Increase in profitability for sugar mills

According to CRISIL Ratings, the operating profitability of integrated sugar mills will increase by 75-100 basis points (bps) to 13-14% in FY 2021-22. This has been due to the continued trend of high sugar exports in the second season (SS, i.e., October-September), accompanied by an increased supply of ethanol for blending with petrol.
The announcement by the government to raise the ethanol petrol blending target of 20% by the next two years (i.e., to 2023) can help in sustaining this momentum in the medium term. Anuj Sethi, senior director at CRISIL Ratings, said, “The improvement in profitability of integrated sugar mills will be supported by higher sugar exports, with remunerative prices and increasing proportion of more profitable ethanol, which will offset the impact of lower profitability in domestic sugar sales, and subdued returns from co-generation of power.”