New recast norms: Sugar mills get 2-year stay for loans taken from SDF

The Centre has issued guidelines for restructuring of loans taken by mills from the Sugar Development Fund (SDF), providing a moratorium for two years and then repayment in five years to eligible defaulting factories.

The total outstanding default from the SDF is nearly Rs 3,100 crore, including principal and interest, according to an official statement issued on Wednesday.

On January 3, the Department of Food and Public Distribution issued guildelines "for restructuring of SDF Loans under Rule 26 of the SDF Rules 1983".

The guidelines for restructuring has been issued to "facilitate rehabilitation of financially weak but economically viable sugar mills which have availed loans under the Sugar Development Fund Act, 1982".

The department said guidelines have provision for a "two-year moratorium and then five years of repayment".

This is expected to provide big relief to financially weak sugar mills which have availed SDF loans, the department said.

"The outstanding amount of default of SDF loans is Rs 3,068.31 crore (as on November 30, 2021) which include Rs 1249.21 crores as principal amount, Rs 1,071.30 crore as interest and Rs 747.80 crore as additional interest due to default.

"Waiver of additional interest in full will be given to the eligible sugar factories," the statement said.

These guidelines will be uniformly applicable for SDF loans availed by all types of concerns, including Co-operative Societies, Private Ltd Companies and Public Ltd Companies.

The rate of interest will be changed to the interest rate as per the prevailing bank rate on the date of approval of the rehabilitation package.

"These points will facilitate reduction of the debt burden over these defaulting sugar mills," the statement said.

A sugar factory that has been incurring cash losses continuously for the last three financial years or factory's net worth is negative, but the factory is not closed/has not ceased to crush cane for more than two sugar seasons, excluding the current sugar season is eligible to apply for restructuring, the statement said.