Bcl Industries Limited — Q3 FY25 earnings call

Call held 14 Feb 2025

Management summary

BCL Industries reported an 18.1% YoY revenue growth in Q3 FY25, driven by strong ethanol volumes. However, profitability was impacted by a 15.7% decline in EBITDA and a 36.3% drop in PAT, primarily due to higher raw material costs. The company is aggressively pursuing strategic expansions in green energy and ethanol production, while exiting the low-margin edible oil business to enhance overall profitability and reduce debt.

Highlights

  • Total Revenue for Q3 FY25 was ₹763 crores, reflecting an 18.1% year-on-year increase.

  • Ethanol volumes demonstrated robust growth, rising by 26.9% to 48,845 KL.

  • Revenue from the ethanol segment reached ₹350 crores, a steady 37.8% increase year-on-year.

  • The company is undertaking significant capacity expansion with new ethanol, bio-CNG, and biodiesel plants planned or under construction.

  • Planned exit from the edible oil segment by Q1 FY26 is expected to free up ₹90 crores in working capital and significantly reduce debt.

Concerns

  • EBITDA for Q3 FY25 stood at ₹48 crores, down 15.7% year-on-year, with a 6% margin.

  • PAT reached ₹21 crores, marking a 36.3% decline from the previous financial year, with a 3% margin.

  • Significant rise in raw material prices (maize and rice) impacted margins during the quarter.

Key financials

  1. Total Revenue ₹763 Cr +18.1%YoY
  2. EBITDA ₹48 Cr -15.7%YoY
  3. EBITDA Margin 6%
  4. PAT ₹21 Cr -36.3%YoY
  5. PAT Margin 3%

What they filed

Q1 FY27: revenue down 26.4%, net profit up 9.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue721 735 723 792 691 −4%726 −1%582 −20%583 −26%
EBITDA55 46 49 53 67 +22%67 +46%55 +12%61 +15%
Net profit30 21 28 33 32 +7%35 +67%26 −7%36 +9%
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.

Segment breakdown

  • Distillery Segment
    48,845 KL Ethanol Volumes₹350 Cr Revenue₹42 Cr EBITDA
  • PML Segment
    13,21,223 cases Liquor Sold

Capital allocation

high confidence
  • Capex Capex disclosed For 75 KLPD biodiesel and 150 KLPD ethanol expansion, coming out of internal accrual, but company will look to raise 60-70 crores in debt.
    • Goyal Distillery (250 KLPD ethanol plant + 20 ton bio-CNG plant + paddy straw-based power plant) ₹370 Cr
    • Bathinda 150 KLPD distillery expansion ₹116 Cr
    • 20 metric ton per day bio-CNG plant
    • Bathinda 75 KLPD biodiesel plant ₹120 Cr
    • Kharagpur 75 KLPD biodiesel plant
    The total capital expenditure for this project is approximately 116 crores. The estimated CAPEX for the project of biodiesel is around 120 crores. See, we are still finalizing the machinery orders. So, you know, I can only give you a ballpark figure. As we finalize, we will have more clarity. But I think including the bio-CNG, the paddy straw-based power plant and the distillery, I think we are looking at around 370 crores of CAPEX in total. For now it is coming out of internal accrual, but I think the Company will look to raise about, get about 60 to 70 crores in debt for these two projects.
  • Debt Debt disclosed
    • Repayment Reduced working capital by 30 crores by slowly shutting out edible oil business. ₹30 Cr
    • Repayment Further reduction in working capital by 60 crores from edible oil exit. ₹60 Cr
    See, for BCL, the current working capital is around 200 crores and which will be further reduced by another 60 crores. We have already reduced 30 crores as we are slowly shutting out our edible oil business. So, for long-term debt in BCL, there is the one loan that is under interest subvention with Canara Bank, which has about 107 crores outstanding. For Svaksha Distillery, we have a working capital of about 55 crores and two term loans, one for the 200 KLPD, which has about 39 crores outstanding and another for the ethanol expansion, which is under interest subvention, about 65 crores. And the rest, the Company has taken to LRDs for commercial buildings. And besides that, there is no other debt.
  • M&A Goyal Distillery Private Limited Acquisition · Closed

    To strengthen presence and set up a 250 KLPD grain-based ethanol plant.

