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UP sugar crisis gets bitter: Private mills approach HC

Another episode added to the already bitter standoff between the Uttar Pradesh government and private sugar mills over sugarcane crushing in the coming season with the mills approaching the Allahabad High Court.

The mills have sought direction to the state government to come out with the recommendation of the state chief secretary-headed high-powered committee instituted last year to devise a permanent cane price formula. Then the government should adopt a ‘participative mechanism’ to discuss it with mills before announcing cane price for the coming season. The next date of hearing is posted to October 16.

About 66 private mills had already notified UP about suspension of operations in the coming season demanding the state first adopted a scientific formula for cane price fixation. The mills claimed they had not even started the customary maintenance work too.

Yesterday, UP cane commissioner Subhash Chandra Sharma had notified dates for starting mills. While, mills in western UP have been asked to start operations by November 10, the units in eastern UP should start crushing by November 15. There are 95 private mills in the state.

Likewise, the 23 cooperative and one sugar corporation mill have been asked to start crushing by the first and second week in western and eastern UP regions respectively.

Besides, the private mills are also carrying arrears of over Rs 2,800 crore for the 2013-14 crushing season. On September 5, the Allahabad HC had directed mills to liquidate their sugar stocks by October 31, 2014 to clear dues. At that time, the mills held nearly 2.75 million tonnes (MT) of sugar, which was about 42 percent of total sugar production of 6.45 MT in UP during 2013-14 by all the 119 mills.

The arrears had stood at about Rs 4,600 crore, which has now reduced to Rs 2,800 crore. At this rate, simple mathematics reveal the arrears would still stand at about Rs 2,000 crore by October 31.

Yesterday, Supreme Court had also rejected the petition of State Bank of India (SBI) and Punjab National Bank (PNB) seeking priority in repayment of their loans given to the private mills with sugar stock as collateral.

“We are liquidating our sugar stock to pay farmers as per the Court order,” an industry official said requesting anonymity. He noted the SC order had not altered the status of the HC observation of September 5.

The SC upheld the HC order that ordered for preferential payment towards farmers’ arrears.

Meanwhile, an industry source said it would take at least 8-10 weeks before mills could start.

Last year, the crushing had started in the first week of December following a similar stalemate.

Meanwhile, Sharma told Business Standard the government had apprised to mills on August 30 about timely crushing schedule, so that they had enough time at hand to prepare for the operations.

“Now, I have formally notified the dates for crushing. We would take strict action against erring mill owners and occupiers,” he warned.

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