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Journalism of Courage
Are sugar mills duping the farmers in Uttar Pradesh? According to an affidavit filed in the Supreme Court this week, it seems they might be. From the evidence in the affidavit, which shows the balance sheets of some of the biggest mills in the state, it appears that while the mills are telling the courts they are incurring losses and hence cannot pay the farmers, they might actually be making profits.
Earlier, the sugar mills had challenged the fixation of State Advisory Price SAP of Rs 125 on the grounds that the state did not take into account that due to the sugarcane glut, the rates of sugar had dropped. They had also said at the time that the rates would have come down to Rs 1,100-1,150 per quintal in February-March 2008. It was submitted that the mills would have been likely to incur a loss of about Rs 3,715 crore.
Based on this argument, the High Court at Allahabad, in its order in November 2007, had directed the mills to pay Rs 110 as an interim measure. The mills are finding it difficult to pay even this and cane arrears run into thousands of crores.
The petitioner, V.M. Singh of the Kisan Mazdoor Sangathan, contends that the sugar prices in the current season never went below Rs 1,400 per quintal, much higher than what was projected by the mills in their court affidavit.
He has also placed as evidence a statement of accounts of the sugar mills, which shows that on the basis of the prevailing price at the time, the mills had made operating profits for the year 2006-7. Also, the mills have shown the net return from sugar alone even though the by-products constitute about 40 per cent of the revenue.
According to the petitioner, after paying Rs 110 per quintal, the sugar mills were making profits of Rs 25-30 per quintal.
He has examined the statement of accounts of the three largest groups8212;Bajaj, Balrampur and Dhampur8212;which account for almost half the private mills of the state. He contends that all of them made profits in the first two quarters of 2006-7, while in the entire year, the Bajaj Hindustan Limited made an operating profit of Rs 248 crore and Balrampur Sugar Mills made Rs 99. 28 crore. Dhampur Sugar Mills incurred a marginal loss of Rs 2. 52 crore.
In fact, the mills have gone from strength to strength, their number growing from 40 to 83 in the last three years. 8220;The fact is that there are no losses, but losses have been attributed to excessive amount of interest paid by them on account of huge loans taken by them to set up new units or for expansion of existing units.8221; For example, Bajaj shows that the interest increased by 2,640 per cent as the company took loans to buy new mills.
8220;The sugar mills have placed incorrect and false information in the high court. They have shown results of only one quarter when they made a loss, and have shown net profits, not the operating profits,8221; added Singh.
The court has asked the mills and the state to respond. The case is listed for April 19.
