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The cooperative sugar industry in Maharashtra is not amused by the Centre’s decision to provide interest-free loans of Rs 6,000 crore.
Mills have instead made a fresh appeal to the Centre to provide financial support of Rs 850 a tonne, create a buffer stock of five million tonnes, and extend till 2019-20 the Rs 4,000 a tonne raw sugar incentive announced recently.
Maharashtra’s sugar mills have Rs 3,400 crore of cane arrears. Of this, cooperative factories owe Rs 1,900 crore. They have blamed their condition on the fact that the prevailing sugar price is Rs 2,100-2,300 a quintal against a cost of production of Rs 3,200-3,400 a quintal.
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In all, 178 sugar factories participated in the crushing season 2014-15 and produced more than 10.5 million tonnes of sugar.
“The government’s decision to provide an interest-free loan of Rs 6,000 crore will not provide much relief to cooperative sugar mills. The balance sheet of the most of these mills will continue to be in the red. The government needs to provide financial support of Rs 850 a tonne and also take steps for restructuring of loans,” Sanjeev Babar, managing director of the Federation of Cooperative Sugar Factories in Maharashtra, told Business Standard.
He added a large number of cooperative sugar mills feared banks would not lend them money because of their negative net worth.
Meanwhile, cooperative sugar mills await the release of Rs 2,000 crore interest-free loans announced by Maharashtra Chief Minister Devendra Fadnavis in April. The state government has indicated that the sugar industry should not expect further subsidy from it.
