The Hindu Business Line : Sugar facts, revisited

I am thankful to Mr S. L. Jain, the Director-General of ISMA for having gone through my article “How true is the sugar sector’s Catch-22 situation?” (Business Line, November 14).

I am also grateful to him for having pointed out that, depending on the situation of different factories, the output of molasses, pressed mud and bagasse can be different.

The figures given in my article clearly brought out the fact that the coefficients of by-products with different percentages of sugar recovery are different.

I am prepared to accept, for the purposes of argument, that the extraction cost should, more reasonably, be taken as Rs 400 per tonne.

I do not agree that only the surplus bagasse (6 per cent out of gross 35 per cent) should be counted towards the income generated by the factory.

This is because the bagasse used for fuel results in saving imputed costs that must be counted towards income. I have gone through the exercise of recalculating my Tables according to the suggestions given by Mr Jain. The Tables according to his figures would present themselves as seen below.

It will, however, be seen that even as per his assumptions, all the sugar factories would still be in a position to pay the statutory minimum price applicable to the respective percentage of sugar recovery.

Crushing one tonne of sugarcane, the sugar factories produce molasses, pressed mud, surplus bagasse and sugar in the proportions seen in the Table on Recovery.

A factory’s earnings per metric tonne of sugar, molasses, pressed mud and surplus bagasse can be taken as Rs 12,000, 1,500, 100, and 800 respectively.

My questioning of the protestations made by sugar factories, both in the private and co-operative sectors, about the income crunch thus stands reconfirmed.