EIDPARRY - E.I.D. Parry (India) Ltd. Share Price

Management provided an outlook emphasizing the performance and strategies across various segments of E.I.D. - Parry (India) Limited, specifically focusing on sugar, biofuels, and consumer products.

1. Sugar and Biofuels Segment: The management noted that the sugar market is expected to remain in a mild surplus through SY '25-'26, with projections of a global surplus of 3.5 million metric tons (MMT). In India, sugar production is estimated to reach 34.3 MMT, with a closing stock of about 6 MMT. They acknowledged challenges due to rising costs driven by the Fair and Remunerative Price (FRP) and lack of clarity on minimum support prices (MSP). Management emphasized the need for policy support to enhance profitability in this segment.

2. Consumer Products Group (CPG): Management stated that recent restructuring aimed to improve working capital management will temporarily affect volumes in the sweetener segment. They expect a turnaround in Q1 FY '27 with a more efficient operating model and the introduction of new categories in the FMCG space. The CPG's turnover was reported at INR 143 crores for the quarter, down from INR 236 crores year-over-year.

3. Performance Metrics:

   • Sugar production increased to 1.39 LMT in Q3 FY '26, up from 1.07 LMT.
   • The average selling price for sugar rose to INR 40 per MT, compared to INR 37.69 previously.
   • Consumer products business regression attributed to lower pricing of pulses leading to a turnover decrease.

4. Future Strategies: Management plans to focus on efficiency and cost control while exploring potential inorganic opportunities in the consumer segment. A significant impairment of INR 10 crore was noted due to channel adjustments.

Overall, the management indicated cautious optimism for recovery and future growth, especially in high-margin segments, contingent upon favorable policy changes and successful execution of their strategy.

1. Question: "How are we planning to overcome challenges in the sugar and distillery business, and which segment do you think will lead revenue growth?"

   Answer: We've seen better pricing in sugar vs. last year, but costs have risen due to higher FRP. There's no clarity on MSP revisions, causing strain. Our distillery volumes are similar to last year, but ethanol prices haven't increased in three years. Operations in TN and AP are subscale, impacting efficiency. We expect cost improvements to enhance profitability. Consumer Products Group, especially sweeteners, will continue to grow post-correction, launching into new food categories in Q1.

2. Question: "What is our future outlook for the sugar and biofuels segment?"

   Answer: We will focus on efficient operations and hope for policy support, particularly MSP and ethanol pricing adjustments. While we aim for improved efficiency, real growth hinges on regulatory changes. For Consumer Products, after strengthening our operations over two quarters, we anticipate a positive trajectory in Q1, also announcing new FMCG categories then.

3. Question: "What are our competitive advantages in the consumer products segment and the total anticipated impact from the channel correction?"

   Answer: Our established brand 'Parry' provides strong equity in sweeteners. We're vertically integrated in our supply chain, enhancing control and margins. We've taken a $1.3 million impairment in Q3 for channel corrections. The total long-term impact will be assessed at the end of Q4, but we don't expect significant further impacts at this stage.

4. Question: "What were our receivables, payables, and inventory as of December 31?"

   Answer: Our receivables were about INR 170 crores, payables around INR 250 crores, and inventory approximately INR 800 crores as of December 31. This indicates our cash is being utilized for working capital but also reflects short-term borrowing needs.

5. Question: "Why did the non-sugar branded business degrow, and what are expectations going ahead?"

   Answer: The non-sweetener business decreased mainly due to a 35%-40% drop in pulse prices year-over-year, affecting turnover. We're restructuring for better profitability, focusing on key SKUs and backward integration in dals. While we're consolidating now, we'll explore expansion only when strategically beneficial.

6. Question: "What insights can you provide about the consumer products business and plans for new product launches?"

   Answer: We've learned considerable lessons, especially regarding seasonal price fluctuations and raw material sourcing. We're focused on profitable SKUs and have integrated backward with our lentil processing. We will detail potential new products by end of Q1, aligning with market needs and leveraging our brand strength in the South.

7. Question: "What is the outlook for the refinery business in terms of cost sustainability and current spreads?"

   Answer: We've successfully reduced costs due to energy efficiency measures and expect to maintain cost levels around $41 per MT. However, spreads may remain pressured due to global sugar surplus; we foresee this environment lasting the next two quarters.

8. Question: "Will you consider inorganic growth opportunities within the consumer segment?"

   Answer: Yes, we're open to inorganic growth, especially in food FMCG categories outside sweeteners, which we will continue to grow organically. We'll clarify our target categories in the May call after consultations with industry experts.