Godavari Biorefineries (NSE:GODAVARIB) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Godavari Biorefineries Limited Q2 and H1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Prajeet Ambre from MUFG Investor Relations. Thank you, and over to you, ma'am. Thank you, Anam. Good morning, everyone, and welcome to Godavari Biorefineries Limited Q2 and H1 FY 'twenty seven Earnings Conference Call.

0:47 Today, on the call, we have Mr. Sameer Soumya, Chairman and Managing Director Mr. Ashish Sina, Deputy General Manager, Investor Relations and Finance to provide insights on the operational and financial performance. Before we begin the call, I would like to give a short disclaimer. This call may contain some of the forward looking statements, which are completely based upon our beliefs and expectations as of today. The statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. With this, I would like to hand over the call to Sameer sir for his opening remarks. Over to you, Sameer. Good morning, everyone. Thank you for joining us today for the Q2 and H1 financial year twenty twenty seven earnings call of Godavari Biorefineries Limited.

1:40 It was an auspicious day two years ago that Godavari went public. I am grateful to our investors for their confidence in us. I am glad today to share with you the encouraging progress that our company has achieved. With a strong growth in our bio based chemicals business and a meaningful improvement in operating performance. Despite continued challenges in the sugar and ethanol industry, our focus on operational efficiencies portfolio, that is product and feedstock diversification and disciplined execution has helped strengthen our business fundamentals. Let me briefly touch upon the broader industry environment. The world is in a state of flux. Geopolitics and climate are creating volatility.

2:25 In these past few months, we have been transported into a world where fossil resources have become scarce, and this underscores the fact that the work we are doing is even more relevant today. The global transition towards renewable and bioprase alternatives continues to create new opportunities with industries increasingly recognizing the importance of sustainable feedstocks, energy security and reliable supply chains. At the same time, the domestic sugar and ethanol industry continues to witness evolving dynamics, particularly around feedstock availability, production economics and changing demand patterns. India's achievement of the E20 blending milestone is an important step towards self reliance, while the development of new applications with greater feedstock flexibility will be important for the industry's next phase of growth.

3:17 We believe these developments further reinforce the relevance of our integrated biorefinery model and our vision of transitioning from oil to soil. Our strategic efforts are towards increasing our high margin bio based specialty chemicals and products. As we had indicated in our earlier calls, the debottlenecking initiatives undertaken in the Chemicals business are translating into stronger commercial performance. We continue to see opportunities across domestic and international markets, supported by demand for sustainable bio based alternatives. We are building on this progress through further debottlenecking, product development and a focus on higher bio based chemicals, including the additional INR 25 crore investment announced in the previous quarter. In our integrated sugar, cogeneration and ethanol business, the industry continues to face challenges arising from feedstock availability, weather conditions and recent policy developments.

4:14 Maharashtra and Karnataka are both suffering from a drought, and this can affect the farm economy. The government has recently restricted the diversion of sugarcane juice and bee heavy molasses towards ethanol for the upcoming ethanol supplier with the objective of ensuring adequate domestic sugar availability. While ethanol production from sea heavy molasses and permitted grain based feedstocks continues, the rise in maize prices has further increased maize margin pressures on grain based ethanol production. Against this backdrop, our integrated operations and multi feedstock capabilities remain important strengths. Our total distillery capacity stands at 800 kiloliters per day. Our ability to cater to both fuel ethanol and E and A markets and to use ethanol for bio based chemicals provides us additional product flexibility, allowing us to evaluate opportunities based on prevailing demand and realization.

5:12 We remain focused on optimizing feedstock utilization and balancing opportunities across sugar, ethanol and bio based chemicals to strengthen operating performance. On the innovation front, we continue to make progress in strengthening our intellectual property portfolio. During the quarter, we secured European patents for our anticancer pharmaceutical composition and bio based rubber enforcement technology, along with a Chinese patent for our antiviral compound. Subsequent to the quarter, we also received patents in Mexico and United States relating to our antiviral and anticancer research. We continue to advance our triple negative breast cancer drug discovery program subject to the necessary regulatory approvals. These developments reflect our focus on developing differentiated products and expanding the applications of bio based technology.

