Sugar mills pin hope on Mayavati:

Sugar millowners in Uttar Pradesh are hoping that the Mayavati government will ease their burden by holding off another increase in sugarcane support prices. Sugar mills in the state say that over the past few years, they have been hit by a triple whammy of high support prices on sugarcane, rising transport cost, and mounting processing expenses. Sources said these mills have suffered losses in the range of Rs 3-4 per kg. The government of Mulayam Singh Yadav, which was voted out of power last week, had raised the support price to Rs 125-130 per quintal, leading to payment arrears of over Rs 1,800 crore. “The cane arrears have climbed to over Rs 1,800 crore… two years ago, there were no arrears,” says an official of a company which has substantial operations in the state. The processing and transportation costs have added to the woes of the mills. While cane prices are little over Rs 13 per kg, companies are not realising more than Rs 12.50 per kg on the sugar. The processing and transportation costs make up Rs 3-4 per kg. The official said there were other factors behind the discouraging show of the UP mills. The recovery from the cane is just 9 per cent compared with 11 per cent in Maharashtra and Karnataka. Balrampur Chini and Bajaj Hindusthan are the two major producers in the state. Balrampur Chini has six mills located in eastern UP with a crushing capacity of 55,500 tonnes per day. It has just set up a plant with a capacity of 7,000 tonnes. Bajaj Hindusthan has nine plants in the state. The industry is now banking on the Mayavati government which took oath today. “We only hope that she takes some pragmatic measures and does not raise further the support price for sugarcane this year,” the source said. The shares of the companies have also taken a beating. Balrampur Chini is trading at Rs 68.85 on the BSE much below its 52-week high of Rs 199.90.