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Jun 14, 2013, 06.19 PM | Source: CNBC-TV18

Allow price hike for struggling sugar cos: Sakthi Sugars

M Manickam, managing director, Sakthi Sugars also expresses concern over rising disparity in raw material and finished products price. He complained about the government not taking major steps to increase sugar price.

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Allow price hike for struggling sugar cos: Sakthi Sugars

M Manickam, managing director, Sakthi Sugars also expresses concern over rising disparity in raw material and finished products price. He complained about the government not taking major steps to increase sugar price.

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Research firm Crisil expects sugar industry to post around Rs 1000 crore loss in sugar year 2012-13 (Sept-Oct) due to disparity between cost of procuring sugar cane and rate at which sugar is sold.

In last three seasons, the average price paid by mills toward purchase of cane has increased 14 percent, whereas sugar cost has gone up 3 percent, making operations unfeasible for sugar makers.

Read This: Sakthi Sugars hails decontrol; sees low production next yr

In an interview to CNBC-TV18, Ajay Srinivasan, director, Crisil Research said, Sugar mills in Uttar Pradesh and Tamil Nadu will be worst hit due to state government's having announced a state advised price (SAP) which is higher than the central government's Fair and Remunerative price (F&RP).

He further said that steep rise in sugarcane procurement cost vis-a-vis sugar price will have an adverse impact on financials.

M Manickam, managing director, Sakthi Sugars also expresses concern over rising disparity in raw material and finished products price. He complained about the government not taking major steps to increase sugar price.

He further said that sugar production was lower by 20 percent year-on-year. "Expect production to be lower by 10 percent next year," he said.

Below is the edited scirpts of Srinivasan and Manickam's interviews

Q1: What are your chief worries about the sugar industry and what kind of losses do you see in FY13 and FY14 as well?

Srinivasan: What we can see is that with the sugarcane price increasing continuously and sugar prices being under pressure because of low prices globally, as well as dumping by sugar mills after the deregulation on the marketing front, we see the quantum of losses only increasing going forward. The chief concern is that while the by-products such as ethanol and cogen are contributing significantly to profitability, the core sugar business itself is under lot of pressure because of this irrationality in cane pricing.

 Q2: What is your expectation of what the industry might post by way of losses in this season and how does it compare with what it did in the previous year to know how the quantum of losses have jumped up and in general the trajectory? When you say Rs 1,000 crore for FY13 do you mean Sugar Year 13 (SY)?

 A. Srinivasan: SY13.

Sakthi Sugars stock price

On February 09, 2016, Sakthi Sugars closed at Rs 26.75, down Rs 1.4, or 4.97 percent. The 52-week high of the share was Rs 41.60 and the 52-week low was Rs 12.20.


The latest book value of the company is Rs 1.78 per share. At current value, the price-to-book value of the company was 15.03.

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