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Oudh Sugar shares gained on the back of better Q4 earnings. Speaking to Bloomberg TV India, the company’s Chief Financial Officer Dilip Patodia said better recovery of sugar from the cane crop and hardening of sugar prices have contributed to better earnings.
What has been the key driver behind such strong operational performance?
It is mainly because of the better recovery of sugar from sugarcane. Last year, for the same quantity of sugar, we got a recovery of 9.5-9.75 per cent whereas this time recovery was around 10.80 per cent. The hardening of sugar prices in the last three months have also contributed to the better performance.
What are the cane arrears right now?
In Bihar we have cleared almost 100 per cent. In Uttar Pradesh, as per the State government guidelines, we have to pay the cane amount in two tranches — the first tranche of ₹230 per quintal and the second tranche of ₹50 per quintal. We have already paid ₹230 per quintal.
So the remaining ₹50 is left…
It is payable after three months of the date of closing of the present sugar season.
When is the receipt of the ₹40 that you get from the UP government? And how much of that is still outstanding?
No, we have not accounted for this ₹40 receipt because ₹28.60 was dependent on the sugar realisation. If the sugar realisation as per government notification remains above ₹31.78 per kilo, then we are not entitled to the subsidy in our account.
In terms of the FRP and the UP SAP, there is a discrepancy of about ₹50 odd per quintal. There is a proposal of a uniform FRP coming in. How good do you think it will be going ahead for mills like yours?
It is always welcome because UP is the only State where the trade has put up a price which is far higher than FRP that is declared by the Central government.
Now that sugar prices are higher at ₹31-32 per kg, sugar firms are at near breakeven level or slightly above breakeven. If these prices go down in future, will the UP SAP offer a big differential to the proposed FRP?
Right now the realisation is ₹33-40 per kg which is near the breakeven point from sugar segment only. But apart from sugar units, we have distilleries in two of our units and cogeneration plant in most of the units. We are getting some contribution from there also. But seeing the production estimate for the next year, we are hoping that the prices will remain firm for the next one-and-a-half years.
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