The Hindu Business Line : UP sugar sector witnessing investment boom

IT has happened before only in the 1930s. Over the 2004-05 and 2006-07 seasons (October-September), the sugar industry in Uttar Pradesh would be investing almost Rs 4,000 crore towards creation of fresh cane crushing capacity of 1,25,000 tonnes per day (tcd). Once these come up, the State will end up producing an additional 25 lakh tonnes (lt) of sugar, against its present annual level of 50 lt.

The projected figures are based on actual work taking place on the ground. UP is in the midst of an investment boom in sugar of the sort witnessed previously in the 1930s. That was when the colonial Government clamped a 185 per cent import duty on sugar from Java (Indonesia) in 1932. The result: The number of sugar mills in India went up from 29 in 1931 to 137 in 1936-37. The then United Provinces, which had 15 mills in 1930, had 75 of them by 1937!

A similar scramble is currently on for setting up factories in the State. Bajaj Hindusthan Ltd, the company that has triggered it off, commissioned its first new 7,000-tcd plant at Kinnouni (Meerut) during the 2004-05 season. In the ensuing season, beginning October, three more units of similar capacities are coming on stream at Bilai (Bijnor), Thanabhawan and Budhana (in Muzaffarnagar). If that were not enough, the company is adding three more mills in Saharanpur, Pilibhit and Lakhimpur Kheri districts in the 2006-07 season.

By then, it would have invested an estimated Rs 1,420 crore in additional crushing capacity of 65,000 tcd and a 160 kilolitre per day (KLPD) distillery at Kinnouni.

Not to be left behind, Balrampur Chini is commissioning a 7,000-tcd factory at Akbarpur (Ambedkarnagar) in 2005-06 and also plans similar unit along with a 60 KLPD distillery at Mankapur (Gonda) for the following season. The anticipated outlay: Rs 550 crore.

The K.K. Birla Group has also finalised a Rs 700-crore investment plan to fructify by the 2006-07 season. This includes two 7,000 tcd mills at Hata (Gorakhpur) and Lakhimpur Kheri by Upper Ganges Sugar & Industries and Oudh Sugar Mills Ltd respectively. Oudh Sugar will further expand its existing 7,500 tcd Hargaon (Sitapur) unit to 10,000 tcd.

Triveni Engineering & Industries and DCM Shriram Consolidated Ltd (DSCL) are now implementing major expansion projects. The former is investing nearly Rs 400 crore in expanding its Khatauli (Muzaffarnagar) factory from 11,750 tcd to 16,000 tcd, besides installing a greenfield 7,000 tcd mill at Sabitgarh (Bulandshahr) to be operational in the 2005-06 season.

DSCL proposes to spend Rs 500 crore for augmenting its crushing capacity from 11,000 tcd to over 33,000 tcd by October 2006 through two new plants of 5,500 tcd each at Hardoi and brownfield expansions of its present Ajbapur (Lakhimpur Kheri) and Rupapur (Hardoi) facilities.

In addition to these, there are the individual 5,000 tcd mill projects of Dwarikesh Sugar at Bahadarpur (Bijnor) and Mawana Sugars at Maukhas (Meerut) that are to undertake crushing in the 2005-06 season. All these together add up to roughly 1,40,000 tcd of new capacity additions, which assuming 10 per cent recovery and 150-160 days of crushing, would translate into an extra 20-22 lt of sugar being produced every year.

Then and now

THE investment boom in sugar during the 1930s, following the passage of the Sugar Industry Protection Act of 1932, led to a massive glut in production and the eventual formation of the Indian Sugar Syndicate in 1937. This was a kind of central marketing organisation set up by 92 mills in the country that sought to deal with the situation of overproduction and build up of huge stocks.

The experience of the 1930s also meant that the next round of capacity additions in the post-Independence period took place mainly in Maharashtra through State-assisted cooperative mills. But now, with the Maharashtra industry going through troubled times and production declining, the focus is once again back on UP mills.

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