The Hindu Business Line : `Upward correction likely in sugar prices'

Oudh Sugar did well in the last quarter in terms of realisations and recoveries. The company's CMD, Mr C.S. Nopany, says that the increased volumes have helped their gains.

He is expecting further improvement in total volumes in the next crushing season.

Mr Nopany attributes the fall in sugar prices to increased production in Brazil.

But, he is hopeful that there will be an upward correction in the prices. Excerpts from CNBC-TV18's exclusive interview with Mr Nopany

The numbers have been pretty good for the quarter. How have the realisations been and how has the recovery been?

The realisations and the recoveries have been good. In the last quarter, our realisations were satisfactory, as far as sugar sales were concerned.

We have been able to gain substantially because of increased volumes.

This year our crushing was higher because of some capacity addition. As far as the future outlook is concerned, some more capacity is being added this year.

Next crushing season, we should see further improvement in total volumes.

Improving capacity

What are your new capacity plans for 2006-07?

The board has approved the setting up of a 7,000-tonne plant with a sugar refinery and cogen plant of 17 megawatts. This would cost us approximately Rs 336 crore.

The total crushing of the company at the moment is around 21,000 crore and we are looking to come to 28,000 crore by November 2008.

We have seen a fall in the sugar prices globally. With this kind of a drop in the global sugar prices, do you foresee a situation wherein Indian producers might not be able to actually export and fulfil their export obligations that they have currently?

As far as the export obligations are concerned, it is correct that the international prices of sugar have fallen. One of the reasons for that is Brazil has increased production substantially.

There is a tremendous congestion in the Brazilian ports with almost over a million tonnes of sugar lying there.

I suspect that once that starts moving out, we will see some upward correction as far as international sugar prices are concerned.

With reference to export obligation, there was this an untimely ban by the Centre, where export of almost 900,000 tonnes had taken place and future export were stopped.

We have represented to the Government. I am hopeful that they will be lifting the ban soon. Once this ban is lifted, I see no reason why we cannot export this quantity of sugar.

Ethanol pricing

With the kind of discussions that are happening between the sugar bodies and the Government about the ethanol pricing, what could be the probable price?

It is difficult for me to say at this moment as to what kind of the probable price it would be. Discussions have been taking place.

I am convinced that both sides are very eager that this programme should continue.

When both sides are eager, yes, there would be a consensus as far as the pricing is concerned.

The important thing is that bringing this programme would save India from importing almost a million tonne of crude oil, which itself translates into substantial saving.

So, I do expect that shortly we should come to a conclusion as far as the kind of pricing and the formula, which have to be adopted.

There is word that the prices may be set somewhere around Rs 22. Any comments on that?

I really don't want to comment on the rumours at this stage. Discussions are on.

I hope that it would be a price, which would be a win-win situation both for the farmers as well as consumers.