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Suresh P. Iyengar

Mumbai, Oct. 20 Sugar shares turned bitter on Monday even as the benchmark Sensex registered a sensational gain of 247 points, reversing its earlier downtrend in the last few weeks.

Sugar companies were hammered after the Maharashtra Government decided to cancel licences of 19 factories due to short supply of cane in the crushing season beginning October.

Bajaj Hindustan dipped 8.67 per cent to Rs 53.70, Shree Renuka Sugar lost 7.76 to settle at Rs 56.45, Bannari Amman Sugars shed 12.30 per cent at Rs 446, Shakthi Sugar declined 5 per cent at Rs 50, Upper Ganges Sugar dipped 5 per cent at Rs 41.35 and Uttam Sugar Mills lost 5 per cent at Rs 31.40.

All these stocks also registered a new 52-week low on Monday.

The State Government will issue licence only to factories where sugarcane availability is more than 50 per cent of their crushing capacity for the entire season.

“As per the Government norms, of the 173 sugar mills in the State only 154 will be operation in the crushing season this year,” said an analyst.

Sugar production of Maharashtra is likely to decline by over 30 per cent to about 60 lakh tonnes in the ongoing 2008-09 season mainly due to fall in acreage under cane cultivation.

According to data from the Ministry of Agriculture, sugarcane area in Maharashtra has slipped to 7.88 lakh hectares this year compared with 10.88 lakh hectares in the previous season.

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

Maharashtra produced 91 lakh tonnes in 2007-08 season, elevating the State to the largest producer in the country.

“In Maharashtra, the crushing, which was scheduled to begin in mid-October, is delayed due to Diwali and is expected to begin in November,” the analyst added.

However, the delay in crushing would lead to higher productivity as sugarcane would remain in the field for longer.

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.

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