Profitability of sugar mills in south India to remain under pressure

Rise in cost production impacting profits

The profitability of the sugar mills located in the southern region of India, especially those in Tamil Nadu and South Karnataka, is likely to be adversely impacted in FY18 due to an increase in the cost of production.

Rating agency Icra estimates lower cane availability in the region following the past three years of continuous drought. Reduced availability of cane for crushing may raise cane costs, that is the fair and remunerative price (FRP) for sugarcane, from October onwards in 2017.

While mills in Maharashtra and North Karnataka are likely to be negatively impacted by higher costs, they are set