NEW DELHI: Sugar stocks surged up to 16 per cent on Wednesday amid reports that the Uttar Pradesh government has given its nod to Rs 2,070-crore financial aid for sugar mills.

A report by an agency quoted sources as saying, "The UP government will pay Rs 28.6/100 kg cane sop to sugar companies."

Data show at least 18 sugar stocks rallied up to 16 per cent for the day. Rana Sugars jumped 15.56 per cent to close at Rs 2.60 (provisional). KM Sugar Mills, Rajshree Sugars & Chemicals and Thiru Arooran Sugars soared between 11 per cent and 15 per cent. Ponni Sugars (Erode), Balrampur Chini Mills, Dwarikesh Sugar Industries added between 8 per cent and 10 per cent.

The UP government had promised sugar mills to pay up to Rs 40/100 kg as cane sop.

While the state government had approved Rs 11.40/100 kg earlier, if we go by reports, it announced the rest of the amount Rs 28.60/100 kg on Wednesday.

Uttar Pradesh is the second largest sugar-producing state.

Bajaj Hindusthan Sugar, Sakthi Sugars, Shree Renuka rose 6-6.5 per cent each. EID Parry, Dhampur Sugar Mills and Triveni Engineering also gained between 2 per cent and 3.5 per cent.

Last year, the UP government had promised Rs 20/100 kg of cane sop, but it failed to pay.

Sugar production in India is estimated at a record 28.3 million tonnes in 2014-15 marketing year (October-September), compared with 24.3 million tonnes in the previous year. The total annual demand is pegged at 24.5 million tonnes.