Shares of the Sugar companies rose on Thursday after that the Cabinet Committee on Economic Affairs (CCEA) has fixed prices for ethanol procurement.
CCEA approved a proposal to fix the delivered price of ethanol in the range of Rs.48.50 to Rs.49.50 per litre depending upon the distance of sugar mill from the depot/installation of the oil marketing companies.
Shares of Shree Renuka Sugars Ltd 6.53 per cent to Rs.17.95, Balrampur Chini Mills Ltd 6.99 per cent to Rs.62.75, Dhampur Sugar Mills Ltd 6.6 per cent to Rs 48.65 and Mawana Sugars Ltd 11.9 per cent to Rs.12.29.
The rates proposed would be delivered price at depot location and inclusive of all Central and State taxes, transportation costs, etc which would be borne by the Ethanol suppliers.
The report further said that, the OMCs will incorporate "Supply or Pay" clause duly backed up with bank guarantee in their supply agreement with Ethanol suppliers.
Besides, suppliers are required to incur additional cost of around Rs.6-8 per litre depending on the applicable state VAT, distance of sugar mill/distillery from OMCs depot and the Excise duty. Thus, for Ethanol suppliers, the landed cost of Ethanol at the OMCs depots would be around Rs.49 per litre.