BCL Industries Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Edible oil exit unlocks margin and capital: The low-margin, working-capital-heavy edible oil business is winding down, with INR 90 cr of working capital already surrendered; cumulative margins are set to improve as the drag disappears.
• Distillery margins poised to inflect: Raw material costs, which rose from 72% to 77% of sales, are starting to soften on FCI rice allocation and a bumper maize crop; management expects margin improvement for at least the next 1–2 quarters.
• Capacity expansion on track: A 150 KLPD Bathinda expansion targets December 2025 commissioning, a 60-tonne paddy straw boiler by November 2025, and a 75 KLPD biodiesel plant by July 2025, all with clearances in hand.
• Fuel cost hedge being built: The new paddy straw boiler aims for 100% reliance on paddy straw at Bathinda by October/November, locking in a fixed fuel price for the full year and insulating against cyclical rice husk price spikes.
• What to watch next quarter: Whether maize prices settle near the forecast INR 25–25.5 range, the pace of edible oil stock liquidation, and any update on the biodiesel plant’s commissioning and initial offtake.

Edible Oil Exit & Capital Reallocation

• Phased shutdown progressing: Oil mills, solvent extraction, and rice mill units are already shut; only the refinery remains operational to liquidate existing stock.
• Liquidation taking longer than planned: Management is deliberately pacing the stock sell-down to avoid market panic and payment defaults; post-liquidation, the company will monetize plant, machinery, and land, though no timeline or valuation has been set.
• Working capital freed: INR 90 cr of working capital tied to the edible oil business was adjusted with the bank before March 31, contributing to the quarter’s lower interest costs.
• No inventory write-down this quarter: Unlike prior periods, there was no notional inventory valuation loss in March 2025, though some oil unit stock was sold at discounted prices to accelerate liquidation.

Kushal Mittal: "We don't just want to increase the revenue for sake of increasing the top line. Of course, bottom line is more important, and the edible oil business was a low-margin business, which was utilizing a majority of our working capital."

Distillery Operations & Margin Drivers

• Capacity utilization now at 100%: The 100 KLPD Kharagpur expansion, commissioned in June 2024, took a couple of months to reach full output; Bathinda faced production headwinds from its paddy straw-based boiler. Both units have been running at full utilization for the past two quarters.
• Q4 margin held back by lagged raw material costs: Despite maize prices softening late in the quarter, outstanding purchase contracts at higher prices had to be honored, muting the benefit. DDGS price weakness also weighed on margins.
• FCI rice allocation changes the input mix: BCL has been allocated FCI rice for ethanol production at a fixed INR 22.5 per kilogram, and FCI rights have been reinstated; this diversifies feedstock away from maize and provides cost certainty.
• Maize price forecast for FY26: Management expects maize to average around INR 25 to INR 25.5, down from the INR 28.5 peak seen last year, supported by a bumper crop and government incentives for crop diversification.
• Maize vs. FCI rice profitability is price-dependent: At INR 24 maize, management stated maize is more profitable than FCI rice; at higher maize prices, the equation flips.
• Q1 FY26 trending well but incomplete: The quarter has been going well so far, with raw material prices softening, though not yet significantly.

Kushal Mittal: "When prices for maize are at INR 24, I would like to change my statement and say that maize is more profitable as opposed to FCI rice."

Capacity Expansion Pipeline

• Sequencing is deliberate: Management will not start the 250 KLPD Goyal project or the Svaksha biodiesel unit until the current Bathinda expansions are commissioned, to avoid overburdening the balance sheet.
• Maize oil extraction is pure value-add: The unit will not hamper ethanol or ENA yields; it is backward and forward vertically integrated, and utilities are mostly shared with the distillery, keeping incremental costs very low.

Fuel Strategy & Cost Structure

• Paddy straw as a fixed-price hedge: Rice husk prices are currently at an all-time low, so the paddy straw benefit is only INR 1–2 per liter right now. However, paddy straw locks in a fixed fuel price for the entire year, protecting against cyclical husk price spikes.
• 100% paddy straw reliance targeted: With the new 60-tonne boiler, management expects Bathinda to run entirely on paddy straw by October/November 2025.
• Interest costs declined temporarily: Lower interest in Q4 reflected the INR 90 cr working capital surrender and low quarter-end inventory, as the maize crop had not yet arrived. Interest costs will rise again as the company stocks up on raw materials and draws working capital limits.

Biodiesel & Diversification

• Biodiesel plant designed with flexibility: If biodiesel prices are not viable or OMC offtake faces issues, the facility can process maize oil into industrial oil for animal feed or other uses, with margins described as roughly the same.
• Management declined to comment on OMC biodiesel contracts: Since the unit is not yet commissioned, the company has no experience with contract cancellations or offtake issues.
• Bio-CNG still under evaluation: Management declined to provide any figures, market sizing, or positioning, calling it a project still being evaluated.
• No comment on private-sector biodiesel demand: When asked about demand from players like Reliance, management stated they have not contacted them and are unsure.

Kushal Mittal: "We have kept the provision in our facility that if biodiesel prices are not viable or there are some issues on the OMC front, then we can process this maize oil and sell it as an industrial oil, whether that is for the animal feed industry or other uses."

IMIL, Ethanol Offtake & Policy

• IMIL segment delivered a strong year: Approximately 17 lakh cases were sold in FY25, supported by healthy demand, and the company continues to hold significant market share.
• Q4 ethanol offtake saw a slight slowdown: Procurement by OMCs dipped modestly, but the impact was not significant; the company diverted production to the ENA market instead. A 15-day shutdown may also have contributed to lower volumes.
• Management firm on no maize or ethanol imports: The view is that the government will not budge on US requests to allow imports, because the biofuel policy is fundamentally designed to raise farmer incomes and drive crop diversification, especially in water-stressed northwestern states.

Kushal Mittal: "We believe that the government of India will not budge on this request to allow the import of ethanol or even maize... the biggest reason we have to understand is to ensure that the farmers income goes up, and that there is crop diversification that happens in the country."

Guidance & Commitments

Key Metrics