Govt’s Minimum Price Hike Sends Sugar Company Shares Tumbling; Stocks Settle 3% Lower

Rana Sugars saw a decline of 2.86 per cent, closing at Rs 25.44 per share on the BSE. Mawana Sugars closed at Rs 102.07, Shree Renuka Sugars at Rs 48.96, Dalmia Bharat Sugar and Industries at Rs 402

The government's decision to increase the Fair and Remunerative Price, the minimum rate paid to sugarcane growers, by Rs 25 to Rs 340 per quintal for the upcoming season was announced on Wednesday.

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In response to the Centre’s announcement of a hike in the minimum price for sugarcane growers, shares of sugar companies took a dip, settling 3 per cent lower on Thursday. The new minimum price, effective for the 2024-25 season starting October, impacted various companies across the sector.

Rana Sugars witnessed a decline of 2.86 per cent, closing at Rs 25.44 per share on the BSE. Mawana Sugars closed at Rs 102.07, Shree Renuka Sugars at Rs 48.96, Dalmia Bharat Sugar and Industries at Rs 402, and EID Parry (India) at Rs 630.60, all experiencing a similar downward trend.

Triveni Engineering & Industries also saw a decrease of 0.73 per cent, settling at Rs 347.90 per share, alongside Dhampur Sugar Mills at Rs 248.95 and KCP Sugar & Industries Corp at Rs 41.75 per piece on the exchange. However, not all companies experienced losses. Rajshree Sugars & Chemicals saw a significant rally of 8.22 per cent, closing at Rs 80.60 per share, while Balrampur Chini Mills gained 0.45 per cent, finishing at Rs 382.45 each on the BSE.

The government's decision to increase the Fair and Remunerative Price (FRP), the minimum rate paid to sugarcane growers, by Rs 25 to Rs 340 per quintal for the upcoming season was announced on Wednesday. This decision, taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi, marks the highest FRP for sugarcane since the Modi-led government came into power in 2014. It's the second time the government has raised the FRP by Rs 25 per quintal in one go.

An official statement released on Wednesday highlighted the broad impact of the decision, stating, "This decision of the central government is going to benefit more than 5 crore sugarcane farmers (including family members) and lakhs of other persons involved in the sugar sector."