Bihar's closed sugar mills find few takers

The Bihar government’s plan to revive 15 closed sugar mills owned by the Bihar State Sugar Corporation may not be completely successful. Only four of these mills have attracted interest of investors even though bids were invited in November last year.

An attempt to lease out the remaining 11 mills through fresh tendering process has resulted in submission of just two bids, sources said. Moreover, companies like Dhampur Sugars and Rajshree Sugars, which made proposals to set up greenfield sugar mills more than two years ago, are yet to begin construction.

Of the four finalised bids, two have been awarded to Hindustan Petroleum Corporation Ltd and one each to Reliance Industries and Rollcon Engineering. Last November, the state government decided to offer 15 closed mills of the corporation on a long-term lease of 60 years, extendable by 30 years, on the recommendation of SBI Capital Markets.

Of the 15 mills, eight have been reserved for sugarcane-based industries like sugar mills or distilleries for ethanol or alcohol production. The remaining seven can be used by non-sugarcane-based industries. For sugarcane-based industries, the state is offering a capital subsidy of 10 per cent of the investment, subject to a Rs 10 crore ceiling.

“The amendment in central Sugarcane Control Order allowing direct conversion of sugarcane juice into ethanol would apply only to units which produce sugar. This has prevented many potential investors from investing since they wanted to enter the state only for ethanol production,” said Gautam Singh, minister for sugarcane industries, Bihar.

Rajshree Sugars and Chemicals, which had announced setting up two sugar mills at an investment of Rs 500 crore, is learnt to have pulled out of the state. Kamlapur Sugar Industries, which had proposed to set up three mills at an investment of over Rs 1,400 crore, is yet to locate land for the same. The recent downturn in sugar industry and consequent liquidity crunch has impacted sentiments.

However, Dhampur Sugars, which has four mills in Uttar Pradesh, is keen to set up a 5,000-tonne crushed daily (tcd) unit it proposed in 2006.