Sonia: You were telling us about how you need to see what the inventory levels are that many of these sugar companies have. We did speak with the management of Oudh Sugar a couple of hours ago and they told that there is a huge inventory of almost 2.7 million tonnes that they are sitting at, at a price of Rs 27 a kilo, so there could perhaps be a big profit from here on as well. Would you buy the stock now, Oudh Sugar?
A: That’s right and in fact, if you see as you have said that I have pointed out that inventory and the valuation two things are very key. In case of Oudh Sugar, we have seen 27 lakh of bags held by company at sub Rs 27 at Rs 26.40 they have indicated.
If you take the present prevailing price at Rs 34 plus that means they have an unrealised gain of Rs 7 per kg and that translate to a profit of about Rs 175 crore and I am not expecting the prices from here on if it gets hardened, which is most likely and the interest cost per month is not more than Rs 0.30 per kg to the mill, so even if you net that off the Rs 175 crore unrealised gain is there in the inventory held by the company that’s number one and in fact, if you see the small company may be Uttam Sugar which is again a very small company they also declared the results on Friday and Saturday and if you see the profit after tax (PAT) of Rs 68 crore against the loss of Rs 16 crore in the Q3, so my point is that this inventory is only held by the UP based sugar mills.
You won’t find this kind of inventories held by any of the Andhra or Tamil Nadu based sugar mills or may be such a sizable quantity. Yes, inventory gain has to be considered.
Today, we will be seeing the result of Triveni Engineering also again I am expecting that Triveni Engineering will also be having an inventory of about 33 lakh bags as of 31 March, so yes I am keeping my positive stance on all the sugar stocks going forward from here as well because all these inventories will get liquidated in next 2-3 quarters, so you are going to see the huge kind of profits coming in for Q1 and Q2 also which are always generally seen to be dull and boring quarter because of the non-crushing season.
So yes, keeping a positive stance on few UP based sugar mills.