Financial institution IFCI Ltd (formerly Industrial Financial Corporation of India) has submitted a Request for Qualification cum Request for Proposal (RFQ-cum-RFP) for facilitating the privatisation of the ailing cooperative sugar mills in Uttar Pradesh.
On July 19, the state government floated a global tender inviting RFQ-cum-RFP from advisors for transferring the assets and liabilities of 25 of the 28 cooperative sugar mills in UP. The state government is the majority stake holder in all the 25 units. The remaining three mills are subject to court cases.
The deadline for the opening of proposals was August 8. However, only two companies, including IFCI, submitted their bids forcing the state government to extend the last date to August 18.
IFCI has been undertaking techno-economic and financial viability studies for projects and extending financial assistance. Now, the technical and financial bids of the advisors would be opened on August 18 and 19 respectively, official sources told Business Standard.
Most of these low-capacity cooperative mills are located in the rural areas and are incurring losses. The UP government is taking steps towards total privatisation of the beleaguered sugar sector to usher in operational efficiency, reduce non performing assets (NPAs) and mitigate non-productive overheads running into several crore rupee annually.
The 33 state sugar corporation mills has already been put on block and five companies — infrastructure major Gammon India, Dalmia Sugar, Noida-based Uflex, Era Landmark and Chadha Sugar — have submitted expression of interests (EoIs).
However, the government had to relax the terms and conditions and allow changes in the land use for these corporation mills to attract the private players, since there had been a lukewarm response to this earlier.
The UP sugar sector is facing perennial challenges of seasonal fluctuation of demand and supply, cane price issue, multiple litigations and government regulation to rein in the prices during inflation, including export ban. The cooperative mills are not centrally located and are mostly based in the rural areas, but command better cane area.
There are about 154 sugar mills in the state, out of which 93, 28 and 33 operate in the private, cooperatives and sugar corporation sectors respectively.
However, only about 132 are in working condition and participated in the 2007-08 crushing season.
