Trading Corporation of Pakistan (TCP) has filed suits against two sugar mills for recovery of some Rs 780 million after these mills failed to supply sugar as per the agreement. Sources told Business Recorder on Monday that TCP has decided to initiate legal proceedings against five sugar mills for recovery of some Rs 2 billion.
"In the first phase, suits have been filed by TCP in the SHC against TMK Sugar Mills and Seri Sugar Mill, as despite several requests and legal notices, these mills failed to clear TCP dues pending for a long time. Interest payment and other charges are gradually increasing," they added.
In 2007-08, the state run grain trader procured some 641,000 tons of sugar from local sugar mills at Rs 20 to Rs 32 per kilogramme to support the local industry and stabilise prices in the domestic market. The procured sugar, as per the agreement, was stored in the mills' warehouses and they were maintaining the stocks on yearly basis.
Later, in 2009, when commodity prices were on peak and the country was facing massive shortage, TCP asked mills for supply of procured sugar, however, some of them regretted to supply sugar as per the agreement.
"Due to massive surge in sugar prices some eight mills reportedly sold TCP's stocks in the open market and hence failed to supply some 86,000 tons of sugar," sources said. Eight mills were declared defaulter by TCP while the total claims against these mills stood at Rs 3.2 billion. For the recovery these dues, TCP served final notices to these sugar mills in March 2011 for payment of Rs 2.2 billion, setting a deadline of March 31, 2011.
Till the deadline, only three sugar mills cleared their dues, while the remaining five mills, despite earning huge profits during the last two years, failed to pay the corporation's dues, they added. TMK Sugar Mills failed to supply 16,838 tons sugar and TCP asked for a payment of Rs 642 million, of which it paid only Rs 5 million and Rs 637 million remained outstanding. TCP has filed suit for payment of Rs 637 million, sources said.
In addition, Seri Sugar Mill had to pay Rs 152 million for non-supply of 4,400 tons sugar. It only paid Rs 3 million leaving Rs 149 million receivables "As over Rs two billion have not been paid by five millers for a long time and they are also using delaying tactics, TCP has decided to file suit against these mills for recovery of outstanding," a high official of TCP confirmed.
He said a legal case against three other sugar mills for recovery of RS 1 billion is also being prepared and soon will be filed in Sindh High Court. These claims include principle amount, bank interest, accidental losses and 25 percent penalty, he added.