This is very good analysis of important metric in sugar industry. Only companies with low cost will survive in sugar industry. which is not revenue driven but cost driven. Companies have to focus on efficiency and not increasing capacity. Any company planning to increase capacity should be exited. leverage should be less than 0.5x.
The main problem with the industry is Govt. control due to which selling price is lower than it should be and cane costs (FRP) are higher than it should be. The industry will never make good margins so only operating efficiency will matter. Reiterating that any company adding capacity will be reducing ROCE.
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