The Hindu Business Line : UP sugar mills begin to pile up cane arrears

Bitter pill
The six mills were slapped the notices last week.
Mills accumulating arrears beyond 14-day payment deadline to get notice.
Units blame the Rs 270 a quintal fall in sugar prices for the situation.

New Delhi , Jan. 4

Dipping sugar prices are beginning to tell on the industry's health, with many mills in Uttar Pradesh (UP) accumulating arrears in cane payments.

More on cards

The Cane Commissioner's office at Lucknow has already issued recovery certificates (RC) to six factories and is planning to serve notices on a dozen-odd others that have not paid up the full amount due to growers within the stipulated 14 days from the date of cane delivery.

The six mills, against whom RCs were issued late last week, include the Kanoria Sugar & General Manufacturing Company's unit at Captainganj (Kushinagar), Mr K.K. Bajoria's Agauta factory at Bulandshahr, Mr M.P. Singh's Venus Sugar at Majhawali (Moradabad), Shervani Sugar Syndicate's Neoli plant at Etah, Mr Avdhesh Verma's Khalilabad Sugar Mills at Basti and the Majithia family's Saraya Sugar Mills at Gorakhpur.

"These mills are yet to clear even cane arrears of past years. We will next issue notices to mills that have already accumulated arrears for the current season beyond the 14-day payment deadline. If they fail to pay up after that, we will straightaway serve RCs on them too," a top State Government official told Business Line.

Triveni, Balrampur

The mills that have, as on December 29, not discharged their full payments within the mandatory period include, among others, Triveni Engineering & Industries' Khatauli plant (Muzaffarnagar), Balrampur Chini's Babhnan (Gonda) and Mijhaura (Ambedkar Nagar) units, Uttam Sugar's Khaikheri mill at Muzaffarnagar, Mr Pawan Kumar Ruia's Kamlapur factory at Sitapur and Parle Biscuits' Parsendi unit at Bahraich.

Clause 3 (3A) of the Sugarcane Control Order, 1966 provides for mills to discharge interest on payments delayed beyond 14 days of cane delivery at 15 per cent per annum. Once the RCs are issued, the cane dues and interest there on can be recovered as arrears of land revenue from the defaulting factories.

The build-up of arrears early in the season - crushing this time began only from November - is significant given that UP is heading for Assembly elections in a few months. As political temperatures rise and cane dues mount further, the issue is likely to be used by the opposition to pin down the ruling Samajwadi Party-led administration and the latter, in turn, blaming the Centre's ban on sugar exports for the growers' plight.

Fall in prices blamed

The mills, on their part, attribute the payment problems to falling sugar prices. Ex-factory realisations are currently around Rs 1,580 per quintal, having gone as high as Rs 1,850 per quintal little more than a year ago. On the other hand, the UP Government has announced a price of Rs 125 per quintal for common cane and Rs 130 per quintal for early maturing varieties during the current season (October-September). These are Rs 10 more than the corresponding rates declared for the 2005-06 season.