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| Edited By: Swati Khandelwal |Source: Zee Business |Updated: Mar 14, 2019, 06:30 AM IST
Executive Chairman, Shree Renuka Sugars Ltd, Atul Chaturvedi, spoke about benefits of sops that were announced for the sugar industry, sugar price, plans for ethanol production and Brazilian operations among others during an interview with Swati Khandelwal of Zee Business.
It will have a positive impact on our company as we are quite active in ethanol, at present. In fact, we have also doubled our capacity in ethanol. We also produce power and have been active in the sugar sector. Thus, the announced sops, subsidy and incentive schemes, will benefit the sugar sector and have far-reaching effects. I feel, the sugar sector, which was suppressed from quite some time, will rebound and regain the strength.
It is a right question, but I will not discuss the financials at present as March has not come to an end yet. But can assure that this year's results will be far better than the last year. In fact, it was visible in the December quarter figures, which is available in the public domain, where we returned to profit after a gap of almost two years. I feel that it will have an impact on the year's balance sheet.
As far as the domestic sugar price is concerned, then the sugar will be sold at the price that has been fixed by the government. After realisation, sugar prices were increased from Rs29 to Rs31. There can be mills that are selling sugar below the price but by large it will be sold at Rs31. When it comes to a spike at sugar prices in India then I don't think that it is going to happen at least as surplus sugar is available in the country. In fact, the surplus sugar will cap the price rise. Possibly, the sugar prices may go up in the international market just as the access sugar of the world is lying with India. There are talks that sugar production will decline by 2 million tonne in the European Union (EU) and 1 million tonne in Thailand. It may see, slight growth in Brazil, but the prices will not see a big jump across India. Interestingly, Sugar's profitability is just not linked to its prices, but it is also linked with the realisation of ethanol and power that is being produced by the companies.
I think, sugar should be termed as energy sector instead of the sugar sector. The government has a special focus on this renewable fuel and that is why we have planned to double our production capacity from around 12 crore litre and I feel that we will be producing 24 crore litre by next sugar season. And, when it comes to production, we have a capacity of 12 crore litre and it is being fulfilled. This year's sale will be 3-4 crore litre more than last year's sale.
We have a plan to invest about Rs 400 crore for doubling our capacity. In fact, it has been financed. Renuka Sugars is a subsidiary of Wilmar Sugar, one of world's largest player in the sugar sector. In addition, the banking sector has changed its attitude towards us. This change is an outcome of the management change. So, fundraising is not an issue for us.
As far as our Brazilian operation is concerned, the company is in judicial protection at present. So, we are not paying any attention to it as we don't have any control over it. It is under judicial protection. We don't have anything new to say on it as there is no specific plan around it yet. But at the end of the day, we will have to remove it from our portfolio.
It is a bit difficult today anything, but it is in process. The judicial process takes times in resolving and that's why will not be able to provide any timeline for it. But we are making efforts in the direction.
See, sugar crushing season has come to an end. Practically, the crushing season is over in Karnataka, where our mills are concentrated. So, the sugar which was supposed to be processed has been processed and are lying in the inventory and its release mechanism is decided by the government. We release around 32,000 to 35,000 tonnes of sugar per month. So, we have a special focus on Madhur, which is a branded sugar developed by us. The remaining sugar is earmarked to MNCs like Nestle, Coca Cola and Pepsi. As far as pricing is concerned, the price is decided by the government and our prices revolve around the fixed prices.
See, we believe that about 1.5 million tonne of sugar has been exported physically from India. About 5-6 million tonne of sugar is lying at various stages of exports. I feel around 300-350 million tonne of sugar will be exported from India this year. In addition, certain developments at the global level are also good for India like US sanctions on Iran. The sanction will make Iran look towards India to fulfill its raw sugar needs, which means an additional 5-6 million tonne of sugar may be exported to Iran. Brazil and Sri Lanka have always been our primary customers and goods are being exported over there. As far as our export targets are concerned then we have fulfilled the quota. In fact, we have also bought the obligations of other players in the market and will be able to complete them too. Besides, we have special attention towards exports and our Kandla sugar refinery is completely dedicated for the purpose.
Lot of restructuring including pruning of the loans were made at the stage when the company was taken over by Wilmar. In the coming days, we will look closely at the debts and try to prune it down. We are working in that direction too.
