Ladies and gentlemen, good day and welcome to E.I.D. Parry India Q2 FY26 Earnings Call, hosted by DAM Capital Advisors Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Manyal from DAM Capital Advisors Ltd. Thank you, and over to you, sir. Hello, everyone, and a warm welcome on behalf of DAM Capital to the Q2 FY26 Earnings Call of E.I.D. Parry. We thank E.I.D. Parry's management for giving us an opportunity to host this call. On the call today, we have Mr. Muthiah Murugappan, Whole-time Director, and other senior management team of EI`D Parry. I hand over the call to the management for opening remarks, followed by a question-and-answer session. Thank you, and over to you, sir. Thanks, Sanjay, and good afternoon to everyone. I'll make a few opening remarks covering the global scenario as well as the Indian sugar scenario as well. Sorry, I'm getting an echo somewhere. Hello? Yes, sir, please go ahead. Yeah, okay. I'm going to start by covering the global scenario. The global sugar market is projected to remain in mild surplus through sugar year 2025-2026, primarily due to increased production in Brazil, India, and Thailand. Favorable weather has supported higher output in India, 50% above normal monsoon during October, while Brazil continues to crush aggressively with a sugar mix of 53% despite dry conditions affecting cane quality. However, risks to Brazilian output persist due to lower Rs and productivity losses due to adverse weather in 2025. According to S&P Platts, global sugar surplus is expected to reach 2.23 million metric tons in 2025-2026. Brazil's Petrobras's decision to lower the gasoline prices has also contributed to building raw sugar surplus and lowering of ethanol parity as well. However, with the price trading below ethanol parity on a sustained basis, the mix is expected to shift back to ethanol during the remainder of the crush. White premium values are expected to trade in the range of $80-$110. The hedging activity by Brazilian and Thai millers and positioning by hedge funds will also have a large impact in pricing and book shaping of sugar [SNDs] in ensuing quarters. I'll now cover the Indian scenario. In sugar year 2024-2025, India's net sugar production stood at 26.1 million metric tons. Gross was 29.6, and diversion to ethanol was 3.5 million metric tons. Domestic consumption was about 28.1 million metric tons, and exports was just under 1 million metric tons. Closing stocks were to the tune of 5 million metric tons. In Q2, which is July 2025 to September 2025, India's monsoon brought mostly above-normal rainfall, filling reservoirs and supporting agriculture. Sugar cane yields have improved across major states, with only minor setbacks from brief flooding in Uttar Pradesh and Maharashtra. Sugar cane output, on account of increased yields and crop, is likely to move up by 15% at an all-India level for sugar year 2026. With the sugar output expected to move up and consumption marginally expected to move up to 28.5 million metric tons, it's very likely that sugar pricing may soften. Moreover, ethanol diversion, wherein grain-based feedstock now accounts for more than 70% of the awarded tenders, ethanol diversion will likely only account for 3.4 million metric tons, thereby putting the estimated closing stocks for sugar year 2026 at a more than healthy 8 million metric tons level. Given these realities, it's very likely that the policymakers will consider greater than 1 million tons of exports, for which official notifications are awaited. The current situation presents an extremely challenging time for the industry. On this account, the industry continues to make very active representations to the policymakers on revision of MSP, increasing the blend percentage beyond 20% in the ethanol blending program, higher allocation towards sugarcane-based feedstock for ethanol, and on better pricing for sugarcane-based ethanol. Just last week, the government of Karnataka has declared an additional price of INR 50 per metric ton of cane over and above our FRP to be borne by all sugar mills in the state on account of intense farmer agitations. This adds an additional burden to the industry which operates in the state. It will be important over the coming weeks to monitor the position taken by policymakers in response to the industry's various representations. I'll now hand over to my colleague, Mr. Y. Venkateshwarlu, to take you through the operating and the financial metrics of our company for the last quarter. Thank you, Muthu, and good afternoon to all the participants. It is a great pleasure to be part of the analyst call and to share the key information of the operational and financial performance of the company. I would like to share with you the key operating parameters of each of the segments. The crushing operations of Tamil Nadu unit, Tamil Nadu, then Nellikuppam and Pugalur has been commenced during the quarter, and the two units have got operated about 64 days and 21 days respectively. As far as the crushing is concerned, we crushed about 3.66 lakh metric tons compared to the corresponding quarter of the