“We are expecting the global prices to move up from here,” said Pramod Patwari, CFO at Balrampur Chini Mills, in an interview with CNBC-TV18 while discussing the Q2FY22 earnings fineprint.
He mentioned that because of a very dry weather in Brazil, production came down from 38.5 million tonne to 31.7 million tonne.
This year quota allocation for the Uttar Pradesh-based mills were lowered by the government of India. That is clearly reflecting in the revenues reported by the company.
According to him, India’s sugar consumption is increasing.
“Last year, consumption stood at 26.5 million tonne. We are expecting the all-India consumption to be at around 27 million tonne going forward, so quota allocation will happen in that ratio,” he said.
Patwari is hopeful that whatever will be the production, the company will be able to sell it domestically.
Current sugar prices are at around Rs 37.4 per kilogram.
The realization will be a function of inventory available in the system.
“Two years back inventory was around 14.7 million tonne at country level, that has come down to 8 million tonne on September 1, 2021 and we are hopeful that by the end of this sugar season, we will be left with an inventory of around 6.2 million tonne. So there will be a drawdown of 2 million tonne from the inventory which should get reflected in the domestic prices,” he explained.
Going forward, Patwari expects that the contribution from ethanol will be around 35 percent of the overall revenue in the company.
“As of now, it (contribution from ethanol) is around 20 percent,” he said.