It has to be observed that the Sugar Company Stock Prices are continuously reaching peaks, since the Cabinet Committee on External Affairs (CCEA) last week on Wednesday, announced 25% hike in the price of Ethanol produced from 100% pure Sugarcane juice.
The price though for ethanol produced from B-heavy molasses was hiked to Rs. 52.43/litre from earlier price Rs 47.13, which is around 11.24% hike. The price of ethanol produced from C-heavy molasses was rather reduced by 0.5% from Rs 43.70 to Rs 43.46.
The Government has also clued about subsidies to the Sugar Mills for their higher productivity.
How Sugar is produced in India
In India, Sugar is extracted majorly produced from sugarcane. The byproducts of the sugar extraction process is also sold for an additional source of income.
Sugarcane is crushed and we get sugar cane juice and bagasse. This bagasse can be used for power generation, which is partially used and the rest of which is sold. Sugar cane juice is converted into sugar and the byproduct molasses can be either sold directly or distilled to get alcohol. This alcohol can be sold to chemical companies, used as a liquor or can be used for the production of ethanol. As per reports farmer, Out of 100 percent of sugarcane, 10% sugar can be produced.
India ranks second after Brazil in terms of production of sugar in the world.
India’s Sugar Production Hubs
The Indian sugar industry has got a potent political importance as there are many farmers (potential voters) linked to this industry. Uttar Pradesh has approximately 115 sugar mills, with most of them being private mills. Maharashtra comes in the second position in India in terms of sugar production. It takes 9.6 months for a sugarcane crop to grow in UP, while it is 12.85 months for Maharashtra. So UP can grow some other crops too later the year. It should also be noted that Maharashtra requires more irrigation then Uttar Pradesh.
In India, sugar industry follows a 3-5 year cycle. Overproduction leads to excess sugar and hence lesser demands. This will drastically reduce the share price of sugar producing companies. When the production of sugar diminishes over a period of time, there happens to be a shortage of sugar leading to an increase in demand. During this time the farmers find it difficult to grow sugarcane and switch to other crops. This part of the sugar cycle helps skyrocket the sugar price and share price of sugar mills for a short period of time. In this way, it is clear that the production of sugar in India is seasonal
Sugarcane crops are sown in the months of March, July, and September of the Year.
Out of the total domestic sugar production in India, around 66.67% is produced by Uttar Pradesh and Maharashtra.
Indian Government and Sugar Industry
Sugar prices are decided by the government. The demand for sugar in the country remains more or less stable every year. But it is the supply which continues to be volatile, affecting the sugar prices.
The company benefits when there happens to be a demand in the market for sugar which is possible when there is a shortage of the same. The sugar cycle remains stagnant for many years. Sugar companies take advantage of this situation.
Risk Management by Sugar Mills
So from the sugar cycle, it is clear that the production of sugar is seasonal and dependent on rainfall. During the lower part of the cycle, the company manages to produce revenue from sugar by-products like molasses (Ethanol/Industrial Alcohol/Liquor) and Bagasse. In this manner, the risk is mitigated while maintaining the revenue of the company.
Indian Sugar exports
Annual demand for sugar in India is around 25 million tonnes. The surplus is then exported to other countries which are Piya distillery molasses certificate currently 2 million tonnes. If India gets good rains in the coming years, then it may increase its export quantity by 3-4 million tonnes.
Listed Sugar Companies in India
E.I.D.- Parry (India) Limited is a holding company. The Company is engaged in the manufacturing and marketing of sugar, biopesticides, and nutraceuticals. Its geographical segments include North America, Europe, Rest of the world and India. It has over nine sugar mills spread across Tamil Nadu, Puducherry, Andhra Pradesh, and Karnataka, including a distillery in Sivaganga. Its sugar factories are located at Haliyal and Bagalkot.
Its sugar factories have a total capacity to crush approximately 39,000 Tons of Cane per day and generate over 160 megawatts of power.
Shree Renuka Sugars Limited is an agri-business and bio-energy company. The Company is engaged in the business of sugar manufacturing, sugar refining, sugar trading, ethanol, and co-generation. Its segments include Sugar, Trading, Co-Generation, Ethanol, Engineering and Other.
The Company has approximately 11 operational mills, including seven in South and West India and four in Centre-South Brazil, with integrated ethanol and power co-generation capacity. It has approximately two port-based refineries in Kandla and Haldia.
Bajaj Hindusthan Sugar Limited, formerly Bajaj Hindusthan Limited, is a holding company. The Company is engaged in the manufacture of sugar, alcohol, and generation of power. The Company’s segments include Sugar, Distillery, Power, and Others. The Company has over 10 sugar plants with an aggregate sugarcane crushing capacity of approximately 136,000 tons crushed per day (TCD), approximately six distilleries having an aggregate capacity to produce industrial alcohol of approximately 800 kiloliters per day and over 10 co-generation plants having a total power generation capacity of approximately 450 megawatts.
Balrampur Chini Mills Limited is an integrated sugar manufacturing company. The Company is engaged in the manufacturing of sugar, ethanol, and power. The Company’s segments include Sugar, Distillery, Co-generation, and Others. Its allied business consists of manufacturing and marketing of ethyl alcohol and ethanol, generation and selling of power, and manufacturing and marketing of organic manure. Its products include molasses and bagasse. The Company has sugar crushing capacity of approximately 76,500 tons of cane per day, distillery capacity of over 320 kiloliters (KL) per day and saleable co-generation capacity of approximately 153.20 megawatts (MW). The Company has over 10 manufacturing units in India.
