Sugar companies' stocks decline after govt raises fair price to Rs 340 per quintal

New Delhi: Shares of Sugar companies tumbled up to 3 per cent in the morning trade on Thursday after the government announced a hike in the minimum price that mills have to pay to sugarcane growers for the 2024-25 season starting October.

The scrip of Rana Sugars plunged 3.21 per cent to Rs 25.35 apiece, Mawana Sugars slumped 2.81 per cent to Rs 101.70, Rajshree Sugars & Chemicals tumbled 2.50 per cent to Rs 72.62, Shree Renuka Sugars declined 2.41 per cent to Rs 48.50, KCP Sugar & Industries declined 2.20 per cent to Rs 40.87, and EID Parry (India) slipped 1.57 per cent to Rs 629.20 apiece on the BSE.

Also, Dalmia Bharat Sugar and Industries went lower by 1.15 per cent to Rs 403.15 per piece, Balrampur Chinni Mills fell 1.12 per cent to Rs 376.50, Dhampur Sugar Mills down by 0.96 per cent to Rs 248 and Triveni Engineering and Industries slipped 0.76 per cent to Rs 347.80 apiece on the bourse.

In the morning session, the 30-share BSE Sensex benchmark declined 410.20 points or 0.56 per cent to 72,212.89 points.

On Wednesday, the central government announced a hike in the Fair and Remunerative Price (FRP), the minimum rate that mills need to pay to sugarcane growers. The FRP has been increased by Rs 25 to Rs 340 per quintal for the 2024-25 season starting October.

The decision to increase the FRP was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi.

This is the highest FRP for sugarcane announced by the Prime Minister Narendra Modi-led government since coming to power in 2014. This is the second time that the Modi government has increased the FRP by Rs 25 per quintal in one go.

"This decision of central government is going to benefit more than 5 crore sugarcane farmers (including family members) and lakhs of other persons involved in sugar sector," an official statement said on Wednesday.