UP sugar mills may commence operation next fortnight

Sugar mills in Uttar Pradesh, the country’s largest sweetener producer, are all set to commence cane crushing in the first fortnight of November following state government’s cane reservation order may be announced anytime this week.

The state government had announced earlier that it would clarify its stand on state advised price (SAP), a typical methodology for fixing up cane procurement price for mills, followed by the reservation order.

Now, since the government already announced the SAP at Rs 140 per quintal last week, the industry estimated the cane reservation order would be issued shortly.

“We are awaiting cane reservation order, an additional cane allocation area without which mills can not commence crushing for the season, which is expected to be issued within a day or two,” said Sanjay Tapriya, director finance and company secretary of Simbhaoli Sugar Ltd.

According to existing Supreme Court order, a mill can procure cane within 15 kilometres radius of its existence.

But, state government orders expansion in areas depending upon mill’s installed crushing capacity and existence of other mills in vicinity. The government divides allocated cane area of closed mills to the operational ones.
 
However, against the state order of Rs 140 per quintal cane prices, the Uttar Pradesh Sugarcane Federation has filed a caveat in the Supreme Court and the Lucknow bench of Allahabad High Court which is likely to come for hearing in the first week of November.

“At the current 12 per cent increase in the SAP from Rs 125 per quintal last year, sugar sales below Rs 1800 per quintal would render us into loss. As the industry has come out of recessionary cycle of three years, mills want to make some profit through bullish price trend this sugar year (October 2008 - September 2009),” Tapriya added.
Meanwhile, B J Maheshwari, company secretary of Dwarikesh Sugar Mills, feels that an interim relief order, like last year, may help us to commence our activities.

Last year, the Supreme Court had order an interim cane procurement price of Rs 110 per quintal which was raised later to the SAP level of Rs 125 per quintal.

Industry sources believe that the Supreme Court can settle the cane price at Rs 125 per quintal through interim order which if it finds prudent, may be raised later to Rs 140 per quintal.

But, for the viability of all that the spot sugar price should be above Rs 1800 per quintal throughout sugar season, they added.