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Informist, Tuesday, Sep 17, 2024

 

By Pallavi Singhal and J. Navya Sruthi

 

MUMBAI – Shree Renuka Sugars Ltd, among India's leading sugar manufacturers, expects to see higher profits on the back of the government permitting ethanol production from sugarcane juice, Executive Chairman Atul Chaturvedi told Informist on the sidelines of The Wheat Summit here today. Chaturvedi, however, also said the industry’s demand to raise the minimum selling price of sugar is valid.

 

Now that the government has allowed ethanol to be made from cane juice, the capacity utilisation of our distilleries should go up dramatically, and with the seasonal output (of sugarcane) seen higher than last year, it should be a good year (for the company),” he said.

 

To boost ethanol blending, the government in August rolled back restrictions on the use of sugarcane juice and sugar syrup in ethanol production in the ethanol supply year starting November. In December last year the government capped the diversion of sugar for ethanol production in 2023-24 (Nov-Oct) at 2.5 mln tn owing to concerns about lower sugar production. In 2022-23, India diverted about 4 mln tn of sugar to produce ethanol.

 

Meanwhile, the industry has been demanding a raise in the minimum selling price for sugar, arguing that the price has not been revised for the past five years. “MSP was last hiked way back, even when the fair and remunerative price (for sugarcane) has gone up by about 30-35%," Chaturvedi said. "The industry feels that the MSP should be jacked up to 42 rupees per kg. Whether the government is going to accept that we are not sure, but that is the industry's demand.”

 

In February, the government raised the fair and remunerative price for sugarcane for the 2024-25 (Oct-Sep) sugar season to 340 rupees per 100 kg. The fair and remunerative price paid to sugarcane farmers has now been raised four times in recent years. It was increased to 290 rupees per 100 kg in 2021-22 from 255 rupees, then to 305 rupees in 2022-23. Last year, it was raised again by 10 rupees to 315 rupees per 100 kg. On the other hand, the minimum selling price for sugar has been stuck at 31 rupees a kg since 2019.

 

According to Chaturvedi, prices of ethanol derived from cane juice also need to be increased and brought on a par with prices of ethanol derived from maize. "There is no reason why maize ethanol is being bought at something like 72 rupees a ltr while that from cane juice is at 65 rupees a ltr,” he said.

 

'UNNECESSARY ORDER'
“In our (industry’s) review of the draft two days back, point-by-point discussions and deliberations were made," the Shree Renuka Sugars executive chairman said. "There was a consensus that the new (sugar control) order doesn't make sense because, as it is, this sector is highly regulated. I think it is fundamentally not correct, logical, or rational.”

 

Regarding specific points the new order aims to revamp, he said that while the industry is in favour of bringing unregulated small producers of khandsari sugar into the ambit of government control, the idea of packaging sugar in jute bags is not something the industry agrees with. "It will not just raise costs for companies but will be extremely unhygienic and will reduce the quality of packed sugar as sugar is hygroscopic in nature,” he said. A hygroscopic substance tends to absorb moisture from the atmosphere at room temperature.

 

The government has issued a draft Sugar (Control) Order, giving itself sweeping powers. The draft order is proposed to replace the existing Sugar (Control) Order, 1966. The decision to revamp the old order was taken "due to technological advancements in the production process and multiple changes in the sugar sector", according to the government.

 

Today, shares of Shree Renuka Sugars closed 2.3% lower on the National Stock Exchange at 46.98 rupees.  End

 

Edited by Rajeev Pai

 

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