Sugar. Indian. Industry. Steel. Tyre. otel. Pesticide. The. oal. nking Express Service. Pipe Housing Finance. Renewable Energy Source.

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1 inum Banking Cement Commercial Vehicle Cotton & Cotton Ya omponent Business Process Management (BPM) Construction Educat arel Chlor-Alkali CRAMS Crude Oil Gems & J Natural Gas Pesticides Power Generation Steel Pa anganese Ore Pharmaceutical Refining & Marketing Reta ight Transport Shipping Tractor Telecom Tower Wheeler S Tyre Tea-Cfee Telecom-W Energy Sources Roads & Highway n Made Fibre Paper Zinc & Lea Pipe Housing Finance Hospital Passenge Shipbuilding Renewable Energy Source Aluminum Cotton & Cotton Yarn Tracto oal otel nking Express Service Steel Two Wheeler Express Service ads Freight Transport Gems & Jewellery ed Passenger Vehicle CRAMS September 2013 Pesticide Cr Natural Gas

2 In SS , the sugar cane acreage increased marginally by 0.5 per cent on a yoy basis to 5,064 thousand hectares. Despite the rise in acreage under sugarcane, the industry is likely to witness a lower sugar production in SS delay in the arrival rainfall also severely affected the sugarcane productivity and thereby the sugar production in SS During the period October 2012-June 2013, the country produced about 24.8 mn tonnes sugar. impact deficiency in rainfall experienced by Maharashtra in 2012 will trigger down the sugarcane acreage in CARE Research believes that the increase in yield and the recovery rate in Maharashtra will moderate the impact drop in acreage on sugar production to some extent in SS drop in sugar production to continue in SS Maharashtra - Continued drop in acreage will pull down the sugar production... In 2012, out 35 districts in Maharashtra, almost 25 districts were declared as a drought hit. key sugarcane producing districts like Kolhapur, Solapur, Pune, Ahmednagar, Sangli, and Satara (together accounted for 68 per cent sugar produced in Maharashtra in SS ) were few among them. Consequently, in SS , the acreage under sugarcane in Maharashtra declined by about 8.3 per cent on a yoy basis. downfall in acreage under sugarcane in Maharashtra is likely to continue in SS CARE Research has estimated that the acreage under sugarcane in Maharashtra will decline marginally in SS In past few years, the SAP declared by the UP government has been the highest among other sugar producing states despite having the low recovery rate. gap between the sugarcane prices UP and other states had widened in the last two sugar seasons. UP based sugar companies have raised their concerns on high cane prices with the state government. However, being the election year, reduction in cane price seems difficult. CARE Research expects that the state government to increase the cane price marginally. So, in SS , the sugar mills based in west and south regions will be relatively better placed compared to the sugar mills based in UP. UP based sugar mills to feel the brunt increased sugarcane prices... Revenue sharing model for sugarcane pricing seems difficult in near term... Under the current sugarcane pricing mechanism, the sugarcane price fixed by the state governments is deeply influenced by socio-political factors. lack linkage between sugar and sugarcane prices leads to cyclicality. Thus, there is a need to devise appropriate sugarcane pricing model which can ensure a long term sustainability the sugar industry and also prove beneficial to farmers. In major sugar producing countries like Brazil, Australia and Thailand the revenue sharing model sugarcane pricing is followed. Taking cues from the Rangarajan Committee, Karnataka and Maharashtra proposed to bring in a new law for purchase and supply sugarcane. However, in SS , the rationalisation in sugarcane pricing policy in UP is difficult to implement being general election in 2014.

3 OUTLOOK ON production consumption scenario Overall demand and supply scenario price pritability INDUSTRY OVERVIEW Overview sugar sector in India Evolution sugar sector Characteristics sugar sector in India Types sugar Table GOVERNMENT REGULATION AND INCENTIVES cane-related policies -related policies DEMAND - SUPPLY SCENARIO IN INDIA Pre 1990 era Section- I CARE Research's Outlook Section- II Section Demand and Supply Scenario in the period SS to SS Demand & Supply Scenario in the period SS to SS Demand and Supply Drivers STATE-WISE SCENARIO State-wise acreage under sugarcane cultivation State-wise sugarcane production State-wise sugarcane yield State-wise sugar production State-wise analysis Maharashtra Uttar Pradesh (UP) Karnataka GLOBAL SCENARIO Global sugar production Global sugar trade International sugar prices Brazil sugar industry COST AND MARGIN ANALYSIS Cost analysis cane production cane pricing Margin analysis SUGAR BY-PRODUCTS Overview Bagasse

