UP mills seek time to clear cane dues

On May 15, the Supreme Court had granted four weeks to the state sugar mills for clearing the dues for the entire 2007-08 season (October-September). This period ends on June 12.

"Private sugar mills in UP bought sugarcane worth Rs 6,993 crore in the 2007-08 season. Of this, payment of Rs 6,150 crore has been made and Rs 843 crore remains as dues. We need more time to clear them," said C B Patodia, president, UPSMA and advisor to the Birla Group of sugar companies.

The state government had announced a price of Rs 125-130 a quintal for the 2007-08 season. But mills delayed operations protesting against this high price. These mills are already incurring losses due to high sugarcane and low sugar prices.

The mills delayed crushing by a month and began only after the Lucknow bench of the Allahabad High Court declared an interim cane price of Rs 110 a quintal in November.

This price was upheld by the Supreme Court, which on May 15 directed mills to make entire payments within four weeks.

Sugar prices have crashed from Rs 1,525 to Rs 1,450 a quintal since May as the government dismantled the two-million-tonne buffer stock created last year, thereby increasing supply in the open market.

This has exerted pressure on sugar prices despite an anticipation of a drop in sugar output to about 26 million tonnes from 28.4 million tonnes in 2006-07, said Patodia.