In a major setback to the Uttar Pradesh private sugar millers, the Lucknow Bench of Allahabad High Court today dismissed their petition challenging the fixing of State Advised Price (SAP) for sugarcane, by the state government.
The division bench comprising Justices D P Singh and S C Chaurasia also imposed a fine of Rs 50 lakh on the petitioners, of which Rs 25 lakh would go to the sugarcane research institute in Shahjahanpur. About three dozen private millers had moved the high court contending that SAP was arrived at without logic, was too high and would put severe financial pressure on them.
The millers had submitted before the court that the power of the state government to fix SAP stood overridden by amendments made by the Centre in the Sugarcane (Control) Order, 1966. They said the Centre was empowered to determine a Fair & Remunerative Price (FAR), after considering the cost of cane production, return to mills from sugar/by-products and a suitable margin for risks and profit for farmers. However, the court observed that the fixation of SAP was neither wrong nor was it too high.
Stung by the HC ruling, the millers are looking at various options, including challenging the order in the Supreme Court. However, they will chart their future course of action after studying the judgment. “We welcome the high court order,” UP cane commissioner Kamran Rizvi told Business Standard. There are about 125 mills in the state, of which 100 are privately owned.
The share prices of Uttar Pradesh-based sugar mills declined over four per cent on the high court ruling. Bajaj Hindusthan’s stock plunged by four per cent to close today at Rs 34.4 while Dwarikesh Sugar and Balrampur China and fell by 3.6 per cent to Rs 40.5 and 1.3 per cent to Rs 49 on the Bombay Stock Exchange.
During 2011 elections, the Uttar Pradesh government had hiked SAP by almost 20 per cent. The price of the early variety of cane was increased by Rs 40/quintal to Rs 250/quintal. SAP of common variety, which accounts for over 60 per cent of total cane production, was increased by Rs 35/quintal to Rs 240/quintal. The early and rejected varieties of cane account for about 20 per cent of production, each. The price of the rejected variety was fixed at Rs 235 per quintal. The government had said the rise would result in payments of over Rs 15,000 crore to cane farmers during the 2011-12 crushing season.
Meanwhile, about 4.2 million tonnes of sugar had been produced in UP with the recovery rate standing at 8.70 per cent, which is likely to improve further. The state is targetting production of almost 6.5 million tonnes of the sweetener.
