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Indian Sugar Industry Meeting with Food Secretary, 6 th August, 2012.

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Presentation on theme: "Indian Sugar Industry Meeting with Food Secretary, 6 th August, 2012."— Presentation transcript:

1 Indian Sugar Industry Meeting with Food Secretary, 6 th August, 2012

2 Balance Sheet 2011-12 S.NoParticulars Quantity (Lakh tons) As per Govt.As per ISMA AOpening stock of sugar (1 st October, 2012)6855 BProduction 2011-12 ( estimated)260 CTotal Sugar Availability = (A+B)328315 DTotal Sugar releases ( book-balance)210 EExport till 30th Sep, 2012 ( estimated)35 FTotal sugar outflow 2011-12 = (D+E)245 Closing stock as on 30th September, 2012 = (C-F)8370 2

3 Sugar Production Projections for 2012-13 S.NoStatesYear Cane Acreage (Lac hectares) Sugar Production (Lac tons) 1.Uttar Pradesh2011-1222.5269.69 2012-1324.2578 2.Maharashtra*2011-1210.2589.67 2012-139.3876 3.Karnataka2011-124.3237.93 2012-133.830 4.Tamil Nadu2011-123.2522.48 2012-133.7325 5.Gujarat2011-121.949.99 2012-132.0310 6.Andhra Pradesh2011-122.0411.24 2012-131.810 7.Other*2011-126.6419.38 2012-137.821 8.All India2011-1250.96260 2012-1352.8250 3 *

4 1. Levy Sugar Liabilities on Sugar Industry  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 1 st 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 4

5 Actual Lifting of sugar 5 Annual levy requirement on paper -27 lakh tonnes * Data not available beyond April 2009

6 Problems of Carry Forward of past liabilities  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 6

7 Status of Levy Sugar on 30 Sept 2012  Unreleased quantities:  Plus, there would be some unlifted quantities also 7 ParticularsSeasonQuantity (lakh tons) Levy Sugar available in 2011-1247.02 Releases from past obligationsUpto 10-1117.89 Releases from current year prod.2011-128.63 Total Releases 11-12 ( upto Sept)26.52 Levy converted into non-levyUpto 09-102.66 Balance levy obligation as on 1 st Oct 2012 2010-115.0017.84 2011-1212.84

8 Our Requests for levy sugar….  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 30 th Sept 2012 8

9 2. Compulsory jute packaging order  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 9

10 Problems being faced by Sugar Industry  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 10

11 Sugar should be removed from JPMA  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 11

12 3. High cost of production: Low ex-mill price: Two largest cane producing states (Rs/ qtl)

13 Thank You

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