Sugar stocks end on a sweet note, surge up to 10% after CCEA move

MUMBAI: Shares of sugar companies surged after the Cabinet Committee on Economic Affairs approved an interest-free loan package worth Rs 6,000 crore for the debt-laden industry.

In intraday trade, Bajaj Hindustan surged 16.78 per cent, Balrampur Chini rallied 13.30 per cent, Dhampur Sugar gained 11.5 per cent, Andhra Sugar surged 10.20 per cent and Oudh Sugar advanced 18.92 per cent on the BSE after ET Now broke the story.

Here's how these stocks ended the day:

Oudh Sugar: up 9.15 per cent

Bajaj Hindustan: 10.05 per cent

Balrampur Chini: 2.69 per cent

Dhampur Sugar: 4.50 per cent

Andhra Sugar: 6.82 per cent



The food ministry plans to use sugar development fund to pay interest on the loans, sources told ET Now.
Sugar mills in Maharashtra, the country's largest sugar producer, have defaulted on payment to sugarcane farmers this season.

Industry observers said every mill has defaulted on payment of the mandatory fair and remunerative price (FRP) to sugarcane farmers as nobody wanted to miss out on the government package of interest-free loans of Rs 2,000 crore announced earlier, reported ET.

In April, the Indian Sugar Mills Association (ISMA) had said that about 25 per cent of over 500 mills in the country may not be in a position to start crushing operations next marketing year starting October 2015 due to huge debt and banks' reluctance to provide fresh loan.

"The debt burden of the industry has tripled to Rs 36,601 crore in 2012-13 fiscal from Rs 11,443 crore in 2007-08. With the increase in debt burden, 20-25 per cent of the sugar mills may not be able to start crushing operations in the 2015-16 marketing year," ISMA Director General Abinash Verma had said.

The sugar mills are under pressure as they owe over Rs 21,000 crore to farmers in cane dues. Prices remain depressed due to glut in supply and decline in exports.