Godavari Biorefineries Q2 Results: Net Loss Expands to ₹75 Crore
Company Overview
Godavari Biorefineries Limited (GBL) is a pioneer in bio-based products with a rich history dating back to its founding in 1940 as The Godavari Sugar Mills Limited. Originally incorporated as Godavari Investment and Finance Corporation Limited in 1956, the company was rebranded in 2006 to align with its shift to biorefinery operations. GBL operates a diversified business spanning sugar production, bio-based chemicals, ethanol, power generation, and other bio-products, leveraging sugarcane as its primary feedstock. GBL was among the first Indian companies to use sugarcane juice and syrup for ethanol production. Its product portfolio includes bio-based chemicals like ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycols, and crotonaldehyde, along with ethanol, sugar, and power. These chemicals serve diverse industries, including agrochemicals, cosmetics, pharmaceuticals, and food, while ethanol is supplied to oil marketing companies, beverage producers, and chemical industries. The company emphasizes sustainability, converting by-products like press mud into fertilizers under the ‘Bhumilabh’ brand and using bagasse for power generation.
GBL operates two key facilities:
- Sameerwadi Facility (Karnataka): Fully integrated, producing sugar, ethanol, rectified spirits, power, and fertilizers.
- Sakarwadi Facility (Maharashtra): Specializes in bio-based chemicals, using ethanol or rectified spirits.
Over its decades-long journey, GBL has achieved notable milestones. It began producing rectified spirits and acetic acid in 1962, alcohol manufacturing at Sameerwadi in 1985, and ethyl acetate at Sakarwadi in 1993. By 2016, the company had introduced innovative products like MPO and 1,3 butylene glycolss, expanding its chemical portfolio.
Godavari Biorefineries Limited (GBL) recently went public with an Initial Public Offering (IPO) worth ₹554.75 crores. The IPO was structured as a book-built issue, comprising a fresh issue of ₹325 crores (0.92 crore shares) and an offer for sale of ₹229.75 crores (0.65 crore shares). The funds are being utilized to strengthen its position in the bio-economy sector and finance its expansion plans, reflecting the company’s strategic focus on growth and sustainability. Positioned as a leader in renewable and bio-based products, GBL’s diversified operations ensure resilience across multiple industries, from energy and chemicals to food and pharmaceuticals.
Industry Outlook
The bio-based chemicals industry is witnessing rapid growth, driven by the increasing need for environmentally sustainable solutions. The global biochemical market, valued at USD 10.4 billion, is projected to grow at an impressive CAGR of 10.4%, indicating strong expansion potential. This growth is supported by several factors, including the shift towards natural products, rising demand for sustainable ESG sourcing, and a focus on better control of feedstock supply chains. Additionally, the ban on hazardous chemicals and favorable government policies promoting eco-friendly alternatives further strengthen the industry’s outlook.
For Godavari Biorefineries Limited (GBL), this sector growth presents a significant opportunity. With its established presence in bio-based chemicals, ethanol, and renewable energy, GBL is well-positioned to capitalize on this demand. The company’s focus on natural ingredients, including bio-ethyl acetate and 1,3 butylene glycol, aligns with the increasing preference for sustainable solutions across industries like cosmetics, pharmaceuticals, and agrochemicals. Furthermore, GBL’s integrated operations and feedstock control (using sugarcane as a primary input) provide it with a competitive edge in ensuring consistent supply and quality.
As global players prioritize bio-based products to meet regulatory requirements and consumer preferences, GBL stands to benefit from these tailwinds. Its investments in innovation and expansion, supported by its recent IPO, position it to scale operations and address the growing demand for sustainable chemicals and energy. The combination of strong market fundamentals, policy support, and the transition toward eco-friendly alternatives underscores a promising sector outlook and a robust growth trajectory for GBL in the evolving bio-economy landscape.
Business Segments
Godavari Biorefineries Limited (GBL) operates through the following business segments, leveraging its integrated biorefinery model:
- Sugar Production: Sugar remains a core business segment for GBL, utilizing sugarcane as its primary feedstock. Sugar is produced in its Sameerwadi Facility (Karnataka), which processes sugarcane and generates by-products like molasses and press mud. The sugar produced is sold to domestic and international markets, catering to food and beverage manufacturers.
- Ethanol and Alcohol Production: GBL is a pioneer in using sugarcane juice and syrup for ethanol production, catering to India’s growing ethanol-blending program. The company produces ethanol, rectified spirits, and industrial alcohol. Ethanol is supplied to oil marketing companies (OMCs) for fuel blending, beverage companies, and industrial sectors. The Indian government’s E20 target (20% ethanol blending by 2025) creates a strong demand for ethanol, bolstering this segment.
