Indian sugar mills association

Indian Sugar Mills Association cuts 2015-16 output estimate by one million tonne

Date:	22 Jan 2016

Source:	The Economic Times

Reporter:	Madhvi Sally

News ID:	5208

Pdf:
Nlink:

NEW DELHI: Indian Sugar Mills Association has cut 2015-16 sugar output estimate to 26 million tonne from 27 million tonnes estimated in September.

The association procured satellite images of area harvested for crushing upto 9thJanuary, 2016 and the area under sugarcane which is yet to be harvested in the remaining period of the season to come to the figure said ISMA officials.

Factors like yield per hectare., estimated sugarcane production from the remaining area, drawal of cane for sugar production, sugar recovery and water availability in reservoirs have been duly considered while making revised analysis for the second advance estimates said ISMA.

Sugar production in Maharashtra is likely to be around 87 lakh tonnes, lower by 3 lakh tonnes as compared to ISMA's first advance estimates of 90 lakh tonnes made in September, 2015. This is mainly because of lower water availability which adversely affected yields in Maharashtra said ISMA.

Sugar recoveries in UP are expected to be much better than previous years. Hence, sugar production in Uttar Pradesh would be around 71.5 lakh tonnes. This is 0.50 lakh tonnes higher than the sugar produced in 2014-15 season, said ISMA.

Sugar production estimated for Karnataka by ISMA in the 1st advance estimates was 49.2 lakh tonnes. Due to lower rainfall in Northern Karnataka, the yields are not as good and, therefore, it is estimated that sugar production will be 43 lakh tonnes.

In case of Tamil Nadu, as against the last season's production of 12.6 lakh tonnes, mills in the state are likely to produce 13.9 lakh tonnes in the current season.

As regards Andhra Pradesh and Telangana and Madhya Pradesh, sugar production in 2015-16 is likely to be less by 0.50 lakh tonnes each, as compared to the first advance estimates released in September, 2015 said ISMA.

The current average of all India ex-mill sugar prices are at around Rs 2950 per quintal of sugar. It has improved in the last few months but has still not recovered to the levels that were prevailing about 18 months back in July-August 2014 said ISMA.

The average cost of production on an all India basis, based on the cane price that the mills have to pay is currently between Rs. 3300 and 3500 per quintal of sugar (including cost of finance) . The sugar mills are, therefore, still unable to cover their costs said ISMA. It is, therefore, feared that if the current ex-mill prices do not improve to allow them to cover their costs, there would be additional cane price arrears of farmers and defaults in repayment of bank loans. Cane price arrears of previous season as on today is around Rs 2500 crore.

The market sentiments have improved in the last few months after 2 to 3 years of depressed sugar prices when the sugar mills incurred massive losses pushing several of them to sickness and NPAs with banks. The current improvement in market sentiments is mostly because of the fundamental reason that sugar production is expected to be lower than the last year due to lower water availability in Maharashtra and Karnataka and the fact that the sugar mills are exporting sugar and reducing the high sugar stocks that they are carrying.

The ex-mill sugar prices need to improve to the level of the cost of production to ensure that the sugar mills are able to at least break even and at the same time is able to pay the cane price to farmers on time and repay the bank loans to avoid NPA and sickness. The sugar industry has to also repay the soft loans that the government had given in 2014 and 2015 from this year onwards, which is adding to the cash outgo burden.

News

Navigation