Competition watchdog CCI has approved the proposed merger of JK Sugar with Dhampur Sugar Mills Ltd (DSML).
"The assessment of the proposed combination, the Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission approves the proposed combination," Competition Commission of India (CCI) said in its order.
Dhampur Sugar Mills in June had said that it has approved the merger of JK Sugar (JKSL) with itself.
JK Sugar has sugarcane crushing capacity of over 4,000 tonnes per day. Dhampur Sugar Mills has capacity to crush 39,500 tonnes of cane per day.
Both the companies are based in Uttar Pradesh, the second largest sugar producer after Maharashtra.
Other than sugar, both the companies also generate electricity from bagasse, by-product left after crushing of cane, and sell molasses as well, another by-product.
"The proposed combination which relates to the amalgamation of JKSL with DSML therefore broadly involves three products sugar, electric power and molasses, for the purpose of competitive assessment under the provisions of the Act," CCI said.
Sugar production, supply sale and sugarcane as input for production of sugar is regulated by the government in the country.
"It is therefore, observed that by controlling the price of sugarcane, the government indirectly controls the cost of production of sugar. ... It is observed that the price difference between the whole sale prices of sugar prevailing in different zones is small," CCI said.
Shares of Dhampur Sugar Mills closed at Rs 68.85 apiece on the BSE, up 3.53% from the previous close.
JK Sugar shares ended at Rs 24.64 apiece, down 4.64% from the previous close.