Thank you very much. We will now begin the question -and-answer session. The first question is from the line of Gautham from Nalanda Securities Private Limited. Please go ahead.

Sir, just one thing, so we have launched this new Amrit product in brown sugar, which is priced at Rs. 80 and your existing product price is Rs. 100. So, what is the thought process behind that if I see your slide 15? Are you trying to create the brown sugar category?

Gautham, this is Balaji here. So, we are looking at pricing the new brown sugar which is nothing but your crystal brown sugar under the ‘Par ry Gold’ brand name and this is priced lower more as a penetrative pricing into the market in order to generate more trials from consumers.

And so this 1800 tons that you have sold of Jaggery plus Amrit , so what would be the exit run rate for June specifically for that month?

For the month of June, we have sold about 400 tons, only in June.

Yes, so we started with Rs. 10 crores in April and June were Rs. 25.2 crores.

And in general, how has the traction been for our products and how many distribution points are we at now?

So, overall, we are at about 1.5 lakh outlets in the south of India and the traction has been pretty good in the first quarter.

And just one last question was in the annual report, we have mentioned Green Grow product, which is, I think, some nutrient- based product made out of bagasse , so can you just highlight what is the opportunity over there and is it like a very long-term play?

Gautham, the Green Grow Media is from bagasse, the residual bagasse. It is a soil-less growing medium, which you would find in greenhouses, got a lot of potential in the export market and in India. Product development and customer development is ongoing. We don't want to discuss too much right now because we are not yet ready and ideally we would like to have an edge in the market as well. The opportunity is large in the sense, soilless medium is also moving towards greener formulations and that i s where bagasse comes in, incumbent formulation s do have environmental issues and that is what we are trying to sort.

And just s orry, one last question was for our N utra division, have you got certification from Europe?

So, yes, we do have some good news that is coming through in the next couple of weeks. So, I think we should be able to start billing to Europe towards the end of sort of Q3.

Q3 you said?

I think we should be billing from Q3 onwards.

Thank you. The next question is from the line of Chirag Jain from Yogya Capital. Please go ahead.

So, I was trying to understand the company, so I had few ques tions regarding the capacity of distilleries that we have. So, can you provide a break-up regarding the split between sugarcane, rice and maize capacity?

So, our total distillery capacity is about 58 2 kiloliters per day (KLPD). All of these are sugarcane-based feedstock. There is one distillery which is 120 KLPD which is in Andhra. That is dual feedstock. So, we can do either sugarcane-based feedstock on it or grain. So, we have actually been running it with grain for the last couple of quarters. A 120 KLPD distillery would be able to give you about just over 3 crore liters of alcohol every year, so just to put it in….

Does the 582 figure include 120 or it is other than that?

Yes, this includes 120 KLPD.

So, it would be around 460 for the sugarcane?

We can't say it is like that because whenever there is a feedstock available for the grain, we can do 582 as well as the molasses base kind of thing.

So, sir, I was trying to understand that the sugarcane availability for ethanol has been kind of reduced and government is trying to push for the rice and the maize , dominantly for the maize, so do we have plans to convert the sugarcane part into the grain-based part?

We will wait for Muthu to join. This is Ashiq. I head the Sugar and Biofuel business. That is an opportunity that we are continuously evaluating. Directionally , grains is an opportu nity. We would want to have a repeat product distillery where we can use different feedstock. We keep evaluating that on a continuous basis.

So, just for example, if you want to convert a 100 KLPD sugarcane distillery into a multi-grain base, so how much the conversion cost would be for us?

That is what Ashiq is mentioning, it is a process of evaluation. At the right time, we will evaluate what is the CAPEX involved versus the return on the additional benefits from the grain, basically.

Sir, also the rice, pulse, and millet size that we have launched , so will it be significant in terms of revenue going forward?

I was just answering. We have exited June at about Rs. 25 crores, and the numbers are going upwards as we go forward. We are looking at building it into a larger value.

So, how do we see it going forward, s o would we be reducing kind of sugarcane and focusing more on the bringing more growth from these three brands, these three products?

Basically, if you look at it this branded staple is not from the sugarcane now. This is more we are going with the asset light model kind of thing. There is no linkage between the sugarcane related operations versus the branded staples.

See, it is a little too early to put a number down on the Staples business because this business has just been launched and we are trying to build it. So, I think as of now, while we have a forward-looking outlook on this, we won't be able to put a number on this.

So, is it on the breakeven side currently?

Yes.

Thank you. The next question is on the line of Bharat S heth from Quest Investment. Please go ahead.

Taking forward from previous participants' question, this Rs. 25 crores from retail, what we are talking is a sweetener or non-sweetener, both put together?

It is non-sweetener, Rs. 25 crores.

And sweetener is how much?

The sweetener will be around Rs. 60 crores.

