Industry sources indicated that they would together challenge the judgement in the Supreme Court through a special leave petition (SLP).
The interim price of Rs 110 a quintal declared by the bench in November last year is no longer valid and mills are now required to pay the difference of Rs 15 a quintal in two months. The difference would mean an additional burden of about Rs 1,100 crore on the industry.
"We are making marginal profits at Rs 110 a quintal since sugar prices continue to remain low. At Rs 125, our bottomlines will turn red and have long-term impact on the industry's financial health. In a cash crunch situation, it is impossible to make this higher payment," said industry sources.
Meanwhile, sugar stocks continued to take a beating for the second consecutive day. At the Bombay Stock Exchange (BSE), shares of Bajaj Hindusthan closed at Rs 154.65, down 5.33 per cent from its previous close, while Balrampur Chini lost 4.53 per cent to close at Rs 72.70.
All UP sugar companies had accounted for a sugarcane price of Rs 110 a quintal while declaring their results in the October-December and January-March quarterly results. Interestingly, most had declared a profit at this price.
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Triveni Engineering had posted a net profit of Rs 34.28 crore for the January-March quarter (535 up over same quarter last year) while Bajaj Hindusthan reported a net profit of Rs 43.03 crore (against Rs 3.66 crore in the same quarter last year). Most companies are likely to report a loss if they readjust their balance sheets at a price of Rs 125.