4 Table Molasses Ethanol Business model analysis SUGAR PRODUCTION PROCESS Bajaj Hindustan Ltd. Shree Renuka s Ltd. Balrampur Chini Mills Ltd. Triveni Engineering & Industries Ltd. cane- state-wise production cane- state-wise area under cultivation cane- state-wise yield cane- state-wise duration crushing season cane- state-wise sugarcane crushed by sugar factories State-wise Number sugar factories - state-wise production State-wise sugar recovery rate cane utilisation for different purposes Month-wise sugar production OUTLOOK State-wise acreage under sugarcane Types sugarcane crops grown in Maharashtra Overall demand-supply situation INDUSTRY OVERVIEW Number factories in operation in India and average capacity per day Comparison regulatory environment in top sugar-producing countries Top five sugar-producing states in India in SS GOVERNMENT REGULATION AND INCENTIVES Trend in statutory minimum prices State advised price release policy SECTION- III Company Section SECTION- IV Annexures List Tables SECTION - I CARE Research's Outlook SECTION - II Section DEMAND - SUPPLY SCENARIO IN INDIA Area under sugarcane production, yield and sugar production (Pre 1990 Era) Comparison SMP for Wheat and cane State-wise estimated acreage under sugarcane Steady growth in sugar consumption and population Trend in recovery rate

5 STATE-WISE SCENARIO Table Area under sugarcane production, yield and sugar production in Maharashtra Area under sugarcane production, yield and sugar production in Uttar Pradesh Area under sugarcane production, yield and sugar production in Karnataka GLOBAL SCENARIO Global sugar Production Brazil sugar Exports Brazil ethanol Exports COST AND MARGIN ANALYSIS Company-wise raw material cost Major sugarcane producing states in tropical and sub-tropical regions SUGAR BY-PRODUCTS Non-integrated Model: sugar + molasses + bagasse Partially-integrated Model: sugar + ethanol+ bagasse Partially-integrated Model: sugar + molasses + power Fully-integrated Model: + Ethanol + Power SECTION IV Annexures cane- state-wise production cane- state-wise area under cultivation cane- state-wise yield cane- state-wise duration crushing season cane- state-wise sugarcane crushed by sugar factories State-wise Number sugar factories - state-wise production State-wise sugar recovery rate cane utilisation for different purposes Month-wise sugar production List Graphs SECTION - I CARE Research's Outlook OUTLOOK Trend sugarcane acreage and sugar production in India Rainfall in Maharashtra (March February 2013) Trend sugarcane and sugar production in Maharashtra Trend sugarcane and sugar production in UP Trend sugar consumption in India Trend average wholesale sugar price in India Trend sugarcane prices Trend sugar production cost Trend operating prit on sugar Trend operating prit on sugar (Integrated model) Trend share cane price as a percentage ex-mill prices

6 INDUSTRY OVERVIEW Domestic demand and supply trend Table Major sugarcane and sugar producing states in India Average wholesale sugar price and Stock to use ratio Trend sugar price in SS production cycle Month-wise production trend sugar DEMAND SUPPLY SCENARIO IN INDIA production trend in pre 1990 era Trend YoY growth in Production SECTION - II Section Trend acreage under sugarcane and sugarcane production Trend sugar production STATE-WISE SCENARIO State-wise acreage under sugarcane cultivation State-wise sugarcane production State-wise sugarcane yield State-wise sugar production State-wise share in sugar production Maharashtra - District-wise sugar production Maharashtra - Sector-wise distribution sugar production capacity Maharashtra Trend sugar crushing season Uttar Pradesh - Sector-wise distribution sugar production capacity Uttar Pradesh Trend sugar crushing season Karnataka - Sector-wise distribution sugar production capacity Karnataka Trend sugar crushing season GLOBAL SCENARIO World sugar import & export Average New York prices (raw sugar) Brazil sugarcane production Brazil sugar production Brazil ethanol production COST AND MARGIN ANALYSIS cane components cane production in India Trend PBDIT and PAT Margin SUGAR BY-PRODUCTS Comparison PAT margin for fully / partially integrated players v/s Non integrated players SUGAR PRODUCTION PROCESS manufacturing process

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