6:04 We are pleased to share that Godavari Biorefineries was recently recognized with the Manufacturing Process Innovator of the Year Award as the Picky Chemicals and Petrochemicals Award 2026, reflecting our team's continued commitment to manufacturing excellence and innovation. Looking ahead, our priorities remain focused on scaling our bio based chemicals business, improving operating efficiencies and strengthening our higher value product portfolio. In sugar and ethanol, we will continue to optimize our integrated operations while remaining responsive to feedstock availability and market conditions. The progress in our chemicals business during the first half gives us confidence in our strategy and the opportunities ahead. We remain committed to building a more diversified innovation driven business and creating long term value through sustainable solutions.

6:57 With that, I would now like to hand over the call to Ashish Sinha, who will take you through the financial performance in greater detail. Over to you, Ashish. Thank you, sir. Good morning, everyone. Let me take you through the key financial highlights for Q2 and H1 FY 'twenty seven. For Q2 FY 'twenty seven, revenue from operations stood at INR 549.2 crores, growing by 27.5% year on year, while total income increased by 26.6% to INR 549.8 crores. EBITDA improved to INR 10.9 crores compared to a loss of INR 4.4 crores in Q2 FY 'twenty six. With EBITDA margin improving to 2% from negative 1% last year, supported by stronger performance in our bio based chemical business.

7:54 Our business performance of Q2 FY 'twenty seven has been encouraging, particularly for our bio based chemical business. The bio based chemical business delivered strong growth with revenue increasing by 38.8% year on year to 204.2 crores and segment EBITDA growing by 47% to INR 22.1 crores. EBITDA margin improved to 10.8% from 10.2%, reflecting the benefits of earlier debottlenecking initiatives and improved operating efficiencies. Q2 FY 'twenty seven EBITDA of bio based chemical is 46% of annual EBITDA of FY 'twenty six.

8:40 In our Integrated Sugar, cogeneration and ethanol business, combined revenue stood at 334.2 crores compared to INR 275.7 crores last year. The Sugar and Co generation segment reported an EBITDA loss of INR 19.3 crore compared to INR 23.1 crore in Q2 FY 'twenty six. While ethanol EBITDA improved to INR 10.6 crore from INR 4.7 crores. Despite seasonal and feedstock related challenges, the overall operating performance improved year on year. At the consolidated level, the net loss narrowed to INR 15.2 crores compared to INR 41.6 crores in the corresponding quarter last year.

9:28 For H1 FY 'twenty seven, total income grew by 14.6% to INR $11.00 9.7 crores, while EBITDA improved to INR 13.4 crore from INR 2.1 crore in H1 FY 'twenty six. The Biorefineries Chemical business remained a key contributor, with revenue growing by 29.3% year on year to INR 372.9 crore and segment EBITDA increasing by 15% to INR 41.2 crore. EBITDA margin improved to 11.1% from 9.6%. H1 FY 'twenty seven EBITDA of bio based chemical is 86% of annual EBITDA of FY 'twenty six.

10:17 The consolidated net loss narrowed to INR 34.6 crore compared to INR 57.6 crore last year. Overall, the improvement in operating performance reflects stronger contribution from Biorefineries Chemical and continued focus on operational efficiencies. While seasonal and fixed operating challenges persist, we remain focused on the saving margin, optimizing working capital and maintaining financial discipline to support sustainable profitability. Thank you. We can now open the floor for questions. Thank you very much. We will now begin the question and answer session. Answer session.

11:09 Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Vivek Gupta from Star Investments. Please go ahead. Thank you, sir, for the opportunity.

11:56 So my first question is on the bio based chemical business delivered around crores of revenue in Q2 ahead of the earlier crore expectation. So when the company continues to target crore in quarterly revenue by Q3 FY 'twenty eight, how much of the recent performance is attributable to higher volumes from debottlenecking versus the product mix or the realization? And what needs to happen operationally to bridge the gap to $2.40 crores target? Thank you for the question, Vivek.

12:42 So we are targeting the growth in Q3 FY 'twenty seven. That comes with the investment of about INR 25 crores in further debottlenecking bio based chemistry. The improvement that we have seen in bio based chemicals of INR $20.04 crores in the quarter gone by, ahead of our INR 190 crore target that we had and ahead of the INR 140 crore about number that we had in the same quarter last year. So the INR 140 and odd crore last year to the INR 190 crore this year was projected on the basis of the debottlenecking investments that we did since then. So that answers partly your question.