previous year, which was 5.62 lakh metric tons. As far as the recovery is concerned, current quarter is 7.97%, again at 7.6% of the corresponding quarter of the previous year. As far as the sugar production is concerned, we produced about 27,000 metric tons of sugar during the quarter, again at the 42,000 metric tons of the corresponding quarter of the previous year. Cane cost, overall cane landed cost is INR 3,620 per metric ton, as against INR 3,491 per metric ton of the corresponding quarter of the previous year. As far as the sugar segment is concerned, we have sold about 83,000 metric tons of sugar domestically. Compared to the corresponding quarter of the previous year, it was 93,000 metric tons. Sugar prices for the current quarter is at INR 41.19 per kg, against the previous period, INR 38.47. We carry the closing stock about 66,000 metric tons, valuing at INR 38.60 at the COP level. The sugar segment achieved a turnover of INR 368 crore, as against the INR 367 crore of the corresponding period of the previous year. All FRP paid on time to all the growers who have supplied the cane to us. As far as the consumer product group is concerned, we achieved a turnover of about INR 169 crore during the current quarter, registering a degrowth of 30% over the corresponding quarter of the previous year of INR 236 crore, mainly on account of restriction and release quota of the sweetener category, and lower realization and fall in market price of pulses compared to the corresponding quarter of the previous year. The cogeneration operations. As far as the cogeneration operation is concerned, we generated about 307 lakh units, as against 505 lakh units in the corresponding period of the previous year. We exported about 168 lakh units, again as against 233 lakh units in the corresponding period of the previous year. The average power tariff for the current quarter is INR 4.04 per unit, as against INR 3.94 per unit in the corresponding period of the previous year. Revenue for the quarter was about INR 12 crores, as against the previous year, INR 15 crores in the corresponding period of the previous year. As far as the distillery operation is concerned, we sold about 409 lakh liters, of which ENA is 170 lakh liters, and ethanol is 233 lakh liters. The same corresponding previous period, we sold about 419 lakh liters, of which ENA was 159 lakh liters, and 260 lakh liters was ethanol. As far as the price relation is concerned, we realized at INR 67.[52] per liter, against previous year realization of INR 64.45 per liter. As far as the revenue is concerned, we achieved a turnover of INR 292 crores compared with the INR 281 crores during the corresponding period of the previous year. As far as the nutraceuticals segment is concerned, Indian operations has achieved about INR 7.6 crores revenue, as against the INR 7.25 crores in the corresponding quarter of the previous year. At the consolidated level of the nutraceuticals business, including US operations, we achieved about INR 61 crores turnover, as against the INR 37 crores in the corresponding quarter of the previous year. The refinery business. We produced about 2.21 lakh metric tons of refined sugar, against the previous period of 2.60 lakh metric tons. Refined sugar sales for the quarter was 2.54 lakh metric tons, as against the 2.15 lakh metric tons of the corresponding previous period. The revenue is about INR 1,168 crores for the current quarter. Corresponding to the previous quarter, it was about INR 1,117 crores. EBITDA for the current quarter is about INR 58 crores. Corresponding previous period, it was INR 29 crores. As far as the PBT is concerned, profit of INR 31.42 crores for the current quarter. Corresponding previous period, it was about INR 5.02 crores. As far as the long-term loans is concerned, it's zero because of corresponding previous period, it was about INR 200 crores. Short-term loans stood at INR 159 crores for the current quarter, and the same was corresponding previous period, it was about INR 179 crores. That's all as far as the E.I.D. Parry's results is concerned. Now, floor is open for the questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their hands while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The next question is from the line of Vaishnavi Gurung from Craving Alpha Wealth Fund. Please go ahead. Hi, am I audible? Yes, ma'am. Yeah, hi. Thank you for this opportunity. My first question is on the sugar segment. Considering the issues pertaining to sugar and ethanol, where the mix is changing from sugar to grain, how do we approach this challenge? Do we anticipate oversupply of sugar or underutilization of our ethanol capacity? Hi, Vaishnavi. This is Ashiq here. Yes, the industry faces a challenge of overall higher ethanol capacity as evident from the recent data that flowed as part of the OMC bidding. Obviously, the country is facing excess capacity, but the excess capacity seems to be higher in grain-based distillery as compared to molasses-based. Having said that, the lower allocations on ethanol, especially in Karnataka, puts a strain on