Bihar govt to lease out sugar mills to private players

Bihar Government is planning to offer its 7 sick sugar mills to the private sector on long term lease. If sources are to be believed, the process may begin from next month. It will be the 5th round of bidding for the closed sugar mills falling under the purview of Bihar Sugar Corporation Ltd.

The state government began giving its closed mills to private companies since 2008. So far, the government has been able to lease out its 8 of its 15 closed sugar mills to different companies including Hindustan Petrochemical Ltd (HPCL), Indian Potash Ltd (a public sector undertaking, in which IFFCO holds the majority stake) and Dalmia Bharat Sugar Ltd. "We have been very successful in our plans," said the Cane Development Minister, Awadesh Prasad Kushwaha, "and the results are there to prove it. In just 4 years, we have been able to lease out majority of our closed sugar mills. It is not a small thing for sugar industry of the state."

The minister added, "Happy with the results and enthusiasm of investors, we are now planning to begin 5th phase of the bidding. In this phase, we will put the remaining 7 sugar mills on the block. The process will begin very soon." Kushwaha also stated, "The successful bidders will also receive various subsidies, which we provide under our new Industrial Policy. This includes stamp duty waiver, VAT reimbursement and capital subsidy on machinery. They will be free to use the land holdings of the mill to set up any kind of industry."

These mills be leased for a period of 60 years and it can be increased to further 30 years, if the investor wants to. According to sources, the process may begin from the next month and will be completed by the first week of the February, next year.

However, the small land holdings of these mills are a cause of concern for some of the officials. One of them said, "The bigger ones have already been netted. These remaining mills have very small holdings, which may not be able to attract as many investors. However, we are trying our best."

The final decision will be taken after meeting with officials of the SBI Caps, which is on Wednesday. SBI Caps has been chosen by the state government as a financial consultant in this matter.

The government has so far able to lease out its 8 sick sugar mills, which includes Sugauli, Lauria, Rayyam, Sakri, Motipur, Bihta, Samastipur and Lohat. Sugauli and Lauria Mills were bought by HPCL in the first phase of the bidding. The PSU has since invested more than Rs.700 crores in reviving these mills. They have started commercial production last year.

Meanwhile, Patna based Tirhut Industries bought Rayyam and Sakri in the second phase, which concluded in 2010. The biggest mill of the state, Motipur Sugar Mill was leased to Indian Potash Ltd in 2011, while NOIDA based Pristine Logistics got the Bihta Sugar Mill. In the fourth phase, the Lohat Sugar Mill was leased to Dalmia Bharat, while Winsome International Ltd. got the Samastipur mill.