Export subsidy, rise in ethanol use sweeten sugar stocks

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Mumbai; Every possible step is being taken by the central government to help the sugar industry, which is suffering from financial scarcity and surplus sugar. In a bid to aid the sugar sector, the government last month announced 60 lakh sugar export subsidy for 2019-20 sugar season. The policy involves an export subsidy of Rs 10,448 per metric tonne (mt) to sugar mills. The total estimated expenditure government will bear Rs 6268 crore. News of the government’s boost for the sugar industry has impacted the stock market as well. Sugar shares have performed well in stock market in last one month expecting that the industry’s performance would improve because of sugar export subsidy and increase in Ethanol production.

Sugar surplus in the country causing harm to the sector, so this move by the government will be helpful in reducing the sugar glut in India and improving the financial condition of sugar mills.

In the past one month, Dharani Sugar & Chemicals shoot up 66 per cent, while Balrampur Chini surged 35 per cent, and Dhampur Sugar and Bajaj Hindusthan gained 33 per cent.

Recently, the government increased the price of ethanol from C heavy molasses from Rs.43.46 per litre to Rs.43.75 per litre, and the price of ethanol from B heavy molasses hiked from Rs.52.43 per litre to Rs.54.27 per litre. Price of ethanol from sugarcane juice/sugar/sugar syrup route was fixed at 59.48 per litre. The Central government has the vision to achieve 20 per cent ethanol blending with petrol by 2030 and is moving in the same direction. Experts believe the production of ethanol will aid sugar mills to become financially stable as they are struggling with depressed sugar prices, surplus stocks, and piling cane arrears.

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