The Hindu Business Line : `Excess sugar sales' by UP mills come under scanner

Excess sales
UP mills have been allegedly selling sugar in excess of their free sale quotas
Some of them are said to have moved sugar from their factories to godowns in Delhi to meet peak festival demand

New Delhi , Oct. 15

The Union Government has launched investigations into the alleged sale of sugar in excess of their free sale quotas (FSQ) by mills in Uttar Pradesh.

The Food Ministry, it is reliably learnt, has sent teams to find out discrepancies, if any, in the actual physical stocks held by mills in UP and the levels being reported to the Sugar Directorate.

The factories, whose inventories and despatches based on excise records have been inspected, are mostly in western UP. They include mills belonging to Bajaj Hindusthan, Triveni Engineering & Industries, Mawana Sugars and Simbhaoli Sugar Mills, sources told Business Line.

Clause violations

"There have been concerns over mills probably holding stocks much below what they have been reporting. Some of them are said to have moved sugar from their factories to godowns in Delhi and other consuming centres in order to meet peak festival demand. Either way, a violation of the Sugar Control Order has seemingly been taking place", they added.

Under clause 4 of the Order, no factory can sell or remove sugar from its bonded godowns "except under and in accordance with a direction issued in writing by the Central Government". Accordingly, the Sugar Directorate `releases' monthly FSQs for each mill under clause 5 of the Order, with no factory allowed to offload sugar in excess of its allocated quota in the open market.

Special permission

Of course, there have been instances in the past of mills obtaining special permission from High Courts to sell sugar in excess of the quotas released to them. In all these cases, the mills have cited liquidity problems faced by them in payment of cane arrears to growers.

"No mill has secured any such court order in the last one year or so. If any excess sale is proven, it would tantamount to a serious offence, as the Order is issued under powers conferred by the Essential Commodities Act", the sources said.

It is another matter though that in the event of sugar decontrol, none of these actions would constitute violations, as mills would be free to choose their quantum and timing of sales.

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