Sukhjit Starch & Chemicals Ltd. — Call Transcript 2023

Nov 20, 2023

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THE SUKHJIT STARCH AND CHEMICALS LIMITED

EVOA.VtNG wrrk NATURE

Ref: SSC/VPF/SE/2023-24/ 600-3

Dt: 20/11/2023

BYE-FILING

To, - The General Manager Listing Department BSE Limited 25th Floor, P.J. Towers, Dalal Street, Fort, MUMBAI- 400 001 Ref: Security Code: 524542

To, The General Manager-Listing Department The National Stock Exchange of India Limited Exchange Plaza, 5th Floor, Plot No. C/1, G Block, Bandra Kurla Complex, Sandra (E), Mumabi- 400 051

Ref: Symbol: SUKHJITS

Reg: Transcript of Earnings. Call hosted on November 16, 2023

Pursuant to Regulation 30(6) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the transcript of the Conference Call / post Earnings Call hosted by the Company on November 16, 2023 to discuss Q2 & H1 FY24 results, is attached herewith.

You are requested to kindly take note of the same.

Thanking You,

Yours Faithfully,

For THE SUKHJIT STARCH & CHEMICALS LTD

Aman Deep Digitally signed by Aman Deep Setia Setia Date: 2023.11.20 17:07:25 +05'30' VICE PRESIDENT (FINANCE) & COMPANY SECRETARY

Encl: as above

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ISO 9001:200 �rtif� & FSSC:22000 Company

T +911824 468800, 260314 F +911824 261669, 262077 E SUKHJIT@SUKHJITGROUP.COM CIN : l15321PB1944PLC001925

SARAI ROAD, PHAGWARA 01sm. KAPURTHALA PUNJAB 144 401, INDIA

www.suKH.JITGROUP.COM

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“T h e Suk h jit Star c h & C h emica l s Limit e d Q2 & H1 F Y '24 E a rnings Confer e nce C a ll”

November 16, 2023

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– MANAGEMENT: MR. BHAVDEEP SARDANA SENIOR VICE PRESIDENT & CHIEF EXECUTIVE OFFICER, THE SUKHJIT STARCH & CHEMICALS LIMITED – MR. DHIRAJ SARDANA SENIOR VICE PRESIDENT & CHIEF EXECUTIVE OFFICER, THE SUKHJIT STARCH & CHEMICALS LIMITED – MR. AMAN SETIA VICE PRESIDENT (FINANCE) & COMPANY SECRETARY,THE SUKHJIT STARCH & CHEMICALS LIMITED

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Moderator: Ladies a n d gentlemen, g ood day and welcome to The Sukhjit Starch & Chemicals L imited Q2 and H1 F Y 24 Earnings C onference Cal l .

As a re m inder, all par t icipant lines w ill be in the listen-only m o de and there will be an opportunity for you to ask question s after the pr e sentation con c ludes. Should you need assistanc e during the co n ference call, p l ease signal an operator by pr e ssing ‘’ then ‘ 0’ on your touchton e phone. Please note that this conference is b e* ing recorded.

I now ha n d the conferen c e over to Mr. A man Setia. T h ank you and all to you, Mr. S e tia.

Aman Setia:

Thank yo u . Good morni n g, ladies and g entlemen. On b ehalf ofThe S u khjit Starch & Chemicals Limited, I would like to extend a war m welcome to a ll of you who h ave joined us for the Q2 H1 Earni n gs Call. We a p preciate your t ime and intere s t in our Comp a ny's performa n ce. I hope that ever y one had an op p ortunity to go through the fi n ancial results w hich have bee n uploaded on the stock exchange.

As we pr e sent the finan c ial and operat i onal performa n ce for the firs t six months o f FY24, we also take t his moment to wish you a Ve r y Happy Diw a li and a Prosp e rous New Yea r .

While we maintain a po s itive outlook fo r our Compa n y's prospects, w e also remain committed to delive r ing the value to our sharehol d ers. By priori t izing the key a reas, we are confident in our abilit y to drive sust a inable growth and generate l ong-term shar e holder value. O ur legacy for the past eight decade s provides a so l id foundation f or the future s u ccess.

