Rs 110 bn cane arrears: UP sugar mills knock at Yogi's door for bailout

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Promoters of top sugar mill companies operating in Uttar Pradesh have met chief minister Yogi Adityanath in the backdrop of massive farmers’ arrears of Rs 110 billion, even as another challenging crushing season is fast approaching.

Officials and promoters of top sugar companies such as Balrampur Chini, Dalmia Bharat, Birla and DCM Shriram met Adityanath on Thursday to apprise him of the issues facing the state sugar industry and seek a bailout against outstanding.

Although the meeting has been termed as ‘a courtesy call’ by the industry officials, it served the purpose of the private millers renewing their demand for an incentive of Rs 40/quintal pertaining to the previous crushing season, when UP mills had paid the highest cane price of Rs 315/quintal under the State Advised Price (SAP) mechanism.

The millers have urged the government to adjust the subsidy against arrears, so that their outstanding could ease to that extent and enable them to raise working capital loans from banks, which have so far been reluctant to lend owing to their standing liabilities and depressed sugar outlook.

According to sources, the CM gave a patient hearing to the grievances of the sugar industry and assured the government would do everything in the best interests of all the stakeholders, including farmers, mills and consumers. A meeting is likely to be held early next week by the state chief secretary to decide on the issue.

The delegation included Indian Sugar Mills Association (ISMA) president and joint MD of Dhampur Sugar Gaurav Goyal; Balrampur Chini managing director Vivek Saraogi; Birla Sugar representative C B Patodia; Gautam Dalmia and Ajit Shriram.

Meanwhile, a sugar department official told Business Standard the government was seized of the challenges facing the sector and necessary steps would be taken. “The state is actively considering all the measures to resolve the situation, but the final call would be taken by the state cabinet.”

He noted the Centre had already announced a package for the sugar industry, which had to some extent eased the pressure on UP mills too.

The domestic sugar market has been baulked by market glut and total outstanding of about Rs 170 billion, of which UP mills account for the highest at over Rs 110 billion. Besides, there are projections of another bumper sugarcane crop and sugar production in the coming 2018-19 season, which would further stoke glut and potentially pull down sugar prices. The export market is also non-existent for sugar companies.

Earlier this week, the Yogi Adityanath government had asked mills to start their crushing operations early from October 15 onwards with the units in western UP taking lead. However, the private mills, which number 94 of the total 119 units, have expressed their inability to participate in the next crushing season due to arrears.

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