    To further strengthen its presence, BCL recently acquired Goyal Distillery Private Limited in Fatehabad, which has the necessary land and approvals for setting up a 250 KLPD, grain-based ethanol plant. Initial groundwork is progressing well and necessary works are expected to begin in the coming months.
  • Liquidity Liquidity disclosed Working capital is around 200 crores, expected to reduce by another 60 crores. Proceeds from real estate divestment also allocated towards debt reduction.
    See, for BCL, the current working capital is around 200 crores and which will be further reduced by another 60 crores. The Company is also continuing the gradual divestment in its real estate inventory with proceeds allocated towards further debt reduction.

Guidance & targets

Profitability

  • Distillery EBITDA Margin Profitability · Going forward · Medium confidence 10-11%
    I think the Company will go back around to at least 10-11% of EBITDA margin from the distillery segment.

    — Kushal Mittal

Capacity

  • Bathinda 150 KLPD Distillery Commissioning Capacity · Next 12 months · High confidence Within 12 months
    This project is scheduled for commissioning within 12 months.

    — Kushal Mittal

  • Goyal Distillery 250 KLPD Ethanol Plant Commissioning Capacity · Next 18 months · High confidence 18 months
    See, that plant will be commissioned along with the 250 KLPD plant in Fatehabad. And so we are seeing a timeline of about 18 months for the 250 KLPD ethanol plant.

    — Kushal Mittal

  • Goyal Distillery Bio-CNG Plant Commissioning Capacity · Next 2 years · High confidence 2 years
    And at least two years for the bio-CNG plant.

    — Kushal Mittal

  • Bathinda 75 KLPD Biodiesel Plant Commissioning Capacity · Next 3-4 months · High confidence 3-4 months
    This we expect to be commissioned in the next three to four months.

    — Kushal Mittal

Business Strategy

  • Edible Oil Segment Exit Completion Business Strategy · Q1 FY26 · High confidence Q1 FY26
    The exit is expected to be completed by Q1 FY '26, freeing up 90 crores in working capital and significantly reducing the debt on the Company.

    — Kushal Mittal

Revenue

  • Distillery Revenue (700 KLPD + Bengal 100% utilization) Revenue · Next year · Medium confidence ₹1,750-1,800 crores
    See, the distillery should give us about 1,750 to 1,800 and the biodiesel once working at 100% capacity utilization should give us anywhere close to 250 crores of revenue. But for the first year, we are not taking 100% capacity utilization because there will be somewhat of a learning curve as we are entering a new industry. And with the Bengal unit working at 100% capacity utilization should give us a revenue of at least around 750 to 800 crores. So, yes, your figures are broadly correct.

    — Kushal Mittal

  • Biodiesel Revenue (100% utilization) Revenue · Next year (at 100% utilization) · Medium confidence ₹250 crores
    See, the distillery should give us about 1,750 to 1,800 and the biodiesel once working at 100% capacity utilization should give us anywhere close to 250 crores of revenue.

    — Kushal Mittal

  • Total Revenue (1,100 KLPD capacity) Revenue · Future (with 1,100 KLPD) · Medium confidence ₹2,800 crores
    1,150 would be, I think around, depends on the, it's not price in the future, but, approximately, I think it should be around 2,800 crores.

    — Kushal Mittal

Raw Material Prices

  • Maize Prices Raw Material Prices · Next year or so · Medium confidence Stay in control
    I can say that yes, with the FCI rice coming in, for the next year or so, the Company expects raw material prices to stay in control.

    — Kushal Mittal

  • FCI Rice Availability Raw Material Prices · Until September end · High confidence Until September end at least
    I think the industry will have FCI rice until September end at least.

