The Hindu Business Line : Sugar stocks sweeter on spiralling prices

Among the big movers in the sector today were Oudh Sugar (up 8 per cent); Bajaj Hindusthan (up 4.50 per cent); Dhampur Sugar (up 3.50 per cent); Upper Ganges (up 2.50 per cent); and Balarampur Chini (up 0.10 per cent)

According to analysts, sugar manufacturers are enjoying an unprecedented rise in margins. Mr Mathew Easow of matheweasow.com said that the current margin growth is around 78-80 per cent over that of a year ago. This was confirmed by the industry insiders.

The estimated sugar consumption in India is 180 lakh tonnes, but, according to industry sources, the production for 2004-05 would not be more than 120 lakh tonnes.

"Ex-factory prices have increased to Rs 17 per kg from Rs 10-11 per kg. Molasses has jumped to Rs 3,500-4,000 per tonne from Rs 600," industry sources said.

Interestingly, raw sugar imports have provided additional profit avenue for the importing mills near the coastal region. In the current season, already 12.18 lakh tonnes of raw sugar have been imported by the mills based in South such as Thiru Arooran, EID Parry and Dharani Sugar.

"It is profitable for the southern mills to import, process and sell in the domestic market. Total cost of processing zero duty imported sugar against advance licence is only Rs 14 a kg," a senior official of Balrampur Chini said.

Apart from higher realisation in sugar, by-products such as molasses and bagasse are fetching better prices also, Mr Rajesh Agarwal pointed out.

"Sugar prices are expected to continue to rise through the next fiscal also because of demand-supply mismatch," he added.

Though per capita consumption is expected to rise, with rising priceline more and more players are planning capacity expansion.

At present, Bajaj Hindustan, Siel, Monnet Sugar, DCM Shriram and Dwarikesh Sugar are contemplating expansion. Balrampur Chini and KK Birla Group have already announced fresh capacity expansion plans of 7,000 and 7,500 tonnes crushed per day.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Canbank MF to merge 2 balanced schemes

Reliance MF launches new equity scheme

Deadline to realise MIP 95 assets of UTI extended

LIC likely to hike equity exposure of investible funds

Bears prevail

Sugar stocks sweeter on spiralling prices

LIC Housing Finance buoyed by rate hikes

Outlook may turn positive for HDFC, Guj Ambuja

Selling pressure takes its toll