Maharashtra: Five cooperative sugar mills yet to pay farmers, repay banks as September deadline looms

Five of the eight cooperative sugar mills across the state, who were extended government guarantee for raising working capital last year, have neither been able to clear the dues of the farmers, nor repay their bank loans.

With the September deadline for repayment looming, and only a fraction of the capital being repaid, the government is looking for ways to resolve the crisis.

Before the start of the 2020-21 crushing season in October last year, 32 cooperative mills, which were facing difficulty in raising working capital from banks, were identified by the state government for extension of government guarantees.

The guarantee allows mills to raise capital from the banks to commence their crushing operations. It was decided at that time that Rs 516. 30 crore will be loaned to the mills, said an official.

Though, given the precarious financial condition, only eight of the 32 working mills managed to get the working capital to the tune of Rs 126.78 crore from the banks, the official added.

Till date, Rs 26.09 crore has been recovered from the mill owners while Rs 114.38 crore still remains to be paid.
“The working capital was meant to provide the mills with enough liquidity to start the (crushing) season and also have enough funds to pay their farmers on time,” said the official.

With five of the eight mills not complying with the terms of agreement, the sugar commissioner, Shekhar Gaikwad, has decided to recover the dues as arrears of land revenue and has ordered action in the regard.

“With mills unable to pay their farmers yet, chances that they would be able to repay the remaining loans on time seem distant,” said a senior official from the cooperative department. Failure on repayment would result in the banks cashing in on the guarantees, which would translate into the government paying the overdue loans – another cause of concern for the authorities. Another way out that is being considered is an extension of the time to repay the loans, or the government extending the guarantee period.

A month after the crushing season has ended, sugar mills in the state are still to pay Rs 2,955.55 crore to their farmers. The mills had purchased 1014.05 lakh tonnes of cane from farmers for which they had to pay them Rs 32,143.75 crore in accordance with the government-declared Fair and Remunerative Price (FRP) of Rs 2850/tonne. But till June 15, only Rs 29,188.20 crore has been paid till date.

Of the 190 mills in the state, which had begun operations at the start of the season, 126 mills have no dues. 10 mills have paid just 40 per cent of their dues and are expected to face action by the sugar commissioner. Meanwhile, recovery notices have been issued against 30 mills.