Sugar industry fears strain as UP, Maharashtra look to revive defunct mills

HYDERABAD: The sugar industry fears pressure on capacity utilisation even as the country's largest sugar-producing states ­ Uttar Pradesh and Maharashtra ­ attempt to revive dozens of defunct sugar mills. Maharashtra is looking to revive 40 defunct mills.

Experts say that these attempts, if successful, may impact the financials of many sugar mills in these regions that were reporting positive margins after a gap of several years of low business.

These sugar mills, experts say, could once again suffer lower capacity utilisation and poor crushing quantities, and may end up with flattish sales if the region sees improved acreage and production. A top sugar miller from UP, expressed his concern over the reopening of mills saying it might prove detrimental for the millers operating out of the state as sugarcane distribution might split.

UP and Maharashtra house nearly 45% of the total operational sugar millers in the country and constitute over 70% of the total sugar produce, Indian Sugar Millers Association (ISMA) data show. The number of operational millers have come down to 493 in 2016-17 from 538 in 2014-15.

ISMA says while the profitable operational days for sugar mills in UP and Maharashtra would be 150, the previous sugar season saw only 144 and 76 days, respectively. Experts say the number of profitable operational days for sugar mills may become fewer with upcoming mills. “If the mills come up in the same sugar growing region, it will definitely impact the millers,“ Abinash Verma, ISMA's director general, said.