Globus Spirits and Gulshan Poly who make grain alcohol have reported results. Due to raw material inflation margins are down and PAT is down. So it might be worth looking if this could impact BCL results due on Saturday August 13, 2022.
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=b809263c-4beb-471b-a3f9-88eb3874b8e4
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=1dedda03-6857-4ab4-8274-d41ca207fda9
There is a difference between BCL and Gulshan/Globus Spirits. BCL major business is still edible oils which is having a tailwind and they are expanding into ethanol slowly.
I am not sure if BCL will also post results in similar lines as Gulshan/Globus in Q1 (same happened in Q4 last year).
Lets see the results on 13th August.
Thanks
Apart from the table in the article, this part I found interesting
âEven ethanol produced from this is not commercially viable for consumers because it may cost you around Rs 120 a litre as against around Rs 60 a litre range for first-generation units,â Verma added.
The Panipat plant, according to the government, is based on state-of-the-art indigenous technology and will utilise about 200,000 tonnes of rice straw (parali) annually to generate around 30 million litres of ethanol a year.
India has set a target of blending 20 per cent of petrol with ethanol by 2025 and to achieve this, the country should produce 10-11 billion litres, of which 6-6.5 billion litres will come from sugarcane and the rest will have to be contributed by corn- and grain-based sources.
To produce this, a capacity for 12 billion litres will have to be installed. Of that 6.5-7.0 billion litres would be from sugarcane and the rest from corn-based distilleries.
As in 2021, the capacity is about six billion litres. Of that sugarcane sources contribute 5.25 billion litres while that from corn-based distilleries is just 750 million litres. Therefore, to achieve the 20 per cent blending target, grain-based distillation must pick up more pace than sugarcane-based ethanol.
As mentioned earlier, BCL results are much better than Globus/Gulshan. Profits have grown year on year. Would be interesting to listen to management commentary on why revenues declined and how much new distillery has contributed in last quarter.
Point taken. I was wary because the market has been cutting no slack for companies who had some incident of corporate governance in the past. If they reported a bad quarter. See what has happened to Everest Kanto and Tanla stock price after one bad quarter.
Investor Presentation :- https://www.bseindia.com/xml-data/corpfiling/AttachLive/4195bb78-2d6c-408b-a154-e2d5f0f62b71.pdf
1.) Not able to understand in distilery segment why the ENAÐANOL volumes are less even though company having orders and got new order from Reliance
2.) If i am not wrong they started the swaksha Distillery in the mid june but In investor presentation it mentioned that it is commenced from july 1st onwards
3.) In case of Edible Oil segment It is mentioned that the demand is low due to high volatility.
4.) One good thing is that margins have improved.
Disc:-Invested.
Q1fy23 concall highlights
Company took 10 day maintenance shutdown for the distillery as there was issue in power plant and the ddgs prices were lower
ENA rates during that quarter were around INR 57 to INR 58. And broken rice rates were around INR 18 to INR 19. And DDGS is a little different than what the market sells. So for BCL was around INR 24
Bhatinda plant to be operational by Q3 end.
Svaksha Distillery commenced production from July 1st at 50% capacity . But due to the initial issues at the power plant, the company has had to take a shutdown for about 15 to 20 days, and is hoping to come into full production starting September '22. While the production stabilized at Svaksha, the company has successfully obtained the orders to supply ethanol to OMCs and also to Reliance. Also received the FCI allocation of rice against supply, and already started to supply DDGS from this unit. The supply of ethanol will start in the second half of August, as some stock is ready and the orders are now pending. The only thing that is pending is some special permits that are issued from the Bengal government.
Edible oil lower demand and volatile prices lead to shortfall in revenue as distributor or retailer doesnt want to stock and also in summer demand is lower and they dont want to sell at loss, expects to be stabilised in few quarters
Margins have improved as BCL is a vertically integrated player as they were able to crush more oil seeds which led to improvemnet in margins unlike other players who import and just refine and sell the oil.
shift to surplus rice as broken rice as there is less broken rice availaable due to more exports to china and bangladesh.
Company working on a solution for the rising grain prices.
Power costs are still rising as per management.
