Govt's sugar bailout package to clear 40% of Rs 220 bn cane arrears: Crisil

With the supply surplus situation anticipated to continue in SS 2019 as well, a further build up in arrears cannot be ruled out

The Rs 70-bilion bailout package announced by the government for sugar industry is likely to bring limited respite for mills with around 40 per cent of reduction in the total estimated cane arrears of Rs 220-bn by May 2018 end.

A study conducted by the credit rating agency Crisil showed that the bailout package, though well intended, does nothing to address the structural issues that have plagued the industry, the most acute of them being non-linkage of sugarcane prices to end-product realisations. Creating a buffer stock and fixing a minimum ex-factory price for sugar will help improve the cash flows