ANI
23 Nov 2022, 19:03 GMT+10
New Delhi [India], November 23 (ANI): A decline in exports in sugar season 2023 (October 2022 to September 2023) coupled with a 3 per cent increase in the fair and remunerative price of sugarcane will impact the profitability of sugar mills this financial year, said Crisil Ratings in a report.
Sugar exports are likely to decline to 8-8.5 million tonne year-on-year in the 2023 season from an all-time high of 11.2 million tonne last season, despite production staying stable at 39.5-40.0 million tonne.
This, the report said, will be largely on account of two factors -- the higher diversion of sugar for ethanol blending and maintaining sufficient carryover stocks of sugar for domestic consumption during the non-crushing season.
For the record, carryover stocks of sugar had declined to a five-year low at the end of the 2022 season that ended in September.
The sugar sector in India is highly regulated, with it being an essential commodity. The government decides the quantum of exports, as well as the monthly sugar quota for domestic sales, besides determining the fair remunerative price of sugarcane.
Given that sugar exports are more remunerative than domestic sales, operating profitability will shrink 50-100 basis points year-on-year to 13 per cent for integrated players and by as much as 150-200 basis points to 9 per cent for non-integrated ones, which are primarily dependent on sugar sales.
That said, the sector's credit outlook remains "stable" due to lower working capital debt following reduced inventory, and only modest spend being undertaken to enhance distillery capacity for ethanol, the report said.
"Integrated sugar players will be better-positioned compared with non-integrated ones despite the pressure on profitability. This is because higher ethanol volumes, increase in ethanol realisations by 3-6%, and higher co-generation revenues will help integrated players partly offset the impact of higher cane price and sluggish domestic sugar prices," said Anuj Sethi, Senior Director at CRISIL Ratings.
"It also helps as these players have continued to invest in distillery capacity for ethanol blending to meet the requirement of oil companies, given the ethanol-petrol blending target of 20 per cent by April 2025 (blending level was 10 per cent in fiscal 2022)," Sethi added. (ANI)
Get a daily dose of India Gazette news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to India Gazette.
More InformationJERUSALEM, Israel: As demand for its driver-assistance technology rises among vehicle-makers, Mobileye Global is forecasting revenues for the 2023 fiscal ...
NEW YORK, New York - U.S. stocks closed sharply lower Monday as investors fretted over which way the Federal Reserve ...
Ahmedabad (Gujarat) [India], January 30 (ANI/Big News Network): The Adani group, in a sharp and focused response to Hindenburg Research's ...
SEOUL, South Korea: South Korean officials have said that the government will double energy vouchers and provide discounts on gas ...
WASHINGTON D.C.: The Wall Street Journal has reported that e-cigarette maker Juul and three tobacco giants are negotiating potential sale, ...
AUSTIN, Texas: Tesla gas announced an investment of more than $3.6 billion to expand its Nevada Gigafactory complex with the ...
Ahmedabad (Gujarat) [India], January 30 (ANI/Big News Network): The Adani group, in a sharp and focused response to Hindenburg Research's ...
New Delhi [India], January 31 (ANI): India has entered Amrit Kaal completing its 75 years of Independence and in this ...
New Delhi [India], January 31 (ANI): The Law and Justice Ministry has constituted a working committee for the drafting of ...
New Delhi [India], January 31 (ANI): External Affairs Minister S Jaishnakar on Tuesday met visiting US Under Secretary of State ...
New Delhi [India], January 31 (ANI): Visibility across North India was reduced to concerning levels on Tuesday as fog engulfed ...
New Delhi [India], January 31 (ANI): Ahead of the Budget session of Parliament, Prime Minister Narendra Modi on Tuesday said ...