Mumbai: The cash-strapped sugar industry in Maharashtra has sought a bailout package from the Maha Vikas Aghagi government to keep itself afloat and compete with its counterparts, especially from Uttar Pradesh.
State finance minister Jayant Patil told FPJ, "In view of the mandatory payment of the fair and remunerative price (FRP) and lack of a rise in sugar prices, the industry is passing through financial stress. Industry wants restructuring of loan and if possible more incentives.
The sugar price, which is at Rs 31 per kg, should be pushed to Rs 35 to 37 per kg." He informed the cost of production is over what the sugar mill is paying to the farmers.
He feared eventually, the sugar industry in the state will shut down unless its issues are addressed on a priority basis.
Maharashtra contributes 30% to the national sugar production. However, because of drought and prolonged rains in some districts, the state sugar production is expected to be 5.7 million tonnes in 2019-20 against 10.7 million tonnes in 2018-19.
So far 134 mills comprising 71 cooperative and 63 private are operational while applications of 31 mills are pending for clearance with the State Sugar Commissioner.
At present, ex-mill sugar price is around Rs 3,120-3,150 per quintal against the cost of production of Rs 3,450 per quintal. ''So the sugar mill is incurring a cash loss of Rs 350 per quintal.
The banks are reluctant to provide fresh loans because of negative net worth and net disposable revenue. However, banks have now agreed to provide loans on a case to case basis.
There is an urgent need for the restructuring of all loans including loans from the Sugar Development Fund,'' said Sanjay Khatal, managing director of the Federation of Cooperative Sugar Factories in Maharashtra (which is a representative body of over 200 mills).
Khatal said the government needs to ask the Maharashtra State Cooperative Bank to provide a short-term loan to release export sugar which will help mills to reduce their inventories.
''To compete with mills from Uttar Pradesh, MVA government needs to provide transport grant of Rs 250 per quintal so that mills can sell in UP and other states in north India,'' he added.
Khatal said sugar mills have cleared 99% of FRP for the 2018-19 crushing season. However, mills have to pay wages to workers and clear bills of sundry contractors.
''Mills have paid FRP worth Rs 23,000 for 2018-19 but because of a 47% drop in sugarcane crop the FRP payment for 2019-20 season will be Rs 14,000 crore,'' he noted.
The cash-strapped sugar industry in Maharashtra has sought a bailout package from the Maha Vikas Aghagi government to keep itself afloat and compete with its counterparts, especially from Uttar Pradesh.
State finance minister Jayant Patil told FPJ, "In view of the mandatory payment of the fair and remunerative price (FRP) and lack of a rise in sugar prices, the industry is passing through financial stress.
Industry wants restructuring of loan and if possible more incentives. The sugar price, which is at Rs 31 per kg, should be pushed to Rs 35 to 37 per kg." He informed the cost of production is over what the sugar mill is paying to the farmers.
He feared eventually, the sugar industry in the state will shut down unless its issues are addressed on a priority basis.
Maharashtra contributes 30% to the national sugar production. However, because of drought and prolonged rains in some districts, the state sugar production is expected to be 5.7 million tonnes in 2019-20 against 10.7 million tonnes in 2018-19.
So far 134 mills comprising 71 cooperative and 63 private are operational while applications of 31 mills are pending for clearance with the State Sugar Commissioner.
At present, ex-mill sugar price is around Rs 3,120-3,150 per quintal against the cost of production of Rs 3,450 per quintal. ''So the sugar mill is incurring a cash loss of Rs 350 per quintal.
The banks are reluctant to provide fresh loans because of negative net worth and net disposable revenue. However, banks have now agreed to provide loans on a case to case basis.
There is an urgent need for the restructuring of all loans including loans from the Sugar Development Fund,'' said Sanjay Khatal, managing director of the Federation of Cooperative Sugar Factories in Maharashtra (which is a representative body of over 200 mills).
Khatal said the government needs to ask the Maharashtra State Cooperative Bank to provide a short-term loan to release export sugar which will help mills to reduce their inventories.
''To compete with mills from Uttar Pradesh, MVA government needs to provide transport grant of Rs 250 per quintal so that mills can sell in UP and other states in north India,'' he added.
Khatal said sugar mills have cleared 99% of FRP for the 2018-19 crushing season. However, mills have to pay wages to workers and clear bills of sundry contractors.
''Mills have paid FRP worth Rs 23,000 for 2018-19 but because of a 47% drop in sugarcane crop the FRP payment for 2019-20 season will be Rs 14,000 crore,'' he noted.
