Govt guarantees sought for 22 Maharashtra sugar mills

Aug 02 2014, 01:32 IST
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SummaryGovernment guarantees have been sought for around 22 sugar mills in Maharashtra with negative networth.

Government guarantees have been sought for around 22 sugar mills in Maharashtra with negative networth. There are around 42 such mills in the state, of which around 22 are still functioning, senior officials in the Maharashtra State Cooperative Sugar Factories Federation ( MSCSFF) said.

According to industry watchers, no government guarantees have been given for mills in the last few years.

The government guarantees have been sought on the ground that 770 lakh MT of cane is expected to be crushed for the sugar season of 2014-15, resulting in total sugar production of around 88 lakh MT, and majority of the mills will be required to crush the excess cane. These mills are not eligible to receive bank loans due to the policy of Nabard and will therefore find it difficult to begin crushing operations in the new season, Sanjiv Babar, MD, MSCSFF, said. The demand was tabled at a recent meet with the CM to take stock of the new sugar season.

According to a recent CAG report, the state owes R 1,874 crore to banks as a result of loan guarantees it extended to the sugar lobby. The report was tabled in the assembly recently. The CAG says cooperative sugar factories account for 72% of the guarantees invoked from the government. The guarantees were extended without enough scrutiny and were poorly monitored, according to the report. “The government did not maintain any record for monitoring and control. This resulted in accumulation of invocation claims of R1,874.87 crore in respect of 60 cooperative sugar factories alone,” said the report. The government had guaranteed loans to 17 sugar factories which had already defaulted on earlier payments. CAG’s report says that between 1992 and 2010, the government had guaranteed loans worth R436 crore to 42 cooperative factories without executing a guarantee deed.

Maharashtra's crushing season is expected to begin on October 15 instead of the earlier decided date of October 1 since the assembly polls are expected to be held around the same time. Around 100 sugar cooperatives and 65 private mills are expected to crush cane this year, Babar said. The mills have decided to give the first cane payment in accordance with the FRP decided by the Centre and the last payment rates will be considered under the new Accounting Standards II, he said.

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