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Stocks of sugar companies in Tamil Nadu are taking a beating on the exchanges — they are close to hitting 52-week lows in the backdrop of an all-time poor performance anticipated in the coming season.
Stock prices sliding as the 2016-17 sugar season comes to a close this month.
Conversely, with the buoyant outlook elsewhere, mills with operations in the North are closer to their 52-week highs.
Following an extended dry spell in Tamil Nadu, production has been steadily dropping in recent years and the coming 2017-18 (October to September) season could mark a historic low with capacity utilisation in the vicinity of about 25 per cent, on installed capacity.
From a sugar production of 23.79 lakh tonnes in 2011-12, Tamil Nadu’s output has dropped to 10.45 lakh tonnes in 2016-17 and is estimated to hit a low of about 5.7 lakh tonnes in the coming season. This is just about four months’ consumption for the State. Mills elsewhere in UP, Maharashtra and Karnataka are set to benefit from the unfolding scenario.
Bumper crop in north There is no relief in sight for Tamil Nadu sugar mills which had hoped to import raw sugar from the north which is heading for a bumper crop. Without freight subsidy, the numbers just do not work out, say industry representatives. The President of the South Indian Sugar Mills Association — Tamil Nadu, Palani G Periasamy, said the association is urging the Centre to permit import of six lakh tonnes of raw sugar just for the State.
This support is needed to ensure mills manage to pay at least the statutory sugarcane price of ₹2,550 a tonne linked to 9.5 per cent sugar recovery fixed for the coming season. Industry representatives are keeping their fingers crossed. With adequate domestic sugar production estimated at about 250 lakh tonnes in 2017-18 season, peak production from UP, Maharashtra and Karnataka, which will produce about 80 per cent of the estimated output, there is no concern on availability. Compared with 2016-17, the three major producing States are expected to see significant increase in output. UP production is expected to increase to about 100 lakh tonnes (85 lakh tonnes); Maharashtra 75 lakh tonnes (42 lakh tonnes); and Karnataka 26 lakh tonnes (21 lakh tonnes). Sugar-producing States are also likely to start crushing one month earlier in the coming season to meet the festival season demand.
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