Why broken rice is important for alcohol companies:
Understand costing aspects:
Case 1: Revenue / Lt of Bulk alcohol: Rs 64.00
Animal feed & other products: Rs 10-12.00
Total Revenue: Rs 74 -76.00
RM cost: Broken Rice 2.2kg X 26/-: Rs 56-57.00
Gross Margin on Case 1: Rs 18-19.00
In %: ~ 24%
Case 2:
RM cost: Broken Rice 2.2kg X 20/-: Rs 44.00
On the same line, Revenue will also come down by Rs 6.00/- to 58.00/-
Now Total revenue: Rs 68-69.00
Gross Margin on this case: Rs 24-25.00
In %: ~ 35%
Hope you can understand both case scenario. Now come to full costing mechanism
Power Cost: Rs 9-10.00 per ltr
Net Margin: Case 1: Rs 9-10.00 and Case 2: Rs 13-14.00
So Net Net Rs 5-6.00 is impact on EBITDA margin, which is 7-9%.
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