Don’t see further write-downs; buyback a payout to shareholders: Balrampur Chini


Balrampur Chini Mills posted a weak set of earnings as margins and profit after tax were hit by a poor performance from the sugar sector. However, co-gen and distillery business came to the rescue.

The company reported 65 percent decline in its December quarter net profit to Rs 61.4 crore from Rs 175.2 crore in year-ago, impacted by disappointing operational performance.

The company has announced a buyback and so the stock rallied on Thursday.

Sharing the rationale for the Q3 weak performance Vivek Saraogi, MD, Balrampur Chini Mills said although they do not prefer quarter on quarter performance they witnessed a reduction in sugar prices from the high of Rs 37 per kg to Rs 31/kg but now it is back above Rs 32-32.25/kg. However, whatever was produced in the quarter has bene written down at Rs 31.10/kg that is the closing stock as on December 31. The production is also at a high level, he added.

Balrampur Chini sees a record year in terms of production, crushing & recovery
Moreover, the company is also writing off all the expenses in the quarter, he said.

He does expect any more write downs in the next quarter because the balance sheet for the year’s production get finalized in May.

He said the sugar industry has moved from shortage to surplus that means now the production is more than consumption but this needs to be handled well, that is both the Centre and the States need to be cognizant of the fact that surplus production will reflect in pricing. Therefore, the cane prices, policies from the Centre etc need to be aware of this fact.

Going forward co-gen and distillery segments are expected to improve, he said.

With regards to the buyback, he said it is a payout to shareholders.

He also cautioned that one should not expect the profit levels seen in FY17 sustaining in FY18 or going forward. That may not be possible, especially when prices are around Rs 32/kg, he said adding that it is better to find a mean, which is an average of these years.moneycontrol