Sugar Cycles: 7-8 years of losses followed by 2-3 years of super gains!


(Dhananjay) #1274

Why area under sugar plantation won’t come down anytime soon, and why it will always be an political crop.


(Gaurav Agarwal) #1275

Today Triveni Engg came out with result, the press release says that company has taken inventory write-down.

Can someone help me understand, how does inventory write-down gets reflected in Balance sheet and profit & loss account?

Thanks


(Mayank Narula) #1276
  1. Inventory value is written down on current assets side
  2. same is adjusted in cost of goods sold in P&L
  3. Counter entry on balance sheet on liability side is reduction in reserves on account of losses.

(ashutosh_shah) #1278

Inventory is valued on the basis of Accounting Standards set by the ICAI in India.

According to AS-2 inventory is valued at cost or net realisation value(NRV) whichever is lower. This concept is also known as the law of prudence or law of conservatism.

In this case, the Net realisation value was lower than cost. Therefore, the company had to show inventory at NRV and had to book the difference between cost and NRV as the loss.

Hope this clarifies.


(Mayank Narula) #1279

Sugarcane season starts in October. Due to bumper crop last year, Mills received more than their share and had to crush as sugarcane is perishable in nature. Usually they carry around 6-7 months of inventory, 90% of which is finished sugar.

Now that sugar prices in open market have crashed from 40 to below 30, inventory can’t be kept at old prices. Hence, companies are required to book inventory losses, otherwise it will create huge mismatch year-on-year.


(Dhananjay) #1280

(Mehnazfatima) #1281

Sugar stocks getting bashed up…it’s sell on news thing…

Dhampur, dalmia and dwarikesh become value buy only around 200-250 crores market cap…it may happen in the next 2-3 years…

Balrampur becomes a value buy around 35-40 stockprice…

The new sugarcane variety is adopted only 50% in UP…once it becomes 75-80% in UP and is modified for Karnataka and Maharashtra climate…then the total sugar production in India may jump to even 34-35 million tons…

On the other hand consumption is increasing at a slower pace…of 0.5million tons per year…

I am afraid that this time we may see a severe downcycle in sugar…mother of all bear markets in sugar stocks for the next 3-4years…

Maybe the next turnaround in sugar will happen only when mawana simbhaoli Bajaj and renuka collapse


(Gaurav Agarwal) #1282

(vipinsays) #1283

Chinese prez agreed to import sugar and non basmati rice from India to balance trade deficit


(sougataG) #1284

https://www.moneylife.in/article/sugar-industry-bailout-to-clear-only-40-percentage-of-cane-arrears-report/54270.html


(Susindar) #1285

(GSrikan) #1286

Got to keep an eye on how much b-heavy molasses would be diverted for ethanol production. The high oil prices would be supportive for this measure.

Discl: Invested in Dhampur @200 levels


(nikhilbora) #1287

Please help me to find last one month 's chart for sugar prices for Indian market.


(Susindar) #1288

(krrish seth) #1289

The way monsoon is going on it seems bumper production this season also


(Mehnazfatima) #1290

Yes and as expected the sugar production for next, y,ear is calculated to be around 35 million tons…not only that there is a global glut / huge excess in sugar production


([email protected]) #1291

So looks like its a wait, watch and execute strategy for the sugar cycle to play out, one needs ample amount of patience, one question to fellow boarders, should the entry into sugar stocks happen only after 2 years from now and that too the entry shouldnt be big bang but more spread out, am I right in my understanding?


(Niraj Kumar) #1292

Sugar cycle is not dependent upon govt policy or timeframe but only critical factor is extreme failure of monsoon in Maharashtra and Karnataka. Usually monsoon failed in these areas at least once in five year timeframe which is a natural cycle related with elnino weather condition. Usually up based area has good canal based irrigation cycle so failure of monsoon has only slight effect on up based mills. It is likely that within next 3 years monsoon may fail once which may lead to sugar production less than sugar demand which can increase sugar prices upwards of 40 rs. Also due to elnino effect sugarcane crop in Thailand also get damaged so international markets supply also get reduced and lead to increase in sugar prices in international market as well. Otherwise sugar demand of around 25 million tonne in India and around 175 million tonne in the world is constant.


(Sanjay Khosh) #1293

Dalmia Bharat Sugar: Q1 profit rises to Rs 62.04 crore versus Rs 55.10 crore; revenue increases to Rs 653.30 crore versus Rs 636.55 crore (YoY).

Even if the company was not able to make a lot out of sugar, they managed to post exceptional profits by more than doubling their profits from power segment and more than quadripling their distillery segment profits
Q1 FY19 results are uploaded below
3ae22130-cdff-4835-8720-d6be0b9cda21.pdf (1.5 MB)


(Raj A A) #1294

Centre extends date for export of sugar. Industry is already loosing Rs 7-8 per Kg.
http://epaper.business-standard.com/bsepaper/svww_zoomart.php?Artname=MjAxODA4MjRhXzAxNTEwMTAwNg==&ileft=190&itop=929&zoomRatio=130&AN=MjAxODA4MjRhXzAxNTEwMTAwNg==