The Hindu Business Line : SC order boosts sugar stocks

Mumbai, Sept. 8 Sugar company stocks hogged the limelight on the bourses on the back of the Supreme Court interim order directing Uttar Pradesh sugar companies to pay Rs 110 a quintal against the State advised price of Rs 125 a quintal for the sugarcane procured in the season ending September 30.

Bajaj Hindustan gained 4.24 per cent to Rs 171, Shree Renuka Sugar 5.30 per cent to Rs 120, Mawana Sugar 5.14 per cent to Rs 41, Balrampur Chini 5.14 per cent to Rs 92, Simbhaol Sugar 4.99 per cent to Rs 42, Dwarikesh Sugar 4.95 per cent to Rs 91 and Dhampur Sugar Mills 4.88 per cent to Rs 58.

The Uttar Pradesh Government in October 2007 ordered mills to pay Rs 125 a quintal, which was reduced by Rs 110 a quintal in November by the Uttar Pradesh High Court after the millers contested the Government order.

There are about 50 million sugarcane farmers in Uttar Pradesh, the largest sugarcane producer. The State advised price was much higher than Rs 81 prescribed by the Central Government.

Sugar company stocks were under pressure during the better part of the year due to a sharp fall in prices on the back of a bumper sugar production. In July, retail sugar prices started increasing and are ruling about Rs 1,700 a quintal to Rs 1,800 a quintal.

Mills have been offloading larger quantity of sugar in the open market as per the Government direction, said an analyst.

Sugar production in 2008-09 is estimated to fall 20 per cent to 21.7 million tonnes (mt) against 27.3 mt produced in the same period last year. It is set to slip further by 14 per cent to 18.7 mt in 2009-10 sugar seasons.

Sugar output

In Maharashtra, sugar output is estimated to drop 38 per cent to 5.7 million tonnes (9.2 mt), Uttar Pradesh 14 per cent to 6.5 mt (7.6 mt), Karnataka 2.5 mt (2.8 mt), Tamil Nadu 2 mt (2.5 mt) and Andhra Pradesh 1 mt (1.3 mt).

Hit by less remuneration last few years, farmers have shifted to other cash crops leading to a sharp decline in area under sugarcane cultivation, he said.

The area under sugarcane cultivation in Maharashtra is estimated to drop 26 per cent to 8 lakh hectares in 2008-09 against 10.88 lakh hectares last year. Consequently, the cane output is expected to fall 21 per cent to 70.2 mt (85.5 mt), while cane available for crushing may be lower 35 per cent at 50 mt (76.1 mt).

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