• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Harish Damodaran

But rates unlikely to touch $450 a tonne, say millers

New Delhi , Dec. 19

All is not lost for sugar mills, that feel exports are viable, even after the Centre's belated decision to partially lift a near six-month-long ban on shipments.

Realisation

"We have not received any enquiries as yet. But exports are certainly realistic at prices of $350 per tonne free-on-board (f.o.b)," said Mr M. Manickam, Managing Director of the Coimbatore-based Sakthi Sugars Ltd. At this rate (Rs 15,700) and keeping costs of internal transport and port handling (stevedoring and fobbing) within Rs 1,000, mills can realise around Rs 14,700 per tonne from exports.

When seen against what factories are now getting on domestic sales - Rs 14,800-14,900 in the South and Rs 14,000-14,100 in Maharashtra - exports may not be a losing proposition. The good news is the recovery in international sugar prices: On Monday, London futures for March delivery rose from $341.70 to 352.10 per tonne, while that for May delivery closed $9.50 higher at $347.30 per tonne.

Viability factor

"We are unlikely to see prices of $450 per tonne (or the $490 plus level prevailing when exports were banned with effect from June 22). But $350 per tonne is still reasonably fine", noted Mr Prakash Naiknavare, Managing Director, Maharashtra State Cooperative Sugar Factories' Federation.

Exports, he added, are viable as long as they are carried out from factories in Maharashtra and the South. The northern mills will not find exports attractive enough not only because of freight costs to the ports being nearly double, but also due to realisations on domestic sales being around Rs 1,500 per tonne higher than in Maharashtra.

"It costs me over Rs 1,300 per tonne to move sugar from Uttar Pradesh to the port. The only way to offset this is to sell EC-grade sugar of below 45 ICUMSA that fetches a $20 per tonne premium. We hope to do this through our new factory at Brijnathpur (Ghaziabad)," said Mr Sanjay Tapriya, Director (Finance), Simbaoli Sugars Ltd.

Restrictions

The Centre, as of now, has restricted exports only to holders of advance licences (AL), who are required to ship out one tonne of white (refined) sugar for every 1.05 tonnes of duty-free raw sugar imported by them in the past. The outstanding re-export obligation under the AL scheme is about 11 lakh tonnes (lt).

The bulk of the AL holders are from the South: Sakthi Sugars (re-export obligation of 2.35 lt), Thiru Arooran Sugars (2.65 lt, including 1.72 lt of its associate, Shree Ambika Sugars), Sagar Sugars (1.08 lt), Dharani Sugars (one lt), Shree Renuka Sugars (0.65 lt), SCM Sugars (0.6 lt), Gayatri Sugars (0.45 lt), Godavari Sugars (0.4 lt) and EID Parry (0.3 lt).

In the North, the only player with significant re-export obligation is Simbhaoli (0.75 lt), with Dhampur Sugar (0.16 lt), Mawana Sugars (0.1 lt) and Daurala Sugar (0.04 lt) being the other AL holders.

"We want the Government to open up exports by non-ALS holders as well," Mr Naiknavare said.

More Stories on : Sugar | Exports & Imports

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

Stories in this Section
A formula to grow organic paddy profitably

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line