Despite the recurring sugar sector crisis due to falling prices and mounting arrears, Uttar Pradesh sugar output in the 2014-15 crushing season has surpassed last year's figures.

The sugar production during the current crushing season has surpassed 6.56 million tonnes (mt), against about 6.47 mt in the full 2013-14 season.

With about 68 of the total 118 sugar mills still operational, the cumulative state sugar output is likely to reach 6.70 mt, when the season rounds off by the end of April.

Of the 50 sugar mills, who have wrapped up their operations, 43 and seven belong to the private and cooperative sectors, respectively. Most of these units are situated in the central (22) and eastern (21) regions, while the western region accounts for seven mills closed so far. The mills stop crushing, when cane crop in the area allocated to them during the respective crushing season gets exhausted.

Sugarcane arrears have been mounting on mills and currently stand at about Rs 6,300 crore (including interest). Bulk of the cane dues are with the private mills, which account for 94 units in the state. The cooperative sector comprises 23 units, while one unit is owned by the Uttar Pradesh State Sugar Corporation Limited.

So far, the mills had collectively crushed nearly 69 mt of sugarcane and the sugar recovery stands at 9.52 per cent, compared with the last year's recovery ratio of 9.23 per cent. Recovery refers to sugar realisation per unit of cane crushed.

Uttar Pradesh Sugar Mills Association Secretary Deepak Guptara told Business Standard the arrears have been mounting primarily due to the falling sugar prices, which currently stand at Rs 2,550-2,600 a quintal.

At the start of the crushing season last year, the state government had retained the cane price at Rs 280 a quintal, while allowing mills to pay at the rate of Rs 240 a quintal upfront and deferring payment of the remaining Rs 40 a quintal at the end of the season.

However, the sugar prices fell further from that point putting extra pressure on the mills' payment capacity.

The private sugar mills further carry arrears of about Rs 9 crore and Rs 280 crore for 2012-13 and 2013-14 seasons, respectively. Allahabad High Court is already hearing a case in this matter and the next date of hearing is due on April 21.