The Hindu Business Line : Sugar mills in UP begin paying cane arrears

UTTAR PRADESH sugar mills have begun paying their accumulated arrears of about Rs 517 crore, which is essentially the difference between the sugarcane prices fixed by the Centre's Statutory Minimum Price (SMP) and the State Government's "advised" price for 2002-03 cane season.

"We are now accepting it (arrear payments) as a liability. Earlier, we were not accepting it as a liability," said an UP Sugar Mills Association official. All sugar companies have decided to start making "token payments depending upon their financial condition", he added.

The move comes on the heels of Mr Rahul Gandhi raising the issue in Parliament in his maiden speech recently. In May 2004, the Supreme Court had upheld the rights of State Governments to fix or `advice' cane prices over and above the SMP declared by the Centre. Sugar mills had paid SMP to farmers instead of the State Advised Price (SAP) in 2002-03 and had moved Court disputing the authority of State Governments to fix cane prices. The total arrears shot up to about Rs 540 crore, including the sugar mills from Uttaranchal.

Till Thursday, about 12 sugar mills had begun paying up the dues partially - ranging from 5 to 15 per cent of the arrears - totalling about Rs 15.47 crore. The mills include Bajaj Hindusthan (Rs 2 crore in Palia and Rs 2 crore in Gola), Balrampur Chini (total of Rs 1.6 crore in Tulsipur and Balrampur), Triveni Engineering (Rs 1 crore in Deobandh and Rs 80 lakh in Khatauli), Modi Sugars (Rs 2.95 crore in Malakpur), Babhnan unit (Rs 1.22 crore), Ramkola unit (Rs 40 lakh), Shakumbhari Sugar (Rs 43.21 lakh), Daya Sugar (Rs 20.1 lakh) and Dorala Sugar (Rs 50 lakh).

About 50-60 per cent of the companies would start paying this month itself, said an industry insider.

Asked if the mills would record the liabilities in their accounts for this fiscal, which would be ending on March 31, an UP Sugar Mills Association official said: "They have to."

Rest of the mills will start making the payment beginning early April, he added. However, it remains to be seen whether the sugar mills make provisions in their accounts for these payouts and how long they take to pay their total dues.

According to Bajaj Hindusthan officials, the company will show its arrears as liability for this fiscal. The company has arrears of Rs 36 crore over three years, which it would pay up over three years. The company plans to pay Rs 12 crore this sugar season (October 04-September 05).

For the current (2004-05) sugar season, the arrears yet to be paid amount to Rs 560.6 crore as of mid-March, with the private mills accounting for Rs 403.97 crore, cooperatives 101.01 crore and sugar cooperatives accounting for Rs 55.62 crore.

Modi Sugars Malakpur unit has arrears of Rs 30.08 crore, Dhampur Sugar Rs 37.24 crore, Syohara unit Rs 14.58 crore and Dhanora unit has Rs 14.07 crore of arrears, among others.

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