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In the backdrop of Allahabad High Court order asking Uttar Pradesh private sugar mills to clear 75% of their arrears by July 15, the millers have collectively managed to pay only about 17% of the dues.
The order was passed by the HC on May 27 after hearing a petition regarding mounting arrears. It had directed the individual mills to pay 25%, 50% and 75% of their arrears by June 15, June 30 and July 15 respectively.
At that time, the total arrears on private mills stood at around Rs 6,000 crore against the cane price of Rs 240 per quintal, since the state government had allowed the mills to pay the additional Rs 40 per quintal at the end of the crushing season.
Currently, the total arrears on private mills stand at around Rs 5,000 crore, excluding the interest payment of Rs 341 crore.
Considering the private millers were required to pay 75% of their arrears or about Rs 4,500 crore by July 15, they have collectively managed to pay only 17% of the dues.
However, there are wide variations reported by the individual mills in their arrears payment. There are mills, which have paid only Rs 15-16 per quintal for cane procurement, while some have settled cent% dues against Rs 240 per quintal parameter.
The HC would hear the case on July 28. The state government had also been asked to apprise the court regarding payment status and action taken against defaulters. The state chief secretary had held two meetings with sugar mill owners and officials over arrears.
In fact, UP cane arrears are almost Rs 8,200 crore if the full state cane price of Rs 280 per quintal is considered.
Meanwhile, the sugar industry is optimistic the state government and the HC would appreciate the crisis facing the sector, not only in UP but pan-India as well.
"The sugar sector crisis transcends the states' boundaries and all the mills are facing the same problems everywhere due to the falling sugar prices, which are currently at Rs 22 per kg (ex-factory)," UP Sugar Mills Association (UPSMA) secretary Deeptak Guptara told Business Standard.
He claimed the Karnataka government had written off cane arrears of Rs 923 crore for 2013-14, while the mills in Maharashtra had apprised their state government they would not be able to pay even the fair and remunerative price (FRP) for cane and determine their individual paying capacity.
The FRP, fixed by the Centre, for the coming crushing season 2015-16 is around Rs 230 per quintal, while the respective state cane prices are much higher.
In a recent letter to the union food secretary, UPSMA had hinted at suspending their operations during 2015-16 season citing high cane price vis-à-vis realisation from sale of sugar.
It referred to the glut in the domestic and international sugar market and depressed sugar prices to underline crisis in the sector, which has resulted in record farmers' arrears, litigations and mounting losses.
Meanwhile, the sugar department officials could not be reached for comments.
