Sugar Firms Eye Other Avenues

New Delhi: The revenues and the profits of sugar firms are looking at a shift from their main business, sugar, to cogeneration and distillery. Their October-December 2006 quarterly results indicate that companies are experiencing higher growth rate in either distillery or cogeneration than in sugar. For Triveni Engineering and Industries (TEIL), the revenue from sugar business felll by 12 per cent (from Rs 225.16 crore to Rs 198.06 crore), while the revenue from cogeneration grew at 30 per cent (from Rs 22.48 crore to Rs 29.23 crore) in the third quarter results. For Bajaj Hindusthan (BHL), the revenue from sugar business went up at only 3.54 per cent (from Rs 267.52 crore to Rs 277 crore), while the revenue from distillery business grew at 82.6 per cent (from Rs 15.11 crore to Rs 27.6 crore) for the December 2006 quarter. The quarter also witnessed a huge difference between revenue growth and profit increase for companies. For instance, while the net revenue of BHL grew at 5.95 per cent (from Rs 277.91 crore to 294.47 crore), net profit dropped by 28.7 per cent (from Rs 24.24 crore to Rs 17.28 crore). For Dwarikesh Sugar, while the company's revenue increased by 58.7 per cent (from Rs 40.36 crore to Rs 64.05 crore) its net profit slipped by 43.6 per cent (from Rs 7.63 crore to Rs 4.3 crore). Obviously, sugar prices are down by about Rs 200 a quintal to Rs 1,550 this quarter. The obvious reason for the depressing performance this quarter is the declining sugar prices and the sugar export ban that was lifted in two phases (December 18 and January 11). Companies are expected to perform better in the January-March quarter on account of sugar exports and higher coverage of the ethanol-blending programme.