Thanks Mehnaz for clarifying on the Off Season Expenses. In case of Dhampur, it seems they book this expense in Q3 partly and majorly in Q4. That would indicate that Q4 should not be as good as one would hope, but the same shall be compensated in Q1 and Q2. Last 5 Qtr expenses in case on Dhampur :
Off Season expenses
Q3 17 : 732.95
Q2 17 : (3200.95) income.
Q1 17 : (1910.02) income.
Q4 16 : 5093.92
Q3 16 : 650.12
Dhampur has expensed 43cr in q3fy17 , in comparison to 6cr in q3fy16. So coming Q4 won’t be affected much.
I think Dhampur came come with a profit of around 100 crores in Q4…which is the best quarter for sugar mills
Conference call of Balrampur going on…most important info…sugar production set to fall to 20.50 million tons…huge downward revision from 23.5 to 20.5…govt may import 1-2 million tons to balane and bridge the gap…inventory will remain tight…even if import takes place, prices will remain buyount…FRP for next year is increased by 10%…
UP production to increase from 6.4 to 8.4 million tons…increase by 20%…UP mills to benefit hugely…income from ethanol and cogen revenue to increase due to higher crushing…production in next sugar season from UP may stay around the same level of 8.4 million tons…present price is 37plus per kg…next two quarters prices would be better…
ethaol price from OMC around 38.50 -39 rupees per litre…Balrampur to produce around 8 crore litres of ethanol…
Last year balrampur sold 52 crore units …around same quantity to be sold this year too…
isma is giving actual sugar production data on its website every 15 days . The data on mid Jan showed 5% decline over last year and that report had stated that the production will fall in the coming days further . The data at the end of Jan showed a decline of 9% over the same period last crushing season . Interesting set of data would be from the month of Feb which will give a clearer picture of the production shortage from ismas estimate .Sugar sector in my view should do well till the next monsoon arrives. The valuations of Oudh in comparison to other mills look tempting at the moment .
PS : Invested in dwarikesh around 290 levels 2 months back
UP Sugar mills clears 75% dues to farmers this season. UP mills are set to produce 3.5MT additional this season taking the total to 8.5MT.
http://epaper.business-standard.com/bsepaper/svww_zoomart.php?Artname=20170214aK016101001&ileft=4&itop=46&zoomRatio=130&AN=20170214aK016101001
Global supplies will outpace demand by 1 to 3 MT according to Tropical Research services , a unit of S&P Global. They further predict India will import sweetener .But if something goes wrong with inadequate rain in Brazil, supply demand situation will worsen.
http://epaper.business-standard.com/bsepaper/svww_zoomart.php?Artname=20170214aK016101003&ileft=713&itop=46&zoomRatio=130&AN=20170214aK016101003
The politics of sugar in UP and how it is played
Read more at:
http://economictimes.indiatimes.com/articleshow/57136095.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Most of the sugar cos are reporting sales growth of less than 20% for Q3. Although profit growth is higher. Sales growth tapering is probably indicative of sugar price is getting stabilised (atleast the increase in price realization is slowing down). Sales volume may also be tapering off. Higher profit growth is probably due to old inventory that is held at lower cost.
For eg…in Balrampur, volume sale in Q3 fy17 is lower than q3 fy16. Also, the inventory that they hold is less than q3 sales volume. This probably indicates that sales may be tapering off.
Crushing for next season already started post nov. Usually it starts now, feb-mar. This indicates that this year’s crop may be bountiful. In another 4-5 months, the new stock will start hitting the market.
Discl – exited my sugar basket of Dhampur, Balrampur and Triveni. I entered late, and probably sold early. But I am comfortable with this as I don’t understand the cycle.
Sugar import imminent no later then April 15 from maybe Dubai or Thailand.
This article was published on 13th Feb and since then our sugar stocks have been diving…Any co-relation?
Also why import from Dubai??
And we exported Sugar in 2016? I am still trying to get this picture why did we export:
As of now…UP election is going on…sugar plays a very important role in western Up politics…hence there wont be any import announcement till Mid march…
If import is allowed, the prime beneficiary will be Renuka…which has a port based refinery …,
Even if imports are allowed, domestic sugar companies should still make money due to prevailing international prices. Import will only to cover the short supply not to replace. Kindly correct my understanding if its incorrect.
seems that sugar production is falling quite fast check ismas latest production data till 15th feb production down by 15.35% as compared to previous crushing season . Till Jan end it was 9% lower and in mid jan it was merely 5% lower. Details also state the lower demand for sugarcane and also state that this has resulted in muted prices till now . As someone stated till mid march theres not going to be any imports due to higher costs. Also ISMA’s noted that import is a costlier option.
Sweet 2017 for UP sugar companies. Record profit, highest in 30yrs, due to bumper crop, price rise. This is likely to continue for another three qtrs.
http://epaper.business-standard.com/bsepaper/svww_zoomart.php?Artname=20170220aA001101003&ileft=486&itop=223&zoomRatio=130&AN=20170220aA001101003
The link does not open.
Sugar mills making more from molasses…
In continuation to this, Triveni has given a very detailed update in the attached file:
While company states that production is estimated to increase substantially in the current season over the previous season, it also states that prices are expected to remain firm. While that seems counter-intuitive (if supply is more, then price should fall), but probably there are global factors at play, which the company has referenced in their note. While at absolute levels, the performance of the companies may continue to remain robust in FY 18, base effect will play a significant role and therefore growth over FY17 may not be as high as FY17-over-FY16. Current Inventory holding in Triveni is less than Q3’s production (same situation as Balrampur) indicating that old stock is getting over.
Attached are some extracts of the note. Please read through the entire note and draw your own conclusions. I have disclosed that I have exited my sugar positions.
