The Hindu Business Line : Cane wars reach flashpoint

Turf war
With BHL acquiring Pratappur Sugar & Industries Ltd (PSIL) in December 2005 — the latter's 3,200-tcd mill is at Deoria in eastern UP — the unwritten no-confrontation code between the two sugar majors began to unravel.

New Delhi , June 29

After slugging it out in western Uttar Pradesh (UP), the sugar daddies have taken their cane wars to the eastern and central parts of the State.

And this time, it is a head-on fight between the Big Two who had so far avoided poaching into each other's cane area: Bajaj Hindusthan Ltd (BHL) and Balrampur Chini Mills.

Till 2003-04, BHL had only two plants at Golagokarannath and Paliakalan: both in Lakhimpur Kheri district of central UP. Balrampur Chini's mills at Balrampur, Tulsipur (same district), Babhnan (Gonda) and Haidergarh (Barabanki) were all in the eastern region.

Things changed after BHL entered western UP: hitherto the turf of Triveni Engineering, Mawana Sugars, DCM Shriram Industries and Dhampur Sugar Mills. During the 2004-05 and 2005-06 seasons (October-September), BHL commenced crushing at Kinauni (Meerut), Thanabhawan, Budhana (both in Muzaffarnagar) and Bilai (Bijnor).

Balrampur Chini, meanwhile, consolidated its eastern presence by setting up a new unit at Akbarpur and taking over Dhampur Sugar's facility at Rauzagaon (Barabanki).

That took its combined crushing capacity to 47,500 tonnes crushed per day (tcd), as opposed to BHL's 53,000 tcd. There was no tussle though, as yet.

Unwritten code

But with BHL acquiring Pratappur Sugar & Industries Ltd (PSIL) in December 2005 — the latter's 3,200-tcd mill is at Deoria in eastern UP — the unwritten no-confrontation code between the two sugar majors began to unravel.

During 2005-06, BHL also took on the management of two sick plants at Basti: the 5,000-tcd Basti Sugar Mill and the 2,500-tcd Govind Nagar Sugar (Walterganj).

What is more, PSIL is establishing three new eastern mills to be operational in 2007-08. They include a 15,000-tcd unit at Kundrakhi (Gonda), just 18 km from Datauli (Mankapur tehsil), where Balrampur Chini's greenfield 7,000-tcd plant is slated to come up in 2006-07. The other two are both in Basti: Saraya-Tejpur (12,000 tcd) and Rudauli (7,000 tcd).

To top it, BHL is commissioning three 10,000-tcd mills in central and western UP during 2006-07 at Khamberkheda (Lakhimpur Kheri), Barkheda (Pilibhit) and Gangnauli (Saharanpur).

Besides, it is adding a 7,000-tcd facility at Maksudpur Banda (Shahjahanpur) in 2007-08, bringing the group's total capacity to nearly 1.35 lakh tcd, excluding brownfield expansions.

Balrampur Chini has not taken BHL's eastern incursions (through PSIL) lightly. On May 4, barely a week after the groundbreaking ceremony for PSIL's Kundrakhi venture, Balrampur Chini did a similar `bhumipujan' at Nihalpur, about 20 km from BHL's existing Golagokarannath mill.

It is also planning a mill at Gularia, close to BHL's Paliakalan plant. Both these units of 8,000 tcd are scheduled to come up in 2007-08, by which time Balrampur Chini's aggregate capacity would cross 70,000 tcd.

The ultimate winner in this game is, of course, the humble UP sugarcane farmer, who would face no dearth of buyers vying for his crop.