Murugappa Group's Eid Parry shuts down units in Pudukottai and Puducherry due to lack of sugarcanes

Sugar contributes 72 per cent of EID Parry's revenues and due to the continuous non-availability of sugarcane the company was forced to close its factory.

Published: 31st July 2019 03:50 PM  |   Last Updated: 31st July 2019 03:50 PM   |  A+A-


For representational purpose. (Photo | Reuters)

By Express News Service

CHENNAI: Availability of sugarcane is affecting sugar industries in Tamil Nadu and Puducherry and major companies like Murugappa Group's Eid Parry has shut down its unit in Pudukottai and Puducherry.

Sugar contributes 72 per cent of EID Parry's revenues and due to the continuous non-availability of sugarcane the company was forced to close its factory in Puducherry which had remained idle during the last four years and also Pudukottai which was not doing well.

M V Shanmugharaj Velusamy, sugar cane farmer in Perambalur who supplies sugarcane to the EID Parry sugar mills says that EID Parry is also struggling to run its sugar mill in Pettavaithalai also due to non-availability of sugar cane.

It is learnt that during the year 2018-19, the sugarcane availability in Tamil Nadu was low due to a widespread drought affecting a major section of the command area. But the cane crushed was better than the previous year. 

There was a considerable decline in cane production during the last few years due to deficit rainfall and farmers shifting to other crops. This has adversely affected the company’s Tamil Nadu operations, where most of its plant capacity continued to remain idle, Murugappa group company EID Parry India said.

Shanmugharaj says besides the drought which has affected sugarcane crop during the last four years, other issues include non-payment of State Advisory Price (SAP) by private sugar mills for sugarcane. Shamugharaj says that the dues during the last four years have gone up to Rs 1,350 per tonne which the mills have to pay to the farmers. "We have raised this issue with the government. I also have Rs 4 lakh pending and was paid only Rs 1 lakh as dues," the farmer says.

The lack of South-West and north-East monsoons and the failure to get their dues cleared has forced many farmers to shift to other crops. Subramani, another farmer, who supplies sugar cane to another reputed sugar mill says that around 35,0000 acres of sugarcane was procured for this sugar mill but now this has dwindled to around 7,000 acres to 10,000 acres

The units, not in operation because of non-availability of adequate sugarcane, will not be operated in future as the expectation of the revival of cane cultivation in the area is low due to a variety of factors, according to the EID Parry’s communiqué to stock exchanges.

The company proposes to transfer assets of the unit to its other units and also dispose of other assets as may be deemed appropriate.

Meanwhile, the company has reported a net loss of Rs 53 crore for the quarter ended June 30, 2019, compared with a net profit of Rs 54 crore, which was as a result of exceptional items, in the year-ago period.

The consolidated sugar operations reported an operating loss of Rs 53 crore. “The performance of the Company continued to be affected in the First quarter 2019-20 due to depressed sugar prices on account of higher sugar inventory and release order mechanism,” managing director of Eid Parry S Suresh said in a release.

“The Union government has further announced a buffer stock subsidy programme in July 2019. This, along with the soft loans, helps reduce the holding cost of sugar inventory. Also, the government’s announcement of no change in Fair and Remunerative Price (FRP) for sugarcane for 2019-20 from that of last year is a welcome move considering the low sugar prices prevailing in the market,” he added

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