See lot of rationale for cane price fixation: Balrampur Chini

Below is the verbatim transcript of the interview.

Sonia: What exactly is happening because we understand that the UP sugar companies had met with the CM as well in the last few days? What has the takeaway been and what do you see coming in from the government's end?

A: From the first meeting with the CM, we are left with a lot of enthusiasm and I felt that honourable CM is a person with tremendous understanding of ground realities. So he is focusing on the fact that we should increase the yield for the farmer, we should work with the farmer to increase its income rather than going into fixation of a price. So felt very good.

Latha: I wanted to understand whether the CM had sympathy for the fundamental point that the industry has been asking that the cane price should be aligned to the end product price, basically something like the Rangarajan formula. Was he agreeable to that?

A: I cannot say that Rangarajan etc, words were discussed but the take home is the CM is very clear that cane price must be paid in 14 days. He is extremely rationale in his thinking on what the price should be and the proof is when he released the press note, he said we are willing to look at the good points of cane price fixation of Maharashtra and Karnataka. So he is clear that if there is no congruity between sugar price and sugarcane price, the ability to pay within 14 days doesn't last. He wants the farmers' income to increase through good varieties which increase farmers' yield by double. I see an extremely practical man with great understanding of the grassroots.

Anuj: This year is a record year, things have changed. Three-four years back we were discussing the feasibility of running sugar operations and now we are at record profits. I was asking about next year. Do you see further improvement from?

A: What I am looking at and what we as a company focusing on is how to deal with and understand and create a model where one can look at sustainable income or sustainable profitability. Let me put on record the appreciation I have in my mind for both the centre and the state government. If you see the central government, let us not forget that they have studied in deep the demand supply gap in their minds and they have come out with an import announcement of 5 lakh. It is an extremely well calibrated announcement. It has dealt with the shortage on each spots. So such deep understanding - hats off.

Coming back to the state, one sees a lot more visibility because I look forward with a lot of rationality on cane price fixation. So ethanol pricing - centre has been rationale. So it's a sustainable business model.

Sonia: Coming back to the point you were making about UP chief minister meeting that you. The other thing on the agenda that was expected was freeing up of the sale of molasses. What was the CM's viewpoint over there and what do you see as the way forward?

A: He did deal with that and the government; he has told his people that we must relook at freeing up the molasses also. So they would come back with that also and they would look at that policy also.

Latha: I want some visibility on how sugar prices will move and therefore sugar company margins. You have been a practiced eye here. Does it look like given the kind of remuneration farmers have got, we should be having more output. Primarily the question that Anuj asked you - the sugar year starts on October 1. Is it likely to be good or better than the current sugar year?

A: This year we will be producing about 202 lakh tonne or 20.2 million and with the opening stock and the demand and the import, we should have a closing balance of about 4.2 million. Going into the next year, I personally expect that production and consumption should be very well balanced. The production should increase by 4 million. So my very initial target, this is not a formal target, is production next year is 24.5, consumption 24 to around 25. So there will be very well balance, so there is no pressure on sugar prices.

Anuj: 200 lakh tonne - are you sure you will be able to achieve that because some experts tell us that the number could be around 185. What about net realisations - the imports maybe being allowed. Will you have an impact on the net realisations?

A: We have already produced 190 plus. We will go to 200. So there is no need to rely on expertise. The data is available. So we will definitely get to 200 plus.

Import 5 lakh is a good decision. It is sprinkled all over the country, so it is not going to be destination specific. It is going to be all over the country and 2 percent of consumption imports coming in is not going to impact prices.