Dec 7, 2006

Sugar sector updates

The government's reluctance to raise ban on export of sugar along with bumper crop in the current harvest season has created negative sentiments on the sector outlook on the medium term basis. The output in the current season is expected to increase the inventories and lend pressure on margins. India's sugar output for the current season is seen at 23 milion tonne (MT), while the consumption is pegged at 19.5 MT. Sugar industry has planned significant capacity addition going forward, thus debt protection is going to deteriorate to an extent. The gainers amongst the industry will be stocks with diversified revenue streams.

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