New Delhi, Jun 9 (IANS): High sugar exports, coupled with increased supplies of ethanol, will improve the operating profitability of integrated sugar mills this fiscal, a Crisil Ratings analysis showed.

"High sugar exports for the second sugar season in a row, coupled with increased supplies of ethanol - and at remunerative prices - for blending with petrol, will improve the operating profitability of integrated sugar mills by 75-100 basis points (bps) to 13-14 per cent this fiscal," the analysis report said.

"Also, the recent announcement by the government to advance the ethanol-petrol blending target of 20 per cent by two years to 2023, could help sustain this momentum over the medium term."

Besides, the report cited that sugar closing stocks are expected to decline to their lowest levels in the past four seasons to 9-9.5 million tonne (MT) in 2020-21, resulting in lower working capital borrowings.

"The improvement in profitability and controlled debt levels will, in turn, bolster the credit profiles of Crisil-rated integrated mills this fiscal."

Furthermore, the report said that credit outlook of non-integrated ones, at the other end, will remain largely stable.

"The improvement in profitability of integrated sugar mills will be supported by higher sugar exports, with remunerative prices and increasing proportion of more profitable ethanol, which will offset impact of lower profitability in domestic sugar sales, and subdued returns from co-generation of power," Crisil's Senior Director Anuj Sethi said.