| "This season's peak level stock was 19 million tonnes (versus 16 million tonnes last season), which is likely to touch 24 million tonnes in the next season. The industry has a storage capacity of 16 million tonnes and may need to add 9 million tonnes, which could be either be permanent or temporary. Even this year, sugar has not been placed in proper godowns in Maharashtra and Uttar Pradesh. Rains have further complicated the situation," said S L Jain, director general of the Indian Sugar Mills' Association (ISMA). |
| According to industry experts, the creation of a permanent godown with a 40,000-tonne storage capacity would cost about Rs 4 crore. |
| Going by this calculation, the industry will need an investment of Rs 900 crore for creating a permanent storage capacity for 9 million tonnes. The problem with investing in storage capacity is that it is a dead investment, with no returns. |
| In case of temporary capacity, the industry will have to pay Rs 7 every month for storing one tonne sugar. This means an expenditure of Rs 6.3 crore every month for storing 9 million tonnes of sugar. |
| "While the country's sugar production is estimated at a record 28 million tonnes this season (up 45 per cent from 19.2 million tonnes last season), next season's production is expected to touch 29 million tonnes. We never saw such production levels and are therefore facing storage problems," said Vinay Kumar, managing director, National Federation of Cooperative Sugar Factories. |
| New units have comparatively low godown storage capacity, as they had not anticipated storage of such huge quantities. |
| "We managed this year's surplus with temporary godowns. Currently, sales are being done from these godowns. However, the situation is likely to turn worse next season," said Kishor Shah, director and chief financial officer, Balrampur Chini Mills. |
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