UP sugar mills' bidding deferred, industry wary

Even as Uttar Pradesh successively defers financial bidding dates for the state sugar mills, the industry feels that the privatisation looks remote this year with the crushing season set to start less than two months from now.

The crushing season, which normally starts in the first week of November, continues till sugarcane is available, which may extend till March-April.

“The transfer of assets and other formalities involved in the sale process may pose a big challenge since the crushing season is almost on the threshold,” an industry spokesperson told Business Standard.

At present, a total of 35 sugar corporation and federation units have been put on block by the state government.

As a sweetener, Uttar Pradesh is offering industrial alcohol licence and assurance of continuation of existing cane area to individual units.

However, the response from the industry has so far been lukewarm. While, the date for filing the financial bids for 11 Sugar Corporation and 15 federation units had been extended to September 14 and September 10 respectively, the dates for filing technical bids for nine federation mills is September 11.

“In all possibility, the privatisation process of the sugar mills may not be completed this fiscal, since the crushing season is ahead. It might be put off for next year,” another industry insider noted.

Besides, there is marked shortfall in sugarcane production pegged at 100 million tonnes this year, of which less than 40 million tonnes would be available for sugar mills for crushing.

Owing to scarcity of cane, the khandsari and gur units vis-à-vis sugar mills would be ready to pay more to farmers to run their units in the backdrop of shortage.

This would make the sugar mills in Uttar Pradesh, dominated by private sector, to concentrate on starting crushing as soon as possible.

The sugar production in Uttar Pradesh, which dipped to under 4 million tonnes during 2008-09 season, is likely to fall further.