how we use our capacity utilization. Some of these volumes will shift to ENA and will be managed, but eventually, we need a policy decision to alleviate the excess capacity situation. The government is also seized on the fact that there is excess capacity today. I'm sure there'll be some work around the same. Thank you. Thank you, sir. One more question on the sugar and ethanol side again. This is more on the consumer business side, actually. Considering our key segment on standalone basis is sugar and ethanol, which is currently facing the challenges? Do we see the consumer business as our leading growth segment going ahead? Yeah, this is Balaji here, the head of the consumer business. The first half of the second quarter for the consumer business has been subdued due to reasons of lower release quota and because of the lower prevailing prices of dal, which were almost 30% lower than the previous year's prices. I think as we go forward, the consumer business will be moving into a growth phase with larger release quotas coming to us in the third and fourth quarter, and with prices of staples expected to stabilize at a slightly higher level as we go forward. If you can put a number to the growth for consumer business on a year-on-year basis? We don't give forward guidance, Vaishnavi. Okay, [interesting], I'll join back with you. Thank you very much. Participants who wish to ask a question may press star and one at this time. I repeat, participants who wish to ask a question may press star and one at this time. The next question is from the line of Sanjay Manyal from DAM Capital Advisors Ltd. Please go ahead. Hi, sir. I have a few questions on the ethanol part. One is what kind of an, so what we broadly understand for 20% blending levels, government has allocated approximately 1,100 crore liters of ethanol. What allocation have we got and will we be able to utilize our capacity to the full? If not, then is it like private OMCs also will sort of, we will get some allocation from them also? We have got about 69% allocation of the bidding that we did on the OMC side. We do engage with private players also, both Nayara and Reliance. Our current position is we will be able to deliver similar capacity utilization like last year, which is upward in the range of 90%+, thanks to the combined allocation that we have been able to garner. We have a capacity of about 18 crore liters in a year. We will deliver about 17 crore liters, the current estimate. Right. If you also can elaborate on the given the fact that ethanol price has not come in the last two years, what is your expectation on that? What kind of margins have been there? I think FRP and sugarcane cost is continuously rising. How the margins have over the last two, three years have shaped, has it been too much of strain at this point in time? How the EBITDA per liter sort of have moved, I believe, downwards? Yeah. The ecosystem changes continue to happen as you guys would have seen in the news. We recalibrate ourselves with every change that comes. On a three-year, last three-year time frame, I think even in the last call, we said that we did make ethanol investments with a particular expectation on return on capital. I think that's got significantly impacted because of the changes in the government policy that's happened over the last couple of years. We expect the scenario to improve on the back of support from the government. We are very sure the government is fully seized of the matter. While the MSP has not come through, we are still positive on the ethanol pricing that the government will step in and address. Right. Thanks, sir. Thanks, thanks for all the answers. Thank you very much. Reminder for participants to press star and one to ask a question. The next question is from the line of Gautam Dedhia from Nalanda Securities. Please go ahead. Yeah, hi. Just one question. On slide 17, you're talking about some channel consolidation in the pulses segment over the next two quarters. Can you just elaborate what is happening over there? Yeah. This is Balaji again over here. What we are working on is we have two channels right now, a separate set of teams selling sweeteners and non-sweeteners. There is some rethinking on that, and there is a consolidation of this channel in terms of the team size and the channel partners. Because the channels are being merged and one set of channel members are going out, there is a correction that is being taken in terms of the whole numbers, and this will come back once this channel merger is complete. This won't affect the volume that we are selling, right? Yeah, it won't in the long run. In the long run and by the end of the year, the business will be back to its normal volume. In the short run, there will be some correction that will happen, and that is what was highlighted, I guess. Gautam, good question. Q3 definitely has a volume impact because we're going through this rationalization. Whilst we're doing this rationalization, we're also strengthening our commercial terms in the market across the staple segment as well as the sweeteners