I will no w share the Highlights of our F inancial Perfo r mance for Q2 and H1 FY24. For H124, the Com p any has report e d a total reve n ue of Rs.647 crores against R s.705 crores i n H1 FY23. EBITDA stood at Rs.63.40 crores aga i nst Rs.76.41 c r ores in the co r responding pr e vious half year. Pro f it after tax sto o d at Rs.27 cro r es against Rs.39 crores in H1 F Y23.

Now, co m ing to the q u arterly perfor m ance for Q2 FY24, the C o mpany has s u ccessfully maintain e d its revenue a t Rs.323 cror e s against Rs. 3 24 crores in Q 1 FY24 desp i te 15 days annual m aintenance s h utdown at its largest man u facturing facility. Compan y has also maintain e d its EBITDA margins at 10. 0 5% with an i m provement of 5 1 bps in Q2 c o mpared to Q1. EBI T DA stood at R s.32.46 crores a s against Rs.30.94 crores in Q 1. Net profit m argin has also impr o ved by 21 bp s from Q1. The profit after ta x stood at Rs.1 3 .66 crores in Q 2 FY24 as against R s .13.04 crores in the previous q uarter.

Dear frie n ds, from the m anagement, w e have with u s , Mr. Bhavde e p Sardana -- S enior Vice President & CEO and M r . Dhiraj Sarda n a-- Senior Vi c e President, C E O of the Com p any.

Now, I h and it over t o Mr. Dhiraj S ardana to gi v e a brief ab o ut the Compa n y and its operation s .

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Dhiraj Sardana: Hello, e v eryone. Sukhj i t Starch &Chemicals, incor p orated in 19 4 3 is an agro processing Company that specializ e s in the produ c tion of starch a nd its derivati v es.With a ric h history as one of I n dia's oldest and largest starc h producers, S u khjit Starch & Chemicals L imited has forged e n during partne r ships with m aj or brands an d end users.A diverse produ c t portfolio includes Starch, Dextr i n, Liquid Gl u cose, HMS, M alto Dextrin Monohydrate Dextrose, Anhydro u s Dextrose, S orbitol 70% S olutionand v a rious byprod u cts, catering to a wide spectrum of industries.T h e products ar e used in diver s e industrial an d commercial a pplications such as f o od and bever a ges, paper and board, person a l care and ph a rmaceuticals a n d textiles, FMCG, a n imal and pet fo ods, etc.,

I now ha n d it over to Mr. Bhavdeep Sa r dana for more i nsight on the C ompany's per f ormance.

Bhavdeep Sardana:

Good mo r ning, investor s and stakehol d ers. Briefly, in the quarter en d ing Septembe r 2023, our Company navigated a c h allenging period marked by pricing pressu r es on finished goods and subdued d emand for cer t ain higher val u e seasonal pro d ucts.

While ra w material av a ilability and p ricing remain e d stable, the impact of we a k demand persisted, particularly f o r some high value seasona l items affecti n g our Q2 re v enue from operation s . This was a l so mirrored i n FMCG maj o rs citing wea k rural dema n d.Regional constrain t s emerged du e to erratic m o nsoons and fl o ods impactin g the demand f or specific products. Responding t o these challen g es, our Comp a ny proactively secured an a m ple supply of basic r aw material a t an optimal c ost considering the unpredi c table climatic conditions affecting the sowing o f kharif crop. This strategi c approach p o sitions us for improved operating outcomes in t h e upcoming q u arters, notabl y , our revenue f rom operations remained robust du r ing Q2 FY24, even amidst o u r 15-day main t enance shutdo w n at our large r facility in Punjab... this was also highlighted b y Mr. Aman Setia in his r emarks on th e financial performa n ce.

Looking a head, we are actively progr e ssing with pl a ns to expand our installed c apacity by 25%, ai m ing for compl e tion in the co m ing quarters. The explorati o n of expansi o n avenues, including Greenfield pr o jects and Br o wnfield. Bro w nfield facility acquisitions is underway continge n t upon market d ynamics and i n ternal assess m ents.

