Sugar production may fall to 80 lakh tonnes

After making a delayed entry on June 5th, the monsoon rains have been anything but satisfactory. The weekly rainfall for the country as a whole during the last one week ending June 15th, 2012 was 15.3 mm, which is 50% below the normal rainfall of 30.6%. The rainfall was below normal across all the regions with the deficit ranging from 44% to 53%. If this trend continues it would a disaster for farmers who heavily rely on monsoon rains for their kharif crops. This would further increase the uneasiness of the policy makers and middle class society who are already grappling with high inflation which shows no signs of receding. The annual rate of inflation, based on monthly wholesale price index rose 7.55% during the month of May compared to 7.23% inflation in April, 2012. The inflation in food articles was higher at 10.74% with inflation in pulses at 16.61% and vegetables at 49.43%. However, Indian Meteorological Department has predicted that monsoon will further advance in the coming weeks into interior regions and hopefully should pickup as the week progresses. The weekend rains have already been strong in certain parts of the country and we hope that it picks in the days to come.

Meanwhile, our government has increased the minimum support price of kharif crops, in order to provide some relief and provide some savings for farmers who are grappling with increased labour costs and higher fertilizer prices which have increased exponentially over the last one year. The government has increased the MSP of paddy (common) and paddy (Grade A) by over 15% to Rs1,250 per quintal. The prices of Jowar (hybrid) and Ragi have been raised by 53.1% and 42.9% respectively to Rs 1,500. The price of urad has been increased by 30.3% to Rs 4,300 per quintal and prices of groundnut-in-shell, sunflowerseed, sesamum and nigerseed have been raised in the range of 21% to 30%. The MSP on cotton has been raised by 18.2% and 28.6% to Rs 3,300 and Rs 2,800 for the long staple and medium staple varieties. However, the flip side to this move is the higher food subsidy burden on the government which will further deplete its already weakening financial resources. Also, consumers will have to shell out more for pulses and oil seeds which are already witnessing elevated inflation levels.

McLeod Russel first to challenge India's retrospective tax laws
The Brij Mohan Khaitan group-controlled McLeod Russel, the largest integrated tea conglomerate in the world has become the first Indian corporate to challenge the government's widely criticized retrospective amendments to tax laws which were proposed in budget 2012, three sources familiar with the development told ET NOW." McLeod Russel has filed a writ petition at the Calcutta High Court alleging that the retrospective amendments to tax laws are unconstitutional and arbitrary. The Calcutta High Court has issued notice to the government and the case will be heard on 10th July," said one of the individuals cited above. Sources indicate that the cross-border deal which caught the attention of the income tax authorities was Mcleod Russel's 2005 buyout of UK based Borelli Tea Holdings Ltd which in turn held 74% stake in Williamson Tea Assam Limited.

Sugar production in Maharashtra to decline by 11% in 2012-13
According to Maharashtra co-operation minister Harshvardhan Patil, sugar production in Maharashtra, the top sugar producer in the country is expected to fall by more than 11% in 2012-13 sugar season. The sugar cane production in the state is likely to be less by close to 22% due to the drought like conditions in the state. "The area under sugar cane is expected to decline from 10.22 lakh ha in 2011-12 to about 8 lakh ha in 2012-13 while the sugar production is likely to go down from 90 lakh tonne to about 80 lakh tonnes. Availability of cane will be the biggest challenge in front of the industry." said Mr. Patil.

Nuziveedu Seeds looking at IPO
Leading cotton seeds producer Nuziveedu Seeds (NSL) has posted a 29% growth in revenue in the last fiscal at Rs 10.7 billion and is exploring the possibility of launching an initial public offer (IPO). Private equity firm Blackstone through its arm Blackstone GPV Capital Partners Mauritius V-C had invested Rs 2.5 billion in NSL during 2010-11 fiscal. NSL, which has 16 seeds processing plants across the country and produces 0.6 million quintal seeds, is targeting revenue of Rs 13 billion this fiscal. "We will maintain 20-30% growth in revenue in the current fiscal" said NSL Chairman and Managing Director M Prabhakar Rao. Asked about the company's plan to launch IPO, Rao said: "We are examining various options to raise funds. We are also looking at IPO. But, we have not set any timeline". He did not disclose any further details.

Scanty rains slow down kharif sowing
Sowing of kharif crops such as oilseeds and pulses are yet to gain momentum due to scanty southwest monsoon rains so far. According to the Agriculture Ministry, sowing of oilseeds such as groundnut and sunflower has commenced at a sluggish pace in Andhra Pradesh, Karnataka and Tamil Nadu. Preliminary reports indicate that oilseeds have been sown in 1.72 lakh ha so far, down from 2.46 lakh ha covered in corresponding period last year. Groundnut has been sown in 88,700 ha, sesamum in 52,400 ha and sunflower in 20,400 ha so far.

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