The Hindu Business Line : Cane arrears of UP's top 10 sugar cos touch Rs 1,500 crore

As per official State Government data, mills in UP have disbursed Rs 8,156.29 crore to growers during the 2006-07 crushing season (October-September) till June 4, against the Rs 10,768.04 crore they were required to pay within 14 days after taking delivery of cane.

Outstandings

That translates into outstandings of Rs 2,611.75 crore, of which Rs 2,033.06 crore is owned by private mills and the rest by cooperatives and State-owned factories.

And of the total Rs 2,611.75 crore, Rs 1,495.89 crore — nearly 60 per cent — is on account of mills belonging to the top 10 companies/groups.

Leading the pack is Mr Shishir Bajaj's Bajaj Hindusthan Ltd (BHL).

The country's No. 1 sugar producer, with an output of almost 15 lakh tonnes (lt) from 12 factories (including three subsidiary/managed mills), owes farmers Rs 479 crore. That is well over a quarter of the total payable amount within the mandatory 14-day period.

Equally, if not more, badly placed are the K.K. Birla Group (28.6 per cent arrears) and Mr Umesh Kumar Modi's two mills that have barely paid up 49 per cent of the cane price to growers.

The companies with relatively low outstandings include Mr Ajay Shriram's DCM Shriram Consolidated Ltd (12.6 per cent), Mr Siddharth Shriram's Mawana Sugars (15.3 per cent) and Mr Vivek Saraogi's Balrampur Chini Mills (16.6 per cent).

On the other hand, Mr Dhruv Sawhney's Triveni Engineering & Industries, Mr V.K. Goel's Dhampur Sugar Mills, Mr G.S. Mann's Simbhaoli Sugars and Mr G.R. Morarka's Dwarikesh Sugar Industries have all run up arrears exceeding 20 per cent.

Buffer subsidy

The Centre's recent move to create a 50 lt buffer and bear the entire carrying cost of this sequestered sugar might ease things a bit.

The buffer subsidy and additional credit from banks would enable mills to liquidate a part of their current cane arrears.

But the problem may not end there, as the coming 2007-08 season would begin with 110 lt stocks equivalent to six-and-a-half months' consumption.

Glut impact

With output expected to top 300 lt, there would be continued downward pressure on sugar prices.

The impact of this might be less on companies with significant revenues from co-generation (Balrampur Chini) or other businesses (Triveni Engineering) than on BHL and others, deriving over 90 per cent of their income from sugar.