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Shree Renuka Sugars Standalone sales (Indian operations) jumped by sharp 165% YoY to Rs 1846.70 crore for the quarter ended December 2012 on the back of higher crushing volume and higher utilization of the refineries. There is higher sugar sales volume mainly from refineries and also higher Cogen exports volumes during the quarter.
The growth in sales was on the back of sharp jump in sales from the Sugar (225%) and Co-generation (155%) divisions during the quarter. Also, Trading (48%) and Co-generation (15%) grew well during the quarter.
However, margins fell by sharp 520 bps YoY to 9.9% and accordingly operating profit grew 74% YoY to Rs 183.10 crore. After the sharp 320% growth in other income to Rs 2.10 crore, PBIDT grew by 75% YoY to Rs 185.20 crore. Even after the higher interest cost (28% YoY) and depreciation (71%) PBT before forex gain jump by 431% YoY to Rs 51.50 crore. After adjusting for the forex loss Rs 25.10 crore (as against the forex gain of Rs 34.20 crore) coupled with meager EO loss Rs 0.40 crore, PBT was down by 41% YoY to Rs 26 crore. Further, with the lower effective tax rate (down by 100 bps YoY to 32.7%) PAT fell by 40% YoY to Rs 17.50 crore.
Standalone Quarterly Performance:
Revenues grew by sharp 165% YoY to Rs 1846.70 crore for the quarter ended December 2012. However, margins fell by sharp 520 bps YoY to 9.9% on the back of sharp rise in consumption cost (1610 bps YoY) despite the fall in staff cost (230 bps YoY) and Other expenses (470 bps YoY) as percentage to sales and net of stock adjustments. As a result operating profit grew by 74% YoY to Rs 183.10 crore. After the sharp 320% growth in other income to Rs 2.10 crore, PBIDT grew by 75% YoY to Rs 185.20 crore. Even after the 28% rise in interest cost to Rs 91.70 crore and 71% rise in depreciation to Rs 42 crore, PBT before EO grew by 431% YoY to Rs 51.50 crore. After adjusting to the forex loss Rs 25 crore (as against forex gain Rs 34.20 crore), PBT before EO fell by 40% YoY to Rs 26.40 crore. After adjusting to EO loss Rs 0.40 crore (as against nil), PBT was down by 41% YoY to Rs 26 crore. Further, with the lower effective tax rate (down by 100 bps YoY to 32.7%) PAT down by 40% YoY to Rs 17.50 crore.
Revenue Mix:
Sugar & Co-Generation – Sharp Jump: Revenues from the Sugar business jump by sharp 225% YoY to Rs 1467.1 crore for the quarter ended December 2012 due to increase in export sugar volumes on account of high output from refineries coupled with improved domestic sugar realizations. Also, Sugar production in India increased by 147% compared to last year on account of higher utilization of Kandla and Haldia refinery. Whereas the Sugar Production in Brazilian subsidiaries increased by 129% compared to last year due to higher cane availability. However, margins fell by sharp 640 bps YoY to 3.4% on the back of lower recovery coupled with increase in sugar cane price reduced the margins in sugar segment and accordingly segment profit growth moderated to 14% YoY to Rs 50.2 crore.
Also, Revenues from the co-generation business jump by 155% YoY to Rs 176.4 crore for the quarter ended December 2012. At PBIT level, margins expanded by 20 bps YoY to 45.5% and after this segment profit grew by 156% YoY to Rs 80.3 crore.
Trading & Ethanol – Good growth: Revenues from the Trading business grew by robust 48% YoY to Rs 293.5 crore for the quarter ended December 2012. However, margins dip by 60 bps YoY to 2.8% and after this segment profit grew by 24% YoY to Rs 8.3 crore. The improved profitability in ethanol segment is due to higher price realizations during the quarter.
Also, Revenues from the Ethanol grew by 15% YoY to Rs 52.2 crore for the quarter ended December 2012. Notably, margins expanded by 650 bps YoY to 35.1% and after this segment profit grew by robust 42% YoY to Rs 18.3 crore.
Standalone Nine Months performance:
The Standalone total sales grew by robust 48% YoY to Rs 4485 crore for the nine months ended December 2012. Also, margins expanded by 70 bps YoY to 10.4% and after this operating profit grew by sharp 58% YoY to Rs 465.30 crore. With the sharp 145% growth in other income to Rs 12.50 crore, PBIDT grew by 59% YoY to Rs 477.80 crore. However, after the sharp 84% rise in interest cost to Rs 301.60 crore and 68% rise in depreciation to Rs 117.90 crore, PBT before EO fell by 12% YoY to Rs 58.30 crore. After adjusting to the forex gain Rs 0.10 crore (as against the loss Rs 38.60 crore), PBT grew by 113% YoY to Rs 58.40 crore. Further, after rise in effective tax rate by 340 bps YoY to 34.1% PAT growth was 103% YoY to Rs 38.50 crore.
Management Comments:
Commenting on the results and performance, Mr. Narendra Murkumbi, Vice Chairman and Managing Director of Shree Renuka Sugars Limited said:
"Shree Renuka Sugars India Standalone business delivered an improved operating performance across all business segments compared to the same quarter last year. We have witnessed a strong increase in revenues across the sugar, ethanol and cogeneration segments. The crushing season started earlier at our Indian mills during the quarter with healthy crushing volumes but lower sugar recovery. Our standalone refineries at Haldia and Kandla were operational during the quarter with high capacity utilization which enabled us to increase the volume of export sugar and energy sales.
India Standalone business has recorded an EBITDA of Rs. 1,852 million which is 75% higher than same quarter last year. Y-o-Y, sugar refining volumes from our port-based refineries have increased by more than 408% highlighting the potential of these assets. We expect to operate both our refineries at Haldia and Kandla at full capacity in the coming quarters on the back of strong demand from domestic and export markets.
On the 2nd of January 2013, Government of India issued a Gazette notification for mandatory blending of 5% of ethanol across the country. Subsequently, a global tender for purchase of anhydrous ethanol by the Oil Marketing Companies was closed on 28th January 2013 in which Shree Renuka has also participated. Our Brazilian mills have ended the crushing season for 2012-13 with combined cane crushing of 9.5 million tons for Renuka do Brasil SA and Renuka Vale do Ivai SA which is an increase of 15% from the previous season."
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