Ministry of Consumer Affairs, Food and Public Distribution announced 100 percent incentive on sugar sacrificed for producing ethanol from B-heavy molasses, sugarcane juice and syrup on December 26.
In reaction, sugar stocks such as Shree Renuka, Balrampur Chini Mills, Triveni Engineering, Dwarikesh Sugar, Uttam Sugar and Avadh Sugar surged over 3-5 percent on December 27.
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"The stock holding limit will be worked out on the basis of giving 100 percent weightage to the month end notional stock of the preceding month," as per a government notification.
Speaking to Moneycontrol, Vijay Banka, managing director of Dwarikesh Sugar explained, "If a mill has diverted 2000 metric tonne for ethanol with 10,000 metric tonne left, the monthly sales allocation was earlier counted on the 1o,000 figure. After this notification, it will be calculated on 12,000-figure."
This will boost stock holding limits for sugar mills and monthly allocation for sales will increase, added Atul Chaturvedi, executive chairman, Shree Renuka Sugars.
This formula will come into effect from January 2023.
In other news, the Petroleum Ministry may soon revise the price of ethanol made out of damaged food grains. Oil marketing companies (OMCs) are likely to revise it to Rs 58.50 per litre from the current Rs 55.54, sources told The HinduBusinessLine.
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