Tezzbuzz Desk- Ahead of the festive season, the government has refused to give additional relief in stock limits to companies using sugar in large quantities. Companies have been instructed to sell the sugar stock held in the market in excess of the prescribed limit by August 31. The purpose of this decision of the government is to stop hoarding and ensure adequate availability of sugar in the market.
The government has rejected the demand of companies making biscuits, bread, candy and other food products for more time to sell excess sugar stocks. Recently the time limit for maintaining sugar stock was reduced from 30 days to 15 days. Under this, companies using sugar in large quantities can keep stock for a maximum of 15 days as per their normal requirement.
In the meeting held with the Food Secretary, some big companies also put forward their concerns. Companies said that if they sell the existing excess stock in the market now and buy sugar again later when needed, then sharp fluctuations in prices may be seen. Some companies also expressed apprehension that they may face difficulty in fulfilling their export orders if supply is affected.
However, trade officials believe that the arrival of additional stocks in the market will reduce pressure on sugar prices. This can provide relief to consumers and will also curb hoarding. This step has been taken by the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) after allegations of hoarding of sugar by big buyers. The concerned companies have rejected these allegations.
An official of a large biscuit company said that companies keep seasonal stocks as per production requirements and not for speculation. They argue that if companies sell their hedged stocks, after some time they will have to buy sugar from the market again, which may lead to a rise in prices.
On the other hand, some FMCG companies are considering the government's decision as positive. According to Mayank Shah, Chief Marketing Officer of Parle, the company keeps stock as per government rules. According to him, after the government's action, sugar prices have come down and this may put a stop to speculation.
Senior sugar industry analyst GK Sood estimates that if bulk buyers release more stock in the market than the prescribed limit, then about 3 to 4 lakh tonnes of additional sugar may be available. This will increase supply in the market and may put pressure on prices.
However, this decision may be challenging for some multinational FMCG and pharma companies. These often require specific grades of sugar from approved mills. In such a situation, if the stock suddenly decreases, they may find it difficult to get the required quality sugar on time. At present, the government's focus is on maintaining adequate supply in the market and controlling hoarding of sugar.