UP sugar mills back in the black after three quarters

Profits rise on lower sugarcane prices, value-added segment.

Uttar Pradesh-based sugar companies have started posting profits, driven by lower sugarcane price and higher revenue from value-added segments such as cogeneration and distillery. Most of them had performed badly in the previous 3-4 quarters.

In November 2007, the Lucknow Bench of the Allahabad High Court had announced an interim sugarcane price of Rs 110 a quintal, Rs 15-20 lower than the state advised price (SAP) of Rs 125-130. 

SWEETENERS
Company	Net profit (Rs cr)	% change
Bajaj Hindusthan	29.67	71
Triveni Engineering	25.68	17
Dhampur Sugar	2.47	-14
% change over y-o-y

All these companies have accounted for sugarcane purchase at a price of Rs 110 a quintal in tune with the Court's order for the quarter ended December 31.

Bajaj Hindusthan (BHL), the country's largest sugar producer, has posted a net profit of Rs 29.67 crore for the quarter, up by over 71 per cent from Rs 17.28 crore for the corresponding quarter last year. Net sales for the quarter stood at Rs 343.95 crore compared with Rs 286.64 crore.

The distillery revenue went up to Rs 72.98 crore as against Rs 25.93 crore, while the cogeneration (power) revenue of Rs 35.51 crore got factored for the first time.

"The better performance is due to a mix of higher revenues from our distillery business, inclusion of cogeneration revenues and better sugar recovery of 9.7 per cent against 9.45 per cent last year due to delayed crushing," said a BHL spokesperson.

Triveni Engineering, the country's third-largest sugar producing company, reported a net profit of Rs 25.68 crore for the quarter ended December 31, up by over 17 per cent from Rs 21.89 crore in the corresponding quarter last year. The company's net sales stood at Rs 347 crore as against Rs 307 crore.

Dhampur Sugar Mills (DSM) has reported a net profit of Rs 2.47 crore for the quarter, marginally lower than Rs 2.86 crore in the corresponding quarter last year.

Significantly, the company had incurred losses in the previous three quarters. A revenue of Rs 27.73 crore from the cogeneration business was included for the first time.

"Our profits would have been certainly hit if the sugarcane purchase price had not been reduced to Rs 110 a quintal from Rs 125 a quintal," said Arhant Jain, president (Finance) at DSM.

Looking forward, the sugar companies expect better profits in the quarter ending March 31 as sugar prices have started firming up due to a downward revision in output estimates, from 32 million tonnes to 26 million tonnes.