    — Kushal Mittal

What to watch in Q4 FY25

FCI Rice Allocation Results

Next quarter (within a day or two of call)
Current Awaiting allocation results from OMCs
Target Specific quantity and timeline of FCI rice allocation announced

Why it matters

FCI rice allocation is expected to cool down grain prices and significantly improve distillery margins, directly impacting profitability.

I think we are awaiting the allocation which we are expecting to receive in a day or two from the OMCs.

Risks & concerns

  • Raw Material Price Volatility

    medium

    Significant rise in maize and rice prices impacted Q3 margins, though correction is expected with FCI rice availability.

    Management acknowledged

  • Bio-CNG Technology & Margin Uncertainty

    low

    Bio-CNG prices fluctuate daily, and technology is still being studied, making margin forecasts difficult at this early stage.

    Management acknowledged

  • Biodiesel Offtake Challenges (OMC lifting)

    low

    Analyst raised concerns about other companies struggling with OMC lifting for biodiesel, but management believes it won't be an issue for BCL due to small capacity and internal raw material sourcing.

    Analyst downplayed

  • SEBI Show Cause Notice

    low

    Notice regarding promoter classification; company has applied for settlement and expects a resolution soon.

    Analyst acknowledged

Q&A highlights

5 direct, 2 evasive
Raw material price impact and correction Direct
Yes, both maize and rice... No, it's yet to come into the market. I think we are awaiting the allocation which we are expecting to receive in a day or two from the OMCs. But just the news of FCI rice being available for the industry has cooled down the grain market.

Clarifies the specific raw materials causing margin pressure and the expectation of price correction due to FCI rice, even before its official allocation.

Asked by Deepesh Sancheti

Bio-CNG industry and margins Evasive
And answering your CNG question, I think I will wait to give in any margins forecast as of now because CNG prices are fluctuating on a daily basis. Bio-CNG is not something like ethanol where the prices remain stable for an entire year. So, we are still studying the technology, evaluating which technology to opt for. And once everything is final, only then will I make any comment on that.

Management is cautious about providing margin guidance for bio-CNG due to price volatility and ongoing technology evaluation, indicating it's still in early stages for them.

Asked by Deepesh Sancheti

Biodiesel capacity and expansion plans Direct
Biodiesel capacity would be 75 KLPD only. For Svaksha, we have only received the necessary clearances as of yet. We haven't begun any work or any machinery order. We haven't done that. We will wait for our 75 KLPD plant at Bathinda to be commissioned successfully before we make any orders there.

Clarifies that current biodiesel plans are limited to Bathinda 75 KLPD, and the Svaksha project is on hold pending Bathinda's success, indicating a cautious approach to further expansion.

Asked by Deepesh Sancheti

Real estate value generation from edible oil exit Evasive
I think it's too early for me to comment on that. Let's wait out to see how the real estate market is once the business is shut and we have removed the machinery, which will be at least next two years. So, I think it's a little early for me to comment on that.

Management is not ready to quantify the value from real estate divestment, suggesting it's a longer-term process and not an immediate cash inflow, which could impact debt reduction timelines.

Asked by Deepesh Sancheti

OMC lifting issues for biodiesel Partial
No, but the capacity is also very small. There is still a gap between the tendered amount and the offered capacity. So, we don't foresee that being a major issue... Yes, there is a major problem on the raw material front. But this is the first time I am hearing you saying that there is a problem from the procurement front, which I don't foresee.

Analyst raises a concern about other companies struggling to sell biodiesel to OMCs, but management dismisses it for BCL due to small capacity and internal raw material sourcing, while acknowledging industry-wide raw material problems.

Asked by Shashank Agarwal

SEBI show cause notice Direct
I think it was regarding an entity which they said should be considered as promoter, which was not declared as promoter entity and I think the case has been adjudicated and we will come up with the resolution soon. We have applied for settlement and let's see what. We are hoping to hear back soon.

Provides clarity on the nature of the SEBI notice (promoter classification) and the company's action (applied for settlement), indicating a potential resolution to a regulatory issue.

