In an interview to CNBC-TV18 M Manickam, managing director, Sakthi Sugars said, the international sugar prices have been flat for almost two years. "They are looking between 19-20 cents. You don't any forward premiums or discount." He expects them to remain fairly stable for the next one or two years.
Further, the company almost doubled its production in this quarter. Also, sugar prices have risen by Rs 2-3 compared to the last year.
"Both of that has impacted and we have performed rather well. I think going forward, hopefully we will be able to maintain some kind of a positive flow from this quarter on. If all goes well I think this year should be a good year for us," he added.
Below is the edited transcript of the interview. Also watch the accompanying video.
Q: To get an outlook with regards to the international sugar prices, there is an expectation of improved supply. How exactly do you see raw sugar prices move in this calendar year?
A: Right now we are looking at the futures. They are flat for almost two years. They are looking between 19-20 cents. You don’t any forward premiums or discount. So, the prices are looking fairly stable for the next one or two years.
Q: You have the Free Export Allowance now. As referred to the domestic sales would you prefer going global because the rupee depreciation would have helped you quite a bit. Are exports realizations better than selling in the domestic markets?
A: Basically the exports are helping out on the cash flow. The prices are both equal to domestic. Today exports are more a cash flow balancing kind of exercise. Today most of the factories have a lot of inventory and the cane prices to be paid, the exports are helping out for generating the cash.
Q: How exactly did this quarter do for you in terms of realizations and what would your outlook be possibly for FY13?
A: This quarter we have almost doubled the production, because this is the major production quarter that we have. Compared to the last year same quarter I think the sugar prices are up by about Rs 2-3.
Both of that has impacted and we have performed rather well. I think going forward, hopefully we will be able to maintain some kind of a positive flow from this quarter on. If all goes well I think this year should be a good year for us.
Q: What’s the early indication on the FY13 production? Do you believe that a slight drought in Maharashtra could lead to a slightly lower production in the next season or will UP and the others manage to compensate?
A: It’s too early to speculate. Unless you come into something like the New Year, January of 2013 we can’t estimate the production for next season. Having said that, there is some amount of pressure in Maharashtra, but UP apparently has planted lot more because of higher cane prices that they have announced. Tamil Nadu was also planted more. So, we are slightly negative in Karnataka and Maharashtra, but you have a positive in UP and Tamil Nadu. We might land up with the same or maybe little more.