According to Sanjeev Babar, MD of the Sangh, a package of this nature will help the industry get back on its feet. In 2005, Nabard had launched a restructuring package for sugar mills in the country following recommendations of the Mitra committee. The committee had then recommended a package covering all operational co-operative sugar mills which had outstanding term loan.
Accordingly, Nabard announced a Rs 2,000-crore debt restructuring package for 91 sugar mills in Maharashtra. The package included extending the repayment period for loans taken by mills and reducing the rate of interest on the restructured loan. Millers fear that the erratic monsoon cycle could hamper sugar production since cane is a rain dependent crop. Sugar prices are going down and the cost of production is increasing as a result of which sugar mills in the state have been finding it difficult to repay loans and the uncertain monsoon could hamper production, Babar said.
According to the Sangh, the country will have an opening balance of 85 lakh tonnes as on September 30,2014 and the acreage under cultivation in 2014-15 is likely to go up to 11 lakh hectares in Maharashtra as opposed to 9 lakh hectares in the previous season and it is therefore important that most sugar factories crush in the next season failing which cane is likely to remain standing in the fields, he said. In this event, mills will require increased working capital and some of them fear that they will not be able to crush cane in the coming season, Babar said.