In a major blow to its attempt at ushering in privatisation in the sugar industry, the UP government has now annulled the bidding process for divestment of its equity in the 33 sugar mills of the UP State Sugar Corporation Ltd.
In the face of a lukewarm response from the industry, the state government, in a late night decision on Friday, has now called for fresh expressions of interest/requests for qualification bids with modified terms and conditions.
In the previous request for proposal, companies which had a minimum net worth of Rs 600 crore and turnover of Rs 500 crore with positive cash profits for at least 3 out of the last 5 financial years were eligible to apply. Now, the revised norms lay down that the applicant may be a company or a consortium of companies for the purchase of the entire equity of GoUP in UPSSCL. In computing the eligibility criteria of the applicant/consortium members, the net worth, turnover and cash profits of their respective associates/group companies would also be eligible. The minimum net worth and turnover of the applicant/consortium has been kept the same. A cane department official said on the condition of anonymity the decision to call for revised bids reflected the government?s dissatisfaction with the five bids that were received.
?The price quoted by the companies was not adequate,? the official said.
?The advisor to the government in the project, Ernst & Young, too preferred fresh bidding with revised norms. The government has thus modified the norms to make it possible for more companies to participate. This will allow competitive bidding,? he added.
It may be mentioned that even after extending the deadline for submission of EoI/RFQs from June 13 to June 30, only five bids were submitted, including Bajaj Hindustan Dalmia Cement, Magna group, Diamond group and the Ponty Chada group.
Out of these five, only Bajaj Hindustan and Dalmia have interests in the sugar sector while the other three are in real estates and are looking at acquiring sick mills for their land value.