Recovery order against 3 Bajaj Hind sugar mills

The Uttar Pradesh government has issued recovery certificates (RC) for non-payment of cane price arrears against the three units of Bajaj Hindusthan, the country's biggest sugar producer.

The three Bajaj units are Gagnauli (Saharanpur district), Budhana (Muzzafarnagar) and Bilai (Bijnore). No comment was available from the company. Apart from these three mills, RC was also issued against the Sitapur unit of Kamlapur Sugar and Industries earlier this week.

So far, RCs have been issued to 18 sugar mills in the state for non-payment of cane price arrears against the cane purchase made in the 2006-07 (October-September) crushing season.

Apart from Bajaj, the other big names that have been issued notices for non-payment of cane prices include companies such as Dhampur Sugar and Uttam Sugar.

Once the certificates are issued, the cane dues and the interest thereon can be recovered from the defaulting factories by the district administration. The district magistrates will auction the sugar stocks to raise money, which will be used to clear the arrears.

"Sugar mills in the state purchased sugarcane worth Rs 11,000 crore during the 2006-07 season. Of this, payments of Rs 9,350 crore have been made, leaving arrears of Rs 1,650 crore as on September 26," said the state cane commissioner Kamran Rizvi.

UP mills have piled up huge cane arrears owing to a glut in sugar output. All the mills have incurred huge losses as the cost of producing sugar remained significantly higher than their realisations.

This was due to an increase in the state-advised price of sugarcane from Rs 115-120 to Rs 125-130 a quintal and a drop in sugar prices from Rs 2,000 to Rs 1,300 a quintal. Since the new crushing season is about to start from October, there is increasing pressure on mills to clear arrears.