Decontrol Is Sweet News For Sugar Daddies

Shares of leading sugar companies zoomed today following the government's 'in principle' approval for the sector's de-control.

Shares of Uttar Pradesh-based sugar major Balrampur Chini jumped more than 10 per cent and later receded to close at Rs 95.05, up 5.61 per cent on the Bombay Stock Exchange.

Shares of Bannnari Aman also rose 97 per cent to close at Rs 119.85, while Ravalgaon Sugar moved up 3.58 per cent to close at Rs 289.50.

Balrampur Chini rose 15.5 per cent to Rs 90 on February 5 from Rs 78 on November 29, 2001. In the same period, the scrip reached a high of Rs 92.25 and a low of Rs 73.

Today's rise in Balrampur Chini and other sugar stocks was due to the announcement of an `in principle' approval for the complete decontrol of sugar trades in the next fiscal after futures trading in sugar becomes operational, most likely in November 2002, dealers said.

Decontrol of sugar implies that the existing levy sugar system and quota release system would be abolished, paving the way for market-determined pricing of the commodity.

The rise in Balrampur Chini is also attributed to its buy-back programme that will commence from February 8. The company had earlier announced its plan to buy-back a maximum of 18,97,000 fully paid-up equity shares at a price not exceeding Rs 100 per share.

The company is also reportedly setting up an 18-mw power plant and expanding the capacity of its alcohol distillery from 60 kilo litre per day to 100 kl . It also plans to set up an integrated sugar complex at Barabanki district in Uttar Pradesh.

The cost of the project is estimated to be around Rs 100 crore. It would be a greenfield project with a 10 mw power plant.