segment. I think strengthening the commercial terms will also keep our working capitals in line with our intent to build a more efficient business model. We will see an impact in volumes for Q3. I think by the time we get into the February time frame, we should be back on track. These exercises can take some time. What kind of? Sorry, sorry. Do it now as the business is scaling as opposed to do it much later when the business is much larger. Are we expecting any cost savings from this exercise also? No, no. This is more prudent and efficient business model construct. That is what we are expecting from this. See, this is a growth business. It is going to need investments in terms of A&P expenses, in terms of talent, and in terms of its scale-up. This business will have to be in an invest and a growth phase. It would be unwise to start looking at—we will be prudent on the way we manage costs, but the focus will be on the enablers for growth. Okay. And just one more question. You said the white premiums, you expect them to be in the range of $80-$110 per ton. At that level, do we break even at the refinery? What is the break-even point for how does it translate from white premiums to refinery spread? Good afternoon. Suresh Kannan here. Typically, re-export refineries need between $115-$120 of white premium to break even on a full-cost basis. Currently, because of the supply surplus that has been explained by Muthu earlier part of the call, we have a big overhang on the supply side, which is resulting in white premiums being depressed because there is enough competition from the low-quality whites coming out of several geographies. Okay. Okay, thank you. Thank you very much. The next question is from the line of Ritwik Sheth from One-Up. Please go ahead. Yeah, hi. Good evening, sir. Just one question. In your opening remarks, you mentioned that FRP prices have been increased by INR 50 per ton in Tamil Nadu. Sir, what is the kind of crushing that we expect in FY 2026 from Tamil Nadu? Ritwik, hi. Good to speak to you again. No, government of Karnataka has announced an additional price over and above the FRPs that we're paying in the state. This is a development, actually. It's a development which is a week old, actually under a week old. It all transpired over the weekend. We're just keeping you guys appraised of it because of course it impacts the industry at large. This is a Karnataka issue. Okay, Karnataka. We crushed last year, we crushed about 21, 22 lakh tons of grain in Karnataka. Ideally, we'll go a little higher this year. Okay. Has this been implemented or it's still under consideration? No, no. It's been implemented. It was implemented on the back of some intense agitation. I think the industry has, we've had to go with this. Got it. Okay, sir. Thank you, sir, and all the best. Thank you. The next question is from the line of Vaishnavi Gurung from Craving Alpha Wealth Fund. Please go ahead. Yeah. Thank you for this opportunity, sir. My question was a follow-up question on the impact of quarterly volume you mentioned. If you can explain that? Sorry, can you ask the question again? It was not clear. Yeah. Am I audible now? Yeah. You just mentioned the impact on quarter three volume. If you can explain that? No. That's the impact on the staples business, particularly on quarter three volumes because we're taking up a channel correction exercise in our distribution channel. I think that was what I was outlining. I wouldn't want to get into numbers. I mean, it's certainly a manageable impact. All I can say is that we'll be back to regular clip in Q4. Okay. Sir, one more question on the ethanol side. You mentioned that you will be maintaining the capacity utilization as it was in the last year. Do we not expect the industry challenges to impact us? We have been fortunate on the TN and AP sale where we have got allocation in line with our expectation because our available industry capacities are lower in that. We have got impacted in Karnataka. Our allocation has been about 49%. We can make it up with the E&A volumes. That is an opportunity in Karnataka. Overall, we will be able to manage the distillate capacities. Okay. That's it from my side. Thank you. Thank you very much. The next question is from the line of Rajabankar, an individual investor. Please go ahead. Hi. My question is there is a drop in sugar sales volume from H125 to H126 by 12% due to drop in domestic release order. However, our trade segments increased 19% and retail segment reduced by 34%. Why was that? I think the retail segment, as I outlined to you, is that within the organization, the allocation of release quantities to the retail business was lower on account of the corrections that the channel consolidation is happening. Second, on the retail business, we have exited certain non-value-adding and non-profitable product sales, resulting in that's why if you see the realization in retail would have been significantly higher. From INR 39 of the previous year, we would have been up almost at about INR 42 or so. The increase in realization is because we shifted the