Thank you. Ladies and gentlemen, we will now begin with the question -and-answer session. The first question is from the line of Prashant Biyani from Elara Capital.

Sir, what would be the rationale for this equity capital raise so closer to the commercial timeline of the project? You would have already tied up with finances and leverage is also not that heavy on the balance sheet.

Yes, so I believe this question exists in the mind of many of our equity investors. So just let me give you some perspective. A, this is a 5% dilution. B, we are participating, so it is not that there is any intent of lowering the promoter stake . C, the focus is on our ability to run the business smoothly, maintain our credit rating, and ensure financial stability, we are currently raising finance at around 6.75% , and to ensure that no financial ratios are disrupted . The idea behind raising this capital is that there is INR 390 crore outlay involved, as you can see , INR 230 crore plus INR 160 crore. Additionally, with the upcoming sugar season, we foresee the need to purchase more cane and make timely payments. Therefore, it was important to ensure adequate liquidity, maintain our rating, and avoid any concerns from bankers regarding potential ratio breaches. We believe this is a very prudent measure.

Okay. Can you give some cost dynamics for the lactogypsum plant, How much is the output of lactogypsum when you make 1 unit of PLA? And for this plant which will make gypsum board, how much could be the revenue potential as well as tentative margins if you would have budgeted the same?

So Prashant, for 80,000 ton nes of PLA, we are expecting lactogypsum in the region of around 1.16 lakh ton nes to 1.2 lakh ton nes. And this has a n annual revenue potential of around INR150-odd crore.

And sir, how many units of lactogypsum make one unit of gypsum board? Or I mean, equivalent input-output ratio?

So, this 1.16 lakh tonnes of gypsum will result in to around 63 lakh pieces , that is the annual capacity of 63 lakh board.

Sir, how much would be the margins for this business?

Margins, we are expecting a payback period of around 5 years.

5 years?

Yes.

Yes, given the current disruption, I believe that since we started evaluating this project, the board prices we had factored in have already increased by 25% due to the West Asia crisis. However, this is a recent development. As for raw materials, we have our own supply and do not need to rely on external sources.

Right. Sir, we have investment in NBFC also. Would we be willing to offload some or full part of it which we own eventually to delever our balance sheet?

Definitely, eventually yes, 100%.

Any timeline and tentative valuation would you be looking at? While we have a history of past transaction at which the stake transfer happened.

So there are two parts to Auxilo's dilution. One is a dilution done to run the business, that is , the capital requirement of the business itself. Two, the last dilution was done at about around INR3,000 -odd crore to INR3,200 crore market cap of Auxilo. So that was the last valuation available. Currently, as I have told you, I have answered your question, the timing , etc. is not fair to answer now. Yes, we are positively inclined towards answering your question in the affirmative.

The next question is from the line of Shailesh Kanani from AMSEC.

First of all, congratulations on the equity fundraise , after a long time , to the whole Balrampur team. Sir, I had few questions. First one is on the PLA project. Now the cost has escalated by INR230 crore, and you have given the reasons that the engineering changes and supply chain issue. So are these modifications fundamentally altering any yield or efficiency of the plant?

So, minor tweaking always will lead to it. Yes, you are right, but it is impossible to be able to quantify all that today. Everything has been done, some part is towards improving the engineering, a lot of it is foreign exchange also. So one could not have booked the machinery which used to come in. Euro moved from 9 0 to 110. So that is not in my hand. I could not have booked the machinery which used to come as per RBI laws, I am told. So that is one major part. Two, this shipping cost, this crude, this ships not coming around Hormuz and the Cape of Good Hope, local transportation. See, you know, the biggest consignment, just to give you a figure, is costing me INR9 crore to transport a column or a part of the machinery, one. There are two such consignments, it takes 4 months. So people at this point of time, I have to complete the project and there are some costs which are probably a little higher than what it should be. Some are genuine, 90% are genuine, 10% is a bit of blackmail. One has to succumb to that in order to complete the plant with precision . Shipping cost, inland transport cost, currency fluctuation, revision of prices of some existing contracts, we have put in fixed price contracts and that bit we try to keep to a minimum. And lastly, some minor engineering and etc. for the 90% modelling which just throws up some new maybe valves, pipelines kind of things. Combination of all.