- Bio-Based Chemicals: A high-growth segment, GBL produces a range of bio-based chemicals derived from renewable feedstocks. Includes ethyl acetate, bio-ethyl acetate, MPO (Mono Propylene Oxide), 1,3 Butylene Glycol, and crotonaldehyde. These chemicals are used in industries such as cosmetics, pharmaceuticals, agrochemicals, and food. GBL’s focus on sustainable bio-chemicals aligns with global demand for eco-friendly products and regulatory restrictions on hazardous chemicals.
- Power Generation: GBL utilizes by-products like bagasse (sugarcane fiber) to generate renewable power. This segment supports the energy needs of GBL’s facilities and contributes surplus power to the grid. Renewable power generation underpins GBL’s commitment to sustainability and reducing its carbon footprint.
- Fertilizers and Soil Conditioners: By-products like press mud are converted into organic fertilizers marketed under the brand ‘Bhumilabh.’ These fertilizers cater to farmers, promoting sustainable agriculture practices. This segment reflects GBL’s focus on creating value from waste, contributing to a circular economy.
- Specialty Chemicals and Advanced Products (Emerging Focus): GBL is expanding its product portfolio to include specialty bio-chemicals with higher margins and advanced applications. Products like 1,3 butylene glycol, which are used in cosmetics, reflect GBL’s efforts to penetrate high-value markets.
Segment Contributions (FY25 Outlook)
- Ethanol and bio-based chemicals are expected to be the key growth drivers, benefiting from favorable government policies and global demand for sustainable alternatives. Sugar continues to provide steady revenue, while power and fertilizers enhance value addition and operational efficiency.
GBL’s diversified portfolio and focus on sustainability, innovation, and renewable solutions position it as a leader in the bio-economy sector, addressing diverse market needs across energy, chemicals, and agriculture.
Key Subsidiaries and Their Information
Godavari Biorefineries Limited (GBL) operates through several key subsidiaries, each contributing uniquely to its growth, market diversification, and sustainability objectives:
- Somaiya Agencies Pvt. Ltd.
This subsidiary functions as GBL’s marketing and distribution arm, focusing on products such as sugar, ethanol, fertilizers, and bio-based chemicals. It strengthens GBL’s domestic and export operations by efficiently managing logistics and maintaining customer relationships. - Godavari Biorefineries BV (Netherlands)
Based in Europe, this subsidiary serves as GBL’s international hub for bio-based chemicals. It is instrumental in marketing and distributing products in regions such as Europe and North America, targeting sectors like pharmaceuticals, cosmetics, and agrochemicals. Its strategic positioning ensures direct access to key global customers, enhancing GBL’s export revenue. - EcoEnergy Solutions Pvt. Ltd.
This subsidiary is focused on renewable energy solutions, leveraging bagasse from sugar production for power generation. It supports GBL’s sustainability goals by increasing energy efficiency across facilities and contributing surplus power to the grid. - New Bio-Based Ventures
As an emerging entity, this subsidiary specializes in advanced research and innovation in bio-based chemicals. Its primary focus is on developing high-value specialty chemicals like 1,3 butylene glycols, aligning with GBL’s strategy to penetrate niche, high-margin markets. - Bhumilabh Fertilizers Pvt. Ltd.
Dedicated to organic fertilizers under the brand ‘Bhumilabh,’ this subsidiary utilizes by-products like press mud from sugar processing. It promotes sustainable farming practices while contributing to GBL’s circular economy model and diversifying its revenue streams.
These subsidiaries collectively enhance GBL’s global presence, focus on innovation, and support sustainability. By leveraging international markets through Godavari Biorefineries BV and fostering eco-friendly practices through EcoEnergy Solutions and Bhumilabh Fertilizers, GBL underscores its commitment to the bio-economy sector. Additionally, the New Bio-Based Ventures subsidiary positions GBL for future growth by prioritizing research and the development of specialized bio-based products.
Q2 FY25 Highlights
- Godavari Biorefineries Limited (GBL) recently listed on both the NSE and BSE, with a final issue price of ₹352 per share. The ₹554.75 crore IPO comprised a fresh issue of ₹325 crore and an offer for sale of ₹229.75 crore. A significant portion of the proceeds, amounting to ₹240 crore, was allocated for debt repayment and prepayment, aiming to reduce principal and interest outflows. The remaining funds were earmarked for general corporate purposes, enhancing financial flexibility.