focus towards more value-added products, and we decided to drop some of these non-value-adding products, resulting in a lower sale from the sales. Hence, you see that the sale of retail is lower than compared to the previous year. On trade, I'll just let Ashiq answer on the trade segment growth that we have seen. Trade and industry segment growth has been in line with our expectation. Whenever we see an opportunity in realization, if we get a better realization, we capitalize on the volumes, and that's the growth that we are seeing. Thank you. That is it from my side. Thank you very much. The next question is from the line of [Atharva Stogi], an individual investor. Please go ahead. Yeah. Thanks for taking my question. My question is on the nutraceutical segment, which has shown a sharp turnaround? Could you just elaborate why this happened, and do you think the current level of EBITDA is sustainable? Hi. The nutraceutical segment, we had an insurance claim which came through. If you look at our consolidated numbers, we have an insurance claim which came through on account of some facility Damage. We have a facility in Florida in the US on account of Damage last year in the hurricane. The insurance claim came through. That is a one-off. I don't believe you will see this clip going forward. However, on the nutraceuticals front, since you brought it up, I mean, we've had some challenges in the recent past in the Indian operations wherein we lost our European certification. That is back. The operations in India are slowly creeping up again. We will maintain at these levels, though. We don't have any plans for capacity addition. In the US, the Valensa business, which is our main asset on the nutra front, we're looking we've had a better Q2 than a Q1, and we're looking ahead to a stronger year. I think we've got some new product launches, and we've also strengthened the talent pool at Valensa to deliver a stronger business remit. Okay. Thanks. Thank you very much. The next question is from the line of Rama Krishna Neti from ZEN Wealth Management Services Ltd. Please go ahead. Hi. Thank you. I have a couple of questions on the consumer group segment. In your initial remarks, you were mentioning there were lower realizations of 30%. I'm assuming it is on the pricing front. Is this across the categories or which product categories? If you can also help us explain the backdrop for these lower realizations, and when do you expect them to stabilize? That is the first question. Second question is with respect to the introduction of new product lines or product categories. Are you done, or are you planning to launch more categories in the future? If you can take us through on that. Finally, if you can please lay out a three to five-year strategy of this group, where do you want this segment with respect to overall contribution at the top line and bottom line? I'm not asking about guidance on numbers and all, but your thoughts as you are intending to take this particular segment grow in a big way. Thank you. Rama Krishna, I'll just cover the first point. The realizations are lower on account of dal prices being extremely subdued compared to an average of about INR 148-150 of the previous year. Dal prices this year have been at about INR 95-96, which is almost a 37%-38% drop in the price. This is on account of a higher amount of import coming in and the government allowing a larger import on yellow peas coming into this country, thereby resulting in a lower price of dals across the country. This is only in Tur Dal and Urad Dal. However, this dal segment accounts for nearly 65% of our total turnover, resulting in a total drop in realization for us as well. This drop is entirely due to market conditions and is not engineered in any way by us intentionally. The second point on NPD, I think there are plans to get into other product categories, obviously, like any other consumer business would do. And since all NPD development processes are confidential, we won't be discussing it in this forum. You can expect a series of NPD product launches over the next few years from the consumer products group. I'll just cover the last point on the broader outlook. Just to take forward from what Balaji had articulated, we're in the business year of Food FMCG, and I think that the intent is to grow this business further. It's a significant growth area that we see for the company. We have a strong brand, and we intend to leverage this as we grow. We're in the midst of just assessing our strategy. We started off with sweeteners. We got into the pulses segment. This is our second year in pulses. We've done a little bit of vertical integration. We've put some product development capability in place. We've expanded the field force. We're just now doing a strategy revisit or really an evaluation of where we stand and what our strategy needs to be going forward. We have certain product category areas which we are interested in. Convenient foods is very interesting to us. Snacking is very interesting to us, apart from sweetener and pulses, which we're already in. We're