Fair enough. So with project being so closer in terms of completion and operational, say 6 to 9 months. So can we expect this is the final kind of revision in project cost and there would not be further in cost irrespective of macro environment?

Yes, our machinery is likely coming in soon, so yes, that should be it.

Okay. Sir, my second question was with respect to the UP bioplastic policy where they are giving 50% capital subsidy. So even if this upward revision, that would be kind of eligible for the same, right?

A very good question, pertinent question. The document, the policy document, does not curtail your investment and yes, therefore what you have said is absolutely correct.

Fair enough. Thanks a lot. So my third question was with respect to the gypsum boards what we are planning to do. So I was reading somewhere that it requires fillers and reinforcements. So are we planning to utilize the bagasse ash or bagasse fiber for production of this? And do we have that excess?

No, that is not required at all. It requires paper and gypsum, that is it.

Okay. So there will not be any further utilization from the by -product from the sugar mills as such?

No, only in terms of utilities like steam and power will go.

Which will be accounted for in the project expense.

Fair enough.

Just to answer your question, how we work in Balrampur, and I guess in any prudent company, is if you see our three divisions, sugar, ethanol and power, there is a transfer pricing for everything. And then you get your segmental revenue and segmental profitability. So when Pramod has spoken to you about a 5 -year payback, and which may substantially decrease with the current raise in the board prices, each utility used here, whether it is steam, anything, is accounted as an expense here and a revenue in the PLA plant.

Fair enough. So , just one last question from my side on this, continuing on the same point. The boards that we will be making , would we be positioning them as a commodity alternative of some kind, or do we have some leverage in terms of being bio -based or having recycled content? So that we can kind of target the premium ESG or green building segment, would that be possible?

This is not envisaged at this point of time. But in the future, it is definitely replacing mine material. So in that case, it is of course a very, very much more eco -friendly way. But to attribute value based on that, I do not know if we will get more value, but definitely the eco-friendly tag is definitely there with it.

Yes, because it is our own product. Yes.

And there is no mining involved. All other boards made have mining involved.

That’s a good point , and a good thought. We can bring in more people from the marketing side later, since it’s 18 months away.

The next question is from the line of Nishita Shanklesha from Crown Capital.

Yes, so I actually just had a follow -up question on the previous participant's question. So I just wanted to understand that our PLA capacity, so you mentioned that on the 80,000 ton nes of PLA capacity, we can expect around 1.16 lakh ton nes of lactogypsum, right?

Yes.

And from the 1.16 lakh tonnes of lactogypsum, we can have around 63 lakh pieces of gypsum boards?

Yes.

So the revenue potential that you mentioned of INR150 crore, that is from the 63 lakh pieces of gypsum board per annum? Is that understanding correct?

Yes.

Okay, got it. So I just wanted to understand what is the revenue potential from our PLA project?

The whole PLA project?

Yes.

That is the same as what was mentioned earlier —nothing has changed. The PLA project remains the same. This is essentially a value addition to a by -product, which would otherwise be waste if not utilized.

The next question is from the line of Rhea Bhatia from CNBC TV18.

I just wanted to understand the breakdown of the preferential issue of INR450 crore. Where exactly will this be used? Because I believe INR160 crore will be for this lactogypsum plant and INR230 crore for the PLA plant, right?

The balance will be on account of corporate general purposes.

Okay, understood. And the PLA plant commissioning, does that remain on track for quarter three?

Yes, absolutely.

It is a tough job, but we are leaving no stone unturned and as things go, it looks absolutely feasible.

