Capitaline

Analyst Meet / AGM 10-Aug-10

Conference Call

Dhampur Sugar Mills

Expects final ethanol prices to be decided around Rs 27/liter

Dhampur Sugar Mills held a conference call on 10^th August 2010 to discuss the financial results and operational performance for the quarter ended June 2010 and outlook for the sector. Gaurav Goel and Gautam Goel, MD addressed the call.
Excerpts from the Call

Management expects the final ethanol prices for ethanol blending programme should not deviate significantly from Rs 27 per liter decided provisionally. The country would need 104 crore liter of ethanol for 5% blending programme.

The Board of Directors of Dhampur approved merger of its wholly owned subsidiary i.e. Dhampur Sugar Distillery (DSDPL) with Dhampur Sugar Mills w.e.f. 1^st April 2010. The capacity of DSDPL is 100 KLPD and the consolidated distillery capacity of the company would become 270 KLPD. The higher capacity will help the company in supplying more ethanol.

The management anticipates decontrol in the sector in October 2010 depending on the crop production in the next season. It will improve the operating situation for the sector.

Management also anticipates reduction in levy quota from 20% to 16% for SY 2009-10.

Cane pricing continues to be a matter of concern for the next season and will largely be in line with that time prevailing sugar prices.

Initial estimates suggest that the cane production in India in 2010-11 is estimated to be higher at 25 million tonne on the back of improved cane acreage, anticipated higher yields and increased availability of cane for sugar.

The company has sugar inventories of 2.59 lakh tonne as on 30^th June 2010 (1.41 lakh tonne as on 30^th June 2009). The average cost of inventories is Rs 26.40 per kg combined for free sale & levy sugar; comprising of free sale sugar cost at Rs 28.04 per kg and Levy sugar cost at Rs 17.92 per kg.

The company had booked total Rs 80 crore loss on levy sugar for FY10 for difference between cost of production and levy prices decided by the Government.

The net revenue for Q3 FY10 increased 64% Y-o-Y to Rs 451 crore. There was loss of Rs 15.65 crore at EBIDTA level against profit of Rs 46.85 crore in corresponding previous quarter. At PAT level there stood net loss of Rs 41.19 crore against profit of Rs 11.14 crore. Sugar business suffered loss on account of high cane cost and reduced sugar price from Feb'10.

Revenues from co-generation were higher on the back of improved realizations effective from October 2009 from Rs 3 per unit to Rs 4 per unit and in off season 2010 at over Rs 5 per unit. The co-gen revenue for Q3 FY10 stood 39% higher Y-o-Y at Rs 378.53 crore. During the quarter, the Company exported 14.43 crore units of power at an average realization of Rs 5.19 per unit.

The power generation for 9M FY09 was about 40% from coal and 60% from bagasse. The cost of power from coal for Q3 FY10 was between Rs 4.5 - 4.7/unit. The exportable power capacity for the company will increase by 7 MW to 87 MW in FY11. Management estimates total 70 crore units of power in FY10.

Sales volume of chemicals for Q3 FY10 stood higher at 51.06 Lakh kg (5.06 lakh kg in Q3 FY09) and the Rectified Spirits/Ethanol volumes were higher at 15.74 lakh liters (27.04 lakh liters in Q3 FY09).

The term debt as on 30^th June 2010 was at Rs 555 crore against Rs 566 crore as on 31^st March 2010. The current SDF loan (@ 4% Rate of Interest) stands at Rs 171 crore which was increased by Rs 13.8 crore during the quarter.

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