Balrampur Chini Mills Limited — Q4 FY26 earnings call

Call held 28 Apr 2026

Management summary

Balrampur Chini Mills discussed the updated capital requirements for its PLA project, which saw a cost overrun of INR 230 crore, bringing the total to INR 3,080 crore. To enhance value, the company approved a new INR 160 crore lactogypsum processing plant with an annual revenue potential of INR 150 crore. To fund these initiatives and maintain financial flexibility, the board approved an equity capital raise of INR 450 crore and an enabling resolution for INR 200 crore in debentures, with promoters maintaining their 43% stake.

Highlights

  • Approval of a new lactogypsum processing plant (INR 160 crore investment) to monetize by-product and create an incremental revenue stream of INR 150 crore annually.

  • Successful equity capital raise of INR 450 crore, with strong promoter participation (43% stake maintained), reflecting confidence in growth strategy.

  • PLA project commissioning remains on track for Q3 FY27 despite cost revisions.

  • The lactogypsum plant is expected to have a payback period of 5 years, with board prices already up 25% due to market conditions.

  • Strategic intent to avoid disposal issues for by-products, similar to past success with co-generation from bagasse.

Concerns

  • PLA project cost overrun of INR 230 crore, increasing total project cost to INR 3,080 crore, attributed to construction materials, supply chain, forex movements, and engineering refinements.

  • Management acknowledged some costs were due to 'blackmail' from suppliers to ensure timely delivery.

Key financials

  1. PLA Project Cost ₹3,080 Cr
  2. PLA Project Cost Overrun ₹230 Cr
  3. Lactogypsum Plant Investment ₹160 Cr
  4. Lactogypsum Annual Revenue Potential ₹150 Cr
  5. Equity Capital Raise ₹450 Cr
  6. Debentures Raise ₹200 Cr

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 Partially through equity raise and debentures
    • PLA project cost overrun ₹230 Cr
    • Lactogypsum processing plant ₹160 Cr
    The proposed plant has an investment outlay of INR160 crore and is expected to have a production capacity of ~76 lakh boards per annum, with commercial production starting in 18 months. To support these initiatives, the Board has approved a preferential allotment of equity shares worth approximately INR450 crore at the SEBI price of INR483, which was the SEBI price on that day. In addition, the Board has approved an enabling resolution for raising debentures of INR200 crore. This is just part of the financing because if you are going in for a big project, you need to do something through debentures.
  • Debt Debt disclosed Cost 6.8%
    • New borrowing Enabling resolution for raising debentures ₹200 Cr
    we are currently raising finance at around 6.75%
  • Liquidity Liquidity disclosed Equity raise and debentures will provide financial flexibility and ensure adequate liquidity for expansion plans and cane purchases.
    This will provide us the financial flexibility required to execute our expansion plans, while maintaining our balance sheet discipline. Additionally, with the upcoming sugar season, we foresee the need to purchase more cane and make timely payments. Therefore, it was important to ensure adequate liquidity, maintain our rating, and avoid any concerns from bankers regarding potential ratio breaches.

Guidance & targets

Capacity

  • Lactogypsum Plant Production Capacity Capacity · post 18 months · High confidence ~76 lakh boards per annum
    The proposed plant has an investment outlay of INR160 crore and is expected to have a production capacity of ~76 lakh boards per annum, with commercial production starting in 18 months.

    — Vivek Saraogi

Timeline

  • Lactogypsum Plant Commercial Production Timeline · post 18 months · High confidence 18 months
    The proposed plant has an investment outlay of INR160 crore and is expected to have a production capacity of ~76 lakh boards per annum, with commercial production starting in 18 months.

    — Vivek Saraogi

  • PLA Project Commissioning Timeline · Q3 FY27 · High confidence Q3
    Okay, understood. And the PLA plant commissioning, does that remain on track for quarter three? Yes, absolutely.

    — Pramod Patwari

Profitability

  • Lactogypsum Plant Payback Period Profitability · post commissioning · High confidence 5 years
    Margins, we are expecting a payback period of around 5 years.

