• CRISIL Research Impact Note
  • Sugar Price
  • EBITDA
August 07, 2019

Another sweetener for sugar mills

Ebitda margins to increase 500-600 bps this fiscal, helped, among others, by buffer stock creation

Cabinet approves creation of buffer stock of 4 million tonne of sugar for one year from August 1, 2019, to July 31, 2020

 

The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has approved the following proposals:

 

  • Creation of buffer stock of 4 million tonne of sugar for one year at an estimated maximum expenditure of Rs 1,674 crore. However, based on the market price and availability of sugar, this may be reviewed by the Department of Food and Public Distribution any time for withdrawal / modification
  • Under the scheme, the cost incurred by sugar mills for this purpose would be reimbursed on a quarterly basis. This would be credited directly into the farmers’ account on behalf of mills, against cane price dues. The subsequent balance, if any, would be credited to the mills’ account
  • Fair and remunerative price (FRP) for sugar season 2020 has been kept unchanged at Rs 275 per quintal. FRP is applicable for all states growing sugarcane except Uttar Pradesh and Punjab.