The interim price of Rs 110 a quintal declared by the bench in November last year (in course of hearing the petition) is no longer valid and mills are now required to pay the difference of Rs 15 a quintal within two months.
"While at Rs 110, an amount of Rs 8,211 crore was payable by the mills. Now, they would be required to pay around Rs 1,100 crore more at Rs 125. The mills, for sure, are not in a position to take this additional burden," said industry sources.
Most sugar companies operating in the state faired badly at the Bombay Stock Exchange (BSE) on Monday. Bajaj Hindusthan lost 6.60 per cent to close at Rs 163.35, Balrampur lost 5.29 per cent to close at Rs 76.15 and Triveni Engineering closed at Rs 84.10, down 2.83 per cent from the previous close.
In the 2007-08 season, mills had refused to crush at the SAP and began crushing after a month's delay only after the court declared an interim price of Rs 110 on November 15. Due to the delay in crushing, farmers were forced to dump cane at the gur and khandsari units in a bid to vacate their fields for sowing wheat.
All state sugar companies had accounted for a price of Rs 110 a quintal while declaring financial results for the October-December and January-March quarterly results. Interestingly, most had declared a profit at this price.
Triveni Engineering had posted a net profit of Rs 34.28 crore for the January-March quarter, while Bajaj Hindusthan reported a net profit of Rs 43.03 crore (against Rs 3.66 crore in the comparable previous quarter).
This is a huge negative for the sugar mills, which will now have to re-adjust their balance sheets and most are expected to report losses.
