India’s net sugar production in FY 2025 is expected to fall to 30mt – ICRA
India’s net sugar production for the 2025 sugar season, which begins in October, is expected to fall to 30 million tonnes (mt) from 32 mt the previous year due to increased diversion to ethanol, according to ICRA.
The ratings firm expects integrated sugar mill revenues to grow by 10% in fiscal year 2025, owing to an expected increase in sales volumes, firm domestic sugar prices, and higher distillery volumes following the operationalisation of new capacities.
Girishkumar Kadam, Senior Vice-President & Group Head – Corporate Ratings, ICRA, stated: “ICRA projects net sugar production to fall to 30 million tonnes in SY2025 from 32 million tonnes in SY2024, based on the expectation that higher diversion will be allowed towards ethanol production despite the high sugar stock level.
Also Read | Ban on sugar for ethanol production: Centre files caveats in High Courts
Even if the diversion to ethanol is increased to 4 million tonnes in SY2025, the closing sugar stock level is expected to remain moderately high. As a result, clarity on the policy for allowing diversion beyond the 1.7 mt cap, as well as exports, remain critical indicators for the sector. Domestic sugar prices are expected to remain stable at ₹38-39/kg until the start of the next season, supporting the profitability of mills”.
“The ethanol blending trend has remained encouraging until Ethanol Supply Year (ESY) 2024, owing to the increased contribution from grain-based distilleries. For ESY2025, the extent of the increase in diversion to ethanol production above and beyond the cap is critical to meeting the Government of India’s 20% blending target.
Other significant challenges that must be addressed include the availability of adequate feedstock for grain-based distilleries and the infrastructure expansion required to support higher blending levels. Furthermore, the timely launch of the E-20 (20% ethanol blended)-compliant vehicles and public adoption of the same would be key to meeting the blending targets,” Kadam explained.
Also Read | Sugar production is up by 5.6% as of January 31, 2021-22: ISMA
ICRA expects the closing sugar stock to be around 9.1 mt on September 30, 2024, which is significantly higher than the sugar stock of 5.6 mt on September 30, 2023. This would equate to 3.8 months of consumption (PY: 2.4 months). According to ICRA estimates, the closing stock will increase to more than four months by September 30, 2025.
Add Comment