Sugar stocks surge as Govt approves Rs6,268cr export subsidy for sugar

The move comes in as a surplus stock of 162 lakh MT of sugar would create downward pressure throughout the season on sugar prices affecting liquidity of the sugar mills, thereby leading to accumulation of cane price arrears of farmers.

Aug 29, 2019 03:08 IST India Infoline News Service

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi, on Wednesday, August 28, gave its approval for providing a lumpsum export subsidy @ Rs10,448 per Metric Tonne (MT) to sugar mills for the sugar season 2019-20. 

Following the news, sugar stocks surged in opening trade.

The total estimated expenditure of ~Rs6,268cr will be incurred for this purpose, according to PIB.

The lump sum export subsidy will be provided for expenses on marketing costs including handling, upgrading and other processing costs, costs of international and internal transport and freight charges on export of up to 60 lakh MT of sugar limited to Maximum Admissible Export Quantity (MAEQ) allocated to sugar mills for the sugar season 2019-20.

The subsidy would be directly credited into farmers’ account on behalf of mills against cane price dues and subsequent balance, if any, would be credited to mill’s account.

The move comes in as a surplus stock of 162 lakh MT of sugar would create downward pressure throughout the season on sugar prices affecting liquidity of the sugar mills, thereby leading to accumulation of cane price arrears of farmers.

In wake of surplus sugar production during sugar season 2017-18 (October – September) and sugar season 2018-19, notwithstanding various measures taken by the Government, the ensuing sugar season 2019-20 is expected to commence with an opening stock of about 142 lakh MT and season end stock is expected to be ~162 lakh MT, according to PIB.

Stock View:

Shree Renuka Sugars Ltd is currently trading at Rs7.08 up by Rs0.29 or 4.27% from its previous closing of Rs6.79 on the BSE.

Dhampur Sugar Mills Ltd is currently trading at Rs153 up by Rs3.65 or 2.44% from its previous closing of Rs149.35 on the BSE.

Balrampur Chini Mills Ltd is currently trading at Rs133.70 up by Rs4.3 or 3.32% from its previous closing of Rs129.40 on the BSE.

Mawana Sugars Ltd is currently trading at Rs30.90 up by Rs1.45 or 4.92% from its previous closing of Rs29.45 on the BSE.

EID Parry (India) Ltd is currently trading at Rs155.95 up by Rs3.7 or 2.43% from its previous closing of Rs152.25 on the BSE.

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