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| Rush to import raw sugar over possible price rise |
| Ajay Modi / New Delhi Mar 13, 2009, 00:43 IST |
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Anumber of Uttar Pradesh -based sugar mills have contracted import of raw sugar (at nil duty) from Brazil in hope of additional revenues since domestic sugar output is likely to be at a four-year low of 16 mn tonnes in the current season (October-September). Raw sugar imports are taking place after a gap of four years.
Leading firms like Dhampur Sugars, Simbhaoli Sugars, K K Birla Group and Dalmia (Bharat) have contracted imports. This is in addition to the import by mills in Maharashtra and Southern India located close to the ports. In all, Indian mills are understood to have contracted imports of 900,000 tonnes raw sugar.
However, mills may wait before contracting fresh exports since rupee is weakening and is hovering close to Rs 52 a dollar. More mills would undertake imports once the trend of sugarcane crop to be crushed in the next season is clear.
Dhampur Sugars has contracted the import of 28,000 tonnes of raw sugar while Simbhaoli has contracted the import of 20,000 tonnes, K K Birla Group has contracted import of 25,000 tonnes.
“The landed cost of raw sugar at our mill in UP is about Rs 18 a kg. An expenditure of Rs 3 is incurred on refining it, leading to an ex-factory cost of Rs 21 a kg,” said C B Patodia, advisor to the Birla Group of Sugar Companies and president, UP Sugar Mills Association.
Patodia added the international raw sugar prices have jumped $30-35 a tonne since Indian firms began contracting imports. “India being a major consuming nation, international prices jump every time there is a decision to import,” he said.
The same happened when we were importing wheat in 2006-07,” he said.
“Since domestic sugar output is low, import is the only way to make good the shortage. It would make sense to sell this raw sugar once domestic realisation improves. Presently, ex-mill price in UP is ruling around Rs 2,150 a quintal, marginally above the cost of processed raw sugar,” said Sanjay Tapriya, director (Finance) at Simbhaoli Sugars.
In order to increase the availability of sugar in the country, the government has allowed sugar mills to import raw sugar under Advance Authorisation Scheme upto September 30 this year. Mills are permitted to sell processed raw sugar in the domestic market and fulfil export obligation on a ‘tonne-to-tonne’ basis within 36 months.
The year of shortage follows two consecutive seasons of record output. During the two previous seasons (2006-07 and 2007-08), sugar mills across India had piled on arrears to the tune of a few thousand crore rupees since realisations had crashed. Owing to the staggered payment by the mills, sugarcane acreage declined over 25 per cent this year as farmers shifted to better paying crops like paddy and oilseeds.
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