Gulshan Polyols Limited — Q4 FY25 earnings call

Call held 22 May 2025

Management summary

Gulshan Polyols reported strong Q4 FY25 results with significant revenue, EBITDA, and PAT growth, primarily driven by the ethanol segment's record performance and increased capacities. However, the starch segment faced challenges due to overcapacity and uncompetitive pricing, leading to losses. The company also experienced high ethanol inventory at quarter-end due to dispatch issues with OMCs and is working on improving capacity utilization and realizing pending government incentives.

Highlights

  • Revenue grew by 47% to ₹2020 crores, driven by increased capacities in the ethanol segment.

  • EBITDA rose 64% to ₹100 crores, despite underperformance in the grain segment.

  • PAT increased 39% to ₹25 crores, benefiting from full depreciation of newly commissioned capacities.

  • Ethanol segment showed record performance with sales increasing over 100% year-on-year.

  • Fructose and sorbitol segments within grain are back to profitability.

Concerns

  • Starch segment is a 'problem point' due to overcapacities, Chinese exports, and uncompetitive pricing from high Indian maize costs.

  • ₹140 crore rise in inventory levels at March-end due to OMCs not taking ethanol indents, a recurring issue.

  • Ethanol capacity utilization is currently at 70% due to 'feeding issues', breakdowns, and malfunctions.

  • Delay in receiving additional state incentives for Madhya Pradesh and Assam plants.

Key financials

  1. Revenue ₹2,020 Cr +47%YoY
  2. EBITDA ₹100 Cr +64%YoY
  3. PAT ₹25 Cr +39%YoY

What they filed

Q1 FY27: revenue up 7.9%, net profit up 315.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue440 610 515 593 542 +23%627 +3%551 +7%640 +8%
EBITDA16 27 29 37 42 +163%85 +215%66 +128%85 +130%
Net profit1 7 7 13 16 +1500%41 +486%38 +443%54 +315%
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

  • Ethanol Segment
    ₹14 Cr Sales Volume
  • Grain Segment
    — Performance
  • Mineral Segment
    — Performance

Guidance & targets

Capacity

  • Ethanol Capacity Utilization Capacity · coming year · Medium confidence 80-90%
    Currently, we are at about, I mean if I see the entire ESY tender which we have taken for both the plants, it is about 70% of the capacity. And going forward, we should be looking at touching 80% to 90% very soon in the coming year.

    — Aditi Pasari

Margin

  • Ethanol EBITDA Margin Margin · this year · Medium confidence 9-10%
    So, well, if I talk about the ethanol industry, I am seeing that we should be looking at EBITDA of about 9% to 10% going forward in this year.

    — Aditi Pasari

Revenue

  • Overall Topline Revenue · going forward · Medium confidence ₹2300-2400 crores
    Take it to about 80% to 90% capacity utilization. So yes putting that in place we are confident that we should be looking at about 2300 to 2400 kind of a top line going forward.

    — Aditi Pasari

  • Grain Segment Revenue Revenue · current year · High confidence Stable
    From the grain segment as a whole, we hope to continue our existing revenue. The revenue should be stable as it was in the current year.

    — Aditi Pasari

Incentives

  • Madhya Pradesh Incentive Incentives · 7 years · High confidence ₹1.5 per litre
    Yes, on Madhya Pradesh, it's about Rs.1.5 per litre. So, if I say that we are producing about 12 crore litre in a year, so that will be about Rs.18 crores per year, will be the incentive, which we should receive from the government year-on-year, for 7 years.

    — Aditi Pasari

  • Assam Incentive (PLI + State + Central) Incentives · High confidence ₹3 per litre
    And for Assam, we have got a PLI of Rs.2, in addition to some other incentives, state incentives and central incentives, which altogether account for about Rs.3 a litre.

    — Aditi Pasari

  • Total Annual Incentives (MP + Assam) Incentives · Medium confidence ₹40 crores
    So, overall, approximately you can say, and I think recently you announced a few more benefits from the Madhya Pradesh government, so on an average, you can say around Rs.40 crores you can expect from these benefits, right?

