Sugar mills to make historic profits of Rs 7/kg this season

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » RELATED NEWS UP mills, farmers agree to sugarcane price of Rs 195/q Buy sugar stocks on dip: Sudarshan Sukhani Opposition to meet farm minister on cane price Bajaj Hind BSE | NSE 10/02/12 Are Mutual Funds betting on Bajaj Hind?

Farmers in Uttar Pradesh will get Rs 190-195 per quintal for sugarcane. The sugar mills will pay Rs 25 over the SAP (State Advisory Price). Sugar stocks were beaten down last week in anticipation that they had to shell out more  to acquire sugarcane.

The crushing for UP mills which was slated to start in November was delayed due to the cane pricing issue. The farmers protested outside Parliament in anticipation to get Rs 280 per quintal from sugar mills. Bajaj Hindusthan and Balrampur Chini are two major sugar producers in Uttar Pradesh,

Profitability math

SP Tulsian, Investment Advisor says the cost for producing sugarcane is Rs 27/kg. He assumes Rs 200/quintal for cane price plus Rs 20 for society & transportation cost. The recovery of sugar from sugarcane will be 10%. This works out to be Rs 22/kg for production of sugar. He further adds the cost of production Rs 5/kg which makes total cost Rs 27/kg. Now, the government had announced 20% levy quota. The price for levy quota has not been announced but assuming it will be Rs 15/kg, sugar mills will incur a loss of Rs 5/kg on 20% levy quota. He adds Rs 5/kg loss to the cost of production which makes the total cost of Rs 32/kg. Ex-mills sugar price is quoting around Rs 33 plus per kg in UP. The sugar mills will further make profit of Rs 6/kg from byproducts of sugar mainly ethanol. This translates to a total profit of Rs 7/kg for UP sugar mills which is lifetime high for any sugar mill in India.

Sugar stocks performance

Company Name	Open	High	Low	Last	Prv	% Chg
				Price	Close
Sir Shadi Lal	147.9	150.5	147	150	142.7	5.12
Pratappur Sugar	32.6	32.95	31.9	32.95	31.4	4.94
Riga Sugar	41.9	42.5	38.25	41.8	39.85	4.89
KM Sugar Mills	31.95	32.9	31	32.8	31.35	4.63
Bajaj Hind	214	226.4	214	222.8	213.15	4.53
Thiru Arooran	146.5	157.9	146.5	150.5	144.3	4.3
Dhampur Sugar	130	137.9	130	134.5	129.6	3.78
Uttam Sugar	62.9	64.2	62	63	61.15	3.03
Simbhaoli Sugar	70.05	72.9	70	72.15	70.15	2.85
KCP Sugar	26.2	27.8	26.2	26.95	26.25	2.67
Ponni Sugars(E)	101	106.8	101	105.65	102.95	2.62
Shree Renuka	229.7	236.25	227.3	232.55	227.95	2.02
Triveni Engg	104.8	107.9	104.4	105.9	103.85	1.97
Upper Ganges Su	86	88.95	86	86.85	85.25	1.88
Oudh Sugar Mill	69.25	72.7	68.1	69.15	68	1.69
EID Parry	315.55	321	313.15	318.35	313.25	1.63
Bannariamman	1230	1250	1186.1	1226.35	1207.9	1.53
JK Sugars	29.6	30.85	29	29.05	28.7	1.22
Balrampur Chini	134.15	138	133.65	135	133.4	1.2
Kesar Enterpris	97.5	101	97.4	98.55	97.5	1.08
Mawana Sugars	44.65	45	44.1	44.2	43.75	1.03
Andhra Sugar	120	122.5	119.5	119.85	119	0.71
Ugar Sugar Work	21.75	22	21.35	21.5	21.35	0.7
Dharani Sugars	116	118.05	113.55	114.25	113.6	0.57
Dwarikesh Sugar	123	127.7	121.85	122.65	122.1	0.45
DCM Shriram Ind	150	150	143.9	145.3	144.7	0.41
Sakthi Sugars	96	97.5	93.3	94.3	94.2	0.11