Uttar Pradesh issues notices to 6 sugar mills

The Uttar Pradesh government has issued recovery certificates against six sugar mills, toughening its stance on mills sitting on huge sugarcane arrears.

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

The six mills against whom certificates have been issued last week are: Dhampur Sugar Mills' Dhampur unit (Bijnore) and Rajpura unit (Badaun), Uttam Sugar Mills' Barkatpur unit (Bijnore) and Khaikheri unit (Muzzafarnagar), Rana Sugar's Moradabad unit and KM Sugar's Motinagar unit (Faizabad). In July, the cane commissioner's office had issued recovery certificates against eight state mills.

"The mills must mobilise all the possible resources to clear the cane arrears. Whenever certificates are issued, money starts flowing in," State Sugarcane Commissioner Kamran Rizvi said. 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 (October-September) sugar season. Of this payments of Rs 9,500 crore have been made, leaving arrears of Rs 1,500 crore. UP mills have piled up huge cane arrears owing to a glut in sugar production that led to low realisations.

All the mills have incurred huge losses as the cost of producing sugar remained significantly higher than their realisations. This was primarily due to an increase in the state advised price of sugarcane from Rs 115-120 to Rs 125-130 a quintal and a decline in sugar prices from Rs 2,000 to Rs 1,300 a quintal.