13:41 To some extent, we have received certain higher volumes because of the, say, I would say, the crisis in the Hormoz area, and it has resulted in some price increases in some products. And so therefore, that is also gives us the increase from INR 190 crores to the INR 200 crores that we've targeted. So I would say it's a combination of the increase of the business itself over because of the debottlenecking done. And the next year, $2.40 crores, will come from the investments that we are doing now, which we hope to start by April of next year. But then it will take some time for that to get into the market in terms of market entry. So we have projected the INR $2.40 crores to be operational from Q3 of FY 'twenty seven. I hope that answers your questions.

14:38 Just want to back Q3 of FY 'twenty eight. Sorry, Q3 FY 'twenty eight. Thank you very much. Yes, sir. Sir, as we increasingly position ourselves as a specialty bio based chemicals company, how is the revenue mix evolving between relatively commoditized products such as ethyl acetate and differentiated higher value molecules? And what would be the key milestone indicating a structural improvement in the segment's margin profile? So structurally, the growth is definitely to add bio based specialty chemicals as we go further.

15:29 In the last half year, 62% of our business has come from the bio based specialty chemicals versus about 38%, has come from about I just want to correct. It's 52% of bio based specialty chemicals. Sorry, 52% has come from bio based specialty chemicals in the half year. So our structural movement is to move towards bio based specialty chemicals. If we do see an opportunity in ethyl acetate because of certain market conditions, we will be responsible to them, and we will increase the business for that accordingly.

16:19 But structurally, our business strategy is clear to continue to improve bio based specialty chemicals. Okay. Okay, sir. Sir, following the... Even just to add, even the investments that we are making of this additional debottlenecking, all of that will go to increase the business of bio based specialty chemicals. The the market. We only capacity now stands at around 800 kiloliters per day. So given the lower ethanol tender allotments in H1, what kind of utilization levels are currently being achieved across the grain based and sugarcane based units?

17:18 And also, how is the management evaluating the opportunity to increase grain processing flexibility within the existing capacity? So this is an evolving situation. As we know in this last quarter, the monsoons have been have failed. The drought is there in Maharashtra and Karnataka. The government of India has reduced the has reduced completely the allocation of sugarcane juice and B molasses to ethanol. So therefore, what we can make is you see molasses and separately, our fungible grain based facility is also running.

18:14 It and it is running right now as we speak. For the new tender, it will depend on also maize economics, the economics for rice, the economics for food grade. So this will be and the gain available. So it is an evolving landscape that we are looking how best to optimize feedstock availability, feedstock economics and products that we will ultimately use it for. The ethanol can be used for the fuel blending program, and we are also users for ethanol in our chemical business as well as the E and A market. So let me definitely, the optimization or the utilization of the distillery, had it been purely a sugarcane at the main distillery would have been much lower because of the change in the government policy from only using sea molasses.

19:19 Because we have created ethanol capacity, which is fungible partly with our current facility, we will be definitely able to produce more ethanol optimizing on feedstock availability. We also expect that the sugar prices will definitely, in light of the poorer monsoons, we expect the sugar prices to be stronger going forward. And sugar production will be also because if we do not divert sugarcane juice to ethanol, it means you are diverting sugarcane juice to sugar. Okay. Okay.

20:05 You, sir. That helps a lot. And all the best for the future quarters. Thank you. Thank you. The next question comes from the line of Kranti from Wealth Mill Securities. Please go ahead. Hi, sir. The initiatives what you are making, it shows the long term visibility. But in the medium to short term, the key concern has been the profitability, okay? When we can see the shareholders seeing the profitability of the company in the medium to short term? How much time it will take? And you have made some initiations like the DME and all. Okay. When they are going to turn into revenue?

20:52 How much the timelines you have? And also with respect to the drug discovery and all, what kind of progress you are making? Can you just throw some light? Thank you for your questions. I firstly, we are a season let us divide the businesses into two broad sections. One is a section of our bio based chemicals and the other is our integrated sugar ethanol power business. The second one, which is sugar ethanol power, is a seasonal business. In our scheme, the first two quarters, that is the first half year, is always negative on profitability. And the second half year is very much positive on profitability and makes up more than what is done in the first half. So that's how our business is configured.

