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September 2020
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Burkina Faso striker Traore leaves Lyon for Aston Villa        AIFF to conduct three-day International Virtual Conference for coaches        Looking to play good brand of cricket to make this season a memorable one: KL Rahul        US stocks fall as market decline extends for third week        No decision to discontinue printing of Rs 2000 note: FinMin        Iran vows 'hit' on all involved in US killing of top general        Russia's Navalny says he's now more than 'technically alive'        Pak uses drone to weapons in J-K's Rajouri; 3 LeT terrorists arrested        Centre rejects study which claims India is world's largest emitter of anthropogenic sulphur dioxide        Garib Kalyan Rojgar Abhiyaan not implemented in Bengal as state did not provide any info: FM        Parliament's monsoon session likely to be curtailed, may end by mid-next week        Kerala reports 4,000 plus fresh COVID-19 cases for second day in row; Toll crosses 500        China flies 18 warplanes near Taiwan during US envoy''s visit        US bans WeChat, TikTok citing national security        IPL 2020: Dhoni''s CSK lock horns with Rohit led MI in opener        US Open champion Osaka out of French Open due to injury        NIA questions Ker Minister Jaleel for over 8 hours; No need for him to resign, says CM        Delhi riots: Police files charge sheet under UAPA against 15 for larger conspiracy        Serum Institute gets DGCA''s nod to resume testing of Covid vaccine again        Russia''s RDIF collaborates with Dr Reddy''s Laboratories for Sputnik V vaccine trials, distribution: CEO        
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Business News
Sugar production to increase to 305 lakh tonnes in marketing year 2020-21: Ind-Ra
 
Mumbai, Aug 4 India Ratings on Tuesday said it expects sugar production to increase to 305 lakh tonnes in sugar year 2020-21 (SS21). Domestic oversupply to continue in SS21 due to high carryover stocks and an expected increase in production, India Ratings (Ind-Ra) said in a report.

Sugar marketing season runs from October till September.

Ind-Ra said it expects sugar production to increase to 305 lakh tonnes in SS21, factoring in a cane diversion equivalent to 15 lakh tonnes of sugar.

Sugar production for SS20 is estimated to be 272 lakh tonnes.

Meanwhile, the COVID-19 outbreak is likely to result in decline in demand by around 5 per cent in SS20, it said.

The agency expects a gradual resurrection second quarter onwards, with the third and fourth quarter of financial year 2020-21 registering some growth, resulting in an overall decline of around 3 per cent in FY21.

The imposition of fresh lockdowns due to increasing spread of the pandemic, however, remains a key monitorable, it added.

The report also stated that the increase in minimum selling price (MSP) of sugar by Rs 2 per kg is likely to support profitability in second half of FY21, with a potential to increase cash flow of sugar mills by around Rs 5,000 crore.

Along with the cabinet note to increase sugar MSP, the Ministry of Consumer Affairs, Food and Public has floated a note to increase the fair and remunerative price of sugarcane by Rs 10 per quintal to Rs 285 per quintal for SS21, it said.

However, Ind-Ra expects the moves to result in a net improvement in EBITDA margins as realisations should increase by 6-6.5 per cent against an increase of 3.5 per cent in cost, resulting in a net cash inflow of around Rs 2,500 crore.

Further, the report said that most large sugar companies have adequate liquidity with meaningful cash and equivalents, unused working capital lines or easy access to banks or capital markets for funding.

Some companies with weak standalone liquidity have strong parent or group to provide financial support.

Besides, sugar companies would generate cash flows from increase in MSP of sugar in the second half of FY21 onwards.

However, a large number of small and mid-sized companies have a stretched liquidity position, which is likely to have been exacerbated by working capital build-up due to slowdown in sugar or ethanol offtake and stretch in payments from state discoms in the first quarter of FY21.

While the Reserve Bank of India''s moratorium on debt servicing will aid these companies till August, liquidity remains a key monitorable, the report added.


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