NSCL suspends cane crushing on fund crunch

Company seeks govt intervention to keep it afloat

Barrage of problems has forced the management of Nayagarh based sugar mill run by Nayagarh Sugar Complex Ltd (NSCL) to suspend sugarcane crushing in the current season (November to March) impacting the lives of about 8000 farmers.

Jobs of 3000 people is also at stake while livelihood of 90,000 people are likely to be affected due to halting of crushing operation by NSCL, officials said.

Lackadaisical attitude of the state government and the lending bank has deprived the sugar mill in availing the assistances meant to clear the cane purchase arrears and maintain a healthy liquidity position.

The 1,250 tonne per day cane crushing sugar complex could not avail the Rs 2.4 crore interest free loan from the UCO bank under the Scheme for Extending Financial Assistance to Sugarcane Undertakings (SEFASU-2014) as declared by the Centre specially meant for payment of outstanding dues to the farmers.
 

Under the SEFASU scheme, all loans were to be sanctioned by June 30 and disbursed by September 30. Further an amount of Rs 4.5 crore under the chief minister's package for development of sugarcane in the areas affected by very severe cyclonic storm Phailin and subsequent floods is yet to be released.

"We have been pursuing UCO bank since April 2014 along with recommendations of the public representatives for availing loan under SEFASU scheme and also had sent a list of farmers eligible to receive financial assistance from the package announced by the chief minister to the designated authorities. Despite in time application for loan to UCO bank, the bank responded to us just three days prior to the final date of disbursement (September 30) mandated by the Centre. Much to the agony nothing has been received", said Sabyasachi Mishra, deputy managing director, NSCL.

A letter issued by the UCO bank to NSCL on September 9, 2014 said, the bank is agreeable to process the application of the company under the scheme provided the government of India extends the sanctioning and disbursement date of the loan for a reasonable period and the company submits the requisite documents demanded by the bank in this regard.

"In the absence of loans under SEFASU scheme, if the government arranges alternatives financing, may be through the cooperative sector, then we are even ready to pay interest on such advances", he stated.

Adding to the woes of the company is the non-issuance of no objection certificate (NoC) by the state government for clearing the dues of takeover of Nayagarh sugar mill by NSCL in 2004. NSCL had taken over the sugar mill, which was earlier operating in the cooperative sector, through a bidding process at a consideration of Rs 5.22 crore to be paid in ten equal instalments by 2017.

However, the company had paid the total outstanding amount to the state government in 2009 by borrowing funds from the bank at a high rate of interest.

"Despite the full payment of the total consideration amount before the due date, we are yet to receive the NoC from the state government. Because of the absence of NOC, banks are not considering our request to enhance the working capital or term loan limits impeding the growth of the unit", Mishra said.

In a recent meeting with the state government officials, the company management has pleaded for early intervention of the state government to keep the company afloat. "We are keeping our fingers crossed on the future course of action", said NSCL chairman Trailokya Mishra.