21:49 As far as the bio based chemicals is still concerned, it is not a seasonal business. And there, we have shown substantial improvement over the past year. As Ashish just mentioned, in the profitability for the H1 of FY 'twenty seven for the Biowid Chemical division, we have achieved about 90% of last year's full profitability of the Chemical division. So we see that business growing being strong. And at the same time, in the second two quarters, you will start seeing also profitability in the integrated sugar ethanol powered model that we have. That answers your first question.

22:35 As far as the second question on DME is concerned, this is a project that we are doing with ICT in Mumbai for the conversion of carbon dioxide directly to dimethyl As mentioned in the past, this is currently in a pilot plant stage. And this pilot plant stage is expected to complete by March 2027. So we would have something to show on what are the outcome of these pilot plant trials only after March. This is something that is real innovation to look at carbon dioxide as a feedstock to make DME, which can be used as an LPG substitute to advance energy security for us and at the same time, work against climate change.

23:28 The last is on drug discovery. Drug discovery, we are doing primarily on taking and advancing our triple negative breast cancer molecule. This currently, we have applied for permissions from CVSCO to do preliminary efficacy trials. We are hoping that we will get this permission in this current quarter. So we should be able to commence the trials right after we get these permissions. This is a trial which typically takes thirty three months, but we should get some numbers on how this molecule is behaving in patients within six to nine months of the starting of the patient trial. So this is where we stand as far as our innovation in drug discovery is concerned. I hope I have answered your three questions.

24:22 Yes. Thank you, sir. Thank you. Thank you. The next question comes from the line of Nivesh Verma from Vixora Securities. Please go ahead. Sir, I had a few set of questions. My first one was with the lead triple negative breast cancer molecule progressing towards preliminary efficiency evaluation, how is the management thinking about funding requirements for subsequent clinical developments? So our aim is to only do preliminary efficacy trials.

25:07 Our budgeting for this would be in the range of INR 15 crores to 20 crores max. We would look if we get positive results in this preliminary efficacy trial, then we would look to outlicense this molecule to pharma companies in India and abroad. Because we are not a pharmaceutical company, this requires a different skill set and finance required to take it to the next level of clinical trial. We believe that there is going to be interest once we show preliminary efficacy. In the past, conversations with these companies had wanted also safety trials to be conducted. These were conducted successfully post the trials in the preclinical trials being successful.

25:55 So that's what our strategy will be. Okay. Got it, sir. And the second question was going to be was simultaneously pursuing chemical debottlenecking. Just a... So we lost your line, if you're still there. Yes. Am I audible? Yes. Now you are. Simultaneously pursuing chemicals debottlenecking ethanol flexibility downstream partnerships and resource led opportunities with chemicals now contributing approximately to 37% of Q2 revenue. How does management envisage the business mix evolving over the next three to five years? So broad strategy is twofold.

26:44 One was to make our ethanol facility to be a multi feedstock facility so that we can diversify away from climate policy and feedstock risk. We believe we have accomplished that. We also had said and articulated that our growth focus will come on bio based specialty chemicals, and that is the work we have done over the last year to debottleneck the business, and we are continuing to do work in bio based specialty chemicals. So going forward, a lot of our attention and growth will come to build this business, and the focus will be on bio based specialty chemicals in with our customers, co creating solutions with them in India and abroad.

27:40 And sir, how will the capital allocation priorities change as the company seeks to improve consolidated returns? As I repeated, our large investment was to make the ethanol facility due multi feedstock. So going forward, capital allocation will focus on the bio based specialty area. If we have to do some minor investments in ethanol facility just to optimize, we may do so, but larger investments will now go towards the bio based specialty business. Okay. Got it, sir. And the last question would be the company has prioritized debottlenecking over the large capacity additions in bio based chemicals as the existing asset base generates higher throughput.

28:28 How much further growth can be achieved through operational improvements before a large greenfield or brownfield investment? See, we had talked about certain larger investments in bio based chemicals, which we are also continuing to explore. We are looking for larger offtake agreements before we proceed with those larger investments, while we pursue them also strongly. So as we get much more visibility in customer offtakes is when we will start working there. As and until we go there, we will keep doing debottlenecking and minor investments to keep growing our bio based specialty chemical portfolio. We believe that the demand is strong, And this is what is demonstrated over the last one year. As I said, we went from a 140 crore last quarter financial year 'twenty six that means the same quarter last year, and we have gone to crossing INR 200 crore this year. We see a strong interest by customers in looking at reliable supply chains.

