Lockdown fails to dampen sugar demand, proposed increase in MSP to support profitability

PUNE: Despite the lockdown, the Indian sugar industry has recorded sales close to the previous year and a proposed increase in minimum selling price of sugar is expected to keep cash flows healthy during 2020-21 sugar season beginning October 1.

The industry was able to achieve good domestic consumption as well as record good exports in the 2019-20 season.

“Despite the lockdown, consumption of sugar in 2019-20 has been similar to the consumption of 255 lakh tonnes in the previous year,” said Vivek Pittie, president, Indian Sugar Mills Association, speaking at a recent industry webinar.

Sugar sales were higher in the pre-lockdown period. In June, when the central government was mulling an increase of 2/kg in the minimum selling price of sugar (MSP), trade sources said large quantities of sugar was sold in anticipation of booking profits. However, the central government announced that it will increase the MSP from 31/kg to 33/kg from October 1. The sugar industry is trying and hopeful that the government may advance the date of increasing the MSP.

According to India Ratings and Research’s (Ind-Ra) outlook for the sugar industry, the increase in MSP of sugar by 2/kg is likely to support profitability in second half of the fiscal 2021, with a potential to accelerate the cash flows of sugar mills by about 50 billion.


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