    — Bala Murli

What to watch in Q1 FY26

Starch Segment Profitability Improvement

next quarter / going forward
Current Problem point, incurring losses
Target Improved margins or return to profitability

Why it matters

Starch is currently a drag on overall profitability; improvement is key to consolidated performance.

We are working on it, and we are also looking at how we can go for more value-added products in this segment. So, this is in process, and we are working towards this segment going forward. It is a problem point, and we are aware about it. And now, going forward, we are looking at seeing how we can improve.

Risks & concerns

  • Starch Segment Underperformance

    high

    Overcapacity in the country, increased exports from China, and higher domestic maize prices make Indian starch uncompetitive, leading to losses.

    Management acknowledged

  • Ethanol Inventory Build-up

    medium

    Recurring issue of high ethanol inventory at March-end due to OMCs prioritizing sugar/grain ethanol, leading to dispatch delays and working capital impact.

    Management acknowledged

  • Sub-optimal Ethanol Capacity Utilization

    medium

    Current utilization at 70% due to 'feeding issues', breakdowns, and malfunctions, preventing 100% day-on-day production.

    Management acknowledged

  • Delay in Government Incentive Realization

    medium

    State incentives for MP and Assam plants are approved but slow to be received, impacting financial benefits.

    Management acknowledged

  • Uncorrected FCI Rice Selling Price

    medium

    Government has not corrected the selling price for ethanol produced from FCI rice, making it less attractive despite lower raw material cost.

    Management acknowledged

Q&A highlights

8 direct
Reasons for losses in starch segment Direct
So, starch, we are being hit by overcapacities in the country. So, you see, pre-COVID, China could not, had stopped exporting starch to the other countries, which has just, which gave India a huge opportunity to expand its capacities and export to the world. Almost 1 lakh tons of starch is being exported out of the country. And just recently, China has again started exporting starch to the world, which has led to competition for the Indian starch industry and un-competitiveness, because the maize price in India is higher than the rest of the world.

Explains the core structural issues impacting the profitability of a key segment.

Asked by Deepak Ajmera

Strategy to improve starch segment margins Direct
We are working on it, and we are also looking at how we can go for more value-added products in this segment. So, this is in process, and we are working towards this segment going forward. It is a problem point, and we are aware about it. And now, going forward, we are looking at seeing how we can improve.

Outlines management's plan to address the underperforming starch business through value addition and cost control.

Asked by Deepak Ajmera

Reason for ₹140 crore rise in inventory levels Direct
Yes, because we have we were sitting on a lot of stock of ethanol in our NPNS sand plant, which was unable to be dispatched because we were not getting the indents from OMCs. There was, you know, these 3, 4 months, OMCs receive ethanol from grain as well as sugar. Therefore, there is -- they tend to have oversupply.

Identifies a significant working capital issue and potential demand-supply imbalance in the ethanol market.

Asked by Deepak Ajmera

Recurring nature of inventory issue and normalization Direct
So, this is a problem you will be seeing year-on-year now going forward, that we will be sitting on inventory in the end of March. Because February, March, April, these are the peak times of supply coming from sugar as well as the grain ethanol segment. We were sitting on large amount, large inventory. We were unable to dispatch because we did not get the indents from the OMCS. But this problem will ease out in July, August because that's when the sugar year comes to an end.

Clarifies that the inventory build-up is a seasonal, recurring problem, impacting March-end financials, but expected to ease later in the year.

Asked by Deepak Ajmera

Limited usage of FCI rice despite availability Direct
But we still have not got the correct selling price for FCI rice. It is, they have not corrected beyond 58.50, which was the price when the FCI rice is available to us at Rs.20. So, this whole difference of Rs.2.5, whose net impact per litre of ethanol is almost Rs.5.5, has yet not been corrected by the government, which we are working towards them.

Highlights a regulatory/pricing hurdle preventing the company from fully utilizing a cheaper raw material source (FCI rice).

