Shree Renuka Sugars has reported a Q2 net loss of ₹232.5 crore. Bloomberg TV India caught up with Narendra Murkumbi, Vice-Chairman & MD, Shree Renuka Sugars.

Let’s start by knowing the main reason for the knock you see in revenues…

In the last two quarters we’ve seen the lowest sugar prices of the last five years. This has resulted in the drop despite having steady volumes, lower prices and negative margins.

How have sugar prices spanned out in the festival season?

Sugar prices have improved since the end of the last quarter. There is also an expectation of positive support from the government on the sugarcane price front. This includes some kind of subsidy to help us pay the sugarcane prices which are very high in our country in comparison to the rest of the world. I would say that the outlook for the next two quarters is significantly better than the past two quarters.

What are your expectations in terms of stocks and the announcements from the government to help the sugar sector?

Sugar prices have improved in the domestic market by 25 per cent in the last three months. But the cost is still higher than the selling price. We expect some support from the government on the sugarcane price and, more particularly, we are looking forward to some kind of subsidy which will enable us to bridge the gap. Further, the sugar price has gone up by 40 per cent globally since July and that should help increase exports in India.

Last year, only 1 million tonnes of sugar were exported. We have a surplus of 3.5 million tonnes and if a significant portion goes out of India in the next six months we would expect a much better price down the line. The government has come out with a very good policy and has given us tax breaks on both ethanol and molasses.

You recently filed for bankruptcy for your Brazilian unit. Can you give us the details?

We have not filed for bankruptcy. But we have filed for judicial protection against bankruptcy. All our departments are at a standstill and the court will take up a revival plan. We are jointly working with our banks in Brazil and we will submit a restructuring proposal to the court. Until then the companies are under the protection of the court and they continue to operate in a normal manner. Global prices are up 40 per cent. We have seen a 20 per cent rise in the price of ethanol. So we have a better outlook in the coming months.

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