Listed firms such as Bajaj Hindusthan Group, Ponni Sugars, Rana Sugars, DS Sugars and Godavari Biorefineries are among the companies that own 85 sugar mils against whom the Indian government has cracked the whip for allegedly selling more quantity of the commodity during November-December 2023.
The Centre has cut 25 per cent of their normal entitled sugar quota while allocating the monthly release for domestic sales in March.
One of the affected companies, which has mills in Karnataka, has denied the allegation. It said sales figures appeared higher than the allocation on double filing of GST returns because of retail sales taking place from another unit of the company.
Open to verification
Officials said the government is open to verifying claims if any company contests the reduction in quota. This was despite the fact that the decision was taken after giving mills sufficient opportunity to explain the reason for exceeding the quota.
In an order issued on February 29 by the Department of Food and Public Distribution allocating 23.5 lakh tonnes (lt) of sugar among 511 mills for sales in the domestic market during March, the Government said, “It has been decided to deduct the release quota for the March 2024 with respect to such violators by 25 per cent of eligible quota for the month of March 2023”.
The Department of Food and Public Distribution said as some sugar mills had violated the stockholding limits and sold sugar in excess of their release quota for November and December 2023, the decision to reduce their quota was taken invoking Section 3 of the Essential Commodities Act, 1955 (10 of 1955), read with clause 4 and 5 of the Sugar (Control) Order, 1966.
Those affected include 28 factories of Maharashtra, 27 in Uttar Pradesh and 22 in Karnataka. These States are top three sugar producers in the country. Sources said these mills were eligible for 3.67 lt of quota, whereas they had been allocated 2.75 lt, a reduction of 91,762 tonnes. Factories in Karnataka are affected most as instead of their eligibility to get quota of 1.34 lt, the mills have got about 1.01 lt.
Taking precaution
In the March quota, as many as 58 mills have not received any allocation due to various factors including the closure of factories. The government has allocated the reduced quantity of 91,762 tonnes among non-erring mills so that there is sufficient availability in the market, sources said.
businessline last month reported the show-cause notices issued by the government to these sugar companies/mills for selling sugar in the open market more than the allocated quota. Many mills were sceptical about drastic action being taken, as they believed that the government might not risk holding up payment to farmers as mills are under pressure to make cane payment. It is said that some mills had sold as high as 40 per cent more sugar than the allocated quantity.
In a letter to all sugar mills last month the government reminded that monthly stockholding limits on sugar factories have been continuing for the last few years under the Sugar Price (Control) Order 2018, Sugar (Control) Order, 1966, under the Essential Commodities Act, 1955, so that sugar prices in the country remain stable. The mills need to adhere to it in letter and spirit.
The government had also pointed out that there was no uniformity in the quantity as sugar factories were using different weighing units such as tonnes, quintals, kg, packet, bags, boxes, while issuing the e-invoice under GST. The Sugar Directorate issued guidelines making it uniform for all mills to use metric tonnes while filing returns.