- In its year-to-date financial performance, GBL reported revenue from operations at ₹320.95 crore, reflecting a 34% year-on-year growth. Despite the revenue growth, the company faced challenges, with negative EBITDA of ₹31.53 crore, loss before tax of ₹64.11 crore, and net loss of ₹75 crore, driven by operational hurdles.
- One of the major impacts stemmed from the Indian government’s restriction on using sugarcane juice for ethanol production during the 2023-24 supply year. However, with the lifting of these restrictions effective November 1, 2024, ethanol production and sales are expected to rebound, contributing to improved performance.
- Additionally, GBL has seen a surge in demand for bio-based chemicals, fueled by the global transition towards sustainable solutions. To capitalize on this, the company plans to expand its operations in select bio-based chemical segments by Q4 FY25.
- A key positive outcome of the IPO is the planned repayment of ₹240 crore in debt, which will significantly reduce interest outflows, thereby improving free cash flows. These enhanced financial resources are strategically aligned to support expansion in the bio-based chemicals sector, starting in Q4 FY25.
In summary, while GBL faced short-term challenges, including regulatory impacts on ethanol production, the company is poised for recovery. The combination of government policy reversal, growing demand for bio-based chemicals, and strategic debt reduction positions GBL for long-term growth and a stronger foothold in sustainable product markets.
Financial Summary
| INR in Cr. | Q2 FY25 | Q1 FY25 | Q2 FY24 | Q-o-Q(%) | Y-o-Y(%) |
| Revenue from Operations | 320.95 | 522.53 | 239.31 | -38.6% | 34.1% |
| Other Income | 1.1 | 2.75 | 0.95 | -60.0% | 15.8% |
| Total Revenue | 322.05 | 525.27 | 240.26 | -38.7% | 34.0% |
| Cost of Materials Consumed | 92.49 | 128.33 | 104.96 | -27.9% | -11.9% |
| Purchase of Finished Goods | 4.88 | 5.19 | 4.04 | -6.0% | 20.8% |
| Changes in Inventories of Finished Goods and Work in Progress | 171.57 | 317.91 | 76.83 | -46.0% | 123.3% |
| Gross Profit | 53.11 | 73.84 | 54.43 | -28.1% | -2.4% |
| GP % | 16.50% | 14.10% | 22.70% | 17.0% | -27.3% |
| Employee Benefits Expense | 29.66 | 30.4 | 28.62 | -2.4% | 3.6% |
| Other Expenses | 54.98 | 52.94 | 56.42 | 3.9% | -2.6% |
| EBITDA | -31.53 | -9.49 | -30.61 | 232.2% | 3.0% |
| Depreciation and Amortisation Expense | 12.3 | 12.57 | 15 | -2.1% | -18.0% |
| EBIT | -43.82 | -22.06 | -45.61 | 98.6% | -3.9% |
| Finance Costs | 20.29 | 19.57 | 19.55 | 3.7% | 3.8% |
| Exceptional Items | 0 | 0 | 0 | 0.0% | 0.0% |
| PBT | -64.11 | -41.64 | -65.15 | 54.0% | -1.6% |
| Total Tax Expense | -10.89 | -15.53 | 0 | -29.9% | 0.0% |
| Profit for the year | -75 | -26.11 | -65.15 | 187.2% | 15.1% |
| PAT % | -23.30% | -5.00% | -27.10% | 366.0% | -14.0% |
| EPS | -17.88 | -6.22 | -15.53 | 187.5% | 15.1% |
SWOT Analysis
Strengths
- Industry Leadership: Maintains a strong position as a market leader.
- Diverse Product Range: Offers a wide variety of products catering to multiple industries.
- Integrated Operations: Ensures efficiency through seamless operations across the supply chain.
- Renewable Energy Focus: Demonstrates commitment to sustainability and green energy initiatives.
Weaknesses
- High Debt Burden: Faces challenges due to significant levels of debt.
- Regulatory Dependency: Business performance is highly influenced by changes in government policies.
- Financial Strain: Experiences ongoing difficulties in improving financial results.
Opportunities
- Growth in Bio-Chemicals: Potential for expansion in bio-based chemical production.
- Ethanol Boom: Increasing demand for ethanol presents lucrative growth avenues.
- Strategic IPO Utilization: Opportunity to strengthen operations and finances through IPO proceeds.
Threats
- Intense Market Competition: Faces stiff rivalry from existing and emerging players.
- Raw Material and Price Volatility: Vulnerable to fluctuations in raw material costs and product prices.
- Economic Uncertainty: Susceptible to the effects of global and domestic economic slowdowns.