Lack of investors and unfavorable economic condition has forced Bihar Government to postpone the sale its closed sugar mills. According to state government officials, it will now reinitiate the process from next year.
The state government began giving its closed mills to private companies since 2008. So far, the government has been able to lease out its 8 of its 15 closed sugar mills to different companies. Impressed by the success, it started the process for leasing out of the remaining mills. Gararu, Warsaliganj, Garaul, Siwan, New Sawan, Hathua, Banmankhi sugar mill were to be leased to private investors in this phase. State government had also appointed SBI Caps as financial consultant for this.
However, it has now decided to postpone the process. "SBI Caps advised against it," Sudhir Kumar, Principal Secretary of the Cane Development Department told Business Standard, "They told us that the prevailing economic conditions are not favorable to bidding. If we go ahead with it, we will not receive as good response as we expect. Therefore, we have decided to postpone the process. We may reinitiate the process next year." However, if the sources are to be believed, the lack of investors also played a big role in this postponement.
One of the officials associated with the process told, "Not many investors were interested in buying these mills. The bigger ones have already been netted. These remaining mills have very small holdings, which is not adequate to attract investors. We have tried to lease them out in earlier phases too, but nobody came. Besides that, interest rates are also their peak, which made companies to delay investment decisions. So, we decided to postpone the bidding process."
The government has so far been able to lease out its 8 sick sugar mills. Sugauli and Lauria Mills were bought by HPCL in the first phase of the bidding. The PSU has since invested more than Rs.700 crores in reviving these mills. They have started commercial production last year.
Meanwhile, Patna based Tirhut Industries bought Rayyam and Sakri in the second phase, which concluded in 2010.
The biggest mill of the state, Motipur Sugar Mill was leased to Indian Potash Ltd. (a PSU in which IFFCO holds the majority stakes) in 2011, while NOIDA based Pristine Logistics got the Bihta Sugar Mill.
In the fourth phase, the Lohat Sugar Mill was leased to Dalmia Bharat, while Winsome International Ltd. got the Samastipur mill.
