, he said. The domestic sales volume, which is based on government’s allocation of monthly quota for each sugar mill, in the April-December period dropped seven per cent to 6.43 lakh tonnes (lt) whereas for the Q3 period it rose nine per cent to 2.11 lt.
On January 18 the Uttar Pradesh government announced a hike of ₹20/quintal in the State Advised Price (SAP) of sugarcane for 2023-24 Sugar Season (October-September).
On the decision to withhold the distillery expansion plan at Sabitgarh, the company said in a statement that it was due to present government policy and challenges in availability of permitted grains at viable procurement costs.
Sawhney also said that the company will go ahead as per SEBI regulations and try to increase its share to get management control of Sir Shadi Lal Enterprises, which has a sugar mill in Shamli district, after buying 25.43 per cent share from one of the promoters at about ₹35 crore. As all the mills of Triveni are located in western UP, it is strategically better to take over Shadi Lal sugar mill, he said adding the company will also consider if opportunities (to buy sugar mills) come in other parts of the state.
On the distillery business, he said the company has sold 44,313 KL of alcohol in Q3, out of which 92 per cent was ethanol and the share of sugarcane-based feedstock (molasses and juice/syrup) in the total sales of alcohol was 73 per cent and grain-based feedstock was 27 per cent.
“Going forward, more will be coming from grain and less from sugarcane feedstock. It is difficult to say how the proportion may turn out to be, but the next unit to be operational at Rani Nangal will use maize in next fiscal,” he said.
The company also announced Board approval for venturing into the new business of manufacturing, marketing and selling own brands in the premium segment of Indian Made Foreign Liquor (IMFL) by setting up a bottling plant in Muzaffarnagar, Uttar Pradesh, at an estimated cost of about ₹25 crore.
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