DCM Shriram sees stable sugar prices next year

Hiral Desai Pronoy Nath Banerji | Updated on January 20, 2018 Published on June 15, 2016

AJAY SHRIRAM, Chairman DCM Shriram

Chairman Ajay Shriram says there won’t be a significant hike in prices as there is adequate stock

Sugar prices continue to surge on robust demand and tight supply. Dry spells in India and Thailand last year, coupled with excessive rains in Brazil, had capped production.

With the IMD predicting a strong monsoon in India, the sugar industry expects better days ahead. Speaking to Bloomberg TV India, DCM Shriram Chairman Ajay Shriram says there won’t be much hike in sugar prices as there is an adequate amount of sugar stock in the country.

What’s your outlook on the monsoon? The surge in sugar prices has brought some relief to farmers and the industry. Do you see this trend continuing? Will the deficiency and price rise continue as we enter the next crushing season? What’s your overall view?

Overall, I am really glad. The sugar industry had some rational position in the last one year. I do not think anyone wants a situation like last year, when the money outstanding to the cane farmer was almost ₹20,000 crore. There must be a balance between the sugarcane price and the sugar price.

Otherwise, the farmer loses, the industry loses and ultimately because of the imbalance, the consumer also loses. All indications are that monsoon will be suitable and that it should give a comparatively good crop.

The estimate for the coming year is about 24 million tonnes. Considering a carry forward of 7.5 million tonnes,

I think there is adequate sugar available for the next year. I do not think there is any fear of shortage. So the price should be stable.

Logically speaking, the price should go up by a couple of rupees to make the industry viable.

I think that is important for the long-term stability of the farmers and the industry.

Globally, there is an upward trend in sugar — the US raw sugar prices have gone up 35 per cent year-to-date and Indian sugar prices have increased 17-20 per cent. At the moment, the domestic price of sugar is hovering close to ₹34-35 per kg. Do you expect this price to go up to ₹40, and will it fall after peaking this year?

No, I do not think the prices will go up that much. I think that there is adequate stock in the country. And India is quite self-sufficient as far as sugar availability is concerned.

I appreciate that the international prices have gone up. And if the prices do go up marginally I think it will be a couple of rupees and not more than that.

Regions where your sugar and cement plants are located are under a lot of stress. Although your cement capacity is not much, the prices have not seen any buoyancy in the western region. Can you comment on that?

Our cement plant is more of a pollution-control plant because we use the sludge that comes out of our manufacturing process for PVC, to make a value-added product in cement.

So our cement business is very small and we are not planning to expand it.

We are planning to just run it efficiently. It contributes to the bottom-line. So that is a suitable situation.

Your debt has gone up last fiscal. Will it increase in FY17?

Our total debt has gone up a little bit. It is because of our expansion projects, which is are chlor-alkali and sugar businesses.

We are spending ₹120 crore to increase our power generation capacity by 18 MW, which we can sell to States. That will give us additional revenues.

Published on June 15, 2016
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