Asked by Bala Murli

Outlook on maize supply and prices Direct
You know, 100% there will be increase in maize cultivation because a lot of focus is happening in that area from the government, from the export industry and also from the feed companies. They are actually all working hand in hand, you know. We are doing workshops and seminars and educating the farmers and also distributing free seeds in areas around our own factories. ... So, the whole scenario of maize is going to turn around in the next 2 years. So, we are very, very positive on this.

Provides a positive long-term outlook on raw material availability and potential price stability for maize, crucial for ethanol and starch segments.

Asked by Sanjay Maniyal

Delay in receiving government incentives Direct
Then we do expect, but everything takes time, it has been taking time, it's not so easy to get these incentives from the government. It is a slow procedure. But yes, we have recently got the approval for our claim from MP government, so we are hopeful we should receive this soon, in this financial year for sure.

Confirms the delay in incentive realization, which impacts the company's cash flow and reported profitability, but indicates progress on approvals.

Asked by Bala Murli

Grain segment product portfolio change for recovery Direct
No, we will have to do some kind of, you know, change in the product portfolio on the grain segment. So, you know, these are all old products and, you know, we are seeing that they are coming towards the end of their product cycle in terms of profitability because over capacity which have got built up in the country. So, now, going forward, the focus will shift on the grain segment for us, for us as a company.

Reinforces the strategic shift needed in the grain segment due to market saturation and overcapacity, indicating future product innovation.

Asked by Sanjay Maniyal

2 min read 6 chapters

Detailed narrative

Q4 FY25 Financial Performance Highlights

Gulshan Polyols delivered robust financial performance in Q4 FY25, with revenue growing by 47% year-on-year to ₹2020 crores. EBITDA saw a significant increase of 64% to ₹100 crores, despite challenges in the grain segment. Profit After Tax (PAT) also rose by 39% to ₹25 crores, supported by full depreciation benefits from newly commissioned capacities. The company aims for an overall top-line of ₹2300-2400 crores going forward, driven by improved capacity utilization.

Ethanol Segment: Record Performance and Growth Drivers

The ethanol segment was a primary growth driver, achieving a record performance with sales volume increasing by over 100% year-on-year to approximately 14 crore liters. The company expects to ramp up capacity utilization from the current 70% to 80-90% in the coming year. Management is targeting an EBITDA margin of 9-10% for the ethanol segment in the upcoming year, reflecting confidence in its continued growth and profitability.

Starch Segment Challenges and Strategic Response

The grain segment, particularly starch, remains a 'problem point' due to severe overcapacities in the domestic market and renewed competition from Chinese exports. High maize prices in India further exacerbate uncompetitive pricing, leading to losses in this division. To address this, Gulshan Polyols is exploring the development of more value-added products and optimizing backward cost expenses, aiming to improve profitability in the long term.

Inventory Management and OMC Dispatch Issues

The company reported a ₹140 crore rise in inventory levels at the end of March 2025, primarily due to OMCs not taking ethanol indents. This issue is attributed to an oversupply in the market during February-April, when OMCs procure ethanol from both grain and sugar sources. Management expects this inventory to normalize by July-August as the sugar year ends and OMCs focus solely on grain-based ethanol, though it acknowledges this could be a recurring year-end phenomenon.

Government Incentives: Status and Outlook

Gulshan Polyols is eligible for significant government incentives, including ₹1.5 per liter for its Madhya Pradesh plant (totaling ₹18 crores annually for 7 years) and ₹3 per liter for its Assam plant (totaling ₹12 crores annually). While approvals for these incentives have been received, their actual realization has been slow. The company anticipates receiving these benefits, estimated at around ₹40 crores annually, within the current financial year, which will further enhance profitability.

Raw Material Dynamics: Maize and FCI Rice

Maize remains a critical raw material, with the company primarily sourcing it for its plants. While FCI rice has become available at ₹22.50 per kg, its utilization is limited to 10-15% because the government has not corrected the ethanol selling price beyond ₹58.50, making it less attractive. However, management is optimistic about future maize availability and pricing, expecting increased cultivation due to government and industry focus, which could lead to more stable and potentially lower prices in the next two years.

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