It is reported by SmartInvestor.

While drought has resulted in low capacity utilisation due to lower cane availability, the mills are also having to deal with increasing fixed cost and price falls, which are impacting their financials.

According to Indian Sugar Mills Association (ISMA), 21 sugar mills in Andhra Pradesh and Telangana produced 190,000 tonnes of sugar till December 31, 2017, which is 16,000 tonnes lower than the sugar produced by 25 mills in 2016-17 SS (sugar season) till December 31, 2016. Sugar season is October to September.

In Tamil Nadu, 20 sugar mills are in operation, down from 34 on December 31, last year. Sugar mills in Tamil Nadu produced 170,000 tonnes of till December 31, 2017 as against 186,000 produced a year ago on the corresponding date.

Sugar production capacity of Tamil Nadu mills is close to three million tonnes.

Area under sugarcane cultivation has been shrinking, quality has started deterating, and sugar content in cane is drying up. As a result, from a peak of 2,55 million tonnes produced 4-5 years ago, production last year dropped to around 1,2 million tonnes, and this season the output will be around 600,000 tonnes, which is hardly 25% of the capacity.