Shares of sugar companiesshot up on the bourses, with some of them hitting the upper circuit on hopes that the Uttar Pradesh Government will dole out some concession on the price front.
A large number of sugar mills in Uttar Pradesh, the second largest sugar producing state after Maharashtra, have refused to commence crushing demanding viable cane pricing.After market hours, the Uttar Pradesh government fixed the minimum sugarcane price at Rs 280 a quintal for the common variety for 2013-14 — the same as last year’s — over a month after the scheduled start of the crushing season. As most sugar stocks had come off sharply their 52-week highs, Wednesday’s rise was a welcome relief to investors.
The stand-off between the sugar mills and the UP Government was over viable pricing for sugarcane. While the mills stated that they could pay only Rs 225 per quintal, farmers were demanding Rs 320 per quital of cane. Last year, the State Government had fixed the price of a quintal of cane at Rs 280.
Sugar recovery during sugar season 2012-13 was down at about 10.03 per cent, compared to 10.25 per cent in the previous year, according to Indian Sugar Mills Association (ISMA) data.
While Maharashtra topped production at 79.94 lakh tonnes of sugar, UP came a close second producing 74.85 lakh tonnes of the sweetener from 122 sugar mills, according to ISMA data published on its Web site.
Stocks of sugar producers based both in the north as well as the south of the country, spurted on Wednesday. These included Bajaj Hindusthan, Oudh Sugar, Dwarikesh Sugar, Balrampur Chini and Dhampur Sugar in the north and Shree Renuka, EID Parry, Andhra Sugar, Dharani Sugar and Sakthi Sugars in the south. In some of these counters trading volume topped the one-crore mark.
Shares of Balrampur Chini closed with a gain of Rs 4.20 or 9.42 per cent at Rs 48.80 while Bajaj Hindusthan shares gained Rs 1.75 or 13.36 per cent to close Rs 14.85.
The trading volume was 1.57 crore shares. Dhampur Sugar closed at Rs 34.15, a gain of Rs 5.65 or 19.82 per cent, Dwarikesh Sugar jumped Rs 4.05 or 19.95 per cent to be locked in at Rs 24.35. Oudh Sugar Mills gained Rs 2.70 or 16.98 per cent at Rs 18.60. The stock hit a high of Rs 19.05 in intraday trade.