Time to re look release
mechanism of Sugar
An Overview
Praful Jagjivan Vithalani
M/s Jagjivan Keshavji & Co.
jksugars@vsnl.com
No Market can have healthy
trade without interest of Buyer
Buyers interest in business is at almost
negative level, without active part of seller
& buyer, no commodity market can have
healthy and prosperous trade.
 When there was discussion among the
Govt. for removal of release mechanism,
prices were 3500 per Qntl which currently
down by 42% at 2000 per Qntl, i.e it needs
75% to gain to come at same level

jksugars@vsnl.com
Reasons for market fall
Average demand is 20 L MT per month
where the supply quantity is in dark,
always more than 80 L MT at a time.
 Crude prices came down by 50% plus.
 Ratio of sugar production went up against
ethanol production by industries in world

jksugars@vsnl.com
Indian sugar marketing not
comparable with world

Indian sugar market can not be compared
with other country, India is an emerging
country but traders and industry both are
paying 15 to 21 % per annum interest rate
for OD facility from bank.
jksugars@vsnl.com
Whole sale traders investment
Falls by 50%
Investment of sugar trade is of over Rs
6000 crore +, as on today that’s for hardly
7 days of requirement.
 At the time of release mechanism the
traders investment was for 15 to 20 days
requirement, which was more than Rs
14000 crores +

jksugars@vsnl.com
Industry investment went up
sharply
Rs 9000 crore plus investment which is
pulled out by traders is now being
increased in investment by industry due to
fall in stock in trade by traders.
 In season 2015 – 2016 industry is going to
face liquidity of fund as well as storing
space also.

jksugars@vsnl.com
Realization of sale price could
have been more

In my view Release Mechanism definately
would have given sale realison of Rs.
3000 per MT more on 245 L MT of
domestic consumption, this mean a
minimum loss of Rs. 7500 crore to the
sugar industry per year without release
mechanism.
jksugars@vsnl.com
Realization of sale price could
have been more for the world
With Demand and Supply, prices of Indian
market do effect world wide sugar prices
as India is the second largest sugar
producing country in world.
 The drop in prices which we have seen
currently, it could have been 10% lower if
Indian release mechanism could have
continued

jksugars@vsnl.com
Export could have been more
As said earlier if sharp fall in indian prices
would have restricted fall in prices of world
market also the export from Indian market
could have been 10-15 Lac MT more.
 This could have been beneficial to have
more sale and liquidity of fund with
industry.

jksugars@vsnl.com
Impact on Industry because of
no Release Mechanism
Industry loosing Rs 7500 crore per year
with an additional investment of Rs 9000
crore in sugar
 This could have helped to lower the
arrears of farmers due.
 Gentlemen business (Industry) have been
effected F.I.R. by state governments.

jksugars@vsnl.com
Losers
Industry
 Farmers
 Govt. of India (Need to give subsidy)
 Wholesalers
 Semi Wholesalers
 Consumers by Rs 3 per KG

jksugars@vsnl.com
Gainers
Statistical data of inflation
 Retailers who have increased their margin
by Rs 3 per KG
 Consumers of India
 FMCG

jksugars@vsnl.com
Appeal for restoration of release
mechanism
Govt. of India
 ISMA
 National Federation of Co-oprative sugar
mills of India
 Govt. of Maharashtra
 Govt. of U.P
 Govt. of other sugar producing states

jksugars@vsnl.com
Million Dollar Question!!

A person selling a finished product costing
Rs 2800 selling it at Rs 2200 become a
Millionaire
HOW ?
jksugars@vsnl.com
Billion Dollar Answer

Because he was a Billionaire and was
selling SUGAR in INDIA!!!!
jksugars@vsnl.com
Opinion and Options
I know there are some opinion by various
individuals against Release Mechanism
 But it’s a principal of every business that
the finished product should and must be
sold above Cost Of Production!!!!
 So either selling price should go up or
Sugar cane price should go down,

jksugars@vsnl.com
Poor Farmers
Central Govt. have already announced
FRP for new season 2015-2016
 Do you think that any govt. will be able to
reduce FRP in India of farmers?

jksugars@vsnl.com
Balance sheet

Expected opening stock of around 100 L
MT +, expected production of 260 L MT =
total availability 360 L MT less expected
consumption of 245 L MT will result in
opening stock of 115 L MT on October
2016, which means minimum 60 L MT
export is need for season 2015 – 2016.
jksugars@vsnl.com
Thank You
for Your Patience hearing !
Praful Jagjivan Vithalani
Proprietor
Jagjivan Keshavji and Co.
Wholesale Sugar Broker
101-102, Horizon Tower, Bhakti Mandir Road,
Hari Niwas Circle, Thane -400602
Phone : +91 22 25300800
FAX : + 91 22 25444625
Mobile: +91 9870008888
Email: jksugars@vsnl.com
jksugars@vsnl.com