UP extends soft loan window for private sugar mills to December 10

The state had announced the soft loan package of Rs 40 billion to help the private millers tide over their precarious payments situation

The state government has extended its concessional loan package for Uttar Pradesh’s private sugar millers till the coming Monday.

Around Rs 35 billion of dues to cane farmers is pending from private mills for the 2017-18 crushing season. The state had announced a soft loan package of Rs 40 billion to help the private millers, after commercial banks had put the sector in their ‘negative list’ for loans, with a supply glut and low retail prices.

However, the state had tough conditions for applying mills, based on their balance sheet and payment ratio. This excluded some top names in the state’s sugar sector, including Bajaj Hindusthan, Modi Group and Simbhaoli Group, which collectively own more than Rs 15 billion.

With about Rs 26 billion of soft loans sanctioned so far, the government is extending the time window, “so that applications in the pipeline are processed. Since there was a long spell of holidays last month, several applications could not be taken up”, cane commissioner Sanjay Bhoosreddy told Business Standard. As these loans are above Rs 100 million each, they are also required to be cleared by the respective banks’ boards, he noted.

Apart from banks having cleared loans about Rs 26 billion, the government had approved a subsidy of Rs 4.5 a quintal to the millers, totalling around Rs 5 billion, he said.

Cane payment arrears are about Rs 60 billion for the country as a whole.

Recently, the state cabinet had decided to retain the previous year’s cane price of Rs 315 a quintal for the current crushing season, though farmer groups had demanded Rs 400 a quintal. Private mills had said they would have problems even paying at Rs 315, due to low retail prices and an export market squeeze.

The Lucknow bench of the Allahabad High is also hearing a petition from the UP Sugar Mills Association, challenging the tenability of the State Advised Price (SAP) for cane.