further validating our assumptions and our hypothesis in some of these categories. We do have a subject matter, an external subject matter expert who is working with us as we speak to put this together. This will take us perhaps a few more months. I think as we jump into the back half of FY26, we will begin an implementation phase of the new strategy, which will really, and our operation continues to significantly grow this business and exit this decade with a good EBITDA percentage on this business. I think that's how we are looking at it. I won't get into specifics, but I think certainly perhaps Q1, Q2 next year, you will start seeing us execute and implement towards a new strategy narrative, which we are in the process of putting together. Sure. Thank you. Thank you very much. The next question is from the line of Somnath Saha from B&K Securities India Private Ltd. Please go ahead. Thank you, sir, for the opportunity. Most of the questions have been answered. Can you help me with the numbers of ethanol production during the quarter from molasses versus grain-based? [inaudible] Yes. Just while we're getting you this data, Somnath, and this. Yes, sir. Do you have any plans to grow in the grain or multi-food distillery base as the focus? I mean, you can see the latest trend of grain-based ethanol. What will be the going-on strategy for your ethanol mix? Let me address the first part of the question. Q2, about 84 lakh liters of maize-based ethanol has got produced on the overall volume of about 409 lakh liters of total sales. Yes. Can you ask the next question? The next question is that. Any capacity addition on? Somnath, we don't have any imminent plans on any capacity addition. Let me give you a reality. There's about INR 2,000 crore liters of ethanol capacity, which is pretty much up and running in the country. The recent bids that were received were only to the tune of, I think, a little over INR 1,100 crore. There were some private bids as well, which takes the number to a total of just north of INR 1,300 crore. There's significant overcapacity in the country. We're actually geared now in India for a blend, which is in the late 20s in terms of. I think where we've landed is still a 20% blend. I don't see the industry per se adding too much capacity. Folks may be thinking of augmenting or creating a duality in their assets for grain as well as molasses, but I don't see too much capacity addition henceforth. There is significant overcapacity in this industry right now. Exactly, sir. Out of this 582 KLPD currently we have, how much is the multi-feed distillation? 120. Is there any plan to get more distillery to multi-feed or convert them? No, not as of yet. We debated often, Somnath, but I think we're going to stay away from CapEx for some time. There isn't clarity on a sustainable policy framework as of yet. Okay. Thank you. Thank you very much. The next question is from the line of Vaishnavi Gurung, by Craving Alpha Wealth Fund. Please go ahead. Sir, if you can please help me with the revenue distribution for sweetener versus non-sweetener in our consumer product segment. Yeah. In the total quarter two, I think about close to 35%-40% is the non-sweetener revenue, and the balance comes from the sweetener. Sir, just one more question. You mentioned that the revenue for consumer products was subdued because of the lower price realization on pulses. If we see consumer products as our growing segment, do we not plan to have a hedge in place for this? Yeah. I think the market downturn was characterized by a lot of policy in terms of allowing larger imports coming into the market. That was a difficult thing to hedge against because it is the market price that is down. It is not our price that is down. The entire market was down. However, there is a little bit of backward integration that is being planned in order to ensure that we hedge this to some extent as we go forward. That is the hedging that we have in mind. Yeah. Also, I think from a revenue, just a price realization on a per unit perspective, Vaishnavi, I think a year ago, the same quarter, you were about 30-odd% higher on a per unit basis realization, and that is down 30-35% from at that point in time. Obviously, you will see your revenue dipping. Okay. So we see better stable prices going ahead for the consumer products in quarter three and four? I think from the pulses and segment, there will be, I think Q3, we're starting to see a little bit of better pricing. We expect that there's been a in the crop is a little lower in India this year. So we see some better pricing to hold on the pulses side. Okay. Thank you. Thank you very much. Participants who wish to ask a question, please press star and one. As there are no further questions, I would now like to hand the conference over to management for closing comments. Yeah. Thank you all for attending our Q2 earnings call. We look forward to interacting again in the subsequent quarter. Thank you. Thank you very much. On behalf of DAM Capital Advisors Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your line. Thank you.