1. Maharashtra sugar mills can’t pay back loans, turn to Narendra Modi govt

Maharashtra sugar mills can’t pay back loans, turn to Narendra Modi govt

Sugar mills in Maharashtra have urged the Centre to restructure their soft loans taken a couple of years ago. Mills say that they are not in a position to make the payments for the first repayment of the soft loan of R3,200 crore that they had availed during 2013-14 and 2014-15.

By: | Pune | Updated: August 12, 2016 7:23 AM
Millers have demanded a 5-7 years window for rescheduling of their loans. The central government had kept a moratorium of two years on repayment of the interest free loan, while the mills had to repay the loan during the next three years. (Reuters) Millers have demanded a 5-7 years window for rescheduling of their loans. The central government had kept a moratorium of two years on repayment of the interest free loan, while the mills had to repay the loan during the next three years. (Reuters)

Sugar mills in Maharashtra have urged the Centre to restructure their soft loans taken a couple of years ago. Mills say that they are not in a position to make the payments for the first repayment of the soft loan of R3,200 crore that they had availed during 2013-14 and 2014-15.

According to Shivajirao Nagawade, chairman, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), the last couple of seasons have been bad for the millers. Around 69 factories have ended up with losses of R900 crore for the season of 2014-15 and the total accumulated losses by the mills in the state are around R2,900 crore, he pointed out.

Representations have been sent to Union finance minister Arun Jaitley and agriculture minister Radha Mohan Singh and chief minister of Maharashtra Devendra Fadnavis has been urged to take up the issue on behalf of the mills in the state, he said.

Millers have demanded a 5-7 years window for rescheduling of their loans. The central government had kept a moratorium of two years on repayment of the interest free loan, while the mills had to repay the loan during the next three years. Instead of a total repayment period of 5 years, mills have demanded extension of the repayment period to 5-7 years.

According to Sanjeev Babar, MD of the federation, crushing reduced by 20% for the season of 2015-16 and the production is likely to drop by 50% in the 2016-17 season. “Sugar prices during October 2015-February 2016 period have been ranging between R2,300 to R2,600 per quintal and from February onwards prices shot up to R3,200 per quintal. However, mills had to make payments for the period crushed until February and therefore millers sold sugar at distress rates. The government also kept shifting policies including imposing duties on export, imposing stockholding limits leading to confusion among mills,” he said.

“ If the production is projected to go down by 50% in the 2016-17 season, cane availability could be a major issue which could mean a shorter season and a rise in cost of production. Moreover several mills may not be in a position to crush cane . The total instalments for the soft loan comes up to R1,000 crore of the loans worth R3,200 crore and fair and remunerative price (FRP) payments also have to be made,” Babar said.

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