Jul 08, 2013, 07.03 PM | Source: CNBC-TV18
In an interview to CNBC-TV18, Narendra Murkumbi, MD, Shree Renuka Sugars spoke about rupee depreciation and the recent talks about government increasing the import duty on sugar.
“ With a good monsoon we are seeing relatively flat prices in fact some commitments for exports. ”
- Narendra Murkumbi (MD)
Food, finance and agriculture ministries on July 4 decided to raise the import duty on sugar to 15 percent from 10 percent , to discourage overseas buying.
Meanwhile, the Indian rupee touched an all time low of 61 against US dollar on Monday, which can be beneficial for company's exports. Murkumbi adds that weak Brazilian currency (real) will boost revenues of its Brazilian subsidiaries.
"In local currency terms our margins are expanding despite the low sugar price. In Brazil, we have the best season in the last three years going on right now. So, on the revenue side it is positive. We have some dollar loans there, but the overall impact on our P&L is positive because of the large exports," he elaborates.
Below is the verbatim transcript of his interview to CNBC-TV18
Q: We understand that the government plans to increase the import duty on sugar to 15 percent versus the earlier 10 percent. What kind of an impact and benefit do you think the industry as well as the company is likely to see?
A: I think right now the domestic prices are being driven more by supply-demand equation. With a good monsoon we are seeing relatively flat prices in fact some commitments for exports. So, I do not think this is a very big factor.
There is very little import happening at the moment. We are currently exporting from both our refineries. We have just started commencing exports from our Haldia refinery as well. The Kandla refinery is already exporting sugar for the last 12 months.
Net-net, I do not think this itself is going to have a very big impact on domestic prices. There has been some improvement, but not much.
Q: In that case the rupee depreciation has come at a very good time. Are you probably able to export more than you thought? Are realisations better for you? Can you just sum up what it might mean to the P&L?
A: I think right now the domestic market has reached export parity on the west coast that is in Maharashtra, Karnataka and also in south in Tamil Nadu. So depending on how the world market behaves on the level of rupee, I think we could see some more exports.
About 100,000 tonnes of sugar has been contracted for exports in the last couple of weeks. We could see some more exports in the coming few months and definitely in the new production season, which starts in November.
Q: How does the change in currency positions as well as the fall in commodity prices impact your P&L? Are you going to benefit from your Brazilian unit? Can you just take us through the impact of the recent volatility on your P&L?
A: The Brazilian currency has been almost as weak as the rupee. This means that our export earnings for sugar in our Brazilian subsidiaries is actually better. In local currency terms our margins are expanding despite the low sugar price. As I have said earlier in Brazil we have the best season in the last three years going on right now.
So, on the revenue side it is positive. Of course we have some dollar loans there, but the overall impact on our P&L is positive because of the large exports.
HeidelbergCement India has reported a sales turnov
Medi-Caps has reported a sales turnover of Rs 6.77
When you unplug you mind for a minute, you restore
Reliance Infra posted its third quarter results. N
Himalaya's Ravi Prasad talks about the contrarian
The continuous uptrend in Indian market is reflect
An Empowered Group of Ministers (EGoM) has allowed
In an interview to CNBC-TV18, Narendra Murkumbi, m