Eyeing total privatisation of the sugar sector, the Uttar Pradesh government is making another effort to sell the 33 ailing state sugar corporation mills, after a similar exercise last year failed to materialise.
The government has invited request-for-qualification and request-for-proposal (RFQ-cum-RFP) from advisors having experience of handling privatisation of at least one assignment of the central or any state government. Soon, the government will also undertake a similar process for selling the 28 ailing cooperative sugar mills. These low-capacity mills are mostly located in rural areas.
The last date for filing the documents with the state principal secretary, sugar industry and cane development, is February 3.
Last year, Uflex, Gammon and the Chaddha group were in the fray for buying them and had filed their bids in September 2008. However, the matter could not progress, since the government had valued the mills at Rs 2,200 crore, while the bidders were not willing to pay beyond Rs 600 crore.
“This time, the government will be more accommodating in terms of financial and technical aspects of the sale,” official sources told Business Standard.
In June 2008, Bajaj Hindusthan, Dalmia, Magna, Ponty Chhadha and Diamond groups had submitted Expression of Interests (EoIs) for these units. However, all the bids were cancelled, since the Recovery Certificates (RCs) had been issued against some of them, besides, “other anomalies” were also detected.
Later, the government modified the bidding terms and conditions. Subsequently in July 2008, five companies, Gammon, Dalmia, Era, Chaddha and Uflex had submitted EoIs as per the modified terms, of which only Gammon, Uflex and Chaddha filed formal bids.
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Meanwhile, a Public Interest Litigation challenging the sale of these mills is still pending before the Allahabad High Court. The petitioner had claimed the divestment was against the central and state laws. Official sources said, since the state government is pursuing the sale of mills afresh, this case could be disposed of as infructuous.
The corporation mills, with obsolete machinery, are located at prime locations and have sizeable land assets. The decision to privatise them was taken in June 2007. These mills collectively carry substantial liabilities to the tune of over Rs 3,300 crore.
Of the 33 sugar mills, 22 are in working condition. Besides, four sick units are under the purview of the Board for Industrial and Financial Reconstruction.