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News
UP's sugar mills to participate in raw sugar import programme
Date:
17 Apr 2017
Source:
Business Standard
Reporter:
Dilip Kumar Jha
News ID:
8564
Pdf:
Nlink:
A couple of Uttar Pradesh - based large sugar mills are planning to participate in the raw
sugar import
programme to extend operations of their refineries despite risk on profit margins due to high inland transportation cost from the designated ports to the refinery.
At least two large sugar factories, which have their refineries in UP, told
Business Standard
on the condition of anonymity that they were preparing to apply for the import of raw sugar. However, Simbhaoli Sugars Ltd, according to its Chief Financial Officer Sanjay Tapriya, has not yet decided whether to participate in the import of raw sugar or not. “We are yet to take a final call on whether to import raw sugar or not this year,” said Tapriya.
Balrampur Chini and Dwarikesh Sugar, for their part, have decided to stay away from raw sugar imports, confirmed their senior officials. “We do not see financial viability in converting raw sugar into refined sugar since our refineries are situated away from the designated ports where the raw sugar will arrive,” said Vivek Saraogi, managing director, Balrampur Chini.
Sugar mills participating in imports, however, are assessing the financial viability of converting raw sugar into refined sugar and selling the sweetener in and around UP. The state is already flush with sugar this year with its estimated production of 8.7 million tonnes, which accounts for nearly 40 per cent of the 20.3 million tonnes output estimated for the current crushing season. “The landed cost of imported raw sugar from Brazil currently stands at Rs 31.50 a kg as against the current prevailing price in and around UP at Rs 35.50 a kg (ex-factory). Estimating Rs 2 as transportation and refining costs, UP sugar mills will be able to sell the sweetener with Rs 2 a kg of profit. In this process, however, small sugar factories would not be able to process raw sugar given that their cost of production would be higher because of lower volumes. They will not fire boilers for processing few thousands of raw sugar,” said a senior
industry
official.
Abinash Verma, director General of the apex
industry
body Indian Sugar Mills Association, however, sees a better business potential for South India-based sugar mills, given that their refineries are closer to the designated ports. Shree Renuka Sugars, with its refineries in all three locations — Haldia (West Bengal), Kandla (Gujarat) and two places in Karnataka, will benefit from the government’s move to allow 0.5 million tonnes of raw
sugar import
this year.
Other mills in these regions will also benefit with savings of Rs 4 a kg from the processing of imported raw sugar and Rs 1.50 a kg of premiums over prevailing prices in UP.
“We have refining capacity in all three zones where the government has assessed a shortage. Hence, we will be applying for imports from the ports of South, West and East India,” said Narendra Murkumbi, managing director, Shree Renuka Sugars Ltd.
Faced with a sharp deficit in sugar availability in the Western and Southern Indian states, including Maharashtra, Gujarat, Tamil Nadu, Karnataka, Andhra Pradesh and West Bengal, the government allowed 300,000 tonnes of raw
sugar import
through ports in the South zone and 150,000 tonnes and 50,000 tonnes of the unrefined sweetener import through the West and East zones, respectively. Interested importers may apply to the designated regional offices of the Directorate General of Foreign Trade until April 23 and quota allocations under TRQ will be handed out on April 27, valid for import up to June 30. For actual import, however, the importers need to apply with the Agricultural and Processed Food Products Export Development Authority, which would issue a non-transferable registration–cum-allocation–certificate on first come first serve basis with a validity of 45 days and extendable for another similar period
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