Five distillery units of some from the country?s leading sugar companies like Bajaj Hindustan and Dhampur Sugar have been sealed by the excise department of Uttar Pradesh for alleged smuggling of molasses, a critical raw material for the liquor industry. But the sugar industry has said the step was totally unwarranted.
?The government?s move is purely political and the closures are entirely unwarranted, especially because the excise department has deputed a staff on duty at every distillery. Where is the scope of any sort of discrepancy at our end,? said an industry insider.
Other than Bajaj Hindustan and Dhampur Sugar the other companies whose units have been sealed are Upper Ganges Sugar and Industries Ltd, Biswa Group and Superior Group. The move has come at a difficult time for the industry as the sugarcane crushing season has just began in the state.
The shares of Bajaj Hindustan closed at Rs 62.55, down 5.5%, and Dhampur Sugar was at Rs 18, down 2.70% at the BSE on Friday, while that of Upper Ganges Sugar and Industries closed at 37.10, down 1.72%. The other two companies are unlisted.
The state excise department said smuggling of molasses, especially from distilleries in western Uttar Pradesh is depriving it of not only revenues but is also creating a artificial molasses scarcity in the market.Speaking to FE, Sudhir Bogade, Excise Commissioner and Molasses Controller says, ?Smuggling of molasses, especially in Western UP distilleries is rampant, especially in captive units, leading to a shortage of molasses in the market. And since Rs 10 lakh excise revenue is involved in every quintal of molasses, the government?s revenue target is drastically affected if even a single quintal goes missing. It is the state?s loss, and therefore has to be totally accounted for,? he says, adding that an account has to be maintained for every quintal, ?whether the molasses is being used for IMFL or country-made liquour.?
According to industry experts, molasses, also called the “black gold” of the culinary world, is a highly valued by-product of the sugar industry and every quintal of it fetches the state government revenue of Rs 10 lakh. The state has set a stiff excise revenue target of Rs 5,290 crore for the fiscal 2008-09 from all commodities, way ahead of the Rs 3,948 crore of last fiscal. To achieve it, the excise department has tightened the noose on all the 59 distilleries in the state including 28 distilleries in private sector.
An official of one of the affectd sugar mill was of the view that the government?s move will have a serious impact on the sugar companies? finances and would be reflected in the payment of cane dues to the farmers and would also aid in the manufacture of illegal country-made liqour.
However, the Birla Sugar, however, tried to play down the closure and an official said that it was a routine stock inspection and there was nothing significant about it.
It may be mentioned that Bajaj Hindusthan Ltd (BHL)is India?s top sugar and ethanol manufacturing company.
While Upper Ganges and the Dhampur distillery units have a capacity of 100 KLPD each, Biswa group?s unit has a production capacity of 45 KLPD and the Bajaj group?s Khambarkhera unit has a production capacity of 160 KLPD.