Balrampur Chini Mills Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Balrampur Chini Mills Limited reported a healthy Q2 FY26, driven by improved volumes, realizations, and power tariffs. The company declared an interim dividend of INR 3.50 per share and continues to advance its PLA project. However, concerns remain regarding the recent SAP increase in UP and the need for ethanol price revisions to support mill viability and address potential sugar surplus due to reduced ethanol diversion.

Highlights

  • Delivered healthy performance in a seasonally weak quarter, marked by improvement in both volumes and realizations.

  • Overall performance supported by upward revision in power tariffs, contributing positively to profitability.

  • Interim dividend of INR 3.50 per equity share declared, amounting to a total payout of INR 70.7 crore.

  • Steady progress on the PLA project, with construction activities advancing well and market development commenced through imported PLA trading.

  • Company expects a 7%-8% increase in cane crushing for Balrampur, improving fixed costs and recovery.

Concerns

  • U.P. Government's INR 30 increase per quintal in SAP for 2025-26 season, requiring improved domestic sugar realization to offset rising cane costs.

  • Reduced diversion from sugarcane for ethanol (289 crore litres from sugar sources, 28% of total requirement), potentially leading to sugar surplus and underutilized ethanol capacity.

  • Need for timely upward revision of ethanol prices (Juice and B-heavy routes) to maintain viability of sugar mills amidst rising sugarcane FRP and SAP.

What they filed

Q1 FY27: revenue up 6.2%, net profit down 15.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,298 1,192 1,504 1,542 1,671 +29%1,454 +22%1,604 +7%1,637 +6%
EBITDA49 124 365 134 120 +145%202 +63%285 −22%114 −15%
Net profit67 70 229 52 54 −19%113 +61%160 −30%44 −15%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex Capex disclosed INR 570 crore funded through debt and the balance from internal accruals.
    • PLA project ₹1,093 Cr
    As of 31st October 2025, investments of INR 1,093 crore have been made towards the project, out of which INR 570 crore has been funded through debt and the balance from internal accruals.
  • Debt Debt disclosed
    investments of INR 1,093 crore have been made towards the project, out of which INR 570 crore has been funded through debt and the balance from internal accruals.
  • Dividend ₹3.5/share (interim)
    I am pleased to share that the Board of Directors has declared an interim dividend of INR 3.50 per equity share, amounting to a total payout of INR 70.7 crore, this is including taxes.

Guidance & targets

Volume

  • Sugar Production (pre-diversion) Volume · 2025-26 season · High confidence 34.5 million tonnes
    Production is expected to rise to about 34.5 million tonnes, this is pre-diversion.

    — Vivek Saraogi

  • Net Sugar Production (post-diversion) Volume · 2025-26 season · High confidence 31 million tonnes
    After diversion of 3.5 million tonnes for ethanol, net production is expected to be about 31 million tonnes.

    — Vivek Saraogi

  • Ethanol Diversion from Sugar Volume · 2025-26 season · High confidence 3.5 million tonnes

    — Vivek Saraogi

  • Domestic Sugar Consumption Volume · 2025-26 season · High confidence 28.5 million tonnes
    Domestic sugar consumption is expected to be 28.5 million tonnes.

    — Vivek Saraogi

  • Closing Sugar Stock Volume · 2025-26 season · High confidence 6 million tonnes
    the closing stock is expected to be around 6 million tonnes.

    — Vivek Saraogi

  • Sugar Exports Allowed Volume · 2025-26 season · High confidence 1.5 million tonnes
    The Government has allowed exports of 1.5 million tonnes for the sugar season 2025-26.

    — Vivek Saraogi

  • Ethanol Approvals from Sugar Sources (Industry) Volume · 2025-26 Ethanol Supply Year · High confidence 289 crore litres
    For 2025-26 Ethanol Supply Year, approvals from sugar sources for the sugar sector stand at 289 crore litres, accounting for only 28% of the total requirement

    — Vivek Saraogi

  • Company Ethanol Production Volume · 2025-26 ethanol year · High confidence 28 crore liters
    For the ethanol year 2025-26, we are expecting around 28-odd crore liters of ethanol including ENA.

    — Pramod Patwari

  • Company Cane Crushing Increase Volume · upcoming season · Medium confidence 7%-8%
    on our internal calculations, we are hoping for a 7%-8% increase in cane crushing for Balrampur.

