The Hindu Business Line : Biz battle may extend to political arena

THE corporate battle currently under way between Bajaj Hindusthan Ltd (BHL) and other sugar majors over the former's aggressive investment plans may end up creating frictions between the Centre and the Uttar Pradesh (UP) Government as well.

The Centre, particularly the Food and Agriculture Minister, Mr Sharad Pawar, is believed to be favourably inclined towards an increase in the minimum radial distance norm between an existing and a new mill from the current 15 kilometres (km) to 40 km, as sought by the Indian Sugar Mills Association (ISMA).

This would act as a deterrent for new units from `poaching' on cane supplies to existing plants and not undermining the viability of the latter. The beneficiary in this case would obviously be the existing mills in western UP which are feeling threatened by BHL's move to set up four new units in the region with an aggregate daily cane crushing capacity of 28,000 tonnes (tcd).

But the Mulayam Singh administration in UP seems fully keen to support BHL's investment plans, involving a projected outlay of about Rs 550 crore. The UP Cabinet is, in fact, set to soon clear a new incentive scheme for attracting large-scale investments in the sugar industry.

The proposed scheme involves grant of a 10-year waiver on entry tax on sugar, purchase tax and cane society commission on sugarcane (currently Rs 2 per quintal and 3 per cent of Statutory Minimum Price, respectively), trade tax and administrative charges on molasses (2 per cent and Rs 110 per tonne, respectively) and stamp duty and registration charges on land.

But the catch is that for an entrepreneur to avail himself of the scheme, he has to invest a minimum Rs 400 crore from 2003-04 to 2006-07. Further, commercial production will have to start before March 31, 2007. And the incentives will take effect, once the company furnishes a Chartered Accountant's certificate showing that one-third of his proposed investment has fructified on the ground.

Sources say that given that there are few players contemplating investments of the envisaged magnitudes, BHL would stand to gain from the UP Government's proposed scheme.

More Stories on : Sugar | Agricultural Policy | Politics

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
SBI hopes to disburse Rs 6,000-cr agri loans

Sugar mills upset with BHL's move to enter western UP — Lobby for changes in radial distance norm

Biz battle may extend to political arena

CTCs firm at Kochi auction

Coonoor teas up

Cotton prices may move up

Take up contract farming in coconut, States urged