Maharashtra Cabinet approves guarantee to 37 coop sugar factories with negative net worth

Mumbai: Despite a cash crunch, the Maharashtra Cabinet chaired by CM Uddhav Thackeray on Tuesday decided to provide a guarantee for the principal loan amount and interest to nearly 37 cooperative sugar factories whose net worth is eroded and incurred huge losses. The state Cabinet, however, has laid down a condition that these factories will have to start crushing and not remain shut despite taking the advantage of the government’s assistance. CM, Deputy CM Ajit Pawar and seniors ministers Balasaheb Thorat and Jayant Patil will examine progress by these factories and if they fail to use the loan to function during the crushing season then the government will take stern action against them.

As reported by the Free Press Journal, these cooperative factories were denied pre seasonal loans by banks as their non-performing assets are quite high. However, these factories had made a representation to the government that without a guarantee they won’t get even a loan for raising the working capital. They had also argued with the negative net worth and precarious finances they were unable to participate in the ensuing crushing season expected to begin on October 15.

The Senior Minister told Free Press Journal, ‘’The cooperative department has argued that the government guarantee for principal and interest is required as these 37 factories should get the pre seasonal loans to join the coming crushing season. Their participation is important as Maharashtra will have a bumper sugarcane crop of 9oo lakh tonnes during 2020-21 crushing season against 752 lakh tonnes in 2019-20. In order to complete the crushing of the entire cane the participation of more sugar factories both cooperative and private is needed.’’ He said that factories, however, will have to start crushing from October 15 and wind up only after the entire cane is crushed.

The minister said had the Cabinet not agreed for a guarantee that in its absence the standing cane crop will have to be given compensation running into a few thousand crore rupees.

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Free Press Journal