The Uttar Pradesh (UP) government has decided to invoke the Swiss Challenge Method (SCM) for divestment of six UP State Sugar Corporation Limited (UPSSCL) mills.
According to the state policy, SCM is undertaken if the bid for the underlying asset is below the expected price, but more than half of it. In some cases, SCM can also be invoked if a single bid is received.
SCM allows third parties to match the highest bid. Later, the original highest bidder shall have the right of first refusal to match the highest bid in the subsequent fresh bidding process. This is aimed at realising the true market value of the asset by enabling second round of bidding.
A total of 11 UPSSCL units had been put on the block for divestment, of which bids were received for 10 mills from Indian Potash, Wave Industries and PBS Food.
The units are Amroha in JP Nagar, Bijnore; Bulandshahr; Chandpur in Bijnore; Jarwal Road in Bahraich; Khadda in Kushi Nagar; Mohiuddinpur in Meerut; Rohanakalan in Muzzafarnagar; Saharanpur; Sakhotitanda in Meerut; and Siswabazar in Maharajganj.
Of these units, Siswabazar and Jarwal Road units had been bid handsomely by Indian Potash; Amroha and Chandpur were bid by Wave and PBS, respectively. UPSSCL had already announced Voluntary Retirement Scheme for the employees of these four units. One unit, Mohiuddinpur, did not found any takers. While three other units had bids above the expected price, the remaining three had attracted single bidders.
“It has been decided that UPSSCL will invite fresh bids under the Swiss Challenge Method. A formal invitation of bids will be issued in a couple of days,” a senior industry department official told Business Standard.
Bids were opened in the first week of June. Later, the matter was placed before the state cabinet for decision. The combined reserved price for all the 11 units is around Rs 640 crore, that will offer a total capacity of over 25,000 tonnes crushed per day. The state government is planning to sell all the UPSSCL mills and had first put on block the functional mills to attract private investors.
However, the divestment process will be subject to the final adjudication by the Supreme Court on a petition challenging the powers of the state government and the corporation to sell them.