ICRA expects a dip in healthy sugar exports

Sugar production in the country is estimated to increase to around 33.3 million MT for SY 2022, 6% higher than second advance estimates of Indian Sugar Manufacturers Association (ISMA). This is after considering around 3.4 million MT towards juice/B-heavy molasses-based ethanol (6.8% higher than SY2021 despite increased diversion towards ethanol). Ratings agency ICRA states that with domestic consumption estimated at around 27.2 million MT and exports expected at 7.5 million MT in SY2022, the closing stock is expected at 6.8 million MT as on September 30, 2022 (PY: 8.2 million MT). It adds that healthy exports and domestic consumption is likely to trim down the closing sugar inventory levels, which in turn would result in lower total debt even as debt-funded distillery expansions are ongoing.

Mr. Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA opines, “With current favourable international sugar realisations in light of global demand-supply balance and geo-political tensions, the industry is likely to manage its closing inventory levels for the current season. However, higher sucrose diversion towards ethanol supported GoI’s focus as well as policies towards the same would be a sustainable solution to manage sugar inventory levels in medium term.  This would thereby support sugar realisations which would result into both expanded profits and strengthened balance sheets.”