Asked by Bhavesh

Impact of edible oil exit on revenue vs. profitability Direct
I don't know why we should just look at the revenue. With the closing down of the edible oil business, we are freeing up our working capital, reducing our overheads. So many costs involved in running this edible oil unit, which has such low margin and such high volatility in the market. So, I think all the ratios of the Company, the working of the Company will see a major, major improvement once this edible oil business is shut. So, I don't think we should just look at the revenue. I think the revenue loss will be compensated by a mile by the increase in efficiency and the overall profitability of the Company.

Management clarifies that the edible oil exit, while potentially reducing revenue, will significantly improve overall profitability, efficiency, and free up working capital, highlighting a strategic shift towards higher-margin businesses.

Asked by Bhavesh

Funding for new projects and debt Direct
For now it is coming out of internal accrual, but I think the Company will look to raise about, get about 60 to 70 crores in debt for these two projects.

Clarifies the funding mix for the 75 KLPD biodiesel and 150 KLPD ethanol expansion, indicating a combination of internal accruals and new debt, but overall debt is expected to decrease due to working capital optimization.

Asked by Rajesh Aggrawal

2 min read 5 chapters

Detailed narrative

Q3 FY25 Performance and Raw Material Headwinds

BCL Industries reported a total revenue of ₹763 crores for Q3 FY25, an 18.1% year-on-year increase. Despite strong ethanol volume growth of 26.9% to 48,845 KL and a 37.8% revenue increase in the distillery segment to ₹350 crores, overall profitability was impacted. EBITDA declined by 15.7% YoY to ₹48 crores (6% margin), and PAT fell 36.3% YoY to ₹21 crores (3% margin). This margin compression was primarily attributed to a significant rise in raw material prices, specifically maize and rice, during the quarter.

Strategic Capacity Expansion and Green Energy Projects

The company is aggressively expanding its production capabilities and diversifying into green energy. This includes the acquisition of Goyal Distillery in Fatehabad for a new 250 KLPD grain-based ethanol plant and a 20-ton bio-CNG plant, with a total CAPEX of approximately ₹370 crores. Construction for a 150 KLPD distillery expansion in Bathinda is underway, expected to be commissioned within 12 months. Additionally, BCL is setting up a 75 KLPD biodiesel plant in Bathinda (estimated CAPEX ₹120 crores, commissioning in 3-4 months) and has received approval for another 75 KLPD biodiesel plant in Kharagpur.

Raw Material Outlook and Margin Improvement Expectations

Management noted that maize prices, which were around ₹27.5 per Kg last quarter, have corrected to ₹25.5-25 per Kg. This correction, along with the anticipated allocation of FCI rice for ethanol (expected until at least September), is projected to stabilize raw material costs. The company expects distillery EBITDA margins to improve to 10-11% going forward, driven by raw material price normalization and the strategic exit from the edible oil business. BCL's flexibility to process both maize and rice positions it favorably to adapt to changing market dynamics.

Edible Oil Business Exit and Financial Restructuring

BCL is undertaking a phased exit from its edible oil segment, targeting completion by Q1 FY26. This move is strategic, aiming to enhance overall profitability and operational focus. The exit is expected to free up ₹90 crores in working capital and significantly reduce the company's debt. Management emphasized that while this might lead to a revenue reduction, the elimination of a low-margin, high-volatility business and associated overheads will lead to a major improvement in the company's overall financial ratios and efficiency.

Debt Management and Capital Allocation Strategy

The company's current working capital is ₹200 crores, with a further reduction of ₹60 crores expected from the edible oil exit. Long-term debt for BCL stands at ₹107 crores (under interest subvention at 4.5%), and Svaksha Distillery has ₹55 crores in working capital and ₹104 crores in term loans (partially under subvention at 4.7%). While BCL plans to raise ₹60-70 crores in debt for the 75 KLPD biodiesel and 150 KLPD ethanol expansion projects, the overall debt is expected to decrease due to working capital optimization and proceeds from real estate divestment.

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