High deposit keeps traders away from open market PDS sugar bids

Maharashtra's annual requirement for PDS sugar stands at .24 million ton

The Maharashtra government's move to procure sugar for the Public Distribution Scheme (PDS) from the open market failed to get bids from cooperative sugar factories and traders, who cited the high earnest money deposit (EMD) of Rs 51 lakh-2.68 crore, depending on the quantity.

A total of 17 district collectors have issued fresh tenders to procure 0.1 million tonnes (mt) for PDS, for six months. The state’s annual PDS sugar requirement is 0.24 mt.

A senior government official told Business Standard, “After sugar decontrol, the Centre has issued directives to states to purchase sugar for PDS from the open market. A subsidy of Rs 18.50 a kg has been sanctioned for sugar procurement for PDS.” The official, however, declined to comment on the high EMD.

The reluctance of cooperative factories and traders to file bids is despite the fact that the prevailing price of M 30 grade sugar is Rs 2,700 a quintal, against the production cost of Rs 3,300-3,400 a quintal.

The Federation of Cooperative Sugar Factories in Maharashtra has appealed to the state government to revise the EMD, keeping in mind the current financial condition of the sector. Sanjeev Babar, managing director of the federation, said, “We have already proposed to supply sugar needed for PDS at the ex-factory price. Now, it is up to the government to consider our proposal.”

Yogesh Pande, founder president, Maharashtra Sugar Merchant & Brokers Association, said it wouldn’t be possible for sugar units and traders to bid, as they were facing major financial constraints.