    — Pramod Patwari

Shareholding

  • Promoter Stake Post Fundraise Shareholding · post fundraise · High confidence 43%
    We would like to highlight that continued participation from the promoters in the fundraise will keep our stake, the family stake, at 43%.

    — Vivek Saraogi

Marketing

  • Gypsum Board Marketing Strategy Clarity Marketing · six to nine months · Medium confidence clearer view
    We'll look at the marketing side in about six to nine months, and then we can share a clearer view.

    — Vivek Saraogi

What to watch in Q1 FY27

PLA Project Commissioning

Q3 FY27
Current On track for Q3 FY27
Target Successful commissioning in Q3 FY27

Why it matters

Timely commissioning is crucial for realizing returns on the significant PLA project investment.

Okay, understood. And the PLA plant commissioning, does that remain on track for quarter three? Yes, absolutely.

Risks & concerns

  • PLA project cost overrun

    medium

    PLA project cost increased by INR 230 crore to INR 3,080 crore due to various factors including forex, shipping, and supplier 'blackmail'.

    Management acknowledged

  • Historical by-product disposal challenges

    low

    Past challenges with bagasse disposal and current limited interest/poor pricing for gypsum disposal from cement plants, which the new lactogypsum plant aims to mitigate.

    Management acknowledged

  • Supplier 'blackmail' and cost pressure

    low

    Management noted that some additional costs were incurred due to suppliers taking advantage of the situation to ensure timely delivery, which they termed 'blackmail'.

    Management acknowledged

Q&A highlights

5 direct
Rationale for equity capital raise close to project timeline Direct
The idea behind raising this capital is that there is INR 390 crore outlay involved, as you can see, INR 230 crore plus INR 160 crore. Additionally, with the upcoming sugar season, we foresee the need to purchase more cane and make timely payments. Therefore, it was important to ensure adequate liquidity, maintain our rating, and avoid any concerns from bankers regarding potential ratio breaches.

Clarified the immediate need for capital despite existing finances, linking it to project outlays, liquidity management, and credit rating preservation.

Asked by Prashant Biyani

Cost dynamics, output, revenue, and margins for the lactogypsum plant Direct
for 80,000 tonnes of PLA, we are expecting lactogypsum in the region of around 1.16 lakh tonnes to 1.2 lakh tonnes. And this has an annual revenue potential of around INR150-odd crore. So, this 1.16 lakh tonnes of gypsum will result into around 63 lakh pieces, that is the annual capacity of 63 lakh board. Margins, we are expecting a payback period of around 5 years.

Provided specific financial and operational metrics for the new lactogypsum project, including input-output ratios, revenue potential, and payback period.

Asked by Prashant Biyani

Potential offloading of NBFC investment (Auxilo) to delever balance sheet Partial
Definitely, eventually yes, 100%. So there are two parts to Auxilo's dilution. One is a dilution done to run the business, that is, the capital requirement of the business itself. Two, the last dilution was done at about around INR3,000-odd crore to INR3,200 crore market cap of Auxilo. So that was the last valuation available. Currently, as I have told you, I have answered your question, the timing, etc. is not fair to answer now. Yes, we are positively inclined towards answering your question in the affirmative.

Indicated a clear intent to divest the NBFC stake eventually, providing a past valuation reference, though specific timing was not disclosed.

Asked by Prashant Biyani

Impact of PLA cost escalation on yield or efficiency and reasons for overrun Direct
minor tweaking always will lead to it. Yes, you are right, but it is impossible to be able to quantify all that today. Everything has been done, some part is towards improving the engineering, a lot of it is foreign exchange also. So one could not have booked the machinery which used to come in. Euro moved from 90 to 110. So that is not in my hand. I could not have booked the machinery which used to come as per RBI laws, I am told. So that is one major part. Two, this shipping cost, this crude, this ships not coming around Hormuz and the Cape of Good Hope, local transportation. See, you know, the biggest consignment, just to give you a figure, is costing me INR9 crore to transport a column or a part of the machinery, one. There are two such consignments, it takes 4 months. So people at this point of time, I have to complete the project and there are some costs which are probably a little higher than what it should be. Some are genuine, 90% are genuine, 10% is a bit of blackmail.