Okay, all right, sir. And just wanted to understand what led to this increase in the cost for the PLA plant, this INR230 crore. Was it largely because of the West Asia crisis?

The next question is from the line of Vikram Suryavanshi from Phillip Capital India Private Limited.

Just on this lactogypsum, How will the sales be done? Will it require a proper sales and distribution channel, or is it more like a commodity where we can focus purely on sales and sell directly to dealers? Just trying to get a sense of the distribution side for gypsum board.

So we are working on the sales strategy and in time to come, we will lay it out threadbare. We are evaluating a few options.

It’s just the beginning, as the project is still about 18 months away. We are confident, we’ve taken a broad stroke understanding , and we will get into the details in due course. And we are already tracking prices, as you can see.

The next question is from the line of Bharat Seth from Quest Investment Advisors Private Limited.

Sir, pardon my ignorance. If you could run us through the overall picture , with both the PLA and gypsum plants , since a large part of the PLA output will be used as raw material for the gypsum plant, how does that affect costs? And does the payback period change, or does it still stay around five years?

It remains the same.

There is no change at all. So let me explain to everyone the way bagasse comes out when you run a sugar factory. That bagasse is either fed into the boiler for co - generation which you sell power, or you can sell bagasse to paper manufacturers. So, this is the way gypsum will come out. Either you dispose, throw, give to cement at dirt cheap rates, with a huge volume staring at your head, or we have taken this call to convert.

And sir, you also mentioned that some of the sugar plant’s output will be used for the PLA plant, which will effectively become a cost input for the PLA facility. So how will this benefit the existing sugar business?

There is no sugar plant as such. What I meant was that, from the PLA plant, the boiler capacity, let us say is 100 ton nes, out of which about 2 tonnes are required for this process . That 2 ton nes of steam used to manufacture the boards will be treated as a cost for the board factory, and correspondingly, it will be recognized as revenue for the PLA plant.

I understand, sir. But when we are going ahead with converting ethanol into PLA, so that economics if you can explain, sir, I will be grateful?

There is no ethanol converted into PLA. Sugar is converted into PLA. Story over for sugar factory. Right?

Yes, so if you can give some economics on that part, broader economics.

So actually, we can take this question offline because for the rest of the audience, we have explained this at least five times before.

The next question is a follow-up from the line of Prashant Biyani from Elara Capital.

Sir, for marketing of these gypsum boards, would you rather be like an outsourced manufacturer for already existing branded company like Gyproc or anyone, or you would want to take it with your own brand?

Actually, this is what we also tried to answer before. We are evaluating our options . And we will go for the best one that comes to us slightly closer to the date of commissioning.

Give us some time, Prashant. So, once we set up the plant, like three -six months into the game plan, we will start searching and you know, we are already contacting people. We will do what is best for the Company, Prashant. Yes, we do not want to sort of get into some big-time branding expense and all, but yes, we will do what is best for the Company.

Yes, and actually those companies have a portfolio to offer to the dealers which we would not have.

I get your stance, I am aligned, but too early now, Prashant, too early.

Right. And just one last thing on this, would the UP market be enough for this or we would have to go Pan-India?

I think Pan-India, Pan-India.

More like, UP and North

North.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Thank you and over to you, sir.

Thank you, and all the best. If there are any further questions, we’d be happy to address them offline, please feel free to reach out anytime. I hope I’ve been able to answer all your questions. The objective of today’s call was to provide a broad construct and understanding, so that all investors are on the same page as far as knowledge-sharing perspective. We want to avoid any speculation or uneven access to information , no one should have a preferential understanding. That is why we took the time to engage with all of you and share this overview. Thank you once again, and thank you to all our shareholders for being with us as always.

Thank you, everyone.

Thank you.

This is a transcription and may contain transcription errors. The transcript has been edited for clarity. The Company takes no responsibility for such errors, although an effort has been made to ensure a high level of accuracy.