The financial situation of UP- based Mawana Sugars and Modi Sugar Mills, which together owe Rs 837 crore dues to sugarcane farmers, is bad and they may not be able to clear the arrears by even selling their assets, industry body ISMA said today.
"Mawana and Modi have already approached the Board for Industrial and Financial Reconstruction (BIFR) and they will find it hard to clear the cane arrears," Indian Sugar Mills Association (ISMA) Director General Avinash Verma told PTI.
"Even if they sell their assets, they will not be able to clear the entire dues to sugarcane growers," he said.
Simbhaoli Sugar Mills, which owes about Rs 225 crore, is also finding tough to arrange funds to clear the cane arrears but the company has not yet approached BIFR, he added.
Stating that cane arrears in Uttar Pradesh are being cleared fast, Verma said that total dues have come down to below Rs 3,000 crore so far.
"If calculated on the basis of the cane price fixed by the Centre, total cane arrears in the state would be only Rs 500 crore. Barring 3-4 mills, most of them have paid 125-140 per cent of the Fair and Remunerative Price (FRP)," he said.
The Centre had fixed a FRP of Rs 210 per quintal for 2013-14 marketing year (October-September), while the UP government has fixed higher cane price of Rs 280 per quintal.
Sugar mills in Uttar Pradesh, the country's second biggest producing state, have threatened to shut down their operations in the new season 2014-15 starting October if the state government continues to fix the cane price arbitrarily.
