Sugar output may increase by 15-20% in FY11: Sakthi Sugars

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Sugar output may increase by 15-20% in FY11: Sakthi Sugars

M Manickam, managing director of Sakthi Sugars, said that the sugar output is likely to increase by 15-20% this year and sugar price will rise by Rs 1-2.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Sakthi Sugars See previous management interviews See what other Experts & Brokerages are saying about Sakthi Sugars Sakthi Sugars BSE | NSE 01/06/12 Are Mutual Funds betting on Sakthi Sugars?

Sakthi Sugars has announced its first quarter (April to June) results. The company has reported a net loss of Rs 10.4 crore for the quarter versus Rs 16.7 crore for the corresponding quarter last year. Its Q1FY11 net sales stood at Rs 355 crore versus Rs 458 crore.

Speaking to CNBC-TV18's Latha Venkatesh and Gautam Broker, M Manickam, managing director of Sakthi Sugars, said that the sugar output is likely to increase by 15-20% this year and sugar price will rise by Rs 1-2 per kg.

Below is the edited transcript of the interview. Also watch the accompanying video. 

Q: Give us your Q1 performance?

A: We have a total turnover of Rs 354 crore for Q1FY11 versus Rs 458. We have not processed any raw sugar this quarter and our operational profit is about Rs 2,493 crore versus Rs 688 crore. In fact, our operational profit is far better than what we did last year because sugar prices are slightly higher and the losses that we incurred in raw sugar are no longer there.

Our net interest is Rs 34 crore versus Rs 26 last year, which basically is much of capitalised interest being written off this year versus last year. So the net profit we have is minus Rs 10 crore versus minus Rs 22 crore last year. So, it was much better performance last year. We are still hoping that the sugar price will pickup a bit and Rs 1-2 per kg increase in sugar prices should give us good relief.

Q: How much of this is capitalised interest that you are writing off and how will the interest number look in the next few quarters like Q2 and Q3?

A: We are writing it over this whole year so it will be roughly about Rs 5 crore of capitalised interest and it should remain almost at constant level for the next three quarters.

Q: We have the EGoM meeting tomorrow on exports. What kind of an expectations does the industry have, half a million tonne more?

A: Half a million tonne more is what we are expecting but international markets are lower. India is getting into a surplus and this year we may cross about 25 million. So, India will have a comfortable position and hence, we should be able to go to the export markets.

Q: Once this half a million tonne is allowed, do you expect domestic realisations to be largely stable or could they inch up a bit?

A: Domestic realisations should be stable because if look at releases for August, they have been fairly high, Rs 17 lakh plus. So even with this kind of releases prices are holding, so with exports the prices will hold for the next quarter.

Q: Can you give us some idea of the segment-wise revenue split?

A: We have about Rs 270 crore in sugar and about Rs 42 crore in alcohol, Rs 23 crore in soy products and about Rs 73 crore in power.

Q: Do you expect an improvement in the other peripheral segments, especially power?

A: We will have to wait and see because the prices of power in the open market seem to have come down a bit. So today's coal prices are not viable and we expect that if there is some softness in the coal prices in the international market after this crises, then we might be in a position to start increasing our output.
 
Q: We are fairly at an advance stage of monsoon and the noises coming from the MET are that it's not a bad year at all even in terms of special distribution. What are you estimating by way of cane and sugar output?

A: Sugar output should increase at least by 15-20%. We were about 24-25 million tonne this year and we could go up to 26-28 million tonne next year, so we will have a lot of sugar available.

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