Our com m itment to enh a ncing the pro d uct portfolio a nd advancing o perating mar g ins remain steadfast. We adhere to a business mo d el focused on serving key c u stomers and markets near our plant locations. This philosophy ai m ed at sustaini n g growth acro s s existing loca t ions while exploring new avenues f or expansion c ontinuously d r ives us to enh a nce overall b u siness and create val u e for our stak e holders.

Our strat e gic placemen t of facilities i n our local do m ain allows u s effective cli e nt service, expandin g our presence across differe n t geographies r emains the ke y objective, strengthening our mark e t share and ga i ning a competitive advantage.

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To addre s s evolving cus t omer demand s , we optimize our product m i x,emphasizing high value offering. This approach enables us t o stay competi t ive amidst ch a nging market dynamics. Aligned w ith the strate g y, we have al l ocated capital expenditure t o enhance the c apacity of existing p lants, increasi n g daily install e d production c apacity from 1 ,600 MT per d ay of corn grind to n early 2,000 t ons over the n ext few mon t hs. Important l y, these investments are entirely fu nded through internal accru a ls, underscori n g our financi a l strength an d Company sustainab i lity. In line w ith our commitment to effic i ency and vol u me enhancem e nt, we are prioritizi n g higher cap a city utilizatio n , striving for optimal perf o rmance and m aximizing operation a l efficiency a n d productivit y . Despite mar g in pressures f rom higher ra w material cost and e nergy cost du e to geopolitic a l conflicts, we partially offse t these impacts by passing on cost to the market.

Our forw a rd-looking str a tegy involves prudent mark e t entries, plan n ing to diversi f y into new product s egments and adding new and diverse customers a s we ascertai n demand visibility. W ith a resilie n t foundation, w e are poised to harness e m erging opport u nities and drive sustainable growth in the years to come.

That is th e commentary f rom the mana g ement side. W e now request the moderator t o open the floor for q uestions and a n swers. Thank you very muc h .

Moderator: We will n ow begin the question-and- a nswer sessio n . Our first qu e stion is from the line of Aditya fr o m Securities I n vestment Ma n agement. Plea s e go ahead. Aditya: Sir, in o u r press release as well as in introductory s p eech, we men t ioned that we are seeing pricing p r essure on our f inish goods. S o, if you coul d just elaborate what is happe n ing in the industry w hich is leadin g to pressure o n realization, a n d is this pricin g pressure for a ll products for expor t s or is it for se l ect products o n ly?

Bhavdeep Sardana: So, thank you Aditya fo r this question a sking for mor e details. Ther e was a momen t in the last quarter w h ere there was p ricing pressure on some of t h e products, no t all of the pro d ucts.As we mentione d that some pr o ducts have seasonal demand. So, there was a higher pressu r e on those due to relatively soft ra w material pric e s,the finished goods product s pricing also c orrected in line. And another factor which happen e d was the co-products by the industry manu f acturers, it has comp e ting products, competing us e s from others, such as oil fro m other source s or protein input fro m other source s . So, there wa s a certain soft e ning in that.B u t that period i s over now, and we a r e looking at co n solidation in p ricing going f o rward.

Aditya: So, if I h a ve to understa n d better, there was a drop in the raw materi a l prices which we passed all to our customers, bu t the overall de m and for our p roducts is still pretty strong. W ould that be a corr e ct assessment?

Yes, yes, demand is strong because our raw materi a l is an agro c o mmodity. Na t urally, the finished g oods pricing a l so fluctuates a c cordingly.

Bhavdeep Sardana:

