The Hindu Business Line : UP mills meet to chalk out `no cane war' strategy

Predatory war
During 2005-06, Triveni Engineering hiked its cane price from Rs 115 to Rs 128 a quintal and also started crushing from its Khatauli plant in early October to fend off competition from BHL's newly opened Thanabhawan and Budhana units.
Simbhaoli also took season early in response to Mawana Sugars' Nanglamal factory.

New Delhi , Sept. 28

Leading sugar barons of Uttar Pradesh met here on Thursday to thrash out a `no-cane price war, no-poaching' pact for the forthcoming 2006-07 crushing season (October-September).

The meeting, called by the Chief Executive of Bajaj Hindusthan Ltd (BHL), Mr Kushagra Bajaj, was attended by the Chairman and Managing Director (CMD) of Triveni Engineering & Industries, Mr Dhruv Sawhney; the CMD of Simbhaoli Sugar Mills, Mr G.S. Mann; the Managing Director of Dhampur Sugar Mills, Mr Gaurav Goel; the Managing Director of Shakumbari Sugar & Allied Industries (Dainik Jagran group), Mr Shailendra Mohan and the Senior Executive Director of Sir Shadi Lal Enterprises (Upper Doab Sugar, Shamli), Mr K.B. Lal.

`Exchanging views'

None of the barons present were willing to give full details of what was discussed, beyond stating that it was held to `take stock' and `exchange views' ahead of the season.

But what clearly emerged was a sense of mills wanting to avoid a repeat of 2005-06, which saw Triveni Engineering hiking its cane price from Rs 115 to Rs 128 a quintal and also starting crushing from its Khatauli plant in early October to fend off competition from BHL's newly opened Thanabhawan and Budhana units. Similarly, Simbhaoli took season early in response to Mawana Sugars' Nanglamal factory.

The end result of this predatory war was that the `ratoon' crop that normally lasts till January got exhausted by the third week of December. Since cold conditions do not allow the new plant cane to ripen for crushing till early February, it led to a severe shortage of raw material, particularly in western UP.

"Today's meeting was basically by companies with mills in western UP. The fact that the initiative came from BHL is significant, since the huge capacities created by it has been a major source of discomfort for other players in the region," sources pointed out.

The main reason for mills closing ranks this time is that UP is headed for assembly polls round February and there is political pressure on raising cane prices. For the 2005-06 season, the State Advised Price (SAP) for normal cane was Rs 115 a quintal, though companies paid Rs 13 a quintal more. They would not find it easy now, given the declining sugar realisations. At the same time, the massive investments in new capacities means that the mills would continue to require sufficient cane to crush.

More Stories on : Sugar | Agricultural Policy

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

Stories in this Section
Pepsico India to start seaweed cultivation in coastal Gujarat

`States must formulate rules to woo pvt investment in agriculture'

Spot rubber rules steady

UP mills meet to chalk out `no cane war' strategy

Low volumes on offer at Coonoor tea auction

Global growth outlook to help energy, base metals

Vegoil market players bullish on biodiesel factor

Ginger exports rise as imports turn unattractive

Campco to diversify into organic manure production

50,000 t Russian wheat shipment rejected