Ban on raw sugar import to be short-lived: Simbhaoli Sugars

The Uttar Pradesh government has asked all the concerned districts to ban off-loading of raw sugar to private sugar mills in western parts of the state owing to a major law and order problem in the state.
In an interview with CNBC-TV18, Sanjay Tapriya, Director of Finance, Simbhaoli Sugars spoke about the ban and the possible impact it would have on sugar factories across Uttar Pradesh.

Here is a verbatim transcript of the exclusive interview with Sanjay Tapriya on CNBC-TV18. Also watch the accompanying video.
Q: A word on the multiple voices we are hearing on fair and remunerative price (FRP) a) that it is only a flaw which Sharad Pawar pointed out and the price will probably be much higher than what the FRP level is set at and b) the state will pay only 20% of the entire thing?

A: There is no flaw in the FRP. FRP is certainly a modification on the Statutory Minimum Price (SMP) which had been there since the last many years. Probably it is the understanding of the FRP, the state or the millers are always open or always can pay higher price than FRP with a mutual agreement which was the case in SMP also. So, probably it is the time taken in understanding and it will be clarified over a period of time.

Q: I think the point over here is that it is not going to be Rs 130 per quintal. For most UP sugar companies it is probably going to be more, would you agree with that?

A: Certainly. That has been well understood. In the case of the SMP regime also the price to be paid to the farmers has always been much more than what the SMP was, not only in UP but in other states as well. So the same situation is in FRP also and the same situation is in MSP of all other crops also. So, there should not be any misunderstanding on the subject.

Q: Was there clarity on the fact that the state will pay only the difference on the levy quota though?

A: No. There is no clarity on that as such, on what the state will pay or it will pay on the levy quota on other things. But the fact is that that the farmers certainly will be paid much more.

Q: The farm minister has just pointed out that the state will indeed pay only 20% i.e. of the entire thing, 80% will not be paid or the difference will not be paid by the state only for the levy quota the state will pay that amount. What kind of impact would that make for a company based in UP like yours?

A: No. Certainly in a real sense and practical sense it won’t make much of a difference to the UP factory because UP factory in any case have been paying or rather willing to pay much more than FRP. The sharing with the government has never been factored into the working as such. So I am not seeing this as an issue and this clarification of 20% of the differential to be shared by state etc is yet to be debated, yet to be discussed.

Q: Some of your industry peers were actually quite positive about this FRP as a move and as a regulatory change. Would you worry now that it will not take the form and shape that industry voices earlier thought it would?

A: It was a good move. We have to agree with these types of moves. They take time to stabilise, and many times they change shape and also the discussions and the real time situation and ground realities do come on the subject. But long term it is a good move. Probably the FRP certainly helped the industry to stabilise or also to price which is beyond the state political control or the state systems.

Q: In the morning we heard that there is wide spread agitation by farmers and for now the Uttar Pradesh government has put a temporary ban on raw sugar imports?

A: To me, it is more of a very temporary measure for just maintaining the law and order situation. It is not going to be for a long term because the country does need sugar and sugar can come from raw processing only. Cane sugar is short. UP has a lot of facilities available and UP has a lot of facility which has surplus as well. So UP will be processing raw sugar and to me it looks like it is more of a week or ten days step to curb the law and order situation.