Maharashtra sugar millers seek Centre help fix ‘short margins’ issue

By: | Published: December 18, 2018 12:10 AM

Millers are currently finding it difficult to export sugar since banks are not releasing sugar, pledged with them, because millers are unable to resolve the problem caused by short margins.

Maharashtra sugar millers seek Centre help fix ‘short margins’ issue

Sugar millers from Maharashtra on Monday approached the Centre with a plea to adjust the short margins arising out of the difference in valuations of sugar by banks and the prevailing market prices so that millers can export more sugar out of the country.

Millers are currently finding it difficult to export sugar since banks are not releasing sugar, pledged with them, because millers are unable to resolve the problem caused by short margins.

In a meeting in Delhi on Monday with the joint secretary of sugar, joint secretary, food, officials of the department of finance , NABARD and Maharashtra State Cooperative Bank, representatives of the National Federation of Cooperative Sugar Factories and the Maharashtra State Cooperative Sugar Factories Federation put forward this issue before the government.

According to Sanjay Khatal, managing director, Maharashtra State Cooperative Sugar Factories Federation, Maharashtra sugar mills have largely and satisfactorily completed the fair and remunerative price (FRP) payments for the 2017-18 season. As per the report of the Sugar Commissionerate, of the `21,1 76.13 crore, an amount of `21,096 crore (99.63%) stands paid leaving a balance of `77.95 crore for which actions are in the pipeline, he said.

Despite the completion of FRP, mills are unable to export sugar since the banks are not ready to release the stocks under their pledge for reasons of ‘short margins’, he pointed out.

“The government of India through its notified scheme for assistance to sugar mills has agreed to provide assistance for payment of FRP in the ‘No Lien Accounts’ of either nationalised/cooperative banks. Despite the same banks are reluctant to release the material for two reasons. They desire written undertaking from the government of India that production assistance can be adjusted towards the ‘short margin’ towards the material being released for exports. They want the payments to be credited to the ‘no lien accounts’ within a reasonable period of time, say two months. It is with great reluctance to note that banks have agreed to sanction additional limits only to facilitate exports,” Khatal explained.

The millers urged the government to agree to the industry’s plea and issue permission for adjusting ‘short margin’ from the assistance for payment of FRP in the ‘No Lien Accounts’ against the additional limits banks have agreed to be sanctioned for sugar mills, specifically for exports.

Khatal said to ensure immediate receipt of claims after fulfilling the condition of export of sugar, it is requested that at least 90% of the amount may be released immediately based on the ‘Bill of Landing’, endorsed with the date of SOB (shipped on board) within 15 days and the balance 10% may be released after the verification and receipt of bank realisation certificate (BRC).

Maharashtra has received an export quota of 15.54 lakh tonne. Following a recent visit of the Chinese delegation, millers expect to sign deals for 5 lakh tonne. Representatives of the federation at the meeting said officials had discussed the issue and urged them to resolve it at their level.

Vidyadar Anaskar, chairman, MSC Bank, said the bank had been seeking a written undertaking from the Centre that the payment would be credited into a separate ‘Non Lien Account’ and not into the accounts of millers. He said that the sugar commissioner should also give a written undertaking on the amount of FRP paid by millers to farmers. He said that bank cannot arbitrarily release the material unless there was a written undertaking from the government.

MSC Bank is the apex cooperative bank in the state and valuations decided by the bank are followed by regional rural banks and urban cooperative banks in the state.

Earlier, the National Federation of Cooperative millers were seeking a soft loan of `10,000 crore would help the country’s millers tide over the current problem of short margins.

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