Rs. 60 crores for only June month?

Yes, correct.

So, total work put together is Rs. 85 crores, correct?

The results are there in the segmental results, Bharat. Because if you look at it, for the quarter, the CPG segment for revenue operations is Rs. 216 crores. Out of that, Rs. 51 crores is from the non-sweetener. The balance is from the sweetener business for the quarter.

So, now going ahead, our strategy we will be focusing geographically only in southern India market because sweetener I believe is mostly B2C kind of a business, whereas in non-sweetener it is B2B, is that fair understanding through distribution model?

So, I will just explain. Non-sweetener is completely B2C and it is going through the distribution model into the retail outlets and we are currently planning to be only in the south of India. The sweetener business comprises of B2C and B2B segment as well. So, that should clarify your question.

Yes, so non-sweetener is both large packs and small packs, both are available. According to the requirement of the category, the packs are being sold.

And how do we want to expand our SKU also in this, if you can give color. And now currently, since you say that we have around 1.5 lakh distributors reach, so where do we see kind of our strategy to take it forward to what kind of level of distributor as well as new SKU?

So, I think the SKU will be expanded based on the relevance to the consumer and the consumer buying habit. We will keep expanding the portfolio. Similarly, distribution, we will be looking at growing the distribution as we go forward.

Any number you would like to put after 2 years or something?

It is a very progressive point, and so we won't be able to put a number on that now.

Muthu, coming back to this Nutraceutical with this European certification available, so how do we see this business for next two years? Because in the past, we have seen several ups and downs. So, overall, how do you would like to give some colour in two years? Where do you see this business in the topline as well as the main contribution to the profit?

Nutra segment, as mentioned in past call, is still under strategic review. We are deeply reviewing various strategies to see how the business can be taken forward. There are two key pieces. One is the Nutra India operations, and secondly, the Valensa operations in the US. So, that clarity, I think once it emerges, we will be able to articulate a better strategy for the Nutr a segment. Up until then, we will obviously continue to run the existing business efficiently and any critical investments around science or product development which are required for the progress of the business, we will continue to do. We have not frozen on any major CAPEX.

Muthu, is there any new product development in pipeline within this N utraceutical segment or will we stick currently to whatever product line we have?

We will largely stick to the current product line s. There is some clinical work which we are doing in the US on the Saw Palmetto products. Currently it is used for prostate health. We are seeing initial scientific discovery on the opportunities with that product on the skin health and dermatological side. So, we are doing some clinical work on that front. So, that is perhaps the only area we a re focused on from Saw Palmetto . In India, continuing with S pirulina and Chlorella, w e have in fact done quite a bit of work to bring our cost position down at both locations and some science work on Chlorella we were doing, but again, no drastic changes, no large CAPEX’s and no new launches. We want to keep the existing business running well until we have a clear strategic approach towards the business.

How do we look at the sugar, cogen and distillery business? This year also looks relatively better and the sugarcane crop in your initial remarks you stated is likely to imp rove. So, how do we, any kind of ballpark, when do we expect on annual basis to turnaround that business?

So, let me give you a general overview on the sector, I guess, the sugar and the alcohol sector. Yes, monsoons have been better, but the deficient monsoon last year still has reeling impact. We go through data from past years, El Nino impact can almost take close to 24 months to really normalize. The deficient rainfalls of last year have certainly had an impact on Tamil Nadu. We are already seeing that, Venkat talked about the lower recoveries that we are experiencing, and it is only now that once the monsoons have picked up, we are starting to see some plant coming in. Tamil Nadu will remain challenging. Of course, the fact that the monsoons and summer showers have been good is good for the main season crops, that is the winter season crushing. With regard to Karnataka, with good summer rains and good southwest monsoon it augurs well. There is a slight drop in area under cane in Karnataka, but I think the yield should be strong and I think that definitely augurs well for the segment. Now, coming to policy, I think policy is very critical. If you look at FRP they have significantly gone up this year by 8% while it might help with some planting, I think it will put a lot of pressure on the mills. There is also a healthy closing stock of 9 MMT. So, we are really awaiting the policy makers approach towards firstly ethanol blending and also exports, but I would say most importantly towards MSP which has not moved up for many years. So, I think the policy angle is something which we now have to very closely watch, and I think this will determine how the sector performs in the fiscal that we are in and the years after that.

And last question, Muthu, so what is the gap in the spread between sugarcane vis -a-vis multi- fed stock that other grain stock that we consume?

