Sugar stocks ended the day on a mixed note today as the Uttar Pradesh sugar crisis intensified with cash-starved private sugar mills in the state threatening to shut down operations in the 2014-15 season.
Shares of Dhampur Sugar Mills fell by 4.22 per cent, while Dalmia Bharat Sugar and Industries slipped 2.74 per cent at the BSE.
Among others, Dwarikesh Sugar Industries was down 1.70 per cent and Balrampur Chini Mills lost 0.41 per cent.
On the other hand, shares of Triveni Engineering & Industries rose by 2.25 per cent, Shree Renuka Sugars climbed 1.56 per cent, Sakthi Sugars (1.54 per cent), Bajaj Hindusthan (0.41 per cent).
Facing about Rs 3,500 crore losses this season, cash- starved private sugar mills in Uttar Pradesh today threatened to shut down operations in the 2014-15 season if the state government does not link cane price with sugar realisation like some other states.
Blaming the UP government for fixing the cane price "arbitrarily" at high levels and taking coercive steps, UP Sugar Mills Association said it has written to the UP Chief Secretary that mills would suspend operations in 2014-15 (October-September) as it has become unsustainable to run factories at losses.
Briefing the media, UPSMA -- represented by major sugar mills, including promoters of India's top two mills Bajaj Hindusthan and Balrampur Chini -- said the UP government has not fulfilled the financial commitment made at the start of the season and instead it has been taking coercive steps against mills defaulting on cane price payment to growers.
Due to high cane price set by the UP government and liquidity problems, mills have not been able make payment to farmers in time and arrears have mounted to Rs 7,000 crore.
Mills are facing financial losses as they are selling sugar lower than cost of the production in the wake of higher domestic production.
UPSMA represents 96 private sugar mills in the state.