Shares of sugar manufacturers, led by Bajaj Hindusthan surged as much as 16 per cent on the Bombay Stock Exchange after the government partially decontrolled the sugar sector by giving freedom to millers to sell in the open market.
The decision to partially decontrol the sugar sector, the only industry left under the government control, was taken by the Cabinet Committee on Economic Affairs Thursday.
Reacting to the development, shares of the sugar producing companies surged as much as 16 per cent in morning trade on the BSE.
Bajaj Hindusthan touched an intra-day high of Rs 24.75, up 16.19 per cent from its previous closing price.
Shree Renuka Sugars surged to Rs 28.35, up 13.4 per cent from its last close.
Balrampur Chini Mills touched Rs 54, up 12.85 per cent from its previous closing price.
Marketmen said the surge in the sugar counter was largely on the back of Thursday's CCEA decision.
The government has partially decontrolled the Rs 80,000- crore (Rs 800-billion) sugar sector by giving freedom to millers to sell in the open market and removed their obligation to supply the sweetener at subsidised rates to ration shops.
Mills at present have to sell a portion of the sweetener they produced at a fixed rate of about Rs 20 per kg to the government.
After Friday's decision, they are free to sell all of their produce in the open market.
The decision will lead to government's annual sugar subsidy doubling to Rs 5,300 crore (Rs 53 billion), while industry will save about Rs 3,000 crore (Rs 30 billion) per year.