So, maybe I will let Venkat give you the exact data, but it is a great question. I will say though on sugarcane, we haven't seen any increases on ethanol procurement prices for the last two years, so we are still actually working with old prices. There wasn't, while there was an FRP increase and there is a significant FRP increase coming up, again policy will hopefully address this from a sugarcane feedstock perspective. From a maize feedstock perspective, they did give us some respite by hiking the maize ethanol purchase price and this has helped. But from the sugar cane feedstock perspective, it is an area of concern. When I talked about our dis tillery segment margins, we would have been very happy with 20 %-21% EBITDA business. That is what we were really building towards in the old policy framework. But I think once there was a reconsideration of this and the fact that prices were not taken up, these margins have fallen substantially and gone in sort of closer to single digit. So, this is a concern. Venkat, would you have the exact spreads?

Thank you. The next question is from the line of Sanjay Manyal from DAM Capital Advisors. Please go ahead.

Sir, just few questions on the sugarcane availability , you mentioned that probably this season the rains are better , but the impact of last year rains will be there as far as current sugarcane availability is concerned. Is it possible for you to give a ballpark number, what kind of crushing numbers we would see in next season?

In the fiscal that we are currently in, we would aspire to almost match last year’s number; however, there could be some challenges in Tamil Nadu on that, but we are working towards trying to match last year’s number.

Sir, just want to understand one more thing about the recovery rate, the way North India or say UP or some of the other states have seen some of the varieties, sugarcane varieties which have given them a very high recovery rate, close to a gross recovery r ate of 12%, is there any long term plan or long term measures which Tamil Nadu or the southern states are taking where recovery rates structurally can improve to a level of maybe 100-200 basis points higher than the current recovery rates?

So, there is constant work which has been done at the R&D level like the sugarcane breeding institute, as companies would do organic work as well. We are not seeing too much improvement. There is also a lot of work on yield improvement which is not of more directly in our control and I think we will see some of that this year, there was a lot of focus on t hat area. In Karnataka, of course, we have some strong vari eties with higher recovery, but we are not seeing too much yet on that front. We will have to continue our work to see how this can pan out. The UP varieties are really going to perform well in southern states, so it is hard to replicate those. EID is really in a unique way, an amalgamation of three states, so we have to average our recovery around Andhra Pradesh, Tamil Nadu as well as Karnataka.

Sir, one question about the refinery business because we have seen last few years where the global prices were quite high, the spread between the raw and the refinery was also pretty high, but somehow we have not been able to get major benefit out of it , so what exactly a long -term plan as far as refinery business is concerned?

There are two parts to your question. I will answer the second one and Mr. Suresh Kannan, my colleague who runs the business wing to cover the first part. From a long-term plans perspective, we are trying to see how best we could work in partnerships to improve the operating parameters and the metrics of the business. So, I think that endeavor continues and as and when we have concrete information around how we take that forward , we will come out with updates. But Suresh, would you want to cover the first part of the question?

As far as the refinery plant is concerned, basically it is on two prongs. One is to upsell our sugar. So, initially, we had started off with selling the sugar in the international trade market a nd subsequently, we are now moving into niche segments, such as beverage manufacturers, food manufacturers, etc., as a result of which we are making some tailor-made products, which gives us a higher premium over the normal trade sugar that has been there. So, over the years, this percentage has moved up as a result of which it will start giving us an additional premium over the spread, whatever the market is able to give us. Our objective is to take this value -added product to a higher percentage of our overall sales. So, that will give us in good stead as far as, even if the spreads have to drop a little bit, we will get compensated by this mix of scale that we have. A large enabler for this is the ability to ship, in container loads instead of break well. And over a period of time, we are finding more solutions in terms of reaching the global market using containers, using multiple ports in the Eastern coast. So, we expect this to scale up and give us a benefit over the medium to long term. The second strategy, of course, being a commodity product is to improve our cost position. Our cost situation currently is quite competitive as far as standalone refiners are concerned. We continue to work on further improvements in terms of the bottlenecking, energy optimization, etc ., wherein we stand ahead of the race. That is the second prong of the strategy to keep the cost improving continuously in order to keep up with the market.

Thank you. The next question is from the line of Sanjay Shah from KSA Securities Private Limited. Please go ahead.

Sir, my question was on non-sweetener staples. Since we have strengthened our sourcing tie-up and even streamlined our process, can you elaborate how well we can go in this because we are catering towards, a very large market size? So, what could be we can see scenario ahead in next 1-2 years or maybe 3 years on the new variety, new geography and so on?

So, I think, see the market, as you rightly said, the market is very large and we are laying the foundations now in terms of distribution buildup and reaching to new outlets and within the south of India. And as I explained earlier for one of the questions, we will be looking at expanding the portfolio and the opportunity we will be growing as we get the opportunity in the future.

You identified any new varieties like we are now into ri ce of different varieties, pulses, millet. So, have we listed out any new products on that side?

It is whatever we are doing, as per the market and as the market opens up and expands, we will be getting into the products as and when it is required.

