New Delhi [India] July 16 (ANI): Above-normal monsoon forecasts are likely to boost sugarcane acreage and yield in key states like Maharashtra and Karnataka, which will result in 15 per cent surge in sugar output
The sugar cane acreage in Maharashtra and Karnataka to experience a better yield this year, boosted by an above-normal monsoon, which resulted in a 15 per cent jump in sugar output, said Rating agency ICRA in a report.
The report also sees that with sugar output experiencing an uplift, this will lead to revenues of sugar companies expanding by 6-8 per cent.
“ICRA projects the gross sugar production to increase to 34.0 million MT in SY2026 from 29.6 million MT in SY2025 amidst an above-normal monsoons and expected improvement in cane acreage and yield in key sugar-producing states,” said Girishkumar Kadam, Senior Vice President & Group Head – Corporate Ratings, ICRA.
However, the report raises concern that profit margin gains for the sugar mills are likely to remain modest if ethanol prices remain stagnant.
“Despite the expected increase in diversion towards ethanol in SY2026, the closing sugar stock level is likely to be comfortable. Further, domestic sugar prices, which are currently in the range of Rs. 39-41/kg, are expected to remain firm till the start of the next season, thereby supporting mills’ profitability,” Girishkumar Kadam added.
The report projects that sugar sector is likely to remain stable, helped by the anticipated improvement in revenues, stable profitability and comfortable debt coverage metrics, along with the Government’s policy support, including the ethanol blending programme (EBP).
However, ICRA emphasizes the need for price revisions of Ethanol to sustain distillery profitability.
“The ethanol blending trend has remained encouraging with 20% blending target set by the Government of India achieved in the recent months,” said Kadam, while commenting on ethanol blending and profitability related to the segment.
“Further, the Government is exploring the option of increasing the blending target beyond 20%, which will support the distilleries. However, juice and B-heavy based ethanol prices have not been revised for two consecutive years despite an increase of ~11.5% in fair and remunerative price (FRP). Hence, revision in ethanol prices remains critical to support the profitability of the distilleries and the sugar industry.” (ANI)
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