In what could be a major issue in the coming Lok Sabha elections, sugar mills in Uttar Pradesh are set to pile up payment arrears of around ₹12,000 crore against cane purchases from farmers by the month-end.
As on March 3, factories in the State had bought ₹13,533.81 crore worth of sugarcane based on the UP Government’s State advised price (SAP) of ₹280 a quintal announced for the 2013-14 crushing season (October-September).
As against this, they had made actual payments of just ₹3,989.48 crore, translating into dues of ₹9,544.33 crore.
The arrears would be lower if one considers only the cane value based on the first instalment SAP of ₹260/quintal.
The State Government has allowed mills to pay this rate within 14 days of taking delivery of cane and pay the balance ₹20 before the end of crushing operations by the middle of April or early-May.
Real dues Technically, taking only the immediate SAP obligation of ₹260/quintal and the 14 days time given to pay even that, current arrears are only ₹6,567.99 crore. But since mills are required ultimately to discharge the full SAP of ₹280, actual dues have already crossed ₹9,500 crore, which will touch ₹12,000 crore by March-end, industry sources told Business Line .
On top of this, UP mills also owe ₹286 crore as cane arrears for the previous 2012-13 season.
The current situation couldn’t have come at a worse time, politically. The major cane-growing belt of western UP – comprising Ghaziabad, Baghpat, Meerut, Muzaffarnagar, Saharanpur, Bijnor and Bulandshahr – is scheduled to vote on April 10. The second round on April 17 will also witness polling in areas with significant cane farmer populations – especially Moradabad, Rampur, Badaun, Bareilly, Pilibhit, Shahjahahpur and Kheri.
In one month’s time, this is going to be a big poll issue. It will obviously go against the ruling Samajwadi Party; but who will benefit is not known,” the sources said.
Corporate arrears Of the total ₹6,567.99 crore of ‘technical’ cane arrears, the major chunk of ₹6,119.73 crore is owed by private sugar mills, with cooperatives and State-owned factories accounting for the rest.
Among those with the largest share of the ₹ 6,119.73 crore dues by private mills are Bajaj Hindusthan (₹1,482.21 crore), Balrampur Chini (₹613.94 crore), Triveni Engineering (₹459.02 crore), Dhampur Sugar (₹399.35 crore), Mawana Sugars (₹374.08 crore), K.K. Birla Group (₹313.34 crore), Simbhaoli Sugars (₹240.02 crore), DCM Shriram Consolidated (₹230.36 crore), UK Modi Group (₹218.28 crore), Rana Sugars (₹192.33 crore) and Dwarikesh Sugar (₹180.75 crore).
“Paying ₹280 a quintal is impossible given ex-factory sugar realisations of ₹29.50-30 a kg. Prices had dropped as low at ₹28 in January. But even at the current improved levels – largely courtesy the Centre’s incentive of ₹3,300 a tonne on raw sugar exports – SAP dues will keep mounting”, the sources added.