There is always scope to improve the sourcing tie-ups. Right now, our volumes are smaller. As the volumes grow, I am sure our efficiency of sourcing also will improve many folds. So, as we go along, we will get better at the sourcing efficiency.

So, just to overlay a little bit, in terms of as Balaji said, I think the focus in the immediate term is on the products entering different outlets, building that distribution and laying a strong foundation. I think over time, we would like to see this business build on its gross margin level. Once we had this base of distribution and foundation set, higher gross margin products can overlay and bolt on the existing portfolio. Noting to that extent or on the back for this would be dosa mixes, roti mixes, upma mixes so on and so forth which would come in. And I think on the sweetener front as well, there will be more value-added sweet products. We are exploring across categories. There are number of other categories on the food FMCG side which are part of the kitchen shelf, part of the dining table, part of the store cupboard of the consumer. I think they are all under development and work in progress and I think we wil l come back once we have more concrete plans . B ut o nce the foundation is built, bolting on with more products and especially building the gross margin profile of the business will be a key area of focus.

Thank you. The next question is from the line of Bharat S heth from Quest Investment. Please go ahead.

On this retail business, non-sweetener, so what I understand that gross margin is always a challenge, but what is our sourcing strategy because what we understand that getting right product at right price and sustaining the quality parameters is a challenge since we are attaching our brand name with that. So, regularly the same quality kind of a st uff availability should be ensured. Since this is a non-controlled seller or farmer, so how do we also using our Coromandel connect with the sourcing product?

Bh arat bhai, we will now need to explore further, we are just building out this business in terms of the Coromandel connect, I think we will certainly explore how we leverage this in terms of building the business further. But Balaji, do you want to cover a little bit of the sourcing side?

Yes, so I think right now we are sourcing the products from the different millers in different geographies, which are known for certain products, and we are sourcing it from those geographies. We are also ensuring that the quality is kept under check because we have our large quality control team in place, which actually checks every lot which is getting dispatched from the miller point and only after that it is getting packed. So, we are keeping a track on that as well. And we are moving with the market pricing at this point in time. But as Mut hu was also saying that as we go forward, there will be a stronger dimension to the sourcing in terms of identifying whether Coromandel will play a role in helping us or we will identify other avenues for sourcing, but that will come up as the future plan.

Bharat bhai, we are very hyperlocal in our approach i n terms of sourcing, processing, and packaging which is why you see different varieties of rice because even in bunch of districts there is a certain variety of rice which is popular and then there had been changes once, we move in out into another cluster of districts. So, that is something we realize, and I think some of that hyperlocal approach apart from other elements have been quite instrumental in getting us a good start.

So, Muthu, to put it this question, what I understand that sourcing is more important for the success of the business, is that fair understanding?

Yes, this state is very critical. As I said, we are very early in this game. I think the team is also building its muscle and building its powers. We will need to work on how we integrate best into this supply chain. There is a very reasonable element of the profit pool which sits on the sourcing side. So, as this business grows, I think it is a key muscle and an expertise which we will be building going forward. So, these are very early days. This is only the fourth month of the business. I think the business has made a reasonable start, but I think I have a lot to learn in this segment and I think we are focused on learning that very quickly and implementing.

Thank you. The next question is from the line of Divesh Vora who is an I ndividual Investor. Please go ahead.

Your short-term loan has gone up hence and can you elaborate on why it has gone up?

S hort term loan is basically the working capital. Since our networking capital has gone up, thereby, your short-term loans also have gone up. Because even if you look at inventory also, inventories has gone up around Rs. 300 crores, in line with the short-term loans also increase.

So, inventory, you are saying it is Rs. 300 crores, right now, but last year also the turnover was around Rs. 698 cores for Q1 June 23 is that the inventory reason behind it?

Divesh, when you look at the short-term borrowings, you look at it year-on-year, it has gone up. When you compared to the March to June, it has come down. I am not sure which number you are looking at. If you are looking at the March number, yes, because when you look at March 23 versus March 24, the inventories have gone up.

So, as far as distillery is concerned, you have mentioned that it is 225 KLPD will come. So, now, do we expect in September the entire facility to be on board, 482?

Thank you. The next question is the follow up question from the line of Gautham from Nalanda Securities Private Limited. Please go ahead.

Just follow up on the refinery part. So, I just want to understand what kind of premiums do we get when we sell to institutions that are above the white premium like percentage wise or absolute numbers?

It is a range of premiums we get on top of the white premium tha t is available from the market. It depends on the type of the product and the institution, but it is generally in the region of $10 to $25 per ton.

And how much percentage of our volume would be in the institutions right now and say, 1- 2 years down the line, how much can we take it to?

The moment we are between 10% and 15% on the institutions, depending on the time period, our aim is to take this number at least to one third plus.

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Thank you Sanjay and thank you to all the participants. We look forward to connecting again in the next quarter. Thank you.

On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.