The Sugar industry is being weighed down by political considerations that primarily drive the sector.
These revelations should be of concern to the industry, the government and the sugarcane farmer today. Here’s why. The country’s sugar production is estimated to set a new record during the current sugar season (October 2017 – September 2018). The surplus stock is already pulling down sugar prices, indirectly impacting revenues of sugar mills. The arrears that sugar companies owe to farmers are also piling up – the latest count being approximately ₹15,000 crore. The weak financial position of sugar companies, as projected by Ace Equity, makes the situation gloomier.
Sugar Rush
Ajay S. Shriram, Chairman and Senior Managing Director, DCM Shriram, an integrated player in the sugar sector, says in the last two months, his company had to write down the value of its sugar stock by almost ₹65 crore. “The selling price of sugar has been going down. We don’t know what it will be by March 31, when a view will be taken for the full year,” he says.
If DCM, one of the healthiest companies in the Ace Equity list, is feeling the heat, one can imagine what the industry situation in general is. Especially since most sugar mills are managed by privately-held and cooperative entities across the country.
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