BCL to purchase 3L tons of paddy in a tender( payable in oct to Nov) which they plan to use it for distillery thereby reducing some RM costs
Company holding good quantity of mustard seeds which has helped in margins to some extent.
on b2c side new launches of country liquor and IMFL brand will be back due to change in excise policy
So. FY 23, CapEx plan is to finish Bhatinda expansion of 200 KLPD ethanol, which probably cost about INR 180 crores.
100KL at Svaksha plant post december will incur 50Cr for expansion
Guidance for this year reduced from 1000Cr to 800Cr for distillery ( due to delay in svaksha going fully operational) and they are aiming for 1200Cr in edible oil , earlier was 1500Cr.
I have not recevied dividend. Did any of you guys recevied dividend?.
dividend received on 14th oct22
Yep i also recevied. Thanks
Seems BCL is planning to diversify in green energy area.
Source - https://www.bseindia.com/xml-data/corpfiling/AttachLive/a9537a13-14d4-4012-9ad0-aa5c7231ed0a.pdf
I think it is a decision between entering green enrgy sector or satting up a 500 KLPD plant. This was discussed by Mr. Mittal in an interview with Zee News last month.
Q2 should be a great quarter. The company will see benefits from the commissioning of this capacity and lower raw material costs.
Discussion with BCL Industries and Gulshan Polyols on disruption of FCI Rice.
Positive for BCL industries is that 50% of their production is ENA where they can use normal broken rice at higher prices and pass on the prices to their customers.
BCL - Q1 FY24 - Concal. I attended.
Guidance :-
https://twitter.com/AnirbanManna10/status/1691083350591639552
Note from Concal held on 14th Aug
The high margin (15-18% EBITDA) Distillery segment generated more Revenue than lower margin (4-4.5%) Edible Oil segment. (My thoughts: This trend may continue as an additional Ethanol capacity of 200 KLPD came online at the start of Q2)
FY 2024 Revenue Guidance: 1000-1200 cr each from Edible Oil and Distillery segment. So 2000-2400 cr total (My thoughts: Mgmt is under promising as Q1 Distillery rev is ~250 cr (1000 annualized). Additional 200KLPD which came online will add at least 300 cr rev(in 3 Qtrs). Also, now Ethanol produced from maize will bring in Rs 62/ltr, earlier they were getting Rs 58 for Ethanol produced by FCI rice. Edible oil prices also recovering well)
FY 2024 EBIDTA Guidance: 15-18% for Distillery and 4-4.5% for Edible Oil. (My calc:cThat would translate to 190-270 crs based on above Revenue guidance. A 1100 cr MC company generating atleast 190 EBITDA and fair amount of cash)
FCI Rice issue:
Disclaimer: Invested. The above notes are from memory and also based on my interpretations of some forward-looking statements from the Management. Please discount for that.
Update: Additional incentive of Rs 3.71 per litre on ethanol produced from damaged foodgrains and maize, has been announced by OMCs. This is in addition to the recent price hike of Rs 4.7 provided on Ethanol produced from damaged foodgrains and Rs 6.01 from maize. This hike is effective from Aug 7 just like the previous hike.
According to me, most of this hike will directly flow to the bottom line (profits) as the Management has mentioned during the quarterly call (prior to the latest hike) that they can deliver 15-18% EBIDTA. With this Rs 3.71 hike, the margins (EBITDA & PAT) should improve further. I believe that it is a step in the right direction by Govt to encourage Ethanol from grains like Maize rather than water-guzzling sugarcane and rice.
Sources:
Disc: Invested
Seems DAM Capital report on Sugar stocks making impact on BCL Industries as well -
Note - Invested
#BCLIndustries to reduce and eventually to shutdown edible oil business in near future. Management focus will be on distillery business as its strong growth potential and high margins. 2023 FY edible oil business at 43.7% of total revenue.
Not sure how this will impact the share price in short/medium term.
Filing:- https://www.bseindia.com/xml-data/corpfiling/AttachLive/6a71fede-28fe-4a3f-8680-aaae0d6c52f8.pdf
margins if sustained are better in distillary segment, though need to be seen in context of all the decision taken by govt in recent time frame.
Overall company has highlighted that net net - the bottomline and topline impact wonât be huge as share in bottomline is very small.
