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`
ͻ Introduction
ͻ Literature Review
ͻ Research Methodology
ͻ Data Collection & Analysis
ͻ Conclusion
 

   
ͻ A commodity can be defined as a product or material or any physical substance
like food grains, processed products and agro-
agro-based products, metals or
currencies, which investors can trade in the commodity market
ͻ Its price is determined as a function of its market as a whole
ͻ Commodities actually offer immense potential to become a separate asset class
for market-
market-savvy investors, arbitragers and speculators

 

   



ͻ A commodity market is a market where various commodities and derivatives
products are traded





   
ͻ Sugar is a basic necessity for every human being.
ͻ Major Sugar producing areas in India are Andhra Pradesh, Assam, Bihar, Gujarat,
Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa etc.
ͻ Factors influencing Sugar Markets
ʹ Price
ʹ Consumer Income
ʹ Changing eating habits
O


ͻ Indian sugar industry, second largest agro
agro--based processing
industry after the cotton textiles industry in country, has a
lion's share in accelerating industrialization process and
bringing socio-
socio-economic changes in under developed rural
areas.
ͻ Sugar Industry in India is well developed with a consumer
base of more than billions of people.
ͻ India is the largest consumer of sugar in the world.
ͻ Sugar industry covers around 7.5% of total rural population
and provides employment to 50 million rural people. About
4.5 crores farmers are engaged in sugarcane cultivation in
India. Sugar mills (cooperative, private, and public) have been
instrumental in initiating a number of entrepreneurial
activities in rural India.
j



ͻ The impact of the Global Economic Crisis on the sugar
industry is not as direct as its effects on other industries. Still,
the slowdown had its own share of contribution to the dire
conditions faced by the sugar industry at present.
ͻ To explain the impact of the crisis on the industry one has to
consider several other factors.
ͻ The main factors that affect the price of sugar commodities
are the demand for sugar and supply of sugarcane. Over the
year these two factors have actively contributed to the price
changes but later on an additional factor has taken shape due
to globalization, i.e. cost of processing or production.
ͻ Due to the factors mentioned in previous slide, the prices of
sugar have been following a ͚sugar-
͚sugar-price cycle͛.
ͻ This cycle explains how variation in sugarcane availability
affects the production of sugar as well as the global sugar
prices, which in turn affects future sugarcane cultivation.
ͻ ͚Sugar
͚Sugar--price cycle͛ also includes the returns from sugar trade
which in turn accommodates the processing or production
costs of borne by the sugar industry.

 



 


 
 
ͻ Growing demand in Brazil for diversification into Ethanol
production
ͻ Fall in production output from India i.e. we are short by 4.5
million Mt in inventories compared to previous years.
ͻ Inconsistent rains.
ͻ Exports.
ͻ Fluctuations in sugarcane production due to inadequate
irrigation facilities, lower sugarcane yield, and frequent
droughts in tropical and sub-
sub-tropical areas
 


ͻ Type of Research ʹ Fundamental Analysis
ͻ - Technical Analysis
ͻ Data
Data-- Secondary Data
 



 







  There is a significant effect of external factors on sugar prices

! There is no significant effect of external factors on sugar prices

°

 
°

 
O 
O

 

India is the largest producer and consumer of sugar in the world.
Despite record production by the agriculturists and industrialists,
neither of them were able to benefit from increased production on
account of high operative costs, which are not even sufficient to cover
the prevailing international prices, leave alone the profit margin.

" #
 

The global sugar Market is also experiencing a scenario of sugar deficit,
as production has failed to meet the consumption for two consecutive
years. The sugar production is expected to bounce back this season due
to the increased capacities in Brazil and India. Consumption is also
expected to increase in the global sugar market, thus creating a balance
in the global sugar scenario.
  
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ͻ The ethanol blending programme has opened up additional revenue

stream for the sugar industry. With the governments intention of
increasing the blending proportion from 5% to 10% the potential is
huge. The ethanol blending programme has been successfully
implemented in 9 states and it will soon be implemented throughout
the nation.
ͻ This would further strengthen the position of the sugar industries in
the country and make them a viable investment option.
 
  
 

 





1. Current assets in sugar industry comprises of 60-

60-70% of the total
assets
2. Average current ratio for the years 2008
2008--09 has been 0.8 times
3. Average debt ʹ equity ratio has been 2.5 times
4. Average return on capital employed is 10.3 %
5. Average debtors days is 15.8 days
6. Average creditors days is 114 days
7. Stock
Stockʹʹ to use ratio ʹ 55%
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There is a significant effect of external factors on sugar prices
The sugar industry seems to be finally coming out of the
worst ever recession that it had seen over the past few
decades. After successive years of surplus production and
uninhibited capacity addition, the sugar output in India has
started declining. While it may be still premature to comment
on the production estimates for 2010-
2010-11, it is evident that
production will not exceed consumption as area under
sugarcane plantation has fallen significantly. This
development has witnessed a smart rally in sugar prices that
have come back to the levels that were prevailing in 2006.
There is still uncertainty about the sugarcane prices as the
matter is under litigation and will have a significant impact on
the profitability of the industry. Furthermore, with the fall in
sugarcane production, prices of byproducts such as molasses
and bagasse have also started strengthening.
  
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