Article in Business Line of Today Dated 30th July 2010 ------------------------ Starch cos to remain healthy
====================================== Reasons to cheer Rise in output of maize — a basic raw material. Burgeoning food sector. Growing export opportunity ============================= M.R. Subramani Chennai, July 29 Companies that produced starch seemed to have fared well this year, barring Tirupati Starch. Most of the firms seem to have gained at least 20 per cent in prices this year, with Universal Starch stocks almost trebling during the period. The Indian starch industry is a sunrise sector and at a stage where it has little to lose. Hardly 40 starch products are made in the country compared with over 500 in the global market. The industry's size is smaller than its international peers. According to Asset Alliance Securities, starch production in the country is around 18 billion tonnes with 65 per cent coming from organised players such as Anil Products, Riddi Siddhi Gluco, Sukhjit Starch, Tirupati Starch, Universal Starch and Gayatri Bio. These units mainly depend on corn or maize as basic raw material. Their cause has been helped by the rapid rise in domestic production of maize. In three-four years, maize production has topped 15 million tonnes (mt). Though output dropped to 16.3 mt last year, against a record 19.7 mt the previous year, there has been no shortage as export demand was lower. For the coming year, reports from Andhra Pradesh, Karnataka and Bihar are encouraging. Starch is used in the production of consumer products such as cereals, puddings, cakes, cookies and crackers. It is also used to make paper, corrugation boxes, textiles and dextrose — a fine chemical used by the pharmaceutical industry. Modified starch is used in chewing gum and jellies, where it is replacing gelatine from the non-vegetarian base. The availability of corn starch is helping some manufacturers cut costs, besides making products more acceptable, particularly in India. Promising sector The food sector in the country holds promise on two accounts. First is the rising population. Second is the rising income that has resulted in surplus money for spending, especially for food. Modern food products such as sauces, soups and puddings have become fast moving products. This has resulted in major multinational companies and consumer products' manufacturers queuing up for starch products. There is another positive angle to the demand and per capita consumption aspect. Demand is rising, no doubt. But according to Asset Alliance Securities, the per capita consumption in the country is lower than 1 kg compared with 64 kg in the US or the global average of 6 kg. Haven't we seen an explosion in coffee consumption in the last few years? There is no doubt that such a thing will be witnessed in the starch sector too. Moreover, Asset Alliance sees promise in the starch sector through use of ethanol and bio-degradable plastics. China's move to scrap 5 per cent export rebate on corn starch is likely to act as a boost for the Indian corn starch industry and allied product manufacturers. A tremendous export opportunity is seen, according to the securities firm. For the kharif season, the Centre has raised the minimum support price for maize by Rs 40 a quintal to Rs 880. But prices are around Rs 1,000. Therefore, the raise is unlikely to have a major impact and the prices are seen stabilising in the short to medium term. Therefore, stocks of starch manufacturing firms could be a safe bet in the medium and long term. -- For Anything related with Stock market be Online at http://www.niftyviews.com/ Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234 FOR TRIAL STOCK/NIFTY/OPTION CALLS You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group. To post to this group, send an email to [email protected] To unsubscribe email [email protected] for more info visit http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB . This is Not a Spam Mail. Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture."
