Sugarcane crushing in Maharashtra unlikely to begin until after Diwali

Factories with positive net worth to get working capital

Cane crushing by sugar factories in Maharashtra is not expected to begin before Diwali for a variety of reasons, unlike the usual date of November 1.

Mills point to falling sugar prices, extended rainfall and an agitation call by various farmers’ bodies, for higher cane payment. Also, the work force appears likely to arrive only after November 5.

Sanjeev Babar, managing director, Federation of Cooperative Sugar Factories in Maharashtra told Business Standard: ‘’Factories are expected to start crushing after Dilwali. About 160 factories (100 co-op and 60 private ones) will take part.’’

Maharashtra contributes about 30 per cent to national sugar production. Babar says output in the 2013-14 season is expected to be 7.2-7.4 million tonnes, against eight mt in 2012-13.

The Shetkari Sanghatana says it will launch a stir from Wednesday for higher cane payment. Suresh Dhas, minister of state for cooperation, said the government had directed that factories not pay less than the state-endorsed ‘Fair and Remunerative Price’ suggested by the central government, of  Rs 2,100 a tonne for 9.5 per cent recovery, with an increase of Rs 221 a tonne for every additional one per cent recovery.

However, the Maharashtra State Cooperative Bank (MSCB) points to directives from the Reserve Bank of India and the National Bank for Agriculture and Rural Development to advance no working capital to factories with negative net worth, of which there are about 30 in the state, unless there is a state government guarantee. ‘The state government has decided not to provide a guarantee for such factories,” said Pramod Karnad, managing director of MSCB.

He says they’ve sanctioned working capital worth Rs 3,200 crore to 29 co-op factories with positive net worth, for the coming season.

And, he noted, with sugar prices at a low of Rs 2,650 a quintal, it was unlikely to lend for a higher cane payment.

According to the information available with state cooperation department, there will be more than 30 sugar factories with negative net worth. However, some of them have approached the private banks and the district central cooperative banks for the working loan.