Now, UP decides to privatise 25 sugar mills in cooperative sector

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In continuation of its policy to usher in privatisation in the state’s sugar industry, the Uttar Pradesh government has started formalities of handing over 25 sugar mills of the Uttar Pradesh Cooperative sector, to the private sector. This comes close on the heels of its earlier decision on the strategic sale of its entire equity in all the 33 sugar mills of the UP State Sugar Corporation.

The government has started the process by of identifying consultants for the project and has decided to ask for request for qualification (RFQ) and request for proposal (RFP) from interested companies. Through this, the state aims at getting the process of privatisation of 25 out of the 28 sugar mills in the co-operative sector on track. A decision on issuing advertisements seeking to appoint consultants was also taken here on Friday.

According to sources in the state sugar industry, the decision to privatise 25 out of a total of 28 sugar mills in the co-operative sector was taken at a high level meeting.

This is the second time that the state has initiated the process of privatising the sugar mills in the co-operative sector.

Last June, it had tried started the process of looking for buyers and had invited industrial houses to submit expression of interest (EoI). It had also appointed management consultancy firm Ernst and Young to prepare a blueprint for the disinvestments. But the first attempt proved to be a non-starter since, and then too, a lukewarm response was shown by the sugar industry in buying these mills due to the high court’s stay over the matter.

This forced the government to abort the bid, but later it amended the Cooperative Act, which was earlier posing hurdles in the transfer of the government’s shares of 51% in these mills. The registrar of the UP Co-operative Sugar Mills was bestowed the power to change the management.

The state government is already in the process of selling its entire equity in all the 33 mills of the Uttar Pradesh State Sugar Corporation (UPSSCL) through competitive bidding and had invited expressions of interest (EoI) from valuers having relevant experience in valuation of shares to assist it in the transaction.

The offer attracted a total five bidders till Friday, the last day for investors to place their bids. The five bidders are Gammon India, Chaddha Group, Dalmiya Sugar, Uflex Group and Era Landmark. Preliminary and technical evaluation have been done on the bids while the financial bids would be opened at a later date.

The decision to divest the state government’s entire stake was taken as running the loss-making 33 sugar mills was costing the Uttar Pradesh government a whopping loss of Rs 2,900 crore.

The government had, on July 4, annulled the bidding process that it had initiated on May 23, and called for fresh bids with modified terms and conditions. This it had done in the face of lukewarm response from the industry. The revised bidding process ended today and all senior officials were busy collecting and evaluating the bids till the time of going to the press and were not available to comment on how many bids were received.