1. Maharashtra sugar mills in drought-hit areas may not crush next season

Maharashtra sugar mills in drought-hit areas may not crush next season

Employee costs could become major challenge; concerns over mills’ survival

By: | Published: April 9, 2016 6:06 AM

Several sugar mills in the drought-hit regions of Maharashtra may find it difficult to continue crushing operations in the 2016-17 season. In Marathwada alone, 50%-60% sugar mills are expected to remain closed in the coming season due to lack of cane availability.

This has led to huge concerns regarding the survival of the mills and managing employee costs could become a big challenge for mills in the region, top officials of the Western India Sugar Mills Association (WISMA) said. Several mills in the Solapur and Ahmednagar regions are also unlikely to start next season.

Cane availability has become a major issue for mills in Marathwada, B B Thombre, president, WISMA, said. This season, of the total of 65 mills in the region, around 46 factories have crushed cane, which was 50% less than that of the previous season, he pointed out, adding that even if sugar prices are firming up, since the mills have crushed less cane, they will gain little benefit. Normally, mills in Marathwada crush 100-110 tonne of cane and the region accounts for 20% of the total crushing that happens in Maharashtra, Thombre said. “However, this year, the scenario has been different. Barely 70 lakh tonne was crushed this season and nearly 25 lakh tonne was unavailable because it was diverted towards fodder and some cane dried up,” he explained.

This effectively means that 30-35 mills in Solapur and Marathwada may not start in the next season. Over and above this, there are 20-22 mills that are likely to struggle to stretch the season for a month at least, industry observers pointed out. Therefore, 50-55 of the total 178 mills in the state may not crush cane next year but the cost overheads will continue to remain. Although these matters have not been brought up yet, there is the possibility of some lay-offs in the coming season in some for the factories, Sanjeev Babar, MD, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF), said.

Factories are going to find it difficult to manage employee costs and therefore, there could be some talks at the local level to explore lay-offs, he explained. Of the total of some 30 factories in Solapur, which has been badly hit by drought, around 12-13 mills may crush in the coming season, he said.

The lack of cane effectively means less production for the state. Estimates for the next season have already been cut to some 65 lakh tonne. The area under sugarcane cultivation is expected to decline 25% during the 2016-17 season due to drought.

According to preliminary estimates, the area in the next crushing season may remain 6-7 lakh hectares and availability of cane for crushing could be about 550 lakh tonnes, he said.

In the ongoing crushing season, according to state government figures, cane had been planted on 9.67 lakh hectares, while the total cane available for crushing has been around 760 lakh tonne. The state is expected to produce 85 lakh quintals of sugar this season.

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