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10/23/2017 Profitability at a sweet spot for sugar companies - The Economic Times
https://economictimes.indiatimes.com/markets/stocks/news/profitability-at-a-sweet-spot-for-sugar-companies/articleshow/61140820.cms 1/17
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By , ET Bureau | Updated: Oct 19, 2017, 11.27 AM IST
While some domestic sugar mills saw
profit margins more than double, a few
other ailing sugar producers reported
profits for the first time after several
years.
Profitability at a sweet spot for sugarcompanies
Hyderabad: Better realisation results in improved profitsafter several years; debt reduction of 19.6% since Aug2016 is the largest among all sectors, says RBI
The Indian sugar industry is seeing profits improve after agap of several years with impressive realisations in thepast one year resulting in debt burden shrinking by at leasta fifth.
This substantial reduction in debt burden has helped theindustry post its highest ever profitability in recent past,
which in turn could bolster profitability inmore quarters to come, said industryrepresentatives and sector analysts.
While some domestic sugar mills saw profitmargins more than double, a few other ailingsugar producers reported profits for the firsttime after several years.
The latest Reserve Bank of India data on deployment of gross bank credit shows thedomestic sugar industry has reduced its debt burden by 19.6%, from ` . 34,800 crore inAugust 2016 to `. 28,000 crore in August this year the highest debt reduction among allsectors. “We have seen substantial re duction in our long-term debt and are seeing improved profitabil ity,“ says Tarun Sawhney, vice chairman and managing direc tor of one ofIn dia's largest sug ar producers, Triveni Engineer ing and Industri es. “Besides, it has alsohelped improve our credit rating, which in turn has helped us negotiate interest rates withbanks.“
Triveni Engineering BSE 4.06 % saw its op erating profit margin more than double to 19% inFY17 from 8% in FY16. Others like Balrampur Chini Mills BSE 1.86 % , Sakthi SugarsBSE 2.57 % and Dhampur Sugar Mills BSE 6.02 % were among the top 20 sugar producersreporting operating profit margins of 26%, 15% and 21% respectively in FY17, significantlyup from 16%, 9% and 10% in FY16. Hyderabad-based Gayatri Sug ars, which wasincurring losses from 2010-11, reported a profit for the first time in 2016-17. It hasregistered a profit of `. 10 crore com . 13.52 crore in the pared to a loss of ` previous fiscal.
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“It has been a result of stable sugar prices in the past one year which has helped the
Ashish Kulshrestha
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