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Aditya:	We haves eena surge inp ricing for allo ur end product s after COVID due to variety of factors.
	So, are the prices now ba ck to pre-COV ID levels or we are still above those levels?
Bhavdeep Sardana:	See, every thing gets cor related to ther aw material. I' ll start the seco nd largest cos t, which is
	energy.E nergy is highe r than pre-CO VID levels as on date. Raw material is n ow getting
	towards th e stability tow ards the higher end because of multiple stake holders of them aize crop
	in India ,m ultiple usersm anifesting itse lf. So, we aren ow going to se e prices of finis hed goods
	at a highe r end from here on.
Aditya:	So, cornp rices pre-COV ID trend aroun d Rs.12 to Rs .14 a kilo whi ch I think now is around
	Rs.20 a ki lo. So just wan ted to understa nd what has led to this rise in maize prices?
Bhavdeep Sardana:	Aditya, yo u are not look ing at the large r picture.Maize pricing was im mediately in the quarter
	preceding COVID, it wa s Rs.22, 23, it fell during CO VID to Rs.12 to Rs.14 andi t has been
	steadfastly rising since then and pric e landed inN orth India is close to Rs.22 to Rs.24
	varying,an d in central In dia, where the kharif crop is there, you are very right, iti s hovering
	betweenR s.20 to Rs.21. That's at the fa rmyard pricing . So, pricing is higher or is b ack to pre-
	COVID le vels, that's the scenario.
Aditya:	Consideri ng the erratic ra infall whichw e witnessed,so do you think th ere are chance s of maize
	prices incr easing further or the maize sh ould stay aroun d these levels only?
Bhavdeep Sardana:	Voice isn ot clear.
Aditya:	So, consid ering the errat ic rainfall whi ch we have wi tnessed this ye ar, so are we witnessing
	that the ca ll prices may in crease further, or do you thin k these levelsa re sustainablef or now?
Bhavdeep Sardana:	See, thee rratic monsoon has resulted in a delayedh arvest of thec rop and thatw ill sustain
	higher pri cing till all th e mundies com e in arrivals, all the market yards which grow may
	during kh arif season. So, the pricing wi ll remain on the higher end, an d I believe tha t that there
	is enough raw materialf or the industry . All stakehold ers, all users of the maizein In dia, to get
	adequatem aize, but I thi nk the pricingi s not going tos often, pricingw ill remain firm .
Aditya:	USA, Bra zil and Argent ina have seen good harvesto f maize andw ith maize price s trending
	downward s for them. So , do you think this could have any impact on our end prod uct pricing
	or we are relatively insul ated?
Bhavdeep Sardana:	India is a non-GM produ cer of maize.A s such, US cor n and Brazilia n corn cannote nter India.
	As a glob al sentiment,t here is a certa in mindset wh ere people ass ume that there will be a
	correction in India asw ell. However, because of th e sustained dem and from Ind ia, all the
	stakeholde rs in Indiaw hich are consu ming maize,e very sectorw ill ensure that their raw
	materiala nd the pricingw ill remain stab le, or range bo und.

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Moderator: Our next question is fr o m the line o f Harsh Shah f rom Dimensi o nal Securities. Please go ahead. Harsh Shah: My first q uestion is on d emand. As yo u mentioned that Q2 demand was pretty sof t , reflecting the senti m ent seen by th e FMCG Com p any. So, just w anted to get y o ur sense on h o w demand is trendin g now, if we l o ok at this fes t ive season,so h ow is the de m and scenario since Q2, if you can give some expl a nation on that? Bhavdeep Sardana: Majorly Q 2 we are seei n g a good dem a nd rising and I think demand in the rural se c tor should be pickin g up. Typicall y , we witnesse d this during t h e festival season that this demand does play out d uring the festi v e season and t h e wedding se a son. All kinds o f product categories start coming i n to action and n aturally as a C o mpany, we al s o stand to gai n from it. Harsh Shah: If we ha v e to see over t he last year w h en the dema n d has been pr e tty subdued,so would we have gained any market s hare with our c lients or by a d ding new clie n ts or adding ne w products within th e existing clien t basket? Bhavdeep Sardana: Of cours e , that's always our endeavor t o keep adding n ew clients an d we add the clients across all levels and categories , there is a con t inuous effort t o add clients o f a certain all s c ale, so we keep doi n g that. As far a s new produc t s are concerne d , what we do is, as a Comp a ny, we are very quic k and nimble t o tailor make s p ecifications w ithin a particu l ar product ran g e and that constitutes as a new pro d uct for a new customer. So, i f someone ha s a very tight s p ecification of a parti c ular product a n d they are un a ble to source i t , we look at it a s a value proposition and try to get a higher marg i n from it and w e are able to d o it because of how we hav e set up our product li n es in all our f a cilities. Harsh Shah: On the m argin front, F Y 22 was the b est year for u s; we saw a m argin of aro u nd 13.5%, 14%,sinc e then we have reached the lo w of 8.9%. So j ust wanted to get a sense of w hat could be the su s tainable margin from here o n and what wo u ld be the key d rivers toward s achieving those nu m bers? Bhavdeep Sardana: Coming b ack of a stron g COVID recovery, the indu s try did very w ell. EBITDA m argins we are doing between 9% t o 12% is the ra n ge I would assume for most in the industry to achieve and we w ould also be h oping to achie v e those numbers. If you see our back-to-b a ck quarter numbers, we are maint a ining and pre s erving our m a rgins. If you s ee in the last two years, we've ha d triple digit op e rating profit o f more than R s .100 crores an d this year as w ell, we are on track, and we hope t o at least come up to that lev e l. And if you g o back to four years ago, see wher e we were. So , demand is th e re, our Comp a ny with a hi g her capacity w hich came online in t he last two to t hree financial y ears has been able to service that demand within India. Hence, w e've grown o u r market share. We've gro w n with the o v erall industry and going forward; w e hope to con t inue this run.

