The Uttar Pradesh (UP) government has kept the cane price unchanged at Rs 280 per quintal, which could be net positive for some sugar companies. This price has been constant for the third year now.
The sugar industry in India has been suffering due to rise in cane prices, high production cost and surplus output.
The likely decision by the government on cane prices and compulsory export quota for sugar would help sugar prices to move upwards is the word coming in from Narendra Murkumbi, Vice Chairman and Managing Director, Shree Renuka Sugars
ICRA expects the domestic sugar production to increase by 3.3-3.7 percent year-on-year (YoY) to around 25 million tonnes in 2014-15 marketing year (October-September)
For the company per se, the write-downs in inventory have been substantial for the first quarter of FY15, said Tarun Sawhaney vice chairman & managing director, Triveni Engineering and Industries.
Speaking to CNBC-TV18, M Manickam, managing director, Sakthi Sugars, says until cane prices are fixed at parity, the hike on blending limit will not make a big difference.
Deepak Guptara, Secretary of UP Sugar Mill Association, says the only long-term solution to this problem is somehow linking sugar prices and cane prices, for which he has been requesting the government to consider the Rangarajan committee formula.
The Uttar Pradesh government is thinking to link cane prices to sugar prices, but the sugar industry maintains its stance that crushing will not be possible until the government adopts the Rangarajan Committee's recommendations.