Sugar co-ops form consortium to acquire sick unit

Falling back on their core philosophy of co-operation, as many as half-a-dozen sugar co-operatives in Gujarat formed a consortium to keep corporate giants at bay.

Six sugar co-operatives have successfully acquired a sick unit to prevent large corporates from entering the space. The story does not end here. Two other sugar co-operatives have joined hands to revive another co-operative in Bharuch district.

Leading private corporate houses, which were into agri and retail businesses had evinced interest in acquiring the defunct Dadaria Sugar, popularly known as Valod Sugar, in Surat district.

In 2004, the Gujarat State Co-operative Bank seized the properties of Valod Sugar and floated tenders last year for the sale of properties to recover outstanding dues of Rs 74.50 crore.

Sensing the threat from the private sector, six sugar co-operatives "" Madhi Sugar, Mahuva Sugar, Bardoli Sugar, Kamrej Sugar, Chalthan and Sayan "" floated a consortium and acquired the Valod Sugar factory for Rs 27 crore.

Despite the fact that sugar manufacturing in Gujarat is mostly governed by the co-operative sector, sugar co-operatives did not want to take any chance. "This is for the first time in the history that sugar co-operatives had come together to take over any sugar factory," Mansinh Patel, president, Federation of Gujarat State Co-operative Sugar Factories, said.

Following discussions with the sugar co-operatives, the state government chose not to go ahead with the bidding and handed over the sick unit to the consortium.

"The Valod Sugar was given to the consortium as all the stakeholders, including the state government, wanted to keep the sick factory in the co-operative sector. The basic objective of forming a consortium was to prevent private companies from entering the sugar sector in the state," said Patel.

Meanwhile, Walia-based Ganesh Sugar and Narmada Sugar of Rajpipala are in the process of acquiring Reva Sugar at Amod village in Bharuch district. Both the sugar factories plan to revive the sick Reva Sugar and are working on the the valuation.

Gujarat has 17 sugar co-operative societies, which collectively have a total turnover of around Rs 1,800 crore. Of these, five are in central Gujarat and 10 in south Gujarat.

The Bardoli sugar factory has the highest sugarcane crushing capacity of 11,000 tonnes per day (tpd), while Chalthan, Sayan, Madhi and Gandevi Sugar co-operative factories each have 5,000 tpd.