Dhampur Bio Organics Limited , a leading sugar and ethanol producer, reported a significant loss in the first quarter, despite a substantial increase in revenue. The company's financial results reflect the challenges faced in the sugar industry, particularly in Uttar Pradesh, but management remains optimistic about future prospects.

Financial Performance

The company reported a loss after tax of Rs 19.37 crore, a stark contrast to the profit of Rs 1.11 crore in the same quarter last year. However, revenue from operations saw a notable increase of 28.75%, reaching Rs 821.00 crore compared to Rs 638.00 crore in the previous year's quarter.

Segment-wise Performance

Sugar Segment

• Revenue increased by 22% to Rs 523.49 crore
• Sugar sales volume remained stable at 95,505 tons
• Average realization improved to Rs 40.84 per kg from Rs 39.15 per kg

Ethanol and Spirits Segment

• Revenue surged by 84% to Rs 127.66 crore
• Ethanol production increased to 21.67 million liters from 13.70 million liters
• Ethanol sales volume grew by 89% to 19.33 million bulk liters

Country Liquor Segment

• Gross revenue increased by 51% to Rs 286.34 crore
• Net revenue (after excise) grew to Rs 28.18 crore from Rs 19.13 crore
• EBIT improved to Rs 4.33 crore from Rs 2.51 crore

Operational Challenges

The company faced significant operational challenges, particularly in sugar recovery:

• Sugar recovery declined to 9.55% from 10.48% in the previous year
• Gross sugar recovery for the season stood at 10.43% versus 11.46% last year
• The decline was attributed to red rot infestation and pest issues affecting two factories in West Central UP

Strategic Initiatives

Despite the challenges, Dhampur Bio Organics has taken several strategic steps:

1. Completed conversion of a 100 KLPD molasses-based distillery to dual-feed capability
2. Increased focus on cane development and pest management activities
3. Commenced production of UPML (Uttar Pradesh Medium Liquor)
4. Repaid long-term loans of Rs 15.00 crore during the quarter

Management Outlook

Gautam Goel, Managing Director & CEO, expressed optimism about the upcoming sugar season:

"Going forward, we do believe the cane development and pest management activities that we put into place more aggressively should help us reverse this trend. All our other rationalization efforts with regards to ethanol, dual feed, have now just about come on stream in June. We hope this will continue to help give us better performances especially in Q3-Q4."

Industry Outlook

The sugar industry in India is facing mixed prospects:

• ISMA estimates total sugar output for the 2024-25 season at 29.90 million tons
• Domestic demand is estimated at 28.00 million tons
• The upcoming 2025-26 sugar season is expected to see increased production of 34-35 million tons
• Global sugar production is projected to reach 189.30 million tons in 2025-26

As Dhampur Bio Organics navigates through these challenging times, the management's focus on operational efficiencies, diversification into ethanol and country liquor, and ongoing cane development initiatives may help in improving the company's performance in the coming quarters.

Dhampur Bio Organics Limited (DBOL), a leading integrated sugarcane processing company, has released its financial results for the first quarter, revealing a mixed performance with strong revenue growth but a net loss. The company has also outlined its strategic plans for future growth, focusing on improving distillery yields and expanding into specialty chemicals.

Financial Highlights

• Revenue from operations surged by 28.75% to ₹821.19 crore, compared to ₹637.84 crore in the same quarter of the previous year.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) declined sharply to ₹6.33 crore, with the EBITDA margin contracting to 0.77% from 5.44% in the same quarter last year.
• The company reported a net loss of ₹19.37 crore, against a profit of ₹1.11 crore in the corresponding quarter of the previous fiscal year.
• Earnings per share (EPS) stood at -₹2.92, compared to ₹0.17 in the corresponding quarter of the previous fiscal year.

Segment-wise Performance

Sugar Segment

• Revenue increased by 22.09% to ₹523.49 crore
• Segment reported a loss of ₹4.75 crore, down from a profit of ₹22.25 crore in the same quarter last year

Bio Fuels & Spirits Segment

• Revenue surged by 83.55% to ₹127.66 crore
• Segment profit decreased to ₹0.64 crore from ₹8.03 crore in the same quarter last year

Country Liquor Segment

• Revenue grew by 50.72% to ₹28.18 crore (net of excise duty)
• Segment profit increased to ₹4.33 crore from ₹2.51 crore in the same quarter last year

Operational Highlights

Future Outlook and Strategic Plans

Dhampur Bio Organics has set ambitious targets, focusing on enhancing its operational efficiency and diversifying its product portfolio:

1. Distillery Yield Improvement: The company aims to achieve distillery yields of 8.5-9.0%, which is expected to boost its ethanol production capabilities.

2. Expansion into Specialty Chemicals: DBOL has announced plans for a multi-year expansion into the specialty chemicals and green chemistry sectors. This strategic move is aimed at enhancing the company's long-term profitability and diversifying its revenue streams.

3. Focus on Sustainable Growth: The company continues to emphasize sustainable practices, as evidenced by its ESG (Environmental, Social, and Governance) initiatives outlined in the financial report.

Management Commentary

Gautam Goel, Managing Director & CEO of Dhampur Bio Organics Limited, stated, "While our quarterly results reflect the seasonal nature of our industry and challenging market conditions, we are encouraged by the strong revenue growth across all our segments. Our focus on operational efficiency and strategic expansion into high-value sectors like specialty chemicals positions us well for sustainable long-term growth."

Conclusion

Despite the quarterly loss, Dhampur Bio Organics Limited's significant revenue growth and strategic initiatives demonstrate the company's resilience and forward-looking approach. The planned improvements in distillery yields and expansion into specialty chemicals are expected to drive growth and profitability in the coming years. Investors and stakeholders will be keenly watching how these strategies unfold and impact the company's performance in subsequent quarters.