In the event of these new capacities materialising, there is bound to be tremendous competition for cane supplies among all factories in the area.

Harish Damodaran

New Delhi, Feb. 18

THE corporate battle for cane in Uttar Pradesh has entered the second phase.

While the war was originally launched sometime in early 2004, when the Shishir Bajaj-controlled Bajaj Hindusthan Ltd (BHL) announced the setting up of four new sugar units with an aggregate crushing capacity of 28,000 tonnes a day (tcd) in the vicinity of plants belonging to entrenched players in the cane heartland of western UP, today it is the turn of the old guard to strike back.

Leading the second `retaliatory' phase is Mr Dhruv M. Sahwney of Triveni Engineering & Industries Ltd. The company is reportedly planning to establish a 5,000-tcd unit just 11 km away from Bhaisana (Muzaffarnagar), which is the location for one of BHL's four proposed plants. Further, it is contemplating expansion of its existing 11,000-tcd Khatauli factory to 15,000 tcd, which, too, is situated hardly 20 km away from Bhaisana. In the event of these new capacities materialising, there is bound to be tremendous competition for cane supplies among all factories in the area.

In fact, what is particularly interesting about the ongoing cane war is that in the initial stage, the established players Triveni, Mr Tilak Dhar's DCM Shriram Industries, Mr Siddarth Shriram's Siel Ltd, Mr Ashok Goel's Dhampur Sugar Mills and the KK Birla group lobbied hard to increase the current minimum radial distance norm between an existing and new sugar unit from the present 15-45 km. The move was meant mainly to foil BHL's plans to set up its four greenfield mills, which, the company alleged, would `poach' on its existing cane area.

But now, with Mr Sawhney having decided to set up a 5,000-tcd plant near BHL's proposed Bhaisana unit, the boot is on the other leg. BHL, it is learnt, has challenged Triveni's retaliatory move on grounds that its plant is only 11 km away from the Bhaisana unit, which violates even the existing 15 km minimum radial distance criteria.

Triveni, in turn, has contested BHL's claim, citing that the radial distance norm applies only to an existing versus new unit, whereas in this case, both happen to be new ventures yet to get off the ground. According to sources, Triveni has even obtained a clarification from the Department of Industrial Policy and Promotion (DIPP) to strengthen its point.

Besides setting up a new 5,000-tcd unit and expanding its Khatauli plant to 15,000 tcd, Triveni is said to also be on the prowl to acquire two existing mills in the western UP belt, for which negotiations are "at an advanced stage. When contacted by Business Line, Mr Sahwney refused to confirm the latest developments, stating "I cannot comment anything at this stage".

(This article was published in the Business Line print edition dated February 19, 2005)
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