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Informist, Thursday, Jul 18, 2024

 

MUMBAI – India may allow exports of 1.5 to 2 mln tn sugar and increase diversion of the sweetener towards the production of ethanol next season due to surplus stocks, Girishkumar Kadam, senior vice-president and group head at Investment Information and Credit Rating Agency said at a webinar today. In the upcoming 2024-25 (Oct-Sep) sugar season, gross production will be 34 mln tn and net production after diversion will be 30 mln tn, he said. 

 

The agency expects the closing sugar stock to be around 9.1 mln tn as on Sep 30, appreciably higher than the sugar stock of 5.6 mln tn as at the end of September last year. 

 

In October, the government extended the export ban on sugar indefinitely until further orders as concern over lower production gripped the market. However, India did allow export of sugar on request of certain countries. In 2022-23 (Oct-Sep), India allowed mills to export only 6.2 mln tn sugar, after permitting exports of a record 11.1 mln tn in 2021-22.

 

According to Kadam, market prices are firm and well above the minimum selling price. However, the industry has urged for a hike in the minimum selling price for sugar as there has been an increase in the fair and remunerative price for sugarcane. The Indian Sugar Mills Association (ISMA) has urged the government to increase the MSP to 38 rupees per kg from 31 rupees per kg at present. 

 

Commenting on the revenue generation in the sugar sector, Kadam said revenues of integrated sugar mills are likely to expand by 10% in 2024-25 (Apr-Jun), supported by an expected increase in sales volumes, firm domestic sugar prices, and higher distillery volumes after the operationalisation of new capacities. Further, the operating profit margins of the sugar mills are projected to remain comfortable in 2024-25, in line with 2023-24, because of firm sugar realisations and higher cane prices for in sugar year 2025. 

 

Additionally, "The ethanol blending trend has remained encouraging till ethanol supply year 2024, given the higher contribution from grain-based distilleries. For ESY2025, the extent of the increase in diversion towards ethanol production over and above the cap remains critical to meet the 20% blending target set by the Government of India. The other key challenges that also need to be addressed include the availability of sufficient feedstock for grain-based distilleries and the infrastructure ramp-up required to support higher blending levels. Further, the timely launch of the E-20 (20% ethanol blended)- compliant vehicles and public adoption of the same would be key to achieving the blending targets," Kadam said. End

 

Reported by Taniva Singha Roy

Edited by Deepshikha Bhardwaj

 

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