Shares of sugar companies had an actually sweet start to the Wednesday's trading session as the prices jumped over 5 per cent on Bombay Stock Exchange (BSE) despite the ongoing impasse over announcement of state sugarcane price in Uttar Pradesh.
Stocks like Bajaj Hindusthan, Shree Renuka Sugars, Balrampur Chini Mills, Dhampur Sugar Mills were rallying in the range of 5-9 per cent. Burdened with huge losses, more than 65 sugar millers in Uttar Pradesh have suspended operations, in their protests against the sugar cane pricing policy of the state government.
According to media reports, 65 of the state's 99 private sugar mills have informed authorities about suspension of operations including well-known listed companies like Bajaj Hindusthan, Balrampur Chini Mills and Dhampur Sugar.
"Unviable, unaffordable and unreasonable sugarcane price has been continuously fixed over and above the paying capacity of the mills or above a level, which did not give a fair and reasonable return to the mills.
"This has already caused huge losses to us and has created an unavoidable situation, which is beyond our control to continue to run the operations in losses," Bajaj Hindustan, the country's largest sugar firm, said in its BSE filing.
Millers also said that their problems have increased as banks have raised interests on working capital loans, leading to huge burden of finance costs. Due to this, millers have decided to shut operations and have demanded that the state government announce state advisory price (SAP) based on the recommendations of the Rangarajan panel.
Dion Global Solutions Ltd.