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Govt creating 2-mn tonne sugar buffer; stocks soar

Govt creating 2-mn tonne sugar buffer; stocks soar
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First Published: Tue, Mar 27 2007. 12 21 AM IST
Updated: Tue, Mar 27 2007. 12 21 AM IST
Sugar stocks rose on Monday after reports that the government had approved creating a two-million-tonne sugar buffer and offering incentives for exports. Stocks of Renuka Sugars, Bajaj Hindusthan, Triveni Engineering, Balrampur Chini and Rajshree Sugars went up by 3-9%, even as the benchmark index Sensex fell 1.22% to close at 13,124.32.
The government has decided to offer major incentives for sugar exports, while creating a buffer stock of two million tonnes (mt) of the price-sensitive commodity to help farmers and sugar producers. The buffer stock will be created for a maximum of two years. Export subsidy at a flat rate of Rs1,350 per tonne will be given for sugar mills in coastal areas and Rs1,450 per tonne for factories situated in northern states. In addition, an incentive of Rs440 per tonne will also be offered for exporting raw sugar.
Out of the 40 sugar stocks traded in the market, three stocks rose more than 8%. The leader was Ponni Sugars (Erode) Ltd. It rose 9.99% to close at Rs38. It was closely followed by Dharani Sugars that rose 9.05% to close at Rs21.7. Among other stocks, Shree Renuka Sugars rose 8.09% to close at Rs 430.10, Sakthi Sugars rose 6.92% to close at Rs62, KCP Sugar rose 5.11% to close at Rs18.50, Bajaj Hindustan rose 4.06% to close at Rs175.40, and Balrampur Chine rose 3.62% to close at Rs64.35.
Only three stocks lost on the bourses on 26 March. They are Kesar Enterprises Ltd (fell 3.87% to close at Rs83.3), JK Sugar (fell 2.12% to close at Rs25.45) and Empee Sugars & Chemicals (fell 0.24% to close at Rs8.37).
A Kotak Commodity Services report, released on Monday, said the sugar prices continued to show improvement. “The mills in Uttar Pradesh and Maharashtra last week had decided to not to sell sugar below a particular level, thereby creating a floor price for sugar in India,” it said.
Citing a report of Indian Sugar Mills Association, it said the sugar output is seen topping 25mt this season. “As per our in-house estimates, we expect this year’s sugar production at 22.36mt. With the floor price in place, there was some consolidation at the lower level,” the report said.
An senior analyst with a brokerage who tracks sugar stocks said the outlook for the industry brightened with the latest government measures. “Sugar stocks have a bitter time and almost all stocks are way below their yearly highs. But we feel that the worst is over for these stocks,” said the analyst, who did not wish to be quoted.
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First Published: Tue, Mar 27 2007. 12 21 AM IST