    — Vivek Saraogi

Operations

  • PLA Commercial Production Start Operations · 2025 · High confidence October
    So, we are expecting commercial production to commence in October.

    — Pramod Patwari

Profitability

  • PLA First Year Loss Expectation Profitability · First year of operation · High confidence No loss
    We are not expecting any loss in the first year also.

    — Pramod Patwari

Capacity Utilization

  • PLA Capacity Utilization Capacity Utilization · within a few months · Medium confidence 100%
    In terms of forget means we hope to reach 100% of the capacity, make an absolutely world-class quality and make our market. So, I think two, three, four months will go in that.

    — Vivek Saraogi

What to watch in Q3 FY26

Clarity on UP Government relief package for sugar mills

within a month
Current Dialogue ongoing, hopeful for reliefs like country liquor price increase, percentage reduction, transport rebate.
Target Announcement of specific relief measures or package.

Why it matters

Directly impacts the profitability and viability of sugar mills in UP, especially after the SAP increase.

I think in one month we will have a lot more clarity on all the three factors I have mentioned. So, I have covered the UP Government, I have covered the Central Government, I have covered the company's own expectation on crushing and recovery.

Risks & concerns

  • Increase in State Advised Price (SAP) for sugarcane in UP

    high

    INR 30 increase per quintal in SAP for 2025-26 season, taking it to INR 400 per quintal, requires improved domestic sugar realization to offset rising cane costs and sustain industry profitability.

    Management acknowledged

  • Reduced ethanol diversion from sugarcane and potential underutilization of ethanol capacity

    medium

    Approvals from sugar sources for 2025-26 Ethanol Supply Year stand at 289 crore litres (28% of total requirement), potentially leaving part of industry's ethanol capacity underutilized and adding to sugar surplus.

    Management acknowledged

  • Need for upward revision of ethanol prices

    medium

    Ethanol prices under Juice and B-heavy routes need timely upward revision to offset increased cane costs and maintain viability of sugar mills, especially with significant rise in sugarcane FRP and SAP.

    Management acknowledged

  • Competition from grain-based feedstocks in ethanol production

    medium

    Balance 72% of ethanol requirement expected from grain-based feedstocks, leading to underutilization of sugar-based ethanol capacity and a call for sugar sector reservation in ethanol allocation.

    Management acknowledged

Q&A highlights

5 direct
Ethanol diversion strategy given SAP increase and no ethanol price change Direct
So, maybe around 10% of our cane crush would go towards Juice route and maybe 25% towards the C-heavy route and the balance towards B-heavy.

Clarifies the company's immediate strategy for ethanol feedstock allocation under current pricing conditions.

Asked by Prashant Biyani

Government communication regarding ethanol price increase Partial
Yes, what I will do is, I will just give a general overview. Do you have any other questions from you?

Management acknowledges dialogue but defers a direct answer on specific communication, indicating sensitivity or ongoing negotiations.

Asked by Prashant Biyani

Impact of 1.5 million tonnes sugar export announcement on prices Direct
So, what I will do is, I will begin with UP Government. There has been INR 30 per quintal rise in the SAP... So, the informal feeling is that, you know, INR 30 per quintal was meant for 2 years and maybe next year... we are in dialogue... both increase in country liquor price of ethanol, reduction in country liquor percentage, transport out-center cane rebate and some other reliefs by the Government.

Provides a comprehensive overview of the policy landscape, including UP SAP, potential relief measures, and Central Government dialogue on ethanol prices, linking it to overall sugar price stability.

Asked by Prashant Biyani

Company's ethanol volume guidance and route-wise breakup for 2025-26 Direct
For the ethanol year 2025-26, we are expecting around 28-odd crore liters of ethanol including ENA... Maybe around 9 crore liters from Juice, 12 crore liters from B-heavy, 3+ crore liters odd from maize, 3.5 crore liters country liquor and maybe about 1 crore liter C-Heavy.

Gives specific quantitative guidance for the company's ethanol production and feedstock mix, crucial for understanding revenue streams.

Asked by Shailesh Kanani

Initial feedback and market response to the PLA initiative Direct
So, current consumption, now maybe 30,000 tonnes-40,000 tonnes per year, based on the sort of import data of PLA compounds. So, our reaction with the customers is everybody wants to do it, but they are saying, where is your production? So, that is when we began the import. We are dialoguing, etc. So, demand is going to come from two things. One is direct dialogue with the customers, which is happening. Two is mandate.

