Nov. 1 (Bloomberg) -- Bajaj Hindusthan Ltd., India's biggest sugar refiner by value, and rivals that have mills in the nation's largest cane-growing state fell in Mumbai trading on concern government price-fixing will erode earnings.

Uttar Pradesh's government ordered mills yesterday to pay farmers as much as 13,000 rupees ($331) a metric ton for sugar cane, or more than the price of sugar made from it. Mills had asked for the price to be cut because of low domestic rates.

Some mills may delay crushing to avoid adding to losses caused by a 30 percent drop in domestic prices of white sugar, analysts said. Bajaj Hindusthan Ltd. and Balrampur Chini Mills Ltd., India's biggest mills with facilities in Uttar Pradesh, reported losses in the quarter ended June, and are among the worst-performing stocks in the past year.

``The price may prompt some mills to not crush,'' Amit Mahawar, an analyst at HDFC Securities Ltd., said. ``Unless prices improve, sugar companies will continue to under-perform the market. The macro picture is still bearish for the sector.''

Bajaj Hindusthan fell for a third day, dropping as much as 3.1 percent, and traded at 181 rupees, or 1.8 percent lower, at 1:12 p.m. Mumbai time. The shares have declined 44 percent in the past year. Balrampur Chini fell as much as 3 percent to 77.6 rupees and is down 25 percent in the past 12 months.

Sugar makers in India pay so-called state-advised prices fixed by provincial governments to shield farmers, a powerful voting block, from losses. Mills in Uttar Pradesh owe growers 14.12 billion rupees in past dues, the state said yesterday.

India, forecast to surpass Brazil as the world's biggest sugar producer this year, closed the year ended Sept. 30 with a stockpile of 11.9 million tons, enough to meet demand for more than seven months.

To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net;

Last Updated: November 1, 2007 03:44 EDT