To get a macro pictur e on the Com p any,so what is the kind of growth rate t h at we can anticipate for Sukhjit if w e take five ye a rs view and c u rrently we are sitting on RO C of around

Harsh Shah:

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11%, 11. 5 %, just wante d to get a sens e on what kind of sustainable ROC the Com p any make because I believe that 9 % , 10%, while t his could be s u stainable, but i t would not tr a nslate into superior R OC for us lik e FY22 we saw maybe 18% t o 20% kind of R OC. So, goin g ahead just wanted t o get a sense on what woul d be the five- y ear growth o u tlook and w h at kind of ROCEca n we expect fro m the Compan y ?

Bhavdeep Sardana: A factual analogy whic h I have used i n the past. In F Y’04-05, the C ompany was barely 100 crores in r evenue, and l a st year, we di d 1,400-odd crores in revenue, that’s 14 time s growth in 18 years. So, you can i m agine what th e next five yea r s are going to l ook like. We a re a young team, bo t h at the pro m oter and the m anagement le v el and we are very excite d about the opportunity in India, an d we are worki n g very hard t o grow both o u r capacities and therefore our mark e t share and ha v e a healthy bo t tom line coupl e d with a very a ggressive top l ine.

Harsh Shah: What is t h e target -? Bhavdeep Sardana: Voice is n ot clear. Harsh Shah: What is t h e ROC target t hat the Compa n y is working w ith? Bhavdeep Sardana: If I can s a y we are aimi n g for 20% to 2 5 %. Moderator: Our next q uestion is fro m the line of D a rshit from Ro b oCapital. Plea s e go ahead. Darshit: You said that we will b e in the range of 9% to 12 % of the EBIT D A margins. S o currently we’re at 9 %, when do y o u think will w e clock in this 1 1% or 12% ki n d of OPM –i n Q3, Q4 or in the ne x t year,what would be the timeline approx..? Bhavdeep Sardana: So, we are at 10% plus m argins as on d ate and as an d when the de m and fully pla y s out in all sectors, u r ban and rural demand, we h o pe that our m a rgins will als o increase. The r e is a high possibilit y that Q3, Q4 will have a b etter margin. L ike I said, w e are an agro processing Companywhich has to d eal with vag a ries of nature and of late g e opolitical con f lict. So, if things do n ’t change mu c h, we are on t r ack to deliver better margins. We are just k eeping our fingers cr o ssed. Darshit: You had m entioned that you are planni n g on doing ca p acity expansi o n. So, any kin d of update on that, w hether we fina l ized where an d what kind of C APEX is goi n g to require? Bhavdeep Sardana: The 25% increase in ov e rall installed c apacity comes online in the n ext few mont h s. It starts getting re l eased in the fi r st quarter of t h e next financia l . I think by th e end of the ne x t financial, all of the capacity enha n cement will be in play. As f ar as a new G r eenfield or a B rownfield expansio n is concerne d , our teams a re evaluating multiple opti o ns, and we w ill discuss internally and chart wha t is good for t h e Company an d announce at a n appropriate time in the next couple of quarters.

