Sugar sector outlook for 2009 stable: Fitch
Prices likely to remain range-bound.
Our Bureau
Mumbai, Feb 13
The outlook for India sugar in 2009 is positive and the sweetener may buck the
commodity trend, said Fitch Ratings in its latest assessment of the sugar
sector. Sugar price increase was unavoidable because of lower output, the
report pointed out.
Prices Range-bound
The report said the worst days for sugar are over, and prices are expected to
remain range-bound through various regulatory measures. Sugar is an essential
food item of mass consumption. The report maintains a stable outlook for the
sector in the current calendar.
Domestic rates
Despite the policy of duty-free import of sugar for processing into white sugar
for domestic consumption and an export obligation to be fulfilled within 24
months, domestic prices would continue to rise to some degree mainly due to
estimated decline in global sugar production and possible global deficit
situation, Fitch pointed out.
Bright outlook
While most companies posted losses last year, Fitch expects the profitability
of sugar companies to improve this year.
In the short-term to medium term, revenues as well as profitability continue to
depend largely on sugar revenues, despite efforts to diversify, the report
remarked.
Pointing out that diversified companies that are well integrated (distillery,
co-generation) rather than pure sugar companies are well placed to enjoy
profitability, Fitch said that growth and contribution of non-sugar business to
incremental revenues flowing to the bottom line of sugar companies would remain
marginal.
http://www.thehindubusinessline.com/2009/02/14/stories/2009021450921600.htm
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