Export clearance sends sugar stocks soaring nearly 10%

MUMBAI: Sugar stocks surged on Tuesday by nearly 10% on the Bombay Stock Exchange (BSE) on hopes that the government is likely to allow sugar exports of up to two lakh tonne. India, the world’s top producer after Brazil and the biggest consumer of sugar, has flip-flopped on allowing 5-lakh tonne of unrestricted sugar exports, not sure of the stocks at a time when the country is struggling to contain high food inflation.

The Indian Sugar Mills Association (ISMA) had reportedly asked the government to allow unrestricted export of sugar under what is termed as open general licence (OGL). This will help sugar mills, reportedly facing losses of about Rs 150 per quintal, make payments to farmers for buying cane. Recent reports also suggested that agriculture minister Sharad Pawar had sought finance minister’s intervention to permit sugar exports immediately, because the window to export sugar from India is available only till end-April 2011.

In a letter to finance minister Pranab Mukherjee, Mr Pawar had reportedly said that the estimated sugar production of 24.5 million tonne (mt) would now be nearly 25 mt, more than the estimated consumption of 22 mt during the 2010-11 sugar season. An EGoM on food, headed by finance minister Pranab Mukherjee, was scheduled to meet later in the day to discuss allowing sugar exports under the open general licence (OGL).

Led by Oudh Sugar Mills, the entire sugar pack displayed a good trading session. Oudh Sugar closed 9.98 % up at Rs 31.40 a share on the BSE. Buoyed by the news, the scrip of Bajaj Hindusthan went up by 2.55% to Rs 70.45 a piece, while Shree Renuka Sugars gained 3.07% to finish the day at Rs 72.20 a share. Others like Simbhaoli Sugars rose by 2.48% to Rs 43.40, EID Parry by 0.66% and Triveni Engineering by 0.10% to Rs 96.75. Meanwhile, the BSE barometer Sensex closed at the 17988.30 level, 149.25 points up from its previous close.