In an interesting twist to the tale, the Uttar Pradesh government?s efforts to sell off its entire equity in the 33 mills of the Uttar Pradesh State Sugar Corporation (UPSSCL) reached a stalemate here on Monday, with only one of the five bidders coming back to submit the financial bid after physically verifying and inspecting the assets and liabilities of all the mills. Earlier, five companies had placed technical bids on July 18. They were Gammon India, the Ponty Chaddha Group, Dalmia Sugar, Uflex Group and Era Landmark. Of these, only Gammon India placed a financial bid for it, which was rejected on Monday. Since only a single bid had come in, it was cancelled and the core committee of secretaries was immediately called to deliberate on the unexpected turn of events and decide on the future course of action.
According to sources close to the developments unfolding in the sugar sector, one definite interpretation of this is that the companies did not think that there was any business sense in buying only 13 sugar mills in running condition and 20 mills that were closed. ?This is despite the fact that the state government has agreed to allow the successful bidder the flexibility for changing the land use for the closed units and also allowed private companies to form a consortia to bid for all the 33 mills instead of its earlier pre-requisite that any one single company should bid for all the mills,? said an official, requesting anonymity.
He further stated that there were essentially two options in front of the core committee: Either to cancel the entire bidding process and call for fresh requests for proposal or simply extend the deadline based on the same conditions.
?A very interesting battle of nerves is going on between the state government and private companies. While the state government wants to wash its hands off the sick and loss-making sugar corporation mills, which are bleeding the state exchequer of more than Rs 700 crore every year and yet make a good deal out of it, the private companies, too, do not want to land themselves with mills which would not make sound financial sense. Even though the government has changed the land use pattern of the closed mills, the lack of response by the private sector means that the companies see no future even if the closed mills are used as real estate assets. In a way they are trying to exert pressure on the government to dilute some of the parameters. It is a game of hide and seek, in which both parties are playing wait and watch and it remains to be seen who winks first,? said an official.
Moreover, according to insiders, the government had fixed a reserve price as analyzed by its appointed valuer as somewhere in the range of Rs 1600-2000 crore. But, none of the companies are willing to pay that kind of a price for the mills.
And to top it all, investors in the sector are hesitant in investing in the state as they feel that industrial environment in UP is not good.