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Darshit: No plans f or taking any d ebt, right? Bhavdeep Sardana: We are n ot planning o n taking any debt for the e xisting expan s ions underwa y . For any Greenfiel d or a large Br o wnfield expa n sion we will d ecide at that ti m e of decidin g what path we are going to take. Darshit: Finally, w hat would be t h e maize price currently? Bhavdeep Sardana: Maize pr i ce in south In d ia is about Rs.22 to 23, maiz e price in cent r al India is abo u t Rs.20 to 21,maize price in north India is about R s.24. Moderator: Our next q uestion is fro m the line of K a nishka from K i rpalani. Pleas e go ahead. Kanishka: So, I thin k most of my q uestions are b a sed on the lon g er-term CAP E X. So, if you c an answer any that w ould be help f ul? Currently, we’re expand i ng from 1,60 0 TPD to 2,00 0 TPD. So, when yo u said that you a ll are doublin g the capacity o v er the next 5 to 6 years or so , would that mean? 2, 0 00 to 4,000 or would that me a n 1,600 to 3,2 0 0? Bhavdeep Sardana: Our exac t plans whether it is 3,000 or 4 ,000 are bein g discussed inte r nally.Safe to a ssume that we woul d be looking at a bare minimu m of 3,000.If w e can go high e r if it makes sense and if we see a n opportunity, w hich is immed i ately in casha b le or executab l e we will not h esitate.But like I sai d , those are ver y forward-look i ng. I don’t wa n t to commit to it. We are eva l uating and our decis i on-making process is going t o take maybe t h ree to four mo n ths and in the immediate subseque n t quarter we w ill announce a c cordingly. Kanishka: Also, aga i n, this may be a bit prematu r e because it’s n ot finalized, but how do you usually do your exp a nsions– is it d o ne in phases o r is it usually d one where th e whole thing c ommences in three, f ive years dow n the line? Bhavdeep Sardana: That’s pr e tty much an o p erational deci s ion.Largely, a s a Company, w e like to com m ission the entire ca p acity at one g o . Utilization m a y take longer. But if I’m wo r king with a m a nufacturer of machi n ery, he’s not g o ing to keep c o ming back unl e ss I go in for v arious small m odules and then have an aggregatio n which someh o w going forw a rd doesn’t seem very cost ef f ective. It’s better to h ave a large th r oughput facilit y and commission it in one g o and the utiliz a tion factor can incre a se over the n e xt few years o f operating. So, this is the m e thodology wh i ch we will follow an d which we ha v e been following in the recen t past. Kanishka: Is there a n y industry sta n dard figures y o u can give for CAPEX of let’s say 1,000 TP D ? Bhavdeep Sardana: See, ther e are many nu m bers going aro u nd. It all depe n ds on the loca t ion, type of pl a nt, type of products, type of utilitie s . So, someon e could set it u p for Rs.350 cr o res somebody with basic products, somebody wo u ld spend over Rs.650 crores. So, there’s n o fixed numbe r . So, there are many variables to it.

