Sugar sector at bottom, foreigners interested: ISMA's Verma

The Indian sugar industry has hit a bottom and things can only get better from here on, feels Abinash Verma, director general, Indian Sugar Manufacturers Association. In an interview with CNBC-TV18, Verma says foreign investors are beginning to take interest in the sector now that many states have begun rationalising their sugar pricing policies. Maharashtra and Karnataka have already done that, and Uttar Pradesh too will follow suit, feels Verma. "There is a huge potential in the Indian sugar sector both on the improvement in the sugarcane varieties, the sugar recovery, the productivity, the ethanol sector, the competitiveness of the Indian sugar industry once the sugarcane pricing policy is rationalized," Verma said. He sees the next financial year being much better for the sugar sector than this one. Below is the interview of Abinash Verma, Director General, ISMA with Latha Venkatesh, Sonia Shenoy & Varinder Bansal on CNBC-TV18. Sonia: What have you made of Shree Renuka Sugars’ deal and what do you think interested Wilmar at a time when the entire sector is reeling under so much pressure? A: I do not have much comment on the individual deal between Wilmar and Shree Renuka Sugars but talking about the Indian sugar industry, I think the Indian sugar industry has reach its bottom and it can only move up from here. I have reasons to say that. First of all the sugar cane pricing policy, which was hitting us very badly, has been already rationalised by Maharashtra government, they have brought in an act on December 24. It has been rationalised by Karnataka government; they have brought in an Act in May. Now we expect utter Pradesh (UP) government also to follow suit, a committee has been setup there to examine and recommend the rational sugarcane pricing policy. So, that is basic and that is what will interest international players in India; there is a huge potential in the Indian sugar sector both on the improvement in the sugarcane varieties, the sugar recovery, the productivity, the ethanol sector, the competitiveness of the Indian sugar industry once the sugarcane pricing policy is rationalised. So, I see lot of interest by the foreign direct investors (FDIs) in India and that is what I think is the beginning now, Wilmar is showing a lot of interest in Shree Renuka and lot of other players would also come to India now. Varinder: Do you see more consolidation happening in the industry per se because after many years we have seen something happen in the sugar sector right now? A: What you are saying is 100 percent right. There needs to be some infusion of capital into the industry in India and the industry is debt ridden and therefore there has been infusion from outside. There has to be inefficient players, the players who do not perform and have generally been supported due to the controls of the government due to the market share being given to everybody, they have to either become more efficient or they have to move out or close down or selloff. Therefore, I believe there has to be consolidation, the good players will survive; people who have better marketing strategies will improve and continue to survive. Source :  http://www.moneycontrol.com/news/business/sugar-sector-at-bottom-foreigners-interested-ismas-verma_1046602.html