Sugar scrips fall as UP hikes price

Written by Commodities Bureau | New Delhi, Oct 20 | Updated: Oct 21 2008, 06:24am hrs
Already reeling under two successive years of a bumper crop and low prices, shares of major sugar companies fell sharply on Monday after the Uttar Pradesh government raised the state administered price (SAP) of sugarcane by Rs 15 per quintal for the new crushing season that began on October 1. Uttar Pradesh is the countrys largest sugar producing state and home to some of the largest sugar companies.

Shares of Bajaj Hindustan Ltd, Indias biggest sugar refiner by sales declined Rs 5.6, or 9.5%, to 53.50 on the Bombay Stock Exchange, its lowest since July 26, 2004. Balrampur Chini Mills Ltd. dropped Rs 6.55, or 12%, to Rs 45.95, the lowest since December 2, 2004, while Renuka Sugar fell by 7.5%.

Meanwhile, the major sugar players from the state have reacted angrily to the latest decision of the UP government.

Vivek Saraogi, MD, Balrampur Chini, told mediapersons that his company would be challenging the decision in the court as it was against a rule issued by the Supreme Court .

The SAP is not based on economic consideration and is not a formula linked to sugar price, Saraogi said. Industry sources said that with sugar output expected to fall to around 21 million tonne to 22 million tonne this year against last years 28.5 million tonne, mills will be under immense pressure to source cane from farmers.