Global sugar prices to remain stable: Balrampur Chini

In an interview with ET Now, Vivek Saraogi, MD, Balrampur Chini Mills, gives his views on the company's future scenario and sugar sector. Excerpts:

The government is mulling sugar what the industry is demanding and what do you think will eventually happen when it comes to the decontrol?

Vivek Saraogi: The industry demand from long has been on complete decontrol and what we feel that the government is looking at, right now, is the finished product that is sugar, so which would be levy releases and some visibility in exports.

If we do see a sugar decontrol come through how will it impact the industry and what impact will it have on domestic sugar prices?

Vivek Saraogi: Once these even begin with let say only the part I have just mentioned, you have a lot more visibility, you have a lot more planning which one can be sought to, so one would assume that this would lead to better health of the industry. And therefore, much better health and progression path for the farmers also.

are reports suggesting the demand for sugar from China is strong and Brazil this year is likely to report a drop when it comes to sugar output so given the kind of global backdrop we are in, where do you see local and global sugar prices moving?

Vivek Saraogi: Once you have said that the China's demand has increased agreed, Brazilian crop is a little lower than probably estimated, agreed. You have India which was at 24.5 or 24.2 looking at 27 so there comes one surplus. You have big high surplus staring at you, so if you see the net impact of all this that is not the global price over the last few days has only fallen. So, one does not see any runaway prices globally also and see a stable market ahead.

first official forecast for 2011-2012 said sugar production would exceed demand by 4.2 million tonnes, the first substantial surplus actually in four seasons would you agree with that?

Vivek Saraogi: It is impossible to come to figures of this sort because once you do an international mapping it is tough to do India's mapping year to year. So, to do every country's mapping which would lead to a global surplus or shortages stuff. But, as I said you have couple of factors which are deficit, couple of factors which are surplus all in all we see a balanced global market.

Government has allowed 5 lakh tonne of additional sugar export under OGL, what is the average realisation from sugar exports for you?

Vivek Saraogi: It depends where you are located because you have a cost which is transportation to the port but I believe it is definitely around that in the mid 30s.

On the back of the current demand and supply scenario are more exports viable from India at this point?

Vivek Saraogi: Definitely, you are staring at a big surplus next year if at 24.2 you were required to do 1.5 million in OGL that is outside of the year in which you did the ALS also. So, you are clearly staring at 26.5-27 that is a very initial estimate, so 4 million is a given surplus.

source: ET