Sugar stocks rally after CCEA gives nod to export subsidy

CCEA cleared a proposal to extend a subsidy of Rs 4,000 a tonne on export of 1.4 million tonnes of raw sugar in the 2014-15

Shares of sugar companies continued their upward march for the second day in a row, after the cabinet committee on Economic Affairs on Thursday cleared a proposal to extend a subsidy of Rs 4,000 a tonne on export of 1.4 million tonnes of raw sugar in the 2014-15 crop year (which began last October and runs till end-September this year).

Bajaj Hindustan, Shree Renuka Sugars, Balrampur Chini Mills, Oudh Sugars, Ugar Sugar Works and EID Parry are trading higher between 2-6% on the Bombay Stock Exchange (BSE).

This is expected to help millers export a portion of surplus production and will help sugar mills to clear the cane price dues of farmers.

It said for mills with distillery facilities, the incentive applies only if they offer to supply a fourth of their annual alcohol production (a byproduct) as ethanol for the ongoing petrol-blending programme of oil marketing companies.

Abhinash Verma, director-general of the Indian Sugar Mills Association, said at the current global and domestic prices, raw sugar export from India would be just about viable with the incentives. Isma says there is a surplus of around 2.5 mt and the industry will require incentives for another 1.0-1.5 mt.

Among individual stocks, Bajaj Hindustan has surged 4 to Rs 20, Balrampur Chini Mills has moved higher by 3% to Rs 63, Shree Renuka Sugars has soared 4% to Rs 17 and Oudh Sugars has advanced 3% to Rs 20.