The Hindu Business Line : Sugar mills may delay fulfilling export obligation

EVEN as the country's sugar industry has to export about 20 lakh tonnes of sugar to meet the export obligations against import of raw sugar, the industry appears to be in no hurry to ship it in the near future.

Given the firm domestic prices, sugar mills would not like to access the export market immediately.

"Though different companies have different timeframes for meeting their export obligations, about 20 lakh tonnes of sugar need to be exported by 2006-end or early 2007," said Ms Rajshree Pathy, President, Indian Sugar Mills Association (ISMA) at a press conference here.

The export market appears bullish for the Indian sugar industry in the future, particularly with the European Union subsidies being phased out, said Ms Pathy.

"With prices in the international market likely to move up, we are in no hurry to export as there is quite some time left to meet the obligations," she said.

Sugar production: The production of the sugar sector is expected to be "at least 180 lakh tonnes in 2005-06" compared with 127 lakh tonnes in 2004-05, according to Ms Pathy.

"We started the year with stocks of around 4.5 million tonnes of sugar, and as of now, the output for the year ending September 30, 2006 is expected to be 180 lakh tonnes," the ISMA Director-General, Mr S.L. Jain, said. He said with an annual consumption of 185 lakh tonnes, the mills were expected to be left with closing stocks of 40 lakh tonnes on September 30, 2006.

He said Indian companies were in talks with Pakistan for exports and some contracts had been finalised.

He declined to share further details.

On the issue of supplying ethanol to oil companies to facilitate five per cent blending in fuel, ISMA said the industry had signed a one-year contract, expiring mid-next year, with oil marketing companies for supplying 425 million litres of ethanol.

The contract had been signed at an average price of Rs 18.75 a litre, ex-factory, Ms Pathy said adding that there was no problem from the supply side and the industry could meet the country's ethanol demand.

The industry, however, was concerned about providing levy sugar at a subsidised price.

"We supply 10 per cent of our production as levy sugar at a price differential of about Rs 400 a quintal. The industry is hit by about Rs 700 crore annually on account of this," she said, adding that they would take up this issue with the Union Government. ISMA said it would like the Government to decontrol the release mechanism of sugar.

The Government regulates the quantum of sugar that mills are allowed to sell in the open market on a monthly basis as per the release mechanism.

Raising concerns over the irregularities in the allocation of cane areas, ISMA has demanded a comprehensive policy on the sugar industry besides implementing the Tuteja Committee recommendation that the minimum distance between the two sugar factories be increased to 25 km.

On the expected demands from the Budget next year, Ms Pathy said: "We really don't have any demands. Except for the issue of making available low cost finance for restructuring to private sugar mills that went sick."

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