29:34 And as I mentioned, the fossil costs have gone higher. So the gap between fossil and green for some customers is now bridgeable. So this is how we see that growth coming. And our scientists are working closely with customers in India and abroad, co creating solutions to give us give these opportunities to the company. Got it, sir. Thank you. Thank you for answering the questions and wishing everyone a Happy Diwali. Happy Diwali. Thank you. The next question comes from the line of Hitesh Agrawal from Investment Partners. Please go ahead. Yes, sir. Thanks for the opportunity. I hope I'm audible. Yes. Yeah. So I I have a couple of questions. First on the bio based.

30:19 So bio based chemical revenue has increased by 49% and EBITDA margin EBITDA grew at roughly around 47%, right? So how one can see the EBITDA margin improvement from here, incremental margin improvement, I mean, as the business scales up further and the future growth proportion? I would ask you to please repeat your question. So yes, I have a question on that. Bio based chemical revenue has increased by 30%, right, in Q2, And our EBITDA has grew by 47%. So however, the EBITDA margin improvement was relatively more or at 60 basis points. How one should think about the incremental margin as the business scale up further? And what proportion of the future growth is expected to come from the higher value specialty products rather than the existing?

31:13 So I mentioned this, our structural strategic pathway is to increase bio based specialty chemicals. In the last quarter, we gave a projection that we would come to INR 190 crores in this quarter just gone by and INR $2.40 crores per quarter that is in Q3 FY 'twenty eight. That improvement in growth was planned for and is planned for based on bio based specialty chemicals. What we have seen right now is that there is business in bio based specialty chemicals as well as an increased business in ethyl acetate.

31:59 So as opportunities will come in products such as ethyl acetate, if there is an opportunity, we'll take it. We do consider that only maybe temporary. We don't know how that is. Our long term structural strategic intent is to grow the business in Biogas Specialty Chemicals. Okay. Okay, sir. Got it. And the second question on inventory. As I see, our inventory has declined significantly from $7.75 crores to roughly around $2.50 crores. Okay? And our operating cash flow stood around roughly around $66.65 crores. So how much of the inventory reduction reflects the normal cycle versus structural improvement in the working capital management?

32:47 Shouldn't we expect inventory? Inventory largely is coming because of the seasonal nature of the business. In March, the inventory is high because the sugar stocks are at the highest. And in September, you see those stocks much lower. So that is a seasonal variation in the business. As the chemical business grows, to some extent, our chemical inventories will go pro rata to the increase in business. The next question comes from the line of Suhani Singh from ROS Capital. Please go ahead. Hello, sir. Good morning.

33:33 Good morning. Had a couple of questions. Given Godavari's exposure to feedstock, how are you approaching procurement for the upcoming ethanol supply year? Given Godavari's exposure to feedstock, what? Feedstock pressure. How Evolving are situation. Our assessment of feedstocks now, we have feedstock of cane. We have feedstock, which we can take of maize, and we have feedstock that we can apply for, which would be the FCI provided surplus So food we are looking at so Keel, we have been working very closely with our farmers through our agriculture research station to work on high yield technologies, good agronomic practices, regenerative agriculture to better see that if there is a drought condition, how we can still maintain good throughputs in our system.

34:44 That I consider is co creating value and supply chains with our farmers. So just like we have customers who work with us for having reliable supply chains, it is the same principle that we have with farmers so that we have reliable supply chains, but we bring innovation and science and co creation to that so that the soil is healthy and the yields are better and how we can do water conservation practices. So that's as far as cane is concerned. When it comes to maize and rice food grade, we are trying to definitely see that it may be better right now from our rice to ethanol perspective as far as the blending program is concerned.

