Major sugar stocks gain up to 7% after govt announces bailout package of Rs 8,000 crore

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Shares of sugar companies rose on Wednesday as investors looked to bet on a bailout package announced by the government.

Frontline stocks in the sector such as Balrampur Chini, Uttam Sugar, Sakthi Sugars, Bajaj Hindusthan Sugar, and Ugar Sugar, among others, gained 4-7 percent. Few of the stocks also witnessed profit booking as stocks have seen a sharp rise in the past few sessions due to buzz around this package.

The Cabinet on Wednesday approved a bailout package of Rs 8,000 crore for the sector. The Minimum Selling Price (MSP) has been set at Rs 29 per kg.

Moneycontrol had earlier reported that concerned over mounting cane arrears of more than Rs 22,000 crore, the government was likely to announce a bailout package.

Last month, the government had announced a Rs 1,500 crore production-linked subsidy for sugarcane farmers to help millers pay cane payments.

Sugar mills are unable to make payments to sugarcane growers as their financial health has worsened due to a sharp fall in sugar prices after a record production of 31.6 million tonne (MT) so far in the 2017-18 season (October-September).

Maximum cane dues of more than Rs 12,000 crore are in Uttar Pradesh alone, the country's biggest sugarcane producing state. In fact, the issue had become campaign fodder during the recently concluded Kairana bypoll, where the BJP lost to a united Opposition. The Lok Sabha constituency alone has six mills where owners owe the farmers an estimated Rs. 800 crores worth of dues.

Presently, the average ex-mill price of sugar is in the range of Rs 25.60-26.22 per kg, which is below the cost of production. The Centre has already doubled sugar import duty to 100 percent and scrapped export duty to check sliding domestic prices. It has also asked mills to export 2 million tonne of sugar.