Shares of sugar cos fall as govt defers PDS price hike

MUMBAI: Shares of sugar companies fell sharply on Tuesday on reports that the Manmohan Singh-led UPA government has dropped the agenda of hiking sugar prices sold through the public distribution system.

According to reports, the government hit the pause button keeping the festive season in mind. Removing the subsidy would have meant a steep hike in the price of the commodity to Rs 23 per kg from Rs 13.50 per kg.

The relief is expected to last till December. The sugar prices have remained unchanged since March 1, 2002.

Under the levy obligation, sugar mills are required to sell 10 per cent of their output, totalling 2.7MT/year, at 60 per cent of the cost of production to the government, resulting in an annual industry loss of about Rs 25-30 billion.

At 03:00 pm, Bajaj Hindustan was down 4.86 per cent, Balrampur Chini Mills fell 4.48 per cent, Dwarikesh Sugar was 4.80 per cent lower, Oudh Sugar Mills plunged 7.41 per cent and Sajthi Sugars fell 7.68 per cent.