Mumbai: Shree Renuka Sugars, which posted an exponential jump in quarterly net profit on Friday, plans to double output from refineries as sugar prices hit historic highs on output deficit, a top official said.
India’s top refiner, which processed about 0.65 million tonnes of raw sugar in the year to September 2009, plans to refine 1.2 million tonnes in 2009/10 on higher realisations, managing director Narendra Murkumbi said on Friday.
“We will bring in a substantial amount of white sugar in addition to raw sugar,” he told CNBC TV-18. “Like last year, this year also we had contracted (raws import) quite early,” Murkumbi added.
India, the world’s biggest consumer of the sweetner, is likely to import 6-7 million tonnes sugar to battle a deficit at home as low area under planting and poor monsoons hit cane output, prompting millers to turn overseas to meet demand.
In 2009/10, India is likely to produce 15.3 million tonnes, falling severely short of domestic consumption of about 23 million tonnes for a second straight year, a Reuters poll showed, driving global prices.
New York raw sugar futures hit a 29 year high last week, while London white sugar futures hit record high on strong demand from the world’s biggest consumer.
The firm, which bought a Brazilian sugar mill in November, is keen on more such acquisitions as valuations remain attractive in Brazil even as sugar prices touch record highs.
“We are looking to add more assets there. I can say that asset price in Brazil have thankfully not moved in value in the same proportion sugar has moved up,” Murkumbi said.
Shree Renuka saw consolidated net profit in Oct-Dec jump to Rs2.6 billion from Rs0.11 billion a year ago on higher sales realisations and production, while net sales surged more than three-and-a-half times to Rs14.3 billion.
Average realisations from sugar in Oct-Dec rose Rs29 a kg compared with Rs16 a year ago, as prices touched historic highs on a supply deficit, Murkumbi added.
“The numbers are above our estimates. They have sold all inventory they had in Q4. Realisations were good but we expect better realisations of Rs38-39 , going forward,” an analyst with a Mumbai-based brokerage, which has a ‘buy´ rating on the stock, said.
Rival Bajaj Hindusthan Ltd, biggest producer of the sweetner, posted a net profit of Rs852 million in the quarter to December compared with a loss of nearly 559 million last year.
Shares in the firm rose over 12% in the Oct-Dec quarter compared with a marginal rise in benchmark 30-share BSE index. On Friday, they ended up 0.9% at Rs233.45 in a weak Mumbai market.