‘Bitter’ time for State sugar factories

Sugar factories in the State are facing “bitter” competition from their counterparts in Karnataka and Maharashtra. It is owing to dumping of huge quantities of the sweetener in A.P by factories in the two States. The trend is attributed to the relatively less cost of production, high recovery of sugar and exemption from Central Sales Tax (CST).

Sugar factories in AP have lower recovery at a maximum of 10 per cent compared to 13 per cent in Maharashtra and Karnataka, where sugar is offered at Rs. 2,250 to Rs. 2,300 a quintal partly owing to low cane prices. In A.P, it is nearly Rs. 3,200 a quintal. When it comes to CST, sugar factories in A.P are losing heavily, as the government has withdrawn exemption of sugar from CST through G.O Ms No. 78 dated March 4. While nothing much can be done about the recovery of sugar and the overall cost of production, a request by factories in the State for restoring CST exemption has evoked a positive response from Chief Minister N. Chandrababu Naidu. It has not yet translated into action, though.

Sugar factories in Maharashtra and Karnataka dump a sizeable part of their produce in the eastern markets also, particularly West Bengal. A.P factories exporting sugar to eastern States are thus deprived of a level-playing field there.

“Sugar factories in A.P are at present incurring a loss of Rs. 600 per quintal, and the losses are compounded by withdrawal of exemption from CST,” said G. Venkateswara Rao, chief operating officer of KCP Sugar and Industries Corporation. Another issue is the “exit tax” of Rs. 2,500 per ton of molasses sought to be sold in other States.

Dumping of huge quantities of sugar in A.P by factories in other States to blame

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