Sugar imports set to touch record 2.5 million tonnes

Domestic output of the sweetener has dropped 44 per cent.

India’s raw sugar imports is set to touch an all-time high of 2.5 million tonnes in the current sugar season ending September. This follows a 44 per cent drop in domestic sugar output to 14.7 million tonnes in the ongoing season (October-September). India resumed raw sugar import after a three-year gap following this drop in output. In 2004-05 season, the country imported 2.13 million tonnes raw sugar

According to industry estimates, import contracts close to 2 million tonnes have already been signed by various companies and another 500,000 tonnes is likely to get contracted by September. Till date, over 1.85 million tonnes have already arrived.

SWEET WOES

• According to industry estimates, import contracts for close to 2 million tonnes have already been signed
• Bulk importers include Renuka Sugars, Simbhaoli Sugars, Balrampur Chini, Bajaj Hindusthan among others
• Most of these imports are coming from Brazil at a price as high as $325-340 a tonne
• These imports are taking place under open general licence without any export obligation

The bulk of imports have been contracted by Mumbai-based Renuka Sugars. The company, which has the country’s largest refining capacity of 4,000 tonnes a day and is expanding it to 6,000 tonnes by December, has contracted import of about 753,000 tonnes raw sugar.

Simbhaoli Sugars, which owns three sugar mills in Uttar Pradesh, is the second largest importer so far and has contracted import of 112,000 tonnes. Other major contracts have been made by Balrampur Chini (100,000 tonnes), Bajaj Hindusthan (91,000 tonnes), Sakthi Sugars (89,000 tonnes) and Dhampur Sugars (61,000 tonnes).

Most of these imports are from Brazil. The initial contracts were taking place at a price of $280-300 a tonne. However, with the entry of India and lower output forecast in most producing countries, global prices have been on the rise due to which recent contracts have been made at a price of $325-340 a tonne on an average.

These companies are gradually refining the raw sugar and selling it in the market. Most of these imports are taking place under open general licence without any export obligation. The government has permitted duty free import of raw sugar to tide over the shortage and keep sugar prices under check. Sugar prices have moved up by nearly 50 per cent since October and are currently ruling at Rs 28-29 a kg.

Apart from improving domestic availability in a short-supply situation, the imported sugar will improve revenues and profits of the sugar mills. This is important in a year when most mills have crushed substantially low sugarcane compared to last year.

“The imported raw sugar will give our company additional revenues of Rs 300 crore. We also hope to earn margin of Rs 3-4 on every kg of imported sugar,” said Sanjay Tapriya, director (Finance), Simbhaoli Sugars. Tapriya expects import to touch a new record in the 2009-10 season since domestic output is expected at merely 19-20 million tonnes vis a vis a consumption of 22 million tonnes.