Private firm to manage UP sugar mill

Written by Deepa Jainani | Lucknow | Updated: Jun 24 2013, 06:23am hrs
In what could be the beginning of a new chapter for the Uttar Pradeshs sugar industry, private player Integrated Casetech has won the bid to run the lone UP Sugar Corporation sugar mill of Mohiuddinpur on an annual contract basis. The experiment is likely to pave the way for gradual outsourcing of 21 UP Sugar Federation factories, currently being run by the state government at a huge loss, to the private sector.

Principal secretary, sugar department, Rahul Bhatnagar, said a letter of intent (LoI) has been handed over to the company and the agreement will soon be signed. As per the agreement, Integrated Casetech will charge the UP government Rs 2.35 crore during off-season for the mills repair and maintenance, while for months the mill is in operation, it would charge Rs 85 lakh a month, Bhatnagar said.

While providing the raw material (sugarcane) would be the governments responsibility, end products, such as sugar, molasses, cogenerated power, bagasse and press mud, would be the governments property.

While it may be a first for UP, Integrated Casetech, a service outsourcing vertical floated by Simbhaoli Sugars, has been providing these services the world over and also in different sugar producing states in India for some years now. It has provided consultancy services for setting up a greenfield plant in Karnataka and is also operating and maintaining a sugar mill in Haryana. Apart from this, the company has made inroads into foreign territory and has started operating and maintaining three mills in Philippines.

In Syria, it has set up a 1,000-tpd sugar refinery and is providing sugarcane development to clients in Cambodia and Vietnam.

This is a new chapter for our state and will go a long way in making the sector robust. Based on our experience of the Mohiuddinpur mill, we are looking forward to gradually giving our some Sugar Federation mills too for outsourcing. Large-scale retirements are taking place in most Federation mills. As a consequence, switching over to a new system of outsourcing operations and maintenance of the sugar factories will be easier. Despite private hands handling all the work associated with the mills, the ownership will remain with the government of UP, Bhatnagar said.

It may be mentioned that the UP government had invited tenders for undertaking various jobs of repair and maintenance and operation of the 2,500-tcd sugar mill in Mohiuddinpur, a unit of UP State Sugar Corporation, for the crushing season 2013-14. The Mohiuddinpur unit is the only sugar mill that has managed to buck the trend of disinvestment when 10 other sugar mills were sold off to private buyers in 2010 by the Mayawati government. The sale of the sugar mills generated a huge controversy and the Lokayukta is probing the issue.