Triveni Engineering and Industries Limited is engaged in the manufacturing of sugar. The Company’s segments include Sugar, Engineering, and Others. It manufactures white crystal sugar and has approximately seven manufacturing plants in the State of Uttar Pradesh. It has installed capacity of 68-megawatt spread over Khatauli and Deoband sugar mills. It manufactures high-speed gears and gearboxes at the manufacturing facility located at Mysore, Karnataka.
Dhampur Sugar Mills Limited is an integrated sugarcane processing company. The Company is engaged in the manufacturing and selling of sugar, power, and chemicals. The Company operates in three segments: Sugar, Distillery, and Co-generation. The Company’s product offerings include refined sugar, white sugar, retail sugar, power generation, ethanol, Ethyl acetate, extra neutral alcohol, bio compost, and liquid biofertilizers. The Company has approximately five manufacturing facilities, which include Dhampur unit, Asmoli unit, Mansurpur unit, Dhampur unit, and Meerganj unit.
Avadh Sugar & Energy Limited is an India-based company engaged in manufacture and sale of sugar and its by-products and Spirits. It operates through four segments: sugar, spirits, co-generation and other. It operates four sugar mills, two distilleries, and three co-generation power plants. Its sugar mills include Hargaon Sugar Mills, Seohara Sugar Mills, Rosa Sugar Works and India Sugar Mills. Its distilleries include Hargaon Distillery and Seohara Distillery. Its co-generation power plants include Hargaon Co-generation Power Plant, Seohara Co-generation Power Plant, and Hata Power Plant.
Mawana Sugars Limited is engaged in the manufacture and marketing of sugar and related by products from sugar cane at its units at Mawana Sugar Works, Titawi Sugar Complex and Nanglamal Sugar Complex and Co-generation of Power and production of Ethanol. The Company’s segments include Sugar, Power, Chemical and Distillery.It produces rectified spirit, denatured spirit, fuel ethanol, organic manure and fusel oil. The Company’s chemical business includes caustic soda (lye and flake), chlorine and stable bleaching powder. The Company’s subsidiaries include Siel Financial Services Limited, Siel Industrial Estate Limited and Siel Infrastructure & Estate Developers Pvt. Ltd.
DCM Shriram Limited is engaged in the business of fertilizer, sugar and caustic soda. The Company’s segments include Fertilisers, which manufactures urea; Chloro-Vinyl, which manufactures poly-vinyl chloride, carbide and chlor alkali products; Shriram Farm solutions, which trades di-ammonium phosphate, muriate of potash, superphosphate, other fertilizers, seeds and pesticides; Sugar, which manufactures sugar products and co-generation of power; Bioseed, which produces hybrid seeds, and Others, which includes unplasticized polyvinyl chloride (UPVC) window systems, cement, rural retail and plaster of Paris.
Its Agri-Rural Business includes urea and single super phosphate (SSP) fertilizers, and farm inputs marketing, such as crop care chemicals and hybrid seeds. Its Chlor-Vinyl Business includes caustic soda, chlorine, calcium carbide, power, and cement. It has manufacturing facilities of Fertilizer, Chloro Vinyl and Cement in Kota (Rajasthan).
Dwarikesh Sugar Industries Limited is an India-based company, which is primarily engaged in the manufacture of sugar and allied products. The Company is also involved in the production of power and ethanol/industrial alcohol. The Company’s segments include Sugar, Co-Generation and Distillery.
K.M. Sugar Mills Limited manufactures sugar and rectified spirit/ethanol. The Company’s segments include Sugar, Power Generation, Distillery and Others. It manufactures and sells three grades of sugar in jute bags, as well as in polypropylene (PP) bags. It offers various sized sugar products, including L 31, M 31, M 30, S 31 and S 30. It manufactures rectified spirit, ethanol and extra neutral alcohol at its facility at Motinagar, Faizabad.
Uttam Sugar Mills Limited is engaged in the production of sugar, ethanol, and generation of power. The Company operates in three business segments: Sugar, Cogeneration, and Distillery. It operates a distillery plant with a capacity of 75 Kilo Liters per Day (KLPD) at Barkatpur Unit. It has approximately four sugar plants, which are located in northern India.
Dalmia Bharat Sugar and Industries Limited is a sugar company. The Company is engaged in manufacturing of sugar, generation of power, manufacturing of industrial alcohol and manufacturing of refractory products. The Company operates in three segments: Own Manufactured Sugar, Power, and Others.
The Company’s cane crushing capacity is 29,250 tons crushed per day (TCD). Its operations are integrated with a 140 kiloliters per day distillery and a renewable energy capacity of 119 megawatts.
Simbhaoli Sugars Limited is a technology company. The Company’s principal products include Sugar and Alcohol. The Company is engaged in various businesses, such as refined (sulfurless) sugar, specialty sugars, liquor, co-generated power, extra neutral alcohol (ENA), ethanol, bio-manure, and technology consultancy. Its segments include Sugar, Alcohol, Power, and Others.
Sakthi Sugars Limited is engaged in the business of sugar, industrial alcohol, power and soya products. The Company’s segments include sugar, industrial alcohol, soya products, and power. Its sugar by-products include molasses, bagasse and press mud. The Company is a producer of white crystal sugar accounting for a capacity of approximately 19,000 tons of cane crush per day (TCD). Its power division operates co-generation power plants at Sakthinagar, Sivaganga, and Modakurichi, and the aggregate power generation capacity of all three plants is approximately 92 megawatts (MW).