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Kanishka: When are you all going t o be focusing m ore on export s and do expor t s give better m a rgins? Bhavdeep Sardana: Not all th e time, but yes , they give sim i lar margins to what we are s e lling provided the facility one is ex p orting from is ideally placed to look atan e x port demand. A s of now, we don’t have any expo r table surplus to cater to it, so we are n o t very aggres s ive in lookin g at export opportunities. Some do come and w e do offer ou r products in the export m a rket.Going forward, o ur decision o n expansions in the export mar k ets would be a variable in o u r decisionmaking p r ocess. Kanishka: Is there a n y peak debt-e q uity ratio that you all are ok a y going to? Is t here any gap o n the debtequity rat i o over the nex t five, six year s ? Bhavdeep Sardana: See, we'v e shown with o ur performanc e that we've go n e up as high a s 0.7 debt-to-equity ratio. Now, it i s at 0.2 to 0.3. S o that's the fle x ibility that w e have shown t h at our Compa n y can take on debt a n d service it. I t 's at a very he a lthy 0.1 to 0.22. So, as a Co m pany, we are mindful of not bein g aggressive d e bt takers an d using our o w n funds and we plan our e xpansions accordin g ly. We will b e prudent goi n g forward as w ell and that's the yardstick which our management and the ol d er promoters h ave, the legac y they have in s tilled in the cu r rent set of management. Moderator: Our next q uestion is fro m the line of H a rshit from Bot t oms Up. Pleas e go ahead. Harshit: The first question is t h at as you m e ntioned that c urrent quarte r demand wo u ld slightly abnormal l y low because of the festive g etting delaye d . But can you just quantify some kind of a numbe r for capacity utilization bro a dly if we are at 1,600 TP D capacity tod a y,then for Septemb e r, what was t h e kind of anu m ber we were operating, wa n ted to get a s e nse of the volume g r owth over Yo Y or QoQ basis? Bhavdeep Sardana: We've be e n consistentl y working at a g ood capacity u tilization, an d we read the m arket, and we timed our annual m a intenance shut d own accordingly, so thatwe did not go bel o w volume number a n d you've seen our Q1, Q2 n u mbers, they're pretty much si m ilar with margins intact. I hope th a t answers your question and s h ows how our C ompany man a ged that scena r io. Harshit: So, when we look at thi s Rs.320 crore s revenue vers u s last year September Rs.347 crores and at the sa m e point of tim e , we know tha t some of the finished goods p ricing is better today than a year ba c k. So logically,we should rea d it as a volum e decline? Bhavdeep Sardana: No, not r e ally. You hav e not understood what I was t r ying to say ea r lier, or the nu m bers don't reflect. I'll just clarify it for you that M ay price is cor r ected during t h e rabi crop th a t reflected in a lowe r selling price w hile volume has been simila r . May correcte d by 20% and t he top line has only c orrected by 1 0 %. So, Comp a ny has actuall y worked hard e r and it's a hu g e credit to our manu f acturing team for what they h ave achieved.

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Harshit: So, basic a lly, base price s have actually fallen. So, the final goods prices is lower Y o Y. So that compens a tes for the vol u me. Moderator: Our next q uestion is fro m the line of Senthil Manikan d an from ithou g ht PMS. Pleas e go ahead. S Manikandan: You men t ioned that in t h e short term y ou'll be addin g around 400 T P D and then o v er the mid to long t e rm, we'll be e y eing for a 3, 0 00 TPD. So, c an you just e x plain what's t h e industry growth o v er the mediu m term and is t h e entire incre m ental capacity we will be uti l izing it by gaining m arket share or i s the industry g rowth itself will be sufficien t to utilize the i n cremental capacity? Bhavdeep Sardana: A very i n telligent quest i on and gives u s an opportun i ty to talk abo u t our industry. Our entire industry t y pically grows at the rate of G DP. Not every o ne in the indu s try is growing. And there are a han d ful of manuf a cturers who a r e continuousl y growing and t ypically they are the top five man u facturers with i n the country a nd not every o ne is timing t h eir expansion e very year. So, there is adequate d e mand growth within the ind u stry for any c apacity utiliz a tion to get absorbed. Now, as our C ompany, ho w we scale up? L et's say if I s et up a 600 tons per day plant, I m ay start the pl a nt at 300 and then over the next three cal e ndar years or t hree fiscal years, I g o up to. 90%, 9 5 % utilization. S Manikandan: In terms o f products, if you can just e xplain it, we'l l be going for derivatives hi g her valueadded ki n d of products o r like import substituted kin d of products o r it will be exis t ing line of products? Bhavdeep Sardana: See, we a r e evaluating a l l the three opt i ons which you have mention e d. Naturally, w hen we set up a new plant, it will h a ve a mixture o f starch and de r ivatives. What type of deriva t ives is that we are e v aluating.Now t here is another scope which you mentione d import substi t ute. There are certain fermentatio n products which we may look at going f o rward, but th a t may not happen i m mediately,tha t may happen in phase two o f that locatio n . But then ag a in, we are evaluatin g those and I'm not committin g to it. Moderator: Our next q uestion is fro m the line of D e ep Gandhi fro m Astute Inves t ment. Please g o ahead. Deep Gandhi: You did m ention that y o u are expecti n g base prices t o firm up and you mentione d you have stored th e inventory. So, if you can tal k about how ma n y months of i n ventory you h a ve stored? And beca u se you are ex p ecting these prices to firm u p , are you exp e cting any inve n tory gains for the ne x t two quarters? Bhavdeep Sardana: Normally, we store inv e ntory for ama x imum of thre e to four mont h s. So, naturall y , if maize prices go up, there is inventory related g ains to be had and we expect to have some r eleasing of those gai n s over the cur r ent quarter. B u t to say that it w ill also conti n ue in Q4 woul d be a very forward-l o oking and a v e ry ambitious s t atement.

