Balrampur Chini Mills Co-generation and Distillery businesses contribute Rs.719 million to PBIT

Balrampur Chini Mills Limited (BCML), one of the largest integrated sugar manufacturing companies in India, announced its results for the second quarter & half year ended 31 March 2007.

Gross revenues from the sugar business were at Rs. 6,377.6 million and it continues to be the major component of the top line at 82.1%. Co-generation and Distillery businesses increased their contribution to revenues at 17.9% in H1 FY07 given the robust performance delivered in the quarter.

The Company’s firm belief in following the integrated model is substantiated by the earnings delivered by the Co-gen and Distillery segments. Co-generation business delivered Rs.474.7 million (63.4%) to PBIT, demonstrating excellent margins and the ability to operate in a non-cyclical environment. Distillery department contributed Rs. 243.7 million, up by almost two times.

Profits from the sugar division during H1 FY07 were lower given the substantial drop in sugar prices and increase in input costs witnessed in the business.

Key highlights

• Co-generation and Distillery businesses are an integral to BCML’s core strategy and business model. Both these businesses continue to deliver robust performance and enabled the Company to deliver healthy earnings while the sugar segment is passing through a difficult phase
• The Company has always been a firm believer in following the integrated model which can be noted through its planned/executed greenfield and Brownfield expansions
• BCML has acquired 47.6% equity shares of Indo Gulf Industries Ltd and commenced operations on 7th April,2007
• Acquisition of the 3,000 TCD sugar unit located in Maizapur, Eastern U.P. is aligned with the Company’s unique strategy in Eastern Uttar Pradesh of having intra-plant synergies and cross product utilization since its plants are located in close proximity
• Further, it would assist the Company strengthen its farmer base and relationships in Eastern U.P.
• 100 KLPD distillery unit at Mankapur unit to be commissioned in Q3 FY2007
• Total distillery capacity at BCML will be enhanced to 320 KLPD
• All factories continued to deliver excellent operational performance across business segments

Commenting on the performance for Q2 & H1 FY2007, Vivek Saraogi, Managing Director, Balrampur Chini Mills Limited, said:

"As you are all aware, we have always believed in de-risking ourselves from the cyclical nature of the sugar business by practicing the integrated model. Our results validate our strategy and as you will notice, the Co-generation and Distillery businesses have made vital contributions to the bottom-line.

However, as stated earlier, the sugar business is going through a very tough scenario as sugar prices have dropped significantly while cane prices have increased. Such a scenario does not permit us to break-even in the sugar operation. The sugar production is noticeably higher than beginning of the year estimates and in the present scenario, we cannot see any visible upsides."

Source : Equity Bulls

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