The growth in revenues were powered by the sharp growth from Sugar business (39%) coupled with moderate growth from trading business (6%) despite deceleration in Co-generation business (44%). The growth in sales from sugar business was powered by higher sugar sales volume in both domestic and exports markets and better price realizations.

During the quarter, the domestic sugar sales volume increased by 29% while export increased by 23%, which were well supported by the (sugar) refineries during the quarter. Also, the domestic sugar price hardened by 17.1% while the ethanol prices increased by 8.3% for this period.

The Company operating profit margins improved by 70 bps YoY to 12.1% on the back of better resource utilization coupled with lower cost of production as proportion of sales. Accordingly, there was 31% growth in operating profit to Rs 179.80 crore. However, after the sharp rise in interest cost (122% YoY to Rs 113.60 crore) coupled with the higher depreciation (70% YoY to Rs 37.70 crore), PBT before forex gain/(loss) was down by 52% YoY to Rs 28.50 crore. The higher depreciation cost was due to commissioning of Kandla refinery and higher interest cost was due to higher working capital requirement.

After adjusting to the forex loss Rs 7.60 crore (as against nil) coupled with Rs 0.50 crore as prior period expenses, PBT was down by 66% YoY to Rs 20.40 crore. Further, after the sharp rise in effective tax rate (by 1410 bps YoY to 34.8%) net profit was down by 72% YoY to Rs 13.30 crore.

In India, the crushing season ended in April 2012 with the total crushing of 4.9 million tons (6% lower than previous season). However, higher recovery rate of 12.02% for the season ensured the total sugar production from mills was not affected much. Further, the Company's India sugar mills began their off-season period having produced 589363 tons of sugar marginally 2.7% lower over the previous season.

Its Kandla refinery was operational during the quarter, refining sugar from domestically procured raw sugar. About 116264 tons of raw sugar was refined during the quarter producing 111613 tons of high quality refined sugar.

Sugar and Trading:

Revenues from sugar business (77% of sales) grew by robust 39% YoY to Rs 1183.1 crore for the quarter ended June 2012 driven by the higher sugar sales volume in both domestic and exports markets and better price realizations. Also, at PBIT level margins from the sugar business expanded by sharp 580 bps YoY to 11.2% and accordingly segment profit jump by 189% YoY to Rs 132.5 crore.

Revenues from trading business grew by moderate 6% YoY to Rs 203.9 crore for the quarter ended June 2012. Also, segment margins improved by 170 bps YoY to 6.2% and after this segment profit grew by sharp 44% YoY to Rs 12.7 crore.

Ethanol and Co-Generation:

Revenues from Ethanol business were flat at Rs 89.4 crore in Q1'FY 13 due to lower sales volume despite higher price realizations. Also, the margins fell by sharp 1530 bps YoY to 28.9% and accordingly there was 35% fall in segment profit YoY to Rs 25.8 crore.

Notably, The Indian distilleries produced about 30 million liters of Ethanol, mainly from the stored molasses during the quarter. Also, it has dispatched 39 million liters of ethanol to the Oil Manufacturing Companies since September 2011 (as against the purchase order of 73 million liters received up to the September 2012). The balance production was sold for potable use and exports.

Also, Revenues from the Co-generation business fell by sharp 44% to Rs 48.7 crore for the quarter ended June 2012 on the back of lower sales coupled with the lower price realizations. This was due to off-season and lesser number of operational days during the end of the crushing season. At segment level, it posted loss of Rs 12.4 crore (as against profit of Rs 38.2 crore) for the same period.

Performance of Brazilian Subsidiaries:

The Crushing season 2012-13 started in the previous quarter. Notably, the Brazil had more than average rainfall during the last quarter leading to higher stoppages in harvesting which ultimately affected the crushing during the quarter. It has crushed only 1.9 million tons of cane combined at Renuka do Brasil (RdB) and Renuka Vale do Ivai (RVDI) as against 3.36 million tons crushed in the corresponding previous period.

Further, about 64% of the total ATR was diverted into production of sugar during the quarter. The mix is expected to go higher due to better relative sugar prices, tighter engineering in plants and drier weather.

Outlook:

From an average of 23 cents/lbs in April 2012, the World raw sugar prices experienced a fall, touching a low below 19 cents/lbs during the first week of June 2012. The prices have risen since then due to delay in the beginning of crushing season in Brazil. Despite lesser crushing during the quarter in Brazil, it expects to gain from the rainfall in the first half of the season, improved cane yields in the second half ensuring a longer crushing season and higher cane for both, Renuka do Brasil and Renuka Vale do Ivai.

After achieving its best operating performance ever, the India sugar mills had an off-season period during the quarter. Further, with improved refining margins and comparatively lower world raw sugar prices, the focus of its refineries will now shift towards imported raw sugar, having refined domestic raw sugar during the last couple of quarters. The white premium, which has been constantly above 120 USD/ton, will ensure high utilization of its refining capacities going forward.

The Company expects better season in terms of cane crushing and capacity utilization for the Brazilian mills supported by improved weather conditions in Brazil and to reap benefits of better yields resulting from the cane plantation programs under taken during the last season wherein it has planted around 25000 Ha of land.

Commenting on the results and performance, Mr. Narendra Murkumbi, Vice chairman and Managing Director of Shree Renuka Sugars ltd said:

" The current quarter has been good for our India business which benefited from better price for sugar (both domestic as well as export) and ethanol. It has also witnessed increased refining operations from our recently commissioned sugar refinery near Kandla, Gujarat. Although it was an off-season period in India, the current quarter marked the beginning of new crushing season in Brazil where consistent rainfall over the last few months has raised hopes for an improvement in crushing volumes over last year.

Owning to loss of time every quarter in converting the financials for our Brazilian subsidiaries from Brazilian GAAP to Indian GAAP, the management has taken a decision to release only the standalone financial result for the quarter ended 30^th June 2012 currently. The consolidated results will be released in 4 weeks.

The Company has reported a net profit of Rs 133 million for the quarter ended June 2012. Higher sales volume and prices have effected in improved EBIDTA margin of 12.1% against 11.0% during the same period last year. Sugar segment has been highly profitable with EBIT profit of Rs 1325 million along with trading and ethanol segments.

We have witnessed a steep rise in domestic sugar prices over the last few weeks, mainly due to deficient rainfall in the major sugar producing states and reduced production estimates for the refinery business will benefit the increase prices in the coming quarters. The refinery business will be positively impacted due to the absence of competition from white sugar exports from India in the foreseeable future.

The Crushing in the first quarter was significantly lower in our Brazilian mills than the same period last quarter due to unusually heavy rainfall in May and June. However, we expect to benefit in terms of improved yields and extended crushing season over the rest of the year. Management efforts are currently concentrate in improving the agricultural as well as industrial productivity in our Brazilian mills"