Rating agency ICRA has put eight sugar mills on ‘rating watch with negative implication’ following the Uttar Pradesh sugar mills to suspend operations despite the State Government directive to commence operations.
The eight companies include Balrampur Chini Mills, Triveni Engineering & Industries, Dalmia Bharat Sugar, Dwarikesh Sugar Industries, Shakumbari Sugar, LH Sugar Factories, Sir Shadi Lal Enterprises, Wave Industries and Allied Industries.
The sugar mills contend that at the state advised price of Rs 280 a quintal for cane fixed by the UP Government, most mills will incur losses. Despite this, the Uttar Pradesh Government notified price for cane for the current year at the same level of Rs 280 a quintal.
Given the present uncertainty, ICRA said it is difficult to quantify the eventual impact of this development on individual companies’ financial risk profile.
However, the rating agency is monitoring the situation and would conclude its rating action as and when greater clarity emerges.