Balrampur Chini Mills announced that CRISIL has re-affirmed the Credit Ratings assigned for both long-term and short-term as CRISIL AA and CRISIL A1+ respectively. However, the Outlook on the long-term rating has been revised from Stable to Positive.

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Triveni Engineering and Industries Ltd, Bajaj Consumer Care Ltd, Dwarikesh Sugar Industries Ltd and Glenmark Pharmaceuticals Ltd are among the other gainers in the BSE's 'A' group today, 15 April 2021.

Balrampur Chini Mills Ltd surged 10.35% to Rs 262.3 at 11:49 IST. The stock was the biggest gainer in the BSE's 'A' group. On the BSE, 5.56 lakh shares were traded on the counter so far as against the average daily volumes of 1.86 lakh shares in the past one month.

Triveni Engineering and Industries Ltd soared 6.98% to Rs 100.4. The stock was the second biggest gainer in 'A' group. On the BSE, 1.79 lakh shares were traded on the counter so far as against the average daily volumes of 56768 shares in the past one month.

Bajaj Consumer Care Ltd spiked 6.95% to Rs 306.1. The stock was the third biggest gainer in 'A' group. On the BSE, 2.58 lakh shares were traded on the counter so far as against the average daily volumes of 88372 shares in the past one month.

Dwarikesh Sugar Industries Ltd exploded 6.30% to Rs 33.75. The stock was the fourth biggest gainer in 'A' group. On the BSE, 2.33 lakh shares were traded on the counter so far as against the average daily volumes of 1.16 lakh shares in the past one month.

Glenmark Pharmaceuticals Ltd advanced 6.27% to Rs 544.05. The stock was the fifth biggest gainer in 'A' group. On the BSE, 4.46 lakh shares were traded on the counter so far as against the average daily volumes of 1.52 lakh shares in the past one month.

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On 4 November 2020, the company's board had approved a capex of Rs 320 crore for the aforementioned capacity addition project.

The company said that the increase in capex to the tune of Rs 105 crore is mainly owing to the inclusion of 20 KLPD of extra-neutral alcohol (ENA), higher storage capacity for raw material and finished goods, sharp rise in steel prices and change in designs of equipment to bring in more efficiency and embrace automation.

The higher investment would result in higher efficiency, better recovery of ethanol from juice which will add to the bottom line and will result in better payback than envisaged earlier,” it added.

The company proposes to borrow Rs 220 crore from banks under the scheme for extending financial assistance for enhancement of ethanol capacity as announced by the Government of India. Balance amount would be funded through internal accruals.

The company has already received in-principle approval from the Department of Food and Public Distribution, Government of India, confirming the eligibility for interest subvention on said loan of Rs 220 crore.

The plant which is expected to be commissioned by December 2022 would operate on dual fuel i.e. on sugarcane juice during the season and on grains during off season. The plant will be a complete zero liquid discharge plant (ZLD) equipped with incinerator boiler and turbine for cogeneration of power. The plant is expected to generate annual revenue of around Rs 650 crore and has a cash pay-back period of less than 4 years.

Separately, on Saturday (10 April 2021), the sugar maker informed that the credit ratings agency ICRA has reaffirmed the long and short-term credit ratings of Balrampur Chini Mills as [ICRA] AA and [ICRA] A1+, respectively. The ratings agency has revised the outlook on the long-term rating to 'positive' from 'stable'.

Balrampur Chini Mills is one of the largest sugar producers in India. The operations of the company are forward integrated, manufacturing alcohol (using molasses, a byproduct of sugar) and power (using cogeneration from bagasse, another byproduct of sugar manufacturing).

The company's consolidated net profit declined 62.91% to Rs 26.89 crore on a 10.34% fall in net sales to Rs 1072.17 crore in Q3 FY21 over Q3 FY20.

The scrip was down 3.10% to currently trade at Rs 226.75 on the BSE. It traded in the range of 222 and 242.45 so far during the day.

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The ratings agency has revised the outlook on the long-term rating to 'positive' from 'stable'.

ICRA said that the rating action considers an expected improvement in Balrampur Chini Mills' (BCML) operating profitability and debt coverage indicators in FY2022 on the back of higher B-heavy ethanol sales volumes and an expected stable sugar realisation.

In Uttar Pradesh (UP), sugar production is estimated to decline by approximately 20% in SY2021, which is likely to support sugar prices in the near term. Also, with continued higher diversion of cane towards B-heavy molasses, there is likely to be an increase in the sales volume of B-heavy ethanol, having better realisation, thus increasing the overall revenue and profits from the distillery segment.

The ratings continue to factor in BCML's large scale of sugar business with operationally efficient sugar units with forward integration into the cogeneration and distillery businesses, which provides alternative revenue stream and partially reduces the impact of cyclicality of the sugar business.

The company is planning to set up a new distillery of 320 kilo litres per day (klpd), which is expected to commence operation by December 2022, which will further strengthen the operating profile, going forward.

The long-term rating continues to be constrained by the cyclical nature of the sugar industry, agro-climatic risks related to cane availability and the susceptibility of profitability to sudden changes in Government policies.

However, ICRA notes that recent interventions by both the Central Government and the state government, which included revision in minimum support price, interest subvention loans for setting up of ethanol manufacturing facilities, soft loans and export subsidy, supported the sugar industry and benefited integrated sugar producers like BCML.

ICRA could upgrade the rating if there is a sustained improvement in profitability from the distillery and sugar division. Specific triggers for a rating upgrade would be maintaining operating profit margin above 15% on a sustained basis.

However, pressure on the rating could emerge in case of any adverse changes in government policy, which weakens the profitability and debt coverage metrics on a sustained basis. Any large debt-funded additional capex, other than what is already planned, and/or inorganic growth plans may also have a negative impact on the rating.

Balrampur Chini Mills is one of the largest sugar producers in India. The operations of the company are forward integrated, manufacturing alcohol (using molasses, a byproduct of sugar) and power (using cogeneration from bagasse, another byproduct of sugar manufacturing).

The company's consolidated net profit declined 62.91% to Rs 26.89 crore on a 10.34% fall in net sales to Rs 1072.17 crore in Q3 FY21 over Q3 FY20.

The scrip shed 0.04% to end at Rs 234 on the BSE on Friday.

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