The Indian Sugar Industry - Indian Sugar Mills Association

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Indian Sugar Industry
Meeting with Food Secretary,
6th August, 2012
Balance Sheet 2011-12
2
S.No
Particulars
Quantity
(Lakh tons)
As per Govt.
As per ISMA
A
Opening stock of sugar (1st October, 2012)
68
55
B
Production 2011-12 ( estimated)
260
260
C
Total Sugar Availability = (A+B)
328
315
D
Total Sugar releases ( book-balance)
210
210
E
Export till 30th Sep, 2012 ( estimated)
35
35
F
Total sugar outflow 2011-12 = (D+E)
245
245
Closing stock as on 30th September, 2012 = (C-F)
83
70
Sugar Production Projections for 2012-13
3
1.
2.
3.
4.
5.
6.
7.
8.
States
Year
Uttar Pradesh
Maharashtra*
Karnataka
Tamil Nadu
Gujarat
Andhra Pradesh
Other*
All India
Cane Acreage
(Lac hectares)
Sugar Production
(Lac tons)
2011-12
22.52
69.69
2012-13
24.25
78
2011-12
10.25
89.67
2012-13
9.38
76
2011-12
4.32
37.93
2012-13
3.8
30
2011-12
3.25
22.48
2012-13
3.73
25
2011-12
1.94
9.99
2012-13
2.03
10
2011-12
2.04
11.24
2012-13
1.8
10
2011-12
6.64
19.38
2012-13
7.8
21
2011-12
50.96
260
2012-13
52.8
250
*
S.No
1. Levy Sugar Liabilities on Sugar Industry
4

10% of production as levy since 2001-02

In 2009-10, increased to 20%, because of low estimated production of
145 lakh tons, which actually turned out to 189 lakh

21 lakh tons of levy carried forward as on 1st Oct, 2011


Worth Rs.6000 crore
Adding 11-12 obligations, total levy available was 47 lakh

Usual average lifting of 16-17 lakh, would leave carry forward of
30 lakh for next year
Actual Lifting of sugar
5
30
Annual levy requirement on paper -27 lakh tonnes
25
20
15
Upto April*
26.65
23.54
10
23.2
19.71
19.39
13.92
5
9.73
9.21
2006-07
2007-08
13.89
11.78
0
2008-09
Levy Sugar released( lk tn)
* Data not available beyond April 2009
2009-10
2010-11
Actual Lifting( lk tn)
Problems of Carry Forward of past liabilities
6

Levy obligations of mills can be carried forward by 2 years

Higher inventory burden/ blocked storage space

Blocked cash flows: cane price arrears

Higher interest burden, borrowed at 14-16%

Quality deterioration in terms of colour, lumps and sucrose

Payment by Govt. at previous year’s rate

If supplied from new season’s production, costs are higher, but
rates are still of previous season
Status of Levy Sugar on 30 Sept 2012
7

Unreleased quantities:
Particulars
Season
Quantity (lakh tons)
Levy Sugar available in 2011-12
Releases from past obligations
Releases from current year prod.
47.02
Upto 10-11
17.89
2011-12
8.63
Total Releases 11-12 ( upto Sept)
Levy converted into non-levy
Balance levy obligation as on 1st Oct
2012

26.52
Upto 09-10
2.66
2010-11
5.00
2011-12
12.84
Plus, there would be some unlifted quantities also
17.84
Our Requests for levy sugar….
8

Conversion of past liabilities


2010-11 conversion to be done immediately
Reasonable Carry Forward of past liabilities

Till new production is available for levy

Conversion of past liabilities automatically

Announcement of new season’s price before 30th Sept 2012
2. Compulsory jute packaging order
9

JPMA, 1987 covered food-grains, cement, fertiliser and sugar.

Cement and fertilizers excluded in1998 and in 2001 respectively.

Ministry of Textiles administers JPMA, jute being their subject.

Sugar Directorate administers Sugar Packing & Marking Order

It permanently requires compulsory packing in 50 kg jute bags only.

There is an Act viz. JPMA, this Order should be repealed

SAC has to annually recommend for packing in jute bags

Imported jute or the bags can’t be used for foodgrains & sugar
Problems being faced by Sugar Industry
10

Inadequate jute/jute bags in India (accepted in Parliament too)


10% of requirement is always imported from Bangladesh
Poor quality of jute bags

Big gaps lead to leakage and moisture regain

Below standard bags, weight and dimension problems, causing mills to
fill extra sugar to match gross weight and problems in stacking

Jute bags cost more than double that of PP/HDPE bags

Translates into additional cost of 40 paise per kilo of sugar

Rs.1000 crore annual loss to mills, reduces payment to farmers

Govt. agencies protected by administered price
Sugar should be removed from JPMA
11

Imports and compulsory packing cannot go together

SAC recommended for 20% compulsory packing of sugar in
jute bags for 2012-13 jute year (July-June)


CCEA note for same expected soon

Food Ministry should recommend for complete removal of sugar
Gaps in jute bags allow air, good for foodgrains, bad for sugar


When shortage, sugar should be first completely taken out from JPMA
Treat sugar industry at par with other private industries like
cement and fertilisers
3. High cost of production: Low ex-mill price:
Two largest cane producing states
3400
Uttar Pradesh
3400
3300
3300
3200
3200
3100
3100
3000
3000
2900
2900
2800
2800
2700
2700
2600
2600
2500
2500
Maharashtra
Cost of Production ( Rs. Per Qtl)
Cost of Production ( Rs. Per Qtl)
Ex-mill Prices ( Rs. Per Qtl)
(Rs/ qtl)
Ex-mill Prices ( Rs. Per Qtl)
Thank You
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