Financial Information:

Net sales declined by 6% YoY to Rs 457.83 crore for the quarter ended December 2011 due to fall in sales from the sugar division despite the higher contribution from ancillary business. However, OPM improved by 90 bps YoY to 9.3% which led to 5% growth in operating profit to Rs 43.16 crore. The interest cost (factoring net forex loss of Rs 5.31 crore) rose by 27% to Rs 21.48 crore and depreciation by 14% to Rs 19.36 crore PBT fell by the 66% to Rs 2.64 crore. After adjusting for tax provision of Rs 0.40 crore during the quarter PAT fell by 71% to Rs 2.25 crore.

Highlights of the call:

• Revenues from the sugar division (75% of sales) declined by 9% YoY to Rs 437.91 crore for the quarter ended December 2011 on account of higher cost of production due to higher landed cane cost (Rs 252 per quintal as against Rs 216 per quintal). At PBIT level it posted loss of Rs 8.55 crore compared to profit Rs 2.47 crore in the corresponding previous period.

• The cane crushed in Q3FY 12 grew by 28% YoY to 13.3 lakh tones. However, the sugar production grew by 3% to 1.1 lakh tones for the same period. Further, the Sugar sales during the quarter witnessed 29% fall to 1.08 lakh tones. Notably, the average sugar realization improved to Rs 30.69 per kg compared to Rs 28.29 per kg in the corresponding previous period.

• Revenues from the Power business (18% of sales) grew by 18% to Rs 105.82 crore for the quarter ended December 2011 driven by healthy growth in sales volume. At PBIT level segment margins improved by 140 bps YoY to 28.4% which led to 24% growth in segment profit to Rs 30.08 crore.

• The Company's Power generation improved to 14.27 crore units in Q3FY 12 compared to 12.51 crore units in Q5FY11. Also, the Power exported to UPPCL improved to 9.26 crore units in Q3 FY 12 compared to 8.39 crore units in Q5FY11. However, the realizations declined to Rs 4.24 per unit compared to Rs 4.56 per units in the corresponding previous period.

• The Power segment continues to be a healthy profit contributor in a cyclical sugar business. The Company continues to focus on this division to offset the cyclicality of the sugar business and expect this division to provide an earnings cushion during a down-cycle.

• Revenues from the Chemical/ Ethanol business (7% of sales) grew by sharp 84% YoY to Rs 40.37 crore for the quarter ended December 2011 on the back of higher sales volume combined with enhanced realizations. At segment level margins expanded by 260 bps YoY to 11.4% led to 137% jump in the segment profit to Rs 4.61 crore.

• The Production of Chemicals drastically improved by 94% to 48.06 lakh kg for the quarter ended December 2011. Also, the Chemical sales grew by robust 83% to 44.26 lakh kg for the same period.

• The Production of Rectified Spirit (RS)/Ethanol grew by 16% to Rs 56.66 lakh BL for the quarter ended December 2011. Also, the Rectified Spirit (RS)/Ethanol sales grew by 37% to 67.11 lakh BL for the same period.

• The average realizations for chemical improved significantly to Rs 50443 per tonne in Q3'FY 12 compared to Rs 41222 per tonne in Q5'FY11.

• The average realizations for Rectified Spirits/Ethanol/ENA/SDS stood at Rs 30783 per KL in Q3'FY 12 compared to Rs 26623 per KL in Q5 FY 11.

• As per the order of the Hon'ble Supreme Court dated 17th January 2012, the Company is required to pay differential Cane Price for the Sugar Season 2006-07 & 2007-08 amounting to Rs. 47.36 crore. The same has now been provided for in the accounts and shown in the financial results as 'Exceptional Item'. However, it has been decided to withdraw Rs 47.36 crore from the General Reserve in this connection.

• Forex loss on long-term monetary items for half year ended 30th Sept. 2011 earlier charged to revenue (interest) amounting to Rs. 5.06 crore has now been reversed and credited to revenue (interest) during the current quarter. The total forex loss on long-term monetary items for the nine months ended on 31st December 2011 amounting to Rs. 9.37 crore has been adjusted to the respective cost of fixed assets. During the current quarter, forex loss on short-term monetary items amounting to Rs. 10.38 crore has been charged to revenue (interest) in accordance with the accounting policy adopted by the company.

• The Cane crushing is expected to be higher by 10% during sugar season 2011-12. The improved availability of cane is expected to increase sugar production to 25.5 MT. However, the lower yields to impact the sugar production in current season. Further, the better clarity on sugar production to emerge at the end of season.

• The India sugar production seems to be on target and expects sugar production contribution of 6.6 MT from UP, 9 MT from Maharastra and 3.1 MT from Karnataka.

• The Cane arrears expected to get built in UP area (due to higher SAP price) and expect this would impact the cane plantations for the next sugar season.

• The First tranche of sugar export of 1 MT allowed for sugar season 2011-12 under the open general License (OGL). The second tranche of sugar export of 1 MT tonne being allowed. Further, allowing of exports will improve the domestic sugar price situation.

• The domestic prices likely to be stable at Rs 31.00 (ex-mill price).

• The Export sugar realizations were at Rs 27-28 per Kg and the Domestic sugar realizations are at Rs 29-31 per Kg. The Company has license to export from the Maharastra mills where the domestic realization were at 25-26 per kg.

• The Company Average recovery rate for the previous sugar season was at 9.3% and expected to be same for the current season.

• The increased volumes in ancillary business led by higher sugarcane availability to reduce volatility and augment earnings. The stable power prices to further improve earnings from power segment. Also, the supply of ethanol at enhanced rate of around Rs 27 per liter, fixed as interim price by OMC's is likely to increase.

• The Company's exportable co-gen capacity is at 85 MW available for full year. It will continue with power sales even during the off-season by using its alternative fuel based boilers at Dhampur and Asmoli plants.

• The Chemical/Ethanol business expected to contribute positively largely led by improvement in realizations from Ethanol at 27/liter (interim price).

• As on December 31^st 2011, the term debt stood at Rs 516.2 crore. With liquidation of inventories the interest cost for the quarter stood at Rs 21.48 crore, which includes Rs 10.38 crore forex loss for the quarter and reversal of Rs 5.06 crore forex loss charged in earlier two quarters.

• The working capital requirement is expected to be higher in the subsequent quarter as production will continue up to the end of March or early April 2012.

• It has repaid Rs 31.2 crore long-term debt during the quarter.

• The Company will focus on business opportunities in Chemical/Ethanol business going forward which offers better margins.