 "ICRA expects the domestic sugar production to increase by 3.3%-3.7% annually")
Rating agency ICRA expects domestic production to increase by 3.3 to 3.7 per cent year-on-year to around 25 million tonnes in sugar year 2015.
A sugar year (SY) extends from October of one year to the September of the next.
Sabyasachi Majumdar, senior vice-president, at ICRA, said: “Barring any significant decline in the sugar production from Uttar Pradesh and Karnataka, domestic output is expected to increase, to around 25 million tonnes during SY15 and outstrip domestic consumption for a fifth year in a row.”
Liquidation of stocks by mills following court action in Uttar Pradesh also affected prices in September 2014. Despite export, a surplus scenario prevails. Coupled with arrival of fresh supply, it is likely to put pressure on the realisations in the near future.
Continuation of export subsidy remains critical to relieve pressure from domestic stocks and support domestic prices to an extent.
Further, profitability of mills in Uttar Pradesh and Tamil Nadu has been hit due to high cane costs and lowery recovery rates when compared to other regions.
Debt levels continue to remain on the higher side, although availment of interest-free excise duty loans (under the Scheme for extending financial assistance to sugar undertakings) by the sugar mills could ease pressures on coverage indicators and liquidity to an extent. Going forward, with the range-bound realisation and high cane prices, continued government support remains critical for viability of the sugar mills in 2014-15.
Higher cane availability in the states of Maharashtra (11 per cent) and in Karnataka (two per cent) and delay in the commencement of crushing by sugar mills in Uttar Pradesh for lower cane availability (by eight per cent) year-on-year is likely to result in some diversion of sugarcane production to alternative sweeteners.
Sabyasachi Majumdar, Senior Vice-President, ICRA Limited, says “Barring any significant decline in the sugar production from UP and Karnataka, the domestic sugar production is expected to increase by Rs 3.3%-3.7% y-o-y to around 25 million MT during SY15 and outstrip domestic consumption for fifth year in a row.”
A sugar year (SY) extends from October of one year to the September of the next.
Sabyasachi Majumdar, senior vice-president, at ICRA, said: “Barring any significant decline in the sugar production from Uttar Pradesh and Karnataka, domestic output is expected to increase, to around 25 million tonnes during SY15 and outstrip domestic consumption for a fifth year in a row.”
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In a recent study on the industry, ICRA said a decline in international prices, coupled with expectation of higher production during SY15, had impacted domestic prices in August and September 2014.
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Liquidation of stocks by mills following court action in Uttar Pradesh also affected prices in September 2014. Despite export, a surplus scenario prevails. Coupled with arrival of fresh supply, it is likely to put pressure on the realisations in the near future.
Continuation of export subsidy remains critical to relieve pressure from domestic stocks and support domestic prices to an extent.
Further, profitability of mills in Uttar Pradesh and Tamil Nadu has been hit due to high cane costs and lowery recovery rates when compared to other regions.
Debt levels continue to remain on the higher side, although availment of interest-free excise duty loans (under the Scheme for extending financial assistance to sugar undertakings) by the sugar mills could ease pressures on coverage indicators and liquidity to an extent. Going forward, with the range-bound realisation and high cane prices, continued government support remains critical for viability of the sugar mills in 2014-15.
Higher cane availability in the states of Maharashtra (11 per cent) and in Karnataka (two per cent) and delay in the commencement of crushing by sugar mills in Uttar Pradesh for lower cane availability (by eight per cent) year-on-year is likely to result in some diversion of sugarcane production to alternative sweeteners.
Sabyasachi Majumdar, Senior Vice-President, ICRA Limited, says “Barring any significant decline in the sugar production from UP and Karnataka, the domestic sugar production is expected to increase by Rs 3.3%-3.7% y-o-y to around 25 million MT during SY15 and outstrip domestic consumption for fifth year in a row.”