Bajaj, Dalmia bids for UP sugar mills rejected

The five bidding companies included Bajaj Hindusthan, Dalmia, Magna, Ponty Chhadha and the Diamond Group. The bids were opened on June 30. The bids were cancelled since recovery certificates (RCs) had been issued against some of the bidding companies, besides other anomalies were also detected.

According to the new terms, the bidding company should have a net worth of at least Rs 600 crore, minimum turnover of Rs 500 crore and must have posted cash profit for at least three financial years in the last five financial years.

Interested firms will have to bid for the entire equity of the corporation sugar mills.

While Bajaj is the largest sugar producer in the country and owns 16 sugar mills in the state, Dalmia owns three mills at Ramgarh and Jawaharpur in Sitapur district and Nigohi in Shahjahanpur.

Last month, the government had lodged FIRs against the Bajaj Group mills for paying cane growers after deducting the transportation cost at the rate of Rs 10.50 per quintal, which the state government contended was against the Supreme Court order. Later, the SC ordered the Bajaj Group to repay the deducted amount to keep the payment rate at Rs 110 per quintal.

The last date for the submission of EoIs was extended from June 13 after only Bajaj and Dalmia had submitted their bids. An investors' meet was also called in Delhi on June 20 to push the privatisation process of the mills further.

These sugar mills are located at prime locations in the state and have a sizeable land asset. Of the 33 sugar corporation mills, 22 are in a working condition, but only 17 of them had participated in the 2007-08 crushing season.

Four mills are under the Board for Industrial and Financial Reconstruction (BIFR). The decision to privatise these mills was taken in June 2007. Most of these sugar mills also carry substantial payment liabilities and farmers' dues.

The area under sugarcane is likely to shrink by 30 per cent this year due to the delay in payments and confusion on cane price in the last crushing season.

This means that the mills would be hard pressed to get sugarcane for crushing in the 2008-09 season, which would kick off in October.