A file picture of sugarcane being taken for crushing.

Harish Damodaran

New Delhi, Nov. 9 Even as the deadlock with the State Government over cane pricing continues, a couple of sugar mills in Uttar Pradesh have started crushing operations for the current 2008-09 season (October-September).

Factories in Uttar Pradesh were till now refraining from taking up crushing for the new season, following a dispute over the State Government fixing (‘advising’) a price of Rs 140 a quintal for normal cane and Rs 145 a quintal for early maturing varieties. The State Advised Price (SAP) for 2007-08 was set at a lower Rs 125-130 range.

The industry had filed a writ petition against the new SAP at the Allahabad High Court. The latter, on Thursday, refused to grant any interim relief to the mills. Instead, it asked the State Government to file a counter affidavit, while fixing November 18 as the date for the matter to be heard.

But in the meantime, two mills — Mr U.K. Modi’s Modi Sugar Mills and Simbhaoli Sugars Ltd (SSL) of Mr G.S. Mann — have broken ranks and begun crushing. Modi Sugar’s unit at Modi Nagar (Ghaziabad) commenced operations on Wednesday, with SSL following suit at its Brijnathpur and Simbhaoli factories towards the week-end.

“SSL was left with little option, given the proximity of both mills to the Modi Nagar plant in the same district,” sources told Business Line.

Under the purchase system followed in Uttar Pradesh, growers supply cane to mills against indents specifying a predetermined delivery schedule. For every batch of cane they bring, the mills issue a parchi mentioning the net weight and price payable for that quantity.

This time round, the mills that have started crushing have reportedly left the price payable portion in the parchis blank, while stamping ‘subject to court orders’ on top of it. “There has been an informal agreement with the growers that if the High Court prescribes a particular price on November 18, they would be paid that rate. But suppose that does not happen and the case goes to the Supreme Court, the growers would straightaway be given last year’s SAP of Rs 125-130 till the matter gets decided,” the sources said.

The growers were apparently satisfied with the interim arrangement, as it would enable them to vacate their cane area well in time to plant wheat. Moreover, although the Uttar Pradesh Government had fixed the cane price for 2007-08 at Rs 125-130 a quintal, the growers actually received only Rs 110 as an interim rate fixed by the Supreme Court pending a final decision on the mills’ petition against the previous year’s SAP.

“The industry’s hope is that the high court will grant an interim relief against the SAP for 2008-09 too, failing which they can again approach the Supreme Court. But that entails waiting till almost the month-end,” sources pointed out, adding that it was ‘unrealistic’ to expect the courts to fix the same Rs 110 interim price for the current season as well when sugar prices have clearly firmed up.

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