Experts said that banks are now reluctant to finance the sugar sector with many mills having exhausted their sectorial and unit exposure limits. (File)
Cooperative sugar millers from Maharashtra have written to Prime Minister Narendra Modi, seeking his intervention for the release of government dues to the tune of Rs 800 crore.
Jaiprakash Dandegaonkar, chairman of the Maharashtra Federation of Cooperative Sugar Factories, in his letter has asked for the early release of dues to improve the liquidity of mills.
In his letter, Dandegaonkar said the government dues pertained to the maintenance of buffer stock and sugar exported by the mills during 2018-19 and 2019-20.
The 102 sugar mills now have unpaid dues to the tune of Rs 834.46 crore, of which Rs 610.52 crore was the pending sugar export subsidy. Both the state and national federation had taken up the matter with the Ministry of Consumer Affairs, Food and Public Distribution, but it was not solved due to want of funds.
Sugar mills, the letter said, are facing problem of liquidity, mainly due to the present minimum selling price of sugar being fixed at Rs 3,100 per quintal. “Continuation of sale of sugar at a cash loss of Rs 350 per quintal due to the MSP being capped at Rs 3,100 per quintal. Our industry has been repeatedly requesting its enhancement to Rs 3,450 per quintal along with step-wise increases for different grades of sugar. The government is yet to take a decision on it,” the letter read.
The nationwide lockdown has virtually put a stop to sale of sugar as all sweetmeat shops, ice cream manufacturers and cold drink makers have stopped procuring sugar. This has disturbed the cash flow for mills who are now finding it difficult to raise enough capital to clear their pending Fair and Remunerative Price (FRP) for the cane purchased from farmers. Payment towards harvesting and transportation of cane is also pending.
Experts said that banks are now reluctant to finance the sugar sector with many mills having exhausted their sectorial and unit exposure limits.
The liquidity is also otherwise stuck up in the buffer stock with the central government. The letter urged the Prime Minister to intervene to ensure quick clearance of dues.
In its last stage, the 2019-20 sugar cane crushing season for Maharashtra till April 15 has seen mills procuring 535.03 lakh tonnes of cane for which they had to pay Rs 12,539.34 crore as per the government declared minimum FRP. However, mills have till date cleared Rs 11,310.67 crore of this, running up arrears of Rs 1,254.08 crore.