Sugar companies enjoyed an increase in their share prices on Friday, a day after the government decided to decontrol the Rs 80,000-crore industry.

On Thursday, the government abolished the monthly release mechanism and liberated sugar mills from the obligation to sell 10 per cent of their total output at Rs 13.50 a kg to the government for its distribution to the weaker section of the society via the public distribution system (PDS) across the country.

Sugar companies are now able to sell the produce at their own convenience, which is expected to bring them more cash. However, the government will review the decision in two years.

The decision was a big encouragement to investors. Stock in Thiru Arooran Sugars jumped a whopping 20 per cent, while Uttarm shares climbed 19.16 per cent.

Shares of big players like Balrampur Chini, Bajaj Hindusthan, Shree Renuka Sugars, and Simbhaoli Sugars also jumped, though not as much as small players.

Sanjay Tapriya, CFO of Simbhaoli Sugar Industries Ltd, said, "The estimated 3% additional income will be added to our annual profit which was otherwise under tremendous pressure."

Abinash Verma, Director General of the Indian Sugar Mills Association (ISMA), also said that the abolition of 10 per cent obligatory levy criterion would help the industry get an additional cash flow of 3 per cent in net profit.

After reporting a huge profit of Rs 933 crore in 2011, the industry posted a loss of Rs 317 crore in 2012.