35:33 We are looking at maize prices being high as economically a tougher situation immediately for maize to ethanol. That is our view. We also see that we can use we can also be in the E and A markets as well as for chemicals, we are also ethanol for our own business. So this is how we look ourselves that we have a multi feedstock facility, and we also have a facility where we can be in multiple markets. That's how we are looking at it. But we are looking at economics carefully. So what we do, we do it in a smarter way And reduced capacity utilizations in ethanol that is purely cane driven ethanol will be matched by higher capacity utilizations of sugar.

36:24 As far as the facility is concerned, having an ability to process grain helps us add ethanol capacity to what would have been reduced ethanol capacity since the policy has changed to not allow C B molasses or juice to make ethanol. Is that a long answer to your question? No, no, but that has so are we preferring logging in the inventory ahead of the season or maintaining flexibility until tender locations and pricing becomes clearer? No, which inventory are you talking about? Sugarcane is in the field. So we will harvest that as it goes. Then you have maize and rice.

37:10 Rice, if you apply for and if you get the tender, you'll be allocated the rice. For maize, we are right now thinking that the maize prices are quite high to lock in into the ethanol price in the market. Okay. That helps. So the Integrated Sugar cogeneration and ethanol segment reported an EBITDA loss of INR 8.7 crores in Q2. So come... It's compared to 18.4 crores last year. However, it's in profitability remains under pressure. So what drove this sequential improvement in q two, and which factors will most be most important for restoring sustainability? Would it be high sugar realization, better gain recovery, ethanol allocations or lower feedstock cost? So in our business, every year, H2 is always better than H1.

38:08 So one is just that we are a seasonal business. And no matter what you do, H2 will more than make up for H1. So H2 is always profitable if you look at even the last two H2s that you might see. So that's a straight answer to you. We did an improvement over last year's H1 because of slightly better sugar realizations in this second first half, that is the Q in the first half of this year. The next question comes from the line of Sunil Surana from Star Broking.

38:57 Please go ahead. Sir, I have a couple of questions, sir. Sir, with the strong growth witnessed in the chemical business, could management provide some color on the volume versus realization contribution? And are Specialty Chemical gaining shares within the segment? Or it is the growth still largely driven by higher volume in existing products? It's a combination of both, Snehal. Because if you see the increase, it has gone from INR 140 crores last year, same quarter, to about INR 200 plus crores. So the increase of INR 60 crores is based by increase in business of existing capital plus the debottlenecking of bio based specialty chemicals, which are also what we are keeping doing when we do the business. So if I for example, if I talk about the investment I'm making of INR 25 crores now, which I say will further lead to business in Q3 of FY 'twenty eight, then they will become chemicals that I'm introducing in April to September of next year. And then they take their time to kick in, Then you might say that they are are they new or are they increased business of existing chemicals. So that's how it is. So last year, we were debottlenecking.

40:18 Those chemicals got introduced in the market. And then you see those chemicals become, what I would say, normal chemicals this year. We continue to see opportunity. We will debottleneck those as well as well as we will work on new chemicals, which we will introduce. That's how we see the business. Okay, sir. And sir, my next question is related to the bio based chemicals. So it generated around INR 41.2 crore in EBITDA during H1 FY 'twenty seven, while the consolidated EBITDA stood at only INR 13.4 crore. Given the significant diversion, so what level of improvement is required in an integrated sugar and ethanol business for the company's consolidated profitability to become sustainable?

41:06 It will automatically happen in Q3 and Q4. When we start taking in cane. There is no cane processed in Q1 and Q2. So there are no production operations as far as the sugar facility is concerned. Now we start taking in the sugar, and you will see big improvements in Q3 and Q4. This is what happens every year. Okay. So the chemical business alone only, sir, drives some improvement in consolidated earnings over the next few quarters? No. We have to broadly look at it that firstly, the are you looking at just next two quarters out of seasonality? Or you're looking at what just happened in Q3 and Q4? So Q3 and Q4 will automatically have stronger operations in the integrated sugar ethanol just because it is period of operations.

42:00 And so this is what will happen. Chemicals will drive the business growth. And this year, since we have put in an ethanol based facility from grain, whether it kicks in, it is already operational. We hope to see some benefits from that facility as well. And we will have to see how the sugarcane and sugar economics also plays out as the market as the months progress. Okay, sir. Thank you. That's all from my side. Thank you. The next question comes from the line of Varun Misra from SG Capital. Please go ahead. Yeah. Hi, Varun. Thank you for the opportunity.

