Court directs UP sugar mills to liquidate stock

Tells mills to sell 5% of their stock every week; fixes Rs 3,100/quintal as floor price

The Allahabad High Court on Wednesday directed sugar mills in Uttar Pradesh to start liquidating their stocks to clear cane arrears. The mills were asked to liquidate five per cent of their stocks every week for the next three weeks.

It was decided the case would again be taken up on September 3. Till then, the court has restrained any coercive action by the state government against mills.

For the sale of stocks, the court fixed Rs 3,100/quintal as the floor price. A total of 30 per cent of the realised amount would go towards clearing cane dues.

The 95 private mills in the state hold 2.98 million tonnes (mt) of unsold sugar. As such, they will have to sell 149,000 tonnes every week, realisations from which would stand at Rs 462 crore, based on the floor price.

Many feel selling such substantial stocks will be a tough task for mills, especially in an off-season. Typically, mills sell stocks through agents, wholesalers and retailers.

For this season, private mills in the state are saddled with cane dues of about Rs 5,000 crore. So far, the government has registered 60 first information reports and issued recovery certificates against 52 mills, owing to their failure to clear dues. After recovery certificates were issued, the district administrations concerned had seized the stocks for auction. However, the government failed to auction the stocks, stored at the warehouses of mills.

The stocks of 23 state cooperative mills, estimated at 0.23 mt, are available with the government.

In earlier hearings, State Bank of India, Punjab National Bank and UP Cooperative Bank had filed separate petitions before the high court, seeking first right on the liquidation proceeds of sugar stocks, as mills had taken working capital loans based on these stocks.

The sugar sector in Uttar Pradesh is estimated at Rs 30,000 crore.