UP govt issues notices to defaulting sugar mills

The Uttar Pradesh government has issued recovery certificates against seven sugar mills to ensure payment of cane prices to farmers. The state is toughening its stance on mills that have piled up huge cane arrears.

Once the certificates are issued, the cane dues and the interest thereon can be recovered from the defaulting factories.

"We have issued recovery certificates against seven sugar mills, whose combined cane arrears are to the tune of Rs 200 crore. Their track record is extremely poor and they have not been able to clear the majority of payments," Kamran Rizvi, the state cane commissioner told Business Standard.

The seven mills are - Jagran Group's Shakumbari Sugar and Allied Industries (Saharanpur), Uttam Sugar Mills (Saharanpur), Modi Sugar Mills (Baghpat), JHV Sugar Mills (Maharajganj), Nawabganj Sugar Mills (Bareilly), Diwan Sugars (Moradabad) and Gadaura Sugar mills (Maharajganj).

"Most of these mills have cane arrears ranging between Rs 15-30 crore, with the arrears of Modi Sugar Mills running as high as Rs 70 crore. Their godowns as well as bank accounts have been sealed," said Rizvi.

The District Magistrates of these respective districts will auction the sugar stocks, to raise the money that will be used to clear their arrears. If there is a shortfall, some of their other properties could also be sold, he said.

With a production of about 9 million tonnes, UP accounts for almost one-third of the country's sugar production and is the second largest sugar producing state, after Maharashtra.

UP mills have piled up huge cane arrears owing to a glut in sugar production - a result of the 2004 incentive package - that led to low realisations and a cane price that remained higher than the return on sugar.

To tackle the huge cane arrears in the state, the government has given mills a deadline of August o make all their payments, failing which the state will resort to coercive actions.