Morgan Stanley in a Note said,
The UP state government announcement on the cane price for the current sugar season of ~Rs2,920/MT landed cost, is much higher than expectations (higher end of expectations was Rs2,820/MT). The cane price for last season was Rs2,520/MT. Profitability of north Indian millers is likely to be dented. In other words, sugar cost of production (ex sales of by-products for ethanol and co-gen) is likely to be 35,000/MT, which is comparable to the current spot sugar prices, implying no profits for the sugar division at the operating level, with additional interest burden to deal with.
We estimate that there is about an 80%+ or "highly likely" probability for the scenario.
