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Bajaj Hindustan set to bag 24 UP sugar mills
Rumi Dutta in Mumbai |
May 03, 2004 08:01 IST
Bajaj Hindustan, the Shishir Bajaj-controlled company that is the country's largest sugar enterprise, is all set to acquire 24 sugar mills from the Uttar Pradesh State Sugar Corporation.
The company has emerged as the highest bidder in the state government's privatisation programme, leaving behind the other two bidders, Balrampur Chini and DCM Shriram. The winning bid was estimated to be around Rs 200 crore (Rs 2 billion), sources close to the development told Business Standard.
Senior executives at Bajaj Hindustan refused to comment on the issue.
The acquisition of the 24 sugar mills, with a combined capacity of 38,000 tonnes a day, will make Bajaj Hindustan by far the largest company in the Rs 25,000 crore (Rs 250 billion) domestic sugar industry with a capacity of around 69,000 tonnes.
Currently, through greenfield expansions, the company is in the process of increasing its crushing capacity to 31,000 tonnes a day from 24,000 tonnes.
In line with a Rs 140 crore (Rs 1.40 billion) expansion plan, it is setting up a 7,000-tonne unit in Meerut that is expected to be operational by December 2004.
The K K Birla group, with a sugar crushing capacity of 30,000 tonnes a day, and Balrampur Chini (26,000 tonnes) are the other leading companies in the industry.
"The Uttar Pradesh High Court has disqualified a writ petition and has vacated the stay on the divestment of the 24 state-owned sugar mills. Among the three bidders, Bajaj Hindustan has emerged the highest bidder.
If the matter is not taken to the Supreme Court, the divestment programme will be completed soon," sources said. The high court ruling was handed down two days ago. The Bench was headed by Chief Justice Rakesh Sharma and Justice T Chatterjee.
The bidding process began in November 2003.
The Uttar Pradesh State Sugar Corporation's 24 mills are being given to the private company on a 30-year management lease contract. Most of the mills that are being privatised are losing money and some have been declared sick by the Board for Industrial and Financial Reconstruction. Around 11 of the 24 mills, including those at Rohanakalan (Muzaffarnagar), Saharanpur, Amroha, Bijnor, Chandpur
(Bijnor), Jarwal Road (Bahraich), Siswa Bazar (Maharajganj), Khadda (Kushinagar), Bulandshahr, Mohiuddinpur and Sakoti-Tanda (both in Meerut) are in working condition.
The eight sick units are at Ramkola (Kushinagar), Lakshmiganj (Kushinagar), Deoria, Bhatni and Baitalpur (both in Deoria), Pipraich (Gorakhpur), Burhwal (Barabanki) and Shahganj (Jaunpur). Five mills at Chhitauni (Kushinagar), Ghughli (Maharajganj), Maholi (Sitapur), Barabanki and Bareilly have discontinued operations.
According to analysts, the sugar industry is likely to see good returns in the near term with prices remaining stable. This is primarily on account of a good monsoon leading to a healthy crushing season.
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