The sale of five state-owned sugar mills in Uttar Pradesh to Ponty Chaddha, a businessman close to the state's Chief Minister Mayawati, is being investigated for corruption. The mills were sold to Chaddha's company for Rs. 206 crore, far below their estimated market value of over Rs. 2,000 crore. Opposition parties are demanding a CBI probe into the low-price sales. An investigation by the state Lokayukta is already underway following complaints about the undervalued sales. The CAG is also auditing the transactions and has found irregularities in how the assets were valued and bidding process conducted.

1. Congress (I) has been highlight the scams of Mayawati government as a result of which Uttar Pradesh
has suffered losses in thousands of crores in each case. Mayawati has no vision, no agenda for
development of the state. Instead of creating assets for the state she has been selling the existing
assets to private parties at much below nominal price. As a result while Mayawati has been making
personal gain, the state has suffered huge losses. Mayawati sold sugar mills belonging of state sugar
corporation. Eleven mills were sold through auction. Five mills were sold to PontyChadda even
below minimum reserved price, said Congress (I). Terms of auction did not permit sale below
reserved price yet auction was made below minimum reserved price. Thus while Mayawati’s scam in
sale of sugar mills have benefited private parties and Mayawati it has caused loss of thousands of
crores of rupees to the state, said Congress (I).
The sale of state-owned sugar mills to PontyChaddha, the UP CM’s favourite business baron, is under
scrutiny, reports VirendraNath Bhatt
Sugar rush Cane being crushed at a sugar mill near Moradabad
Photo: ShailendraPandey
UTTAR PRADESH Chief Minister Mayawati may find herself in choppy political waters over the
disinvestment of sugar mills run by the public sector UP State Sugar Corporation Ltd (UPSSCL). Already,

2. the move has been criticised in the CAG audit, and the Lokayukta is conducting a probe after a complaint
by a farmer. Now, the Opposition parties have demanded a CBI probe into the sale of five sugar mills for a
song — Rs 206 crore — to the CM’s favourite business group run by PontyChaddha, when their actual
worth is more than Rs 2,000 crore.
Of the 21 mills privatised in October last year, 10 were operational while the rest have been lying
closed for several years. The total area occupied by the mills located in urban areas of west, east and
central Uttar Pradesh, is more than 500 hectares. The state government claims that the mills were sold
after due diligence and by adopting the most transparent method.
PontyChaddha, uncrowned king of the liquor business in Uttar Pradesh, already has a sugar mill at
Dhanaura in Moradabad district. The acquisitions could thus help him in his existing business, as
molasses, a byproduct of crushed sugarcane, is a key raw material for country liquor.
In 2008, the Mayawati government had created a special excise zone comprising of five divisions —
Bareilly, Moradabad, Meerut, Saharanpur and Agra. Chaddha was given the exclusive rights to run the
liquor vends for both country liquor and Indian-made foreign liquor. But in the end, through his
proxies and associates, he ended up controlling the liquor business in all the 72 districts of the state.
Repeated attempts by TEHELKA to contact Chaddha elicited no response.
After the denouement in Karnataka, where BS Yeddyurappa was forced to step down as chief minister
following indictment by the Lokayukta on illegal mining, the probe by the Uttar Pradesh Lokayukta,
Justice (retd) NK Mehrotra, could become a potent weapon for the Opposition parties in the state to
campaign against the ruling BahujanSamaj Party (BSP) during the Assembly election due in early
2012. The BSP is already at the receiving end for rampant corruption in the National Rural Health
Mission, which is being investigated by the CBI.
Besides the Lokayukta, much to the discomfiture of the Mayawati regime, the CAG is also conducting
an audit into the sale of the sugar mills, asking inconvenient questions. “We have detected three clear
irregularities in the disinvestment of the 21 sugar mills — the method adopted for the valuation of
assets like the plant, machinery and land, the bidding process and huge loss to the state exchequer on
account of evasion of stamp duty,” says a CAG official.
The scam came to light in October 2010 when VM Singh, who heads the Pilibhit based
RashtriyaKisanMazdoor Union, filed a case with the state Lokayukta claiming that the state-owned
Amroha Sugar Mill in JyotibaPhule district and Bulandshahr Sugar Mill in Bulandshahr had been sold
at prices below market rates.
Singh complained that the Amroha Sugar Mill, which has a cane crushing capacity of 3,000 metric
tonnes per day and located in an area of 31 hectares, was sold for just Rs 13.94 crore. If one takes the
real estate value into account, the property is worth around Rs 250 crore (see box).
Similar is the case with the 32-hectare Bulandshahr Sugar Mill, which has a cane crushing capacity of
5,000 metric tonnes per day. It was sold for Rs 29.75 crore when the market value is around Rs 225
crore.
The Lokayukta shot off a notice to the state government asking it to explain the discrepancy in the
prices. The government justified the lower prices by claiming that the private investor will have to
operate the mills and not be able to use the land as real estate.
Amroha Sugar Mill
JyotibaPhuleDistrictCane Crushing Capacity
3,000 metric tonnes per day

3. IN THE reply to the Lokayukta,
the then principal secretary
(sugarcane) Net Ram wrote, “For
getting maximum value of the
mills from disinvestment, the UP
government had amended the UP
Sugar Undertakings (Acquisition)
Act in 2009, allowing the land use
change subject to certain
conditions.” But the move was
quashed by the Allahabad High
Court in April 2010. The UP
government approached the
Supreme Court, which in its
interim order said the buyers of
the mills will be covered by the
final order of the apex court. Net
Ram concluded that this order
also adversely affected the bid
values to be offered by the
prospective investors.
Interestingly, Chaddha, who has a
couple of multiplexes, will be
able to use the land for real estate
development if this change in
land use is allowed by the apex
court, which is considering the
matter.
Area
31 hectares
Sale Price
Rs 13.94 crore
Market Price
Rs 250 crore
Complainant
Pilibhit farmer VM Singh
Bijnor Sugar Mill
BijnorDistrictCane Crushing Capacity
7,500 metric tonnes per day
Area
15 hectares
Sale Price
Rs 101 crore
Market Price
Rs 500 crore
Complainant
KiritSomaiyya, BJP MP
Bulandshahr Sugar MillBulandshahrdistrictCane Crushing Capacity
5,000 metric tonnes per day
Area
32 hectares
Sale Price
Rs 29.75 crore
Market Price
Rs 225 crore
Complainant
Pilibhit farmer VM Singh
Lord krishna Sugar Mill
SaharanpurCane Crushing Capacity
2,500 metric tonnes per day
Area
60 hectares
Sale Price
Rs 35 crore
Market Price
Rs 450 crore
Complainant
YogeshDahiya, Farmers’ Forum
Jarwal Road Sugar Mill
BahraichCane Crushing Capacity
2,500 tons per day
Area
22 hectare
Sale Price
Rs 27 crore
Market Price
Rs 250 crore
Complainant
KiritSomaiyya, BJP MP