Highlights strong demand for PLA and the dual strategy of direct customer engagement and government mandates to drive adoption, indicating confidence in the project's success.

Asked by Shailesh Kanani

Industry-wide ethanol capacity utilization and the need for sugar sector reservation Direct
The problem is in the grain side. So, if mills have not got full order, like what we bid, we have got our entire capacity order; we are full... sugar sector should have some reservation. So, if Government used to take 1,050 crore a year, and the E22 mandate takes a couple of years to come, in the interim 450 crore, which is at least 45% to 50%, should be allotted to the sugar sector and should be a kind of half-half split between the two sectors.

Explains the current imbalance in ethanol feedstock allocation, with grain-based capacity underutilized and the sugar sector advocating for a larger share of the ethanol pie, which is critical for sugar mill viability.

Asked by Sanjay Manyal

PLA EBIT level breakeven and timeline for full capacity utilization Partial
So, it is tough for now. It will take a little more time, but not much... We are not expecting any loss in the first year also... In terms of forget means we hope to reach 100% of the capacity, make an absolutely world-class quality and make our market. So, I think two, three, four months will go in that.

Provides insights into the expected ramp-up and profitability trajectory of the new PLA project, indicating initial focus on market penetration and quality over immediate high profitability.

Asked by Krishan Parwani

3 min read 5 chapters

Detailed narrative

Sugar Sector Outlook & Policy Landscape

The sugar sector anticipates a production rise to 34.5 million tonnes (pre-diversion) for the 2025-26 season, with net production at 31 million tonnes after diverting 3.5 million tonnes for ethanol. Domestic consumption is projected at 28.5 million tonnes, leading to an estimated closing stock of 6 million tonnes. The Government has allowed 1.5 million tonnes of sugar exports for the season. A key concern is the U.P. Government's INR 30 per quintal increase in SAP, raising it to INR 400 per quintal, which necessitates improved domestic sugar realizations to maintain industry profitability. The company is in dialogue with the UP Government for a relief package, including potential increases in country liquor prices and other concessions.

Ethanol Business Dynamics

For the 2025-26 Ethanol Supply Year, approvals from sugar sources stand at 289 crore litres, representing only 28% of the total requirement, with the balance expected from grain-based feedstocks. This shift could lead to underutilized sugar-based ethanol capacity. Balrampur Chini expects to produce around 28 crore liters of ethanol, comprising 9 crore liters from Juice, 12 crore liters from B-heavy, 3+ crore liters from maize, 3.5 crore liters from country liquor, and 1 crore liter from C-Heavy. The management emphasizes the critical need for timely upward revision of ethanol prices for Juice and B-heavy routes to offset rising cane costs and ensure the viability of sugar mills, advocating for a larger share of the ethanol pie for the sugar sector.

PLA Project Update

Balrampur Chini is making steady progress on its Polylactic Acid (PLA) project, a key forward integration and value addition strategy. As of October 31, 2025, investments of INR 1,093 crore have been made, with INR 570 crore funded through debt and the remainder from internal accruals. Commercial production is expected to commence in October 2025, and the company is not anticipating any loss in the first year of operation. Market development is underway, including trading of imported PLA, with strong customer interest and efforts focused on securing mandates and direct customer engagement. The company aims to achieve 100% capacity utilization within a few months post-commissioning.

Company Performance & Capital Allocation

The company reported a healthy performance in a seasonally weak quarter, characterized by improved volumes and realizations, further supported by upward revisions in power tariffs. The Board of Directors declared an interim dividend of INR 3.50 per equity share, totaling INR 70.7 crore. For the upcoming season, Balrampur Chini anticipates a 7%-8% increase in cane crushing, which is expected to improve fixed cost absorption and recovery. The company's capital allocation for the PLA project highlights a mix of debt and internal accruals, demonstrating a disciplined approach to investment.

Industry Challenges & Management Strategy

The sugar industry faces challenges from rising sugarcane prices (e.g., UP SAP increase) and the competitive landscape of ethanol production. Management is actively engaging with both the UP and Central Governments to secure a relief package and advocate for ethanol price revisions. The company believes that a comprehensive policy for the bioplastic sector, including a level playing field for PLA, is essential. Despite the challenges, Balrampur Chini remains confident in its operational improvements, strategic diversification through PLA, and ability to create long-term shareholder value.

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