Domestic sugar production is likely to decline to around 28.2 MT compared to 32.9 MT in 2018-19, because of the near-drought in Maharashtra and Karnataka.
“We expect closing sugar stock for 2019-20 at 12-12.5 MT. Despite sugar surplus, the government support measures have resulted in increase in sugar prices," said Sabyasachi Majumdar, ICRA Ratings senior vice president and group head.
The government first announced a financial package for the industry in July and last month followed it up by approving an export subsidy of Rs 10.44 per kg of sugar to enable mills ship 6 MT of the product.
“It is a big relief to sugar industry, since 6 MT would translate into sugar value of Rs 18,000 crore even if we sell at Rs 30 per kg. It reduces the stock and carrying cost accordingly, while mills get vacant storage space for new sugar,” said Abinash Verma, director general of Indian Sugar Mills
However, Tamil Nadu mills are in crisis. Only 14 of the 25 private sugar mills
in the state are unlikely to operate in 2019-20 season owing to sugarcane shortage and liquidity constraints.
Representatives from South Indian Sugar Mills
Association (SISMA) said in Chennai their request is staggered repayment, restructuring of dues and a financial package.