Mumbai, Oct 21 - Sugar maker Bajaj Hindusthan Ltd sees its cane procurement cost rising by up to 3.9 billion rupees for the year-ending September 2009 but expects this to be offset by firm sugar price, a company official said.
India's northern state of Uttar Pradesh, the country's second-largest sugar producer after Maharashtra, raised the minimum price for sugarcane, late on Sunday, by 12 percent to 140 rupees per quintal.
"Our cane procurement cost will obviously rise... We are looking at an additional burden of 350-390 crore (rupees)," the official, who did not want to be identified, told Reuters over the telephone on Tuesday.
Bajaj Hindusthan, India's largest sugar producer, annually procures 13-15 million tonnes of sugarcane from farmers, and is likely to cut production in the current sugar year by 10 percent due to higher cane prices, he said.
The company, however, does not see its profitability being hit by higher cane rates if the sweetener stays buoyant.
"We'll have to see how sugar prices behave. If they are moving up, profitability will not be impacted," he said.
The sugar maker reported a net loss of nearly 94 million rupees in the year-ending September 2007 on net sales of 17.8 billion rupees due to a slump in sugar prices during the period.
It will report final quarter and full-year results for 2007/08 in December.
Sugar prices fell below 1,300 rupees a quintal to hit a fresh low in December 2007 but industry estimates prices to stay above 1,600 rupees in the current sugar year due to a fall in output on lower cane availability.
India's sugar production is expected to drop to about 20 million tonnes this year, from over 26 million tonnes a year ago
Shares in the company reversed early losses and were up as much as 1.7 percent to 54.6 rupees.