42:48 Sir, a couple of questions from my end. With the restrictions on the sugarcane juice and the bee heavy molasses diversion for ethanol along with the... Like, let's say, we have an increase in the grain prices which we see, How do you see the rates going up? Like, what do you see the economics of ethanol industry evolving, let's say, within this year and going forward? And could these developments lead to a lower industry wide capacity in terms of utilization, like towards the sugarcane production? It would be a good conversation to have six months later, Varun. Broadly, if you look at the bids that industry has provided to ethanol, it shows that there is enough ethanol for E 'twenty in the country. So that's one.

43:37 It also means that the Indian government's policy of creating feedstock diversification to meet its E 'twenty goals has also largely been there. So that's at a very macro level. From a point of view of the reduction in B molasses or juice to ethanol, we have to always assume that there are going to be volatility in the world. There was there is volatility caused by geopolitics in The Gulf. Similarly, as we are a country of the sun, the soil, the small farmer, when the rains are not going to come up to market, we've had last seven, eight good monsoons, we should expect that once in every few years, we will have a tough monsoon.

44:29 So when that happens, capacity utilization from of ethanol from sugarcane juice or bee will get affected. Our whole strategy for building capability to process grain was in events of such eventualities. Now when we look at what is going further, there is maize or damaged food grain or rice that we can use, surplus rice. In our assessment, we may have a belief that the mains prices are higher, and we may apply for get try to get rice, surplus rice. So in any case, that's each company will make its own judgments on how they want to optimize. And this is what we are also planning to do. We have definitely seen our distillery as having multi feedstock so that we can better insulate ourselves from the volatility of having only one feedstock.

45:28 All right, sir. That helps. Also like given our pricing operations as of now, could you quantify how sensitive is this segment in terms of profitability? And what changes... Like, what are the changes can we expect? And any recovery from this segment, how would, like... Would a modest improvement in the recovery mean, like, let's say, it would offset the pressure on ethanol economics? My view is that the ones the reduction in rains is definitely going to cause tightness in the sugar market. So we will definitely have to see how the sugar prices move and how it works in terms of sugar economics. So clearly, we will all we will be reducing our diversion from the sugarcane we process to ethanol because of the policy change, and that will go to sugar.

46:24 And the sugar prices will definitely be better than they were last year. And economically, we will have to see how that plays out in the year. But sugar prices, we definitely think will move much better than they were last year. And so we'll produce more sugar than we did, and we'll produce less cane with ethanol than we did. But we do produce hope to produce that we will definitely produce some grain based ethanol this year in addition to the sea molasses based ethanol. Understood. And given our CapEx of INR 25 crores to prioritize the debottlenecking, adding capacity per se, what would be the chemicals like which we are considering to add in this? It's a whole range of chemicals. We make more than 20, 25 bio based specialty chemicals.

47:11 This debottlenecking will be spread across a range of chemicals. Okay, sir. And so one last question from my end. So like we've seen there has been an environment in terms of the loss which we booked as compared to last year as well as on a sequential basis. So when do we see ourselves, like, turning back positive? Like, can we expect it in this financial year or maybe in FY '28? We were fat positive last year also, and we were we are hoping for the next two quarters should be very good quarters. They will definitely you look at the history of our past quarters, Q3 and Q4 are always strongly positive, and we are hoping for the same this time. All right. So that helps. Thanks a lot, sir. All the best.

48:01 Thank you. The next question comes from the line of Snehal Surana from Star Broking. Just a follow-up question from my end. The question is the grain based distillery was commissioned in quarter one FY 'twenty seven. So has this facility reached a stable operating efficiency in terms of yield and conversion cost? Or there are still commissioning related inefficiency that is affecting the profitability of the company? So we have commissioned the facility in the end of June of that is Q1, end of Q1. And the facility is operating. It is operating at capacity to meet the orders we had for the ethanol based program.

48:51 We had taken contracts from the oil marketing companies to deliver ethanol to these to the OMCs and then we are making the product to deliver the same to them. Thank you. So thank you. I would like to thank everyone for joining us on this call today.

49:45 Once again, I wish all a very happy Dhanteras and a very happy Diwali in advance. Thank you. Thank you. On behalf of MUFG Investor Relations, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.