Sugar stocks rose up to eight per cent on Friday amid expectations that the government’s recent favourable decisions would turnaround companies’ struggling financial health.
Share price of Riga Sugar rose 8.03 per cent, while that of the country’s leading sugar producer, Bajaj Hindusthan, jumped 6.53 per cent. Other leading producers including Simbhaoli Sugars, Shree Renuka Sugars, Dwarikesh Sugar and Balrampur Chini rose 5.94 per cent, 4.45 per cent, 3.74 per cent and 2.99 per cent, respectively on Friday.
“This is a sentimental boost in tune with overall rise in the Sensex. There has been no change in fundamentals despite government’s favourable policies,” said Sageraj Baria, an analyst with Angel Broking.
| TOP TEN SUGAR STOCKS PRICE ON BSE IN Rs | |||
| Company | 31-Mar | 1-Apr | Chg % |
| Riga Sugar | 23.05 | 24.90 | 8.03 |
| Bajaj Hind | 71.20 | 75.85 | 6.53 |
| Simbhaoli Sugars | 41.25 | 43.70 | 5.94 |
| DCM Shriram Ind | 66.35 | 69.75 | 5.12 |
| Jeypore Sugar | 131.25 | 137.50 | 4.76 |
| Empee Sugars | 70.20 | 73.50 | 4.70 |
| Shree Renuka Sugars | 69.60 | 72.70 | 4.45 |
| Rajshree Sugar | 53.65 | 56.00 | 4.38 |
| Kesar Enterprises | 47.10 | 49.15 | 4.35 |
| Dwarikesh Sugar | 72.10 | 74.80 | 3.74 |
The industry estimates that the government may not extend duty free import of sugar to protect the domestic industry from the effects of declining prices. In case the government does not issue a notification immediately, the import duty on sugar will be 60 per cent effective April 1.
The duty free notification already lapsed on March 31 and the government did not issue any fresh ones. Hence, the industry presumes that the government levied 60 per cent import duty on sugar import to protect domestic industry, a UP-based miller said.
Import duty on sugar was abolished in early 2009 to boost domestic supply in view of steep decline in production in the 2008-09 sugar year (October-September). In 2008-09, the country’s total output was recorded at 14.7 million tonnes. In 2009-10, the output improved to 19 million tonnes, but was still short of demand. Before that, the import duty on sugar was 60 per cent. The duty-free import of sugar was valid until March 31.
Trade body Indian Sugar Mills Association estimates the total output at 25 million tonnes, while industry sources forecast the country’s total production at 24 million tonnes. Even with a lower forecast, India’s sugar production is higher than estimated consumption at 23.5 million tonnes. With an estimated carryover stock of 4.8 million tonnes, the country is expected to end the current season with over five million tonnes of surplus.
The empowered group of ministers recently announced 500,000 tonnes of sugar export order, but its notification is yet to be issued. Officials believe that the government will meet industry’s demand to allow more exports for a recovery in prices.
Meanwhile, sugar prices shot up marginally in spot market. In Delhi, prices shot up by Rs 25 a quintal to trade between Rs 3,000-3,150 a quintal from Rs 2,980-3,125 earlier (ready medium variety).
Mill delivery medium and second-grade prices also went up from Rs 2,775-2,925 and Rs 2,760-2,900 to settle at Rs 2,800-2,950 and Rs 2,775-2,925 a quintal, respectively. In Vashi market, however, sugar prices traded range-bound between Rs 2,826-2,916 a quintal (M-30) and Rs 2,781- 2,826 a quintal (S-30).
The government on Friday allocated 1.7 million tonnes of non-levy and 207,000 tonnes of levy quota of sugar sales for April. Out of 1.7 million tonnes of non-levy sugar, 1.58 tonnes would be normal quota, while 200,000 tonnes would be refined sugar processed from imported raw sugar and 100,000 tonnes as carryover from last month. Cost of sugar production stands on Friday around Rs 30 a kg.
