Karnataka: State government offers sugary treat, MSIL to place bid for seized sugar
BELAGAVI: Mysore Sales International Limited (MSIL), a state government undertaking, is likely to bid during the auction of about nine lakh tons of sugar seized from sugar factories for non-payment of arrears to sugarcane farmers for 2013-14.
According to official sources, a meeting was held in Belagavi regarding disposal of sugar stock seized from sugar factories, and directions issued to deputy commissioners' of districts concerned to float tenders for sale of sugar. Instructions were given to them to start this process as early as possible as the government had committed on the floor of Assembly to clear the dues in two instalments before July 31.
The first instalment had to paid before July 10 for which the department of commerce and industry had already issued an official order for payment of Rs 321 crores. The process of depositing Rs 100 a ton into bank accounts of farmers' who supplied sugarcane to 28 sugar factories last year, had commenced. Sources said though MSIL does not use one kg of sugar in manufacturing, it had been engaged by the government to intervene and buy sugar to bail out farmers.
Interestingly, the business turnover of this government undertaking was around Rs 1,200 crores, with a profit of around Rs 40 crores. To participate in the bidding, MSIL could be forced to borrow funds from banks to raise around Rs 200 crores to Rs 250 crores to ensure that no bidder should quote very low prices, taking advantage of the situation.
“We are aware that some bidders may quote Rs 10 per kg of sugar as they know well that the government wants to dispose off the stock as early as possible. Besides, there are reports of participation of owners of some sugar factories in the auction in order to buy at a low price and to sell when the prices go northwards. MSIL will intervene at that juncture and try to bid at Rs 20 to Rs 22 a kg to convey the message that government is not ready for distress sale,” sources added.
