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Sugar Industry cheers ethanol price hike

Gayathri Udyawar
/ Categories: Markets, DSIJ Mindshare
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Stocks that were forever punished for being sugar producers saw immense active following the hike of ethanol prices by the central government. During Friday morning session, stocks of several sugar players were up from more than 5 per cent to upto 20 per cent.

Sugar stocks that hit upper circuit of 20 per cent in the morning session include Magadh Sugar at Rs. 107.45 per share, Avadh Sugar at Rs. 471.20 per share, Thiru Arooran Sugar at Rs. 28.65 per share, Rajshree Sugar at Rs. 27.75 per share, Dalmia Sugar at Rs. 78.00 and Uttam Sugar at Rs. 110.25 per share.

Frontline sugar stocks, Mawana Sugar was quoting Rs. 60.25, up by 18.14 per cent, Sakthi Sugars was at Rs. 17.40, up by 16.86 per cent, Shree Renuka Sugars was at Rs. 14.25, up 11.33 per cent, Balrampur Chini was at Rs. 84.60, up by 8.67 per cent, EID Parry was at Rs. 226.95 per share, up by 6.03 per cent and Dharani Sugars was at Rs. 14.55 per share, up by 4.98 per cent.

Earlier on Wednesday, the central government hiked the price of ethanol produced from sugar cane juice by 25 per cent in order to incentivise the distressed sugar industry, in particular, the sugar mills. The government aims to divert the use of sugar cane juice for the production of ethanol. The Cabinet, head by Prime Minister, Narendra Modi approved a 25 per cent hike in the price of ethanol derived from 100 per cent sugar cane juice. The price was increased from Rs. 47.13 per litre of ethanol to Rs. 59.13 per litre. Sugarcane crushed at sugar mills will have to utilize 100 per cent of the cane juice produced for the making of ethanol instead of producing sugar.

The Ethanol produced from C-heavy Molasses is priced at Rs. 43.47 per litre and will remain unchanged, while from B-heavy Molasses that was priced at Rs. 47.49 will now fetch Rs. 52.43 per litre, which is a hike of 10 per cent.

Sugar Industry leaders welcomed the government's decision and reaffirmed the industry's commitment to help government achieve the target of 10 per cent ethanol blending with petrol by 2022. This is expected to reduce India's fuel import bill by Rs. 12,000 crore.

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