Twelve sugar stocks rose by 0.41% to 14.46% at 10:15 IST on BSE after the Uttar Pradesh-based sugar mills announced suspension of operations, following an impasse over announcement of state sugarcane price.
Triveni Engineering & Industries (up 14.46%), Dwarikesh Sugar Industries (up 10.64%), Dhampur Sugar Mills (up 7.56%), Oudh Sugar Mills (up 6.92%), Shree Renuka Sugars (up 6.57%), Bajaj Hindusthan (up 6.96%), Sakthi Sugars (up 3.89%), EID Parry (India) (up 3.65%), Balrampur Chini Mills (up 3.36%), KCP Sugar & Industries Corporation (up 3.41%), Rana Sugars (up 1.65%) and Eastern Sugar & Industries (up 0.41%), edged higher.
The BSE Sensex was down 37.17 points, or 0.18% at 20,853.65.
Sugar mills in Uttar Pradesh (UP) are facing financial problems because of depressed sugar prices. They have not been able to pay cane arrears and they have also incurred cash losses.
UP-based mills have officially declared that the sugar industry of the state would stand non-operative till the Rangarajan formula is adopted to fix the cane price.
According to media reports, governments in UP have favoured farmers when it comes to deciding the cane price, with the intention of garnering their votes. The special advisory price that sugar mills pay to farmers has surged 70% to Rs 280, from Rs 165 three years back. On the other hand, sugar prices have been hiked by just 7-8% over the last three years, reports added.
Bajaj Hindusthan said in a statement that the UP government has been fixing unreasonable, unaffordable and illogical State Advised Price (SAP) for sugarcane. As a result, sugar mills have incurred huge cash losses and its financial resources have exhausted; consequently the sugarcane arrears have also piled up to the detriment of interests of the farmers, besides the sugar mills. It added banks, too, had declined to provide higher working-capital loans to the sugar industry, aggravating private mills' problems.
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Triveni Engineering & Industries, DCM Shriram Consolidated, Uttam Sugar and Oudh Sugar Mills made similar filings on the exchange.
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