Sugar stocks get sweet

Sugar stocks are up amongst the top gainers on the BSE currently. Shree Renuka Sugar is the top gainer, up over 7% at Rs.18.05 followed by Balrampur Chini, the second top gainer, up 7% at Rs.62.70.

Sugar stocks are up as they could end up making more money with the Gov finally fixing the sale price of ethanol at Rs.48.50 -49.50/litre, used for blending with petrol. The price currently is at Rs.29/litre.

Blending of ethanol to the tune of 5% has been mandated from Nov’12 but OMCs could not comply due to procurement and supply constraints. Till now, the price of ethanol was decided mutually by the OMCs and the ethanol suppliers, which are mainly the sugar companies. But that has now changed with the Govt fixing the price at a much higher level than what the OMCs would have paid to the sugar companies.

This price has been fixed, based on the distance of the sugar mill from the depot of the OMCs. For the distance ranging from 0-100 kms price is fixed at Rs 48.50 per litre, for 101-300 kms price will be around Rs 49.00 per litre and for the distance more than 300 kms price will be around Rs 49.50 per litre. This price includes all Central and State taxes, transportation costs, which would be borne by the Ethanol suppliers.