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Deep Gan dhi:	You ment ioned that you 're also looking at some new products in th e presentation. So, if you
	can talka bout what kind of productsa re you looking at and the op portunity size of the new
	products?
Bhavdeep Sardana:	Post-COV ID there has been a big change inc onsumer pref erences. Skin care,skin
	cleansing, those lines eve ryone has take n seriously, an d I think thos e habits are th ere now in
	everyone' s daily life. Th ere are certain products which we manufactu re which can be tailored
	where we can supply to larger skin cl eansing majors of the countr y, and we are evaluating
	those asa segment entry . As far as tot ally new produ ct lines, there are fermentab le both for
	animal fe ed nutritiona nd human con sumption pro ducts whichg o into those the vegan
	movemen t for human co nsumption. So , we are evalu ating again the opportunitys ize in that
	whether it is only an exp ort opportunity , or will the In dia demand als o play out? So again, we
	are worki ng with the lar ger retailers in India and the larger produce rs in the USa nd Europe
	and howt hey perceive th e market.So, it 's a wait and w atch in that spa ce.
Moderato r:	Our next question is from the line ofA ditya from Sec urities Investm ent Managem ent. Please
	go ahead.
Aditya:	I had a co uple of questio ns on our food park business. So, if you cou ld just help us understand
	how much area has been leased andh ow much is sp ending? Anda re we seeing any delays
	because th e revenue is no t increasing th at much in the food park busin ess?
Bhavdeep Sardana:	Yes, thef ood park busin ess is a very sm all part of ou r overall buy.A s far as the ar ea to lease
	out, about 55% has been leased out.W e are under ta lks to lease ou t another 20% . Since the
	overall lan d area is notv ery large, 55a cres, and out of that, only le asable area wa s about 33
	acres and 24 acres lease d out, only 11 acres of plotte d development , which we ne ed to lease
	out. So, it 's not that hug e. As far as to p line not incr easing, you mu st understand that it's an
	infrastruct ure play. You get utility serv ice charges, wh ether it is team , whether it is electricity
	or wareho using. So that top line willn ot be there. B ut yes, it's a su stained utiliza tion of the
	infrastruct ure which weh ave corrected and we have be come EBITDA positive in the food park
	and going forward we wi ll see further im provement the re.
Aditya:	I believe we had investe d around 140 crores to 150c rores in this bu siness. So, wh at kind of
	revenuesc an this generat e when all the areas are leased out?
Bhavdeep Sardana:	Again, as I mentioned,i t's an infrastru cture play whe re the utilities are on a userp ay model.
	Now, 65% to 70% of the utilities are al ready fully occ upied or fully generating reve nue to the
	Company .Going forward I can say th at at full utiliz ation of those utilities,wem ay see an
	increaseo f about 35% to 40% from thes e levels.
Aditya:	We are su pposed to rece ive I think 50 crores from the governmenta sa subsidy. So , have you
	receivedt he same?
Bhavdeep Sardana:	We haver eceived 40-odd crores already from 50 crore s.

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Moderator: Ladies a n d gentlemen, t h at was the las t question of o u r question-an d -answer sessi o n. I would now like t o hand the co n ference over to the managem e nt for closing c omments. Aman Setia: I would l i ke to thank ev e ryone for taki n g out time an d joining us tod a y for this con c all. I hope we have b een able to re s pond to your q ueries adequa t ely. We look f orward to you r continued support as we navigate the road ahea d together. If y ou have any further querie s , you may kindly re a ch out to our i n vestor relatio n s partner, Orie n tCapital. Tha n k you so man y ladies and gentleme n and have a g o od day. Moderator: On behal f of Sukhjit St a rch & Chemic a ls Limited, th a t concludes t h is conference. Thank you for joinin g us and you may now discon n ect your lines.

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