"Most of the items used in the repair or maintenance of a sugar plant are made of iron or steel. Since steel and iron prices have jumped sharply, the cost of these items have also seen a price rise. For our 10,000 tonnes crushed daily (tcd) Seohara sugar mill in Bijnor (Uttar Pradesh), we had incurred an off-season maintenance cost of Rs 5 crore last year.
It is likely to shoot up to Rs 8 crore this time", said C B Patodia, advisor to the Birla Group of Sugar Companies and president of the UP Sugar Mills' Association.
Flat steel product prices have jumped 17 to 24 per cent since April 2007 while long products like bars and rounds have appreciated 50 to 60 per cent over the same period. The Birla group incurred an expenditure of Rs 25 crore on maintaining its 7 mills last year and estimates this cost to rise to Rs 38 crore this year.
Sugar mills usually run between October to April every year, which is the crushing period and are shut during rest of the year. After the crushing comes to an end, mills need to undergo repair in order to resume crushing in the next season.
"A 5,000 tcd mill used to require Rs 3 crore for the off-season maintenance last year. This time it requires about Rs 4.25 crore, which is an increase of 41 per cent. The cost of wiring, steel plates, boiler tubes, etc have gone up by over 25 per cent.
The usual increase every year used to be in the range of 8-10 per cent", said Sanjay Tapriya, director (Finance) at Simbhaoli Sugars. The company spent Rs 9 crore on maintenance of its 3 mills last year. It expects this to go up to about Rs 12 crore this year.
Patodia said the sharp increase would mean a push in production cost of sugar. At Seohara, we produce about 14,00,000 quintals of sugar. At Rs 5 crore, we incurred a maintenance cost of Rs 35 for every quintal. But at Rs 8 crore, the maintenance cost per quintal jumps to Rs 57, he said.
