Despite record high sugar prices, its proportionate contribution to the overall revenue of crushing mills during the season’s first quarter (October-December) has remained about the same as last year.
The quarterly results of major companies such as Bajaj Hindusthan, Triveni Engineering, Shree Renuka Sugars and Dhampur Sugars show the contribution of sugar to total sales revenue at 78.2 per cent, as against 78.8 per cent in the same quarter of the previous year. Total sales, though, are about 56 per cent more.
B J Maheshwari, wholetime director of Dwarikesh Sugar Industries attributed the lack of change in sugar’s share to the significant price rise in the other two by-products in the crushing process, industrial alcohol and electricity, two major revenue segments for mills. The Uttar Pradesh government raised electricity prices per unit by by Re 1 during the last sugar season. And, the price of industrial alcohol was up by about 60 per cent.
| NOT SO SWEET Quarterly figures of major companies | ||||
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Net sales | |||
Contribution from sugar
Thus, although premium sugar prices rose by 88 per cent compared to a year earlier, the contribution of co-generated electricity and alcohol remained almost the same, at about 10.3 per cent and 4.6 per cent, respectively.
During the year, sugar prices hit almost Rs 50 per kg in the retail market, with the mill’s realisation at an average of Rs 44 per kg. The industry estimates sugar output this year at below last year’s actual production of 14.7 million tonnes, due to lower acreage planting.
Sown area is, however, likely to go up by the end of the current season, given the expected revision in prices of ethanol and power, said an analyst. Mills are are currently bound to supply ethanol at Rs 23 per litre, against their cost of production of Rs 25 a litre. However, the oil ministry is likely to notify an increase in price any time soon to Rs 27-28 a litre of ethanol.
Also, many power purchase agreement with state grids in states like Uttar Pradesh and Maharashtra are due for renewal by the end of the current season. Mills will surely demand higher prices and deficit states will have no option but to buy. Hence, the revenue from this head is bound to increase proportionately in the next season, added the analyst.
