Shares of sugar companies advanced today after the government hiked the minimum selling price (MSP) of sugar by Rs 2 per kg to Rs 31. The move will boost the liquidity of cash-strapped millers and help clear mounting cane arrears of around Rs 20,000 crore.
Shares of Balrampur Chini Mills rose over 4 percent to Rs 122.40 per share. Avadh Sugar shares jumped 4.5 percent to Rs 383.90 per share. Mawana Sugara shares surged over 8 percent to Rs 44.25 per share. Dhampur Sugar Mills shares gained nearly 3 percent to Rs 197.60 per share.
MSP is the rate below which the mills cannot sell sugar in the open market to wholesalers and bulk consumers like beverage and biscuit makers.
Food Minister Ram Vilas Paswan said MSP has been increased in view of the rising sugarcane arrears to farmers. Arrears of sugarcane farmers stood at around Rs 20,000 crore as of January-end, according to industry body ISMA.
Paswan also said a mechanism will be put in place to ensure the benefit given to the industry is passed on to the sugarcane farmers.
The decision comes following demands from the industry and representation made by NCP chief and former agriculture minister Sharad Pawar to Prime Minister Narendra Modi.
With inputs from PTI