Sugar glut may crush stocks

K. S. Badri Narayanan Chennai | Updated on January 27, 2013 Published on January 27, 2013

Stocks of sugar companies will come under pressure as the Indian Sugar Mills Association last week raised the output estimate for 2012-13 marketing year (October-September) to 243 lakh tonnes. Earlier, ISMA had projected a production of 240 lakh tonnes. In the 2011-12 marketing year, sugar output stood at over 260 lakh tonnes.

The industry’s projection is higher than the Government’s estimate of 230-235 lakh tonnes. This will further pressure the already strained sugar mills. The bumper crop expected in Brazil is also likely to pull down prices. "A rise in the cost of sugar production and the subsequent decline in margins will result in lower operating margins for sugar mills across the country," said India Ratings, in a recent report.

Published on January 27, 2013
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