Provided a detailed breakdown of the reasons for the INR 230 crore cost overrun, including forex, shipping, and some 'blackmail' from suppliers, and confirmed minor impact on yield/efficiency.

Asked by Shailesh Kanani

Eligibility for UP bioplastic policy 50% capital subsidy for the revised PLA project cost Direct
A very good question, pertinent question. The document, the policy document, does not curtail your investment and yes, therefore what you have said is absolutely correct.

Confirmed that the revised PLA project cost would still be eligible for the 50% capital subsidy under the UP bioplastic policy, which is a significant financial benefit.

Asked by Shailesh Kanani

Breakdown of the INR 450 crore preferential issue use Direct
The balance will be on account of corporate general purposes.

Clarified the allocation of the raised capital: INR 160 crore for lactogypsum plant, INR 230 crore for PLA project overrun, and the remainder for general corporate purposes.

Asked by Rhea Bhatia

Marketing strategy for gypsum boards: own brand vs. outsourced/branded company Partial
Actually, this is what we also tried to answer before. We are evaluating our options. And we will go for the best one that comes to us slightly closer to the date of commissioning. Give us some time, Prashant. So, once we set up the plant, like three-six months into the game plan, we will start searching and you know, we are already contacting people. We will do what is best for the Company, Prashant. Yes, we do not want to sort of get into some big-time branding expense and all, but yes, we will do what is best for the Company.

Management indicated they are evaluating options for gypsum board marketing, prioritizing what's best for the company without committing to a specific strategy yet, highlighting it's too early to decide.

Asked by Prashant Biyani

2 min read 5 chapters

Detailed narrative

PLA Project Cost Revision and Rationale

The PLA project's total cost has been revised upwards by INR 230 crore, bringing the new total to INR 3,080 crore from the initial INR 2,850 crore. This overrun is primarily attributed to increased costs of key construction materials, global supply chain disruptions, adverse forex movements (Euro moved from 90 to 110), and certain refinements in engineering and design. Management also noted that some costs were inflated due to suppliers demanding higher prices for timely delivery, which they referred to as 'blackmail'.

New Lactogypsum Processing Plant Approved

Balrampur Chini has approved an investment of INR 160 crore for a new lactogypsum processing plant at Kumbhi. This facility will convert lactogypsum, a synthetic by-product of the PLA manufacturing process, into gypsum boards. The plant is projected to have an annual production capacity of approximately 76 lakh boards and is expected to commence commercial production within 18 months. This initiative is anticipated to generate an annual revenue potential of INR 150 crore and has an estimated payback period of 5 years.

Capital Raising Initiatives for Growth and Liquidity

To support the increased project outlays and ensure financial flexibility, the Board approved a preferential allotment of equity shares worth INR 450 crore. Promoters will participate in this fundraise, maintaining their 43% stake, which amounts to approximately INR 193 crore. Additionally, an enabling resolution was passed to raise debentures of INR 200 crore. These funds are intended to cover the INR 390 crore combined outlay for the PLA overrun and the new lactogypsum plant, provide adequate liquidity for cane purchases, maintain credit ratings, and avoid potential ratio breaches.

Strategic Intent and Sustainability Focus

The lactogypsum plant is viewed as a highly compelling initiative that monetizes a by-product, enhances operational efficiency, and creates a new revenue stream. It also reinforces the company's sustainability agenda by embedding circular economy principles, converting waste into value-added products. This move is strategically aligned with past successes, such as converting bagasse into co-generation, to avoid dependence on external disposal options and potential 'blackmail' situations.

PLA Project Commissioning and Policy Benefits

Despite the cost overrun, the PLA project commissioning remains on track for Q3 FY27. Management confirmed that the revised project cost would still be eligible for the 50% capital subsidy under the Uttar Pradesh bioplastic policy, which does not curtail investment based on project size. This subsidy is expected to significantly offset a portion of the project's capital expenditure.

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