14 out of 25 private sugar mills in Tamil Nadu not to start operations

Officials said sugarcane planting area had come down drastically in the state leading to poor capacity utilisation

At least 14 of the 25 private sugar mills in Tamil Nadu will not commence operations in the 2019-2020 sugarcane season due to a shortage of sugarcane and liquidity constraints.

At a high level meeting on 'Issues relating to Sugar Industry and Cane Growers of Tamil Nadu', convened by DFS, Ministry of Finance, representatives of South Indian Sugar Mills Association (SISMA) sought staggered repayment, a deep restructuring of dues, and asked for a special relief package for the entire industry.

SISMA officials said sugarcane planting area had come down drastically leading to poor capacity utilisation. They added that the sugar industry had started to turn around and with proper relief measures, it would come out of the stress in the next 18 months. They also made a special request to the banks and the RBI to consider fresh loans and restructuring.

Industry officials had earlier said that operating mills at lower capacity had increased the cost of production by Rs 10 per kg compared to mills in northern states.

The sugar manufacturing industry in Tamil Nadu is facing severe stress due to deficient rainfall in the last five years, barring 2015. Capacity utilisation in Tamil Nadu fell from 99 per cent in 2011-12 to 35 per cent in 2018-19. Sugar production in the state also fell from 2.38 million tonnes in 2011-12 to an estimated 0.85 million tonnes in 2018-19.

During the meeting, farmers’ representatives also expressed their concerns on persistent drought, withering crops, unpaid dues, mounting debt etc.