Maha sugar mills sell record 2-mn quintal on July 9 fearing further crash

Not keen to pile up stock but use proceeds to clear bank dues and pay FRP to cane growers

Sugar mills in Maharashtra have resorted to selling their stocks at lower prices.

On Thursday, mills sold a record two million quintals of sugar across the state. Sugar mills sold S30-grade sugar at Rs 1,910-1,950 a quintal without taxes. Mills sold M30-grade sugar at Rs 2,125-2,175 a quintal with taxes. Delivery is expected within a week.

Industry players said mills would sell at depressed prices as they a fear further decrease. Millers said their financial condition might deteriorate if sugar remained unsold as they needed to clear the arrears of banks and make the mandatory payment of Fair and Remunerative Price to cane growers.

Sanjeev Babar, managing director of the Federation of Cooperative Sugar Factories in Maharashtra, confirmed  mills wanted to clear their stock at the prevailing price. “Mills are starting to panic as they are yet to get concrete financial support from the Centre and the Maharashtra government. Further, the huge surplus of sugar at the national level will lead to prices being kept low,” he told Business Standard.

Babar said Maharashtra had produced a record 10.4 million tonnes in the 2014-15 crushing season against 7.72 million tonnes last year. The state would have a carry-forward stock of 5 million tonnes when the next crushing season started in October.

Kalyanrao Kale, chairman of Vasantrao Kale Cooperative Sugar Factory, Pandharpur, said the situation was grim for the sector. “The industry was expecting subsidy for raw sugar and the creation of buffer stock of 5 million tonnes. However, the Centre has yet to take a decision in this regard. Besides, the state government has not yet released Rs 2,000-crore assistance to the sugar sector announced in April. Therefore, mills want to clear their stocks at the present price,” he added.

Yogesh Pande, founder president of Maharashtra Sugar Brokers Association, said a sudden spurt in sugar demand was due to a change in the sentiment, owing to dry spell and uncertainty. He said prices have crashed Rs 800 a quintal in the current year and traders might use this opportunity to increase stocks.

Rajan Shinde, executive director at Venkateshwara Sugar Mills, said the distressed selling was due to excess sugar. Besides, mills were struggling to pay FRP to cane growers.