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Financial Distress for Sugar Units (Government Policy (Industrial…
Financial Distress for Sugar Units
Input Cost
H&T Costs
Practice of hefty advances
Commission payments
Financial Costs
Lower credit rating due monsoon affected / cyclical business
Sugarcane Cost
Excess payments over FRP
Results in low recoveries
Unnecessary competition
Industry mal-practice
Government Policy
Old Releases
Matter to be decided
FRP Policy
Already considers return for farmer. Logically cant give weight-age to sales price but then controlled sales needs to be reduced to 30% PDS
Import Policy
Guideline of safety stock needs to be issued & followed for removal anxiety around sugar import
Necessary Commodity Act & Inflation
Benefit to institutional buyers
Industrial Consumption
70% of institutional buyers take advantage of price volatility & government restrictions
Differential Institutional Pricing may be adopted
PDS system may be brought back for control over pricing for domestic consumption
Other Loans
Long term structuring
farmer Shareholding
Who is making money?
Farmers
H&T Contractors
Government
Institutional Buyers / Traders