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| India Infoline Research Team / 17:15 , Aug 13, 2010 |
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CMP Rs69, Target Rs72, Upside 4.7%
- Standalone revenues surge 70% driven by 36% jump in sugar revenues (realization up 26% yoy to Rs27/kg, volumes rose 16% to 0.3mn MT) and trading income (up 5-fold yoy)
- Lower prevailing sugar price in comparison to the higher cost of production (due to cane price of ~Rs280-300/qtl paid in 2009-10 season) led to standalone EBIT losses in sugar
- Distillery volumes fell ~28% yoy because of stoppage of blending contract leading to ~25% decline in ethanol sales
- Consolidated revenues more than doubled yoy though numbers not strictly comparable due to VDI and Equipav (from July 8, 2010) inclusion
- Consolidated OPM fell 929bps on weakness in sugar business while pre-tax profits fell 23%
- Reported PAT rose 15.5% yoy aided by net tax income of Rs49mn and Rs550mn in FX gains during the quarter
- New refinery at Mundra (3,000TPD) would aid in volume expansion at a time when sugar prices are likely to stay under pressure due to robust output of ~24mn tonnes in 2010-11; remain cautious on the stock and maintain 9-month TP of Rs72, based on 6.4x F9/11 EV/EBIDTA
Results table (consolidated)
(Rs m)
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Q3 F9/10
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Q3 F9/09
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% yoy
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9M F9/10
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% yoy
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Net sales
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19,995
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8,935
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123.8
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52,096
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202.4
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Material costs
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(17,238)
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(6,694)
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157.5
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(39,590)
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233.1
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Personnel costs
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(205)
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(131)
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56.5
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(571)
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28.9
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Other overheads
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(926)
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(553)
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67.5
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(3,153)
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62.6
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Operating profit
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1,626
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1,557
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4.4
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8,782
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196.6
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OPM (%)
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8.1
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17.4
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(929) bps
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16.9
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(33 bps
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Depreciation
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(552)
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(174)
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217.2
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(986)
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105.8
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Interest
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(646)
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(231)
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179.7
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(1,200)
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37.3
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Other income
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426
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(39)
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-
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831
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581.1
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PBT
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854
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1,113
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(23.3)
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7,427
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329.3
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Tax
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49
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(337)
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-
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(1,667)
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239.5
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Effective tax rate (%)
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-
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30.3
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-
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22.4
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-
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Minority interest
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(1)
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5
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-
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(7)
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-
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Adjusted PAT
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902
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781
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15.5
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5,753
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370.4
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Adj. PAT margin (%)
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4.5
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8.7
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(423) bps
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11.0
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(394) bps
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Reported PAT
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902
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781
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15.5
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5,753
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370.4
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Ann. EPS (Rs)
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5.4
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11.2
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(51.7)
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11.4
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96.6
| Source: Company. India Infoline Research
Trading income bolstered standalone revenues
Rs mn
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Q3 F9/10
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Q3 F9/09
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% yoy
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9M F9/10
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% yoy
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Sugar
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7,963
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5,859
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35.9
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25,686
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123.7
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Trading
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3,450
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671
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414.2
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13,249
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1,211.8
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Co-gen
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1,129
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801
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40.9
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3,521
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37.1
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Ethanol
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284
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378
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(24.9)
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1,184
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1.3
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Others
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21
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10
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110.0
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36
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38.5
| Source: Company. India Infoline Research
Depressed prices led to EBIT losses in sugar (standalone)
EBIT %
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Q3 F9/10
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Q3 F9/09
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(Inc)/Dec
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9M F9/10
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(Inc)/Dec
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Sugar
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(2.4)
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14.7
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14.7
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578
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Trading
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8.3
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1.0
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725
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11.0
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848
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Co-gen
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9.2
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25.3
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(1,613)
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14.8
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(2,388)
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Ethanol
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18.3
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23.8
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(550)
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19.8
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(1,095)
| Source: Company. India Infoline Research
SHRS domestic performance
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Q3 F9/10
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Q3 F9/09
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% yoy
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Cane crushed, mn MT
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0.15
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-
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-
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Sugar produced, mn MT
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0.02
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-
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-
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Recovery (%)
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12.3
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-
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-
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Sugar sales, mn MT
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0.31
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0.26
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16.4
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Realizations, Rs/kg
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27.0
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21.4
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26.1
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Refined sugar produced, mn MT
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0.28
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0.25
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10.7
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Distillery sales, mn ltrs
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11.2
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15.5
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(27.6)
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Avg alcohol realizations, Rs/l
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25.4
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24.5
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3.6
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Co-gen sales , mn units
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124
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68
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82.4
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Co-gen realization, Rs/unit
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5.1
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6.2
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(17.2)
| Source: Company. India Infoline Research
VDI operating highlights
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Q3 F9/10
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Cane crushed, mn MT
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0.57
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Raw sugar produced, mn MT
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0.04
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Ethanol produced, mn ltrs
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15
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ATR (~recovery rate), kg/ton
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124
| Source: Company. India Infoline Research
VDI financial snapshot
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Rs mn
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Turnover
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1,429
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Sugar
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662
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Ethanol
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241
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Molasses & others
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526
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PBIDT
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717
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PAT
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81
| Source: Company. India Infoline Research
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